ANNUAL REPORT 2016
Fiscal year ended March 31, 2016

Company
Philosophy

On the basis of “Creativity” and “Research and Development,”
thus forever contributing to progress in both science and society

Corporate History
Corporate History

1949

Product Development History

Japan Electron Optics Laboratory Co., Ltd. established

JEM-1 electron microscope completed
JEM-5G electron microscope first exported to the CEA Saclay Atomic Energy
Research Institute, France

1956

JNM-1, Japan’s first nuclear magnetic resonance (NMR) system, completed

1961
1962

Company name changed to JEOL Ltd.
JEOL listed on the Second Section of the Tokyo Stock Exchange

JXA-3 X-ray microanalyzer completed

JEOLCO (USA) INC. established as the first overseas subsidiary

1963

JMS-01 double-focusing mass spectrometer completed
JLC-01 general-purpose automatic recording fluid chromatograph completed

1966

JEOL listed on the First Section of the Tokyo Stock Exchange

JSM-1 scanning electron microscope completed
JEM-1000 1000kV ultrahigh voltage electron microscope completed

1967
1968
1972
1974
1976
1982
1983
1989
1993
1995
1996
2001
2002

JEBX-2A electron beam lithography system completed
JLC-5AH, world’s first fully automated amino acid analyzer, completed
JCA-1KM “Clinalyzer” clinical chemistry analyzer completed
JAMP-3 Auger microprobe and JESCA-2 photoelectron spectrometer completed“Tokyo Meeting,” first overseas marketing meeting, held
JEPAS-1000 electron beam measuring instrument completed
JIBL-100 focused ion beam system completed
JSTM-4000XV ultrahigh-vacuum scanning tunnel microscope completed
JEIP-900F high-density reactive ion plating system completed“BS EN ISO 9001” obtained
Launch of the JEOL Group website (http://www.jeol.co.jp)

High-speed next-generation clinical chemistry analyzer “BioMajesty” completed

New JEOL TECHNICS LTD. building completed
YAMAGATA CREATIVE CO., LTD. (YMCC) established, and the New Datum Hall
completed
Obtained ISO 14001 certification for environmental management system

2003
2004

JEOL Group’s Environmental Statement announced

2005

Agreed to set up an industry-academia collaboration office with the University of
Tokyo

2007
2009

New clean room in Building 3 completed
JEOL DATUM LTD. and JEOL ACTIVE CO., LTD. absorbed

2010

JEOL BRASIL INSTRUMENTOS CIENTIFICOS LTDA. established

YMCC Tendo Factory completed

JEOL FINETECH CO., LTD. and JEOL ENGINEERING CO., LTD. absorbed

Ion source for mass spectrometers “DART” completed
JEM-ARM200F atomic resolution analytical electron microscope completed
JMS-S3000 SpiralTOF, matrix assisted laser desorption/Ionization time-of-flightmass spectrometer, completed
InTouchScope JSM-6010LA completed

JEOL Group medium-term management plan, “CHALLENGE 5,” announced
JEOL SYSTEM TECHNOLOGY CO., LTD. absorbed

2011

JEOL (RUS) LLC establishedJIB-4000 focused ion beam milling/imaging system completed

JEOL INDIA PRIVATE LIMITED establishedJEOL RESONANCE Inc. established2012

New thermal field emission scanning electron microscope JSM-7100F completed
New benchtop scanning electron microscope JCM-6000 “NeoScope™” completed
New 0.75-mm solid-state NMR probe completed
JEM-1400Plus new field emission transmission electron microscope completed

2013

JEOL Group medium-term management plan, “Dynamic Vision,” announced

2014

Capital reinforcement implemented

Zero boil-off magnet for NMR system completed
JSM-IT300 scanning electron microscope completed

65th anniversary of establishment
Riken CLST-JEOL Collaboration Center established

Ultimate atomic resolution transmission electron microscope JEM-ARM300F completed
Nuclear magnetic resonance system JNM-ECZ series completed
JSM-7800F PRIME new Schottky field emission scanning electron microscope completed

JEOL (BEIJING) CO., LTD. moved to new company location
JEOL (GULF) FZE established2015

NIMS-JEOL Center of Excellence for Analytical Technology opened
JEOL (GERMANY) GmbH new building completed

JMS-T200GC high-end gas chromatograph time-of-flight mass spectrometer completed
JSM-IT100 InTouchScope™ scanning electron microscope completed
JEM-F200 multi-purpose electron microscope completed
JCA-ZS050 future generation clinical chemistry analyzer completed

JEOL positively challenges the world’s highest technology,
through its products.
Consolidated Financial Highlights
JEOL Ltd. and consolidated subsidiaries, for the years ended March 31, 2016 and 2015

Millions of yen

Thousands of U.S. dollars(Note)

2016

2015

2016

¥ 107,373¥ 95,380$ 952,735

Operating income

6,145

2,926

54,529

Income before income taxes

5,770

3,496

51,198Net income attributable to owners of the parent

4,090

1,991

36,287

Net income attributable to owners of the parent (yen)

42.32

18.58

0.38

Total equity (yen)332.05315.102.95

Total assets

113,501

115,869

1,007,110

Total equity

32,08730,450284,710For the year:
Net sales

Per share data (in yen and U.S. dollars):

At year-end:

Note: The U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥112.7 to U.S.$1 (the approximate exchange rate on March 31, 2016).

Net sales

Operating income (loss)

Net income (loss) attributable toowners of the parent(Millions of yen)

(Millions of yen)

(Millions of yen)

107,373
99,332
95,380

6,145

6,024

13

4,090

3,984
2,926

14

15

16

12

1,991

1,599

19,831
14,388–9,051–1,175
12(Millions of yen)

32,08730,45028,792

83,192
79,6292,967

Total equity

13

14

15

16

12

13

14

15

16

12

13

14

15

16

Contents
2 President’s Message
4 The New Medium-Term Management Plan
“Triangle Plan”
6 Topics
8 Board of Directors, Audit & Supervisory
Board Members and Corporate Officers
9 Consolidated Five-Year Summary
10 Consolidated Financial Analysis
14 Consolidated Balance Sheet

17 Consolidated Statement ofComprehensive Income
18 Consolidated Statement of Changes
in Equity
19 Consolidated Statement of Cash Flows
20 Notes to Consolidated Financial
Statements
33 Independent Auditor’s Report
34 Corporate Outline

16 Consolidated Statement of Income

1

Disclaimer Regarding Forward-Looking Statements
The information contained in this annual report isgiven for the sole purpose of providing information
regarding the business performance of JEOL Ltd.
during the fiscal year ended March 31, 2016, and is
not intended to solicit investment in any securities
issued by the Company. Any statements with respect
to JEOL’s current plans, strategies and forecasts areforward-looking statements based upon information
available as of March 31, 2016, and involve known
and unknown risks and uncertainties.
Actual events and results may differ materiallyfrom those anticipated in these statements.

President’s Message

First of all, let me take this opportunity to express
my heartfelt gratitude for your continuous support.
It is a pleasure to deliver my message to ourstakeholders in this JEOL Annual Report for the
fiscal year ended March 31, 2016.

Business Results during the Fiscal
Year Ended March 31, 2016
The economic climate during the consolidated
fiscal year under review generally showed amoderate recovery supported by the government’s
monetary easing policies and a recovery in capital

Gon-emon Kurihara

investment. This occurred despite uncertainties

President and Representative Director

such as the impact of geopolitical risk, theslowdown of economic growth in emerging
countries, accelerated global stock price declines,
and the steep appreciation of the yen in the
fourth quarter.
Under these circumstances, the JEOL Group
worked hard to implement the prioritized strategies
defined in its medium-term management plan,“Dynamic Vision” (FY 2013 to FY 2015) to enhance
its enterprise value and management base as well
as boost orders and sales. We have reported our
results in the section of Consolidated Financial
Analysis section of this document.

2

In Pursuit of Higher Corporate Values

Shareholder Return and Dividends

The JEOL Group developed the “Triangle Plan,” its

Our basic policy for profit distribution is to

new medium-term management plan for FY 2016

maintain stable dividends from a long-term

to FY 2018.

perspective based on our efforts to improve ourUnder the plan, we will build on the management

financial standing and corporate structure. For the

structure reforms achieved under “CHALLENGE

fiscal year under review, in light of our business5” (the medium-term management plan for FY

performance and financial condition, the year-end

2010 to FY 2012), and the growth strategy under

dividend was ¥3.50 per share (the full-year dividend“Dynamic Vision” (the medium-term management

including the interim dividend was ¥6 per share).

plan for FY 2013 to FY 2015). While continuing theBy pursuing profit-oriented management, we

YOKOGUSHI Strategy (cross-sectional collaboration

will continue to enhance our enterprise value andstrategy) implemented in the previous management

improve our earnings base. We look forward toplans, we will pursue “speed,” “difference,” andyour understanding on these matters.

“change” as a new set of keywords to deepen andmaterialize our growth strategy. Based on thesevisions and strategies, we will strive to transformthe Company into a highly profitable, mediumsized enterprise that continuously generates
solid profits.
The JEOL Group will continue to work all-out
to renovate its business structure and set up astable revenue source structure, while promoting
environmental conservation, enhancing compliance,
maintaining our commitment to corporate ethics,
and reinforcing our management base for sustainablegrowth by fostering a favorable corporate culture
on a Group-wide basis.

3

The New Medium-Term Management Plan

(FY 2016 to FY 2018)
Under the “Triangle Plan,” we will further strengthen
the management structure reforms achieved under“CHALLENGE 5” (the medium-term management planfor FY 2010 to FY 2012), and the growth strategy under“Dynamic Vision” (the medium-term management
plan for FY 2013 to FY 2015). While continuing the
YOKOGUSHI Strategy (cross-sectional collaboration

strategy) implemented in the previous management
plans, we will pursue “speed,” “difference” and “change”
as a new set of keywords to deepen and achieve ourgrowth strategy. Based on these visions and strategies,
we will strive to transform the Company into a highly
profitable, medium-sized enterprise that continuously
generates solid profits.

