Profile

Sanden continues to create new value through
Challenge & Innovation based on the “Environment”
The Sanden Group continues to develop and deliver products, systems, and services thatprovide constant satisfaction to its customers around the world.
Automotive Systems Business

Evaporator
Condenser

Sanden manufactures and delivers compressors and climate systems for automotive air
conditioners around the world. Our state-ofthe-art technology suitable for hybrid vehicles
and electric vehicles is highly evaluated by theworld’s leading car manufacturers.

Electric Compressor

CO2 Compressor
Air-conditioning Unit
Intercooler

Car

Truck

Construction Machinery

Commercial Store Systems BusinessOpen Showcase

CoffeeMachineTemperature Humidity
Monitoring Service
Flat Design Showcase

Sanden manufactures and delivers freezing andrefrigerating showcases, vending machines, andcoffee servers around the world. Our products,
systems, and services contribute to our customers’ business growth.

Electronic
Money
Terminal

Vending
MachineCorporate Philosophy
Sanden’s Corporate Philosophy, which was adopted in 2003, sets forth our universal shared values
and basic stance. By putting this Corporate Philosophy into practice, the Sanden Group aims toattain sustainable growth and continue to be a company that is trusted by society.
Structure of the Corporate Principles
Aiming to Become “Global Excellent Companies”

Founding Spirit“Let Us Develop with Wisdom
and Prosper in Harmony”“Let Us Develop with Wisdom andProsper in Harmony” means that weshould use our intelligence in combining our development and pioneering
abilities to win prosperity for us all.

Management Principles

Founding
Spirit• Satisfy our customers’ needs
with high-quality productsManagement
Principles
Corporate Philosophy
Corporate Vision
Management Policies
Mid-Term Plan, Execution Plan

STQM
STQM SANDEN WAY• Contribute to the social andcultural improvement of the­community through businessactivity• Build a company of which all
are proud, through the efforts
of self-motivated employees
These principles have served as fundamental employee action guidelines
since Sanden’s founding.

The Sanden Group (G-SDC) will observe the following 10 principles
in full compliance with laws, regulations, and rules.
Basic Principles(Universal Values Shared by
the Global Community)

1. G ood Corporate Citizenship and Harmony
with Society 
We will grow as good corporate citizens, trusted by society and in ­harmony with the international community.

2. R espect for Human Rights
 e will build a corporate culture founded on respect forW­individuals and human rights.

3. T he Environment 
We will endeavor to preserve the environment in every

aspect of our corporate activities to ensure that future
generations will inherit our beautiful, irreplaceable earth.

4. C orporate Ethics
 e will conduct our corporate activities in a spirit of sinW
cerity and ­fairness based on a strong sense of ethics.

5. S afety and Health 
We will enable our employees to achieve a healthy life-

style by ­creating an environment that assures their healthand safety.

Basic Stance toward Stakeholders
6. Customers 
We will stand on the admired ability of engineering d­ evelopment and manufacturing, and can offer products, systems, and s­ ervices, based on the QUALITYFIRST, that provide constant satisfaction to our customers around the world.

7. Employees 
We will grow together with our employees by creating an organizational culturethat encourages free and vigorous c­ ommunication imbued with a spirit of respectfor humanity in line with our corporate culture of challenge and innovation.

8. Shareholders and Investors
We will respond to the trust and expectations of our s­ hareholders and investors by
expanding the Sanden Group, enhancing our corporate value and making our management more transparent.

9. Communities
 e will respect regional customs and cultures around the world and contribute toW
the social and cultural development of the communities, which we are related with.

10. Suppliers
 e will grow together with our suppliers as business partners who provide ourWcustomers with the best possible products, systems, and services on the basis offair and transparent relationships.

Contents
Corporate Philosophy.................................................1

Financial Section

Highlights of the Fiscal Year.........................................2

Management’s Discussion & Analysis........................14

Top Message..............................................................4

Consolidated Balance Sheets...................................18

Performance Overview................................................8

Consolidated Statements of Operations/
Consolidated Statements of Comprehensive Income....20

CSR............................................................................9
Topics.......................................................................10
Corporate Governance..............................................11
Message from Outside Directors...............................12
Directors/Audit & Supervisory Board Members/
Corporate Officers....................................................13

Consolidated Statements of Changes in Net Assets.....21
Consolidated Statements of Cash Flows...................22
Notes to Consolidated Financial Statements.............23
Independent Auditor’s Report....................................38
Corporate Data/Stock Information............................39

SANDEN Holdings Corporation1

Highlights of the Fiscal Year
Thousands of
U.S. dollars (Note)

Millions of yen

FY2013

Net sales............................................................ ¥274,786

FY2014FY2015FY2016FY2017FY2017¥306,984¥294,237¥ 282,061¥ 287,609$2,707,163

Operating income...............................................

4,858

9,407

5,494

1,582

5,469

51,477

Net income (loss) attributable to ownersof the parent.....................................................

5,843

5,580

6,965

(22,488)

4,255

40,050Comprehensive income (loss).............................

13,123

11,713

2,044(24,232)

1,884

17,733

Total net assets.................................................. ¥ 65,651¥ 75,677¥ 75,503¥  49,159¥  50,957$  479,640

Total assets........................................................

277,920299,265

301,325

280,194

276,289

2,600,611

Net assets per share (yen and U.S. dollars)........ ¥2,218.39¥2,554.01¥2,537.79 ¥1,576.34¥1,633.99$    15.38
1.44

Net income (loss) per share(yen and U.S. dollars)........................................

213.24202.00252.15(814.10)154.00Capital adequacy ratio (%)..................................

22.1

23.6

23.3

15.5

16.4

Return on equity (%)...........................................

10.5

8.5

9.9

(39.6)

9.6

Price earnings ratio (%).......................................

10.8

13.3

6.4

—

9.9

Cash flows from operating activities.................... ¥ 18,803¥ 16,223¥  6,304¥  10,048¥   7,140$   67,206

Cash flows from investing activities.....................

(12,105)(13,301)(14,932)(10,371)

4,093

38,525

Cash flows from financing activities.....................

(8,675)(2,022)

6,066(2,479)(6,536)(61,521)

Cash and cash equivalents at end of the year......

19,07820,58817,482

14,04018,776

176,731

Gross profit......................................................... ¥ 48,101¥ 57,246¥ 53,311¥  49,319¥  52,654$  495,613

Gross profit ratio (%)...........................................

17.5

18.6

18.1

17.5

18.3

Ratio of SG&A expenses (%)..............................

15.7

15.6

16.3

16.9

16.4

Total net assets ratio (%).....................................

23.6

25.3

25.1

17.5

18.4

Note: U.S. dollar figures are translated, for convenience only, at the rate of ¥106.24 to US$1.00, the effective rate of exchange prevailing on March 31, 2018.
The Company implemented a 5-for-1 share consolidation on October 1, 2017. Net assets per share and Net income (loss) per share are stated as if the shareconsolidation was implemented at the beginning of the fiscal year 2013.

Environmental Figures
FY2013

FY2014FY2015FY2016FY2017

Energy usage (in GJ)...........................................

2,654,591

2,764,352

2,803,609

2,829,938

2,853,787

CO2 emissions (in t-CO2)....................................

124,080129,026

130,335

132,505

136,629

FY2013

FY2014FY2015FY2016FY2017

Japan.................................................................

4,432

4,340

4,168

3,836

3,622

Asia-Pacific.........................................................

5,449

5,901

5,655

5,634

5,630

Americas............................................................

1,581

1,464

1,251

1,186

1,019

Europe...............................................................

1,818

1,810

2,152

2,742

2,869

Total...................................................................

13,28013,515

13,226

13,39813,140

Number of Employees by Region

2

ANNUAL REPORT 2018

Net Sales

Gross Profit Ratio

Operating Income(Millions of yen)(%)

(Millions of yen)

400,000

20

300,000

274,786

306,984 294,237
282,061 287,609

10,000

18.6
18

18.1

17.5

17.5

18.3

9,407

8,000
6,000

200,000

16

100,000

14

5,469

5,494

4,858

4,000

0

2013

2014

2015

2016

2017 (FY)

1,582

2,000

12

2013

2014

2015

2016

2017

0

(FY)

2013

Ordinary Income (Loss)Net Income (Loss) Attributableto Owners of the Parent

Total Assets(Millions of yen)

(Millions of yen)

(Millions of yen)

12,0008,000

10,314

6,000

9,000
6,000

6,138

4,976

5,580

300,000

4,255

4,000

4,411

2015

2017 (FY)2016

400,000

6,965
5,843

2014

277,920299,265 301,325

280,194 276,289

200,000
2,000

3,000

(2,262)0-3,000

2013

2014

2015

2016

(22,488)02017 (FY)-22,000

2013

2014

2015

2016

100,000

2017

0

(FY)

Total Net Assets

Capital Adequacy Ratio

ROE(Millions of yen)

(%)

(%)

40

15

30

10

75,677 75,503

80,00065,65160,00049,159 50,957

22.1

23.6

20,000

10

0

0

0

-50

15.5

16.4

2015

2016

2017

2013

(FY)

2014

2015

2016

2017

(FY)

CO2 Emissions by Region(GJ)(t CO2)(Persons)

3,000,000

150,000

15,0002,500,000

125,000

12,5002,000,000

100,000

10,0001,500,000

75,0007,500

1,000,000

50,0005,000

500,000

25,000

2,500

Japan
China

2013

2014

EuropeAmericas

2015

2016

Asia-Pacific2017 (FY)

0

Japan
China

2013

2014

EuropeAmericas2017 (FY)

2016

9.6

9.9

(39.6)
2013

Energy Usage by Region

0

8.5

2015

5

20

2014

10.5

2014

23.3

40,000

2013

2013

2015

2014

2015

2016

2017

(FY)

Number of Employees by Region

2016

Asia-Pacific2017 (FY)

0

2013

2014

2015

Japan
EuropeAsia-Pacific (including China)

20162017 (FY)

Americas* No companies are accounted for by the equity
method.

SANDEN Holdings Corporation

3

Top Message

We will push forward
toward steadily achieving
the goals of our Corporate
Mid-Term Plan.
Kin-ei Kanda
Representative Director & President

Fiscal 2017 Results
The Sanden Group announced details of its Corporate

ment system reform to achieve our stated goals. In

Mid-Term Plan, under the concept of “Shrink to Grow,”

fiscal 2017, the fiscal year ended March 31, 2018

in May 2017. The goals of this plan are to carry out theand the first year of our Corporate Mid-Term Plan, we

comprehensive structural reforms initiated during fiscal

reported an increase in revenue and earnings. In spe-

2016 and to promptly return the Group to a growthcific terms, net sales climbed to ¥287.6 billion andpath. At the same time, we identified specific financial

ordinary income reached ¥4.4 billion. In addition,

targets and a plan to achieve net sales of ¥320.0 bil-comprehensive structural reforms generated returns

lion, an ordinary income ratio of 5%, and an equity ratio

totaling ¥8.0 billion, up ¥5.0 billion compared with theof 25% in fiscal 2020. With this in mind, we identifed

previous fiscal year, contributing significantly tofour key Mid-Term Plan initiatives including comprehen-

improved results in fiscal 2017 and driving the Group

sive cost transformation, asset efficiency enhancement,

forward in fiscal 2018 and beyond.

optimization of the business portfolio, and manage-

Progress under the Corporate Mid-Term Plan
1. Comprehensive cost transformation

4

One key component of the Group’s comprehensive costproduction and the launch of new models in the automo-transformation initiative is productivity innovation. In thetive sector. Moving forward, we will continue to focus on

fiscal year under review, successful steps were taken to

cost reduction and promote the start-up of new produc-

strengthen the capability of the Group’s Yattajima Plant,tion processes. We introduced flexible production line andto support overseas business locations as a global moth-cell management systems at the Group’s Akagi Plant, theer plant and the mainstay domestic production facility ofprincipal domestic production facility in the Commercial

the Automotive Systems Business. These actions were in

Store Systems Business, and rolled out these manufac-

response to the Group’s ongoing trend toward overseas

turing improvements to overseas business locations.

ANNUAL REPORT 2018

Furthermore, building on measures undertaken in fiscal

Every effort is being made to meet the increasingly

2016, we worked to restructure operations in thediverse requirements of customers in a timely manner

Americas and completed the reorganization of thewhile realizing low-cost, high-mix, low-volume, high-Automotive Systems Business in Japan during fiscal 2017.

efficiency production and curtailing Group-wide costs.

2 . Asset efficiency enhancement
In order to reinforce the Group’s business competitive-

from the sale of noncurrent assets, and ¥9.8 billion fromness, it is vital that we strengthen our overall financial

the sale of investment securities. Looking ahead, we will

structure. Accordingly, we generated cash flows in excess

continue to strengthen our overall financial structure inof ¥20.0 billion in fiscal 2017. This included ¥6.8 billion

order to reinforce our business competitiveness throughthrough improvements in working capital, ¥4.0 billion

the optimal allocation of investments.

3 . Optimization of the business portfolio
Recognizing the limited nature of the Group’s manage-

ment’s recent policy to promote the shift to environmen-

ment resources and the need to focus on growth fields,

tally friendly vehicles, we are endeavoring to makewe decided to withdraw from production in the Living

strategic inroads into the Chinese market as a group.

Environment Systems Business. As a result, we are allo-

On top of existing facilities in Japan and Europe, wecating management resources from this business to fields

are also introducing an electric compressor production

where further growth is anticipated. Looking to meet theline in China. Plans are in place to establish a global pro-upswing in future demand, we are working to bolster ourduction structure that is capable of producing 1.5 million

production capabilities worldwide particularly in theunits by August 2018. In addition, we are rolling out agrowth markets of China and Europe. We have, for exam-heat pump air-conditioning system production line forple, commenced operations at a new plant in China. This

electric vehicles and are looking to bring online a climate

new plant boasts the Group’s largest production capacity.

wind tunnel in Tianjin. Through these means, we are

In addition, we set up branch plants in Tianjin andworking to capture new business opportunities.

Chongqing to better address the increase in customer
demand and enable supplying of products throughout
China. Taking into consideration the Chinese govern-

Mid-Term Target

4 Key Initiatives(Billions of Yen)FY2016

Material and parts procurement transformation

FY20201

Net Sales

Ordinary
Income Ratio

Equity Ratio

282.1

(1)%

16%

320.0

5%

25%

Comprehensive costtransformation to
improve profitability

Productivity innovation
Quality reforms

2

Asset efficiency
enhancement tostrengthen the overall
financial structure

Selection and concentration of investment
Reduction of working capital
Liquidation of non-core assets

3

Optimization of the business portfolio to create corporate value

4

Management system reform to achieve sustainable growth

SANDEN Holdings Corporation

5▲

Top Message

4 . Management system reform
Sanden has identified corporate governance and theresources. To further delegate authority to and strengthenneed to further strengthen its global management struc-the business companies, we adopted a headquarters

ture as issues requiring reform. From a governance per-system at each business company in an effort to increase

spective, the Company increased the number of outside

the pace of our operations and bolster our manufacturing

directors from two to three in fiscal 2017 in order toand material and parts procurement capabilities.

improve management transparency. At the same time, we

Implementation of these measures during the previous

established the Executive Nomination and Compensation

fiscal year allowed Sanden to further strengthen its global

Committee to nurture future leaders and structure com-business competitiveness. During the mid-term, we will

pensation schemes. As far as its global management

continue to take action to reform management systems

structure is concerned, steps were taken to streamline

as necessary to achieve the goals of our Corporate Mid-the Group’s organization and to optimize management

Term Plan.

5. Growth business strategies
In our Automotive Systems Business, we are providing¥230.0 billion and compressor production capacity fromenvironmentally friendly products that enhance value

17 million units to 21 million units by 2020 and higher

while addressing customers’ needs by drawing on ourthereafter.

global capabilities to deliver innovative and uniqueFirst, we will continue to bolster the competitivenessitems. The automobile market is again projectedof our mainstay PX compressor. Among a host of

to achieve 3% annual growth going forward. We plan toinitiatives, we are rolling out a new EPX model, which

secure growth in excess of the market in areas that

dramatically exceeds the performance of the existing

include automobiles, trucks, and construction machin-

PX compressor, reducing clutch costs, and developing

ery. Harnessing such strengths as our global customer

large-capacity compressors.

base, innovative and environmentally friendly producttechnologies, and global manufacturing network, we willlift the current level of sales from ¥200.0 billion to

Meanwhile, we are ramping up efforts to develop,
upgrade, and expand products for electric vehicles inAutomotive Systems Business
Growth Business Strategies

Initiatives for Business Growth

Principle of growth: Keep offering “Impression” by utilizing
global strength, innovation, and uniqueness of environmentally friendly products

New

Providing eco-friendly productsthat contribute to enhance thevalue of world-class customers’
vehicles and customer satisfaction

Technology / Products

China: Partner strategies OEM
Europe: Eco-friendly products (EC, PX)
Americas: High efficiency, large

230
199

(Compressor
17 million units)

FY2016

6(Billions of yen)

ing
uir s
cq
f a rightols
it ie ercia
t iv
Ac o m mcth of aue marketomotiv

Strengths

Customers’ foundation on
Innovative technologies for
eco-friendly products

Global manufacturing base and
FY2020ANNUAL REPORT 2018

FY2025

network

Rankine systemwater heater

HVAC
EC

Cost Competitiveness

800V

Market Development
HVAC

EC48V
PX

Inter cooler

Heat pump

Evaporator
Compressor forgas heat pumpGas coolera global basestElectrification
New PX (EPX)
CO2 compressor

Existing

3% grow(Compressor
21 million units)

Product Capabilities

Heater core

Existing

New Markets

Newresponse to the growing trend toward vehicle electrifica-

challenges that customers continue to face, including

tion. Sanden has already commenced the production ofsales growth and the need to save labor.

various products for environmentally friendly cars. ThisIn addition to the existing can and plastic bottle

includes the strategically developed electric compressor

vending machine as well as convenience markets, wetogether with heat pump air-conditioning systems as

will develop and launch unstaffed store and micro-

well as electric water heaters for electric vehicles.

market products and services that employ automatedLooking ahead, Sanden will strategically develop andtake-out, IoT, and other conventional technologies.

release products that address the needs of customers

Moreover, we are making plans to enter the restaurant

and the market while meeting its environmental Top

business by focusing on the competitive advantage ofRunner targets on a progressive basis. In this manner, we

our temperature-humidity control systems.

will secure definitive growth in 2025, 2030, and beyond.

