Nihon Unisys Group

Integrated Report 2015
For the Year Ended March 31, 2015

Table of Contents
01 The Nihon Unisys Group: History of Value Creation
02 Corporate Philosophy andCharter of Corporate Behavior
03 Our Change in Position to Create New Values
05 Financial and Non-Financial Highlights
07 Message from the CEO
To All Stakeholders

Strategy for Corporate Value Improvement

page 11

Supporting Foundation for
Corporate Value Improvement

page 19

20 Reform of Corporate Culture and Strengtheningof Human Resources Capabilities
21 Our Initiatives for Corporate Social Responsibility
23 Corporate Governance andInternal Control System
26 Directors, Audit & Supervisory Board Members,
and Corporate Officers
Financial Section

page 27

11 Business Strategy Message from the CMO
13 Technological Strategy Message from the CSO

27 Overview and Analysis of the Results for FY2014
31 Consolidated Financial Statements

15 Financial Strategy Message from the CFO
17 Best Practices: An Initiative for Growth Strategies

59 Corporate Data / Stock Information /Editorial Policy

The Nihon Unisys Group: History of Value Creation

1950

1960

1970

1980

We contributed to the progby providing business sol uvarious industries

We contributed to the formation of Japan’s current informationsociety by delivering the first commercial computersMainachievements

1955

1967

1977

Installed Japan’s first commercial
computers at the Tokyo Stock
Exchange, Inc. and Nomura
Securities Co., Ltd.

Introduced Japan’s first online
banking processing

Developed the software “FAST”
for financial institutions

We introduced many of theservices that are now considered to
be daily essentials, including theability to make deposits and withdrawals from any branch, automated salary payment banktransfer, automatic utilities payments, and automatic tellers.

This software was developed forregional financial institutions suchas shinkin banks, credit associations, and agricultural cooperatives.
“FAST” made it possible to reduce
development costs and speed up
the development of new programs.

At a time when the growth of the
securities industry demanded theaccelerated mechanization ofadministrative work, we imported
large computers from the USA andinstalled them.

Changes in business infrastructure in response to
the changing times
Mainframe centralized processing systems
01

Nihon Unisys Group Integrated Report 2015

Nihon Unisys Group
Corporate Philosophy

Nihon Unisys Group
Charter of Corporate Behavior

Our Mission
Work with all people to contribute to creating a society that is friendly to people and the environment
Our Vision
Be a group that strives to be sensitive to the expectations and needs of society and that thinks throughhow ICT can contribute to meet them
Our Values

1. Pursuit of High Quality and High Technology
Always have the latest knowledge that is useful for society while
improving our skills

2. Always act according to the principles ofsocial responsibility
3. Sincerely work on the core subjects andissues of social responsibility

The seven key principles of ISO26000: Accountability, transparency, ethicalbehavior, respect for stakeholder interests, respect for the rule of law,

Identify each other’s good points, encourage each other to improvethose good points and harness the strengths of each person

respect for international norms of behavior, and respect for human rights.

* Core subjects and issues of social responsibility

3. Attractive Company for Society, Customers,
Shareholders and Employees
Listen sincerely to our stakeholders to improve our corporate value

2000

gress of society
utions to support

1. Act with coexistence of people andthe environment as the highest priority* Principles of social responsibility

2. Respect for Individuals and Importance ofTeamwork

1990

We will meet our responsibilities towards society and the environment to protect the futureof our children.

The seven core subjects of ISO26000: Organizational governance,
human rights, labor practices, the environment, fair operating practices,
consumer issues, community involvement and development, andrelevant issues related to each of the core subjects.

2010

2015

We contributed to the growth of customers and society
by always seizing technological advances and creating
systems that could be used to offer new services

1991

2007

Launched the integrated CAD /CAM system “CADCEUS®”

Introduced core-banking system
BankVision®, the world’s first“full-banking” system based on
the Windows® platform

Our CADCEUS was the first
domestically-produced 3D CAD /CAM system, used for various
manufacturing businesses including automobiles, electric appliances, component fabrication, andmetal molds.

And then…

Business
Ecosystems

BankVision was a large-scale,mission-critical system which was
designed as an open system toenable rapid system development
for the provision of new banking
products and services.

Solutions
Cloud-based information system

Distributed processing systems by client servers

Nihon Unisys Group Integrated Report 201502

Our Change in Position to Create New Values
Our Vision for the Mid-term Management Plan — Our Vision towards 2020

Mobilize services based on interconnected
Build our future through ICT advances.
The era of new reform has arrived.
We have created and integrated numerous solutions together with customersof various industries on the basis of our ICT experience and expertise.
We will integrate services using our knowledge to start and develop ICT businesses andproactively envisage new forms of cooperation in business in the more inter-connected worldthat the “Internet of Things” has made possible.
The Nihon Unisys Group will take the initiative in creating unparalleled bases for

2015
Providing new schemes that connect various types ofindustries in the growing area of the digital economy

Changing to a new position

s

ss
e
in

Ecosys

te

m

s

Bu

delivering innovative services until they become the norm.

Creating new value(business ecosystems)*
by interconnecting various
customers, users, services
and vendors

Strengths of the Nihon Unisys GroupStrength#1

Strength#2

Strength#3

Collaborative relationship with the customersof various industries

Capabilities of enabling
successful system
implementation

Capabilities of enabling
one-stop support that is
free from vendor lock-in

Stable customer base across a range ofsectors including finance, manufacturing, distribution and the public sector

Ability to build and run a large-scale
systemAbility to deal with the whole processfrom upstream consultation to the development, introduction, operation, andmaintenance of the system

Technology and human resources
03

Nihon Unisys Group Integrated Report 2015

businesses.
SolvingsocialissuesSolving
customers’issues2018

2020

Becoming a business ecosystem core and a front runner in designing
future business scenarios

Solving
users’
issuesStrength#4

Capabilities of designingand delivering newservices
Ability to create new ecosystems,
which has been cultivated throughsocial infrastructure and co-creation
business initiatives* Business ecosystem: A collaborative relationship for companies to create anearnings model that enables them to cooperate mutually and link their businessresources and strengths beyond the boundaries of individual industries

Nihon Unisys Group Integrated Report 201504

Financial and Non-Financial Highlights (As of March 31, 2015)(Millions of yen)

Consolidated financial data

FY2010FY2011FY2012FY2013

FY2014

Net sales��������������������������������������������������

252,990

255,123

269,170

282,691

269,155

Operating income ������������������������������������

6,527

7,310

8,311

9,575

10,925

Net income (loss)��������������������������������������

2,575(12,499)

1,251

6,305

7,246

Total assets����������������������������������������������

207,282

190,084

197,780

202,468

199,772

Total equity ����������������������������������������������

76,77063,22367,91776,017

81,976

Net interest-bearing debt��������������������������

48,507

46,90740,85838,473

33,666

Cash flows from operating activities��������

21,70813,43018,448

11,88918,037

Cash flows from investing activities ��������

(11,168)(10,642)(11,443)(8,289)(10,548)

Free cash flows����������������������������������������

10,540

2,789

7,005

3,600

7,489

Cash flows from financing activities ��������

(5,587)(5,948)(8,985)(151)(12,887)

Cash and cash equivalents, end of year����

30,41427,25525,27428,72423,326

Operating margin��������������������������������������

2.6%

2.9%

3.1%

3.4%

4.1%

Return on equity (ROE)����������������������������

3.4%

—

1.9%

8.9%

9.7%

Net debt / equity ratio (times)������������������

0.64

0.76

0.61

0.51

0.42

Equity ratio������������������������������������������������

36.4%

32.6%

33.6%

36.9%

40.6%

Price earnings ratio (times) ����������������������

20.1

­­—

61.7

15.0

14.8

Basic net income (loss) per share (yen)����

27.12(132.99)

13.31

67.08

77.07

Net asset per share (yen) ������������������������

803.52658.90707.57795.61861.53

Cash dividends per share (yen)����������������

10.00

5.00

10.00

15.00

20.00

Dividend payout ratio��������������������������������

36.9%

—

75.1%

22.4%

26.0%

FY2011FY2012FY2013

FY2014

9,157

8,820

8,486

8,246

Nihon Unisys(non-consolidated)

3,677
681
4,358

3,526
686
4,212

3,068
633
3,701

2,924
607
3,531

Nihon Unisys(non-consolidated)

18.2
14.7
17.7

18.5
15.3
18.0

19.0
16.5
18.5

19.4
16.7
18.9

43.3
38.6
42.6

43.4
39.2
42.7

43.9
40.1
43.3

44.3
41.0
43.7

Non-financial data

Scope of data collection

Number of employees (consolidated)������ Consolidated GroupMen ������������

Number of employees

Women ��������
Total ������������
Men ������������

Average years of service

Women ��������
Total ������������
Men ������������

Average age (years)

Nihon Unisys
Women ��������
(non-consolidated)
Total ������������
Nihon Unisys

Women in management rate (%)*1���������� (non-consolidated)
Paid leave utilization rate (%)�������������������� Consolidated Group*5
Disabled employment rate (%)���������������� Consolidated Group*5

—

2.8

2.3

2.9

64.4
1.66

62.2
1.76

60.7
1.78

63.4
1.74

CO2 emissions (t)*2 ���������������������������������� Consolidated Group*6

16,50917,417

18,85521,804

Nihon Unisys
CO2 emissions intensity (t / m ) ������������������ (non-consolidated)

0.11930.17080.15950.1940

Energy usage (kl) ������������������������������������ Consolidated Group*6

10,026

9,830

11,12010,521

Nihon Unisys
Energy use intensity (kl / m2)*3�������������������� (non-consolidated)

0.08890.0904

0.09380.0899

1,231

790

512

628

2 *3

*4

Waste output (t)���������������������������������������� Consolidated Group*7*1 As of April 1*2 The emission factors released by the energy supply companies (electricity, gas) for the applicable sites (buildings) are used as the emission factors used in the calculation of CO2 emissions(for fuels such as heavy fuel oil, the emission factors published by the Ministry of the Environment are used)*3 Intensity: Yield per unit area at business locations*4 Energy usage: Crude oil equivalent*5 Nihon Unisys, Ltd. and UNIADEX, Ltd. Nihon Unisys on a non-consolidated basis for up to FY2013.
*6 Consolidated subsidiaries stated on page 59 (excluding G&U System Service, Ltd.), Nihon Unisys Accounting Co., Ltd., the health insurance society, and the corporate pension fund
*7 Nihon Unisys Headquarters Building, the Tokyo Bay Development Center, Hokkaido Regional Office, and Kansai Regional Headquarters. Nihon Unisys Headquarters Building and the Tokyo
Bay Development Center for up to FY2013.

05

Nihon Unisys Group Integrated Report 2015

Net Sales

Operating Income /Operating Margin(Billions of Yen)

Net Income (loss) / ROE(Billions of Yen)

300.0

269.2

253.0 255.1

282.7

(%)

10.9

12.0

269.2

250.0

9.6

10.0

(Billions of Yen)

5.0

200.0

7.3

8.0

3.1

6.0

100.0

4.0

2.0

50.0

2.0

1.0

2.6

0

’10

’11

’12

’13

0

’14 FY’10’12’14 FY’13

Net Interest-Bearing Debt /Net Debt / Equity Ratio(Billions of Yen)

(Billions of Yen)
48.5
46.9
50.0
197.8 202.5 199.8

190.1
180.0

0.64

38.5

33.7

0.61

30.0

2.0

Net Income (12.5)
ROE –

0

’10

’11

’12

’14 FY

’13

20

100.0
75.1

0.80

75.0
10

0.42

10

20.0

0.40

10.0

0.20

15

15

0.60

0.51

120.0

10
50.0

36.9
5

60.0

0

’10

’11

’12

’13

0

’14 FY

’10

’11

’12

’14 FY’13

Gross Profit
By Segment

Utility,
Services /OthersHardwareFinancial

37.7%

25.1%

Public /Government

FY20145.9%¥269.2 billion

11.0%

Manufacturing

OthersSystemServices

4.0%

33.4%

Personnel Composition
Structure
Marketing

9.9%

4.2%

55.6%

Sales

18.1%

SystemEngineers

Hardware

16.6%

10.0%

FY2014¥63.4 billion

’11

’12

’13

’14 FY

25.0

0

OthersSystem Services

1.1%

8.8%

SupportServices

FY2014

9.6%¥33.6 billion
Outsourcing

12.1%

Support Services

53.9%

25.8%

CO2 Emissions

Energy Usage

(t)

(kl)

25,000

Staff

’10

26.0

Software

17.4%

13.9%

0

22.4

Operating Assets
By Segment

Outsourcing
Commerce andDistribution

Dividend
PayoutRatio –Cash Dividends per Share (left axis)
Dividend Payout Ratio (right axis)

Software

13.7%

5

0

Net Interest-Bearing Debt (left axis)
Net Debt / Equity Ratio (right axis)

Net Sales
By Customer Market

0(Yen)(%)
20

1.00
40.9

1.9
1.3

2.0

Cash Dividends per Share /Dividend Payout Ratio(Times)

0.76

40.0

4.0

Net Income (left axis)
Return on Equity (right axis)

Total Assets

207.3

3.4
2.6

0

Operating Income (left axis)
Operating Margin (right axis)

240.0

6.0

3.0
4.0

’11

8.0

6.0

3.4

150.0

2.9

7.2
6.3

4.0

4.1

6.5

10.0

8.9

8.0

8.3

(%)

9.7

10.0

6.0

21,80420,00016,50917,417

12,00010,00018,855

11,12010,521

10,026 9,830

8,000

15,000FY2014

8,246

6,000
10,0004,000

CustomerEngineers

12.2%

5,000

0

2,000

’11

’12

’13

’14 FY

0

’11

’12

’13

’14 FY

Nihon Unisys Group Integrated Report 201506

Message from the CEO

To All Stakeholders

Taking on the challenges of sustainablewith the aim of further increasing our
Review of the Previous Mid-termManagement Plan

to enhance services such as outsourcing in which we

Through the previous Mid-term Management Plan fromture services such as cloud federation services

FY2012, the Nihon Unisys Group has been promoting

enabling collaboration between multiple clouds. How-the strategies of “expanding core businesses” andever, even in these areas, the competitive environment“taking on the challenge of new businesses.”

has intensified, making further reforms aimed at

In terms of the results of “expanding core businesses,” in addition to a total of nine banks using ouroperate the customer’s ICT environment and infrastruc-

improving profitability necessary.
On the other hand, in regard to “taking on the chal-“BankVision ” next-generation open core-banking

lenge of new businesses” we have steadily beensystem for regional banks by January 2015, we also

expanding our track record in this three-year period.

ensured stable operation of customers’ mission-critical

Specific examples include the “value card” gift card

systems in many fields such as financial, power gener-

mall business in cooperation with EC businesses, theation, manufacturing, distribution and services. Such

“Accident-free program DR” that raises awareness on

system architecture and the related maintenance,

safe driving, and the battery-charging infrastructure

support services and product sales, have become thesystem service “smart oasis®.” In the future, we will

Group’s stable revenue base.

continue to focus on enhancing new services that go®

However, looking at the market, the shift to the use

beyond industry boundaries, and the recognition ofof cloud computing at many companies has acceler-making new businesses highly profitable early on willated in recent years. In response to this trend, we aim

be a major challenge.

Initial Plan

Results of
Mid-term Management Plan

(Published in December, 2011)(2012g14)

Net Sales
Operating Margin
Net Income
ROE
Net D / E Ratio

07

Nihon Unisys Group Integrated Report 2015

FY2012FY2013

FY2014¥280.0 billion¥269.2 billion¥282.7 billion¥269.2 billion

5.0%

3.1%

3.4%

4.1%

¥8.0 billion¥1.3 billion¥6.3 billion¥7.2 billion

8.8%

2%

9%

10%

0.5 or less

0.61

0.51

0.42

growth and reform
corporate value.
Business Performance and Progressin Strengthening Financial Position
Although we achieved sales of ¥280 billion, which
was listed as our guideline, ahead of schedule in
FY2013, earnings declined in FY2014 due to a decline
in product sales.
On the other hand, although they did not meet ourplan, operating income and net income increased consecutively for three years due to improved profitability
in system services and cost structure reform by reducing fixed costs. Therefore, results are in a steady recovery phase. ROE also improved to 10% in FY2014.
In addition, FY2014 net D / E ratio was 0.42, achieving the guideline of 0.5 or less, and the strengtheningof our financial position has been proceeding smoothly.

Aspiration behind the New Mid-termManagement Plan
In Japan, the environment that companies find themselves in has changed significantly as we are facing a
number of issues such as an aging and declining population. In addition, in a variety of industries, it has
become necessary to create a “business ecosystem”
connecting industries and business categories beyond
existing frameworks to gain a competitive advantage.
I believe that these changes are a chance to continue
taking advantage of the strengths that the Group has
developed over many years. These strengths include
our track record in providing services to customers in a

Shigeru Kurokawa
President & CEO

08

Message from the CEO

wide range of industries; our track record with the

One of the “two challenges” is Digital Innovation.

Japan Unisys Users Association , which has been sup-We will expand operation of a platform to accelerate

porting activities between companies that go beyond

and optimize start-up of customers’ digital marketing

industry business categories; the technical capabilities

business such as “global brand prepaid” settlementthat we have developed in our core business; and therelated business and settlement-linked marketing“capabilities of designing and delivering new services”“evolved CLO (Card Linked Offer).*2”*1

that we developed under our previous Mid-term Man-

Another “challenge” is Life Innovation. We willagement Plan. By exhibiting these strengths, we will

create new services that can help to resolve social

create new business ecosystems with our customers in

issues by connecting services. For example,

a variety of industries and business categories. As aenabling household and health management for the

result, we aim to build a new position towards 2020,

elderly using prepaid card settlement in cooperation

increasing the user value of the services provided whilewith organizations such as regional medical institu-

continuing to improve corporate value and acceleratingtions, financial institutions and retailers. Throughour contribution of values to society.

these two challenges, we will aim for sales of ¥40
billion in FY2017.

Strategy of Aspiring for Growth
To realize our aims, from FY2015 we started a new
Mid-term Management Plan, featuring “two challenges
and one reform” as our growth strategy.

External Environment*1 Japan Unisys Users Association: Members of this Association are users of Nihon Unisys
Group’s products. The Association organizes a range of activities aimed at building ties
between firms in different industries and sectors and helping member firms enhancetheir capabilities. There are currently approximately 580 member firms.
*2 CLO: Service using “big data” such as cardholder’s attributes and payments history to
select particular customers to offer privileges such as coupons or cash-back offers
when the card is used. Demand has been expanding in recent years.

1. Changes in the social environment
Expansion of the digitized area
Emergence of markets by consumers
Major changes in the social environment

2. C hanges in the management andindirect and direct workforces
Changes in the business models and businesstypes through globalization and cooperation
among different industries

Financial
SectorSettlement

Expanding
E-commerce
Areas of
Digital Economy

Information of
consumers

3. Changes in the information system
Prevalence of cloud-computing and licensed useof services without owning IT assets
Rapid growth of 3rd Platform
Need for new business bases

Distribution
SectorIoT *3Public /Government
SectorManufacturing Sector*3 Internet of Things: Interconnection of various things within the internet infrastructure

09

Nihon Unisys Group Integrated Report 2015

On the other hand, the “one reform” is the strength-

to demonstrate their ability, we have set corporate

ening of core business areas, as a Business ICT Plat-

culture and human resources reform as one of the key

form, to quickly and optimally provide application

strategies in the new Mid-term Management Plan.

assets and intellectual property to customers’ busi-

While performing thorough personnel evaluations

nesses that are evolving at a rapidly increasing speed.

that emphasize the performance of individuals as we

To that end, we will revamp our service system,

have done since the previous Mid-term Management

strengthen our response to the IoT (Internet of Things)

plan, we asked each employee for their own personaland cloud first with the objective of sales of ¥280 billion

declaration regarding the spirit of challenge and trans-in this area in FY2017.

formation in the aim of fostering a culture that pro-Through these “two challenges and one reform” wemotes innovation. In addition, in the human resources

will create a “business ecosystem” together with cus-development, we emphasize that employees do their

tomers and partners that connects different industries.

own learning, and provide a variety of places to sup-In order to realize these growth strategies, weport this, and we will discover leaders who will drive

believe that it is essential to take advantage of both our

future growth.

business and technology intellectual properties acrossAs a foundation to support corporate value, we

industries. Therefore, we reformed the organizational

will also continue to take steps to strengthen corpo-

structure in April 2015. The sales departments andrate social responsibility, corporate governance andsystems departments that had been split by industry

internal controls.

were reorganized. The sales departments were inte-

In conclusion, under our vision for the Mid-term

grated as the business innovation department, and theManagement Plan towards 2020*4, and with an eye tosystems departments were integrated as the businessthe future beyond, the Group will tackle the challenge

services department. We also formed the incubationof solving customers’ and society’s problems withdepartment with the function of business creation.

ground-breaking new services utilizing ICT. We willcontinue to respond to the expectations of various

Uniting Company-wide to Improve
Corporate Value

stakeholders starting with our customers, and are

The biggest asset of the Group is human resources.

in the future.