Corporate Message
Providing the solutions to support customer innovation

Outline of New Medium-Term Management Plan
Based on results achieved by “CHALLENGE 5” and “Dynamic Vision,” and continuing
the YOKOGUSHI Strategy (cross-sectional collaboration strategy) and focusing on
the three axes of “speed,” “difference” and “change,” JEOL strives to become adistinctive and highly profitable, medium-sized enterprise, by promoting topline growth,cost reduction and improvement in earning power.

Step 2 (FY 2013–2015)
Shift to the growth strategy
Step 1 (FY 2010–2012)
Reinforcement of the business foundation“CHALLENGE 5”
Management structure reform
Restructuring of group companies
Corporate culture reform
Visualization, PDCA and market reform
Expansion into emerging countries
Local subsidiaries were established in
Brazil, Russia, India, China and otheremerging countries“Dynamic Vision”
R&D Capability UP
Manufacturing Power UP
JEOL Branding UP
Full-scale YOKOGUSHI Strategy started
Funding measures implemented
JEOL Resonance Inc. restructured into
a consolidated subsidiary4

Step 3 (FY 2016–2018)Materialization of thegrowth strategy

Outline of New Medium-Term Management Plan

Speed The one who controls the speed, controls the business• Achieve a speed-up of development in all product categories• Strengthen product development ability by improving the high through-put function• Reduce delivery time and delivery adjustment time
• Achieve prompt supply of consumable parts and prompt service• Strengthen the response to the needs of the private-sector market where speed is essentialof competitive advantage
Difference Creation(which makes the difference)• Strengthen product development focusing on differentiation from competitor products• Promote YOKOGUSHI sales promotion• Implement specific YOKOGUSHI activities that directly bring results to the business• Further promote the solution business focusing on differentiation from competitor products

Change Adaptation to environmental changes and efforts for self-reform• Expand the business model from retailing to the aftermarket• Establish a system to continuously monitor the business environment, detect changes and respond to the changes

Foundation of the “Triangle Plan”
Provide Total Solutions for Advanced Technology Development

Innovative Batteries

Drug Discovery

Epigenome
Next Generation
Light-Emitting Element

Element Strategy
Nano Catalyzer

GSC
Green Sustainable
ChemistryOdor Analysis

Functional Food
DDS
Drug Delivery Systems

Regenerative Medicine

Soft Materials

Nano Carbon

Superconductivity

Artificial Photosynthesis
Biomass

Forensic Science

Metabolome

Wave length
Instruments

TEM

SEM

EPMA

AES

XPS

Scientific andMetrology instruments

TEM

SEM

EPMA

AES

XPS

XRD

IR/UV

XRF

ESR

NMR

MS

ESR

NMR

MS

CA/LC

Medical equipment
Industrial equipment

XRF

SB/EB/ST

Environmental Engineering

Consumables / Referrals
Maintenance / Services
Consultation

Quantitative Targets

Contracted Analysis/
R&D Support

120 billion andconsolidated ordinary proﬁt of ¥7 billion (ordinary proﬁt ratio: 5.8%) in FY 2018
Consolidated net sales of ¥5

TopicsJuly

2015

The Advanced Technology of High-Temperature
Superconductivity Makes a Major Step Forward to the
Accelerated Development of New Drugs and Materials

A Simpler, Intuitive System Operation andVery Easy Customer Maintenance with
Excellent Cost-EffectivenessAs a part of the “Development of Beyond 1 GHz NMR System” project
supported by the Japan Science and Technology Agency “SENTAN
program,” JEOL succeeded in the development of an ultra-high magnetic
field nuclear magnetic resonance (NMR) system, which achieved thehighest magnetic field in the world of 1020 MHz with HTS magnets.

JEOL completed the development of the JCA-ZS050 in Octorber
2015, and started sales in Japan under a new brand of in-vitro
clinical chemistry analyzer, the BioMajesty™ ZERO series in
April 2016. The JCA-ZS050 is a solution to our customers’
ever-growing needs for greater efficiency in laboratory testing
against the backdrop of limited financial resources available atmedical institutions, expansion of pre-diagnosis examinations,and widespread practice of team medical care. Compared tothe traditional BioMajesty™ series, it offers higher cost
performance, utilizing even smaller reagent volumes, improved
system operation and simplified customer maintenance.

* The world’s highest magnetic field: 1020 MHz (24.0 T) as of April 17, 2015.

2015

Equipped with a High-Sensitivity
Semiconductor Detector, Delivering
Efficient Analysis
JEOL has developed and released a new benchtop
scanning electron microscope, the JCM-6000Plus
NeoScope™, designed to meet the diverse needs ofcustomers and to accommodate market expansion. The
JCM-6000Plus is equipped with the high-sensitivity
semiconductor detectors used in the high-end
instruments of the series, making it easy to acquirecomposition contrast information about the specimen,
and enabling efficient analysis. The series continues toinclude high-vacuum functionality and a secondary
electron detector, offering the ability to clearly observe
fine structures on the specimen surface at highmagnification.

October

JEOL Launched the
Next-Generation Clinical
Chemistry Analyzer JCA-ZS050:

JEOL Succeeded in Developing the World’s Highest Magnetic Field*
NMR System (1020 MHz):JEOL Released a New Benchtop
SEM JCM-6000Plus NeoScope™:

2015

AugustJEOL Launched the New Field
Emission Scanning Electron
Microscope JSM-7200F:
Multi-Purpose FE-SEM Combining High
Resolution and Easy Operation
JEOL completed the development of and launched theJSM-7200F, a new field emission scanning electron microscope,
onto the market. The JSM-7200F utilizes JEOL’s proprietaryin-lens Schottky Plus technology from JSM-7800FPRIME thatallows improved higher spatial resolution at low accelerating
voltages (1.6 nm @ 1 kV), and achieves maximum probe currentof 300 nA. The JSM-7200F is a multi-purpose FE-SEM that cansatisfy a wide range of needs with both higher resolution andeasier operation than conventional
instruments.

JEOL-NIMS Center of Excellence
for Analytical Technology Opened
JEOL opened jointly with the National Institute forMaterials Science (NIMS), the JEOL-NIMS Center of
Excellence for Analytical Technology. The purpose of thecenter is to diffuse new solid-state NMR analyticaltechnologies that will contribute to materials research,aiming to develop theworld top-class NMR
systems by making thebest use of the leadingedge technologies of
JEOL and NIMS.

Environmental Activities
 articipation in a Network of Enterprises That ConsiderP
the Environment in Akishima City
Based on the concept of contribution from the regional levelto the global environment, we have actively participated fromthe beginning in the “Network of Enterprises That Consider theEnvironment in Akishima City,” which was set up in April 2005 andwhich involves Akishima City in the Tokyo metropolitan area andenterprises in Akishima.

(JEOL Group IMS Policy) Under its company philosophy, the
JEOL Group strives to provide total solutions that meet the needsof customers and markets and contribute to the realization of asustainable recycling society, by providing services and productsthat include the latest scientific and metrology instruments,
semiconductor-related equipment, industrial equipment, medical
equipment and other types of equipment.
Promotion of Environmental Conservation Activities
The JEOL Group strives to comply with the EU Waste Electricaland Electronic Equipment Directive (WEEE Directive) and the
EU Restriction of Hazardous Substances Directive (RoHS) by
establishing the Environmental Regulation Committee.

Expansion of the “Don’t-Throw-Away” Campaign(Campaign for Cleaning Up Commuting Routes)
Since 1994, the JEOL Group has conducted a campaign to clean
up areas around the Company’s premises and routes from theCompany to a nearby railway station. The clean-up activity has
been held more than 100 times.
6

2015 November

2016

February

JEOL Released New ScanningElectron Microscope JSM-IT100
InTouchScope™:

Sales Site in Europe Establishedand Strengthened:

A Compact, Multi-Functional SEM

On February 4, 2016, the opening ceremony for the new
office building of JEOL (Germany) GmbH wasconducted. Before this ceremony, in August 2015 JEOL
(Germany) moved its headquarters to the suburb of
Munich, where most advanced research organizations
and universities are concentrated. The new officebuilding has a demonstration hall where the latest
scientific and metrology instruments are installed. The
company will actively propose solutions to customers inGermany, which leads in global
research and development, andother European markets.

JEOL completed the development of and released a
new scanning electron microscope, the JSM-IT100
InTouchScope™. The new JSM-IT100 has a footprint
30% smaller than its predecessors (the JSM-6510,
JSM-6010Plus InTouchScope™), requiring only about
the same space as a benchtop
scanning electron microscope,
which considerably increases
flexibility at the installation site.

JEOL (Germany) GmbH Opening Ceremony

2016

Compact Ultra-High Magnetic Field NMR
to Be Realized:
A Joint Team Developed an NMR System
Incorporating Rare Earth-Based High Temperature
Superconductor Wire
The joint research group comprising the NMR facilit y of
the RIKEN Center for Life Science Technologies, Japan
Superconductor Technologies Inc., the National Institute forMaterials Science, JEOL Resonance Inc., and Chiba University,
has developed an NMR system incorporating rare earth-based
high-temperature superconductor wires and succeeded in the
NMR analysis of protein specimens by using this system. Thisdevelopment is expected to lead to the realization of a very
compact ultra-high magnetic field NMR system.

JEOL has completed the developmentof and released the JEM-F200, a
multi-purpose transmission electron
microscope. The JEM-F200 is a new
field emission transmission electron
microscope, which features higher
spatial resolution and analytical
performance, an easy-to-use new
operation system for multi-purpose operation, asmart appearance, and a range of environmentallyfriendly, energy saving systems for CO2 reduction.

April

JEOL Employees Received the Prizes for Scienceand Technology FY 2016 for Two Achievementsfrom the Commendation for Science andTechnology by the Minister of Education,
Culture, Sports, Science and Technology
Hideyuki Takahashi (SA Business Unit, JEOL) and Ryoji
Tanaka (a development group expert from the Engineering
Division, JEOL Resonance Inc. (a consolidated subsidiary)
received the Prizes for Science and Technology (in theDevelopment Category) FY 2016 from the Commendationfor Science and Technology by the Minister of Education,
Culture, Sports, Science and Technology. Mr. Takahashi
received the prize for development and improvement of asoft X-ray emission spectrometer for electronic microscopes.
Mr. Tanaka received the prize for development of the world’s
first over-1GHz NMR system using a high-temperature
superconductor.