Over and above these new products and markets,
we are supporting customers’ efforts to enhance value

In the Commercial Store Systems Business, we areby strengthening our global services and maintenancedeploying technologies and services while taking fullsystems. In fiscal 2017, we established service andadvantage of the IoT phenomenon in a bid to realize

maintenance companies in South Korea, Thailand, andnew global next-generation solutions that focus on

Taiwan. In addition to properly addressing the growing

products, systems, and services or convenienceinterest in food safety and security especially in

stores, vending machines, as well as temperature-

Southeast Asia, we will help customers enhance their

humidity monitoring services. Drawing on the inherent

corporate value.

strengths of its value chain and existing technology
flexibility, and as the only company in the distribution

Moving forward, we will work to achieve ourindustry with a four global base structure that encom-

Corporate Mid-Term Plan while at the same time meet-

passes Japan, the Americas, Europe, and Asia, Sanden

ing the expectations of all stakeholders. As we work

will continue to provide safety and peace of mind in

toward achieving our goals, we ask for your continued

people’s future dietary and daily lives. Making the most

support and understanding.

of its strengths, the Company will develop and roll out
products and services that help address many of theJune 2018

Commercial Store Systems Business
Growth Business Strategies

Initiatives for Business Growth

Principle of growth: Create the future that realizing the solutionof next generation with technology, service, and IoTNew(Billions of yen)

81
71
Ov

co

mm

merci
tic comerc

ial

Strengths

Value chain(cold chain) know-howalFlexibilities of existing technology
Labor Saving

Humidity

4 global base structure
FY2016FY2020

FY2025

Lumilinnaß

Diversification

Coffee serverLabor Saving

Control IoT

Wine saver

Freshness
control machineMarket Development
Micromarket
e-meshCashless

Showcase

Existing

Domes

er

s
sea

Expanding cold chain system tooverseas along with enhancing
service of products that wascultivated by highly developed
value chain in Japan

Technology / Products

Cold chain
Partner strategy

Product Capabilities

CVS CO2
products

Existing

Flexible vending
machineDeliverylocker

New Markets

IC tag smart storeNew

SANDEN Holdings Corporation

7

Performance Overview

Net sales increased by 2.0%, to ¥287,609 million, with higher

Other Business3.7%

sales in the Automotive Systems Business and other factors.
Operating income improved by 245.7%, to a profit of ¥5,469¥10,605

million. Although the cost of raw materials increased, earnings
improved mainly because of profitability improvement resulting
from the comprehensive structural reforms that began in theprevious fiscal year. Ordinary income was ¥4,411 million comparedwith a loss of ¥2,262 million one year earlier, and net income
attributable to owners of the parent was ¥4,255 million compared

Automotive
Systems
Business

72.6%(Millions of yen)

Commercial Store
Systems Business¥208,855

23.7%(Millions of yen)

Net Sales¥287,609¥68,147(Millions of yen)

(Millions of yen)with a loss of ¥22,488 million one year earlier.

Automotive Systems Business
The Sanden Group continued to develop innovative products that reflect theenvironmental interests of customers. Group companies sold many productsthat provided value for customers, mainly with their compact, lightweight, andenergy-saving functions. As a result, sales were higher than one year earlier,due in part to growth in sales in Europe and benefits from foreign exchange
rates. Earnings also increased. The main reasons were the higher sales in
Europe and profitability improvement resulting from the comprehensive structural

Sales and Operating Income(Billions of yen)reforms. As a result, segment sales increased by 4.9%, to ¥208,855 million,
and operating income increased by 49.6%, to ¥6,610 million.

220
200
180

200

182

208

199

198

160
140
120
100
80
60
40

3.8

5.6

6.5

4.4

6.6

2013

2014

2015

2016

2017 (FY)

20
0

Sales

Operating Income

Commercial Store Systems BusinessIn the Retail Store Systems Sector, sales increased as the Sanden Group continued to provide comprehensive ideas and solutions encompassing products, systems, and services linked to customers’ growth strategies and needs involving
environmental issues. In the Vending Systems Sector, there were activities forbusiness expansion that were centered on the development of environmentallyfriendly products and the launch of new products. However, sales decreased
mainly because of the declining trend in the vending machines market in Japan.

Sales and Operating Income (Loss)

Segment earnings were higher than one year earlier because of the profitability
improvement resulting from the comprehensive structural reforms and for otherreasons. As a result, segment sales decreased by 4.4%, to ¥68,147 million, and(Billions of yen)
94

100
80

operating income was ¥285 million compared with a ¥370 million loss one year

40

earlier.

20

-20

6.2

3.5

0.2

1.8
(0.3)

2013

2014
Sales

ANNUAL REPORT 2018

68

71

60

0

8

83

81

2015

2016

Operating Income (Loss)2017 (FY)CSR

Establishing the Sanden Brand as One Trusted
by Society
Consistent with its Corporate Philosophy, the Sanden Group is endeavoring to

Methods of Establishing Priorities
and the Results

ensure the Sanden brand is one trusted by society through the provision ofcontinuing to take on challenges and evolve amid changing times.
We identified the departments that have relationships with the CSR items
listed in the Group’s Corporate Philosophy, including the environment, customers,
employees, shareholders and investors, and suppliers. Then, for each department,
we took into consideration two major angles: namely, “importance formanagement” and “importance in the light of social requirements (expectationsof stakeholders).” Going forward, we will set specific objectives for initiatives
related to selected themes, specifically “environment” and “people,” and work
to raise the level of these CSR activities throughout the Group.

Importance in the light ofsocial requirements(Expectations of stakeholders)

products, systems, and services that match the needs of society, while
Materiality“Environment”
and“People”

Importance for management

Moreover, we have commenced implementing global-scale initiatives thattake into consideration sustainable development goals (SDGs).

Environment
The Sanden Group considers preservation of the global environment to be
the most-important shared responsibility of people everywhere. As an
industrial company grounded in technology development, and manufacturing,
we are developing business initiatives that take into consideration
environmental conservation in all aspects of our corporate activities.
In fiscal 2017, Sanden Holdings received the 5th Green Social Contribution
Award and the 37th Ministry of Land, Infrastructure, Transport and Tourism

Sanden Forest/Akagi Plant

Green Urban Award in recognition of the Company’s contributions to the
local community and efforts to improve the environment at the Sanden
Forest/Akagi Plant, a symbol of its environment-friendliness. (Please referto page 10 for details of environmental technologies of the Sanden Group.)
PeopleTotal working hours per person in 2016*

After identifying “people” as a material CSR item, the Sanden Group
organized the working style measures it had implemented to date intoa chronological table.
Over the past decade, the Group has taken positive step to ensure thatworkers take holidays, shortened daily working hours, and reduced overtime
hours in an effort to promote work-life balance. As a result of these(hours)
2,150
2,100
2,050
2,000

endeavors, average total working hours per person in 2016* fell substantially

1,950

to 1,965 hours, from 2,108 hours in 2015.

1,900

Looking ahead, the Group will continue to encourage employees to take

1,850

paid holidays and to ensure flexible employment that takes into consideration

1,800

the circumstances of employees.

2,108

1,965

2005

2016

(FY)

* Required working hours average + overtime working hours average - average hours of paid holidays taken

SANDEN Holdings Corporation

9

Topics
The Sanden Group’s Environmental Technologies
Globally Expanding Environmental Technologies That Launch a New Era
Standing on its product development and manufacturing capabilities, the Sanden Group engages inthe development of environmental technologies in an effort to encourage customers to make use of
better products. Here, we provide details of a selection of the Group’s products that contribute tosociety through the use of environmental technologies and innovation.
I ncreasing Global Production Capacity of Electric Compressors
The Sanden Group has set up and commenced operations at a new electriccompressor production line at its Yattajima Plant in Isesaki City, Gunma
Prefecture. Building a production structure across three locations in Japan,
China, and Europe with a capacity in excess of 1.5 million units, the Groupwill address the growing demand for electric compressors going forward.
New electric compressor production lineH eat Pump System That Can Efficiently Heat and Cool Electric Vehicles
The Sanden Group has commenced the supply of heat pumps to Shanghai
Automotive Industry Corporation (Group) through Sanden Huayu Automotive
Air-Conditioning Co., Ltd. The Group’s heat pump systems are the first to beinstalled in electric vehicles in China. Drawing on the merits of its heat pumpsystems to lower the power consumption of electric vehicles, the Group will
work to capture orders across global markets.

Heat pump system for electric vehicles

C RYSTA II & MILK UNIT Fully Automated Coffee Machine
Released in March 2018, Sanden’s cutting-edge CRYSTA II coffee server ismarketed to the food service industry, including coffee shops, restaurants, andhotels. In addition to refreshing drip coffee, CRYSTA II is a commercial-use coffee machine that offers such related beverages as caffe lattes. The most-prominent feature of CRYSTA II is its ability to also provide a light foamed milk using
a silky milk system. Users can enjoy an exquisite taste to the final drop of their
beverage.

CRYSTA II & MILK UNITN ew Sensation Sparkling Machine Lumilinna
Lumilinna β is a closed-front, stack machine that maintains temperatures justabove freezing to vend super-chilled beverages. This machine transforms liquids
into a wondrous beverage that produces a unique snow-like sensation. Lumilinna β
opens up new market opportunities that encompass not only soft drinks, butalso alcoholic beverages. Steps have been taken to promote test sales in Korea,
Malaysia, and Dubai with the aim of expanding sales globally.
Lumilinna β

10

ANNUAL REPORT 2018

Corporate GovernanceFundamental Corporate Governance Policies
Employing the “company with auditors” model based on Japan’s Corporate Law, Sanden has created a corporate governancesystem that includes a Board of Directors, Audit & Supervisory Board Members, an Audit & Supervisory Board, and an
accounting auditor. In addition, with the aim of securing the transparency and objectivity of management, Sanden has alsoestablished a Nomination and Compensation Committee as an ­advisory committee to the Board of Directors.
The Board of Directors has nine members, including three outside directors, while the Audit & Supervisory Board has
four members, including three outside Audit & Supervisory Board Members.
To strengthen management oversight functions, Sanden appoints fully independent outside directors and outside Audit &Supervisory Board Members. Currently, Sanden’s five outside executives are certified as “independent” under the Securities
Listing Regulations of the Tokyo Stock Exchange. By setting directors’ terms to one year, Sanden has put in place a system
to ensure management transparency and one that enables quick responses to changes in the market environment. Also,
by adopting a Corporate Officer system, the Group aims to strengthen business execution functions and increase management
efficiency. Moreover, the Management Committee and Board of Directors deliberate in a timely fashion on important mattersin compliance and risk management. Furthermore, by putting in place internal and external hot lines as an internal reporting
system, Sanden is working to strengthen risk management, corporate ethics, and legal compliance. In view of such factors
as Sanden’s business category, history, and culture, the Company has judged that the current system is appropriate
for the corporate governance of the Sanden Group.

Sanden’s Corporate Governance and Internal Control Organization Units and Their Interrelationships

General Meeting of Shareholders
Appointment/Removal

Board of Directors(9 Directors)

Appointment/Removal

3 Outside Directors(3 Independent Directors)

Supervision/advice

Nomination andCompensation
Committee
Advisory
Committee

Audit & Supervisory Board(4 Audit & Supervisory Board Members)

3 Outside Audit &Supervisory Board Members(2 Independent Audit &Supervisory Board Members)

Representative Director & PresidentManagement Committee
Drafting Management
Strategies[Business Execution]
Directors,
Corporate Officers

Directors
The Company

Internal
Auditors

Accounting
AuditorInternal
Auditing

Auditing
Accounting Auditing

Business Companies, Subsidiaries,
and Affiliated Companies

SANDEN Holdings Corporation

11

Message from Outside Directors
CareerApr. 1968
Jan. 1981
Jan. 1993
Jan. 1996
June 1999
July 2000
June 2008

Hideto Ozaki

June 2013J oined Toyota Motor Corporation
Transferred to Toyota Motor Sales U.S.A.
Accounting Division general manager
Finance Division general manager
Director in charge of accounting/financeToyota Financial Services Corporation representative director and CEO
Aioi Insurance Co., Ltd.
(presently Aioi Nissay Dowa Insurance Co., Ltd.) executive chairman
Outside director, Sanden (present)

Outside Director

I will make every effort to enable Sanden’s sustainable growth and increase its corporate value. The automobile industry iscurrently undergoing a so-called once in a century transformation, while the world of manufacturing is seeing significant changes
due to the rapid progress of IT. Sanden needs to adapt and change to this new era in order to survive in 5 to 10 years’ time.
 ​It is vital for the Company to reform its inward-looking corporate culture, globalize management, utilize diverse personnel,
streamline its technological development, revamp IT systems Companywide (i.e., shift to IoT-based IT systems), and beyond all elsecompletely eliminate wasteful operations (i.e., those with no added value) to enable lean management. With Sanden transforming
into a highly productive company, I would very much like to see developing new personnel be a part of this process.

CareerApr. 1969
Jan. 1991
Sep. 1992
Apr. 1996
Apr. 2003
May 2005
Oct. 2010

Hideo Hohgi

Outside Director

June 2015
June 2017J oined Nissan Motor Co., Ltd.
Executive Vice President, Nissan North America
Executive Director, BMW Japan Corp.
Representative Director & President, Chrysler Japan Co., Ltd.
Professor, Graduate School of Commerce, Waseda University
Executive Director, Waseda-Nanyang Double MBA
Director, WBS Research Center, Research Institute of the Faculty ofCommerce, Waseda University
Outside Director, Sanden (present)
Director, Eiken Foundation of Japan (present)

I am privileged to be equipped with highly practical and managerial expertise developed at three major automotive manufacturers
in Japan, Germany, and the United States and with academic knowledge and insights enhanced through research and teachingat the university. Mobilizing this wide and in-depth knowledge and more time and efforts than average external directors, I could
finally locate the root causes of Sanden’s weaknesses in corporate governance and management. As a member of the new
Board, I will continue to do my best to expedite the governance and management improvement and the updated strategy
execution and to put Sanden on a steady growth path.

CareerNaonori Kimura
Outside Director

Dec. 1988
June 1998
Sep. 2001
Jan. 2004
Nov. 2007
Jan. 2012
Apr. 2013
Jan. 2015
Dec. 2016
June 2017
June 2017 an a start-up company (Sold in 1998)
R
Joined NCR Japan, Ltd.
Joined Towers Perrin Tokyo BranchJoined Arthur D Little Japan Inc.
Director, Industrial Growth Platform, Inc. (IGPI)Partner and Managing Director, IGPIProfessor, Graduate School of Management, Globis University (present)Partner/Member of the Board/Managing Director, IGPI (present)
Managing Director, IGPI Shanghai (present)
Outside Director, Molten Corporation (present)Outside Director, Sanden (present)

For many years, I had been involved in supporting management operations at a major global manufacturer (including corporate governance formulation, strategic planning, operational reforms, and next-generation leadership training). I firmly believethat Sanden possesses latent capabilities in its business fields that it has yet to fully tap into. Given that it operates in fields
that are extremely competitive, however, the Company needs to make rapid decisions and take appropriate actions to quickly
respond to changing conditions that transcend the status quo. I will do my utmost to support management’s steady efforts toundertake ongoing operational reforms.

12

ANNUAL REPORT 2018

Directors/Audit & Supervisory Board Members/Corporate Officers(Back row, left to right)

Naonori Kimura,(Front row, left to right)

Mitsunori Kodaka,

Hideto Ozaki,

Hideo Hohgi,

Katsuya Nishi,

Kin-ei Kanda,

Shinji Ichikawa,

Hiroshi Yomo,

Tsutomu Sakakibara,

Kazumichi Matsuki,

Mark Ulfig,

Ichiro Yumoto

Tsuguo Ito

Directors
Kin-ei Kanda

Representative Director& President

Tsutomu Sakakibara

Representative Director &Executive Vice President

Mitsunori Kodaka

Tsuguo Ito

Hideto Ozaki

Hideo Hohgi

Director & Senior Executive
Corporate Officer

Director (outside)

Katsuya Nishi

Representative Director &Executive Vice President

Mark Ulfig

Director &Executive Vice President

Director & Senior Executive
Corporate Officer

Naonori Kimura
Director (outside)

Director (outside)

Audit & Supervisory Board Members
Shinji Ichikawa

Audit & Supervisory Board
MemberIchiro Yumoto

Hiroshi Yomo

Audit & Supervisory Board
Member (outside)

Audit & Supervisory Board
Member (outside)

Kazumichi Matsuki

Audit & Supervisory Board
Member (outside)

Corporate Officers
Tadashi Kondo

Takao Kaihatsu

Takashi Kageyama

Masuya Mori

Senior Executive
Corporate Officer

Senior Executive
Corporate Officer

Executive Corporate Officer

Executive Corporate Officer

Akihiro Yamato

Shinji Maruyama

Hiroshi Takahashi

Takashi Shimomura

Executive Corporate Officer

Corporate Officer

Corporate Officer

Corporate Officer

Yuri Tsuji

Yoshihiro Tachikawa

Hideyuki Kobayashi

Hiroki Terao

Corporate Officer

Corporate Officer

Corporate Officer

Corporate Officer

Toru Akima

Junya Takahashi

Corporate Officer

Corporate Officer
As of June 2018

SANDEN Holdings Corporation

13

Financial Section

Management’s Discussion & Analysis
Net Sales

Earnings also increased. The main reasons were the higher

We have started the four-year Corporate Mid-Term Plan that will

sales in Europe and profitability improvement resulting from theend in March 2021 to ensure revitalization of the Sanden Group.

comprehensive structural reforms.

The plan establishes the following financial targets and has four

As a result, Automotive Systems Business segment sales were

key initiatives in order to reach these targets.

¥208.8 billion ($1,965.8 million), up 4.9% from the previous fiscal
year. Operating income was ¥6.6 billion ($62.2 million), representing an increase of 49.6% from the previous fiscal year.

• Financial targets

Second, in the Retail Store Systems Sector of the Commercial

Net Sales: ¥320 billion
Ordinary Income Ratio: 5%Store Systems Business, sales increased as the Sanden Group

Equity Ratio: 25%

continued to provide comprehensive ideas and solutions encompassing products, systems, and services linked to customers’• 4 Key initiatives

growth strategies and needs involving environmental issues.

(1) Comprehensive cost transformation to improve

In the Vending Systems Sector of the Commercial Storeprofitability

Systems Business, there were activities for business expansion

(2) Asset efficiency enhancement to strengthen the overallthat were centered on the development of environmentally friend-

financial structure

ly products and the launch of new products. However, sales

(3) Optimization of business portfolio to create corporate

decreased mainly because of the declining trend in the vendingvalue

machines market in Japan.