Our human resources are our true wealth. To realize*4 Our Vision for the Mid-term Management Plan towards 2020: See P.3-4

committed to long-term corporate value improvement

the growth strategy and medium- to long-term corporate value improvement so that each employee is able

Strategic
Policies

President & CEO

Challenge 1
Digital Innovation

Providing services and platforms that will help companies operate digital businesses
in the fastest and optimum manner beyond the boundaries of individual industries.

Challenge 2Life Innovation

Creating service businesses that will serve our society better and operating themas part of our business portfolio.
Short- to Mid- Term: creation of business ecosystems
Mid- to Long-Term: promotion of services businesses through the next-generation technologies

ReformBusiness ICT Platforms

Promoting the industrialization of services*5 in order to accelerate our service delivery,
and revising the service portfolio to include the capabilities of combining the servicesof our company and others and providing them in the fastest and optimum manner.

Reform of Corporate Culture /Strengthning of
Human Resources Capabilities

Reforming the corporate culture to foster innovation and encouraging employees tocreate new business models.

Investment Strategies

Focusing on the investments in the categories of Challenges and Reform as well as
Strengthening of Human Resources Capabilities.

*5 Industrialization of services: Efficient provision of services through automation, standardization and componentization

Nihon Unisys Group Integrated Report 201510

Strategy for Corporate Value Improvement

New Mid-term Management Plan

Business Strategy

Message from the CMO

We are accelerating the creation of business ecosystems andcreating / expanding business in our growth-strategy areas of“Digital Innovation” and “Life Innovation.”create new business value by creating
business ecosystems together with ourclients, taking advantage of our experiencein ICT area.
One of the key areas in the creation of
the business ecosystems is electronic
payment services as part of the “Digital
Innovation” area outlined in our mediumterm management strategy. We alreadyhave proven achievements in marketing

Akiyoshi Hiraoka
Representative Director, Executive Corporate Officer
Chief Marketing Officer

support of prepaid cards in convenience
stores. Going forward, we will build aone-stop platform to provide various services related to international brand prepaid
and debit-card operations, including issuance, transaction processing, and membership management, in collaboration with
Dai Nippon Printing Co., Ltd. We havealready started the co-development of aplatform for payment and settlement for

In our Mid-term Management Plan, The“international brand prepaid cards” andNihon Unisys Group declared our commit-

provision of the platform to card compa-

ment to reforming our business model.

nies, and are also pursuing overseas

This commitment is driven by a growing

expansion of the prepaid card introduction

movement to replace existing businessand support business.

systems and frameworks with new frame-

power, it will be essential for many com-

Accelerating the creation of business ecosystems through the promotion of an “open & closed
strategy”

panies to create new “business ecosys-

To enlarge our business ecosystems, wetem” made up of alliances among

will continue to add various services onto abusinesses in different industrial sectors.

single platform. Specifically, the sales

Client requests such as “we want topromotion structure tailored to the pur-create a business ecosystem quickly” orchasing behavior of each consumer will

“we want to join a business ecosystem

operate on the same platform as electronicnow” will increase. In this backdrop, ourpayment services. We are also looking at

Mid-term Management Plan aims to

the possibility of adding additional services

works created by the emerging power oftechnological advances and the easing of
regulations. To be a part of this emerging

11

Nihon Unisys Group Integrated Report 2015

of services (reservations, authentication,

Promoting the creation of a structurethat will produce “reform-minded
leaders”

and payment) on the same platform.

To realize the position-shift necessary forsuch as charging infrastructure for electricvehicles, which require the existing series

It is essential to promote an “open &the creation of business ecosystems, it isclosed strategy” to realize rapid and signifi-

necessary for each employee to think ofcant growth of our business ecosystems.

themselves as an integral part of the pro-“Open” refers to the proactive opening ofcess and to create new business services

interfaces for participating companies andwithin their own work. In addition, we also

other vendors to utilize their businessneed to produce more than 300 “reform-

resources, while “closed” refers to theminded leaders” who will drive reforms andsetting of clear boundaries between open

challenges to create business by leading theand closed areas by creating core areas inproject to create business ecosystems on a

the business ecosystem to be protectedcompany-wide basis.

as our business strengths. We will outline

To this end, we have been working on

an example from the “Life Innovation”

hands-on / experience-based humanarea of our growth strategy outlined in the

resource development since 2010, which

medium-term management plan, regarding

has resulted in some internal intellectual

the services of the (electric) charging infra-

properties and networks between partici-

structure. Although it is necessary for ourpants. We are planning to send humanplatform to be “open” to a wide range ofresources to an external “seed accelerator

companies in different industries, such as

program” that has been created to support

charging stand manufacturers and install-

small groups of entrepreneurs with financ-ers, card issuers, and information service

ing and know-how. The program will require

providers, the communication technology

a great deal of discipline, as each participant

used in the charging infrastructure ser-is expected to produce visible results. How-

vices that we were the first to develop canever, the company itself will act as a mentor

be called a “closed” area.

to produce reform leaders by making ourGoing forward, we will determine theborders between open and closed areas
so as to connect our business to prosper-

intellectual properties and internal networks
available for participants as needed.
To accelerate these reform initiatives, we,ous services and technologies across thesenior executives, are also determined toworld as quickly as possible. We willtake the lead in turning our attention todevelop many new business proposals

different areas and industries, seeking inno-

spanning the borders of various industries,

vative services and technologies in a proac-aiming for profitability and the achieve-

tive manner, discovering seeds to develop

ment of the guidelines in our Mid-term

into business ecosystems, as well as

Management Plan.

achieving innovation in management.

Nihon Unisys Group Integrated Report 201512

Strategy for Corporate Value Improvement

New Mid-term Management Plan

Technological Strategy

Message from the CSO

We will develop new technologies to meet new market needs
through the reform and innovation of Business ICT Platforms.

For the Nihon Unisys Group to implement

service ideas across existing industry andits growth strategy as outlined in the

category boundaries.

Group’s Mid-term Management Plan, in

We will develop and expand various cloud-terms of technology, the Group needs to be

based services. For example, the SoR busi-

able to respond promptly to major changes

ness includes moving our establishedin market needs regarding system develop-

technology into the cloud. We completed thement. Future needs in system development

move of our project management methods

will expand in the area of Systems of

into the cloud in FY2014, and our application

Engagement (SoE) in addition to the contin-

platforms for Java and .NET will be next. In

uous expansion in the area of Systems of

the SoE business, we will offer various tools

Record (SoR) focusing on mission-criticaland services via the cloud to support theand business systems.

development of businesses involving mobile

SoE can be called a customer contact

devices such as smartphones. We will alsosystem that employs various data for market-

provide platforms to manipulate big data anding. For example, it may involve a direct

open data.

marketing system that uses consumers’

As for IoT services, we will develop a versa-

location information and purchasing behavior

tile access platform and quickly deliver results

acquired via smartphones. The increased

to customers with various IoT service needs.

popularity of such systems can be accounted

With regard to the development and operation

for by changes in the external environment,of this platform, UNIADEX, Ltd., one of ourincluding the rapid digitalization of various

group companies, is in charge of operations

data, expanded information storage capacity

monitoring and operation control of the device

and communications infrastructures, and thelayer, such as sensors, and the network layer

augmentation of cloud services.

that transmits and receives data. Nihon Unisys
is engaging in big data processing, machine

Changes in system construction andservice provision in accordance withthe expansion of SoE businesslearning projections, and security enhance-

In the expanding SoE business, speed willin collaboration.

ment of the whole system so as to optimize
the strengths of both companies by working

be more important than anything else inmethods in which only the characteristic,

Implementation of bold and practicalorganization reform to meet market
needs

minimally required functions are developed

Nihon Unisys has placed a sales team and a

and implemented at first, and then othersystem team in each division in each custom-functions are added and amended according

er’s market area, to efficiently increase theto customers’ feedback. In addition, fromnumber of orders by creating a structure thatthe customers’ point of view, we must be aallows us to operate as a team in response topartner that suggests and pursues specificbusiness opportunities. However, as market

system construction. It is necessary toadopt repetitive design and development

13

Nihon Unisys Group Integrated Report 2015

needs have greatly changed and service
creation across the borders of industries andbusiness categories has been accelerated,
we have recognized the necessity of transforming our approach into a structure thatwill allow us to devote human resources toquickly launching new systems and services.
From April 2015, we reorganized ourexisting organizational structure by market
area; the sales and system divisions werechanged to business innovation and busi-

Susumu Mukai
Representative Director, Senior Corporate Officer
Chief Service Officer

ness service divisions respectively. The
engineers working for the USOL regional
development companies that we acquired in
April 2015 have also been integrated into thenew business service division. We will accelerate our service provision with “industrialized services” such as componentization,
standardization, and automation of our existing application assets and intellectual property through this organizational reform.

projects to respond to the rapidly growing
needs in the SoE business. In these events,

Developing new skills and techniques
to meet SoE business needs

we call for employees who have ideas about

In designing and structuring large-scale,into groups. Each group then creates, dem-mission-critical systems in the SoR business,onstrates, and presents an actually functional

which has been our core business area, it

program in just 1-2 days. These events

has been a common practice for our in-require an innovative mindset as well ashouse system engineers to play a leading

knowledge and skills to swiftly combine

role in requirement definition, logical design,previously published services in a limited

and project management, then for partners

time as if they were industrial components,

to take over after the system design phase.

as only 1-2 days are given to transform an

As SoE needs grow in the future, we willidea into a complete service.

the predetermined theme and divide themneed new knowledge and skills to imple-

We hope that our aspiring engineers will

ment trial-and-error adjustment in a short

improve their skills and techniques so thattime to meet customer expectations.

they will be able to precisely and quickly

We have held Ideathon and Hackathon

provide systems that meet customer expec-

events in the company since FY2013 as atations through our various educational pro-part of our human resource development

grams including these learning opportunities.

Nihon Unisys Group Integrated Report 201514

Strategy for Corporate Value Improvement

New Mid-term Management Plan

Financial Strategy

Message from the CFO

We will transform our business operations to focus on
capital efficiency with the aim of mid- to long-term corporate
value improvement.

Investment Strategy to Support the
Implementation of the Mid-termManagement Planin the Life Innovation field. At the same time,

In the Mid-term Management Plan

the area of Business ICT Platforms. The total(2012g2014), we took steps to strengthenamount of capital investment will increase

our financial base and improved our equityfrom approximately ¥30 billion in the previous

ratio, ROE, and net D / E ratio. In the three

three year Mid-term Management Plan toyears of the new Mid-term Management

approximately ¥40 billion, and similarlyPlan, we will continue to develop the finan-

research and development expenses arecial strategy to support the corporate growthplanned to increase from approximately ¥15

strategy while maintaining financial discipline.

billion to nearly ¥20 billion.

we will maintain investment in hardware andsoftware for infrastructure architecture etc. inIn the future, in order to continue creating
tems, the Nihon Unisys Group must focus

ROE Target and Shareholder Return
Policyour investment based on an “open & closed

Up until now, we have run our business plac-

strategy” on initiatives that contribute to theing our main emphasis on income statement

creation of new values.

such as revenue and operating margin while

new value by developing business ecosys-

Specifically, we will invest heavily inToshio Mukai
Representative Director, Senior Corporate Officer
Chief Financial Officer

Investment
Strategies

Area of Investment

flow of items such as investment. In thisbuilding in challenging areas such as elec-

Mid-term Management Plan, we wish totronic payments in the area of Digital Innova-

convert to operating the business being con-tion and service platforms in the marketing

scious of a good balance of the income state-field, as well as solution-oriented investment

ment, balance sheet and cash flow, placing

Investment inTechnology and Solutionsn Enhancement of marketing

Challenge 1

also considering the balance sheet and cash

research and development and infrastructureservices

Investment in
Outsourcing Business /Capital Investmentn Creation and provision ofservice platforms

Business
Investmentn Investments in digitalbusiness

Increase in theinvestments

Digital Innovationn Further investments in the

Challenge 2Life Innovation

ReformBusiness ICT
Platform
Investments in
Workforce
Development

15

Nihon Unisys Group Integrated Report 2015

research of social issues andtechnologies
n Enhancement of regional
solution services
n Further investments in thetechnologies such as cloud,IoT and Big Data as well as
the new methods ofdevelopmentn Further investments in the—businesses that will becreated through the use ofnext-generation technologies

n Further investments in thebusinesses of SaaS solution
and outsourcing that will
become our future strength

—

—

—

n Investments in the efforts by

all employees for creating
new business models andalso in skills development

Mid- to Long- Term
Investments

Selection andconcentration

Increase in theinvestments

strictly monitor the operation and judgment ofemphasis on capital efficiency.
ROE was 10% in FY2014. As we change

each of these divisions. ROE should continue

to a high value-added business model based

to improve for the whole Group as a result of

on a growth strategy, we shall stably achievethese efforts.

the level of 11-13%, and further in FY2020

In addition, up until now we have placed

we hope to achieve a level of 15% or more.

strengthening the financial base as the top

We aim to thoroughly instill in our staff

priority and set the dividend payout ratio at

good judgment regarding which risks should

20%. However, due to the fact that the finan-

be taken and which should not, and for eachcial structure has improved under the previous

division to take responsibility not only forthree-year Mid-term Management Plan, andprofit and loss, but the balance sheet andconsidering the balance of investment neededcash flow, allowing for autonomous busi-

for growth and internal reserves, we will aim

ness operations and investment decisions.

for approximately 30% dividend payout ratio
and increase the shareholder return.

The management team will continue to

Guidelines on figures
FY2014FY2017

FY2020Net Sales¥269.2 billion¥320.0 billion¥350.0 billion

Operating Income¥10.9 billion¥17.0 billion—

Operating Margin

4.1%

5.3%

8–9%

Capital efficiency and shareholder return
ROE
Stable realization of

11–13

%

(Target 15% or more in FY2020)

Dividend payout ratio
Strengthen the shareholders
return to approximately

30%

Toward the Realization ofMedium- and Long-term Corporate
Value Improvement

challenges that go with transforming ourThrough discussions with shareholders andand focusing on capital efficiency. Aiming forother stakeholders, we have received manysustainable growth and mid-to long- termsuggestions. Building on these suggestions,improvement in corporate value, I would likewe have been working to improve the qual-

to see even more opportunities for discussion

ity of our management. In order to achieve

and the incorporation of third party viewpoints

the new Mid-term Management Plan andfrom outside the organization in addition torealize our vision towards 2020, in the future

the implementation of necessary measures.

business structure, such as reforming ourbusiness culture, training human resources

we must takes steps to tackle the
Nihon Unisys Group Integrated Report 201516

Strategy for Corporate Value Improvement

Best Practices: An Initiative for Growth Strategies
Introduction of the ninth new mission-critical system centered on
the next-generation open core banking system BankVision®
Implementation of “Next U’s Vision® project,” a new business platform forregional financial institutions
Nihon Unisys and Hokkoku Bank, Ltd. jointly developed a new mission-critical system for Hokkoku Bank, with Nihon
Unisys’ next generation open core-banking system “BankVision” at the core, and it began running sequentially fromJanuary 4, 2015.
“BankVision,” the first Windows®-based full banking system in the world, has been adopted by 10 regional banks as a
mission-critical open system, which is more than any other domestic IT vendor. Hokkoku Bank has become the ninth bankto begin using the system. At the same time, in regards to sales office systems, regional banks renewed their systems to
the “BANK_FIT-NE®” system that was deployed and operated for the first time and by installing the communication function of “MIDMOST®,” the same open middle software that is used by “BankVision.” Therefore, we were able to realize asystem configuration in the office terminals without going through the communication server, thereby eliminating an
obstacle. We will strengthen our sales structure further in the future and aim to receive new orders from regional banks.
In addition to our business of providing core-banking systems and various kinds of information systems to regional
financial institution customers, as we have done the past, we are also progressing with the creation (and co-creation) of
new businesses beyond the boundaries of industries and business categories, activation of the regional economy andefforts to support regional social infrastructure through our “Next U’s Vision Project.” In the future, along with theregional financial institutions, we will continue to plan and build “new business platforms that will connect with society,collect information, create business and support growth.”

Payment linked marketing initiatives“International brand* prepaid” payment platform service
Evolved CLO (Card Linked Offer) platform service“Payment linked marketing” is a business platformthat seamlessly links (1) “payment infrastructure” inCustomers’ store
visiting behavior

the store, (2) “customer management” in the backoffice, and (3) “sales promotions and customer referrals” to induce consumers to come to the shop fromtheir home or the town (see right). By analyzing a

Consumers

Promotion,customerreferrals

combination of consumer information and payment
information (shopping behavior information), thePromotion content

system can provide appropriate content at the right

Optimization ofindividually-tailoredpromotional content

time and in a suitable way, realizing efficient promotion

Payment
infrastructure

DNP
×
Nihon Unisys
Payment Linked
MarketingCustomermanagement

Online & offline stores

Purchasing data, including
use of loyalty points
and method of payment.
Data aggregation and analysis

Marketing managers

and customer referrals.
As part of the payment infrastructure, Nihon Unisys is working with Dai Nippon Printing Co., Ltd. to jointly develop theplatform required for the introduction and operation of payment services for international brand prepaid and began offering cloud services for card-issuing companies. International brand prepaid cards that can be used in international brandmerchants all over the world. As no approval process such as that required for a credit card is needed, this service can be
freely used by anyone. It is the first system in Japan to provide a one-stop service from card manufacturing and issuance,
payment management and BPO (Business Process Outsourcing) to marketing.
In addition, we will develop in collaboration with Dai Nippon Printing a platform offering a variety of CLO services linked
to payment, such as credit cards, prepaid cards and point cards. By using this platform service, CRM (Customer Relationship Management), which was traditionally difficult for manufacturers to realize due to low customer contact, can beeasily realized.
* International brands: International payment card brands such as VISA, MasterCard and JCB

17

Nihon Unisys Group Integrated Report 2015

Next-generation unified infrastructure “CoreCenter® “Helping customers to improve business efficiency and gain competitive
advantage with induction-type solutions
Nihon Unisys Group provided a series of solutions called “CoreCenter” based on “CoreCenter
BASE,” which brings together various shared business functions upon which services for various
business types such as retail, direct marketing and leasing are built. Customers can choose whichfunctions they require and apply appropriate parameter settings, making it possible to quickly
complete system deployment, and also enabling customers to respond promptly to suddenchanges in their business environment. The short development period also keeps system
deployment costs down.
Commercial operation of “CoreCenter for Retail” by its first user began in February 2012, followed by “CoreCenter for DM”, for direct marketing firms in March 2015, and “CoreCenter for
Lease (Lease Vision®)”, for a leasing companies in April 2015.

Providing service infrastructure for energy to support
a sustainable societyWith the electric vehicle charging infrastructure system service “smart oasis®”, we have added functions
aimed at enhancing convenience for users, as well as providing the “Nationwide EV / PHV Charging Map.”
With the impact of government demonstration experiment projects and various subsidies, the number ofcustomers asking to be connected to the service is expanding.
In addition, we have been making effective use of JAXA satellite datawith our “satellite data utilization for energy management system(EMS) services,” for which we have built a system that will analyze ‘bigdata’ acquired from Earth observation satellite sensors and groundsensors, and will predict the power generation level of renewableenergy sources in different climatic conditions.
In addition, with the liberalization of retail electric power sector scheduled for April 2016, we will offer the cloud service “Enability series,” acustomer and billing calculation system for power retailers.

Providing the cloud-based childcare support service,“ChiReaff Space ™,” for nurseries nationwide
Against the background of women’s social advancement and long waiting lists for places in daycare centers, a new system for the purpose of expansion of childcare has been enacted in April
2015 by the Cabinet Office. While the industry is undergoing significant changes, ensuring sufficient nursery personnel working in childcare, an environment needs to be created in which parents
can leave their children with peace of mind.
With the development of our “ChiReaff Space” childcare support
service, we have brought about improvements in the work environment of nursery teachers and increased the amount of time inwhich nursery teachers are actually in contact with the children,
thereby improving the overall quality of childcare provision andhelping to ensure the peace of mind of parents and guardians. We
began marketing this service to childcare facilities throughout Japan
starting on July 6, 2015 and we aim to have this system adopted
by at least 1,000 childcare facilities over the next five years.

Nihon Unisys Group Integrated Report 201518

Supporting Foundation for
Corporate Value Improvement
The Nihon Unisys Group will forge ahead with unparalleled service infrastructure and continue
to implement innovative services that will become the new standards in the future.
Therefore, in the Mid-term Management Plan, we will endeavor to change ourbusiness model and aim to improve corporate value in the medium- to long-term.
“Reform of corporate culture and strengthening of human resources capabilities“ and“our initiatives for corporate social responsibility“ will become the foundation to support
improved corporate value. We will also work to strengthen our “corporate governance andinternal control system” as the most important foundation supporting these efforts.

nvironment
Reform of Corporate Culture /Strengthening of Human Resources Capabilities

Please refer to p. 20 for details.