January

JEOL Released the JEM-F200, aMulti-Purpose Transmission
Electron Microscope

JEOL Released the JMS-MT3010HRGA, the advanced Multi-Turn
Time-of-Flight Mass Spectrometer:

2016

2016

May

JEOL Introduced Cryo TEM
for the Bio Market
Cryo TEM provides a solution to automatically
retrieve data necessary to determine atomicmodels such as those of membrane proteins,which improves the efficiency of leading-edge
drug discovery.

2016

June

JEOL Co-Hosted the Commemorative
Seminar for Establishment of theEndowed Research Department, Osaka
University Institute for Protein Research
At the Institute for Protein Research, Osaka University,
JEOL co-hosted with the institute a seminar to celebrate
the establishment of the JEOL-Endowed Research
Department for multi-scale structural biology. A
speaker from JEOL explained the Company's
new 200kV Cryo TEM and lectured on the new
analysis method that sees the structure ofproteins via hydrogen.

For Trace Gas Analysis in Advanced Energy Fields
JEOL developed and released the JMS-MT3010HRGA, a multiple circulation time-of-flight mass spectrometerbased on the latest ion multi-turn technology, realizing downsizing and high mass resolution. In addition
to the high mass resolving power necessary for identifying unknown materials, it can detect hydrogen
atom ions and meet a range of research needs, including the realization of a hydrogen-energy-basedsociety and the development of future energy sources.

CSR
S cience Class Support and Science Campschools in Sendai City, Shiogama City, and Natori City, which were
devastated by the Great East Japan Earthquake. JEOL plans tocontinue this activity in the future.

As part of the commemorative projects for the 60th anniversary of
the establishment of the JEOL Group, Science Class Support has
been continuously conducted since December 2007 for neighboring
elementary schools and others. This special class sees instructors
sent from the JEOL Group,and pupils can observe plantpollen and others using
desktop scanning electron
microscopes.
Since November 2011,a special lesson has been
given to pupils at elementaryK azato Research Foundation
In commemoration of the 20th anniversary of the establishmentof the Company, the Kazato Research Foundation was launched
in 1969 by a donation from Kenji Kazato, the founder of JEOL, topromote R&D of electron microscopes and related equipment, as
well as research using electron microscopes and related equipment.

7

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

President &Representative Director

Representative Director &Executive Vice President

Director &Executive Vice President

Gon-emon Kurihara

Masashi Iwatsuki

Toshiyuki Masai

Directors & Senior Executive Officers

Koichi Fukuyama

Hiroshi Akao

Satoshi Nagakubo

Directors & Executive Officers

Hideyuki Nimura

Izumi Oi

Standing Audit &Supervisory Board Members

Outside Directors(As of June 28, 2016)

Takashi Wakasa

Toyohiko Tazawa

Outside Audit &Supervisory Board Members

Kazunori Fukushima

Executive Officers

Hajime Miyakawa

Akifumi Goto

Corporate Officers

Hirofumi Kusano

Shin Saito

Peter Genovese

Yasuo Hijikata

Wataru Wakamiya

Katsumoto Yaguchi

Hiroaki Fukuda

Akihiro Kobayashi

Yasutoshi Nakagawa

Yoshihiro Ohkura

Atsushi Seki

Tadashi Okubo

Mitsuru Takahashi

Tadashi Komagata

8

Consolidated Five-Year Summary
JEOL Ltd. and consolidated subsidiaries, for the years ended March 31, 2016, 2015, 2014, 2013, and 2012

For the year (Millions of yen):

2016

2015

2014

2013

2012

¥107,373¥95,380¥99,332¥79,629¥83,192

Scientific and metrology instruments

73,90969,221

72,69256,45253,875

Industrial equipment

9,988

7,436

9,090

6,612

11,268

Medical equipment

23,476

18,723

17,55016,56518,049Selling, general and administrative expenses

34,12931,91827,632

24,35723,307

Operating income (loss)

6,145

2,926

6,024

2,967

(1,175)

Ordinary profit (loss)

5,370

3,532

3,340

1,909

(2,408)Net income (loss) attributable to owners of the parent

4,090

1,991

3,984

1,599

(9,051)

Capital expenditures

2,859

3,014

3,681

3,226

2,408

2,216

2,191

1,530

2,177

1,505

Industrial equipment

200

386

1,517

501

183

Medical equipment

302

319

258

260

69

Eliminations/Corporate

141

118

376

288

651

Depreciation expense

2,877

2,718

2,528

2,276

2,890

Research and development costs

6,479

5,515

4,515

4,291

4,384

4,671

4,065

3,550

3,223

3,446

Industrial equipment

668

633

274

450

460

Medical equipment

1,140

817

691

618

478

Total assets¥113,501¥115,869¥111,452¥98,534¥93,820

Total equity

32,08730,45028,792

19,831

14,388Net income (loss) attributable to owners of the parent¥42.32¥18.58¥47.98¥19.01¥(115.60)

Total equity

332.05315.10276.72213.58181.94

Common stock

6.00

5.00

5.00

2.00

2.00

Preferred stock−−

50,000.00

36,712.30−

Return on equity (ROE)

13.1

6.7

16.4

9.4

(47.6)

Return on assets (ROA)

3.6

1.8

3.8

1.7

(9.6)

Net sales

Scientific and metrology instruments

Scientific and metrology instruments

At year-end (Millions of yen):

Per share data (Yen):

Cash dividends

Value indicators (%):

9

Consolidated Financial Analysis

Overview of the Fiscal Year Ended March 31, 2016

The economic climate during the consolidated fiscal year underenhance its enterprise value and management base as well as

review generally showed a moderate recovery supported by the

boost receipt of orders and net sales.

government’s monetary easing policies and a recovery in capital

Net sales for the consolidated fiscal year under review were

investment. This occurred despite uncertainties such as the¥107,373 million (up 12.6% compared with ¥95,380 million in

impact of geopolitical risk, the slowdown of economic growth in

the previous year). In terms of profit and loss, operating income

emerging countries, accelerated global stock price declines, andwas ¥6,145 million (up 110.0% compared with ¥2,926 million

the steep appreciation of the yen in the fourth quarter.

in the previous year), ordinary profit was ¥5,370 million (upIn these conditions, the JEOL Group worked hard to

52.0% compared with ¥3,532 million in the previous year), andimplement the prioritized strategies defined in its medium-term

profit attributable to owners of the parent was ¥4,090 million

management plan, “Dynamic Vision,” (FY 2013 to FY 2015) to(up 105.4% compared with ¥1,991 million in the previous year).

Net sales by segment(Millions of yen)

Medical equipment

23,476

21.9%
Net sales

Industrial equipment

9,988

9.3%

¥107,373

10

Scientific andMetrology instruments

73,90968.8%

Operating income (loss) / Operating income (loss) to net sales

Segment Information

Operating income (loss) (Millions of yen)
Operating income (loss) to net sales (%)

Information by Business Segment
6.1

Scientific and Metrology Instruments Segment

3.7

We responded to consistently brisk demand for electron

5.7
3.1

6,024

microscopes from a broad range of fields, ranging from

6,145

materials R&D, medicine and biology to quality control.
Inquiries about our nuclear magnetic resonance systems–1.4

have significantly increased in the global market as their

2,967

2,926

competitiveness has improved.
Net sales of this segment for the year were ¥73,909 million(a 6.8% increase from the previous year).
Industrial Equipment Segment–1,175

Sales of electron beam lithography systems advanced. Sales

12of electron guns and power sources for electron beam vapor

13

14

15

16

5.8

6.0

disposition were also strong.
Net sales of this segment for the year were ¥9,988 million (a34.3% increase from the previous year).
Medical Equipment Segment
Domestic sales of clinical chemistry analyzers recorded steady
growth. In overseas markets, sales growth was driven by the

R&D costs / R&D costs to net sales

introduction of new products for Siemens, our OEM partner.
R&D costs (Millions of yen)

Net sales of this segment for the year were ¥23,476 million

R&D costs to net sales (%)(a 25.4% increase from the previous year).
5.3

5.4

4.5

6,479
5,515

11

4,384

4,291

12

13

4,515

14

15

16

Consolidated Financial Analysis

Financial Position

Net income (loss) per share

(Yen)

47.98

Total assets at the end of the consolidated fiscal year under

42.32

review amounted to ¥113,501 million, down ¥2,368 million
from the end of the previous consolidated fiscal year. The major
factor for this decline was a decline of ¥3,111 million in noncurrent assets attributable to a decline in investment securities,

19.01

while current assets increased by ¥743 million attributable to18.58

higher inventories, partially offset by a decline in trade notes
and account receivables.
Total liabilities amounted to ¥81,414 million, down ¥4,005
million from the end of the previous consolidated fiscal year. Thiswas mainly due to a decline in short-term bank loans which waspartially offset by an increase in notes and accounts payable.

–115.60
12Total equity expanded ¥1,637 million, to ¥32,087 million,

13

14

15

16

reflecting the recording of ¥4,090 million in profit attributable toowners of the parent. As a result, the shareholders’ equity ratio asof March 31, 2016 rose 2.0 percentage points, to 28.3%.

Cash Flows

For the consolidated fiscal year under review, net cash provided
by operating activities amounted to ¥8,137 million, compared

Shareholders’ equity ratio / Return on equity

to an inflow of ¥9,405 million in FY 2015. This rise was mainly

Shareholders’ equity ratio (%)

Return on equity (%)

due to an expansion in inventories, while trade receivables
25.8

decreased and trade payables increased.
Net cash used in investing activities totaled ¥1,697 million,

26.3

28.3

20.1

compared to a net cash outflow of ¥2,711 million in FY 2014.

16.4

15.2

This net cash outflow was mainly attributable to purchases of

13.1

property, plant and equipment, which were partially offset by
9.4

proceeds from the sales of investment securities.