(4) Management system reforms to achieve sustained

Segment earnings were higher than one year earlier because

growthof the profitability improvement resulting from the comprehensive
Due to activities based on this plan, on a consolidated basis of

structural reforms and for other reasons.

the Sanden Group, net sales for fiscal year 2017, ended March

As a result, Commercial Store Systems Business segment

31, 2018 increased by 2.0%, or ¥5.5 billion, compared with thesales were ¥68.1 billion ($641.4 million), down 4.4% from theprevious fiscal year, to ¥287.6 billion ($2,707.1 million).

previous fiscal year, and the operating income was ¥0.2 billion

First, in the Automotive Systems Business, Sanden continued($2.6 million) (compared with a ¥0.3 billion operating loss in theto develop innovative products that reflect the environmental

previous fiscal year).

interests of customers. Group companies sold many productsthat provided value for customers, centering mainly on compact,

Costs, Expenses, and Earnings

lightweight, and energy-saving features. As a result, sales were

Net sales increased by 2.0%, or ¥5.5 billion, to ¥287.6 billion

higher than one year earlier, due in part to growth in sales in($2,707.1 million) as mentioned above. Cost of sales increased

Europe and benefits from foreign exchange rates.

by 1.0%, or ¥2.2 billion, compared with the previous fiscal year,

Breakdown of Net Sales

3.7%
23.7%

Net Sales

Gross Profit Ratio(Billions of yen)
350

(%)
20

300
15

250

Net Sales¥287,609200
10(Millions of yen)

150

72.6%

100

5

50

Automotive Systems Business Group
Commercial Store Systems Business Group
Other Business Group14

ANNUAL REPORT 2018

0

2012

2013

2014

2015

2016

2017

(FY)

0

2012

2013

2014

2015

2016

2017

(FY)

to ¥234.9 billion ($2,211.5 million). Consequently, gross profit

sales of investment securities, as a part of efforts to strengthenamounted to ¥52.6 billion ($495.6 million), up 6.8%, or ¥3.3 bil-

the Company’s overall financial structure by enhancing the effi-lion, and the gross profit ratio rose from 17.5% to 18.3%.

ciency of assets. Return on equity was up from -39.6 to 9.6%.

SG&A expenses decreased to ¥47.1 billion ($444.1 million),and the ratio of SG&A expenses to net sales fell 0.5 percentage

Financial Position

point, to 16.4%, compared with the previous fiscal year.

Total assets at March 31, 2018 decreased by ¥3.9 billion com-

Research and development (R&D) expenses, which are charged

pared with the end of the previous fiscal year, to ¥276.2 billion

to manufacturing costs and SG&A expenses, decreased 0.6%,($2,600.6 million). This mainly reflected decreases in trade notesto ¥7.8 billion ($73.9 million). The ratio of R&D expenses to net

and accounts receivable as well as investment securities.
Total liabilities declined by ¥5.7 billion year on year, to ¥225.3

sales slipped 0.1 percentage point, to 2.7%, compared with thebillion ($2,120.9 million), mainly reflecting decreases in payables-

previous fiscal year.

other and interest-bearing liabilities.

Operating income amounted to ¥5.4 billion ($51.4 million),compared with ¥1.5 billion in the previous fiscal year. Earnings

Total net assets increased by ¥1.7 billion compared with the

improved mainly because of the improvement in profitability

previous fiscal year-end, to ¥50.9 billion ($479.6 million), largely

resulting from the comprehensive structural reforms that began inowing to the increase in net income attributable to owners of thethe previous fiscal year.

parent.

Other income (expenses) amounted to a gain of ¥0.3 billion

Sanden incurred a substantial deterioration of its net assets($3.7 million), compared with a loss of ¥20.5 billion in the previ-

during the previous fiscal year owing primarily to the implementa-

ous fiscal year.

tion of various measures aimed at strengthening the Company’s

As a result of the above factors, income before income taxes

structure and the posting of losses relating to the anti-monopoly

was ¥5.8 billion ($55.2 million), compared with a loss of ¥18.9

law. Moving forward, Sanden will continue to strengthen its over-billion in the previous fiscal year. Net income attributable to own-

all financial structure through a wide range of initiatives, including

ers of the parent came to ¥4.2 billion ($40.0 million), comparedefforts to enhance the efficiency of its assets.

with the net loss attributable to owners of the parent of ¥22.4 billion in the previous fiscal year. Despite incurring other expenses

Liquidityof ¥5.6 billion, which included impairment losses on property,(1) Cash Flows

plant and equipment, at cost of ¥2.9 billion following a review ofNet cash provided by operating activities for the fiscal year underthe business portfolio, as a part of the Company’s structure

review amounted to ¥7.1 billion ($67.2 million), which was ¥2.9

reform cost, this positive turnaround was largely due to the afore-billion lower than the previous fiscal year. While income before

mentioned movement in operating income as well as the posting

income taxes of ¥5.8 billion ($55.2 million) as well as theof other income totaling ¥7.0 billion, which included a gain on

decrease in trade accounts and notes receivable of ¥6.0 billion

Net Income (Loss) Attributable to
Owners of the Parent

Net Income (Loss) per Share

(Billions of yen)
10

Total Assets/Capital Adequacy Ratio

(Yen)
300

8

(Billions of yen)
300

(%)
30

250

25

200

20

150

15

100

10

50

5

200
6
4

100

2
0
0
-20

2012

2013

2014

2015

2016

2017

(FY)

-1,000

2012

2013

2014

2015

2016

2017

(FY)

0

2012

2013

2014

2015

2016

2017 (FY)0

Total Assets (left scale)
Capital Adequacy Ratio (right scale)

SANDEN Holdings Corporation

15

▲Management’s Discussion & Analysis($57.3 million) had a positive effect on operating cash flows, theThe Sanden Group companies principally secure the required

Company reported such cash outflows from operating activities

working capital by short-term bank loans. As of March 31, 2018,as a decrease in accounts payable-other of ¥5.6 billion ($53.4

short-term bank loans amounted to ¥45.0 billion ($423.6 million)

million) in connection with losses relating to the anti-monopoly

and were denominated primarily in Japanese yen, the U.S. dollar,

law posted during the previous fiscal year.

and the Euro.

Net cash provided by investing activities amounted to ¥4.0 bil-Funds for production facilities are obtained through long-termlion ($38.5 million), which was a turnaround of ¥14.4 billion com-loans. As of March 31, 2018, long-term bank loans amounted topared with net cash used in investing activities in the previous¥81.1 billion ($763.6 million). A large part of the long-term bankfiscal year. The principal investing cash outflow was purchases ofloans was borrowed with fixed interest rates from financial institu-

property, plant and equipment of ¥8.8 billion ($83.3 million).

tions. It included ¥36.3 billion ($342.3 million), which was bor-

Major investing cash inflows included proceeds from sales ofrowed and bonds during the fiscal year under review, mainly ininvestment securities of ¥8.7 billion ($82.1 million) and proceeds

Japan for investment in facilities.

from sale of property, plant and equipment of ¥4.0 billion ($37.9
million).
Net cash used in financing activities came to ¥6.5 billion ($61.5

The Sanden Group considers interest rates, the market environment, the ratio of direct and indirect fund-raising, and thebusiness situation between financial institutions and the Sanden

million), which was ¥4.0 billion higher than the previous fiscal

Group when deciding on an appropriate long-term fund-raisingyear. Major cash inflows from financing activities included pro-plan.

ceeds from long-term loans payable and proceeds from issuance

The Sanden Group aims to maintain a firm financial positionof bonds together totaling ¥36.3 billion ($342.3 million). This wasand believes the net cash provided by operating activities, indi-

more than offset by such outflows from financing activities as therect financing through loans and the issuance of bonds, andrepayment of long-term loans payable and net decrease in short-

direct financing through the issuance of stock provide possible

term bank loans totaling ¥40.6 billion ($382.8 million).

sources of funds for future growth.

Taking into consideration these cash flows together with theeffect of exchange rate changes on cash and cash equivalents,

Business and Other Risks

cash and cash equivalents at the end of the fiscal year were

The following is an overview of major business and other risks¥18.7 billion ($176.7 million), which was ¥4.7 billion higher than

faced by the Sanden Group that may significantly affect inves-the cash and cash equivalents of ¥14.0 billion at the end of thetors’ decisions. The Sanden Group examines risks and takes

previous fiscal year.

appropriate measures to control risks. Please note that forwardlooking statements below are based on Sanden Group judg-(2) Capital Demands

ments made at the end of the fiscal year under review.

The Sanden Group requires working capital primarily for the purchase of materials and parts for products manufactured by the(1) Economic Conditions

Sanden Group, manufacturing costs, and operating expenses

The Sanden Group mainly sells automotive air-conditioning sys-

such as SG&A expenses.

tems, air-conditioner compressors, vending machines, and refrig-

Moreover, funds for capital investment are mainly required forerated showcases throughout the world. Demand for theseenhancing both local production and self-manufacture to

products is affected by economic conditions in the various coun-strengthen the global production system and developmental

tries and regions in which these products are sold. In particular,

facilities, maintaining and renewing facilities related to streamlin-

automotive market trends in North America, Europe, Asia, anding, and acquiring molds for production. In the fiscal year under

China, where we operate the Automotive Systems Business, may

review, capital investments principally comprised investments

affect the Sanden Group’s business results and financial position.

related to the Group’s Automotive Systems Business in Japanand overseas.

(2) Fluctuations in Exchange Rates

Sanden procures the funds necessary to meet its essential

The Sanden Group’s global operations, including its Automotive

requirement from a variety of sources. In addition to drawing on

Systems Business, involve foreign currency transactions. In par-its operating cash flows and own resources, these sources

ticular, exchange rate fluctuations in the Sanden Group’s major

include borrowings from financial institutions and the issuance oftransaction currencies, the U.S. dollar and the Euro, and curren-

corporate bonds.

cy fluctuations in China and other parts of Asia may affect theSanden Group’s business results and financial position.

(3) Financing
With regard to financing, the Sanden Group makes decisions
according to the intended use of funds as well as the timing,
duration, and the region in which the funds are required.

16

ANNUAL REPORT 2018

In addition, the currencies stated in the financial statements ofconsolidated overseas subsidiaries and companies accounted

for by the equity method have been translated into Japanese yen(7) Price Competition

and recorded in the Company’s consolidated financial state-

The Sanden Group’s operating conditions are marked by increas-ments. Therefore, the translation rate may affect net income andingly fierce price competition in the automobile and vending

stockholders’ equity as accounted for in the consolidated finan-

machine industries, and demands from automobile and beveragecial statements.

manufacturers to lower prices intensify every year.
The Sanden Group believes that its products possess a com-

(3) Changes in Raw Material and Parts Market Conditions

petitive advantage in terms of quality, cost, and technology.

The Sanden Group engages in a wide range of activities includ-

However, in the aforementioned difficult business environment,

ing the manufacture and sales of products and systems mainly

there is no guarantee of maintaining such advantages, including

through its Automotive Systems and Commercial Store Systems

the supply of materials and parts, and this may affect the Sanden

businesses. As these activities involve the procurement of raw

Group’s business results and financial position.

materials and parts, a variety of factors including the shortage ofitems or sharp upswings in prices attributable to changes in mar-

(8) Reliance on Customer Performance

ket conditions that result in higher manufacturing costs may

The Sanden Group provides products to automobile and bever-affect the Sanden Group’s business results and financial position.

age manufacturers around the world. Therefore, customer performance and other factors that are beyond the control of the(4) Natural Disasters

management of the Sanden Group may affect the Group’s busi-

If the manufacturing and business bases of the Sanden Groupness results and financial position.

suffer serious damage as a result of a natural disaster such as anearthquake, the Sanden Group’s business results and financial(9) Limitations on Intellectual Property Protection

position may be impacted by the halting of production activities

The Sanden Group has accumulated a wide range of proprietaryand delay in the deliveries of materials and parts.

technologies, know-how, and other intellectual property throughits development activities over the long period since its establish-(5) New Product Development

ment. Legal restrictions in certain regions may prevent theBased on its well-measured forecasts of trends and changes in

Sanden Group from completely protecting its intellectual property

the market, the Sanden Group develops cutting-edge technolo-

or restrain the Sanden Group from fundamentally restricting thirdgies, which are then used in its products, and works to globally

parties to manufacture imitations of the Sanden Group’s products

expand its business across a wide range of areas including its

through the use of its intellectual property.

Automotive Systems and Commercial Store Systems businesses. In the event that forecasts differ from trends and changes in(10) Product Liability

the market and difficulties in the development and introduction of

The Sanden Group is continuing quality control initiatives based

products are encountered, these circumstances may affect theon its Sanden Total Quality Management (STQM). However,

Sanden Group’s business results and financial position.

product liability claims related to items manufactured by the
Sanden Group in the past, at present, and into the future could(6) Potential Risks Associated with International

affect the Sanden Group’s business results and financial position.

Operations and Entry into Overseas Markets
The operations of the Automotive Systems Business and the(11) Legal and Regulatory Risks

Commercial Store Systems Business encompass development,

The Sanden Group is subject to various governmental regulations

manufacturing, and sales bases located in 23 countries andin the countries and regions in which it operates, including thoseregions in North America, Europe, Asia, and China. Business

related to business investment permits, export restrictions, taxa-

activities in these countries and regions are subject to the follow-

tion, the environment, and other matters. In the event that theseing risks:regulations are changed or new regulations are introduced, this• Changes in and revisions to laws and regulations in countries in

could affect the Sanden Group’s business results and financial

which the Sanden Group operates,

position.

• Changes in the economic and political climate,• Unstable political situations, including wars,• Labor disputes, and• Marine transport-related strikes.
Any of the aforementioned events may affect the SandenGroup’s business results and financial position.

SANDEN Holdings Corporation

17

Consolidated Balance Sheets
Sanden Holdings Corporation and Consolidated Subsidiaries
March 31, 2018 and 2017
Thousands of
U.S. dollars (Note 1)

Millions of yen

2017

2018

¥ 14,040$  176,731

55,80824,4284,567(753)
47,1802,372
9,488
157,132

465,822240,860
47,072(6,381)
447,006
24,378
128,896
1,524,416

21,774
1,186
118
2,691
3,869
6,018
(3,064)32,59422,567
9,299
90
2,621
4,422
6,026
(3,216)
41,811

204,951
11,163
1,110
25,32936,41756,645(28,840)
306,795

Property, plant and equipment, at cost (Note 9):Land��������������������������������������������������������������������������������������������������������������������������������������������
16,912
Buildings and structures����������������������������������������������������������������������������������������������������������������
62,908
Machinery and equipment������������������������������������������������������������������������������������������������������������� 102,666
Furniture and fixtures��������������������������������������������������������������������������������������������������������������������
44,438
Lease assets��������������������������������������������������������������������������������������������������������������������������������
23,651���������������������������������������������������������������������������������������������������������������
Construction in progress
6,699  Total���������������������������������������������������������������������������������������������������������������������������������������� 257,277
Accumulated depreciation������������������������������������������������������������������������������������������������������������� (175,536)   Net property, plant and equipment���������������������������������������������������������������������������������������������
81,741

17,87962,128106,240
43,482
23,394
5,562
258,688(177,438)
81,250159,186
592,131
966,359418,279
222,618
63,0552,421,658(1,652,259)
769,399

Total assets ��������������������������������������������������������������������������������������������������������������������������������� ¥276,289¥280,194$2,600,611

ASSETS2018

Current assets:
Cash and time deposits (Notes 6, 9 and 15)����������������������������������������������������������������������������������� ¥ 18,776
Receivables (Notes 6, 9 and 12):   Trade notes and accounts���������������������������������������������������������������������������������������������������������
49,489   Unconsolidated subsidiaries and affiliates�����������������������������������������������������������������������������������
25,589  Other���������������������������������������������������������������������������������������������������������������������������������������
5,001
������������������������������������������������������������������������������������������������
   Allowance for doubtful accounts(678)
Inventories (Notes 3 and 9)������������������������������������������������������������������������������������������������������������
47,490
Deferred income taxes (Note 5)������������������������������������������������������������������������������������������������������
2,590
Prepaid expenses and other current assets (Notes 6 and 12)�����������������������������������������������������������
13,694   Total current assets ������������������������������������������������������������������������������������������������������������������ 161,954

Investments and other assets:
Investment securities (Notes 4 and 6):   Unconsolidated subsidiaries and affiliates�����������������������������������������������������������������������������������
  Other���������������������������������������������������������������������������������������������������������������������������������������
Net defined benefit asset (Note 8)��������������������������������������������������������������������������������������������������
Deferred income taxes (Note 5)������������������������������������������������������������������������������������������������������
Intangible assets���������������������������������������������������������������������������������������������������������������������������
Other�������������������������������������������������������������������������������������������������������������������������������������������
Allowance for doubtful accounts����������������������������������������������������������������������������������������������������
   Total investments and other assets��������������������������������������������������������������������������������������������

See accompanying notes.

18

ANNUAL REPORT 2018

Thousands of
U.S. dollars (Note 1)

Millions of yen

2017

2018

¥ 54,518
29,789$  423,672
178,943

51,808
1,221
14,689
993
3,793
—
5,820
1,900
7
8,852
173,396

493,844
9,958
103,520
6,579
35,382
9,280
39,42918,994272
94,3801,414,316

62,121
3,376
—
815
6,113
2,647
75,07544,181
3,257
112
1,724
5,247
3,115
57,637584,723
31,777—
7,671
57,53924,915
706,654

11,037
3,731
33,703

11,037
3,747
29,447

103,887
35,118317,234(1,126)47,346(1,203)43,028(10,598)445,651292(16)(1,484)(954)(2,161)3,618(16)(2,048)(1,032)
520

2,748
(150)
(13,968)(8,979)(20,340)

Non-controlling interests in consolidated subsidiaries���������������������������������������������������������������
5,772
Total net assets����������������������������������������������������������������������������������������������������������������������������� 50,957   Total liabilities and net assets���������������������������������������������������������������������������������������������������� ¥276,289

5,610
49,159¥280,194

54,329479,640$2,600,611

LIABILITIES AND NET ASSETS

2018

Current liabilities:
Short-term bank loans (Notes 6 and 9)������������������������������������������������������������������������������������������� ¥ 45,011
Long-term debt due within one year (Notes 6 and 9)����������������������������������������������������������������������� 19,011
Payables (Note 6):   Trade notes and accounts��������������������������������������������������������������������������������������������������������� 52,466   Unconsolidated subsidiaries and affiliates�����������������������������������������������������������������������������������
1,058  Other��������������������������������������������������������������������������������������������������������������������������������������� 10,998
Income taxes payable (Notes 5 and 6)��������������������������������������������������������������������������������������������
699
Accrued employees’ bonuses��������������������������������������������������������������������������������������������������������
3,759
Allowance for outstanding claims���������������������������������������������������������������������������������������������������
986
Accrued liabilities��������������������������������������������������������������������������������������������������������������������������
4,189
Lease obligations due within one year (Notes 6 and 9)��������������������������������������������������������������������
2,018
Deferred income taxes (Note 5)������������������������������������������������������������������������������������������������������
29
Other current liabilities (Note 12)��������������������������������������������������������������������������������������������������� 10,027   Total current liabilities��������������������������������������������������������������������������������������������������������������� 150,257
Long-term liabilities:
Long-term debt due after one year (Notes 6 and 9)�������������������������������������������������������������������������
Net defined benefit liability (Note 8)������������������������������������������������������������������������������������������������
Officers’ retirement benefits����������������������������������������������������������������������������������������������������������
Deferred income taxes (Note 5)������������������������������������������������������������������������������������������������������
Lease obligations due after one year (Notes 6 and 9)����������������������������������������������������������������������
Other noncurrent liabilities (Note 13)����������������������������������������������������������������������������������������������
   Total long-term liabilities�����������������������������������������������������������������������������������������������������������
Contingent liabilities (Note 12)
Net assets (Note 10):Stockholders’ equity:
Common stock:   Authorized: 79,200,000 shares  Issued:
28,066,313 shares������������������������������������������������������������������������������������������������
�����������������������������������������������������������������������������������������������������������������������������
Capital surplus
Retained earnings�������������������������������������������������������������������������������������������������������������������������
Treasury stock, at cost:   413,024 and 439,448 shares in 2018 and 2017, respectively������������������������������������������������������
   Total stockholders’ equity����������������������������������������������������������������������������������������������������������
Accumulated other comprehensive income:Net unrealized gains (losses) on securities, net of taxes�������������������������������������������������������������������
Unrealized gains (losses) on hedging derivatives, net of taxes����������������������������������������������������������
Foreign currency translation adjustments���������������������������������������������������������������������������������������
Remeasurements of defined benefit plans, net of taxes�������������������������������������������������������������������
   Total accumulated other comprehensive income�������������������������������������������������������������������������

Note: The Company implemented a 5-for-1 share consolidation on October 1, 2017. The numbers of shares are stated as if the share consolidation was implemented on April 1, 2016.
See accompanying notes.