Our Initiatives for Corporate Social Responsibility

Please refer to p. 21–22 for details.

Corporate Governance and Internal Control System

Please refer to p. 23–26 for details.

ocial

19

Nihon Unisys Group Integrated Report 2015

overnanceSupporting Foundation for Corporate Value Improvement

Reform of Corporate Culture andStrengthening of Human Resources Capabilities
Each and every employee must work on reforming the corporate culture and human resources, to enable the generation of
innovative services through new ideas and perspectives.

Reform of corporate culture

Strengthening of human resources capabilities

Solving the problems not only of customers, but of users andTo carry reforms and challenges forward, we need to pursue

society as well, is positioned as an important viewpoint among

human resource development by taking the idea that “innovation

the growth strategies outlined in our new Mid-term Manage-

always happens on site” as a premise and recognizing the neces-ment Plan. In order for our employees to “challenge” various

sity of “helping all employees to demonstrate their greatest

issues with foresight and insight, it is necessary to “reform”

potential on site.” It is also important for employees to focus on

our corporate culture to allow us to build on existing practices

their thought processes and gain skills in order to create innova-

in order to try new approaches. To realize such a culture, it istion on site, and for the company to provide them with opportuni-

essential that all executive team members and employees

ties to demonstrate their skills and abilities.

share the same values and that the working environment
accommodates diverse ways of working.
We carry forward the initiative for corporate culture reform using

First of all, in our “reform-minded leaders program,” leadersfrom the program will endeavor to establish a cycle of fostering
the next leaders. Then, we will renew our existing career devel-

the cycle of “communication” of ideas to employees, “support”

opment program in order to develop various skills in the areas tofor reform activities by employees, and “evaluation” of progress.

be enhanced in the next generation, such as business develop-

Our existing initiatives stipulate that executive team members will

ment, service design, new technology application and manage-

visit offices all over Japan from January 2015 onward to discuss

ment, according to each person’s mid-term career design.

the targets for each office, which will be published across theWe employ these programs to strengthen employees’ innova-

company, and we have already established our new corporatetion skills via actual experience while also working on practicalstatement to reflect the 2020 goal of the Nihon Unisys Group,business creation such as the “Ideathon” or “Hackathon,” in a

“Foresight in sight.” Going forward, we will develop “Unilympic,”

form that is open to everyone in the company. We will provide

a company-wide reform activity for all employees, foster reform

young employees with opportunities to discuss corporate culture

leaders properly positioned in each office, and evaluate the prog-

reform as a task force, and by linking the results of such discus-

ress of our reform initiatives company-wide.

sions with new policies their perspectives will be enhanced.

In addition, we will promote diversity measures, making

The regular implementation of these programs and revision as

adjustments to relevant systems to support the realization ofnecessary will promote the development of employees with thedifferent workstyles that enable individual employees to realize

ability to innovatively challenge issues.

their full potential.

Goals of our reform initiatives
Through these initiatives for reform of corporate culture and strengthening of human resources
capabilities, we aim to transform our business structure by making it a more “robust” and“active” structure that will allow us to grasp new business opportunities without delay.
This will improve the efficiency and profitability of our business model while continuing tovalue our existing customer base and respect our established business models.
Our business activities in the Mid-term Management Plan will put “Creating Shared Value(CSV)” into practice to solve the problems of customers, users, and society. For this purpose,
all employees have pledged to “challenge themselves to engage in reform.” In addition toemployees who are involved with new business or technological development, all company
employees should work on reform for their own sake to realize the transformation of our

Koji Katsuya
Corporate Officer, CIO,
General Manager of Corporate Planningbusiness structure.

Nihon Unisys Group Integrated Report 201520

Supporting Foundation for Corporate Value Improvement

Our Initiatives for Corporate Social Responsibility
We will continue to contribute to the realization of a sustainable society through our business activities,
cooperating with stakeholders, in response to the expectations and demands of society.

Responding to the expectations and demands of society
We consider Nihon Unisys Group’s CSR to be the realization of

on the PDCA cycle in accordance with ISO26000. Taking into

our corporate philosophy: “Work with all people to contribute toaccount the Group’s business strategy and issues of particular

creating a society that is friendly to people and the environment.”

importance to society as a whole, such as socially responsible

We continue to strive to gain the trust of all our stakeholders

investment (SRI), priority initiative themes and goals are estab-through our contributions to resolving social problems and provid-

lished at “CSR practitioners meetings” attended by employees ining values to society, and through our initiatives in response to

charge of each area of our CSR activities, and are discussed andsociety’s call for corporate social responsibility according to theconfirmed by the “CSR committee,” which also regularly reviews

ISO26000 standards.

our CSR initiatives and goals and promote transparency andIn particular, we always endeavor to listen sincerely to theinformation disclosure.

voices of our stakeholders and promote our CSR activities based

Progress of our CSR priority initiatives in FY2014
Core Subjects of
ISO26000

Our main activities in FY2014

Evaluation

Issues and future countermeasures

Penetration of CSR•

Establishment of PDCA cycle for CSR using
ISO26000• CSR education for all employees throughthe implementation of structured e-learning(average participation rate: 96.4%)

Above
the goal•

Expansion of internal and external
communication and strengthening
penetration

Stakeholders
Communication•

Continuous communication with customers,
stockholders and investors, employees andlocal communities• First publication of the integrated report• Implementing consultation with third-party
outside experts• Improvement of CSR information disclosure interms of both quality and quantity

Above
the goal•

Quality improvement regarding
external communication

Human rights

Respect forhuman rights•

Understanding of human rights issues being
discussed internationallyBelow
the goal•

Cross-sectoral approach is needed todeal with a wide range of issues

Labor practices

Promotion of diversity•

Amendment of the evaluation system for employ- Below
ees taking childcare leave and implementation of the goalworkshop for employees taking childcare leave• Opening discussion about quantitative targets forthe promotion of female employees•

Promotion of appointment and recruitment of a diverse staff, presenting thegoals of our group

The environment

Environmental
management•

Promotion of the reduction of environmental
burden through business activities• Promotion of employees’ awareness-raising
activities regarding environmental issues andactivities• Expansion of information disclosure(environmental accounting)•Consideration of the promotion ofactivities to reduce environmental
burden, in collaboration withbusiness divisions•

Continuous approach towardsubcontractors

Organizational
governance21

Priority initiative
themesAchieved
the goal

Implementation of briefing for subcontractors,
Abovesharing CSR information to be implemented along the goal
the entire value chain• Revising our procurement guidelines by addinga request that our partners cooperate with our
CSR initiatives and our response to the conflictmineral issue.

Fair operating practices Promotion of CSR via
supply chain management for subcontractors•

Attention to customers Quality improvement ofIT systems development and maintenance& operational projects•

Expansion of information disclosure on the quality Achieved
assurance system and initiatives on websites
the goal•

Further expansion of information
disclosure for quality improvement

Community involveSocial contribution
ment and development activities•

Continue the promotion of social contribution
activities by employees (581 participants)•

Increase in participating employees
Reaffirmation of the relevance of
current activities and businessNihon Unisys Group Integrated Report 2015

Achieved
the goal•Topic 1

Reduction of environmental burden throughbusiness activities

Nihon Unisys Group has been working on the reduction of the environmental burden of our business activities, as a beneficial
aspect of environmental management, and established environmental activity themes in conjunction with the Mid-term Management Plan for each division in FY2012.
In FY2014, 98% of divisions achieved the goals of their activities themes regarding the promotion of energy savings byenvironmental solutions for society and our customers, and power-saving and energy-saving measures by business operations improvement within our company.

Our main activities in FY2014
Activity themes

Activities

Proposal, sales, and development of social infrastructure leading
to a power-saving and energy-saving societyl Sales of “smart oasis®” charging infrastructure system service
l Promotion of new energy business

Proposal, sales, and development of services leading topower-saving and energy-saving for customers and societyl Provision of cloud services
l Promotion of big data businessl Sales of “Green procurement Meister” chemical substance management system

Proposal, sales, and development of products leading topower-saving and energy-saving for customers and societyl Sales of power-saving servers and network equipmentl Sales and construction of wireless LAN systems

Power-saving and energy-saving activities in the company by
improvement of operational efficiency and quality, andpower-saving activities

l Internal power savingl Improving operational efficiency
l Proper treatment of industrial waste

Internal power-saving and energy-saving activities by
the transformation of work stylel Promotion of paperless operationl Change of internal training system

Topic 2

Promotion of CSR through the value chain

The Nihon Unisys Group aims to establish a sustainable value chain in
collaboration with our business partners, including the suppliers andsubcontractors in system design, development, operation and maintenance, for mutual sustainable growth.
For subcontractors, we hold regular briefings to provide information
on new and amended regulations and changes to our procurement
rules according to relevant regulations and to request their compliancewith both new and existing rules. In FY2014, we explained our policies
and initiatives for the CSR of our group and asked for collaboration to

Briefing for subcontractors

meet our goals. We also continuously provide information after the briefings via our website for subcontractors.
We implement fair and transparent procurement, complying with both domestic and international laws, regulations, andsocial norms, by setting up a “Procurement Code of Conduct” in our procurement activities for both hardware and software
products. We also promote the procurement of products and services with lower environmental impact from suppliers who
actively promote environmental protection, according to “Nihon Unisys Green Procurement Guidelines.” We amended our
procurement code of conduct in August 2014 to include “avoiding the use of conflict minerals,” in order to source hardware
products that don’t use conflict minerals that fund activities in conflict-affected regions.
In FY2015, we will review our suppliers on their approaches towards green procurement, their responses to antisocial
forces, and the discontinued use of conflict minerals.

Nihon Unisys Group Integrated Report 201522

Supporting Foundation for Corporate Value Improvement

Corporate Governance and Internal Control System
The establishment of an effective corporate governance and internal control system is essential forsustainable growth and long-term improvements in corporate value, and accordingly the Company works tostrengthen such structures.

Corporate Governance
Basic policy

and be accountable for all of the principles of the code, including

The Nihon Unisys Group believes that building relationships of

ensuring the rights and equality of shareholders, properly cooper-

trust with all stakeholders is of the highest importance andating with stakeholders other than shareholders, ensuring proper

includes “striving to increase corporate value through listening

information disclosure and transparency, implementing the duties

sincerely to stakeholders” as part of its corporate philosophy. Asof the Board of Directors, etc., and engaging in dialog withsuch, we are working to bolster corporate governance and rein-shareholders.

force the transparency and soundness of management.

We also make efforts to increase the Company’s value by utiliz-

Furthermore, out of respect for the spirit and intent of theing the Corporate Governance Code in coordination with Board of

Corporate Governance Code, we will fundamentally comply with

Directors, Audit & Supervisory Board and related departments.

Governance and Business Execution Structure
Nihon Unisys has an Auditor & Supervisory Board. In addition, Nihon Unisys has established and maintains the following structure toachieve effective and efficient management.

As of June 25, 2015

General Shareholders’ Meeting
Appointment /Dismissal

Appointment /Dismissal

Board of Directors

Audit

Eight directors(including four outside directors)

Appointment /Dismissal
ReportAudit & Supervisory Board

Independent Auditors

Five Audit & Supervisory Board members (including
four outside Audit & Supervisory Board members)

Appointment and supervision ofRepresentative Directors

Business Execution Structure

Audit

AssistCollaboration

Accounting audit

Audit & Supervisory
Board Office
Representative Director, President & CEO

Internal Audit Division

Executive Council
Compliance Committee
Project Review Committee

Risk Management Committee

R&D / Investment Committee

CSR Committee

Information System Investment Committee

Information Security Committee

Business Execution Divisions (Operating Divisions, etc.)

Board of Directors
The Board of Directors, which is composed of eight directors

environment and clarifying the responsibilities of the directors.
The number of independent outside director was increased toincluding four outside directors, is held every month as a general

two (compared to one in the previous fiscal year) from FY2015 sorule. The Board of Directors decides and reports on key corporatethat half the members of the Board of Directors are outside

issues. The term of office of directors is one year. This term wasdirectors, which makes the membership structure of the Board

decided on with the goal of securing a flexible managementof Directors more diverse.

structure that can promptly respond to the changing business

FY2014 

9(As of June 26, 2014)

Outside directors
3
Independent outside
directors
1

23

Nihon Unisys Group Integrated Report 2015

FY2015 

8(As of June 25, 2015)

Outside directors
4
Independent outside
directors
2

Audit Structure

In addition, Audit & Supervisory Board members, the Internal Audit

The Company has five Audit & Supervisory Board members

Division, and Independent Auditors regularly hold the Triple Audit(including four outside Audit & Supervisory Board members), three

Liaison Committee to exchange opinions and enable collaboration,of whom are engaged as standing Audit & Supervisory Board

including the exchange of opinions as necessary.

members. Based on the Audit & Supervisory Board audit stan-

Meetings of the Board of Directors and Audit & Supervisory Board
and Attendance by Outside Directors andAudit & Supervisory Board Members
Audit &
Board of
(FY2014)
Directors Supervisory

dards, the audit policy, and the audit plan developed by the Audit& Supervisory Board, Audit & Supervisory Board members attend
meetings of the Board of Directors and other important meetings,
and also review the status of both operations and assets, thereby
monitoring the business execution of the directors.

Board

12

Number of meetings
Attendance Outside directors
Outside Audit & Supervisory Board members

12

91%

—

90%

90%

Compensation of Directors and Audit & Supervisory(excluding outside directors) for the purpose of increasing theBoard Members

motivation of directors to pursue ongoing improvements in the

Policy for Deciding on the Compensation of Directors

Company’s performance and corporate value.

Compensation for directors includes basic compensation

Policy for Deciding on the Compensation of Audit &(monthly salaries), bonuses and stock options.
Monthly salaries for directors emphasize a link with perfor-

Supervisory Board Members

mance, and are determined by the Board of Directors based on

For Audit & Supervisory Board members, compensation is not

the responsibilities of each individual director with consideration

linked to performance, but rather paid as a fixed monthly salarytaken for generally accepted payment levels and the balance withdetermined through discussion with Audit & Supervisory Board

employee salaries.

members. This system is employed to ensure that Audit & Super-

Bonuses are calculated based on the Company’s consolidated
net income for the given fiscal year. In addition, stock options

visory Board members are able to effectively conduct their auditing duties from an independent standpoint.

were continued as a part of compensation for directors
Total Compensation Paid to Directors and Audit & Supervisory Board Members and Number of Recipients (FY2014)
Compensation Paid by Type (Millions of Yen)

Total Compensation Paid
(Millions of Yen)

Basic Compensation

Directors(Excluding outside directors)

253

253

0

–

7

Audit & Supervisory Board members(Excluding outside Audit & Supervisory
Board members)

28

28

N/A

N/A

1

Outside directors andAudit & Supervisory Board members

77

77

N/A

N/A

9

Classification

Stock Options

Recipients(People)Bonuses

The following measures will be instituted in FY2015 as part of systems for linking compensation to performance.
1. A portion of compensation for each applicable individual (10% regardless of position) will be provided in the form of stock acquisition rights, rather than in the form of monetary payments.
2. The number of exercisable stock acquisition rights will be determined based on the Company’s consolidated net income for FY2015 as well as other factors. Performance exactly in line withinitial forecasts and fulfilling other conditions will be indexed to 100%, and the number of exercisable subscription rights to shares will be adjusted within a range from 0% to 200% basedon actual performance.

Business Execution Structure

while considering expert opinion presented by corporate staff

The Company has adopted the corporate officer system in ordermanagers from related divisions.

to separate management oversight from business execution andwith the aim of achieving prompt performance of operations.
The Executive Council composed of representative directors

We have established various committees (Compliance
Committee, CSR Committee, Risk Management Committee,
Information Security Committee, R&D / Investment Committee,

and directors that concurrently serve as corporate officers has

Project Review Committee, Information System Investment

been established as a body to make efficient decisions regarding

Committee, etc.) to offer a practical perspective to the delibera-

important business execution-related matters. To deal withtion of specific management issues related to the business execu-

issues that require decisions, we have developed a system oftion of the directors.

approval in which either corporate officers responsible for the

The Internal Audit Division has been established as an internal

division in question, decision-making bodies (committees), or

body under the direct control of the President & CEO to assess themembers of the Executive Council collectively make decisions

effectiveness and efficiency of internal controls across the Group.

Nihon Unisys Group Integrated Report 201524

Supporting Foundation for Corporate Value Improvement

Internal Control System
The Nihon Unisys Group has identified the goals of its internal control systems as improving operational effectiveness and efficiency,
ensuring the reliability of financial reports, guaranteeing stringent legal compliance in business activities and maintaining asset portfolios.
To accomplish these goals, the Group maintains and operates internal control systems as required while also working to continuously
improve these systems as described below.

Improving Operational Effectiveness and Efficiency

Corporate Behavior and the Group Compliance Basic Regula-

The Group has established a Mid-Term Management Plan

tions, based on which all of the Group’s employees conduct

and specific management targets, and is endeavoring to

ethical behavior in compliance with laws and regulations, social

develop systems that will improve operational effectivenessnorms and in-house regulations.

and efficiency.

Risk Management

Ensuring the Reliability of Financial Reports

The Group has established a Risk Management Committee

To ensure the reliability of financial reporting, the Company haschaired by the Chief Risk Management Officer (CRMO) toestablished a basic policy for appropriate financial reporting and isprovide supervision and guidance on risk management for theworking to foster a sincere corporate culture that observes rules.

entire Group.
The Risk Management Committee has developed a common

Compliance
In recognition of compliance as one of the most critical issues,
the Group has established the Nihon Unisys Group Charter ofrisk classification system for the Group to share and centralize
the management of risks throughout the entire Group.

Messages from Outside Directors (Independent)
This marks the third year since I assumed thedevelopment of 300 reform leaders capable of independently achieving

position of outside director at Nihon Unisys.

challenges and reforms, and we have strengthened and developed humanCurrently, the Group is formulating a new

resources development systems in order to achieve these goals throughMid-term Management Plan based on a

initiatives such as organization-wide projects, “ideathons,” and “hack-long-term view and we are undergoing aathons” among young employees.

period of reform in order to achieve this plan.
While various reforms will be implemented,

Go Kawada

Outside Director(Independent)

the main initiatives will include the establish-

to encourage lively debate by fully utilizing my own experience and spe-ment of a management structure that iscialized knowledge based on an independent and external perspective.

conscious of speed in the integration of Group

Going forward, I plan to exchange information with directors and Audit &companies, thorough risk management including the withdrawal fromSupervisory Board Members including other independent directors as

unprofitable businesses, and the strengthening of human resource devel-

I work even harder with the hope of contributing to the further develop-

opment. Under this Mid-term Management Plan, we aim for thement of the Nihon Unisys Group.

Ayako Sonoda
Outside Director(Independent)

The new Mid-term Management Plan is aoutside of the company in pursuit of knowledge. Although people tend to

growth strategy based on the concept of truly

overemphasize the ratio of female employees when considering diver-creating shared values (CSV) with society bysity, the essence of diversity is allowing diverse human resources toestablishing sustainable new business models

perform to the best of their ability, which does not only include female

in the process of digital economy innovation tostaff members. It is important to create workplaces that allow individuals

respond to social needs and issues. Whenwith differing areas of specialization and expertise to maximize theirtaking on challenges in the field of Life Innova-

performance and collaborate together to deepen our knowledge.

tion in particular, open innovation is essential

As I assume this position as outside director, I hope that I can befor creating services that enrich society anduseful in the mutual recognition of diverse values and foreseeing theestablishing new business models. To create

future of society. I will do my utmost to create value by leveraging non-innovations based on original and unique ideas, it is necessary to improvediversity and actively leverage collaboration with people and organizations

25

We hope that such initiatives will significantly contribute to improving
long-term corporate value. As an independent director, I believe my role is

Nihon Unisys Group Integrated Report 2015

financial strengths, which is my area of expertise.

Directors, Audit & Supervisory Board Members,
and Corporate Officers
Directors

Shigeru Kurokawa

Akiyoshi Hiraoka

Susumu Mukai

Toshio Mukai

Go Kawada

Kazuhiko Takada

Takeshi Yamada

Ayako Sonoda

Advisor, Yamada & Partners Certified
Public Tax Accountants’ Co.

Corporate Officer, in charge of SI Business Development Division, Advanced
Business Center, and Information System
Division, Dai Nippon Printing Co.,Ltd.

IT Solutions Business Division Manager,
IT & Communication Business Unit,
Mitsui & Co., Ltd.

President, Cre-en Inc.