6.7

Net cash used in financing activities was ¥5,820 million,
compared to a net cash outflow of ¥3,378 million in FY 2015.
This was mainly due to repayments of loans and corporate
bonds and the purchase of treasury stock.
–47.6
12

12

13

14

15

16

Outlook for the Next Fiscal Year

Capital expenditures / Depreciation expense
Capital expenditures (Millions of yen)

Depreciation expense (Millions of yen)

3,681

Looking ahead, although expectations for economic recovery

3,226

have been increasing, it is anticipated that uncertainty will

2,890

linger. Under these circumstances, the Group has firmly
determined to make the utmost efforts to achieve the set

3,014
2,276
2,528

2,408

2,859 2,877

2,718

targets by intensively promoting the measures defined in our
medium-term management plan, “Triangle Plan” (FY 2016 toFY 2018), and securing order receipts as well as sales while
implementing cost improvements.
With respect to the consolidated operating forecasts forthe fiscal year ending March 31, 2017, we expect ¥107,000
million in net sales (down 0.3% year on year), ¥3,000 million
in operating income (down 51.2%), ¥3,000 million in ordinary
12

profit (down 44.1%), and ¥1,800 million in profit attributable toowners of the parent (down 56.0%).

13

13

14

15

16

Consolidated Balance Sheet(March 31, 2016)

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

2016

ASSETS

2015

2016¥ 11,717¥ 11,465$ 103,970

724

676

6,428

Trade notes

941

694

8,353

Trade accounts

23,75327,041

210,760

Unconsolidated subsidiaries and affiliates

1,537

1,434

13,635

Other

478

500

4,239

Allowance for doubtful receivables

(418)

(386)

(3,712)Inventories (Note 4)

41,31837,823366,615

Deferred tax assets (Note 8)

2,157

2,569

19,135Prepaid expenses and other current assets

2,688

2,336

23,861

84,895

84,152753,284

Land

1,834

1,879

16,270

Buildings and structures

21,87520,807

194,096

Machinery and equipment

3,498

3,515

31,041Tools, furniture and fixtures

17,97818,613

159,519

Lease assets

3,629

3,935

32,204

34

666

306

48,84849,415433,436(35,811)(36,006)(317,759)

13,037

13,409115,677

Investment securities (Notes 3, 5 and 12)

6,272

8,373

55,647

Investments in and advances to unconsolidated
subsidiaries and affiliates (Note 12)

2,585

2,684

22,933

Software

453

743

4,020

Software lease

115

110

1,021

2,866

3,236

25,436

588

689

5,216

2,690

2,473

23,876

15,56918,308138,149¥113,501¥115,869$1,007,110

Cash and cash equivalents (Note 12)
Time deposits (Note 12)

CURRENT ASSETS:

Receivables (Note 12):INVESTMENTS AND OTHER ASSETS:PROPERTY, PLANT AND EQUIPMENT (Notes 5):

Total current assets

Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment

Goodwill
Deferred tax assets (Note 8)
Other assets
Total investments and other assets

TOTAL
See notes to consolidated financial statements.

14

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

2016¥ 11,1032015¥ 15,071

2016$ 98,519

5,809

3,750

51,546

Current portion of bonds (Notes 5 and 12)

650

585

5,768

Current portion of long-term lease obligations (Notes 5 and 11)

490

825

4,346

Trade notes

13,524

11,428

119,997

Trade accounts

8,086

7,881

71,747

314

319

2,784

2,850

2,411

25,286

Income taxes payable

530

633

4,706

Deferred tax liabilities (Note 8)25

LIABILITIES AND EQUITY
Short-term bank loans (Notes 5 and 12)
Current portion of long-term bank loans (Notes 5 and 12)

CURRENT LIABILITIES:

Payables (Note 12):

Unconsolidated subsidiaries and affiliates
Other

Advances received

8,176

8,474

72,542

Accrued bonuses to employees

1,155

1,097

10,252Other current liabilities

5,403

5,564

47,95058,11558,038515,662

Bonds (Notes 5 and 12)

2,663

875

23,625Long-term bank loans (Notes 5 and 12)

8,775

13,29377,862Long-term lease obligations (Notes 5 and 11)

784

1,943

6,957

Deferred tax liabilities (Note 8)

25

30

221

Liability for employees' retirement benefits (Note 6)

10,26010,44091,042Retirement allowances for directors, executive
officers and Audit & Supervisory Board members(Note 6)

190

195

1,683

Asset retirement obligations

331

329

2,937

Other long-term liabilities

271

276

2,411

23,29927,381

206,738

Common stock—authorized, 200,000,000 shares;
issued, 97,715,600 shares in 2016 and 2015

10,03810,03889,066

Capital surplus

9,386

9,386

83,284Retained earnings

14,05810,451

124,734

(537)

(535)

(4,762)

Unrealized gain on available-for-sale securities

2,514

3,601

22,308Foreign currency translation adjustments(1,062)(448)(9,419)Defined retirement benefit plans(2,310)(2,043)(20,501)

32,08730,450284,710¥113,501¥115,869$1,007,110

Total current liabilities

LONG-TERM LIABILITIES:

219

Total long-term liabilities

EQUITY (Note 7):

COMMITMENTS AND CONTINGENT LIABILITIES(Notes 11, 13 and 14)

Treasury stock—at cost, 1,083,293 shares in 2016
and 1,080,846 shares in 2015
Accumulated other comprehensive income (loss):

Total equity
TOTAL
See notes to consolidated financial statements.

15

Consolidated Statement of Income(Year Ended March 31, 2016)

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

2016

2015

¥107,373¥95,380$952,735

67,09960,536595,378

40,274

34,844357,357

34,12931,918302,828

6,145

2,926

54,529Interest and dividend income

195

146

1,725

Revenue from performance of research anddevelopment services

150

215

1,332

1

77

12

Interest expense

(461)

(495)

(4,091)

Foreign exchange (loss) gain—net

(951)

707

(8,438)Loss on sales of trade receivables

(28)

(190)

(250)

Loss on sales and disposals of property, plant andequipment—net

(59)

(39)

(523)

Loss on liquidation of unconsolidated subsidiary(161)(1,430)Gain on sales of investment securities (Note 3)

667

5,920

Equity in gain of unconsolidated subsidiaries
and affiliates

154

146

1,366

Other—net

118

3

1,046

(375)

570

(3,331)

5,770

3,496

51,198Current

1,047

1,100

9,290

Deferred

633

405

5,621

1,680

1,505

14,911

4,090

1,991

36,287¥ 4,090¥ 1,991$ 36,287

NET SALES (Note 10)
COST OF SALES (Note 10)
Gross profit
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES(Notes 9 and 10)
Operating income

OTHER INCOME (EXPENSES):

Insurance claim receipt

Other (expenses) income—net
INCOME BEFORE INCOME TAXESINCOME TAXES(Note 8):2016

Total income taxes

NET INCOME
NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT

Yen

2016

U.S. Dollars

2015

2016

PER SHARE OF COMMON STOCK (Notes 2.u and 15):
Basic net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

16¥42.32¥18.58

$0.38

6.00

5.00

0.05

Consolidated Statement of Comprehensive Income(Year Ended March 31, 2016)

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

2016

2015

2016

¥4,090¥1,991$36,287

Unrealized (loss) gain on available-for-salesecurities(1,087)

1,579(9,638)Foreign currency translation adjustments

(389)

247

(3,448)

Defined retirement benefit plans

(267)

458

(2,377)

Share of other comprehensive (loss) income inunconsolidated subsidiaries and affiliates

(225)

138

(1,997)(1,968)2,422(17,460)¥2,122¥4,413$18,827¥2,122¥4,413$18,827

NET INCOME
OTHER COMPREHENSIVE INCOME (LOSS) (Note 16):

Total other comprehensive (loss) income
COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent
Noncontrolling interests
See notes to consolidated financial statements.

17

Consolidated Statement of Changes in Equity

Thousands

BALANCE, MARCH 31, 2014
(APRIL 1, 2014, as previously
reported)

Millions of Yen
Accumulated Other
Comprehensive Income (Loss)

Number of
Shares ofCommonStock
Outstanding

Number of
Shares ofPreferred
Stock
IssuedCommonStockCapitalSurplusRetained
Earnings

Treasury
Stock97,7162¥10,038¥11,582¥ 9,018¥ (534)

Cumulative effect of accountingchangeBALANCE, APRIL 1, 2014(as restated)(Year Ended March 31, 2016)

Unrealized
Foreign
Gain onCurrency
Available-for- Translation
Sale Securities Adjustments¥2,022¥ (833)

DefinedRetirement
Benefit
Plans

Total
Equity¥(2,501)¥28,792(25)
97,7162

10,038

11,582

8,993

(25)
(534)

2,022

(833)

(2,501)

28,767

Net income attributable toowners of the parent

1,991

1,991

Cash dividends for prior year-end,¥2.5 per share, for current year
interim, ¥2.5 per share

(533)

(533)
(2,197)Purchase of treasury stock(2)

Retirement of treasury stock(2,196)2,196

Net change in the year
BALANCE, MARCH 31, 2015

97,716¥10,038¥ 9,386(2,197)¥10,451¥ (535)

1,579

385

458

2,422

3,601

¥ (448)¥(2,043)¥30,450

Net income attributable toowners of the parent

4,090

4,090

Cash dividends, for prior yearend, ¥2.5 per share, for current
year interim, ¥2.5 per share

(483)

(483)
(2)

Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2016

97,716¥10,038¥ 9,386¥14,058¥ (537)(2)(1,087)

(614)

(267)

(1,968)¥2,514¥(1,062)¥(2,310)¥32,087

Thousands of U.S. Dollars (Note 1)
Accumulated Other
Comprehensive Income (Loss)

BALANCE, MARCH 31, 2015

CommonStockCapitalSurplusRetained
Earnings

Treasury
Stock$89,066$83,284$ 92,734$(4,746)

Unrealized
Foreign
Gain onCurrency
Available-for- Translation
Sale Securities Adjustments$31,946$(3,974)

DefinedRetirement
Benefit
Plans

Total
Equity$(18,124)$270,186

Net income attributable to owners of the parent

36,28736,287

Cash dividends, for prior year-end, $0.02 per share,
for current year interim, $0.02 per share(4,287)(4,287)(16)

Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2016

$89,066$83,284

See notes to consolidated financial statements.