SANDEN Holdings Corporation

19

Consolidated Statements of Operations
Sanden Holdings Corporation and Consolidated Subsidiaries
Years ended March 31, 2018 and 2017
Thousands of
U.S. dollars (Note 1)

Millions of yen

2018

Net sales (Note 19)�������������������������������������������������������������������������������������������������������������������������� ¥287,609
Cost of sales���������������������������������������������������������������������������������������������������������������������������������� 234,955
Gross profit������������������������������������������������������������������������������������������������������������������������������������ 52,654
Selling, general and administrative expenses (Note 20)������������������������������������������������������������������ 47,185
Operating income (Note 19)������������������������������������������������������������������������������������������������������������
5,469
Other income (expenses):
Interest and dividend income���������������������������������������������������������������������������������������������������������
246
Exchange gains (losses), net����������������������������������������������������������������������������������������������������������
(1,437)
Equity in net income of affiliates����������������������������������������������������������������������������������������������������
2,667Interest expense���������������������������������������������������������������������������������������������������������������������������
(2,180)Gain (loss) on sales and disposals of property, plant and equipment, net������������������������������������������
132
Gain on sales of investment securities��������������������������������������������������������������������������������������������
5,488
Extraordinary product warranty cost (Note 21)��������������������������������������������������������������������������������
—Loss related to antitrust law (Note 22)��������������������������������������������������������������������������������������������
—Structure reform cost (Notes 23 and 24)����������������������������������������������������������������������������������������
(2,884)
Provision for outstanding claims (Note 25)��������������������������������������������������������������������������������������
(1,901)Other, net�������������������������������������������������������������������������������������������������������������������������������������
266   Other income (expenses)�����������������������������������������������������������������������������������������������������������
398
Income (loss) before income taxes�����������������������������������������������������������������������������������������������
5,867
Income taxes (Note 5):
Current����������������������������������������������������������������������������������������������������������������������������������������
1,269
Deferred���������������������������������������������������������������������������������������������������������������������������������������
139   Total income taxes��������������������������������������������������������������������������������������������������������������������
1,409
Net income (loss)���������������������������������������������������������������������������������������������������������������������������
4,458
Net income attributable to non-controlling interests������������������������������������������������������������������
202
Net income (loss) attributable to owners of the parent��������������������������������������������������������������� ¥  4,255

2017

2018

¥282,061
232,742
49,31947,737
1,582$2,707,163
2,211,549
495,613444,135
51,477248(2,838)3,385(2,218)2,386
38(3,410)(7,777)(7,803)—(2,559)(20,548)(18,966)

2,315(13,525)
25,103(20,519)
1,242
51,656——(27,146)(17,893)
2,503
3,746
55,224

1,812
1,071
2,884
(21,850)638¥ (22,488)

11,944
1,308
13,262
41,961
1,901$   40,050

Yen

U.S. dollars (Note 1)

2018

Amounts per share of common stock:
Net income (loss):  Basic��������������������������������������������������������������������������������������������������������������������������������������� ¥ 154.00  Diluted�������������������������������������������������������������������������������������������������������������������������������������—Cash dividends applicable to the year�������������������������������������������������������������������������������������������� ¥    —

2017

2018

¥ (814.10)—¥      —

$     1.44—$      —

Note: The Company implemented a 5-for-1 share consolidation on October 1, 2017. The amounts per share are computed as if the share consolidation was implemented on April 1, 2016.
See accompanying notes.

Consolidated Statements of Comprehensive Income
Sanden Holdings Corporation and Consolidated Subsidiaries
Years ended March 31, 2018 and 2017
Thousands of
U.S. dollars (Note 1)

Millions of yen

Net income (loss)���������������������������������������������������������������������������������������������������������������������������
Other comprehensive income (Note 11):
Net unrealized gains (losses) on securities, net of taxes ������������������������������������������������������������������
Unrealized gains (losses) on hedging derivatives, net of taxes ���������������������������������������������������������
Foreign currency translation adjustments ��������������������������������������������������������������������������������������
Remeasurements of defined benefit plans, net of taxes ������������������������������������������������������������������
Share of other comprehensive income of affiliates accounted for using equity method ���������������������
Total other comprehensive income�����������������������������������������������������������������������������������������������������
Comprehensive income�����������������������������������������������������������������������������������������������������������������
Total comprehensive income attributable to:
Owners of the parent��������������������������������������������������������������������������������������������������������������������
Non-controlling interests���������������������������������������������������������������������������������������������������������������
See accompanying notes.

20

ANNUAL REPORT 2018

2018

2017

2018

¥4,458¥(21,850)$41,961(3,323)
0
1,001
78
(331)
(2,573)¥1,8841,116
131(2,406)266(1,490)(2,381)¥(24,232)(31,278)
0
9,422
734
(3,115)(24,218)$17,733¥1,574
310¥(24,481)
249$14,8152,917

Consolidated Statements of Changes in Net Assets
Sanden Holdings Corporation and Consolidated Subsidiaries
Years ended March 31, 2018 and 2017
Millions of yen
Stockholders’ equ ty

Year ended March 31, 2017
Balance at beginning of year
Net loss attributable to ownersof the parent�����������������������������������Cash dividends paid(¥15.00 per share)��������������������������
Increase in net unrealized gains(losses) on securities, net of taxes����
Increase due to changes infair value of hedging derivatives�������
Adjustments from translation of foreign currency financial statements���
Remeasurements ofdefined benefit plans�����������������������
Increase in non-controlling interests���
Disposal of treasury stock������������������
Acquisition of treasury stock��������������
Balance at end of year������������������

Accumulated other comprehensive income
Foreigncurrencytranslation
adjustments

Remeasure­ments ofdefinedbenef t plans,
net of taxes

Total
accumulated
othercomprehensive
incomeNoncontrollinginterests inconsolidated
subsidiaries

Total
net assets

Retainedearnings

Treasurystock,
at costTotal
stockholders'equityUnrealized
Net unrealized gains (losses)
gains (losses) on hedging
on securities, derivatives,
net of taxes
net of taxes¥11,037 ¥3,747¥54,021¥(1,221)¥67,584¥2,496¥(147)¥ 1,464¥(1,299)¥2,513¥5,405¥75,503——(22,488)—(22,488)

—

—

—

—

—

—

(22,488)——(2,085)—(2,085)

—

—

—

—

—

—

(2,085)

—

—

—

—

—

1,121

—

—

—

1,121

—

1,121

—

—

—

—

—

—

131

—

—

131

—

131

—

—

—

—

—

—

—

(3,512)—(3,512)—(3,512)

—
—
—
—
—
(0)
—
—
¥11,037 ¥3,747————¥29,447——23(5)¥(1,203)

—
—
23
(5)
¥43,028————¥3,618————¥ (16)————¥(2,048)266———¥(1,032)266———¥  520—205——¥5,610

266
205
23
(5)
¥49,159

Commonstock

CapitalsurplusMillions of yen
Stockholders’ equ ty

Year ended March 31, 2018
Balance at beginning of year
Net income attributable to ownersof the parent�����������������������������������
Decrease in net unrealized gains(losses) on securities, net of taxes����
Increase due to changes infair value of hedging derivatives�������
Adjustments from translation of foreign currency financial statements���
Remeasurements ofdefined benefit plans�����������������������
Increase in non-controlling interests���
Disposal of treasury stock������������������
Acquisition of treasury stock��������������
Balance at end of year������������������

Accumulated other comprehensive income
Foreigncurrencytranslation
adjustments

Remeasure­ments ofdefinedbenef t plans,
net of taxes

Total
accumulated
othercomprehensive
incomeNoncontrollinginterests inconsolidated
subsidiaries

Total
net assets

Retainedearnings

Treasurystock,
at costTotal
stockholders'equityUnrealized
Net unrealized gains (losses)
gains (losses) on hedging
on securities, derivatives,
net of taxes
net of taxes¥11,037 ¥3,747¥29,447¥(1,203)¥43,028¥3,618¥(16)¥(2,048)¥(1,032)¥   520¥5,610¥49,159

—

—

4,255

—

4,255

—

—

—

—

—

—

4,255

—

—

—

—

—

(3,325)———(3,325)—(3,325)

—

—

—

—

—

—

0

—

—

0

—

0

—

—

—

—

—

—

—

564

—

564

—

564

—
—
—
—
—
(15)
—
—
¥11,037 ¥3,731————¥33,703——83(6)¥(1,126)

—
—
67
(6)
¥47,346————¥  292

—
—
—
—
¥(16)

—
—
—
—
¥(1,484)78———¥  (954)78———¥(2,161)—
161——¥5,772

78
161
67
(6)
¥50,957

Noncontrollinginterests inconsolidated
subsidiaries

Total
net assets

Commonstock

CapitalsurplusThousands of U.S. dollars (Note 1)
Stockholders’ equity

CommonCapitalRetained

Year ended March 31, 2018
surplusearnings
stock
Balance at beginning of year
$103,887 $35,269 $277,174
Net income attributable to ownersof the parent�����������������������������������
——40,050Decrease in net unrealized gains(losses) on securities, net of taxes����
———Increase due to changes infair value of hedging derivatives�������
———Adjustments from translation of foreign currency financial statements���———
Remeasurements ofdefined benefit plans�����������������������
———Increase in non-controlling interests���———
Disposal of treasury stock������������������
—
(141)
—
Acquisition of treasury stock��������������
———Balance at end of year������������������ $103,887 $35,118 $317,234

Accumulated other comprehensive income

Treasurystock,
at costTotal
stockholders’equity$(11,323) $405,007

Unrealized
Net unrealized gains (losses)
gains (losses) on hedging
on securities, derivatives,
net of taxes
net of taxes$34,054

Foreigncurrencytranslation
adjustments$(150) $(19,277)

Remeasure­ments ofdefinedbenef t plans,
net of taxes

Total
accumulated
othercomprehensive
income$(9,713) $   4,894 $52,804 $462,716—

40,050

—

—

—

—

—

—

40,050——(31,297)———(31,297)—(31,297)

—

—

—

0

—

—

0

—

0

—

—

—

—

5,308

—

5,308

—

5,308

—
—
—
—
—
—
781
630
—
(56)
(56)
—
$(10,598) $445,651 $ 2,748

—
—
—
—
—
—
—
—
$(150) $(13,968)

734
734
—
734
—
—
1,515
1,515
—
—
—
630
—
—
—
(56)
$(8,979) $(20,340) $54,329 $479,640

See accompanying notes.

SANDEN Holdings Corporation

21

Consolidated Statements of Cash Flows
Sanden Holdings Corporation and Consolidated Subsidiaries
Years ended March 31, 2018 and 2017
Thousands of
U.S. dollars (Note 1)

Millions of yen

2018

Cash flows from operating activities:
Income (loss) before income taxes����������������������������������������������������������������������������������������������������� ¥ 5,867
Adjustments to reconcile net income (loss) to net cash provided by operating activities:   Depreciation and amortization������������������������������������������������������������������������������������������������������� 11,079   Amortization of goodwill����������������������������������������������������������������������������������������������������������������
71����������������������������������������������������������������������������������������������������
   Equity in net income of affiliates(2,667)   Loss (gain) on sales and disposals of property, plant and equipment, net������������������������������������������
(132)   Gain of sales of investment securities�������������������������������������������������������������������������������������������� (5,478)   Structure reform cost��������������������������������������������������������������������������������������������������������������������
2,884   Decrease (increase) in assets:    Trade accounts and notes receivable�����������������������������������������������������������������������������������������
6,092   Inventories�������������������������������������������������������������������������������������������������������������������������������
(213)��������������������������������������������������������������������������������������������������������
   Accounts receivable–other(558)    Allowance for doubtful accounts������������������������������������������������������������������������������������������������
(221)   Other current assets����������������������������������������������������������������������������������������������������������������� (1,867)   Increase (decrease) in liabilities:    Trade accounts and notes payable���������������������������������������������������������������������������������������������
(1)    Accrued employees’ bonuses����������������������������������������������������������������������������������������������������
(34)   Accounts payable–other������������������������������������������������������������������������������������������������������������ (5,674)    Provision for outstanding claims������������������������������������������������������������������������������������������������
986    Other current liabilities and long-term liabilities�������������������������������������������������������������������������� (1,259)   Income taxes paid������������������������������������������������������������������������������������������������������������������������ (2,833)  Other, net�������������������������������������������������������������������������������������������������������������������������������������
1,102    Net cash flows from operating activities�������������������������������������������������������������������������������������
7,140
Cash flows from investing activities:
Purchases of property, plant and equipment��������������������������������������������������������������������������������������� (8,859)
Proceeds from sale of property, plant and equipment��������������������������������������������������������������������������
4,028
Purchases of intangible assets�����������������������������������������������������������������������������������������������������������
(374)
Investments in affiliates���������������������������������������������������������������������������������������������������������������������
—�����������������������������������������������������������������������
Proceeds from purchase of investments in subsidiaries—
Proceeds from sales of investment securities�������������������������������������������������������������������������������������
8,725
Other, net�����������������������������������������������������������������������������������������������������������������������������������������
574    Net cash flows from investing activities��������������������������������������������������������������������������������������
4,093
Cash flows from financing activities:
Net increase (decrease) in short-term bank loans������������������������������������������������������������������������������� (10,294)
Proceeds from long-term loans payable��������������������������������������������������������������������������������������������� 29,814
Repayment of long-term loans payable���������������������������������������������������������������������������������������������� (30,382)
Proceeds from issuance of bonds������������������������������������������������������������������������������������������������������
6,554
Repayment of lease obligations��������������������������������������������������������������������������������������������������������� (2,065)
Cash dividends paid��������������������������������������������������������������������������������������������������������������������������
—Other, net�����������������������������������������������������������������������������������������������������������������������������������������
(162)    Net cash flows from financing activities������������������������������������������������������������������������������������� (6,536)
Effect of exchange rate changes on cash and cash equivalents�������������������������������������������������������
37������������������������������������������������������������������
Net increase (decrease) in cash and cash equivalents
4,736
Cash and cash equivalents at beginning of year����������������������������������������������������������������������������� 14,040
Cash and cash equivalents at end of year (Note 15)������������������������������������������������������������������������� ¥18,776
See accompanying notes.

22

ANNUAL REPORT 2018

2017

2018

¥(18,966)$ 55,224

12,076283(3,385)(2,386)(38)
7,803

104,282668(25,103)(1,242)(51,562)
27,146

1,148
2,280
1,089
1,934
1,321

57,341(2,004)(5,252)(2,080)(17,573)(3,466)
(415)
6,066
—
3,871
(2,177)3,010
10,048(9)(320)(53,407)
9,280(11,850)(26,666)
10,372
67,206(13,476)
6,388
(257)
(3,024)
166—(168)(10,371)(83,386)
37,914(3,520)——82,125
5,402
38,525

2,271
18,930(19,830)—(1,746)(2,085)(19)(2,479)(638)(3,440)17,482¥ 14,040(96,893)
280,628(285,975)
61,690(19,437)—(1,524)(61,521)348
44,578132,153$176,731

Notes to Consolidated Financial Statements
Sanden Holdings Corporation and Consolidated Subsidiaries
Years ended March 31, 2018 and 2017

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of Sanden Holdings
Corporation (the “Company”), a Japanese corporation, and its consolidated
subsidiaries have been prepared in accordance with the provisions set forth in
the Japanese Financial Instruments and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as toapplication and disclosure requirements of International Financial ReportingStandards (“IFRS”).
The accounts of the consolidated overseas subsidiaries are prepared inaccordance with either IFRS or generally accepted accounting principles in the
United States (“US GAAP”), with adjustments for four specified items as applicable. Please refer to “Unification of Accounting Policies Applied to Overseas
Subsidiaries for Consolidated Financial Statements” below for details. The
accompanying consolidated financial statements have been restructured andtranslated into English (with some expanded descriptions) from the consolidated financial statements of the Company prepared in accordance with Japanese
GAAP and filed with the appropriate Local Finance Bureau of the Ministry of
Finance as required by the Financial Instruments and Exchange Law. Some
supplementary information included in the Japanese-language statutory­consolidated financial statements, but not required for fair presentation,
is not presented in the accompanying consolidated financial statements.
The consolidated financial statements are stated in Japanese yen, the­currency of the country in which the Company is incorporated and operates.
The translations of the Japanese yen amounts into U.S. dollars are included
solely for the convenience of readers outside Japan, using the prevailingexchange rate at March 31, 2018, which was ¥106.24 to U.S. $1.00. The­convenience translations should not be construed as representations that theJapanese yen amounts have been, could have been, or could in the future
be converted into U.S. dollars at this or any other rate of exchange.
2. Significant Accounting Policies
Consolidation — The consolidated financial statements include the accountsof the Company and its consolidated subsidiaries (46 subsidiaries at March 31,2018 and 49 subsidiaries at March 31, 2017). For the purposes of preparing
the consolidated financial statements, all significant intercompany balances,transactions and unrealized profits have been eliminated.
In accordance with the Accounting Principles for Consolidated Financial
Statements (the “Accounting Principles”), all companies are required to consolidate all significant investees, which are controlled through substantial ownership of majority voting rights or the existence of certain conditions.
The changes in the scope of consolidation are as follows:
Consorcio Teksan, S.A. de C.V. and two other subsidiaries, all of which had
been included in the scope of consolidation, were merged into SANDEN
MANUFACTURING MEXICO S.A. DE C.V., which is a consolidated subsidiary,
resulting in an exclusion of the former three subsidiaries from the scope of
consolidation for the year ended March 31, 2018.
Certain subsidiaries including Sanden Bright Partner Corporation are excluded from the scope of consolidation because the effect of their sales, net
income or loss, total assets and retained earnings on the accompanying­consolidated financial statements are immaterial.
Financial information of Tianjin Sanden Automotive Air-Conditioning Co., Ltd.,
Sanden Shanghai Refrigeration Co., Ltd., Sanden (Suzhou) Precision Parts Co.,
Ltd., Sanden Chongqing Automotive Air Conditioning Co., Ltd., Sanden
Shanghai Environment Thermal Systems Co., Ltd., and SANDEN
MANUFACTURING MEXICO S.A. DE C.V. for the fiscal year ended December 31,
2017 is included for the purpose of preparing the consolidated financial statements, with necessary adjustment for significant transactions that occurred
during the period between December 31, 2017 and March 31, 2018. In
respect of Choon Tian International (Shanghai) Co., Ltd., whose fiscal year-end
is also December 31, financial information of the subsidiary as of and for the
12-month period ended March 31, 2018 is consolidated.