Supervising management by leveraging a
wealth of experience and specialized
insight regarding taxation and accounting

Providing advice and supervising
management overall by leveraging a
wealth of business experience

Providing general advice and supervising
management by leveraging many yearsof business experience in the field of theinformation industry

Providing advice from a multi-faceted
perspective by leveraging experience in thefields of CSR and environmental management and experience in activities promoting
the active use of female staff members

Representative Director,
President & CEO

Representative Director,
Executive Corporate Officer

Outside Director (Independent)

Outside Director

Representative Director,
Senior Corporate Officer

Representative Director,
Senior Corporate Officer

Outside Director

Outside Director (Independent)

Outside Audit & Supervisory Board members

Kazuhiro Hara

Audit & Supervisory Board
member*Akihiro Imura

Outside Audit & Supervisory
Board member** Standing Corporate Auditor

Etsuo Uchiyama

Outside Audit & Supervisory
Board member*

Monitoring the execution duties
of directors by leveraging a
wealth of business experienceand insight regarding internal
auditsMonitoring the execution duties
of directors by leveraging past
managerial experience andinsight regarding taxation andaccounting

Yoshinori Ijichi

Masayuki Okada

Corporate Officer

Kazuhiro Iwata

Michihiko Tsunoda

Shigemi Furuya

Masao Noda

Senior Corporate Officer,
Dai Nippon Printing Co., Ltd.
(responsible for administration,
related business departments, andoverseas business supervision)

Representative Partner,
Noda Law Office

Monitoring the execution of duties
by directors by leveraging specialized expertize mainly related tofinance and accounting

Monitoring the execution duties
of directors by leveraging theperspective of an expert withexperience primarily pertaining
to law

Outside Audit & Supervisory
Board member

Outside Audit & Supervisory
Board member

Corporate Officers
Senior Corporate Officer

Senior Corporate Officer

Superior Corporate Officer

Superior Corporate Officer

Minoru Tasaki
Kouichi Ishiyama
Hirokazu Konishi
Hiroki Hyodo

Keiji Matsuo
Noboru Saito
Shinobu Sasao
Kazuo Nagai

Yasuhide Hatta
Koji Katsuya
Hirofumi Hashimoto
Kazuo Sato

Nihon Unisys Group Integrated Report 201526

Financial Section

Overview and Analysis of the Results for FY2014

Financial Highlights
		Net sales fell 4.8% year-on-year, to ¥269,155 million, reflecting a decrease in product sales,
among other factors.
		Operating income rose 14.1% year-on-year, to ¥10,925 million, due to factors including an
improvement in service profits.
		Net income increased 14.9%, to ¥7,246 million, partly due to the contribution made by
the gain on sales of securities.

During FY2014, the Japanese economy continued to graduallyl Hardware

improve, with signs of improvement in corporate earnings

The Hardware segment consists of the provision of hardware

among other encouraging developments. In the domestic infor-

under a sales or lease contract. Net sales in this segment

mation services market, there was a gradual increase in soft-

declined 18.8%, to ¥51,337 million, and segment profit

ware investment and a full-fledged recovery is expected todecreased 29.7%, to ¥6,985 million.

continue. However, we recognize that the Group continues tol Others

face a harsh operating environment as there are concerns over

The Other segment comprises businesses such as equipment

Japan’s economy suffering downward pressure from factors

installation not included in reportable segments. Net sales in thissuch as uncertain global conditions as well as intensified compe-

segment rose 5.4%, to ¥9,794 million, and segment profit

tition in the industry.

increased 5.6%, to ¥2,551 million.

Analysis of Results of Operations

Net Sales
Consolidated net sales fell 4.8% year-on-year to ¥269,155 million
due to a decrease in sales of hardware, system services, andNote: Segment profit has been adjusted based on operating income as recorded on the
Company’s consolidated statement of income. The total of all above segment profit
figures is ¥63,442 million. By deducting the reconciliations amount of ¥52,517 million,
which includes research and development costs, amortization of goodwill, and selling,
general and administrative expenses not allocated to specific segments, the operating
income figure of ¥10,925 million will be reached. The figures above do not include
consumption tax, etc.

support services, despite strong outsourcing sales.
Financial results for each segment are as follows.

Composition of Net Sales by Segment
Othersl System Services

Hardware19%

4%

System Services

31%

The System Services segment consists of contracted softwaredevelopment, system-related services, and consulting. Net sales
in this segment fell 2.9%, to ¥83,404 million, and segment profit
increased 31.0%, to ¥21,215 million.
l Support Services

Software11%

FY2014

Outsourcing

Support Services

14%

21%

The Support Services segment consists of support services forsoftware, maintenance services for hardware, and installation
services, etc. Net sales in this segment fell 4.2%, to ¥55,246
million, and segment profit decreased 11.0%, to ¥16,331 million.
l Outsourcing

The Outsourcing segment consists of the contracted administration of information systems and other services. Net sales in thissegment rose 9.4%, to ¥38,646 million, and segment profit
increased 7.5%, to ¥7,668 million.
l Software

The Software segment consists of the provision of software
under a user license agreement. Net sales in this segment fell
1.9%, to ¥30,728 million, and segment profit declined 9.4%, to¥8,692 million.

27

Nihon Unisys Group Integrated Report 2015

Net Sales by Segment (Millions of Yen)FY2013

FY2014

ChangeSystem Services

85,861

83,404–2.9%

Support Services

57,66655,246–4.2%

Outsourcing

35,336

38,646+9.4%

Software31,33830,728–1.9%

Hardware

63,19751,337–18.8%

Others

9,293

9,794

+5.4%

Total

282,691

269,155–4.8%

Operating Income

Analysis of Cash Flows

Gross profit decreased ¥168 million (0.3%) year-on-year, toCash and cash equivalents at the end of FY2014 decreased¥63,442 million, due to lower net sales.

¥5,397 million, to ¥23,326 million. This was because net cash

Selling, general and administrative expenses fell ¥1,519 million

provided by operating activities was used for investment in com-

(2.8%), to ¥52,517 million as a result of a ¥306 million decreaseputers for sales activities and software for outsourcing purposesin selling expenses and a ¥1,213 million decreases in general andalong with the redemption of bonds.

administrative expenses achieved through efforts to control costs
such as employee compensation and R&D costs.
As a result of the above, operating income increased ¥1,350
million (14.1%), to ¥10,925 million.

l Cash Flows from Operating Activities

Net cash provided by operating activities in FY2014 totaled¥18,037 million (an increase of ¥6,148 million from the previous
fiscal year). One factor behind this result was proceeds of

Net Income¥11,226 million in the form of income before income taxes and

Net income amounted to ¥7,246 million, up 14.9%, due to fac-minority interests (up ¥3,067 million from the previous fiscal

tors including the recording of a special retirement expenses ofyear). Major factors increasing cash included the non-cash item

¥1,401 million. Because net income was ¥6,305 million in theof depreciation and amortization of ¥9,747 million (which had theprevious fiscal year due to the posting of a ¥1,605 million loss on

effect of decreasing cash by ¥436 million from the previous fiscal

impairment of long-lived assets for outsourcing, among otheryear) and a decrease in inventories of ¥3,868 million (which had

factors, net income increased by ¥941 million this year.

the effect of increasing cash by ¥8,820 million from the previous
fiscal year). These items offset major factors decreasing cash,

Analysis of Financial Condition

including decrease in allowance for loss on contract development

Analysis of the Balance Sheetof ¥1,584 million (which had the effect of decreasing cash by

At the end of FY2014, total assets amounted to ¥199,772¥3,098 million from the previous fiscal year).

million, representing a year-on-year decrease of ¥2,696 million.
Total current assets were down ¥5,788 million as the ¥1,292

l Cash Flows from Investing Activities

million increase in prepaid expenses was outweighed by

Net cash used in investing activities was ¥10,548 million (updecreases of ¥5,397 million in cash and cash equivalents and¥2,259 million compared with the previous fiscal year).This¥3,868 million in inventories. Total non-current assets increased

mainly reflected the fact that the Company used ¥5,258 million¥3,092 million due to a ¥1,822 million increase (net) in machin-(up ¥2,226 million compared with the previous fiscal year) forery and equipment and a ¥1,752 million increase in investment

payments for purchases of property, plant and equipment, suchsecurities, which offset a ¥3,056 million decrease in deferred

as computers for sales activities, and ¥7,721 million (up ¥2,265

tax assets.

million compared with the previous fiscal year) for payment for

Total liabilities decreased ¥8,654 million, to ¥117,796 million
due to factors including the redemption of bonds.

purchases of soft ware, mainly consisting of investments insoftware for outsourcing purposes.

Total equity increased ¥5,959 million, to ¥81,976 million, due tofactors including an increase in defined retirement benefit plans.

l Cash Flows from Financing Activities

The equity ratio improved 3.7 percentage points, to 40.6%.

Net cash used in financing activities was ¥12,887 million (up¥12,735 million from the previous fiscal year). This was largely
due to outflow in the form of increase of repayments oflong-term debt of ¥13,940 million (up ¥11,650 million from theprevious fiscal year).

Nihon Unisys Group Integrated Report 201528

Financial Section

Working Capital Requirements

FY2015 Outlook

The Nihon Unisys Group requires sufficient working capital to pay

We plan to post consolidated net sales of ¥280,000 million infor outsourced systems and support services as well as to pro-

FY2015, representing a year-on-year increase of 4.0%.

cure computers and software for sales purposes and to purchaseIn terms of profits, through increased net sales as well as

computers and software for leasing and outsourcing purposes.

boosted profitability in the System Services segment, we fore-

Working capital is also required to meet operating expenses such

cast a 14.4% year-on-year increase in operating income, to

as manufacturing costs and selling, general and administrative¥12,500 million, and a 17.3% increase in profit attributable toexpenses. Operating costs consist primarily of personnel costs,

owners of parent to ¥8,500 million.

sales support costs, and research and development costs. The

Because the Company expects to record increased income formain components of sales support costs and research and devel-

FY2015, the Company plans to pay increased annual dividends of

opment costs expenditure are personnel costs for system engi-¥30.00 per share, consisting of an interim dividend of ¥15.00 per

neers involved in sales support and research and development.

share and a year-end dividend of ¥15.00 per share.

For the working capital required these purpose, we appropriate
net cash provided by operating activities.

Consolidated Performance Forecasts for FY2015 

To ensure reliable, flexible access to funds and to improve(Millions of Yen)FY2014FY2015 (Forecast)

Changeour financial efficiency, the Group has established commitment

Net Sales

269,155

280,000+4.0%

lines with four banks. As of March 31, 2015, the total available

Operating Income

10,925

12,500+14.4%

balance (“unused balance of the commitment lines”) was

Profit Attributable to
Owners of Parent

7,246

8,500

+17.3%¥11,500 million.
Dividend Policy

Risks in Business Operations

In accordance with a basic policy of providing dividends in line

Risks related to the Group’s businesses and finances describedwith performance, the Company will seek to continue deliveringin this report that have the possibility of having a material effectstable shareholder returns based on the understanding that theon the decisions of investors are as follows.

increase of corporate value is the most important means ofNote that forward-looking statements contained in this docu-

repaying shareholders. Decisions about the specific dividend

ment are based on the understanding of the Group as of the end

amount will be made with due consideration for securing internalof the fiscal year under review.

reserves for business development and with comprehensive
consideration of the business environment.
The Company’s articles of incorporation stipulate that aninterim dividend can be provided based on a resolution by the(1) Impact from Economic Trends and the Market Environment
The business results and financial conditions of the Group may be affectedby a number of factors including reluctance to invest in information systems, unexpectedly intense price competition, and delayed response to

Board of Directors with September 30 as the base date, andtechnological advancement due to economic trends and shifts in theaccordingly the basic policy is to provide dividends from sur-information service market. They may also be affected by a worsening ofpluses two times per year, consisting of an interim dividend in
addition to the year-end dividend upon resolution at the share-

the business environment as a result of changes in regulations and systems such as laws, taxation, and accounting systems or changes in social
infrastructure such as power and communications.

holders’ meeting.
For FY2014, in consideration of the business results for the
fiscal year under review, the Company paid annual dividends of(2) Project Management Risks
The Group is engaged in many different system development projects.
However, intensified competition has meant that customers are continu-¥20.00 per share consisting of an interim dividend of ¥10.00 per

ally demanding more sophisticated systems, resulting in projects becom-

share and a year-end dividend of ¥10.00 per share, an increase

ing increasingly complex. Accordingly, if a problem arises in a developmentin the annual dividend of ¥5.00 per share from the previous

project, there is a risk that the problem would require greater-than-fiscal year.

expected costs and time to resolve, which could lead to a cost overrun. To
avoid such a risk, the Group has instituted a thorough and multifaceted
system for assessing risk in the Project Review Committee at both theproposal and implementation stage. It is also working to implement effective measures for preventing cost overruns and detecting problems at an
early stage by enhancing the project management system, increasing
productivity by systematizing and standardizing the system development
method, and implementing the Andon system, which detects problems in

29

Nihon Unisys Group Integrated Report 2015

a project at an early stage, as well as implementing a cycle of improve-(7) Intellectual Property Rights Risks

ment that includes the review of problems to ascertain their true causes

The Group applies intellectual property rights to a large number of com-and implement fundamental countermeasures.

puter programs for its business operations. Thus, any failure in the acquisition or maintenance of licenses as scheduled could affect the Group’s(3) System Failure Risks

business activities. In addition, there is a possibility that the Group may be

The systems and services provided by the Group have a significant effectone of the parties concerned with intellectual property rights litigation on

on important administrative systems of customers and on social infrastruc-computer programs and, as a result, any incurred expenses could affectture. In the event of a major failure due to a system malfunctioning, an

the Group’s business results.

operational mistake, etc., involving these systems and services, thebusiness results of the Group could be affected by such factors as a(8) Risks Associated with Key Supplier Relations

decline in society’s trust in the Group, a decline in the Group’s brandWe procure hardware from suppliers in Japan and overseas such asimage, and the payment of compensation for damages that have occurred.

Unisys Corporation, and provide them to customers. For this reason,

Accordingly, the Group determines quality standards, such as thechanges to product specifications or the suspension of the supply of

categorization of systems in use by their degree of social importance,

products due factors such as unforeseen changes in the business strategy

problem occurrence rates, and the number of days needed to complete

or deterioration in the business conditions of supplier companies could

the response to a problem, and establishes systems to respond to prob-

affect the Group’s business results.

lems. In addition, in regard to the occurrence of problems, the Group is

In addition, we handle the import, sales, and maintenance services ofworking to provide information to related in-house departments through a

Unisys Corporation-made computers and other products in Japan, while

problem reporting system and to rapidly implement responses to prob-

Unisys Corporation grants us the use of its trademarks, technical infor-

lems. The Group is also working to raise the quality of systems in use bymation, and assistance. The trading relationship with Unisys Corporation

implementing evaluation and improvement activities through periodic

has been secure, but if the relationship became unbalanced and could

system maintenance.

not be sustained, this would have a material impact on the Group’sbusiness results.

(4) Risks Associated with Investment Decisions
The Group makes large investments with the aim of providing new prod-(9) Exchange Rate Fluctuation Risks

ucts and services to strengthen its competitiveness and expand its busi-

The Group imports and sells Unisys Corporation-made computers andnesses. When such investments are made, the Project Review

other foreign-made products. Thus, the Group’s procurements in foreign

Committee, the R&D / Investment Committee and above them the Execu-

currency denominations could be exposed to fluctuations in foreign

tive Council carefully determine the appropriateness of business plans andexchange rates. To avoid such risks, the Group takes risk-hedging mea-other factors. However, there is no guarantee that an adequate return onsures through forward exchange contracts. The Group’s purchase ofinvestment will always be achieved. If the Group is unable to achieve an

foreign-currency denominations totaled ¥17,255 million for the fiscal year

adequate return, then its business results may be affected.

under review.

(5) Information Control Risks(10) Compliance Risk

The Group has many opportunities to access customers’ confidential

The Group’s business activities are exposed to the risk of lawsuits andpersonal and / or corporate information, as well as information on thelegal action by third parties, and depending on the outcomes of such

Group itself, through business activities related to the development andevents it could result in having to pay unexpectedly large amounts ofprovision of information systems. We therefore consider information

damage compensation and ultimately affect the Group’s business results.

control to be a top priority in order to hold information in strict confidence,

For this reason, the Group has established the Nihon Unisys Group Action

and take all possible measures for appropriate management of information

Guidelines and the Group Compliance Basic Regulations, based on which

as a member of the ICT industry. To cope with the small possibility of an

all of the Group’s employees conduct ethical behavior in compliance withinformation leak in an emergency case that is beyond conventional imagi-

laws and regulations, social norms, and in-house regulations.

nation, the Group has insurance contracts to address the situation up to acertain extent. However, in the case that damage repair expenses are(11) Natural Disaster Risks

higher than the overall amount of contract coverage, or in the case that the

The occurrence of a natural disaster, such as an earthquake or infectious

leak has resulted in severe damage to the Group’s reputation, there is thedisease outbreak, could cause damage to or otherwise result in the loss

possibility that the business results and financial conditions of the Groupof social infrastructure of one or more of the Group’s major businesswould be severely affected.

bases. Such a disaster could also impact many of our suppliers or
employees or result in a situation in which the Group must restrict its(6) Risks Associated with Retention of Skilled Engineers

business activities to ensure the safety or maintain the well-being of

The shortage of skilled engineers in the information service industry is asuch suppliers or employees. Were such a disaster to occur, the Groupsignificant issue. If we are unable to recruit high-caliber engineers to meet

may have to incur significant expenses to respond to the damages,

our needs, this could have a material impact on the Group’s ability towhich could greatly impact service provision or other business activities

secure technological advantages. The Company is working to address thisand ultimately affect the Group’s business results. Therefore, in prepara-

issue by creating an environment in which Group personnel can acquiretion for such an occurrence or a situation where such an occurrence ishigh-level skills. To this end, we have instituted a wide range of personnel

anticipated, the Group is striving to establish a structure based on whichdevelopment measures, including career planning and other support

its operations could be maintained.

systems as well as programs to enhance employee abilities.

Nihon Unisys Group Integrated Report 201530

Financial Section

Consolidated Financial Statements
Consolidated Balance
Sheet
Consolidated
Balance
Sheet

Nihon
Unisys,Ltd. andSubsidiariesSubsidiaries
Nihon
Unisys,Ltd.Consolidated
and Consolidated
March 31, 2015

March 31, 2015

Millions of Yen

ASSETS

2015

2014

2015

Current Assets:
Cash and cash equivalents (Notes 3 and 15)
Accounts receivable―trade (Notes 5 and 15)
Inventories (Note 6)
Deferred tax assets (Note 9)
Other
Allowance for doubtful accounts
Total current assets¥23,326
68,121
9,901
5,919
15,451(144)
122,574¥28,724
67,95813,7696,291
11,716(97)
128,361$194,108566,872
82,392
49,255
128,576(1,198)1,020,005

Property, Plant and Equipment:
Land
Buildings and structures (Note 7)
Machinery and equipment (Note 7)
Other
Total

619
12,19339,821
1,581
54,214619
12,12744,934
1,714
59,394

5,151
101,465
331,372
13,156451,144

Accumulated depreciation
Net property, plant and equipment(40,103)
14,111(47,239)
12,155(333,719)
117,425

Investments and Other Assets:
Investment securities (Notes 4 and 15)
Investments in associated companies
Goodwill
Software (Note 7)
Lease deposits
Asset for retirement benefits (Note 10)
Deferred tax assets (Note 9)
Other
Total investments and other assets
Total

16,434
1,591
1,798
19,076
7,865
7,177
1,033
8,113
63,087¥199,772

14,7381,534
1,935
18,815
7,889
7,124
4,090
5,827
61,952¥202,468

136,756
13,24014,962
158,742
65,44959,724
8,596
67,512524,981$1,662,411

See notes to consolidated financial statements.