18$124,734$(4,762)(16)(9,638)(5,445)(2,377)(17,460)$22,308$(9,419)$(20,501)$284,710

Consolidated Statement of Cash Flows(Year Ended March 31, 2016)

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

Income before income taxes

2016¥ 5,7702015¥ 3,4962016$ 51,198(1,193)2,877
370(1,163)
2,718
370(10,590)
25,527
3,282

59

39

523

(154)
(667)
161

(146)

(1,366)(5,920)
1,430

2,521
(4,086)
2,725
57
63

5,319
(2,755)
1,596
226
87

22,370(36,256)
24,184
503
558

(95)

533

(840)

(5)

(2)

(42)

(266)
2,367
8,137
(115)

(913)
5,909
9,405
173
(652)

(2,360)21,003
72,201(1,019)Adjustments for:
Income taxes—paidDepreciation and amortization
Amortization of goodwill
Loss on sales and disposals of property, plant andequipment—net

OPERATING ACTIVITIES:

Equity in gain of unconsolidated subsidiaries and affiliates
Gain on sales of investment securities
Loss on liquidation of unconsolidated subsidiary
Changes in assets and liabilities:
Decrease in trade notes and accounts receivable
Increase in inventories
Decrease in trade notes and accounts payable
Increase in advances received
Increase in provision for accrued bonuses to employees(Decrease) increase in liability for employees' retirement
benefits
Decrease in retirement allowances for directors, executive
officers and Audit & Supervisory Board members
Other—net
Total adjustments
Net cash provided by operating activities

INVESTING ACTIVITIES:(Increase) decrease in time deposits—net
Purchase of investment securities

1,219
126
(2,525)(289)(113)(1,697)(3,968)1,300(3,759)
2,465
(648)
(2)
(482)

Proceeds from sales of investment securities

Net cash used in financing activities(726)(5,820)77(1,927)(121)(261)(2,711)(1,509)4,500(3,624)493(760)(2,197)
(534)
917
(664)
(3,378)FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND
CASH EQUIVALENTS

(368)

509

(3,262)

252
11,465¥11,717

3,825
7,640
¥11,465

2,237
101,733$103,970

Proceeds from sales of property, plant and equipment
Purchases of property, plant and equipment
Purchases of intangible assets
Other—net
Net cash used in investing activities
Decrease in short-term bank loans—net
Proceeds from long-term bank loans

FINANCING ACTIVITIES:

10,817
1,115(22,408)(2,562)(1,003)(15,060)(35,212)
11,535(33,354)
21,868(5,745)(16)(4,273)

Repayments of long-term bank loans
Proceeds from bonds issuance
Payment for redemption of bonds
Purchase of treasury stock
Cash dividends paid
Proceeds from sale and leaseback
Other—net

NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
See notes to consolidated financial statements.

19(6,445)(51,642)

Notes to Consolidated Financial Statements (Year Ended March 31, 2016)

1 BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL
STATEMENTS
The accompanying consolidated financial statements have been preparedin accordance with the provisions set forth in the Japanese Financial
Instruments and Exchange Act and its related accounting regulations,and in accordance with accounting principles generally accepted inJapan (“Japanese GAAP”), which are different in certain respects as
to application and disclosure requirements of International Financial
Reporting Standards.
In preparing these consolidated financial statements, certain
reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to present
them in a form which is more familiar to readers outside Japan.
The consolidated financial statements are stated in Japanese yen,
the currency of the country in which JEOL Ltd. (the “Company”) is
incorporated and operates. The translations of Japanese yen amounts
into U.S. dollar amounts are included solely for the convenience ofreaders outside Japan and have been made at the rate of ¥112.7 to $1,
the approximate rate of exchange at March 31, 2016. Such translations
should not be construed as representations that the Japanese yenamounts could be converted into U.S. dollars at that or any other rate.

subsidiaries in accordance with either International Financial ReportingStandards or the generally accepted accounting principles in the UnitedStates of America (Financial Accounting Standards Board AccountingStandards Codification) tentatively may be used for the consolidation
process, except for the following items that should be adjusted in the
consolidation process so that net income is accounted for in accordancewith Japanese GAAP, unless they are not material: (a) amortization of
goodwill; (b) scheduled amortization of actuarial gain or loss of pensions
that has been recorded in equity through other comprehensive income;(c) expensing capitalized development costs of R&D; and (d) cancellationof the fair value model accounting for property, plant and equipment andinvestment properties and incorporation of the cost model of accounting.

c. Unification of Accounting Policies Applied to Foreign
Associated Companies for the Equity Method
In March 2008, the ASBJ issued ASBJ Statement No. 16, “AccountingStandard for Equity Method of Accounting for Investments” which was
subsequently revised in line with the revisions to PITF No. 18 above. The
standard requires adjustments to be made to conform the associate’s
accounting policies for similar transactions and events under similar
circumstances to those of the parent company when the associate’s
financial statements are used in applying the equity method unless it
is impracticable to determine such adjustments. In addition, financial
statements prepared by foreign associated companies in accordance witheither International Financial Reporting Standards or generally accepted
accounting principles in the United States of America tentatively may be
used in applying the equity method if the following items are adjusted
so that net income is accounted for in accordance with Japanese
GAAP, unless they are not material: (a) amortization of goodwill; (b)scheduled amortization of actuarial gain or loss of pensions that has
been recorded in the equity through other comprehensive income; (c)expensing capitalized development costs of R&D; and (d) cancellation of
the fair value model of accounting for property, plant and equipment andinvestment properties and incorporation of the cost model of accounting.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation
The consolidated financial statements as of March 31, 2016 and 2015,
include the accounts of the Company and its 14 significant subsidiaries(together, the “Group”).
Under the control and influence concepts, those companies in which
the Company, directly or indirectly, is able to exercise control over
operations are fully consolidated, and those companies over which theGroup has the ability to exercise significant influence are accounted forby the equity method.
Investments in 13 unconsolidated subsidiaries and 3 affiliates areaccounted for by the equity method.
Goodwill represents the excess of the fair value of the net assets of
the acquired subsidiaries at the date of acquisition over their cost.
Goodwill is amortized on a straight line basis over 10 years, with the
exception of minor amounts which are charged to income when incurred.
All significant intercompany balances and transactions have been
eliminated in consolidation. All material unrealized profit included in
assets resulting from transactions within the Group is eliminated.

d. Business Combinations
In October 2003, the Business Accounting Council issued a Statementof Opinion, “Accounting for Business Combinations,” and in December
2005, the ASBJ issued ASBJ Statement No. 7, “Accounting Standard
for Business Divestitures” and ASBJ Guidance No. 10, “Guidance
for Accounting Standard for Business Combinations and Business
Divestitures.”
In December 2008, the ASBJ issued a revised accounting standard forbusiness combinations, ASBJ Statement No. 21, “Accounting Standard
for Business Combinations.” Major accounting changes under the revised
accounting standard are as follows: (1) The revised standard requires
accounting for business combinations only by the purchase method.
As a result, the pooling of interests method of accounting is no longer
allowed. (2) The previous accounting standard required research anddevelopment costs to be charged to income as incurred. Under therevised standard, in process research and development costs (IPR&D)
acquired in the business combination are capitalized as an intangible
asset. (3) The previous accounting standard provided for a bargain
purchase gain (negative goodwill) to be systematically amortized over a
period not exceeding 20 years. Under the revised standard, the acquirerb. Unification of Accounting Policies Applied to Foreign
Subsidiaries for the Consolidated Financial Statements
In May 2006, the Accounting Standards Board of Japan (the “ASBJ”)
issued ASBJ Practical Issues Task Force (“PITF”) No. 18, “Practical
Solution on Unification of Accounting Policies Applied to Foreign
Subsidiaries for the Consolidated Financial Statements” which was
subsequently revised in February 2010 and March 2015 to reflectrevisions of the relevant Japanese GAAP or accounting standards inother jurisdictions. PITF No. 18 prescribes that the accounting policies
and procedures applied to a parent company and its subsidiaries for
similar transactions and events under similar circumstances should in
principle be unified for the preparation of the consolidated financial
statements. However, financial statements prepared by foreign