Equity method— The equity method was applied to the investments in 7 affiliates
at March 31, 2018 and 8 affiliates at March 31, 2017, by using financial statements for the fiscal years of each affiliate, some of which differ from those of theCompany. The Company’s entire equity interests in Sanden (Shanghai) Automotive
Air-Conditioning Co., Ltd. was sold to Sanden Huayu Automotive Air-Conditioning
Co., Ltd., which is an affiliated company that is accounted for by the equity method,resulting in an exclusion of the former affiliated company from the scope of equity
method for the year ended March 31, 2018. Investments in all other unconsolidated
subsidiaries and affiliated companies including Sanpak Engineering Industries (PVT)Ltd. are stated at acquisition cost. These companies are not accounted for using theequity method, due to their immaterial impact on the consolidated net income andconsolidated retained earnings. Earnings of such companies are recorded in the
Company’s books only to the extent that cash dividends are received.
Allowance for doubtful accounts — Under Japanese accounting standards
for financial instruments, allowance for doubtful accounts provided by theCompany and its domestic subsidiaries consists of the estimated uncollectible
amount with respect to identified doubtful receivables and an amount calculated using an experienced rate with respect to the remaining receivables.
Consolidated overseas subsidiaries have provided an allowance for doubtful
accounts at the estimated amounts of possible losses.
Inventories— Inventories are principally stated at the weighted-average cost,
unless the market value of inventories declines significantly and the cost is notexpected to be recovered. In such cases, cost is reduced to net realizable value.
Investment securities — Investment securities held by the Company andits consolidated subsidiaries are classified as: a) equity securities issued byunconsolidated subsidiaries and affiliated companies and b) available-for-salesecurities. The Company and its consolidated subsidiaries do not hold trading
securities or held-to-maturity debt securities.
Equity securities issued by unconsolidated subsidiaries and affiliated companies that are not accounted for using the equity method are stated at acquisition cost and written down to its impaired value if an indication of impairment
is present and the fair value is less than the cost.
Available-for-sale securities for which fair value is readily determinable arestated at market value. Unrealized gains or losses, net of taxes are posted ina separate component of net assets. Available-for-sale securities for which
fair value is not readily determinable are stated at cost.
Those available-for-sale securities which are significantly impaired are written down to an estimated realizable value regardless whether the fair value isreadily determinable or not.
Gains and losses on sales of available-for-sale securities are determined byusing the moving average method.
Derivatives and hedges — Derivative financial instruments are stated at fairvalue and changes in the fair value are recognized as gains and losses in the
consolidated statements of operations.
If derivative financial instruments are used as hedges and meet certain
hedging criteria, the gains or losses resulting from changes in the fair value ofthe derivatives are recorded in accumulated comprehensive income in the consolidated balance sheets until the related gains and losses on the hedged
items are recognized.
If interest rate swaps used by the Company and its consolidated domestic
subsidiaries meet certain hedge criteria, the net settlement of interest undersuch interest rate swaps is reported as a component of interest on related
hedged assets or liabilities (the “Exceptional method”).
The Company and its consolidated subsidiaries use forward exchange contracts, interest rate swaps and commodity swaps mainly for the purpose of
mitigating (i) fluctuation risk of foreign currency exchange rates with respect
to receivables in foreign currency and future transactions in foreign currency,(ii) fluctuation risk of interest rates with respect to long-term loans payable,and (iii) fluctuation risk of commodity prices of raw materials.
The Company and its consolidated subsidiaries evaluate hedge effectivenessannually by comparing the cumulative changes in fair value of hedged itemswith the corresponding changes in the hedging derivatives, except for interest
rate swaps to which the Exceptional method applies.
SANDEN Holdings Corporation23

▲

Notes to Consolidated Financial Statements

Property, plant and equipment — Property, plant and equipment are statedat cost. Depreciation is computed using the straight-line method. For theCompany and its consolidated domestic subsidiaries, depreciation of assets
whose acquisition costs are between ¥100 thousand and ¥200 thousand isprovided using the straight-line method over three years.
Estimated useful lives are as follows:   Buildings and structures
3 to 50 years (8 to 50 years in 2017)   Machinery and equipment 3 to 13 years
Goodwill and intangible assets — Goodwill is amortized over a period of five
years using the straight-line method. Intangible assets are amortized using thestraight-line method over the estimated useful lives.
Long-lived assets impairment — Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying
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 thesum 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 is measured as the amount by which the carrying amount of an asset or
asset group exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of theasset or asset group or the net selling price at disposition.
The impairment of assets for certain overseas subsidiaries is accounted forin accordance with either International Financial Reporting Standards or US
GAAP, which requires long-lived assets and certain identifiable intangibles to beheld and used by an entity to be reviewed for impairment whenever events ofchanges in circumstances indicate that the carrying amount of an asset may
not be recoverable.
Accounting for lease transactions as lessee — For the finance leases that
do not transfer ownership, the Company and its consolidated subsidiaries
account for them in the same manner as usual acquisitions. Depreciation ofleased assets is computed using the straight-line method over the lease periodwith zero residual value.
Income taxes — The provision for income taxes is computed based on pretax
income included in the consolidated statements of operations. Deferred tax
assets and liabilities are recognized for the expected future tax consequencesof temporary differences between the accounting and tax basis of assets andliabilities. A valuation allowance is recorded to reduce deferred tax assets tothe extent that it is no longer probable that relevant tax benefit will be realized.
Retirement benefits — The Company’s consolidated subsidiaries have adopted the benefit formula basis for calculation of projected benefit obligation
incurred in the current fiscal year. Prior service costs are recognized in the consolidated statements of operations using the straight-line method beginningfrom the fiscal year in which they are incurred, over years within average residual periods of service of employees. Actuarial gains and losses are recognizedin the consolidated statements of operations using the straight-line method
over years within the average residual periods of service of employees. The
Company recognizes actuarial gains and losses in the fiscal year when they are
incurred.
Provision for directors’ stock compensation — Provision for directors’
stock compensation represents the amounts for future payments of theCompany’s stock to directors. The provision is recognized based on the amountthat is expected to be paid, which is determined using the points allocated toeach director as prescribed in the Company’s share delivery policy.
Allowance for outstanding claims — Allowance for outstanding claimsr­ epresents the amount for future payments of settlement in relation to violations of antitrust laws, etc. with regard to past transactions of certain automotive devices.
Foreign currency translation — Under Japanese GAAP, all receivables andpayables denominated in foreign currencies are translated at the exchange rate
prevailing at the year-end, and differences arising from translation are includedin the consolidated statements of operations.

24

ANNUAL REPORT 2018

Translation of financial statements of overseas subsidiaries — The­balance sheet accounts of overseas subsidiaries and affiliated companies
are translated into Japanese yen at the year-end rates. Annual revenue andexpense accounts are accumulated amounts of quarterly figures that are translated at the quarterly average rates of exchange.
The increase and decrease in net assets resulting from this translation­procedure were reported as foreign currency translation adjustments inother comprehensive income and non-controlling interests in consolidated­subsidiaries.
Unification of Accounting Policies Applied to Overseas Subsidiaries
for Consolidated Financial Statements — The Company adopts Practical
Issues Task Force No. 18, entitled the “Practical Solution on Unification of
Accounting Policies Applied to Overseas Subsidiaries for Consolidated Financial
Statements” (as amended on March 29, 2017, “PITF No. 18”).
PITF No. 18 provides as follows: 1) the accounting policies and procedures
applied to a parent company and its subsidiaries for similar transactions andevents under similar circumstances should, in principle, be unified for the preparation of the consolidated financial statements; 2) financial statements prepared by overseas subsidiaries in accordance with either IFRS or US GAAP
tentatively may be used for the consolidation process; and 3) the following
items should be adjusted in the consolidation process so that net income isaccounted for in accordance with Japanese GAAP unless they are not material:(i) Amortization of goodwill(ii)	Actuarial gain and loss of defined benefit plans recognized outside profit
or loss(iii) Capitalization of intangible assets arising from development phases(iv) Fair value measurement of investment properties and the revaluation
model for property, plant and equipment, and intangible assets
Consolidated statements of cash flows — In preparing the consolidated
statements of cash flows, cash on hand, readily available deposits and highly
liquid short-term investments with maturities not exceeding three months at
the time of purchase are considered to be cash and cash equivalents.
Amounts per share — Basic net income (loss) per share of common stock
is computed using the weighted-average number of shares of common stock
outstanding during the year. Diluted net income (loss) per share of common
stock is computed using the weighted-average number of shares of common
stock outstanding during the year after giving effect to the dilutive potential of
the shares of common stock to be issued upon the exercise of warrants. Cashdividends per share represent actual amounts declared as applicable to therespective years.
Revenue recognition — The Company and its consolidated domestic subsidiaries generate revenue principally through the sales of finished products. In
the Automotive Systems Business and the Other Business, sales revenue isrecognized when products are shipped and the customer takes ownership. In
the Commercial Store Systems Business, sales revenue is principally recognized when products are shipped. However, certain products require installationby the Company and its consolidated domestic subsidiaries and, in such cases,
sales revenue is recognized when the installation is completed.
Reclassifications — Certain previous year amounts have been reclassified toconform to the 2018 presentation to reflect the changes of importance onsome accounts. This reclassification has no impact on previously reported
results of operations or retained earnings.
Accounting standards issued but not yet adopted — “Implementation
Guidance on Tax Effect Accounting” (Accounting Standards Board of Japan(“ASBJ”) Guidance No. 28, February 16, 2018)“Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ
Guidance No. 26, February 16, 2018)(1) Summary
Treatment of taxable temporary differences relating to subsidiary shares in
non-consolidated financial statements has been revised and treatment ofrecoverability of deferred tax assets for entities that fall under Category 1 has
been clarified.

(2) Effective date
The Company expects to apply the guidance from the beginning of the year
ending March 31, 2019.
(3) Effects of application of the guidance
The Company is currently evaluating the effect on the consolidated financial
statements arising from the application of the guidance.
“Accounting Standard for Revenue Recognition” (ASBJ Statement No.
29, March 30, 2018)“Implementation Guidance on Accounting Standard for Revenue Recognition”(ASBJ Guidance No. 30, March 30, 2018)(1) Summary
ASBJ developed a comprehensive accounting standard for revenue recognition.
Revenue is recognized by applying the following five steps:
Step 1: Identify the contract
Step 2: Identify the performance obligations under the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the separate performance obligations
Step 5: R ecognize revenue when performance obligations are satisfied or as
they are satisfied(2) Effective date
The Company expects to apply the standard and guidance from the beginningof the year ending March 31, 2022.
(3) Effects of application of the guidance
The Company is currently evaluating the effect on the consolidated financial
statements arising from the application of the standard and guidance.
3. Inventories
The following is a summary of inventories at March 31, 2018 and 2017.

Millions of yen
2018
2017

Merchandise and finished goods������������ ¥21,895
Work in process������������������������������������ 12,089
Raw materials��������������������������������������� 10,065
Other inventories����������������������������������� 3,438
Total����������������������������������������������������� ¥47,490¥23,200
10,547
10,026
3,406¥47,180

Thousands of
U.S. dollars(Note 1)
2018

$206,089
113,789
94,73832,360$447,006

4. Investment in Securities
The following is a summary of the acquisition costs and book values of available-for-sale securities with available fair values as of March 31, 2018 and2017.

Securities with book value exceedingacquisition cost

Equity securities������������������������������������������
Bonds��������������������������������������������������������
Others��������������������������������������������������������
Total�����������������������������������������������������������
Securities with book value not exceedingacquisition cost

Equity securities������������������������������������������
Bonds��������������������������������������������������������
Others��������������������������������������������������������
Total�����������������������������������������������������������

Millions of yen
2018
Acquisition
Book
cost
value
Difference

¥552
—
—
¥552

¥973
—
—
¥973

¥421
—
—
¥421

Acquisition
cost

Book
value

Difference

¥ —
—
—
¥ —

¥ —
—
—
¥ —

¥ —
—
—
¥ —

Securities with book value exceedingacquisition cost

Millions of yen
2017
Acquisition
Book
cost
value
Difference

Equity securities������������������������������������������ ¥3,836
Bonds��������������������������������������������������������
—Others��������������������������������������������������������
—Total����������������������������������������������������������� ¥3,836¥8,686——¥8,686¥4,849——¥4,849Acquisition
cost

Book
value

Difference

Equity securities ����������������������������������������� ¥   94Bonds �������������������������������������������������������
300
Others �������������������������������������������������������
—Total ���������������������������������������������������������� ¥  394¥   94299—¥  394¥   (0)(0)—¥   (0)

Securities with book value not exceedingacquisition cost

Securities with book value exceedingacquisition costThousands of U.S. dollars (Note 1)
2018
Acquisition
Book
cost
value
Difference

Equity securities������������������������������������
Bonds��������������������������������������������������
Others��������������������������������������������������
Total�����������������������������������������������������

$5,195——$5,195$9,158——$9,158$3,962——$3,962

Securities with book value not exceedingacquisition cost

Acquisition
cost

Book
value

Difference

Equity securities������������������������������������
Bonds��������������������������������������������������
Others��������������������������������������������������
Total�����������������������������������������������������

$  —
—

$  —
—

$  —
—

—
$  —

—
$  —

—
$  —

The following is a summary of the book values of available-for-sale securities for which fair value was not readily determinable at March 31, 2018 and2017.

Millions of yen
2018
2017

Unlisted stock��������������������������������������������������� ¥212

¥219

Thousands of
U.S. dollars(Note 1)2018

$1,995

Total sales of available-for-sale securities for the years ended March 31,2018 and 2017 amounted to ¥9,187 million ($86,474 thousand) and ¥125
million, related gains amounted to ¥5,488 million ($51,656 thousand) and¥38 million, and related losses for the years ended March 31, 2018 and2017 amounted to ¥9 million ($84 thousand) and ¥0, respectively.

SANDEN Holdings Corporation25

▲

Notes to Consolidated Financial Statements

5. Income Taxes
The Company and its consolidated domestic subsidiaries are subject to corporation, inhabitants’ and enterprise taxes, which, in the aggregate, indicate thestatutory tax rate in Japan of approximately 30.7% for the years ended March
31, 2018 and 2017.
The following table summarizes the significant difference between the statutory tax rate and the Sanden Group’s effective tax rate for accounting purposes
for the year ended March 31, 2018:2018

Statutory tax rate:
30.7%
Nondeductible expense�������������������������������������������������������������� 2.3
Foreign tax credits��������������������������������������������������������������������� 1.9
Different tax rates applied to overseas subsidiaries���������������������� (3.5)
Amortization of goodwill������������������������������������������������������������� 0.4
Equity in net income of affiliates������������������������������������������������� (14.3)
Tax effect for unrealized profits on inventories������������������������������ 2.3
Tax credit���������������������������������������������������������������������������������� (1.0)
Tax breaks for investment for facilities����������������������������������������� (9.1)
Valuation allowance������������������������������������������������������������������� 14.6
Others��������������������������������������������������������������������������������������� (0.2)
Effective tax rate���������������������������������������������������������������������������� 24.0%
For the year ended March 31, 2017, disclosure of the difference between
the statutory tax rate and the Sanden Group’s effective tax rate for accounting
purposes is omitted due to loss before income taxes.
Significant components of the Sanden Group’s deferred tax assets and­liabilities as of March 31, 2018 and 2017 were as follows:

Millions of yen
2018
2017

Deferred tax assets: Unrealized gains on inventories
from intercompany sales����������������� ¥   149
 Accrued expenses����������������������������� 1,047
Warranty liabilities�����������������������������
641
Allowance for doubtful accounts �������
630 Doubtful accounts written off�������������
648 Loss on devaluation forslow-moving inventory��������������������
Accrued employees’ bonuses������������

806
756

 Unrealized gains on fixed assets
from intercompany sales�����������������
70
Depreciation�������������������������������������
740 Net defined benefit liability����������������
515 Net operating loss carryforward��������� 12,830 Environmental liability�����������������������
73 Impairment loss on long-lived assets���394 Tax breaks for investment
for facilities������������������������������������� 2,110 Others���������������������������������������������� 2,507
Gross deferred tax assets���������������������� 23,922
Less: Valuation allowance���������������������� (17,305)
Total deferred tax assets������������������������ 6,616
Deferred tax liabilities:
Depreciation�������������������������������������
(854)
Net unrealized gain on securities�������
(125) Effect on retained earnings
of foreign affiliates��������������������������
(682)
Others����������������������������������������������
(516)
Gross deferred tax liabilities������������������� (2,179)
Net deferred tax assets ������������������������ ¥4,436

26

ANNUAL REPORT 2018

Thousands of
U.S. dollars(Note 1)2018¥   121
429
1,100
598
718

$  1,402
9,855
6,033
5,929
6,099

809
750

7,586
7,115

104
701
515
13,873
144
1,255

658
6,965
4,847
120,764
687
3,708

1,470
1,505
24,098(17,337)
6,760

19,86023,597225,169(162,885)
62,274(921)(1,228)(8,038)(1,176)

(760)
(589)
(3,499)(6,419)(4,856)(20,510)¥ 3,261$ 41,754

Net deferred tax assets are included in the accompanying consolidated balance
sheets as follows.