31

Thousands of
U.S. Dollars(Note 1)

Nihon Unisys Group Integrated Report 2015

Millions of Yen

Thousands of
U.S. Dollars(Note 1)

LIABILITIES AND EQUITY

2015

2014

2015

Current Liabilities:
Short-term bank loans (Notes 8 and 15)
Current portion of long-term debt (Notes 8 and 15)
Accounts payable―trade (Note 15)
Accounts payable―other
Income taxes payable (Note 9)
Accrued expenses
Advances received
Allowance for loss on contract development
Other (Note 14)
Total current liabilities¥4,00015,11525,231
2,323
383
7,692
12,214
1,688
9,002
77,648¥750
13,94024,435
1,844
541
7,686
12,764
3,272
6,036
71,268$33,286
125,780
209,961
19,331
3,187
64,009101,639
14,04774,911
646,151

Long-Term Liabilities:
Long-term debt (Notes 8 and 15)
Convertible bonds (Notes 8 and 15)
Long-term accounts payable―otherLiability for retirement benefits (Note 10)
Deferred tax liabilities (Note 9)
Asset retirement obligations
Other (Note 14)
Total long-term liabilities

21,65515,088
143
881
66
1,335
980
40,14836,77015,163
48
1,158
33
1,308
703
55,183

180,203
125,555
1,190
7,331
549
11,1098,156
334,093

5,483
15,282367
68,032

5,483
15,282661
68,26845,627
127,170
3,054
566,131(19,283)3(19,318)(160,464)
25

5,511
(11)
6,004
81,388588
81,976¥199,772

3,437
(21)
1,666
75,458559
76,017¥202,468

45,860(92)
49,963
677,274
4,893
682,167$1,662,411

Commitments and Contingent Liabilities (Notes 14 and 17)
Equity (Notes 11 and 12):
Common stock―authorized, 300,000,000 shares;
issued, 109,663,524 shares in 2015 and 2014
Capital surplus
Stock acquisition rights
Retained earnings
Treasury stock―at cost
15,623,600 shares in 2015 and 15,651,708 shares in 2014
Deposit for subscriptions to treasury shares
Accumulated other comprehensive income:Net unrealized gain on available-for-sale securities
Deferred loss on derivatives under hedge accounting
Defined retirement benefit plans
Total
Minority interests
Total equity
Total

Nihon Unisys Group Integrated Report 201532

Financial Section

Consolidated Statement of Income
Nihon
Unisys, Ltd. Statement
and Consolidated
Consolidatedof Subsidiaries
IncomeYear Ended March 31, 2015

Nihon Unisys, Ltd. and Consolidated Subsidiaries
Year Ended March 31, 2015
Millions of Yen

Net sales
Cost of sales (Note 10)
Gross profit
Selling, general and administrative expenses (Notes 10 and 13)
Operating income
Other income (expenses):
Interest and dividend income
Interest expense
Gain on sales of investment securities (Note 4)
Loss on impairment of investment securities
Foreign exchange gain
Loss on impairment of long-lived assets (Note 7)
Equity in earnings of associated companies
Loss on sales and retirement of noncurrent assets
Gain on reversal of subscription rights to shares
Gain on revision of retirement benefit plan
Special retirement expenses
Other―net
Other expenses―net
Income before income taxes and minority interests
Income taxes (Note 9):
Current
Deferred
Total income taxes
Net income before minority interests
Minority interests in net gain
Net income
Per Share Amounts (Notes 2.t and 19):
Basic net income
Diluted net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

2015¥269,155
205,71363,44252,517
10,925

2014¥282,691
219,080
63,61154,0369,575

2015$2,239,785
1,711,850
527,935
437,022
90,913

496
(401)
1,249
(22)
77
(111)
54
(124)
290
152
(1,401)42
301
11,226

421
(518)
325
(577)
262
(1,605)
44
(95)
266
60
(1,417)
8,158

4,127
(3,337)
10,394
(183)
641
(924)
449
(1,032)
2,413
1,265(11,658)
350
2,505
93,418

480
3,443
3,923
7,303
57
¥7,246

887
942
1,829
6,329
24
¥6,305

3,995
28,65132,646
60,772474$60,298

Yen¥77.0766.72
20.00¥67.0859.49
15.00

U.S. Dollars
$0.64
0.56
0.17

Consolidated Statement of Comprehensive Income
Nihon Unisys, Ltd. and Consolidated Subsidiaries
Year Ended March 31, 2015
Millions of Yen

Net income before minority interests
Other comprehensive income (Note 18):
Unrealized gain on available-for-sale securities
Deferred gain (loss) on derivatives under hedge accounting
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to (Note 18):
Owners of the parent
Minority interests
See notes to consolidated financial statements.

33

Nihon Unisys Group Integrated Report 2015

Thousands of
U.S. Dollars(Note 1)Thousands of
U.S. Dollars(Note 1)

2015
¥7,3032014¥6,3292015$60,772

2,074
10
4,339
6,423
¥13,726

1,480
(7)
1,473
¥7,802

17,25983
36,10753,449$114,221¥13,669
57¥7,77824$113,747
474

Consolidated Statement of Changes
in Equity
Consolidated
Statementof Changes in Equity
NihonUnisys,
Unisys, Ltd.
Subsidiaries
Nihon
Ltd.andandConsolidated
Consolidated
Subsidiaries
YearEnded
Ended March
March 31,Year
31,2015
2015

Thousands

Outstanding
number ofshares ofcommon stock

Balance, April 1, 2013
Net income
Cash dividends
Net changes in items
Net changes during the year
Balance, March 31, 2014
Cumulative effect of accounting change
Balance, April 1, 2014 (as restated)
Net income
Cash dividends
Purchase of treasury stock
Disposal of treasury stock
Deposit for subscriptions to treasury shares
Net changes in items
Net changes during the year
Balance, March 31, 2015

93,991Millions of Japanese Yen

Common stock Capital surplus¥5,483Stockacquisitionrights¥15,282

¥858

21
21
94,012

5,483

15,282

(197)
(197)
661

94,012

5,483

15,282

661

(1)
29
28
94,040¥5,483¥15,282

(294)
(294)
¥367

Deposit for
Treasury stock
subscriptions to-at cost
treasury shares

Retainedearnings¥63,141
6,305(1,175)(3)
5,127
68,268(5,833)62,435
7,246(1,645)¥(19,344)
26
26(19,318)(19,318)

(4)

(1)
36

5,597
¥68,032

35¥(19,283)

3
3¥3

Millions of Japanese Yen
Accumulated other comprehensive income

Balance, April 1, 2013
Net income
Cash dividends
Net changes in items
Net changes during the year
Balance, March 31, 2014
Cumulative effect of accounting change
Balance, April 1, 2014 (as restated)
Net income
Cash dividends
Purchase of treasury stock
Disposal of treasury stock
Deposit for subscriptions to treasury shares
Net changes in items
Net changes during the year
Balance, March 31, 2015

Net unrealized
gain (loss) on
available-forsale securities

Deferred gain
(loss) on
derivatives
under hedge
accounting¥1,958

(¥14)

1,479
1,479
3,437

(7)
(7)
(21)

1,666
1,666
1,666

3,437

(21)

1,666

2,074
2,074
¥5,511

Definedretirement
benefit plans

10
10
¥(11)

4,338
4,338
¥6,004

Thousands

Outstanding
number ofshares ofcommon stock

Balance, March 31, 2014
Cumulative effect of accounting change
Balance, April 1, 2014 (as restated)
Net income
Cash dividends
Purchase of treasury stock
Disposal of treasury stock
Deposit for subscriptions to treasury shares
Net changes in items
Net changes during the year
Balance, March 31, 2015

Total

¥67,364
6,305(1,175)2,964
8,094
75,458(5,833)69,625
7,246(1,645)
(1)
32
3
6,128
11,763¥81,388

Total equity

¥553
(18)
24
6
559
559
(28)

57
29
¥588

¥67,917
6,305(1,193)
2,988
8,100
76,017(5,833)70,184
7,246(1,673)
(1)
32
3
6,185
11,792¥81,976

Thousands of U.S. Dollars (Note 1)

Common stock Capital surplus

Stockacquisitionrights

94,012$45,627$127,170$5,501

94,012$45,627$127,170$5,501(1)
29
28
94,040Minority
interests$45,627$127,170(2,447)(2,447)$3,054

Deposit for
Treasury stock
subscriptions to-at cost
treasury shares

Retainedearnings$568,095$(48,539)$519,556
60,298(13,689)$(160,756)$(160,756)

(34)

(8)
300

46,575$566,131

292$(160,464)

25
25
$25

Thousands of U.S. Dollars (Note 1)
Accumulated other comprehensive income
Deferred gain
Net unrealized(loss) on
Definedgain (loss) on
derivatives
retirement
available-forunder hedge
benefit planssale securities
accounting

Balance, March 31, 2014
Cumulative effect of accounting change
Balance, April 1, 2014 (as restated)
Net income
Cash dividends
Purchase of treasury stock
Disposal of treasury stock
Deposit for subscriptions to treasury shares
Net changes in items
Net changes during the year
Balance, March 31, 2015

$28,601$(175)$13,864$28,601$(175)$13,864

17,25917,259$45,860

83
83
$(92)

36,09936,099$49,963

Total$627,927($48,539)$579,388
60,298(13,689)(8)266
2550,994
97,886$677,274

Minority
interests

Total equity$4,652$4,652
(233)

474
241
$4,893$632,579($48,539)$584,040
60,298(13,922)(8)266
2551,46898,127$682,167

Nihon Unisys Group Integrated Report 201534

Financial Section

Consolidated Statements of Cash Flows
Nihon Unisys, Ltd. and Consolidated Subsidiaries
Thousands of Year Ended March 31, 2015

Consolidated Statements of Cash Flows
Nihon Unisys, Ltd. and Consolidated Subsidiaries
Year Ended March 31, 2015

Operating Activities:
Income before income taxes and minority interests
Adjustments for:
Income taxes paid
Loss on impairment of long-lived assets
Depreciation and amortization
Amortization of goodwill
Gain on sales of investment securities
Loss on impairment of investment securities(Increase) decrease in accounts receivable―trade
Decrease (increase) in inventories
Decrease in interest and dividends receivable
Increase in asset for retirement benefits
Increase in defined retirement benefit plans
Increase (decrease) in accounts payable―trade
Decrease in interest payable
Increase in accrued expenses
Increase (decrease) in deposit received(Decrease) increase in liability for retirement benefits(Decrease) increase in allowance for loss on contract development
Decrease in other allowance
Other―net
Total adjustments
Net cash provided by operating activities
Investing Activities:
Proceeds from sales of property, plant and equipment
Payments for purchases of property, plant and equipment
Payments for purchases of software
Proceeds from sales of investment securities
Payments for purchases of investment securities
Proceeds from redemption of investment securities
Other―net
Net cash used in investing activities

2015

2014

2015

¥11,226¥8,158$93,418(1,107)
111
9,747
137
(1,249)
22
(163)
3,868
3
(6,551)
4,339
796
(85)
13
503
(2,243)(1,584)
(238)
492
6,811
18,037(555)
1,605
10,183
138
(237)
577
1,232
(4,952)
1(5,601)
1,666(1,083)
(64)
361
(551)
114
1,514
(254)
(363)
3,731
11,889(9,212)924
81,1101,140(10,394)183(1,356)32,18825(54,514)
36,107
6,624
(707)
108
4,185
(18,665)(13,181)(1,981)
4,094
56,678150,096243(5,258)(7,721)
2,630
(457)
100
(85)
(10,548)54(3,031)(5,455)
780
(700)

2,022
(43,755)(64,251)
21,886(3,803)832(707)(87,776)3,250

63(8,289)Financing Activities:
Net increase in short-term bank loans
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from issuance of convertible bonds
Repayments of other debt
Net decrease in commercial paper
Purchase of treasury shares
Proceeds from sale of treasury stock
Cash dividends
Cash dividends to minority interests
Other―net
Net cash used in financing activities

(1)

450
1,150
(2,290)15,225(485)(13,000)(1)(1,646)(28)
28(12,887)(1,175)
(18)
(7)
(151)

(13,697)(233)
233(107,240)

Net (decrease) increase in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year

(5,398)28,724¥23,326

3,449
25,275¥28,724(44,920)
239,028$194,108

See notes to consolidated financial statements.

35

Millions of Yen

Thousands of
U.S. Dollars(Note 1)

Nihon Unisys Group Integrated Report 2015

(13,940)(550)

27,045(116,003)(4,577)(8)

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Nihon Unisys, Ltd. and Consolidated Subsidiaries
Nihon Unisys, Ltd. and Consolidated Subsidiaries
Year
Ended March 31, 2015
Year Ended March 31, 2015

1. Basis of presenting consolidated financial statements
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Financial
Instruments and Exchange Act and its related accounting regulations and in accordance with accounting principles generally accepted in Japan(Japanese GAAP), which are different in certain respects as to application and disclosure requirements from International Financial ReportingStandards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial
statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain
reclassifications have been made in the 2014 financial statements to conform them to the classifications used in 2015.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which Nihon Unisys, Ltd. (the “Company”) is
incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience ofreaders outside Japan and have been made at the rate of ¥120.17 to $1, the approximate rate of exchange at March 31, 2015. Such translations
should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.
2. Summary of significant accounting policies(a) Consolidation – The consolidated financial statements as of March 31, 2015 include the accounts of the Company and its 18 (the same asof March 31, 2014) significant subsidiaries and one (the same as of March 31, 2014) associated company accounted for by the equity
method (collectively, the “Group”).
Under the control and influence concepts, those companies in which the Company, directly or indirectly, is able to exercise control over
operations are fully consolidated, and those companies over which the Group has the ability to exercise significant influence are accounted
for by the equity method.
Investments in the remaining 8 (6 as of March 31, 2014) unconsolidated subsidiaries and 10 (9 as of March 31, 2014) associated companies
are stated at cost. If the consolidation or equity method of accounting had been applied to the investments in these companies, the effecton the accompanying consolidated financial statements would not be material.
The excess cost of an acquisition over the fair value of subsidiaries’ net assets acquired is amortized on a straight-line basis over 20 years.
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit included in
assets resulting from transactions within the Group is eliminated.
(b) Cash equivalents – Cash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant
risk of changes in value.
Cash equivalents include time deposits, certificates of deposit, commercial paper and bond funds, all of which mature or become due
within three months of the date of acquisition.
(c) Inventories – Inventories are stated at the lower of cost determined by the moving-average method or net selling value.
(d) Investment securities – Investment securities are classified and accounted for depending on management’s intent. These are classified asavailable-for-sale securities or held-to-maturity securities.
Marketable available-for-sale securities are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported in a
separate component of equity.
The cost of securities sold is determined based on the moving-average method.
Nonmarketable available-for-sale securities are stated at cost as determined by the moving-average method. For other-than-temporary
declines in fair value, nonmarketable available-for-sale securities are reduced to net realizable value by a charge to income.
Held-to-maturity debt securities, for which there is a positive intent and ability to hold to maturity, are reported at amortized cost.
(e) Allowance for doubtful accounts – The allowance for doubtful accounts is stated at amounts considered to be appropriate based on theGroup’s past credit loss experience and on evaluation of potential losses in the receivables outstanding.

Nihon Unisys Group Integrated Report 201536

Financial Section(f) Property, plant and equipment – Property, plant and equipment are stated at cost. Depreciation of rental and outsourcing computers
included in machinery and equipment is mainly computed by the straight-line method over useful life, principally five years with noresidual value.
Depreciation of buildings and structures and other machinery and equipment is mainly computed by the straight-line method.
Useful lives range from 6 to 50 years for buildings and structures. The useful lives for lease assets are the periods of the respective leases.
Machinery and equipment held for lease are depreciated by the straight-line method over the respective lease periods.
(g) Software – Software development costs, incurred through the completion of a Beta version of specific software for sale to the market, arecharged to income as incurred. Costs incurred subsequent to the completion of the Beta version are capitalized as software.
Software for sale to the market is amortized at the greater of either the amount to be amortized in proportion of the actual sales of thesoftware during the current year to the estimated total sales over the estimated salable years of the software or the amount to beamortized by the straight-line method over the estimated salable years, principally over three years.
Software for internal use is amortized by the straight-line method over the estimated useful lives, principally over five years. Software held
for leasing is depreciated by the straight-line method over the respective lease periods.
(h) Long-lived assets – The Group reviews its long-lived assets for impairment whenever events or changes in circumstance indicate thecarrying amount of an asset or asset group may not be recoverable. An impairment loss is recognized if the carrying amount of an asset or
asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of
the asset or asset group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the
net selling price at disposition.
(i) Allowance for loss on contract development – The allowance for loss on contract development is provided for an estimated amount ofprobable losses to be incurred in future years on the software development contracts that cost ¥50 million ($416 thousand) or more.
(j) Retirement and Pension Plans – The Company and certain subsidiaries have defined benefit corporate pension plans (cash balance plans)and defined contribution pension plans covering substantially all of their employees. Other consolidated subsidiaries have defined benefit
pension plans, defined contribution pension plans, and severance lump-sum payment plans. In addition, some of the consolidated
subsidiaries have implemented a defined contribution pension plan in the fiscal year ended March 31, 2015, by which part of the defined
benefit pension plan was terminated.
Actuarial gains and losses are recognized using the straight-line method over the average of the estimated remaining service period(mainly 10 years for the fiscal years ended March 31, 2015 and 2014) starting in the following year. Prior service cost is amortized in
expenses using the straight-line method over the average of the estimated remaining service period (10 years for the fiscal years ended
March 31, 2015 and 2014).
The Company and a certain subsidiary participate in the New Career Support Program (the “NCSP”) to assist certain employees in retiring
before their mandatory retirement age. The Company and the certain subsidiary provide for the estimated future payments to be paid
under the NCSP and include this amount as a liability for retirement benefits.
In May 2012, the ASBJ issued ASBJ Statement No. 26, "Accounting Standard for Retirement Benefits" and ASBJ Guidance No. 25, "Guidanceon Accounting Standard for Retirement Benefits," which replaced the accounting standard for retirement benefits that had been issued by
the Business Accounting Council in 1998 with an effective date of April 1, 2000, and the other related practical guidance, and were followedby partial amendments from time to time through 2009.
(1) Under the revised accounting standard, actuarial gains and losses and past service costs that are yet to be recognized in profit or loss
are recognized within equity (accumulated other comprehensive income), after adjusting for tax effects, and any resulting deficit or
surplus is recognized as a liability (liability for retirement benefits) or asset (asset for retirement benefits).
(2) The revised accounting standard does not change how to recognize actuarial gains and losses and past service costs in profit or loss.
Those amounts are recognized in profit or loss over a certain period no longer than the expected average remaining service period of
the employees. However, actuarial gains and losses and past service costs that arose in the current period and have not yet beenrecognized in profit or loss are included in other comprehensive income, and actuarial gains and losses and past service costs that wererecognized in other comprehensive income in prior periods and then recognized in profit or loss in the current period shall be treatedas reclassification adjustments.
(3) The revised accounting standard also made certain amendments relating to the method of attributing expected benefit to preiods, thediscount rate, and expected future salary increases.
This accounting standard and the guidance for (1) and (2) above are effective for the beginning of annual periods beginning on or after April
1, 2013, and for (3) above are effective for the beginning of annual periods beginning on or after April 1, 2014, or for the beginning ofannual periods beginning on or after April 1, 2015, subject to certain disclosure in March 2015, all with earlier application being permitted
form the beginning of annual periods beginning on or after April 1, 2013. However, no retrospective application of this accounting standard
to consolidated financial statement in prior periods is required.

37

Nihon Unisys Group Integrated Report 2015

The company applied the revised accounting standard and guidance for retirement benefits for (1) and (2) above, effective March 31,2014,
and for (3) above, effective April 1, 2014.
With respect to (3) above, the company changed the method of attributing the expected benefit to periods form a straight-line basis to abenefit formula basis, the method of determining the discount rate from using the period which approximates the expected averageremaining service period to using a single weighted average discount rate reflecting the estimated timing and amount of benefit payment,
and recorded the effect of (3) above as of April 1, 2014, in retained earnings.
As a result, liability for retirement benefits as of April 1, 2014, increased by ¥8,566 million ($71,282 thousand), retained earnings as of April
1, 2014, decreased by ¥5,833 million ($48,539 thousand), and operating income and income before income taxes and minority interests forthe year ended March 31, 2015, increased by ¥373 million ($3,104 thousand). In addition, basic net increased by ¥2.65 ($0.02) and ¥2.31($0.02), respectively.
(k) Asset Retirement Obligations – In March 2008, the ASBJ issued, ASBJ Statement No. 18, “ Accounting Standard for Asset Retirement
Obligations ” and ASBJ Guidance No. 21, “ Guidance on Accounting Standard for Asset Retirement Obligations. ” Under this accounting
standard, an asset retirement obligation is defined as a legal obligation imposed either by law or contract that results from the acquisition,
construction, development and the normal operation of a tangible fixed asset and is associated with the retirement of such tangible fixed
asset. The asset retirement obligation is recognized as the sum of the discounted cash flows required for the future asset retirement and isrecorded in the period in which the obligation is incurred if a reasonable estimate can be made. If a reasonable estimate of the asset
retirement obligation cannot be made in the period the asset retirement obligation is incurred, the liability should be recognized when areasonable estimate of the asset retirement obligation can be made. Upon initial recognition of a liability for an asset retirement obligation,
an asset retirement cost is capitalized by increasing the carrying amount of the related fixed asset by the amount of the liability. The asset
retirement cost is subsequently allocated to expense through depreciation over the remaining useful life of the asset. Over time, theliability is accreted to its present value each period. Any subsequent revisions to the timing or the amount of the original estimate ofundiscounted cash flows are reflected as an adjustment to the carrying amount of the liability and the capitalized amount of the related
asset retirement cost.
(l) Stock options – ASBJ Statement No. 8, “ Accounting Standard for Stock Options ” and related guidance are applicable to stock options
granted on and after May 1, 2006.
This standard requires companies to measure the cost of employee stock options based on the fair value at the date of grant and recognize
compensation expense over the vesting period as consideration for receiving goods or services. The standard also requires companies toaccount for stock options granted to nonemployees based on the fair value of either the stock option or the goods or services received. In
the consolidated balance sheet, stock options are presented as stock acquisition rights as a separate component of equity until exercised.
The Group has applied the accounting standard for stock options to those granted on and after May 1, 2006.
(m) Construction contracts – For software development contracts that cost ¥ 50 million ($416 thousand) or more for the fiscal years ended
March 31, 2015 and 2014, the percentage-of-completion method is adopted only if the percentage of completion can be reasonably
determined. For other contracts, the completed-contract method is applied.
The percentage of completion is evaluated by Earned Value Management (“EVM”). EVM divides deliverables defined on the contract, suchas software and related documents, by work phase. EVM defines percentages of completion as the ratio of earned value of work phasecompleted during the fiscal year divided by the entire work phase.
(n) Research and development costs – Research and development costs are charged to income as incurred.
(o) Leases – In March 2007, the ASBJ issued ASBJ Statement No. 13, “Accounting Standard for Lease Transactions,” which revised the previous
accounting standard for lease transactions issued in June 1993. The revised accounting standard for lease transactions was effective forfiscal years beginning on or after April 1, 2008.
Under the previous accounting standard, finance leases that were deemed to transfer ownership of the leased property to the lessee were
to be capitalized. However, other finance leases were permitted to be accounted for as operating lease transactions if certain “ as if
capitalized” information was disclosed in the notes to the lessee’s financial statements. The revised accounting standard requires that all
finance lease transactions should be capitalized to recognize lease assets and lease obligations in the balance sheet. In addition, the revised
accounting standard permits leases which existed at the transition date and which do not transfer ownership of the leased property to thelessee to be accounted for as operating lease transactions.
The Group applied the revised accounting standard effective April 1, 2008. In addition, the Group accounted for leases which existed at thetransition date and which do not transfer ownership of the leased property to the lessee as operating lease transactions.
The adoption of this standard had no effect on the Company’s consolidated statement of income.
All other leases are accounted for as operating leases.