20

recognizes the bargain purchase gain in profit or loss immediately on theacquisition date after reassessing and confirming that all of the assets
acquired and all of the liabilities assumed have been identified after
a review of the procedures used in the purchase price allocation. The
revised standard was applicable to business combinations undertaken on
or after April 1, 2010.
In September 2013, the ASBJ issued revised ASBJ Statement No.
21, “Accounting Standard for Business Combinations,” revised ASBJ
Guidance No. 10, “Guidance on Accounting Standards for Business
Combinations and Business Divestitures,” and revised ASBJ Statement
No. 22, “Accounting Standard for Consolidated Financial Statements.”
Major accounting changes are as follows:(a) Transactions with noncontrolling interest—A parent’s ownershipinterest in a subsidiary might change if the parent purchases orsells ownership interests in its subsidiary. The carrying amountof noncontrolling interest is adjusted to reflect the change in theparent’s ownership interest in its subsidiary while the parent retains
its controlling interest in its subsidiary. Under the previous accounting
standard, any difference between the fair value of the consideration
received or paid and the amount by which the noncontrolling interestis adjusted is accounted for as an adjustment of goodwill or as profit
or loss in the consolidated statement of income. Under the revised
accounting standard, such difference is accounted for as capitalsurplus as long as the parent retains control over its subsidiary.
(b) Presentation of the consolidated balance sheet—In the consolidatedbalance sheet, “minority interest” under the previous accounting
standard is changed to “noncontrolling interest” under the revised
accounting standard.
(c) Presentation of the consolidated statement of income—In the
consolidated statement of income, “income before minority interest”
under the previous accounting standard is changed to “net income”
under the revised accounting standard, and “net income” under theprevious accounting standard is changed to “net income attributableto owners of the parent” under the revised accounting standard.
(d) Provisional accounting treatments for a business combination—If theinitial accounting for a business combination is incomplete by the endof the reporting period in which the business combination occurs, anacquirer shall report in its financial statements provisional amounts
for the items for which the accounting is incomplete. Under theprevious accounting standard guidance, the impact of adjustments
to provisional amounts recorded in a business combination on
profit or loss is recognized as profit or loss in the year in which themeasurement is completed. Under the revised accounting standard
guidance, during the measurement period, which shall not exceed
one year from the acquisition, the acquirer shall retrospectively
adjust the provisional amounts recognized at the acquisition date
to reflect new information obtained about facts and circumstancesthat existed as of the acquisition date and that would have affected
the measurement of the amounts recognized as of that date. Suchadjustments shall be recognized as if the accounting for the businesscombination had been completed at the acquisition date.
(e) Acquisition related costs—Acquisition related costs are costs, such asadvisory fees or professional fees, which an acquirer incurs to effect abusiness combination. Under the previous accounting standard, theacquirer accounts for acquisition related costs by including them in
the acquisition costs of the investment. Under the revised accounting
standard, acquisition related costs shall be accounted for as expenses
in the periods in which the costs are incurred.
The above accounting standards and guidance for (a) transactions
with noncontrolling interest, (b) presentation of the consolidated balance
sheet, (c) presentation of the consolidated statement of income, and (e)acquisition related costs are effective for the beginning of annual periods
beginning on or after April 1, 2015. Earlier application is permitted fromthe beginning of annual periods beginning on or after April 1, 2014,
except for (b) presentation of the consolidated balance sheet and (c)presentation of the consolidated statement of income. In case of earlier
application, all accounting standards and guidance above, except for (b)presentation of the consolidated balance sheet and (c) presentation of
the consolidated statement of income, should be applied simultaneously.
Either retrospective or prospective application of the revised
accounting standards and guidance for (a) transactions with
noncontrolling interest and (e) acquisition related costs is permitted.
In retrospective application of the revised standards and guidance, theaccumulated effects of retrospective adjustments for all (a) transactions
with noncontrolling interest and (e) acquisition related costs which
occurred in the past shall be reflected as adjustments to the beginningbalance of capital surplus and retained earnings for the year of the firsttime application. In prospective application, the new standards andguidance shall be applied prospectively from the beginning of the year of
the first time application.
The revised accounting standards and guidance for (b) presentationof the consolidated balance sheet and (c) presentation of theconsolidated statement of income shall be applied to all periods
presented in financial statements containing the first time application of
the revised standards and guidance.
The revised standards and guidance for (d) provisional accounting
treatments for a business combination are effective for a businesscombination which occurs on or after the beginning of annual periods
beginning on or after April 1, 2015. Earlier application is permitted for abusiness combination which occurs on or after the beginning of annual
periods beginning on or after April 1, 2014.
The Company applied the revised accounting standards and guidancefor (a) transactions with noncontrolling interest, (b) presentation of
the consolidated balance sheet, (c) presentation of the consolidated
statement of income, and (e) acquisition related costs above, effective
April 1, 2015, and (d) provisional accounting treatments for a businesscombination above for a business combination which occurred on orafter April 1, 2015. The revised accounting standards and guidance for(a) transactions with noncontrolling interest and (e) acquisition related
costs were applied prospectively.
With respect to (b) presentation of the consolidated balance sheet
and (c) presentation of the consolidated statement of income, theapplicable line items in the 2015 consolidated financial statements havebeen accordingly reclassified and presented in line with those in 2016.
There was no impact from these accounting changes.

e. Cash Equivalents
Cash equivalents are short term investments that are readily convertible
into cash and that are exposed to insignificant risk of changes in value.
Cash equivalents include time deposits, which mature or become due
within three months of the date of acquisition.
f. Inventories
Finished products are mainly stated at the lower of cost, determinedby the moving average cost method, or net selling value. Finishedproducts of consolidated foreign subsidiaries are stated at the lowerof cost, determined by the specific identification method. Work inprocess is mainly stated at the lower of cost, determined by the specificidentification method, or net selling value.
Raw materials and supplies are stated at cost, determined by themoving average cost method, or net selling value.

21

g. Investment Securities
All securities are classified as available for sale securities and arereported at fair value, with unrealized gains and losses, net of applicabletaxes, reported in a separate component of equity. The cost of securities
sold is determined based on the moving average method.
Nonmarketable available for sale securities are stated at cost
determined by the moving average method. For other than temporary
declines in fair value, investment securities are reduced to net realizablevalue by a charge to income.

assets at the balance sheet date. The projected benefit obligations are
attributed to periods on a straight line basis. Actuarial gains and losses
are amortized on a straight line basis over 12 years within the averageremaining service period. Past service costs are amortized on a straight line
basis over 11 to 12 years within the average remaining service period.
In May 2012, the ASBJ issued ASBJ Statement No. 26, “AccountingStandard for Retirement Benefits” and ASBJ Guidance No. 25,“Guidance on Accounting Standard for Retirement Benefits,” which
replaced the accounting standard for retirement benefits that had been
issued by the Business Accounting Council in 1998 with an effective
date of April 1, 2000, and the other related practical guidance, and were
followed by partial amendments from time to time through 2009.
(a) Under the revised accounting standard, actuarial gains and losses andpast service costs that are yet to be recognized in profit or loss arerecognized within equity (accumulated other comprehensive income),
after adjusting for tax effects, and any resulting deficit or surplus
is recognized as a liability (liability for retirement benefits) or asset(asset for retirement benefits).
(b) The revised accounting standard does not change how to recognize
actuarial gains and losses and past service costs in profit or loss.
Those amounts are recognized in profit or loss over a certain period
no longer than the expected average remaining service period of theemployees. However, actuarial gains and losses and past service costs
that arose in the current period and have not yet been recognizedin profit or loss are included in other comprehensive income, andactuarial gains and losses and past service costs that were recognizedin other comprehensive income in prior periods and then recognizedin profit or loss in the current period are treated as reclassification
adjustments (see Note 16).
(c) The revised accounting standard also made certain amendments
relating to the method of attributing expected benefit to periods, thediscount rate, and expected future salary increases.
This accounting standard and the guidance for (a) and (b) above
are effective for the end of annual periods beginning on or after April
1, 2013, and for (c) above are effective for the beginning of annual
periods beginning on or after April 1, 2014, or for the beginning ofannual periods beginning on or after April 1, 2015, subject to certain
disclosure in March 2015, all with earlier application being permitted
from the beginning of annual periods beginning on or after April 1, 2013.
However, no retrospective application of this accounting standard toconsolidated financial statements in prior periods is required.
The Company applied the revised accounting standard andguidance for retirement benefits for (a) and (b) above, effective March
31, 2014, and for (c) above, effective April 1, 2014.
With respect to (c) above, the Company changed the method of
attributing the expected benefit to periods from a straight line basis
to a benefit formula basis, the method of determining the discountrate from using the period which approximates the expected averageremaining service period to using a single weighted average discountrate reflecting the estimated timing and amount of benefit payment
and the method of estimating expected future salary increases
from salary increases “expected to be certain” to salary increases“expected,” and recorded the effect of (c) above as of April 1, 2014,
in retained earnings. As a result, retained earnings as of April 1,
2014, decreased by ¥25 million.

h. Property, Plant and Equipment
Property, plant and equipment are stated at cost.
Depreciation of property, plant and equipment of the Company andits consolidated domestic subsidiaries is computed by the decliningbalance method based on the estimated useful lives of the assets, while
the straight line method is applied to all property, plant and equipmentof consolidated foreign subsidiaries. The range of useful lives is from 7
to 65 years for buildings and structures and from 2 to 15 years for tools,
furniture and fixtures.
Lease assets are depreciated by the straight line method over therespective lease period. The useful lives for lease assets are the terms of
the respective leases.
i. Long Lived Assets
The Group reviews its long lived assets for impairment whenever eventsor changes in circumstance 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 the sum of theundiscounted future cash flows expected to result from the continued
use and eventual disposition of the asset or asset group. The impairment
loss would be measured as the amount by which the carrying amountof the asset exceeds its recoverable amount, which is the higher of the
discounted cash flows from the continued use and eventual dispositionof the asset or the net selling price at disposition.
Accumulated depreciation includes the accumulated amounts of
impairment losses.
j. Software
Software development costs for internal use are deferred at cost lessaccumulated amortization, which is calculated by the straight line
method over the estimated useful lives (5 years).
k. Stock Issue Costs
Stock issue costs are amortized to income by the straight line method
over 3 years.
l. Bond Issue Costs
Bond issue costs which were incurred on or after May 1, 2006, areamortized by the straight line method over the bond term in accordancewith ASBJ PITF No. 19, “Tentative Solution on Accounting for Deferred
Assets,” which was issued by the ASBJ on August 11, 2006, and was
effective for fiscal years ending on or after May 1, 2006.
m. Retirement and Pension Plans
Employees of the Company and certain consolidated subsidiaries who
retire at or after the age of 60 are entitled to approximately 60% of theirbenefits in the form of an annuity. The funds for the annuity payments
are entrusted to an outside trustee.
Effective April 1, 2000, the Company adopted a new accounting
standard for retirement benefits and accounted for the liability for
retirement benefits based on the projected benefit obligations and plann. Asset Retirement Obligations
In March 2008, the ASBJ issued ASBJ Statement No. 18, “AccountingStandard for Asset Retirement Obligations” and ASBJ Guidance No. 21,“Guidance on Accounting Standard for Asset Retirement Obligations.”
Under this accounting standard, an asset retirement obligation is defined22

s. Foreign Currency Financial Statements
The balance sheet accounts of the consolidated foreign subsidiaries
are translated into Japanese yen at the current exchange rate as of
the balance sheet date except for equity, which is translated at thehistorical rate. Differences arising from such translation are shown as“Foreign currency translation adjustments” under accumulated othercomprehensive income in a separate component of equity. Revenue andexpense accounts of consolidated foreign subsidiaries are translated into
yen at the average exchange rate.