Millions of yen
2018
2017

Assets:Deferred income taxes�������������������������������� ¥2,590 ¥2,372
Deferred income taxes, non-current������������� 2,691
2,621
Liabilities:
Deferred income taxes��������������������������������
(29)(7)
Deferred income taxes, non-current������������� (815) (1,724)
Net deferred tax assets����������������������������������� ¥4,436 ¥3,261

Thousands of
U.S. dollars(Note 1)
2018

$24,378
25,329(272)(7,671)$41,754

6. Financial Instruments
1. Qualitative information on financial instruments(1) Policies for using financial instruments
The Sanden Group raises funds according to its medium-term financial plan, andit utilizes diversified financing methods of raising funds through bank loans or
issuance of bonds. If surplus funds arise, the Sanden Group uses highly liquid
instruments for the management of funds. The Sanden Group also enters into
financial derivative transactions to hedge various risks, as described in detailbelow and does not use derivatives for speculative purposes.
(2) Details of financial instruments used and the exposures to risk and how theyarise
Trade notes and accounts receivable are exposed to the credit risks of customers.
Receivables denominated in foreign currencies are exposed to foreign currency
exchange risk. In principle, foreign exchange forward contracts are used to hedge
this risk.
Marketable and investment securities are mostly shares of our related business
partners, and are exposed to stock market fluctuation risk.
Maturities of trade notes and accounts payable are mostly within four months.
Payables denominated in foreign currencies are exposed to foreign currency
exchange risk. In principle, foreign exchange forward contracts are used to hedge
this risk.
Principally, the purposes of bonds, long-term loans payable and lease obligations are for financing capital investment, and the longest maturity is 9 years after
March 31, 2018. A large part of them are borrowed or issued with fixed interest
rates; therefore, there is no interest rate risk. The Sanden Group enters into interest rate swap agreements to reduce exposure to losses resulting from adverse
fluctuations in interest rates on the part of long-term loans payable with variableinterest rates.
The Sanden Group entered into financial derivative transactions such as forward exchange contracts, to hedge exchange rate risk associated with foreign
currency denominated trade receivables and payables, interest rate swap agreements to reduce exposure to losses resulting from adverse fluctuations in interest
rates on long-term loans payable, and currency and interest rate swap agreements to hedge exchange rate risk and interest rate risk associated with foreign
currency denominated bank loans.
(3) Supplemental information on fair values
Fair values of financial instruments are measured based on the quoted market
prices, if available, or reasonably calculated values if quoted market prices are notavailable. Fair values of financial instruments for which quoted market prices are
not available are calculated based on certain assumptions, and the fair values
might differ if different assumptions are used. In addition, the contract amount of
the derivative transactions described below in “7. Derivatives” does not represent
the market risk of the derivative transactions.
2. Fair values of financial instruments (at March 31, 2018)
Book values of the financial instruments included in the consolidated balance
sheet and their fair values at March 31, 2018 are as follows.

In addition, financial instruments whose fair value cannot be reliably measured are not included. (Please see “Note 2. Financial instruments for which
the fair values cannot be reliably measured.”)Note 1: Fair value measurement of financial instruments
Assets1. (1) Cash and time deposits, (2) receivables and (3) consumption taxes receivable
The book value of these assets approximates fair value because they are settled in a short period.
2.(4) Investment securities
The fair value of equity securities equals to the quoted market price, if available.
The fair value of debt securities equals to the quoted market price or price provided by financial institutions. More information on available-for-sale securities
is described in “4. Investment in Securities.”

Millions of yen
2018
Fair value

Difference¥ 18,776
79,401
4,527
973¥103,679

¥  —
—
—
—
¥  —

¥ 64,523
45,011

¥  —
—

2,018
699
6,700
74,433

2,029
699
6,733
74,138

11
—
33
(295)

(7) Lease obligations
due after one year���������������������������
6,113
Total liabilities�������������������������������������� ¥199,500

6,150¥199,28737¥(213)

Derivatives *2��������������������������������������� ¥    122¥    122¥  —

Note 2: F inancial instruments for which the fair values cannot be reliably measured are as follows:

Thousands of U.S. dollars (Note 1)
2018Book value
Fair value
Difference

Millions of yen
2018

Thousands of
U.S. dollars(Note 1)
2018

Investment securities:
Unlisted������������������������������������������������������������ ¥   212Unconsolidated subsidiaries and affiliates����������� 21,774$  1,995
204,951

Book value(1) Cash and time deposits������������������� ¥ 18,776(2) Receivables*1��������������������������������� 79,401(3) Consumption taxes receivable����������
4,527(4) Investment securities�����������������������
973
Total assets����������������������������������������� ¥103,679(1) Payables����������������������������������������� ¥ 64,523(2) Short-term bank loans��������������������� 45,011(3) L ease obligations due within
one year�����������������������������������������
(4) Income taxes payable����������������������
(5) Bonds��������������������������������������������
(6) Long-term loans payable�����������������

(1) Cash and time deposits������������������� $  176,731 $  176,731 $   —(2) Receivables *1�������������������������������� 747,373
747,373—(3) Consumption taxes receivable����������
42,611
42,611—(4) Investment securities�����������������������
9,158
9,158
—
Total assets����������������������������������������� $  975,894 $  975,894 $   —(1) Payables����������������������������������������� $  607,332 $  607,332 $   —(2) Short-term bank loans��������������������� 423,672
423,672—(3) Lease obligations due within
one year�����������������������������������������
18,99419,098103(4) Income taxes payable����������������������
6,579
6,579
—
(5) Bonds��������������������������������������������
63,06463,375
310(6) Long-term loans payable����������������� 700,611
697,835 (2,776)(7) Lease obligations
due after one year���������������������������
57,53957,887348
Total liabilities�������������������������������������� $1,877,823 $1,875,818 $(2,004)
Derivatives *2��������������������������������������� $    1,148 $    1,148 $   —*1: Allowance for doubtful accounts associated with trade notes and accounts receivable isdeducted.
*2: Derivative assets and liabilities are disclosed on a net basis.

Liabilities
1. (1) Payables, (2) short-term bank loans and (4) income taxes payable
The book value of these liabilities approximates fair value because they are settled in a short-term period.
2. (3) Lease obligations due within one year, (5) bonds, (6) long-term loans payable and (7) lease obligations due after one year
Fair value equals to the present value of future cash flows discounted by using
the current interest rate for similar loans payable, bond and lease contracts ofcomparable maturities and contract conditions.

The above are not included in “(4) Investment securities” because these investment securities do not have a quoted price in an active market and whose fairvalue cannot be reliably measured.
Note 3: The redemption schedule for monetary claims and investment securities
with maturities at March 31, 2018 was as follows:
Millions of yen
2018
WithinMore than
1 year
1 yearCash and time deposits������ ¥ 18,776
Receivables�����������������������
79,401
Consumption taxes
receivable������������������������
4,527
Investment securities
with maturities(1) Bonds����������������������
—(2) Others����������������������
—Total���������������������������������� ¥102,705

Thousands of
U.S. dollars (Note 1)
2018
WithinMore than
1 year
1 year¥——$176,731
747,373$———

42,611

—

—
—

—
—

—
—

¥—

$966,726$—

3. Fair values of financial instruments (at March 31, 2017)
Book values of the financial instruments included in the consolidated balance
sheet and their fair values at March 31, 2017 are as follows.
In addition, financial instruments whose fair value cannot be reliably measured
are not included. (Please see “Note 2. Financial instruments for which the fair values cannot be reliably measured.”)SANDEN Holdings Corporation27

▲

Notes to Consolidated Financial Statements

Book value(1) Cash and time deposits������������������� ¥ 14,040(2) Receivables*1���������������������������������
84,050(3) Consumption taxes receivable����������
3,246(4) Investment securities�����������������������
9,080
Total assets����������������������������������������� ¥110,418(1) Payables����������������������������������������� ¥ 67,720(2) Short-term bank loans���������������������
54,518Millions of yen
2017
Fair value

Difference¥ 14,040
84,0503,246
9,080¥110,418

¥ —
—
—
—
¥ —

¥ 67,720
54,518

¥ —
—

1,900
993
73,9701,916
993
74,47016—499(6) Lease obligations
due after one year���������������������������
5,247
Total liabilities�������������������������������������� ¥204,352

5,302¥204,922

55¥570

Derivatives *2��������������������������������������� ¥   (458)¥   (458)¥ —(3) Lease obligations due within
one year�����������������������������������������
(4) Income taxes payable����������������������
(5) Long-term loans payable�����������������

*1: Allowance for doubtful accounts associated with trade notes and accounts receivable isdeducted.
*2: Derivative assets and liabilities are disclosed on a net basis.

Note 1: Fair value measurement of financial instruments
Assets1. (1) Cash and time deposits, (2) receivables and (3) consumption taxes
receivable
The book value of these assets approximates fair value because they aresettled in a short period.
2. (4) Investment securities
The fair value of equity securities equals to the quoted market price, if available. The fair value of debt securities equals to the quoted market price or
price provided by financial institutions. More information on available-forsale securities is described in “4. Investment in Securities.”

Liabilities
1. (1) Payables, (2) short-term bank loans and (4) income taxes payable
The book value of these liabilities approximates fair value because they aresettled in a short-term period.
2. (3) Lease obligations due within one year, (5) long-term loans payable and(6) lease obligations due after one year
Fair value equals to the present value of future cash flows discounted byusing the current interest rate for similar loans payable and lease contractsof comparable maturities and contract conditions.
Note 2: F inancial instruments for which the fair values cannot be reliably measured are as follows:
Millions of yen
2017

Investment securities:
Unlisted���������������������������������������������������������������������������������� ¥   219Unconsolidated subsidiaries and affiliates��������������������������������� 22,567
The above are not included in “(4) Investment securities” because theseinvestment securities do not have a quoted price in an active market andwhose fair value cannot be reliably measured.
Note 3: The redemption schedule for money claims and investment securities
with maturities at March 31, 2017 was as follows:
Millions of yen
2017
WithinMore than
1 year
1 yearCash and time deposits����������������������������������������������� ¥ 14,040
Receivables����������������������������������������������������������������
84,050Consumption taxes receivable��������������������������������������
3,246
Investment securities with maturities(1) Bonds���������������������������������������������������������������
300(2) Others���������������������������������������������������������������
—Total��������������������������������������������������������������������������� ¥101,636

¥—
—
—
—
—
¥—

7. Derivatives
1. F orward exchange contracts and currency swaps, which are stated at fair value and to which hedge accounting is not applied, at March 31, 2018and 2017:(Forward exchange contracts and currency swaps)
Millions of yen
More
than
1 yearFair
value

Unrealized
gains(losses)

Contract
amountMorethan
1 yearFair
value

Unrealized
gains(losses)Thousands of U.S. dollars (Note 1)
2018
More
Unrealized
Contract
than
Fair
gains
amount1 yearvalue(losses)

¥—
—

¥113
—

¥113
—

¥35,54094¥——¥(480)
27¥(480)
27$68,910—$——$1,063—$1,063
—

¥—

¥113

¥113

¥35,633¥—¥(452)¥(452)$68,910$—$1,063$1,0632018

Transaction

Contract
amountForward exchange
contracts����������������� ¥7,321
Currency swaps���������
—Total�������������������������� ¥7,321

2017

2. Derivative transactions to which hedging accounting was applied at March 31, 2018 and 2017:(Forward exchange contracts)
Hedging accounting method

2018
Deferral hedge accounting

28

Transaction

Hedged items

Millions of yen
Contract amountMore than 1 year

Fair value

Accounts payable������������������������������������������ ¥  102Accounts receivable�������������������������������������� 2,997

¥30
—

121

Total ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� ¥3,099

¥30

¥118

ANNUAL REPORT 2018

Forward exchange contracts¥ (2)Hedging accounting method

2018
Deferral hedge accounting

Transaction

Thousands of U.S. dollars (Note 1)
Contract amountMore than 1 year Fair value

Hedged items

Accounts payable������������������������������������������ $   960Accounts receivable�������������������������������������� 28,209

$282
—

1,138

Total ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� $29,169$282$1,110Hedging accounting method

2017
Deferral hedge accounting

Forward exchange contracts

Transaction$  (18)Millions of yen
Contract amountMore than 1 year

Hedged items

Fair value

Accounts payable ����������������������������������������� ¥  207¥—

Accounts receivable�������������������������������������� 7,682
Total ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� ¥7,888

—

127

¥—

¥126

Forward exchange contracts(Interest rate swaps)
Hedging accounting method

Transaction

Millions of yen
Contract amountMore than 1 year

Hedged items

2018
Exceptional method
Receiving floating rate and paying fixed rate Long-term loans payable �������������������������� ¥ 3,030
Deferral hedge accounting
Receiving floating rate and paying fixed rate Long-term loans payable �������������������������� 9,789
Total ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� ¥12,819

Hedging accounting method

Transaction

Hedged items¥  (0)

Fair value¥1,6044,542¥  —*1(108)¥6,146¥(108)

Thousands of U.S. dollars (Note 1)
Contract amountMore than 1 year
Fair value

2018
Exceptional method
Receiving floating rate and paying fixed rate Long-term loans payable ���������������������� $ 28,520
Deferral hedge accounting
Receiving floating rate and paying fixed rate Long-term loans payable ����������������������
92,140Total ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������� $120,660$15,097
42,752$   —*1(1,016)$57,850$(1,016)*1: F or certain long-term loans payable for which interest rate swaps under the Exceptional method are used to reduce exposure to losses resulting from adverse fluctuations in interest rates, the fairvalue of such swaps was included in the fair value of such long-term loans payable, which is the hedged item.

Hedging accounting method

Transaction

Hedged items

Millions of yen
Contract amountMore than 1 year

2017
Exceptional method
Receiving floating rate and paying fixed rate Long-term loans payable �������������������������� ¥19,283
Deferral hedge accounting
Receiving floating rate and paying fixed rate Long-term loans payable �������������������������� 8,265
Total ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� ¥27,548

Fair value¥3,0304,647¥    — *1(132)¥7,677¥(132)*1: F or certain long-term loans payable for which interest rate swaps under the Exceptional method are used to reduce exposure to losses resulting from adverse fluctuations in interest rates, the fairvalue of such swaps was included in the fair value of such long-term loans payable, which is the hedged item.

8. Retirement Benefits
1. Outline of the retirement benefit plans
The Company has adopted the defined contribution pension plan for enrolled
employees since March 1, 2014. Retirement benefit liability to the pensioners
is recorded based on the estimated amount of retirement benefit obligations
and plan assets at the end of the fiscal year. Expected plan assets exceed
retirement benefit obligations at March 31, 2018, and therefore the excess isrecorded in net defined benefit asset.
Consolidated domestic subsidiaries also have their own retirement benefit
plans for employees terminating their employment. Certain consolidated
domestic subsidiaries have a funded defined contribution pension plan or utilize
the governmental mutual aid institution to cover a portion of the benefits. The
remaining portion is unfunded and covered by severance payments by those
consolidated domestic subsidiaries.
Consolidated overseas subsidiaries have various retirement and post-retirement benefit plans. Such plans consist of defined benefit severance payment
or pension plans, defined contribution pension plans, post-retirement medical
plans and defined contribution plans based on government regulations. Someof these plans adopted by the consolidated overseas subsidiaries are funded.

2. D efined benefit plans, including plans to which the simplified method is applied(1) Movement in retirement benefit obligations
Millions of yen
2018
2017

Thousands of
U.S. dollars(Note 1)
2018

Balance at beginning of year������������������������ ¥7,496
236
Service cost�������������������������������������������

¥7,465
175$70,557
2,221

Interest cost�������������������������������������������

205

174

1,929

Actuarial losses (gains)����������������������������
Benefits paid������������������������������������������
 Termination of the defined benefit
retirement plan�������������������������������������
Exchange differences������������������������������

0

142

0

(318)

(277)

(2,993)

—

(30)

—

31

(152)

291

Balance at end of year�������������������������������� ¥7,652¥7,496$72,025SANDEN Holdings Corporation29

▲

Notes to Consolidated Financial Statements(2) Movements in plan assets
Millions of yen
2018
2017

Thousands of
U.S. dollars(Note 1)
2018

Balance at beginning of year������������������������ ¥4,329 ¥4,128
Expected return on plan assets����������������
257
259
Actuarial gains (losses)����������������������������
29(16)
Contributions paid by the employers��������
189
153
Benefits paid������������������������������������������ (208)(196)
Exchange differences������������������������������ (203)2Balance at end of year�������������������������������� ¥4,394 ¥4,329$40,747
2,419
272
1,778
(1,957)(1,910)$41,359(3) Reconciliation from retirement benefit obligations and plan assets to net
defined benefit liability (asset)
Millions of yen
2018
2017

Thousands of
U.S. dollars(Note 1)
2018

Funded retirement benefit obligations����������� ¥6,227 ¥6,174
Plan assets������������������������������������������������� (4,394) (4,329)$58,612(41,359)

1,833
Unfunded retirement benefit obligations������� 1,424 Net defined benefit liability
at end of year��������������������������������������� 3,257

1,845
1,321

17,253
13,403

3,167

30,657

Net defined benefit liability���������������������� 3,376
3,257
Net defined benefit asset������������������������� (118)(90) Net defined benefit liability at end of year� ¥3,257 ¥3,167

31,777(1,110)$30,657(4) Retirement benefit costs
Millions of yen
2018
2017

Thousands of
U.S. dollars(Note 1)
2018

Service cost������������������������������������������������������ ¥236 ¥175
Interest cost����������������������������������������������������� 205
174
Expected return on plan assets�������������������������� (257) (259)Amortization of actuarial losses (gains)��������������� 111
129
Total retirement benefit costs
for the fiscal year�������������������������������������������� ¥295 ¥219

$2,221
1,929(2,419)1,044$2,776

Note: In addition to the above retirement benefit costs, additional severance payments for early
retirement of ¥1,987 million were made, which were charged to the consolidated statements of operations as part of “Structure reform cost” in other expenses for the year
ended March 31, 2017.