Nihon Unisys Group Integrated Report 201538

Financial Section(p) Income taxes – The provision for income taxes is computed based on the pretax income included in the consolidated statement of income.
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying
currently enacted tax laws to the temporary differences.
The Company and certain of its subsidiaries have applied the consolidated taxation system from the year ended March 31, 2013.
(q) Appropriations of retained earnings – Appropriations of retained earnings are reflected in the financial statements for the following year
upon shareholders’ approval.
(r) Foreign currency transactions – All short-term and long-term monetary receivables and payables denominated in foreign currencies aretranslated into Japanese yen at the exchange rates at the balance sheet date. The foreign exchange gains and losses from translation arerecognized in the statement of income to the extent that they are not hedged by forward exchange contracts.
(s) Derivatives and hedge accounting – The Company and certain subsidiaries use a variety of derivative financial instruments, including
foreign currency forward contracts and interest rate swaps, as a means of hedging exposure to foreign currency and interest rate risks. The
Company and certain subsidiaries do not enter into derivatives for trading or speculative purposes.
Derivative financial instruments are classified and accounted for as follows:(1) All derivatives are recognized as either assets or liabilities and measured at fair value, and gains or losses on trade, except forderivatives which qualify for hedge accounting, are recognized in the consolidated statement of income.
(2) For derivatives used for hedging purposes, if derivatives qualify for hedge accounting because of high correlation and effectivenessbetween the hedging instruments and the hedged items, gains or losses on derivatives are deferred until maturity of the hedgedtransactions.
Foreign currency forward contracts are utilized to hedge foreign currency exposures in procurement of merchandise from overseas
suppliers. Trade payables denominated in foreign currencies are translated at the contracted rates if the forward contracts qualify forhedge accounting.
Interest rate swaps are utilized to hedge interest rate exposures on certain liabilities. The interest rate swaps which qualify for hedge
accounting are measured at market value at the balance sheet date and the unrealized gains or losses are deferred until maturity as otherliabilities or assets. However, in cases where interest rate swaps qualify for hedge accounting and meet specific matching criteria, the net
amount to be paid or received under the interest rate swap contracts are added to or deducted from the interest on the assets or liabilities
for which the swap contract was executed.
(t) Per-share information – Basic net income per share is computed by dividing net income available to common shareholders by theweighted-average number of common shares outstanding for the period.
Diluted net income per share reflects the potential dilution that could occur if securities were exercised or converted into common stock.
Diluted net income per share of common stock assumes full exercise of outstanding warrants.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to the respective
years, including dividends to be paid after the end of the year.
(u) Accounting Changes and Error Corrections – In December 2009, the ASBJ issued ASBJ Statement No. 24, "Accounting Standard for
Accounting Changes and Error Corrections" and ASBJ Guidance No. 24, "Guidance on Accounting Standard for Accounting Changes andError Corrections." Accounting treatments under this standard and guidance are as follows:(1) Changes in Accounting Policies – When a new accounting policy is applied following revision of an accounting standard, the new policy
is applied retrospectively unless the revised accounting standard includes specific transitional provisions, in which case the entity shallcomply with the specific transitional provisions.
(2) Changes in Presentation – When the presentation of financial statements is changed, prior-period financial statements are reclassified
in accordance with the new presentation.
(3) Changes in Accounting Estimates – A change in an accounting estimate is accounted for in the period of the change if the change
affects that period only and is accounted for prospectively if the change affects both the period of the change and future periods.
(4) Corrections of Prior-Period Errors – When an error in prior-period financial statements is discovered, those statements are restated.
This accounting standard and the guidance are applicable to accounting changes and corrections of prior-period errors which are madefrom the beginning of the fiscal year that begins on or after April 1, 2013.
(v) New Accounting Pronouncements
Accounting Standards for Business Combinations and Consolidated Financial – In September 2013, the ASBJ issued revised ASBJ
Statement No. 21, "Accounting Standard for Business Combinations," revised ASBJ Guidance No. 10, "Guidance on Accounting Standards
for Business Combinations and Business Divestitures," and revised ASBJ Statement No. 22, "Accounting Standard for Consolidated Financial
Statement."

39

Nihon Unisys Group Integrated Report 2015

Major changes are as follows:(1) Transactions with noncontrolling interest - A parent's ownership interest in its subsidiary might change if the parent purchases or sells
ownership interests in its subsidiary. The carrying amount of minority interest is adjusted to reflect the change in the parent's
ownership interest in its subsidiary while the parent retains its controlling interest in its subsidiary. Under the current accounting
standard, any difference between the fair value of consideration received or paid and the amount by which the minority interest is
adjusted is accounted for as an adjustment of goodwill or as profit or loss in the consolidated statement of income. Under the revised
accounting standard, such difference shall be accounted for as capital surplus as long as the parent retains control over its subsidiary.
(2) Presentation of the consolidated balance sheet - In the consolidated balance sheet, "minority interest" under the current accounting
standard will be changed to "noncontrolling interest" under the revised accounting standard.
(3) Presentation of consolidated statement of income - In the consolidated statement of income, "income before minority interest" under
the current accounting standard will be changed to "net income" under the revised accounting standard, and "net income" under thecurrent accounting standard will be changed to "net income attributable to owners of the parent" under the revised accounting
standard.
(4) Provisional accounting treatments for a business combination - If the initial accounting for a business combination is incomplete by theend of the reporting period in which the business combination occurs, an acquirer shall report in its financial statements provisionalamounts for the items for which the accounting is incomplete. Under the current accounting standard guidance, the impact ofadjustments to provisional amounts recorded in a business combination on profit or loss is recognized as profit or loss in the year inwhich the measurement is completed. Under the revised accounting standard guidance, during the measurement period, which shallnot exceed one year from the acquisition, the acquirer shall retrospectively adjust the provisional amounts recognized at the aquisition
date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and that would haveaffected the measurement of the amounts recognized as of the date. Such adjustments shall be recognized as if the accounting for thebusiness combination had been complete at the acquisition date.
(5) Acquisition-related costs - Acquisition-related costs are costs, such as advisory fees or professional fees, which an acquirer incurs toeffect a business combination. Under the current accounting standard, the acquirer accounts for acquisition-related costs by including
them in the acquisition costs of investment. Under the revised accounting standard, acquisition-related costs shall be accounted for as
expenses in the periods in which the costs are incurred.
The above accounting standards and guidance for (1) transactions with noncontrolling interest, (2) presentation of the consolidatedbalance sheet, (3) presentation of the consolidated statement of income, and (5) acquisition-related costs are effective for the beginning ofannual periods beginning on or after April 1, 2015. Earlier application is permitted from the beginning of annual periods beginning on or
April 1, 2014, except for (2) presentation of the consolidated balance sheet and (3) presentation of the consolidated statement of income.
In the case of earlier application, all accounting standards and guidance above, except for (2) presentation of the consolidated balance
sheet and (3) presentation of the consolidated statement of income, should be applied simultaneously.
Either retrospective or prospective application of the revised accounting standards and guidance for (1) transactions with noncontrollinginterest and (5) acquisition-related costs is permitted. In retrospective application of the revised standards and guidance, the accumulated
effects of retrospective adjustment for all (1) transactions with noncontrolling interest and (5) acquisition-related costs which occurred in
the past shall be reflected as adjustments to the beginning balance of capital surplus and retained earnings for the year of the first-time
application. In prospective application, the new standards and guidance shall be applied prospectively from the beginning of the year of thefirst-time application.
The revised accounting standards and guidance for (2) presentation of the consolidated balance sheet and (3) presentation of theconsolidated statement of income shall be applied to all periods presented in financial statements containing the first-time application of
the revised standards and guidance.
The revised standards and guidance for (4) provisional accounting treatments for a business combination are effective for a businesscombination which occurs on or after the beginning of annual periods beginning on or after April 1, 2015. Earlier application is permitted
for a business combination which occurs on or after the beggining of annual periods beginning on or after April 1, 2014.
The Company expects to apply the revised accounting standards and guidance for (1), (2), (3) and (5) above from April 1, 2015, and for (4)above for a business combination which will occur on or after April 1, 2015. In addition, the revised accounting standards and guidance for(1) transactions with noncontrolling interest and (5) acquisition-related costs were applied retrospectively. The effects of the application of
the revised accounting standards and guidance for 2015 were as follows:(i) Consolidated balance sheet as of April 1, 2015 - "goodwill" decreased by ¥794 million ($6,607 thousand), "capital surplus" decreasedby ¥1,081 million ($8,995 thousand), and "retained earnings" increased by ¥287 million ($2,388 thousand).
(ii) Consolidated statement of changes in equity as of April 1, 2015 - "capital surplus" decreased by ¥1,081 million ($8,995 thousand) and"retained earnings" increased by ¥287 million ($2,388 thousand).
The Company is in the process of determining the impact on the consolidated statement of income and consolidated statement of cash
flows, and measuring the effects of applying the revised accounting standards and guidance in future applicable periods.
(W) Changes in Presentation – Reclassifications have been made to prior periods to conform to the current year presentation;(1) Consolidated Balance Sheet - "Short-term bank loans" which had been previously included in the "other" among Current Liabilities
was separately disclosed as the amount was deemed material.
(2) Consolidated statements of Cash Flows - "Increase in defined retirement benefit plans" which had been previously included in the"other-net" among Operating Activities was separately disclosed as the amount was deemed material.

Nihon Unisys Group Integrated Report 201540

Financial Section

3. Cash equivalents
Cash equivalents at March 31, 2015 and 2014 consisted of the following:

Millions of Yen
2015
2014
¥23,326¥28,724¥23,326¥28,724

Cash and time deposits
Total

Thousands of
U.S. Dollars

2015$194,108$194,108

4. Investment securities
Investment securities as of March 31, 2015 and 2014 consisted of the following:

Millions of Yen
2015
2014

Current:
Trust fund investments and other
Total

Thousands of
U.S. Dollars

¥76
¥76

Noncurrent:
Equity securities
Debt securities
Trust fund investments and otherTotal¥15,812622¥16,434

2015
$632
$632

¥14,156100
482¥14,738$131,580
5,176$136,756

The costs and aggregate fair values of investment securities at March 31, 2015 and 2014, were as follows:

March 31, 2015
Available-for-sale securities:
Equity securities
Other
Total

Cost
¥6,635236¥6,871

Held-to-maturity securities¥300

March 31, 2014
Available-for-sale securities:
Equity securities
Other
Total

¥7,752
343¥8,095

March 31, 2015
Available-for-sale securities:
Equity securities
Other
Total

$55,213
1,964$57,177

Held-to-maturity securities$2,496

Cost

Millions of Yen
Unrealized
Unrealized
Gains
Losses¥7,92631¥7,957¥5,189¥5,189¥14,561267¥14,828
¥(2)

¥298

¥(64)
(24)
¥(88)

¥12,877319¥13,196

Thousands of U.S. Dollars
Unrealized
Unrealized
Gains
Losses$65,957
258$66,215

Information regarding available-for-sale securities which were sold during the years ended March 31, 2015 and 2014, was as follows:

March 31, 2015
Available-for-sale securities:
Equity securities
Other
Total
March 31, 2014
Available-for-sale securities:
Equity securities
Other
Total

41

Nihon Unisys Group Integrated Report 2015

Proceeds¥2,424206¥2,630¥1,249

¥780

¥237

¥780

¥237

¥1,249Fair
Value$121,170
2,222$123,392$(16)

Millions of Yen
Realized
Gains

Fair
Value

Realized
Losses$2,480March 31, 2015
Available-for-sale securities:
Equity securities
Other
Total

Thousands of U.S. Dollars
Realized
Realized
Proceeds
Gains
Losses$20,1711,714$21,885$10,394$10,394

Impairment losses on available-for-sale equity securities for the years ended March 31, 2015 and 2014, were ¥22 million ($183 thousand) and¥577 million, respectively.
5. Accounts receivable―trade
Costs and estimated earnings recognized with respect to construction contracts which were accounted for by the percentage-of-completion
method at March 31, 2015 and 2014, were as follows:

Costs and estimated earnings
Amount billed
Total

Millions of Yen
2015
2014
¥4,883¥6,7401,055
878¥3,828¥5,862Thousands of
U.S. Dollars

2015$40,634
8,779$31,855

6. Inventories
Inventories at March 31, 2015 and 2014, consisted of the following:Work in process
Merchandise and finished products
Supplies
Total

Millions of Yen
2015
2014
¥2,875¥2,9096,676
10,489350
371¥9,901¥13,769

Thousands of
U.S. Dollars

2015$23,924
55,555
2,913$82,392

7. Long-lived assets
The Group reviewed its long-lived assets for impairment as of March 31, 2015. As a result, the Group recognized an impairment loss of ¥91
million ($757 thousand) for the asset groups used to provide internal use assets, and ¥19 million ($158 thousand) for the asset groups used toprovide application services, due to continuous operating losses of those units and the carrying amounts of the relevant assets were written
down to the recoverable amount.
The recoverable amounts of those asset groups were measured at their value in use, and the asset group, for which the recoverable amount ofvalue in use is negative, is calculated as zero.
Loss on impairment of long-lived assets for the year ended March 31, 2015, consisted of the following:
Internal use assets:
Software
Total

Millions of Yen
2015
¥91
¥91

Application services:
Software
Total

¥19
¥19

Thousands of
U.S. Dollars

2015
$757
$757

$158
$158

The Group reviewed its long-lived assets for impairment as of March 31, 2014. As a result, the Group recognized an impairment loss of ¥ 8
million for the asset groups used to provide application services, and ¥1,597 million for the asset groups used to provide outsourcing, due tocontinuous operating losses of those units and the carrying amounts of the relevant assets being written down to the recoverable amounts.
The recoverable amounts of those asset groups were measured at their value in use, and the asset group, for which the recoverable amount ofvalue in use is negative, is calculated as zero.

Nihon Unisys Group Integrated Report 201542

Financial Section

Loss on impairment of long-lived assets for the year ended March 31, 2014, consisted of the following:
Millions of Yen
2014
¥8
¥8

Application services:
SoftwareTotal
Outsourcing:
Machinery and equipment
Software
Total

¥19
1,578
¥1,597

8. Short-term bank loans and long-term debt
Short-term bank loans of ¥4,000 million ($33,286 thousand) bore interest at a rate of approximately 0.41% at March 31, 2015.
Long-term debt at March 31, 2015 and 2014, consisted of the following:

1.39% unsecured bonds due 2015
Unsecured loans from banks and insurance companies, 0.48% to 1.19%, due serially to 2019
Euro Yen zero coupon convertible bonds due 2016
Total
Less current portionLong-term debt, less current portion

Millions of Yen
2015
2014
¥10,000¥36,770
40,71015,08815,16351,85865,873(15,115)(13,940)¥36,743¥51,933

The annual maturities of long-term debt as of March 31, 2015, for the next five years were as follows:Year Ending March 31,

2016
2017
2018
2019
2020
Total

Millions of Yen¥15,115
31,1035,640¥51,858

Thousands of
U.S. Dollars

2015$305,983
125,556
431,539(125,780)$305,759
Thousands of
U.S. Dollars$125,780
258,825
46,934$431,539

As is customary in Japan, collateral must be provided under certain circumstances, if requested by a lending bank, and such bank has the rightto offset cash deposited with it against any debts or obligations that become due and, in the case of default or certain other specified events,
against all debts payable to the bank. The Group has never received such a request.
The issue price of the convertible bonds due in June 2016 is 101.5% of the face value of the bonds. The conversion price was ¥1,114 per share atJune 20, 2013. If all the outstanding convertible bonds had been exercised at March 31, 2015, 13,465 thousand shares of common stock would
have been issued.
The conversion price of the convertible bonds is subject to adjustments to reflect stock splits and certain other events. In the 71st Ordinary
General Meeting of Shareholders held on June 25, 2015, dividend for FY2015 has been determined to ¥20 per share. As a result, the conversion
price was adjusted to ¥1,112.1. Each stock acquisition right may be exercised at any time during the period from July 4, 2013 to June 6, 2016.
9. Income taxes
The Group is subject to Japanese national and local income taxes which resulted in a normal effective statutory tax rate of approximately 35.6%
for the year ended March 31, 2015 and 38.0% for the year ended March 31, 2014.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities at March 31,
2015 and 2014, were as follows:

Current assets:
Deferred tax assets:
Accrued bonuses
Inventory valuation
Tax loss carryforwards
Allowance for loss on contract development
Accrued business and office taxes
Unrealized profit of inventories
Others
Total
Less valuation allowance
Total

43

Nihon Unisys Group Integrated Report 2015

Millions of Yen
2015
2014
¥1,945
1,062
957
558
140
61
1,430
6,153
(222)
¥5,931¥1,957
1,260
372
1,180
180
158
1,796
6,903
(604)
¥6,299Thousands of
U.S. Dollars

2015$16,185
8,837
7,964
4,643
1,165
508
11,90051,202(1,847)$49,355

Deferred tax liabilities:
Deferred gain on derivatives under hedge accounting
OthersTotal
Net current deferred tax assets

¥(5)
(7)
¥(12)

¥(3)
(5)
¥(8)

$(42)
(58)
$(100)¥5,919¥6,291$49,255

Net current deferred tax assets at March 31, 2015, included in the consolidated balance sheet were as follows:
Millions of Yen¥5,931(12)¥5,919Deferred tax assets―current
Deferred tax liabiliƟes―current
Net deferred tax assets―current

Millions of Yen
2015
2014

Noncurrent assets:
Deferred tax assets:
Tax loss carryforwards
Loss on impairment of long-lived assets
Depreciation expense
Liability for retirement benefits
Deferred gain on derivatives under hedge accounting
Others
Total
Less valuation allowance
Total
Deferred tax liabilities:
Asset for retirement benefits
Net unrealized gain on available-for-sale securities
OthersTotal
Net noncurrent deferred tax assets

Thousands of
U.S. Dollars$49,355(100)$49,255
Thousands of
U.S. Dollars

2015¥8,623
2,470
2,327
191
8
2,328
15,947(10,064)¥5,883¥9,313
3,984
3,665
367
9
3,386
20,724(12,164)¥8,560$71,757
20,554
19,364
1,589
67
19,373
132,704(83,748)$48,956¥(2,455)(2,329)(132)¥(4,916)¥(2,542)(1,667)(294)¥(4,503)$(20,429)(19,381)(1,099)$(40,909)¥967¥4,057$8,047

Net noncurrent deferred tax assets at March 31, 2015, included in the consolidated balance sheet were as follows:
Millions of Yen¥5,883(4,916)¥967

Deferred tax assets―noncurrent
Deferred tax liabiliƟes―noncurrent
Net deferred tax assets―noncurrent

Thousands of
U.S. Dollars$48,956(40,909)$8,047

A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated
statements of income for the years ended March 31, 2015 and 2014, was as follows:
2015
2014
Normal effective statutory tax rate
35.6%
38.0%
Increase (decrease) in valuation allowance(20.8)(31.9)
Effect of change of tax rate
16.2
3.3
Expenses not deductible for income tax purposes
1.7
3.0
Amortization of goodwill
0.4
0.6
Amount of per capita local tax
1.0
0.6
Equity in earnings of associated companies
(0.2)
(0.2)
Nontaxable items
(1.7)
(1.9)
Effect of difference between effective tax rate and actual effective tax rate
2.4
6.3
Effect of application of consolidated taxation system
(0.2)
5.7
Other―net
0.5(1.1)
Actual effective tax rat
34.9%
22.4%
At March 31, 2015, the Company and certain consolidated subsidiaries have tax loss carryforwards aggregating approximately ¥27,717 million($230,648 thousand), which are available to be offset against taxable income in future years. These tax loss carryforwards, if not utilized, will
expire as follows:Year Ending March 31,

2018
2019
2020
2021
2024
Total

Millions of Yen¥1,191
6,614
10,9395,487
3,485¥27,716

Thousands of
U.S. Dollars$9,91155,03991,02945,66029,001$230,640

Nihon Unisys Group Integrated Report 201544

Financial Section

New tax reform laws enacted in 2015 in Japan changed the normal effective statutory tax rate for the fiscal year beginning on or after April 1,
2015, to approximately 33.1% from 35.6% and for the fiscal year beginning on or after April 1, 2016, to approximately 32.3%.
In addition, Deduction of net operating loss carryforward will be limited for the fiscal year beginning on or after April 1, 2015, to 65% from 80%
of earnings prior to adjustment for tax loss carryforwards and for the fiscal year beginning on or after April 1, 2017, to 50%.
The effect of these changes was to decrease deferred tax assets, net of deferred tax liabilities, by ¥ 1,269 million ($10,560 thousand) andincrease accumulated other comprehensive income for unrealized gain on available-for-sale securities by ¥262 million ($2,180 thousand) anddefined retirement benefit plan by ¥ 286 million ($2,380 thousand) in the consolidated balance sheet as of March 31, 2015, and to increase
income taxes—deferred in the consolidated statement of income for the year then ended by ¥1,817 million ($15,120 thousand).