as a legal obligation imposed either by law or contract that resultsfrom the acquisition, construction, development and normal operationof a tangible fixed asset and is associated with the retirement of suchtangible fixed asset. The asset retirement obligation is recognized as
the sum of the discounted cash flows required for the future asset
retirement and is recorded in the period in which the obligation isincurred if a reasonable estimate can be made. If a reasonable estimateof the asset retirement obligation cannot be made in the period theasset retirement obligation is incurred, the liability should be recognizedwhen a reasonable estimate of the asset retirement obligation canbe made. Upon initial recognition of a liability for an asset retirement
obligation, an asset retirement cost is capitalized by increasing thecarrying amount of the related fixed asset by the amount of the liability.
The asset retirement cost is subsequently allocated to expense throughdepreciation over the remaining useful life of the asset. Over time, theliability is accreted to its present value each period. Any subsequent
revisions to the timing or the amount of the original estimate ofundiscounted cash flows are reflected as an adjustment to the carrying
amount of the liability and the capitalized amount of the related asset
retirement cost.

t. Derivatives and Hedging Activities
The Group uses derivative financial instruments to manage its exposures
to fluctuations in foreign exchange and interest rates. Foreign exchange
forward contracts and interest rate swaps are utilized by the Group to
reduce foreign currency exchange and interest rate risks. The Group does
not enter into derivatives for trading or speculative purposes.
Gains or losses on derivatives used for hedging purposes, if qualified
for hedge accounting because of a high correlation and effectivenessbetween the hedging instruments and the hedged items, are deferred
until maturity of the hedged transactions.
Forward contracts applied to forecasted (or committed) transactions
are also measured at fair value but the unrealized gains/losses aredeferred until the underlying transactions are completed.
Interest rate swaps which qualify for hedge accounting and meet
specific matching criteria are not remeasured at market value but thedifferential paid or received under the swap agreements is recognized
and included in interest expense.

o. Research and Development Costs
Research and development costs are charged to income as incurred.
p. Leases
In March 2007, the ASBJ issued ASBJ Statement No. 13, “AccountingStandard for Lease Transactions,” which revised the previous accounting
standard for lease transactions.
Under the previous accounting standard, finance leases that weredeemed to transfer ownership of the leased property to the lessee
were capitalized. However, other finance leases were permitted tobe accounted for as operating lease transactions if certain “as if
capitalized” information was disclosed in the note to the lessee’s
financial statements. The revised accounting standard requires that all
finance lease transactions be capitalized by recognizing lease assets
and lease obligations in the consolidated balance sheet. In addition, therevised accounting standard permits leases that existed at the transition
date and do not transfer ownership of the leased property to the lessee
to continue to be accounted for as operating lease transactions.
The Company applied the revised accounting standard effective April
1, 2008. In addition, the Company continues to account for leases thatexisted at the transition date and do not transfer ownership of the leased
property to the lessee as operating lease transactions.
All other leases are accounted for as operating leases.

u. Per Share Information
Basic net income per share is computed by dividing net income
attributable to common shareholders by the weighted average number ofcommon shares outstanding for the period.
For the years ended March 31, 2016 and 2015, diluted net
income per share is not disclosed because the Company no longer has
convertible securities.
Cash dividends per share presented in the accompanying
consolidated statement of income are dividends applicable to therespective years including dividends to be paid after the end of the year.
v. Accounting Changes and Error Corrections
In December 2009, the ASBJ issued ASBJ Statement No. 24, “AccountingStandard for Accounting Changes and Error Corrections” and ASBJ
Guidance No. 24, “Guidance on Accounting Standard for Accounting
Changes and Error Corrections.” Accounting treatments under thisstandard and guidance are as follows: (1) Changes in Accounting
Policies—When a new accounting policy is applied following revision ofan accounting standard, the new policy is applied retrospectively unlessthe revised accounting standard includes specific transitional provisions,in which case the entity shall comply with the specific transitional
provisions. (2) Changes in Presentation—When the presentation offinancial statements is changed, prior period financial statements arereclassified in accordance with the new presentation. (3) Changes in
Accounting Estimates—A change in an accounting estimate is accounted
for in the period of the change if the change affects that period only, andis accounted for prospectively if the change affects both the period of
the change and future periods. (4) Corrections of Prior Period Errors—
When an error in prior period financial statements is discovered, thosestatements are restated.

q. Income Taxes
The provision for income taxes is computed based on the pretax income
included in the consolidated statement of income. The asset and liability
approach is used to recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the
carrying amounts and the tax bases of assets and liabilities. Deferredtaxes are measured by applying currently enacted income tax rates to thetemporary differences.
r. Foreign Currency Transactions
All short term and long term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at
the exchange rates at the balance sheet date. The foreign exchange
gains and losses from translation are recognized in the consolidated
statement of income to the extent that they are not hedged by forward
exchange contracts.

23

w. New Accounting Pronouncements
Tax Effect Accounting—On December 28, 2015, the ASBJ issued
ASBJ Guidance No. 26, “Guidance on Recoverability of Deferred Tax
Assets,” which included certain revisions of the previous accounting andauditing guidance issued by the Japanese Institute of Certified Public
Accountants. While the new guidance continues to follow the basic
framework of the previous guidance, it provides new guidance for theapplication of judgment in assessing the recoverability of deferred tax
assets.
The previous guidance provided a basic framework which included
certain specific restrictions on recognizing deferred tax assets dependingon the company’s classification in respect of its profitability, taxable
profit and temporary differences, etc.
The new guidance does not change such basic framework but, in
limited cases, allows companies to recognize deferred tax assets even fora deductible temporary difference for which it was specifically prohibitedto recognize a deferred tax asset under the previous guidance, if thecompany can justify, with reasonable grounds, that it is probable thatthe deductible temporary difference will be utilized against future taxable
profit in some future period.
The new guidance is effective for the beginning of annual periods
beginning on or after April 1, 2016. Earlier application is permitted forannual periods ending on or after March 31, 2016. The new guidanceshall not be applied retrospectively and any adjustments from theapplication of the new guidance at the beginning of the reporting
period shall be reflected within retained earnings or accumulated othercomprehensive income at the beginning of the reporting period.
The Company expects to apply the new guidance on recoverabilityof deferred tax assets effective April 1, 2016, and is in the process ofmeasuring the effects of applying the new guidance in future applicable
periods.

The information for available for sale securities which were sold during
the year ended March 31, 2016, is as follows:2015¥6,21359¥6,272¥7,763610¥8,373

Noncurrent:
Marketable equity securities
Nonmarketable securities
Total

Cost
March 31, 2016
Securities classified asavailable-for-sale
equity securities
March 31, 2015
Securities classified asavailable-for-sale
equity securities¥2,648Finished products
Work in process
Raw materials and supplies
Total

¥66

2016
¥11,423
27,944
1,951¥41,318

2015¥12,205
23,732
1,886¥37,823

Thousands of
U.S. Dollars
2016$101,359
247,954
17,302$366,615

5 SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans at March 31, 2016 and 2015, consisted of notes
to banks and bank overdrafts. The annual interest rates applicable tothe short term bank loans ranged from 0.92% to 1.60% and 0.63% to1.95% at March 31, 2016 and 2015, respectively.
Long-term debt at March 31, 2016 and 2015, consisted of thefollowing:
Millions of Yen
2016
2015
¥ 100
Unsecured 0.73% yen bonds, due 2016
Unsecured 1.00% yen bonds, due 201660
Unsecured 0.60% yen bonds, due 2017
¥ 100
200
Unsecured 0.45% yen bonds, due 2018
400
600
Unsecured 0.10% yen bonds, due 2018375
500
Unsecured 0.10% yen bonds, due 2019438
Unsecured 0.53% yen bonds, due 2020
1,500
Unsecured 0.32% yen bonds, due 2020
500
Loans from banks and insurance companies,
due serially to 2020 with interest rates
ranging from 0.63% to 1.95% (2016) andfrom 1.00% to 2.54% (2015):
10,270 11,610
Collateralized
Unsecured
4,314
5,433
Lease obligations
1,274
2,768
Total 19,171 21,271
Less current portion(6,949) (5,160)
Long-term debt, less current portion¥12,222 ¥16,111$55,131516$55,647

Fair
Value

¥6,213Thousands of
U.S. Dollars
2016

$

888
3,549
3,327
3,882
13,3104,437

91,12738,281
11,303
170,104(61,660)$108,444

Annual maturities of long term debt, excluding finance leases (see Note11), at March 31, 2016, for the next five years were as follows:¥2,648

Cost
March 31, 2016
Securities classified asavailable-for-sale
equity securities¥3,631Thousands of U.S. Dollars
Proceeds
Realized Gains$10,817$5,920Millions of Yen

The costs and aggregate fair values of investment securities at March 31,
2016 and 2015, were as follows:
Millions of Yen
Unrealized Unrealized
Gains
LossesMarch 31, 2016
Available-for-sale—Equity securities

4 INVENTORIESInventories at March 31, 2016 and 2015, consisted of the following:Thousands of
U.S. Dollars
2016

2016

Millions of Yen
Proceeds
Realized Gains¥1,219¥667

There are no available for sale securities which were sold during the year
ended March 31, 2015.
There is no impairment loss on available for sale equity securities forthe years ended March 31, 2016 and 2015.