(5) Remeasurements of defined benefit plans, before tax

Millions of yen
2018
2017

Actuarial gains (losses)��������������������������������
Total balance at end of year�������������������������

¥81
¥81

Thousands of
U.S. dollars(Note 1)
2018

$762
$762

¥280
¥280

Actuarial gains (losses) that are yet
to be recognized��������������������������������������� ¥(937)
Total balance at end of year ������������������������ ¥(937)30

ANNUAL REPORT 2018¥(1,019)¥(1,019)

2018

2017

42%
51
3
4

44%
49
2
4

Total�������������������������������������������������������������������������������� 100%100%

Bonds�����������������������������������������������������������������������������
Equity securities���������������������������������������������������������������Cash and time deposits����������������������������������������������������
Others�����������������������������������������������������������������������������

b. Long-term expected rate of return
Current and estimated asset allocations and current and long-term expected
returns on various categories of plan assets have been considered in determining the long-term expected rate of return.
(8) Actuarial assumptions
The principal actuarial assumptions at March 31, 2018 and 2017:2018

Thousands of
U.S. dollars(Note 1)
2018$(8,819)$(8,819)

2017

Discount rate������������������������������������������������������ 0.3%–4.0% 0.3%–3.8%
Long-term expected rate of return����������������������� 0.3%–7.5% 0.3%–7.5%
3. Defined contribution plans
Contributions to defined contribution plans of the Company and its consolidated
subsidiaries were ¥980 million ($9,224 thousand) and ¥2,411 million for the
fiscal years ended March 31, 2018 and 2017, respectively.
9. Short-Term Borrowings, Long-Term Debt and Lease Obligations
Short-term bank loans bore weighted-average interest rates of 2.01% and1.47% at March 31, 2018 and 2017, respectively.
Long-term debt at March 31, 2018 and 2017 consisted of the following:

Millions of yen
2018
2017

Thousands of
U.S. dollars(Note 1)
2018

Unsecured bonds:
0.17% due in 2022��������������������������� ¥ 2,000
0.17% due in 2022��������������������������� 1,700
0.86% due in 2023���������������������������
0.20% due in 2023���������������������������

¥   —$ 18,825—

16,001

1,000

—

9,412

2,000

—

18,825Loans from banks, insurance companiesa nd agricultural cooperatives, bearing
weighted-average rates of 1.59%
and 1.36% at March 31, 2018and 2017, respectively������������������������� 74,433

73,970700,61173,97029,789763,676
178,943¥44,181$584,732

81,133
Less: Amount due within one year����������� 19,011
Amount due after one year��������������������� ¥62,121

The redemption schedule on bonds subsequent to March 31, 2018 was asfollows:

Year ending March 31,(6) Accumulated remeasurements of defined benefit plans, before tax

Millions of yen
2018
2017

(7) Plan assets
a. Plan assets comprise:2019 ������������������������������������������������������������������
2020 ������������������������������������������������������������������
2021 ������������������������������������������������������������������
2022 ������������������������������������������������������������������
2023 ������������������������������������������������������������������
2024 and thereafter����������������������������������������������

Millions of yen

Thousands of
U.S. dollars(Note 1)¥  712
1,205
1,685
1,885
1,212
—

$ 6,701
11,342
15,86017,742
11,408—

The aggregate annual maturities of long-term loans payable at March 31,2018 were as follows:

Millions of yen

Thousands of
U.S. dollars(Note 1)2019 ������������������������������������������������������������������ ¥18,299
2020 ������������������������������������������������������������������ 20,649
2021 ������������������������������������������������������������������ 17,743
2022 ������������������������������������������������������������������ 10,778
2023 ������������������������������������������������������������������
4,504
2024 and thereafter����������������������������������������������
2,459$172,242
194,361
167,008
101,449
42,394
23,145

Year ending March 31,

The following assets were pledged as collateral for short-term bank loans of¥1,564 million ($14,721 thousand) and long-term loans payable of ¥2,226
million ($20,952 thousand) at March 31, 2018 and short-term bank loans of¥2,296 million and long-term loans payable of ¥1,616 million at March 31,
2017:Millions of yen
2018
2017

Inventories and other����������������������������������� ¥4,823
Land and buildings and structures,
machinery and equipment, etc., net����������� 3,029
Total����������������������������������������������������������� ¥7,852¥3,765

Thousands of
U.S. dollars(Note 1)
2018$45,397

5,309

28,510¥9,074$73,908

The aggregate annual maturities of lease obligations at March 31, 2018
were as follows:Year ending March 31,

2019 ������������������������������������������������������������������
2020 ������������������������������������������������������������������
2021 ������������������������������������������������������������������
2022 ������������������������������������������������������������������
2023 ������������������������������������������������������������������
2024 and thereafter����������������������������������������������

Millions of yen

Thousands of
U.S. dollars(Note 1)¥2,018
1,877
1,514
1,315
920
485

$18,994
17,667
14,25012,3778,659
4,565

10. Net Assets
Under the Companies Act of Japan (the “Act”), the entire amount paid for new
shares is required to be designated as common stock. However, a company
may, by a resolution of the Board of Directors, designate an amount notexceeding one-half of the amount paid of the new shares as additional paid-in
capital, which is included in capital surplus.
The Act provides that a 10% dividend shall be appropriated as additional
paid-in capital or legal earnings reserve until the aggregate amount of additional paid-in capital and the legal earnings reserve equals 25% of common
stock. The legal earnings reserve is included in retained earnings in the accompanying consolidated balance sheets. Under the Act, the legal earnings reserve
and additional paid-in capital could be used to eliminate or reduce a deficit bya resolution at the shareholders’ meeting. Additional paid-in capital and thelegal earnings reserve may not be distributed as dividends. However, all additional paid-in capital and the entire legal earnings reserve may be transferred
to other capital surplus and retained earnings, respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of the Company inaccordance with the Act. No distribution of dividends has been proposed to theannual shareholders’ meeting for the years ended March 31, 2018 and 2017.

11. Comprehensive Income (Loss)
Amounts reclassified to net income in the current year that were recognized inother comprehensive income for the years ended March 31, 2018 and 2017 andtax effects for each component of other comprehensive income are as follows:

Millions of yen
2018
2017

Net unrealized gains (losses) on securities,
net of taxes:
Increase (decrease) during the year��������� ¥ 1,000 ¥1,540
Reclassification adjustments�������������������� (5,427)(38)
Sub-total, before tax������������������������������� (4,426) 1,501
Tax (expense) or benefit��������������������������� 1,102(384)
Total, net of tax��������������������������������������� (3,323)

Thousands of
U.S. dollars(Note 1)2018$   9,412(51,082)(41,660)
10,372

1,116(31,278)

(435)
393

(706)
850

(4,094)
3,699

(41)
42

143
(12)

(385)
395

0

131

0

Foreign currency translation adjustments:
Increase (decrease) during the year��������� 1,001(2,406)

9,422

(29)
111

159
120

(272)
1,044

81
(3)

280
(13)

762
(28)

78

266

734

Share of other comprehensive income ofa ffiliates accounted for using
equity method:
Increase (decrease) during the year���������
Reclassification adjustments��������������������

(57)
(274)

—
—

(536)
(2,579)Total�������������������������������������������������������

(331)(1,490)(3,115)

Total other comprehensive income��������������� ¥(2,573) ¥(2,381)$(24,218)

Unrealized gains (losses) on hedging
derivatives, net of taxes:
Increase (decrease) during the year���������
Reclassification adjustments��������������������
Sub-total, before tax�������������������������������Tax (expense) or benefit���������������������������
Total, net of tax���������������������������������������

Remeasurements of defined benefit plans,
net of taxes:
Increase (decrease) during the year���������
Reclassification adjustments��������������������
Sub-total, before tax�������������������������������Tax (expense) or benefit���������������������������
Total, net of tax���������������������������������������

12. Contingent Liabilities
At March 31, 2018 and 2017, the Company and its consolidated subsidiaries
had the following contingent liabilities:
Millions of yen
2018
2017

Guarantees or reservation of guarantees for loans of affiliated companies
from banks and other lenders������������������� ¥600

¥911

Thousands of
U.S. dollars(Note 1)
2018

$5,647

In connection with a plea agreement with the U.S. Department of Justice forbreaches of antitrust law by the Company civil lawsuits (class action lawsuits),
etc. demanding compensation for damage from the breaches have been filedin North America. The outcome of the lawsuits may affect the Sanden Group’sbusiness performance, however, it is difficult to reasonably estimate theiramount at this moment, and their impacts on the Sanden Group’s operating
results and financial condition are unclear.

SANDEN Holdings Corporation31

▲

Notes to Consolidated Financial Statements

Liquidated receivables which did not meet criteria for derecognition thus
were accounted for as financing transactions as at March 31, 2018 and 2017
and were as follows:
Millions of yen
2018
2017

Trade notes and accounts receivable������������������ ¥825
Consumption taxes receivable���������������������������� 636¥——

Thousands of
U.S. dollars(Note 1)
2018

$7,765
5,986

Liabilities that correspond to the liquidated receivables above are recorded
in “Other non-current liabilities”. The trade notes and accounts receivable
above include factoring associated with self-settled trust of ¥568 million($5,346 thousand) at March 31, 2018.
Trade notes maturing at the end of the consolidated fiscal year are settled
on their clearance dates. As the balance sheet date of the year ended March
31, 2018 was a bank holiday, the following amounts of trade notes thatmatured on the balance sheet date were included in the balance of trade notes
and accounts receivable at March 31, 2018:
Millions of yen
2018
2017

Trade notes and accounts receivable������������������ ¥284¥—

Thousands of
U.S. dollars(Note 1)2018

$2,673

Millions of yen

Current assets����������������������������������������������������������������������������
Non-current assets���������������������������������������������������������������������
Goodwill�������������������������������������������������������������������������������������
Current liabilities�������������������������������������������������������������������������
Foreign currency translation adjustments�������������������������������������
Acquisition cost of shares������������������������������������������������������������Cash and cash equivalents����������������������������������������������������������

¥1,99822
20(1,988)(1)

Proceeds from acquisition, net�����������������������������������������������������

¥  164

2. Good Life Manufacturing Sdn. Bhd.

52
216

Millions of yen

Current assets����������������������������������������������������������������������������
Non-current assets���������������������������������������������������������������������
Goodwill�������������������������������������������������������������������������������������
Current liabilities�������������������������������������������������������������������������
Long-term liabilities��������������������������������������������������������������������
Foreign currency translation adjustments�������������������������������������

¥312
516
52
(860)
(6)
(1)

Acquisition cost of shares������������������������������������������������������������Cash and cash equivalents����������������������������������������������������������
Proceeds from acquisition, net�����������������������������������������������������

13
15
¥  2

13. Environmental Matters
The Vendo Company, a consolidated subsidiary located in the United States ofAmerica, was notified of the contamination of groundwater discovered in areas
close to its manufacturing facility by the California State Regional Water Quality
Control Board. The Vendo Company entered into an agreement to compensate
to the cost for remedial activities. It also entered into a settlement agreementwith neighboring landowners to pay a part of the remediation costs related tothe contamination described above.
The Vendo Company provided for the liability based on the estimated obligation relating to the costs for the remediation, which amounted to ¥273 million($2,569 thousand) and ¥360 million at March 31, 2018 and 2017, respectively, and were included in other non-current liabilities.

16. Amounts per Share
Net assets and net income (loss) per share as at and for the years ended
March 31, 2018 and 2017, respectively, are as follows:

14. Leases
The Company and its consolidated subsidiaries account for finance leases that
do not transfer ownership in the same manner as usual acquisitions.
The leased assets consist of structures, machinery and equipment and furniture and fixtures. Leased software is included as part of “intangible assets.”
These leased assets are mainly for the Automotive Systems Business and theCommercial Store Systems Business.

Weighted-average number of sharesof common stock������������������������������������������� 27,635,774

27,624,211

Millions of yen
2018
2017

Thousands of
U.S. dollars(Note 1)2018

15. Cash Flow Information
Cash and cash equivalents at March 31, 2018 and 2017 consisted of the­following:
Millions of yen
2018
2017

Cash and time deposits�������������������������� ¥18,776
Cash and cash equivalents��������������������� ¥18,776

Thousands of
U.S. dollars(Note 1)
2018

¥14,040$176,731¥14,040$176,731

The Company newly consolidated Choon Tian Pte Ltd. and its subsidiary as
well as Good Life Manufacturing Sdn. Bhd. through its acquisitions of shares inthose companies for the year ended March 31, 2017. Breakdowns of assets
acquired and liabilities assumed by the Company when starting consolidationof the subsidiaries as well as reconciliation between acquisition costs and net
proceeds from the acquisitions were as follows:

32

1. Choo Tian Pte Ltd.

ANNUAL REPORT 2018

Yen
2018

2017

Net assets per share�������������������������� ¥1,633.99 ¥1,576.34
Net income (loss) per share���������������� 154.00(814.10)

U.S. dollars(Note 1)
2018$15.38
1.44

Basic and diluted net income (loss) per share of common stock for the years
ended March 31, 2018 and 2017 have been computed based on the following:
Number of shares
2018
2017

Net income (loss) attributable to ownersof the parent��������������������������������������� ¥4,255
Net income (loss) attributable to ownerso f the parent relating tocommon stock������������������������������������ 4,255¥(22,488)$40,050(22,488)

40,0502017

U.S. dollars(Note 1)
2018¥(814.10)

$1.44

Yen
2018

Basic net income (loss) per share ofcommon stock������������������������������������ ¥154.00

Diluted net income per common share for the year ended March 31, 2018
is not presented as the Company did not have common stock with potential
dilutive effect. Diluted net income per common share for the year ended March
31, 2017 is not presented as the Company recorded a net loss and did nothave common stock with potential dilutive effect.
The Company’s shares held by the executive compensation BIP Trust (“BIP
Trust”) are recorded as treasury stock in shareholders’ equity which are
deducted from the weighted-average number of shares outstanding during theyear for the purpose of calculating net income (loss) per share, and from theoutstanding number of shares issued at the end of the year for the purpose of
calculating net assets per share.

The weighted-average number of shares held by the BIP Trust was 149,662
shares and 163,095 shares for the years ended March 31, 2018 and 2017,
respectively. The total number of shares held by the BIP Trust at the balance
sheet date was 142,695 shares and 159,541 shares as of March 31, 2018and 2017, respectively.
The Company implemented a 5-for-1 share consolidation on October 1,
2017. Amounts per share are computed as if the share consolidation was
implemented on April 1, 2016.
17. Business Combination
For the year ended March 31, 2018
Transaction under common control
Merger among consolidated subsidiaries

2. Outline of accounting policy applied
The Company accounted for the mergers as transactions under common control in compliance with the “Accounting Standard for Business Combinations”(ASBJ Statement No. 21, September 13, 2013) and the “Guidance on
Accounting Standard for Business Combinations and Accounting Standard forBusiness Divestitures” (ASBJ Guidance No. 10, September 13, 2013).
For the year ended March 31, 2017
Transaction under common control
Merger among consolidated subsidiaries
1. Outline of the transaction(1) Name and business of the company under the transaction
Acquirer

1. Outline of the transaction(1) Name and business of the company under the transaction
Name

Main business

Acquirer(surviving
company)

SANDEN MANUFACTURING
Manufacturing of autoMEXICO S.A. DE C.V. (consolidated motive components andsubsidiary of the Company)
devicesAcquiree(absorbed
companies)

SANDEN MEXICANA S.A. DE C.V.
(consolidated subsidiary of theCompany)

Manufacturing of automotive components anddevices

CONSORCIO TEKSAN, S.A. DE C.V. Temporary staff service(consolidated subsidiary of theCompany)
SANDEN RECURSOS MEXICO SRL
DE C.V. (consolidated subsidiaryof the Company)

Temporary staff service(2) Date of the transaction
July 1, 2017(3) Legal form of the transaction
Absorption-type merger where SANDEN MANUFACTURING MEXICO S.A. DE
C.V. is a surviving company and SANDEN MEXICANA S.A. DE C.V.,
CONSORCIO TEKSAN, S.A. DE C.V. and SANDEN RECURSOS MEXICO SRL
DE C.V. are absorbed companies.
(4) Name after the transaction
SANDEN MANUFACTURING MEXICO S.A. DE C.V.
(5) Other matters related to the transaction
As part of the Sanden Group’s drastic structural reform for further enforcement of its global business competitiveness, the transactions aim to consolidate management resources.

AcquireeMain businessa Sanwa Co., Ltd.

Sanwa Altech Co., Ltd.
Sanwa Precision Co., Ltd.
Sanwa Tech Co., Ltd.
Mitsukura Tex Co., Ltd.

Manufacturing of
automotive components
and devices

b Sanwa FabtechCo., Ltd.

Sanden Denso Co., Ltd.
Manufacturing of
Sanwa Thermotech Co., Ltd. commercial store
system components(2) D ate of the transaction
January 1, 2017(3) L egal form of the transactiona) Absorption-type merger where Sanwa Co., Ltd. is a surviving company
and Sanwa Altech Co., Ltd., Sanwa Precision Co., Ltd., Sanwa Tech Co.,
Ltd. and Mitsukura Tex Co., Ltd. are absorbed companies.
b ) Absorption-type merger where Sanwa Fabtech Co., Ltd. is a surviving
company and Sanden Denso Co., Ltd. and Sanwa Thermotech Co., Ltd.
are absorbed companies.
(4) Name after the transactiona) Sanwa Co., Ltd.
b) Sanwa Fabtech Co., Ltd.
(5) Other matters related to the transaction
As part of the Sanden Group’s drastic structural reform for further enforcement of its global business competitiveness, the transactions aim to consolidate management resources in Japan.
2. Outline of accounting policy applied
The Company accounted for the mergers as transactions under common control in compliance with the “Accounting Standard for Business Combinations”(ASBJ Statement No. 21, September 13, 2013) and the “Guidance on
Accounting Standard for Business Combinations and Accounting Standard forBusiness Divestitures” (ASBJ Guidance No. 10, September 13, 2013).

18. Related Party Transactions
1. M
 ajor transactions between the Company and the Company’s directors, certain companies owned by the Company’s directors or affiliates for the year ended
March 31, 2018 are as follows:
Company name or Name of director

Sanden Kankyo Mirai Zaidan(Sanden Environmental Future Foundation)
Sanden Al Salam LLC.

Type of business or Occupation*1
Sales of automotive air-conditioning

Nature of transaction or
account balance

Millions of yen

Thousands of
U.S. dollars(Note 1)—

Donation����������������������������

¥    20$    188

43.0

Sales����������������������������������
Receivable��������������������������

6,446

60,673

13,883

130,675

3,633

34,19625,159236,8129,164

86,257

1,141

10,739572

5,384

Ownership of
the Company (%)—
Sanden Huayu Automotive Air-Conditioning Co.,Ltd.

Sales of automotive air-conditioning

43.0

Other investments*2������������
Sales����������������������������������
Receivable��������������������������
Proceeds for sale of equity
interests in affiliate������������
Gain on sale of equity
interests in affiliate������������

SANDEN Holdings Corporation33

▲

Notes to Consolidated Financial Statements

Donation — Donations contributed to the foundation are determined based on approval of the Board of Directors.
Sales — The terms and conditions applicable to the above material transactions have been determined on an arm’s length basis and by reference to the normal market price.
*1 The objectives of Zaidan’s activities are to develop the people’s consciousness and to create new ideas for the environment.
*2 An allowance for doubtful accounts of ¥2,941 million ($27,682 thousand) was provided for other investments to Sanden Al Salam LLC.
*3 The sales price of equity interests in an affiliate was determined through negotiation considering independent third-party valuation and the payment term was cash in one installment.

2. M
 ajor transactions between the Company and the Company’s directors, certain companies owned by the Company’s directors or affiliates for the year ended
March 31, 2017 are as follows:
Company name or Name of director

Type of business or Occupation

Sanden Kankyo Mirai Zaidan(Sanden Environmental Future Foundation)*1

Ushikubo-Amada Ikuei Zaidan(Ushikubo-Amada Scholarship Foundation)*2

Sanden Al Salam LLC.

Sanden Huayu Automotive Air-Conditioning Co., Ltd.

Ownership of
the Company (%)

Nature of transaction or
account balance

Millions of yen—

Donation����������������������������

¥    20—

Donation����������������������������

30

43.0

Sales����������������������������������
Receivable��������������������������

8,845
17,801Other investments*3������������
Sales����������������������������������

15,859Receivable��������������������������

5,212

Sales of automotive air-conditioning

Sales of automotive air-conditioning

43.0

3,836

Donation — Donations contributed to the foundation are determined based on approval of the Board of Directors.
Sales — The terms and conditions applicable to the above material transactions have been determined on an arm’s length basis and by reference to the normal market
price.
*1 The objectives of Zaidan’s activities are to develop the people’s consciousness and to create new ideas for the environment.
*2 The objective of Zaidan’s activities is to provide scholarships for developing promising human resources in the next generation.
*3 An allowance for doubtful accounts of ¥3,106 million was provided for other investments to Sanden Al Salam LLC.

3.The summaries of financial statements of the two significant affiliates for the fiscal years ended March 31, 2018 and 2017 are as follows:
Millions of yen
2018
2017
Sanden Huayu
Sanden Huayu
Automotive
Automotive
Air-Conditioning
Sanden Al
Air-Conditioning
Sanden Al
Co., Ltd.
Salam LLC.
Co., Ltd.
Salam LLC.