45

Nihon Unisys Group Integrated Report 2015

10. Retirement and Pension Plan
The Company and certain subsidiaries have defined benefit corporate pension plans (cash balance plans) and defined contribution pension planscovering substantially all of their employees.
Other consolidated subsidiaries have defined benefit pension plans, defined contribution pension plans, and severance lump-sum payment
plans.
Some consolidated subsidiaries participate in a multi-employer plan for which the Company cannot reasonably calculate the amount of plan
assets corresponding to the contributions made by the Company. Therefore, it is account for using the same method as a defined contribution
plan.
Part of the consolidated subsidiaries, in the calculation of liabilities and retirement benefit costs related to retirement benefits, apply thesimplified method and account for the liability for retirement benefits based on retirement benefit obligation for personal reason payments.
Some consolidated subsidiaries shifted part of the defined benefit pension plan to a defined contribution pension plan in the fiscal year ended
March 31, 2015.
Changes in the liability for retirement benefit obligations for the years ended March 31, 2015 and 2014, were as follows:

Retirement benefit obligation, beginning of year (as previously reported)
Cumulative effect of accounting change
Retirement benefit obligation, beginning of year (as restated)
Service cost
Interest cost
Actuarial gains
Payments for retirement benefit
Decrese in relation to the shift of pension plan to defined contribution pension plan
Retirement benefit obligation, end of year

Millions of Yen
2015
2014
¥96,751¥98,082¥8,566¥105,317
98,082
2,307
2,129
1,243
1,914
(237)
(32)
(5,258)(5,342)(1,177)¥102,195¥96,751

Changes in the pension assets for the years ended March 31, 2015 and 2014, were as follows:

Pension assets, beginning of year
Expected return on assets
Actuarial gains
Contributions from the employer
Payments for retirement benefit
Decrese in relation to the shift of pension plan to defined contribution pension plan
Pension assets, end of year

Millions of Yen
2015
2014
¥102,856¥94,944
1,542
1,428
6,210
7,488
4,134
4,318
(5,102)(5,322)(821)¥108,819¥102,856

Thousands of
U.S. Dollars

2015$805,118$71,282$876,400
19,198
10,344(1,972)(43,755)(9,795)$850,420
Thousands of
U.S. Dollars

2015$855,921
12,832
51,67734,401(42,457)(6,832)$905,542

Assets related to retirement benefits and debt retirement benefits that have been recorded in the consolidated balance sheet and year-end
balance of pension assets and retirement benefit obligations for the years ended March 31, 2015 and 2014, were as follows:

Funded defined benefit obligation
Plan assets
total
Unfunded defined benefit obligation
Net asset arising from defined benefit obligation
Liability for retirement benefits
Asset for retirement benefits
Net asset arising from defined benefit obligation

Millions of Yen
2015
2014
¥(101,642)¥(96,103)
108,819
102,856
7,177
6,753
(553)
(648)
¥6,624¥6,105¥(553)¥(1,019)
7,177
7,124
¥6,624¥6,105The components of net periodic benefit costs for the years ended March 31, 2015 and 2014, were set forth as follows:

Service cost *1
Interest cost
Expected return on assets
Cost of actuarial gains and losses
Prior service cost
Retirement benefit cost of defined benefit plans
Other *2
Gain on revision of retirement benefit plan *3

Millions of Yen
2015
2014
¥2,307¥2,1291,243
1,914(1,541)(1,428)(145)(24)(1,201)¥1,864¥1,390¥1,085¥1,063¥(152)

Thousands of
U.S. Dollars

2015$(845,818)
905,542
59,724(4,602)$55,122$(4,602)59,724$55,122
Thousands of
U.S. Dollars

2015$19,198
10,344(12,824)(1,207)$15,511$9,029

Nihon Unisys Group Integrated Report 201546

Financial Section*1 Retirement benefit cost of consolidated subsidiaries using the simplified method is included in the service cost.
*2 "Other" means the sum of (i) the amount of contribution required for the defined contribution pension plan, (ii) payment by the retirement
prepaid system to prepaid retired employees, and (iii) the amount of contribution that is required for a multi-employer plan.
In addition, contributions to defined contribution pension plans in the year ended March 31, 2015 was ¥ 847 million ($7,048 thousand)(¥809 million in the fiscal year ended March 31, 2014), and contributions to multi-employer plan to be accounted for as well as to a defined
contribution pension plan were ¥91 million ($757 thousand) (¥103 million in the fiscal year ended March 31, 2014).
*3 Profits arising since some of the consolidated subsidiaries revised their retirement benefit plans, have been recorded in extraordinary
income as retirement benefit plan amendment gains.
*4 In addition to the above, the Company recorded a special retirement expenses of ¥1,401million ($11,658 thousand) in other expenses forthe fiscal year ended March 31, 2015 ( ¥ 286 million in Selling, general and administrative expenses for the fiscal year ended March 31,2014), due to a significant increase in number of employees who applied to the New Carrer Support Program (the "NCSP") which is special innature, such as in terms of the paid amount and application period, compared with the "ordinary" NCSP.
Amounts recognized in other comprehensive income (before income tax effect) in respect of defined retirement benefit plans for the years
ended March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2015
2014
¥6,298Actuarial losses

2015$52,409

Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of defined retirement benefit plans as ofMarch 31, 2015 and 2014, were as follows:
Millions of Yen
2015
2014
¥(8,889)¥(2,591)

Unrecognized actuarial gains
Breakdown of pension assets:

2015

Bonds
Life insurance
StocksReal estate
Cash and cash equivalents
Other
Total

55 %
11
10
4
3
17
100 %

2014

Thousands of
U.S. Dollars

2015$(73,970)

34 %
9
21
6
18
12
100 %

Method of determining the expected rate of return on plan assets:
The expected rate of return on plan assets is determined considering the long-term rates of return which are expected currently and in the
future from the various components of the plan assets.
Assumptions of major actuarial:
Discount rate
Expected rate of return on plan assets
Expected salary increase rate

2015
mainly 1.2%
mainly 1.5%
mainly 3.4% (average)

2014
mainly 2.0%
mainly 1.5%
mainly 3.4% (average)

The liability for retirement benefits at March 31, 2015 and 2014, included the following liabilities:

Allowance for the "NCSP"
Current portion
Net noncurrent portion

Millions of Yen
2015
2014
¥549
¥259
(220)
(119)
¥329
¥140

Total charges relating to allowance for the NCSP for the years ended March 31, 2015 and 2014 were as follows:

Allowance for the NCSP

47

Nihon Unisys Group Integrated Report 2015

Millions of Yen
2015
2014
¥380
¥112

Thousands of
U.S. Dollars

2015$4,569(1,831)$2,738
Thousands of
U.S. Dollars

2015$3,162

11. Equity
The significant provisions in the Companies Act of Japan (the “Companies Act”) that affect financial and accounting matters are summarized below:(1) Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon
resolution at the shareholders ’ meeting. For companies that meet certain criteria such as (1) having a board of directors, (2) having
independent auditors, (3) having a board of corporate auditors and (4) the term of service of the directors is prescribed as one year rather
than two years of normal term by its articles of incorporation, the board of directors may declare dividends (except for dividends in kind) at
any time during the fiscal year if the company has prescribed so in its articles of incorporation. The Company meets all the above criteria.
Semiannual interim dividends may also be paid once a year upon resolution by the board of directors if the articles of incorporation of thecompany so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury
stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends
must be maintained at no less than ¥3 million.
(2) Increases/decreases and transfer of common stock, reserve and surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained
earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment ofsuch dividends until the total aggregate amount of legal reserve and additional paid-in capital equals 25% of the amount of common stock.
Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The
Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can betransferred among the accounts under certain conditions upon resolution of the shareholders.
(3) Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the board of
directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which isdetermined by a specific formula. Under the Companies Act, stock acquisition rights are presented as a separate component of equity. The
Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stockacquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.

Nihon Unisys Group Integrated Report 201548

Financial Section

12. Stock options
The Company's granted stock options as of March 31, 2015, were as follows:

Stock Option
2007 Stock Option

Persons Granted
8 directors; 352 employees;
30 subsidiaries' directors; 250 subsidiaries' employees

Number of
Options
Granted746,300
shares2008 Stock Option

8 directors; 395 employees;
23 subsidiaries' directors; 265 subsidiaries' employees

963,600
shares2009 Stock Option

7 directors; 424 employees;
21 subsidiaries' directors; 256 subsidiaries' employees

2012 Stock Option

ExercisePrice¥1,712$14.25

Exercise Period
From November 1, 2009
to October 31, 2014

August 15, 2008

¥1,791$14.90From July 1, 2010
to June 30, 2015

991,900
sharesAugust 7, 2009

¥864
$7.19

From July 1, 2011
to June 30, 2016

6 directors; 16 employees;
4 subsidiaries' directors; 10 subsidiaries' employees

200,600
sharesJuly 17, 2012

¥1
$0.01

From July 1, 2013
to June 30, 2043

2013 Stock Option

6 directors; 16 employees;
4 subsidiaries' directors; 9 subsidiaries' employees

261,200
sharesJuly 12, 2013

¥1
$0.01

From July 1, 2014
to June 30, 2044

2014 Stock Option

6 directors; 18 employees;
4 subsidiaries' directors; 12 subsidiaries' employees

268,800
sharesJuly 14, 2014

¥1
$0.01

From July 1, 2015
to June 30, 2045

The Company's stock option activity was as follows:
2006 Stock
Option(Shares)
For the year ended March 31, 2014
Nonvested
March 31, 2013―Outstanding
GrantedCanceled
VestedMarch 31, 2014―Outstanding
VestedMarch 31, 2013―Outstanding
490,600
VestedExercised
Canceled
490,600
March 31, 2014―Outstanding
For the year ended March 31, 2015
Nonvested
March 31, 2014―Outstanding
GrantedCanceled
VestedMarch 31, 2015―Outstanding
VestedMarch 31, 2014―Outstanding
VestedExercised
Canceled
March 31, 2015―Outstanding
Exercise price2007 Stock
Option(Shares)2008 Stock
Option(Shares)49

Nihon Unisys Group Integrated Report 20152009 Stock
Option(Shares)2012 Stock
Option(Shares)2013 Stock
Option(Shares)2014 Stock
Option(Shares)261,200
261,200
706,100
3,200
702,900

458,200

468,000

19,4004,300
453,900

21,0002,000
445,000

900
18,500261,200
153,900
107,300

268,800
268,800
702,900

453,900

445,000

18,500107,300

702,900

6,300
447,600

29,0002,700
413,300

18,500107,300¥1,712$14.25¥1,791$14.90

¥864
$7.19

¥1
$0.01

¥1
$0.01

¥1
$0.01

¥553
$4.60

¥706
$5.88

¥819
$6.82

Average stock price at exercise
Fair value price at grant date

Date of Grant
November 15, 2007

268,800
268,800¥1,091
$9.08
¥396
$3.30

¥397
$3.30

¥215
$1.79

The Assumptions Used to Measure the Fair Value of the 2015 Stock Option
Estimate method:Black-Scholes option pricing model
Volatility of stock price:
34.959 %Estimated remaining outstanding period:
2.41 years
Estimated dividend:¥15 per share
Risk free interest rate:
0.065 %
13. Research and development costs
Research and development costs charged to income were ¥4,337 million ($36,091 thousand) and ¥4,660 million for the years ended March
31, 2015 and 2014, respectively.
14. Leases
The minimum rental commitments under noncancellable operating leases at March 31, 2015 and 2014 were as follows:

Due within one year
Due after one year
Total

Millions of Yen
2015
2014
¥483
¥565
1,870
99
¥2,353¥664

Thousands of
U.S. Dollars

2015$4,01915,561$19,580

Due to the immaterial amounts of lease transactions in the consolidated financial statements, “as if capitalized” information for the fiscal
years ended March 31, 2015 and 2014, is omitted.
15. Financial Instruments and Related Disclosures
On March 10, 2008, the ASBJ revised ASBJ Statement No. 10, “Accounting Standard for Financial Instruments” and issued ASBJ GuidanceNo. 19, “Guidance on Accounting Standard for Financial Instruments and Related Disclosures.” This accounting standard and the guidance
are applicable to financial instruments and related disclosures at the end of the fiscal years ending on or after March 31, 2010, with early
adoption permitted from the beginning of the fiscal years ending before March 31, 2010. The Group applied the revised accounting
standard and the new guidance effective March 31, 2010.
(1) Policy for financial instruments
The Group uses financial instruments, mainly bank loans and bonds. Cash surpluses, if any, are invested in low-risk financial assets. All
derivative transactions are entered into, not for speculative purposes, but to manage exposure to financial risks incorporated within its
business.
(2) Nature and extent of risks arising from financial instruments
Receivables such as trade notes and trade accounts are exposed to customer credit risk. Investment securities, mainly equity
instruments of customers and suppliers of the Group, are exposed to the risk of market price fluctuations. Payment terms of payables,such as trade notes and trade accounts, are less than one year. Payables in foreign currencies are exposed to the market risk offluctuation in foreign currency exchange rates. Bank loans, commercial paper, and bonds are mainly used to fund its ongoing
operations. Certain bank loans are exposed to market risks from changes in variable interest rates. Derivatives mainly include forward
foreign currency contracts and interest rate swaps, which are used to manage exposure to market risks from changes in foreign
currency exchange rates of payables, and from changes in interest rates of bank loans. Please see Note 16 for more details about
derivatives.
(3) Risk management for financial instruments
Credit risk management
Credit risk is the risk of economic loss arising from a customer’s failure to repay according to the contractual terms. Receivables such as
trade notes and trade accounts are exposed to customer credit risk. The Company manages its credit risk from receivables on the basisof internal guidelines to identify and minimize the default risk of customers in the early stages. The internal guidelines include
conducting a credit investigation of a new customer to limit its credit amount, periodically reviewing the status of customers, andmonitoring of payment terms and balances of each customer by the business administration department and the credit department.
The Company’s subsidiaries also manage their credit risk on the basis of the same basic internal guidelines as the Company’s.

Nihon Unisys Group Integrated Report 201550

Financial Section

Market risk management (foreign exchange risk and interest rate risk)
With respect to the risk of market price fluctuations of investment securities, the Group monitors market values and/or financial
position of issuers, which are the Group’s customers and suppliers, on a regular basis to determine whether to continue to hold suchsecurities, taking into consideration the relation with those customers and suppliers of the Group.
Currency exchange risk of foreign currency trade payables is hedged principally by forward foreign currency contracts. Interest rate
swaps are used to manage exposure to market risks from changes in interest rates for certain bank loans.
Execution and custody of derivative transactions by the corporate treasury department have been approved by the directors
concerned based on internal guidelines. The transaction data has been reported to the directors concerned and corporate auditors on
a monthly basis.
Liquidity risk management
Liquidity risk comprises the risk that the Company and its subsidiaries cannot meet their contractual obligations in full on maturity
dates. The Group manages its liquidity risk by holding adequate volumes of liquid assets, along with adequate financial plans preparedand updated by the Company ’ s corporate treasury department, based on reports from the Company ’s subsidiaries and its internal
departments.
(4) Fair values of financial instruments
Fair values of financial instruments are based on quoted prices in active markets. If a quoted price is not available, other rational
valuation techniques are used instead. Such valuation reflects variable factors and may result in a different amount depending on
assumptions.
The contract amounts of derivatives shown in Note 16 do not measure the Group’s exposure to market risk.
(a) Fair values of financial instruments
Fair values of financial instruments as of March 31, 2015 and 2014 were as follows:
March 31, 2015
Cash and cash equivalents
Accounts receivable―trade
Investment securities
Total

Millions of Yen
Fair Value¥23,326
68,121
15,126¥106,573¥4,00015,11525,231
15,08821,655¥81,089¥4,00015,187
25,231
16,863
21,748¥83,029¥12¥12

March 31, 2014
Cash and cash equivalents
Accounts receivable―trade
Investment securities
Total¥28,724
67,95813,196¥109,878¥28,724
67,95813,196¥109,878

Short-term bank loans
Current portion of long-term debt
Accounts payable―trade
Convertible bonds
Long-term debt
Total

¥750
13,94024,435
15,16336,770¥91,058¥750
14,027
24,43517,00437,017¥93,233¥26¥26

Short-term bank loans
Current portion of long-term debt
Accounts payable―trade
Convertible bonds
Long-term debt
Total
Derivatives *Derivatives *51

Carrying
Amount¥23,326
68,121
15,128¥106,575

Nihon Unisys Group Integrated Report 2015

Unrealized
Gain (Loss)
¥2
¥2
¥(72)
(1,775)(93)¥(1,940)¥(87)(1,841)(247)¥(2,175)

March 31, 2015
Cash and cash equivalents
Accounts receivable―trade
Investment securities
Total

Thousands of U.S. Dollars
Carrying
Unrealized
AmountFair Value
Gain (Loss)$194,108$194,108566,872
566,872
125,888
125,871$17$886,868$886,851$17

Short-term bank loans
Current portion of long-term debt
Accounts payable―trade
Convertible bonds
Long-term debt
Total

$33,286
125,780
209,961
125,555
180,203$674,785$33,286
126,379
209,961
140,326
180,977$690,929

$100

$100

Derivatives *$(599)(14,771)(774)$(16,144)* Assets and liabilities from derivative transactions are netted, with net liabilities presented in parentheses.
Cash and cash equivalents
The carrying values of cash and cash equivalents approximate fair value because of their short maturities.
Accounts receivable―trade
The carrying values of accounts receivable―trade approximate fair value because of their short maturiƟes.
Investment securities
The fair values of investment securities are measured at the quoted market price of the stock exchange for the equity instruments andat the quoted price obtained from the financial institution for certain debt instruments. The fair values of mutual funds are measured
at the market price.
Fair value information for investment securities by classification is included in Note 4.
Accounts payable―trade, short-term bank loans, and commercial paper
The carrying values of accounts payable―trade, short-term bank loans, and commercial paper approximate fair value because of theirshort maturities.
Long-term debt
The fair values of long-term debt are determined by discounting the cash flows related to the debt at the assumed borrowing rateapplied if the debt of the same interest and principal were newly financed. Interest rate swaps which qualify for hedge accounting andwhich meet specific matching criteria are not remeasured at market value, but the differential paid or received under the swap
agreements is recognized and included in interest expense or income. The fair values of items (i.e., floating rate loans from banks andinsurance companies) hedged by such interest rate swaps are determined by discounting the total cash flows of those hedged items
and hedging instruments at the rationally estimated rate applied if the debt of the same interest and principal were financed.
Derivatives
Fair value information for derivatives is included in Note 16.
(b) Financial instruments whose fair value cannot be reliably determined

Investments in unconsolidated subsidiaries and associated companies
Investments in equity instruments that do not have a quoted market pricein an active market
Other

Carrying AmountMillions of Yen
2015
2014
¥1,591¥1,534¥1,251¥130¥1,279¥263

Thousands of
U.S. Dollars

2015$13,240$10,410$1,082

Nihon Unisys Group Integrated Report 201552

Financial Section(5) Maturity analysis for financial assets and securities with contractual maturities

March 31, 2015
Cash and cash equivalents
Accounts receivable―trade
Investment securities
Available-for-sale securities:(1) Debt securities(2) OtherHeld-to-maturity securities:
Total
March 31, 2014
Cash and cash equivalents
Accounts receivable―trade
Investment securities
Available-for-sale securities:(1) Debt securities(2) Other
Total

March 31, 2015
Cash and cash equivalents
Accounts receivable―trade
Investment securities
Available-for-sale securities:(1) Debt securities(2) OtherHeld-to-maturity securities:
Total

Due in 1
year or less¥23,326
68,121

76¥91,523

Millions of Yen
Due after 1
Due after 5
year throughyears through5 years
10 years

Due after 10
years

¥54
300
¥354

¥28,724
67,958¥96,682

Due in 1
year or less
$194,108566,872632$761,612

¥163
¥163

¥100
¥100

Thousands of U.S. Dollars
Due after 1
Due after 5
year throughyears through5 years
10 years

Due after 10
years

$449
2,496
$2,945* Please see Note 8 for annual maturities of long-term debt.
16. Derivatives
The Company and certain subsidiaries enter into foreign currency forward contracts to hedge foreign exchange risk associated with certain
liabilities denominated in foreign currencies. The Company also enters into interest rate swap contracts to manage its interest rate
exposures on certain liabilities.
All derivative transactions are entered into to hedge interest and foreign currency exposures incorporated within the Company ’ s andcertain subsidiaries’ business. Accordingly, market risk in these derivatives is basically offset by opposite movements in the value of hedged
liabilities.
Because the counterparties to these derivatives are limited to major international financial institutions and credible general trading
companies, the Company and certain subsidiaries do not anticipate any losses arising from credit risk.
Derivative transactions entered into by the Company and certain subsidiaries have been made in accordance with internal policies which
regulate the authorization and credit limit amounts.
No derivative transactions to which hedge accounting is not applied existed at March 31, 2015 and 2014.

53

Nihon Unisys Group Integrated Report 2015

Derivative transactions to which hedge accounting is applied at March 31, 2015 and 2014, were as follows:

March 31, 2015
Foreign currency forward contracts:
Buying U.S. Dollars:- Deferral hedge- Forward contracts applied for designated transactions
Interest rate swaps:- Hedge accounting- Fixed-rate payment and floating-rate receipt
March 31, 2014
Foreign currency forward contracts:
Buying U.S. Dollars:- Deferral hedge- Forward contracts applied for designated transactions
Interest rate swaps:- Hedge accounting- Fixed-rate payment and floating-rate receipt

March 31, 2015
Foreign currency forward contracts:
Buying U.S. Dollars:- Deferral hedge- Forward contracts applied for designated transactions
Interest rate swaps:- Hedge accounting- Fixed-rate payment and floating-rate receipt

Hedged Item

Millions of Yen
Contract
Contract
amount due
Amountafter one year

PayablesPayables¥2,117
1,832

Long-term debt
Long-term debt

3,000
12,650

PayablesPayables¥1,432
1,545

Long-term debt
Long-term debt

3,000
13,150Fair Value¥14¥3,000
7,650

(27)

¥9
¥3,00012,650Hedged Item

Thousands of U.S. Dollars
Contract
Contract
amount due
Amountafter one year

PayablesPayables$17,617
15,245Long-term debt
Long-term debt

24,965105,268(35)

Fair Value$117$24,965
63,660(225)* The fair values of derivative transactions are measured at the quoted price obtained from the financial institutions.
* Payables denominated in foreign currencies covered by a forward exchange contract are translated at the contracted rates if theforward contracts qualify for hedge accounting.
The above interest rate swaps which qualify for hedge accounting and which meet specific matching criteria are not remeasured atmarket value, but the differential paid or received under the swap agreements is recognized and included in interest expense or
income. In addition, the fair values of such interest rate swaps are included in those of the hedged items (i.e., long-term debt).
17. Contingent liabilities
At March 31, 2015, the Group had the following contingent liabilities:

Guarantees of bank loans to employees for housing

Millions of Yen
2015
2014
¥519
¥660

Thousands of
U.S. Dollars

2015$4,319

Nihon Unisys Group Integrated Report 201554

Financial Section

18. Comprehensive income
The components of other comprehensive income for the years ended March 31, 2015 and 2014, were as follows:

Thousands of
U.S. Dollars

Millions of Yen
2015
2014

Unrealized gain (loss) on available-for-sale securities:
Gains (losses) arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total

2015

¥4,042(1,180)2,862(788)¥2,074¥1,401
655
2,056
(576)
¥1,480$33,635(9,819)23,816(6,557)$17,259

¥5
9
14
(4)
¥10

¥3
(17)
(14)
7
¥(7)

$41
75
116
(33)
$83

Deferred gain (loss) on derivatives under hedge accounting:
Gains (losses) arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Deferred gain (loss) on defined benefit plans:
Gains (losses) arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal¥6,447(149)
6,298(1,959)¥4,339Total other comprehensive income¥6,423$53,649(1,240)52,409(16,302)$36,107$53,449¥1,473

19. Net income per share
A reconciliation of the differences between basic and diluted net income (loss) per share (“EPS”) for the years ended March 31, 2015 and2014, is as follows:
For the year ended March 31, 2015
Basic EPS
Net income available to common shareholders
Effect of dilutive securities:
Convertible bonds
Warrants
Diluted EPS―Net income for computaƟon

For the year ended March 31, 2014
Basic EPS
Net income available to common shareholders
Effect of dilutive securities:
Convertible bonds
Warrants
Diluted EPS―Net income for computaƟonNet Income

Weighted-average shares

Millions of Yen

Thousands of shares¥7,246

94,018(48)

13,465389¥7,198107,872¥66.72$0.56

Weighted-average shares

EPS

Thousands of shares

Yen

93,993(39)

11,221
129¥6,266105,343

There were no transactions with related-parties for the years ended March 31, 2015 and 2014.

Nihon Unisys Group Integrated Report 2015

$0.64

Net Income¥6,305

U.S. Dollars¥77.07

Millions of Yen

20. Related-party transactions

55

EPS

Yen

¥67.08¥59.49

21. Segment information
For the years ended March 31, 2015 and 2014
Under ASBJ Statement No. 17, “Accounting Standard for Segment Information Disclosures” and issued ASBJ Guidance No. 20, “Guidance on Accounting Standard for
Segment Information Disclosures, ” an entity is required to report financial and descriptive information about its reportable segments. Reportable segments areoperating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate
financial information is available and such information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and inassessing performance. Generally, segment information is required to be reported on the same basis as is used internally for evaluating operating segment
performance and deciding how to allocate resources to operating segments.
(1) Description of reportable segments
The Group’s reportable segments are those for which separate financial information is available and regular evaluation by the Company’s management is being
performed in order to decide how resources are allocated among the Group. Therefore, the Group consists of six segments – system services, support services,
outsourcing, software, and hardware. The “System Services” segment consists of contracted software development, system-related services, and consulting. The“Support Services” segment consists of support services for software, support services for hardware, and installation services. The “Outsourcing” segment consistsof contracted administration of information systems and others. The “Software” segment consists of providing software under a software license agreement. The“Hardware” segment consists of providing hardware under a sales contract or a lease contract.
On March 1, 2014 UNIADEX, Ltd., a consolidated subsidiary of the Company merged integrate NETMARKS INC., as a mechanism reform. As a result, from the year
ended March 31, 2015, the Group changed the reporting segments, and abolished the previous "Netmarks services" segment. In addition, the segment
information for the March 2014 period, based on the reporting segment after the change, included what was reclassified.
(2) Methods of measurement for the amounts of sales, profit (loss), assets and other items for each reportable segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of significant accounting policies.”(3) Information about sales, profit (loss), assets and other items is as follows:

Sales
Segment profit
Segment assets
Other:
Depreciation
Increase in property,
plant and equipment
and intangible assets
Loss on impairment oflong-lived assets
Goodwill:
Amortization
Balance

Reportable segment
Outsourcing
Software¥38,646¥30,728
7,668
8,692
18,1183,373

SystemServices¥83,404
21,2152,970

SupportServices¥55,246
16,331
3,230

174

346

4,333

200

338

7,842

Millions of Yen
2015¥(52,517)
166,147

Consolidated 3)¥269,155
10,925
199,772

7,613

2,134

9,747

10,705

3,546

14,251

19

91

110

137
1,798

137
1,798

Hardware¥51,337
6,985
5,562

Total
¥259,361
60,891
33,253

Other 1)
¥9,794
2,551
372

Total
¥269,155
63,442
33,625

1,805

828

7,486

127

1,555

673

10,60897

19

19

Reconciliations 2)

1)
2)

The “Other” category, which is not included in a specific reportable segments, consists of installation and other businesses.
Reconciliation of segment profit of ¥ (52,517) million consists of selling, general and administrative expenses of ¥ (48,043) million not allocable to thereportable segments, research and development costs of ¥(4,337) million and amortization of goodwill of ¥(137) million.
Reconciliation of segment assets of ¥166,147 million consists of corporate assets not allocable to the reportable segments.
Reconciliation of depreciation expense of ¥2,134 million consists of depreciation expense of corporate assets not allocable to the reportable segments.
Reconciliation of increase in property, plant and equipment and intangible assets of ¥3,546 million consists of increase in corporate assets not allocable to thereportable segments.

3)

Segment profit is reconciled to operating income in the consolidated statement of income.

Sales
Segment profit
Segment assets
Other:
Depreciation
Increase in property,
plant and equipment
and intangible assets
Loss on impairment oflong-lived assets
Goodwill:
Amortization
Balance

Reportable segment
Outsourcing
Software¥35,336¥31,338
7,130
9,589
16,325
5,018

SystemServices¥85,861
16,1942,632

SupportServices¥57,666
18,346
3,030

210

738

4,401

240

368

3,651
1,605

Millions of Yen
2014¥(54,036)
166,059

Consolidated 3)¥282,691
9,575
202,468

8,239

1,944

10,183

6,641

1,931

8,572

Hardware¥63,197
9,935
9,036

Total
¥273,398
61,19436,041Other 1)
¥9,293
2,417
368

Total
¥282,691
63,611
36,409

1,847

925

8,121

118

1,884

406

6,549

92

1,605

Reconciliations 2)

1,605

1,605
137
1,935

137
1,935

Nihon Unisys Group Integrated Report 201556

Financial Section

1)
2)

The “Other” category, which is not included in a specific reportable segments, consists of installation and other businesses.
Reconciliation of segment profit of ¥ (54,036) million consists of selling, general and administrative expenses of ¥ (49,240) million not allocable to thereportable segments, research and development costs of ¥(4,660) million and amortization of goodwill of ¥(137) million.
Reconciliation of segment assets of ¥166,059 million consists of corporate assets not allocable to the reportable segments.
Reconciliation of depreciation expense of ¥1,944 million consists of depreciation expense of corporate assets not allocable to the reportable segments.
Reconciliation of increase in property, plant and equipment and intangible assets of ¥1,931 million consists of increase in corporate assets not allocable to thereportable segments.

3)

Segment profit is reconciled to operating income in the consolidated statement of income.

Sales
Segment profit
Segment assets
Other:
Depreciation
Increase in property,
plant and equipment
and intangible assets
Loss on impairment oflong-lived assets
Goodwill:
Amortization
Balance

Reportable segment
Outsourcing
Software

SystemServices

SupportServices$694,051$459,732$321,594

176,542

135,899

63,81024,71526,879

1,448

1,664

Thousands of U.S. Dollars
2015
Other 1)

Reconciliations 2)

Consolidated 3)

HardwareTotal$255,704$427,203$2,158,284$81,501$2,239,785

72,331

58,126

506,708

21,228527,936$(437,023)

90,913

150,769

28,06946,284

276,716

3,096

279,812

1,382,600

1,662,412

2,879

36,05815,0206,890

62,295

1,057

63,352

17,758

81,1102,813

65,25812,9405,600

88,275807

89,08229,508

118,590

158

757

915

158

158

Total

$2,239,785

1,140

1,140

14,962

14,962

1)
2)

The “Other” category, which is not included in a specific reportable segments, consists of installation and other businesses.
Reconciliation of segment profit of $(437,023) million consists of selling, general and administrative expenses of $(399,792) million not allocable to thereportable segments, research and development costs of $(36,091) million and amortization of goodwill of $(1,140) million.
Reconciliation of segment assets of $1,382,600 million consists of corporate assets not allocable to the reportable segments.
Reconciliation of depreciation expense of $17,758 million consists of depreciation expense of corporate assets not allocable to the reportable segments.
Reconciliation of increase in property, plant and equipment and intangible assets of $29,508 million consists of increase in corporate assets not allocable to
the reportable segments.

3)

Segment profit is reconciled to operating income in the consolidated statement of income.

Information about industry segments, geographical segments and sales to foreign customers of the Group for the years ended March 31, 2015 and 2014, is as follows:(1) Industry segments
Industry segment information is not presented because the Group operates in a single segment of the industry that provides computers, software and otherrelated products, as well as various kinds of related services.
(2) Geographical segments
Geographical segment information is not presented because the Japanese portion of our consolidated net sales contributed to more than 90% of total net sales.
(3) Sales to foreign customers
Information on sales to foreign customers is not presented because the amount contributed to an insignificant percentage of consolidated net sales.

57

Nihon Unisys Group Integrated Report 2015

Nihon Unisys Group Integrated Report 201558

Corporate Data
(As of March 31, 2015)

Company name Nihon Unisys, Ltd.

Group companies

EstablishedMarch 29, 1958

Paid-in capital¥5,483 million

Description ofbusiness

Services business including
cloud computing and outsourcing; computer and network
system sales / rentals; softwaredevelopment and sales; system
related services

Business
process

Number of
employees:

8,246 (consolidated)

Independent
auditor:Deloitte Touche Tohmatsu LLC

CapitalStock

Company name

Net sales
FY2014

Number of
employees

5,483

163,570

3,531(millions of yen) (millions of yen)

Nihon Unisys, Ltd.

(people)Ownership

Consulting

Systemservices

Business offices Headquarters:

1-1-1 Toyosu, Koto-ku, Tokyo
135-8560, Japan
Regional Headquarters:
Kansai (Osaka), Chubu (Nagoya),
Kyushu (Fukuoka)

Network &supportservices

Regional Offices:
Hokkaido (Sapporo), Tohoku(Sendai), Niigata (Niigata),
Hokuriku (Kanazawa), Shizuoka(Shizuoka), Chugoku (Hiroshima)

Outsourcing
Groupsharedservices

100%

Cambridge Technology Partners, Ltd.

10

1,519

85

100%

USOL Tokyo Co., Ltd. (and six
other companies) and
USOL VIETNAM Co., Ltd.*−

13,641

853

100%

UEL Corporation

100

4,252

184

69%

International Systems
Development Co., Ltd.

40

2,075

134

51%

G&U System Service, Ltd.

50

1,477

65

100%

AFAS Inc.

100

773

43

100%

UNIADEX, Ltd.

750

117,539

3,000

490

9,341

158

94% S&I Co., Ltd.
100%

A-tas, Ltd.

50

2,394

79

75%

TRADE ViSION, Ltd.

200

567

3

100%

Nihon Unisys Business, Ltd.

20

1,644

111

*Nihon Unisys, Ltd. absorbed the seven domestic regional development companies of USOL on April 1, 2015.

Group companies other than the above (non-consolidated companies): UEL (Thailand) Co., Ltd., Netmarks
Information Technology (Shanghai) Co., Ltd., UNIAID Co., Ltd., Beijing Unity Information Technology Co., Ltd.,
Nihon Unisys Accounting Co., Ltd. and NUL System Services Corporation

Editorial Policy
The Nihon Unisys Group has started the new Mid-term Management Plan with the aim of achieving its mid-term vision of“Mobilize services based on interconnected businesses. Build our future through ICT advances.” for 2020.
This report aims to communicate the Group’s medium to long-term growth and improvements in corporate value to a wide
range of stakeholders including shareholders and investors, and it has been edited as an integrated report that introduces an overview of how value is created for the Group through the combination of both financial information and non-financial information.

Tools for the disclosure of financial and non-financial information
The Integrated Report 2015
is available as either a

WebsiteOverall corporate activities
Corporate website
http://www.unisys.co.jp/welcome-e.html

booklet or as a PDF fromour website. A broader
range of detailed information is also available on our
website. In addition, weFinancial information

Non-financial information

Website: IR information
http://www.unisys.co.jp/invest-e/

Website: CSR
http://www.unisys.co.jp/csr/(Available only in Japanese)release various information

Integrated Report 2015 (PDF)

disclosure tools at therequest of stakeholders.

59

Nihon Unisys Group Integrated Report 2015

BookletIntegrated Report 2015

Stock Information(As of March 31, 2015)

Number of shares issued

109,663,524 shares

Number of shareholders

10,194

Principal shareholders

Foreigncorporations andindividuals

Individuals

10.08%

9,833 shareholders
11,055,755 shares

18.90%

169 shareholders
20,727,002 shares

Total

109,663,524 shares
10,194 shareholders

Otherdomestic
corporations

45.92%

110 shareholders
50,358,767 shares

Number ofshares held

Name

Classification of shareholders

Financial
institutions andsecurities companies

25.10%

82 shareholders
27,522,000 shares

Holding ratio(%)(Thousands of shares)

Dai Nippon Printing Co., Ltd.

20,72718.90

Mitsui & Co., Ltd.

9,798

8.93

Japan Trustee Services Bank, Ltd. (trust account)

5,861

5.34

The Master Trust Bank of Japan, Ltd. (trust account)

5,003

4.56

The Norinchukin Bank

4,653

4.24

CMBL S.A. RE MUTUAL FUNDS

3,110

2.83

Nihon Unisys Employees’ Shareholding Society

2,616

2.38

Japan Trustee Services Bank, Ltd. (trust account 9)

2,380

2.17

CBNY-Government of Norway

2,117

1.93

Goldman Sachs International

1,959

1.78

Note: Number of shares is rounded down to the nearest thousand shares.
Nihon Unisys, Ltd., retains 15,622,346 treasury shares (holding ratio: 14.24%).

Stock Information(Yen)

Stock Price (left axis)

Trading Volume (right axis)

1,200

800

(Thousands of shares)
400

20,00015,00010,0005,000

0

4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
2010
2011
2012
2013
2014
2015

Scope of the report

Guidelines that served as a reference

In principle, the scope consists of Nihon Unisys and the compa-

l International Integrated Reporting Framework fromthe International Integrated Reporting Council

nies of the Nihon Unisys Group (consolidated subsidiaries andnon-consolidated subsidiaries), and it is individually noted when
the scope differs.

0

l GRI Sustainability Reporting Guidelines Version 3.1
l ISO26000 / JIS Z 26000

Period of the report

IssuedIn this report, fiscal year (FY) refers to the period beginning April 1

l October 2015
(Previous issues: Corporate Report issued in October 2014,
Annual Report issued in September 2014)

and ending March 31. In principle, the report covers FY2014 (April
1, 2014 to March 31, 2015), and activities during past fiscal years
and conditions following FY2014 are also reported as necessary.

l The next issue is scheduled for September 2016.

Notes concerning forward-looking statements
The statements contained in this report, which refer to theGroup’s current plans and projections, other than historical facts,
represent forward-looking statements made based on judgments
and assumptions in accordance with the information currently
available. Please note that actual results may differ from theforecasts due to fluctuations in risks and uncertainties andchanges in economic developments.

Nihon Unisys Group Integrated Report 201560

Corporate statement

This corporate statement is a common way of thinking among all membersof the Nihon Unisys Group, and serves as a slogan to achieve the vision of
the Mid-Term Management Plan of “Mobilize services based on interconnected businesses. Build our future through ICT advances.”“Foresight” consists of foreseeing and understanding industry changes,
customer needs, and future social issues in advance, and “in sight” has the
double meaning of being able to see and understand things combined withmeaning of “insight.” This repetition of the sound “sight” makes it a memorable statement with a strong impact.
Using this foresight to foresee the next generation and gain a deep understanding of the problems of customers and society as fast as possible with
our experience and insight that goes beyond conventional knowledge, weare dedicated to combining our ICT assets, wisdom, and ideas to provide thebest types of solutions and services to customers, and also provide new
business models and business ecosystems. It is our strong desire to leverage strengths including our DNA as a pioneer in mainframe computing, deep
understanding of and relationships of trust with customers built upon acustomer-first (U&U) spirit, and multi-vendor support in order to strengthen
our potential as a strategic partner for customers and to create completely
new businesses with our foresight and imagination.

Cover photo
This expresses the Nihon Unisys Group’s stance ofembracing future challenges through the creation of newworlds by looking at everything from a broad perspectivewith a point of view that is always different.

Nihon Unisys, Ltd.
1-1-1 Toyosu, Koto-ku, Tokyo 135-8560 Japan
Finance Department / Corporate Communications Department
URL: http://www.unisys.co.jp/welcome-e.html
URL (IR): http://www.unisys.co.jp/invest-e/
URL (CSR): http://www.unisys.co.jp/csr/ (Available only in Japanese)
Copyright © 2015 Nihon Unisys, Ltd. All rights reserved.
Printed in Japan

Status of SRI Index inclusion(As of March 31, 2015)