Thousands of U.S. dollars (Note 1)
2018
Sanden Huayu
Automotive
Air-Conditioning
Sanden Al
Co., Ltd.
Salam LLC.

Total current assets�����������������������������������������������������������������������������
Total non-current assets����������������������������������������������������������������������

¥61,393
26,575¥40,229
4,363¥44,960
21,297¥37,646
3,972$577,870
250,141$378,661
41,067

Total current liabilities��������������������������������������������������������������������������
Total long-term liabilities����������������������������������������������������������������������
Total net assets�����������������������������������������������������������������������������������

52,208737

39,876450

33,230724

33,67913491,415
6,937

375,338
4,235

35,022

4,266

32,302

7,925

329,649

40,154

Sales��������������������������������������������������������������������������������������������������
Income (loss) before income taxes�������������������������������������������������������

85,122

31,15574,804

28,813801,223

293,251

7,626(1,420)

7,214

682

71,780(13,365)

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

¥ 6,285¥ (1,422)¥ 6,062¥   666$ 59,158$ (13,384)

19. Segment Information
1. Summary of reporting segment(1) Reporting segments
Our reporting segments are constituent units whose segregated financial information is available and reviewed by the Board of Directors for making decisions in the
allocation of operating resources and evaluating the operating performance regularly.
The Company plans the comprehensive strategies and extends business activities for each product, system and service globally.
Therefore, the Company has designated these reporting segments: the “Automotive Systems Business” and the “Commercial Store Systems Business.”
Segment division

34

Main product, system, service

Automotive Systems Business

Automotive air-conditioning systems and air-conditioner compressors

Commercial Store Systems Business

Automatic vending machines, commercial freezers and refrigerated showcases

ANNUAL REPORT 2018

(2) Method of measurement of sales, profit (loss), assets, and other items for each reporting segment
The accounting policies of the reportable segment are consistent with the description of the accounting policies.
Information by reporting segment for the years ended March 31, 2018 and 2017 is summarized as follows:
Millions of yen
2018
Automotive
Systems BusinessNet sales:
Outside customers�������������������������������������������������������������������������������
Operating income (loss)������������������������������������������������������������������������
Total assets�����������������������������������������������������������������������������������������
Depreciation and amortization���������������������������������������������������������������
Amortization of goodwill�����������������������������������������������������������������������
Equity in net income of affiliates������������������������������������������������������������
Impairment loss�����������������������������������������������������������������������������������
Investments in equity-method companies����������������������������������������������
Increase in property, plant and equipment and intangible assets�������������

Reporting segment
Commercial Store
Systems Business

Total

OthersTotal
consolidated¥208,855¥68,147¥277,003¥10,605¥287,609¥  6,610¥   285¥  6,895¥ (1,426)¥  5,469¥210,675¥55,550¥266,225¥10,064¥276,289

9,246
71
2,417
230
16,491
10,812

1,434
—
250
708
4,914
1,023

10,681
71
2,667
938
21,406
11,836

397
—
—
137
—
701

11,079
71
2,667
1,076
21,406
12,537

Millions of yen
2017
Automotive
Systems Business

Reporting segment
Commercial Store
Systems Business

Total

OthersTotal
consolidated¥199,180¥71,311¥270,492¥11,569¥282,061¥  4,418¥  (370)¥  4,048¥ (2,466)¥  1,582¥206,262¥60,357¥266,620¥13,574¥280,194

9,821
70
3,066
3,593
17,646
11,201

1,786
213
319
723
4,652
1,185

11,607
283
3,385
4,316
22,29812,387

469
—
—
54
—
585

12,076
283
3,385
4,371
22,298
12,973

Net sales:
Outside customers�������������������������������������������������������������������������������
Operating income (loss)������������������������������������������������������������������������
Total assets�����������������������������������������������������������������������������������������
Depreciation and amortization���������������������������������������������������������������
Amortization of goodwill�����������������������������������������������������������������������
Equity in net income of affiliates������������������������������������������������������������
Impairment loss�����������������������������������������������������������������������������������
Investments in equity-method companies����������������������������������������������
Increase in property, plant and equipment and intangible assets�������������

Note: “Others” includes vehicle sales, living & environment systems, electronics and other activities.

Automotive
Systems BusinessNet sales:
Outside customers������������������������������������������������������������������������ $1,965,879
Operating income (loss)����������������������������������������������������������������� $   62,217
Total assets���������������������������������������������������������������������������������� $1,983,010
Depreciation and amortization��������������������������������������������������������
87,029Amortization of goodwill����������������������������������������������������������������
668
Equity in net income of affiliates�����������������������������������������������������
22,750
Impairment loss����������������������������������������������������������������������������
Investments in equity-method companies���������������������������������������
Increase in property, plant and equipment and intangible assets������

2,164
155,224
101,769

Thousands of U.S. dollars (Note 1)
2018
Reporting segment
Commercial Store
Systems Business
Total

OthersTotal
consolidated$641,443$2,607,332$ 99,821$2,707,163$  2,682$   64,900$(13,422)$   51,477$522,872$2,505,882$ 94,728$2,600,611

13,497
—
2,353
6,664
46,253
9,629

100,536
668
25,103
8,829
201,487
111,408

3,736
—
—
1,289
—
6,598

104,282668
25,103
10,128201,487
118,006

2. Geographic information
Information about geographical areas for the year ended March 31, 2018
(1) Sales
Millions of yen
2018
Asia
Japan

thereof
China

EuropeNorth
America

Total
consolidated

Net sales:
Outside customers���� ¥87,199 ¥95,910 ¥58,029 ¥80,926 ¥23,572 ¥287,609

Japan

Thousands of U.S. dollars (Note 1)
2018
Asia
thereofNorth
China
EuropeAmerica

Total
consolidated$820,773 $902,767 $546,206 $761,728 $221,875 $2,707,163

SANDEN Holdings Corporation35

▲

Notes to Consolidated Financial Statements(2) Property, plant and equipment
Millions of yen
2018
Asia
Europethereof
thereof
China
Poland

Japan

North
Total
America consolidated

Property,plant andequipment��� ¥38,516 ¥19,000 ¥11,729 ¥19,130 ¥11,357 ¥5,093 ¥81,741

Japan

Thousands of U.S. dollars (Note 1)
2018
Asia
Europethereof
thereof
China
PolandNorth
Total
America consolidated$362,537 $178,840 $110,400 $180,064 $106,899 $47,938 $769,399

Information about geographical areas for the year ended March 31, 2017(1) Sales
Millions of yen
2017
Asia
thereof
China

Japan

EuropeNorth
America

Total
consolidated

Net sales:
Outside customers��� ¥88,484 ¥95,758 ¥53,583 ¥65,998 ¥31,819 ¥282,061(2) Property, plant and equipment

Japan

Millions of yen
2017
Asia
Europethereof
thereof
China
PolandProperty,plant andequipment��� ¥38,664 ¥18,632 ¥11,219

North
Total
America consolidated¥17,946 ¥11,086 ¥6,006 ¥81,250

20. Supplementary Information
The main items of selling, general and administrative expenses for the years
ended March 31, 2018 and 2017 in the accompanying consolidated statements of operations were as follows:

Millions of yen
2018
2017

Employees’ salaries and bonuses����������� ¥17,446
Freight������������������������������������������������� 3,537
Depreciation����������������������������������������� 2,265
Provision for:
Employees’ bonuses�������������������������
Warranty liabilities�����������������������������
Retirement benefit costs������������������������

1,702
1,830
833

Thousands of
U.S. dollars(Note 1)
2018

¥17,491
3,652
2,448

$164,213
33,292
21,319

1,605
1,945
829

16,02017,225
7,840

Research and development expenses are recognized as incurred. Researchand development expenses charged to general and administrative expenses or
total manufacturing costs for the years ended March 31, 2018 and 2017 were
¥7,860 million ($73,983 thousand) and ¥7,910 million, respectively.
21. Extraordinary Product Warranty Cost
For the year ended March 31, 2017, the Company decided to collect certain
products from markets that were manufactured and already sold in the past in
the Automotive Systems Business and Commercial Store Systems Business,
which could have defects or potential defects. Costs for inspections andreplacements of the collected products reasonably estimated were charged tothe consolidated statements of operations as extraordinary product warranty
costs in other expenses for the period. No extraordinary product warranty cost
was recorded for the year ended March 31, 2018.

36

ANNUAL REPORT 2018

22. Loss related to Antitrust Law
Loss related to the antitrust law represents fines imposed on violations ofEuropean Union competition law with regard to certain Automotive Systems
Business. No loss related to the antitrust law was recorded for the year ended
March 31, 2018.
23. Structure Reform Cost
For the year ended March 31, 2018
The Sanden Group is currently promoting four key initiatives in order to achieve
the Corporate Mid-Term Plan announced on May 11, 2017. With regard to selection and concentration of the overall business portfolio, which is one of the key­initiatives, a resolution to discontinue manufacturing products of the Living &Environmental Business and other related business has been passed by the Boardof Directors meeting of the Company held on March 23, 2018. As a result of thisresolution, in the Automotive Systems Business, Commercial Store Systems
Business and Other Business, impairment loss on long-lived assets of ¥1,076 million ($10,128 thousand) and loss on valuation of inventories of ¥969 million($9,120 thousand) and others were charged to the consolidated statements ofoperations as structure reform costs in other expenses for the year ended March
31, 2018.
For the year ended March 31, 2017
As part of measures for the Sanden Group’s structural reforms resolved by the
Board of Directors meeting of the Company held on August 5, 2016, the Company
and its consolidated subsidiaries have been working on (1) focusing on investment
to be a growth driver through extensive review of the overall business portfolio, (2)rationalization through integration and consolidation of operations and organizations and (3) improvement of investment efficiency through selection and concentration. As a result of implementations of the measures, in the Automotive Systems
Business, the Commercial Store Systems Business and Other Business, additional
severance payment for early retirement of ¥1,987 million, impairment loss on
long-lived assets of ¥4,371 million and other losses of ¥1,443 million including
loss on valuation of inventories were charged to the consolidated statements ofoperations as a ”Structure reform cost” in other expenses for the year ended
March 31, 2017.

24. Impairment Loss
For the year ended March 31, 2018, the Company recorded impairment losses
on asset groups detailed below, which were included in “Structure reform cost”
in other expenses.

1. Details of asset groups impaired

1. Details of asset groups impaired

Location

Purpose of use

Type of assets

Tinteniac, France

Automotive Systems
Business

Machinery and equipment andothersWylie, Texas, U.S.A.

Automotive Systems
Business

Machinery and equipment andothersLocation

Purpose of use

Type of assets

Isesaki-shi,
Gunma, Japan

Other Business

Machinery and equipment andothers

Saltillo Coahulia,
MexicoAutomotive Systems
Business

Machinery and equipment, landand others

Tinteniac, France

Automotive Systems
Business, Other
Business

Machinery and equipment andothersPasir Gudang Johore, Automotive Systems
Malaysia
Business

Machinery and equipment, furniture and fixtures and others

Shanghai, China

Commercial Store
Systems Business,
Other Business

Machinery and equipment andothers

Kiryu-shi,
Gunma, Japan

Automotive Systems
Business

Land, buildings and others

Maebashi-shi,
Gunma, Japan

Commercial Store
Systems Business

Machinery and equipment, leaseassets (machinery and equipment), furniture and fixtures andothersCasale Monferrato,
Italy

Commercial Store
Systems Business

Machinery and equipment,
buildings and others

Maebashi-shi,
Gunma, Japan

Other Business

Machinery and equipment andothers

2. Method of asset grouping
The Company and its consolidated subsidiaries classify long-lived assets into
groups with reference to units set out for management accounting at which
operational results of the Group are regularly reviewed by management.
3. Events and circumstances that led to recognition of impairment loss
The Sanden Group is currently promoting four key initiatives in order to achieve
the Corporate Mid-Term Plan announced on May 11, 2017. With regard toselection and concentration of the overall business portfolio, which is one of
the key initiatives, a resolution to discontinue manufacturing products of the
Living & Environmental Business and other related business has been passedby the Board of Directors meeting of the Company held on March 23, 2018. As
a result of changes in the Group’s production frameworks, the consolidations or
reorganizations in the Group, and the selections and concentrations of further
assets investments, production facilities in the asset groups described in “1.
Details of asset groups impaired” above became excessive or no longer recoverable, in terms of costs, within the remaining useful lives of major assets in
the groups, resulting in the writing down of carrying amounts of the assets totheir recoverable amounts.
4. Method of determining recoverable amountThe recoverable amount of the asset group was measured as the higher of the
net selling value or value in use. Net selling values are primarily based on
appraisal values obtained from real estate appraisers. Business assets that are
not expected to generate future cash flows from their use, or to be sold at values exceeding costs for its disposition, are valued at nominal values.
5. Amount of impairment loss
Amounts of impairment loss by categories of long-lived assets were as follows:

Millions of yen

Thousands of
U.S. dollars(Note 1)

Buildings and structures����������������������������������������
Machinery and equipment�������������������������������������
Furniture and fixtures��������������������������������������������
Others������������������������������������������������������������������

¥   12900
6157$   112
8,471
56
1,477

Total���������������������������������������������������������������������

¥1,076$10,128

For the year ended March 31, 2017, the Company recorded impairment
losses on asset groups detailed below, which were included in “Structurereform cost” in other expenses.

2. Method of asset grouping
The Company and its consolidated subsidiaries classify long-lived assets into
groups with reference to units set out for management accounting at which
operational results of the Group are regularly reviewed by management.
3. Events and circumstances that led to recognition of impairment loss
As part of measures for the Sanden Group’s structural reforms resolved by the
Board of Directors meeting of the Company held on August 5, 2016, theCompany and its consolidated subsidiaries have been working on (1) concentration of investment into growing business through review of the businessportfolio, (2) rationalization through integration and consolidation of operations
and organizations and (3) improvement of investment efficiency through selection and concentration. As a result of changes in the Group’s production frameworks, the consolidations or reorganizations in the Group, and the selections
and concentrations of further assets investments, production facilities in theasset groups described in “1. Details of asset groups impaired” above became
excessive or no longer recoverable, in terms of costs, within remaining useful
lives of major assets in the groups, resulting in the writing down of carrying
amounts of the assets to their recoverable amounts.
4. Method of determining recoverable amountThe recoverable amount of the asset group was measured as the higher of the
net selling value or value in use. Net selling values are primarily based on
appraisal values obtained from real estate appraisers.
Values in use are calculated by discounting future cash flows at rates from
6.5% to 7.5%. Business assets that are not expected to generate future cash
flows from their use, or to be sold at values exceeding costs for its disposition,
are valued at nominal values.
5. Amount of impairment loss
Amounts of impairment loss by categories of long-lived assets were as follows:
Millions of yen

Buildings and structures����������������������������������������
Machinery and equipment�������������������������������������
Furniture and fixtures��������������������������������������������
Land��������������������������������������������������������������������
Others������������������������������������������������������������������

¥  136
3,280
176
203
575

Total���������������������������������������������������������������������

¥4,371

25. Provision for Outstanding Claims
Provision for outstanding claims represents the amount for future payments ofsettlement in relation to violations of antitrust laws, etc. with regard to pasttransactions of certain automotive devices.
SANDEN Holdings Corporation

37

Independent Auditor’s Report

38

ANNUAL REPORT 2018

Corporate Data/Stock Information
Name

SANDEN HOLDINGSCORPORATION

Representative

Kin-ei Kanda,
Representative Director & President

Established

July 30, 1943

Capital (As of March 31, 2018)¥11,037 million

Net sales¥287,609 million(Fiscal year ended March 31, 2018)

Number of employees

13,140 (consolidated)(As of March 31, 2018)

Address Headquarters

 0 Kotobuki-cho, Isesaki-shi,
2
Gunma, Japan 372-8502
TEL +81-(0)270-24-1211

Securities code

6444

Stock exchange listingFirst Section, Tokyo Stock
Exchange

Shareholder registryadministrator

Sumitomo Mitsui Trust Bank, Ltd.
1-4-1, Marunouchi,
Chiyoda-ku, Tokyo

Total number of shares
outstanding (As of March 31, 2018)

28,066,313 shares

Trading unit of shares

100 shares(As of March 31, 2018)*As of October 1, 2017, the Company haschanged the number of shares per trading
unit from 1,000 to 100.

Number of shareholders

9,884(As of March 31, 2018)

Tokyo Headquarters Akihabara Daibiru Building,
1-18-13 Soto Kanda, Chiyoda-ku,
Tokyo, Japan 101-8583
TEL +81-(0)3-5209-3231
Group Companies (Japan) https://www.sanden.co.jp/english/company/domestic.html(Overseas) https://www.sanden.co.jp/english/company/overseas.html
Major shareholders (Top 10) (As of March 31, 2018)

Distribution of shares by type of shareholder

Name of shareholders(As of March 31, 2018)

Number ofshares(Thousands)

Percentage ofvoting rights

1

The Master Trust Bank of Japan, Ltd.
(Trust Account)2

Sanden’s Customers Share Holding Association

1,703
1,533

6.12
5.51

3

Japan Trustee Services Bank, Ltd. (Trust Account)

1,077

3.87

4

Mizuho Corporate Bank, Ltd.

1,017

3.65

5

The Gunma Bank, Ltd.

1,017

3.65

6

Daido Life Insurance Co., Ltd.

694

2.49

7

Sanden’s Employee Share Holding Association
BNP PARIBAS SECURITIES SERVICESLUXEMBOURG/JASDEC/FIM/LUXEMBOURG
FUNDS/UCITS ASSETS

580

2.08

536

1.92

9

DFA INTL SMALL CAP VALUE PORTFOLIO

534

1.92

10

Japan Trustee Services Bank, Ltd. (Trust Account 5)

466

1.67

8

Financial
Institutions

Government andLocal Public Bodies

35.84%

0.00%

Individuals andOthersFinancial
Instruments
Business

35.82%

1.65%

Foreign Entities,
etc. (individuals)

0.02%

Foreign Entities, etc.
(Other than individuals)

Other
Corporate

16.99%

Note: Treasury stock is not included in the major shareholders shown above.

9.67%

Note: 805 shares held in the name of the Company are included in“Individual and Others” in the graph above.

Stock price trends and trading volume
Stock price (Yen)

44,0003,000
22,000000
11,0005-for-1
share consolidation0
Trading volume (thousand shares)

50,00040,00030,00020,00010,0000

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
2014

2015

2016

2017

2018

Note: The Company implemented a 5-for-1 share consolidation on October 1, 2017. Accordingly, the past stock prices of all fiscal years are calculated the same way as after the share consolidation.

SANDEN Holdings Corporation

39

Akihabara Daibiru Building,1-18-13 Soto Kanda,
Chiyoda-ku, Tokyo, Japan 101-8583
Phone: +81-(0)3-5209-3231
URL: https://www.sanden.co.jp/english/index.html

Printed in Japan