3 INVESTMENT SECURITIESInvestment securities as of March 31, 2016 and 2015, consisted of thefollowing:
Millions of Yen

March 31, 2016
Available-for-sale—Equity securities$23,499¥5,130¥15

Thousands of U.S. Dollars
Unrealized Unrealized
Gains
Losses$32,214$582¥7,763

Year Ending March 31

Fair
Value

2017
2018
2019
2020
2021
Total

$55,131

24

Millions of Yen¥ 6,459
3,490
3,815
2,293
1,840
¥17,897

Thousands of
U.S. Dollars$ 57,314
30,96633,853
20,342
16,326$158,801

The carrying amounts of assets pledged as collateral for short term bankloans of ¥1,878 million ($21,167 thousand), current portion of longterm bank loans of ¥3,665 million ($41,305 thousand) and long termbank loans of ¥6,605 million ($74,438 thousand) at March 31, 2016,
were as follows:

2016
¥ 535

2015
¥ 535

Thousands of
U.S. Dollars
2016$ 4,750

3,332

3,287

29,5662,161¥6,0282,597¥6,41919,175$53,491

Millions of Yen
Land
Buildings and structures—netof accumulated depreciation
Investment securities
Total

Balance at beginning of year
(as previously reported)
Cumulative effect ofaccounting change
Balance at beginning of year
(as restated)
Current service cost
Interest cost
Actuarial losses
Benefits paid
Plan termination benefits paid
OthersBalance at end of year

In addition to the above loan balances, in order to increase liquidity,
the Company entered into a committed loan facility agreement, foran aggregated amount of ¥9,000 million ($79,858 thousand), witha syndicate of six Japanese banks, arranged by The Bank of Tokyo
Mitsubishi UFJ, Ltd. The details at March 31, 2016 and 2015, were as
follows:
Millions of Yen
Total amount of commitmentline contract
Utilized amount
Net

2015

¥9,000¥9,000$79,858(2,000)¥7,000(1,000)¥8,000(17,746)$62,112

2016

2015

¥18,845¥17,684$167,211

25
18,84517,709167,211

951
251
603
(783)
(2,299)(427)¥17,141

982
263
168
(877)

8,434
2,229
5,349
(6,949)(20,397)(3,781)$152,096600¥18,845(2) The changes in plan assets for the years ended March 31, 2016 and2015, were as follows:

2016¥8,814

2015¥7,764

Thousands of
U.S. Dollars
2016$78,212

206

178

1,823

(124)

233

(1,102)

1,367

835

12,133(549)(2,299)(94)¥7,321(569)(4,869)(20,397)(843)$64,957

Millions of Yen

Thousands of
U.S. Dollars
2016

2016

Thousands of
U.S. Dollars
2016

Millions of Yen

Balance at beginning of year
Expected return on plan
assetsActuarial (gains) losses
Contributions from theemployer
Benefits paid
Plan termination benefits paid
OthersBalance at end of year

The committed loan facility agreement includes financial covenants,
with which the Company is in compliance. The financial covenants are
as follows. As of March 31, 2016, there is no infringement of the debt
covenants.
(a) The amount of the Group’s net assets at the end of the fiscal year(b) The amount of the Group’s net assets at the end of the previous
fiscal year(c) The amount of the Group’s net assets at the end of the fiscal year in
March 2012—¥14,388 million(a) must not fall below 75% of the larger of (b) and (c).

373
¥8,814(3) The changes in liability for retirement benefits under the simplified
method for the years ended March 31, 2016 and 2015, were as
follows:
Thousands of
U.S. Dollars
2015
2016
¥400
$3,637
31
287
(21)
(21)
¥410
$3,903

Millions of Yen

6 RETIREMENT AND PENSION PLANS
The Company and certain consolidated subsidiaries have severance
payment plans for employees, directors, executive officers and Audit &Supervisory Board members. Certain consolidated foreign subsidiaries
also have pension plans.
Under most circumstances, employees terminating their employment
are entitled to retirement benefits determined based on the rate of
pay at the time of termination, years of service and certain otherfactors. Such retirement benefits are made in the form of a lump sum
severance payment from the Company or from certain consolidated
subsidiaries and annuity payments from a trustee. Employees are entitledto larger payments if the termination is involuntary, by retirement at the
mandatory retirement age, by death, or by voluntary retirement at certain
specific ages prior to the mandatory retirement age.
The liability for retirement benefits at March 31, 2016 and 2015,
for directors and Audit & Supervisory Board members is ¥190 million($1,683 thousand) and ¥195 million, respectively. The retirement
benefits for directors and Audit & Supervisory Board members are paid
subject to the approval of the shareholders.

Balance at beginning of year
Net periodic benefit costs
Benefits paid
Balance at end of year

2016
¥410
32
(2)
¥440

(4) Reconciliation between the liability recorded in the consolidated balance
sheet and the balances of defined benefit obligation and plan assets
Millions of Yen
Funded defined benefit
obligation
Plan assets
Total
Unfunded defined benefit
obligation
Net liability arising fromdefined benefit obligation

2016

2015

¥17,804¥19,461$157,979(7,752)
10,052(9,215)
10,246(68,788)
89,191

208

194

1,851

¥10,260¥10,440$91,0422016¥10,260

2015¥10,440

Thousands of
U.S. Dollars
2016$91,042¥10,260¥10,440$91,042Millions of Yen(1) The changes in defined benefit obligation for the years ended March
31, 2016 and 2015, were as follows:

Liability for retirement benefits
Net liability arising fromdefined benefit obligation

25

Thousands of
U.S. Dollars
20167 EQUITY
Japanese companies are subject to the Companies Act of Japan (the“Companies Act”). The significant provisions in the Companies Act that
affect financial and accounting matters are summarized below:(5) The components of net periodic benefit costs for the years ended
March 31, 2016 and 2015, were as follows:
Thousands of
U.S. Dollars
2015
2016
¥ 933
$ 8,434
263
2,229
(178)
(1,823)

Millions of Yen
Service cost
Interest cost
Expected return on plan assets
Amortization of transitional
obligation
Recognized actuarial losses
Amortization of prior service
cost
Benefit costs accounted for thesimplified method
Total
Settlement loss
Net periodic benefit costs

2016
¥ 951
251
(206)

a. Dividends
Under the Companies Act, companies can pay dividends at any
time during the fiscal year in addition to the year end dividend upon
resolution at the shareholders’ meeting. Additionally, for companies thatmeet certain criteria including (1) having a Board of Directors, (2) having
independent auditors, (3) having an Audit & Supervisory Board, and (4)the term of service of the directors being prescribed as one year rather
than the normal two year term by its articles of incorporation, the Boardof Directors may declare dividends (except for dividends in kind) at any
time during the fiscal year if the Company has prescribed so in its articles
of incorporation. However, the Company does not meet all the above
criteria.
Semiannual interim dividends may also be paid once a year upon
resolution by the Board of Directors if the articles of incorporation of theCompany so stipulate. The Companies Act provides certain limitations on
the amounts available for dividends or the purchase of treasury stock.
The limitation is defined as the amount available for distribution to theshareholders, but the amount of net assets after dividends must be
maintained at no less than ¥3 million.

218
204

418

1,799

(10)

(10)

(86)

32

33

287

1,222
290
¥1,512

1,677

10,8402,574$13,414¥1,677(6) Amounts recognized in other comprehensive income (before income
tax effect) in respect of defined retirement benefit plans for the years
ended March 31, 2016 and 2015
Thousands of
U.S. Dollars
2015
2016
¥ (10)$ (86)
250(2,291)
218¥458$(2,377)

Millions of Yen
Prior service cost
Actuarial losses
Transitional obligation
Total

2016
¥ (9)
(258)
¥(267)

b. Increases/Decreases and Transfer of Common Stock, Reserveand Surplus
The Companies Act requires that an amount equal to 10% of dividends
must be appropriated as a legal reserve (a component of retained
earnings) or as additional paid in capital (a component of capital surplus)
depending on the equity account charged upon the payment of such
dividends until the aggregate amount of legal reserve and additional
paid in capital equals 25% of the common stock. Under the Companies
Act, the total amount of additional paid in capital and legal reserve
may be reversed without limitation. The Companies Act also provides
that common stock, legal reserve, additional paid in capital, othercapital surplus and retained earnings can be transferred among theaccounts within equity under certain conditions upon resolution of theshareholders.

(7) Amounts recognized in accumulated other comprehensive income(before income tax effect) in respect of defined retirement benefit
plans as of March 31, 2016 and 2015
Thousands of
U.S. Dollars
2015
2016
¥ (70)$ (540)2,113
21,041¥2,043$20,501

Millions of Yen
Unrecognized prior service cost
Unrecognized actuarial losses
Total

2016
¥ (61)
2,371¥2,310(8) Plan assets
a. Components of plan assets
Plan assets as of March 31, 2016 and 2015, consisted of the following:
2016
Debt investments
Equity investments
Cash and cash equivalents
General account
Others
Total

9%
43
1
38
9
100%

c. Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury
stock and dispose of such treasury stock by resolution of the Board of
Directors. The amount of treasury stock purchased cannot exceed theamount available for distribution to the shareholders which is determinedby a specific formula. Under the Companies Act, stock acquisition rights
are presented as a separate component of equity. The Companies
Act also provides that companies can purchase both treasury stockacquisition rights and treasury stock. Such treasury stock acquisitionrights are presented as a separate component of equity or deducted
directly from stock acquisition rights.

2015
17%
48
1
28
6
100%

b. Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering thelong term rates of return which are expected currently and in the futurefrom the various components of the plan assets.

8 INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanesenational and local income taxes which, in the aggregate, resulted innormal effective statutory tax rates of approximately 33.1% and 35.6%
for the years ended March 31, 2016 and 2015, respectively.
The tax effects of significant temporary differences and tax loss
carryforwards which resulted in deferred tax assets and liabilities at
March 31, 2016 and 2015, are as follows:(9) Assumptions used for the years ended March 31, 2016 and 2015, areset forth as follows:
Discount rate
Expected rate of return on plan assets

2016
1.0%
1.9

2015
1.3%
3.3

26

Millions of Yen
Deferred tax assets—Current:
Accrued bonuses to employees
Research and development costs
Advances received
Accrued enterprise taxes
Unrealized intercompany profits ofinventories
Loss on write-down of inventories
Tax loss carryforwards
Other
Less valuation allowance
Total
Deferred tax liabilities—Current
Net deferred tax assets—Current
Deferred tax assets—Non-current:
Property, plant and equipment
Amortization of software
Impairment loss
Loss on write-down of investment
securities
Liability for employees' retirement
benefits
Retirement allowances for
directors, executive officers andAudit & Supervisory Board members
Tax loss carryforwards
Other
Less valuation allowance
Total
Deferred tax liabilities—Non-current
Net deferred tax assets—Non-current
Deferred tax liabilities—Current—
other
Total
Deferred tax assets—Current
Net deferred tax liabilities—Current
Deferred tax liabilities—Non-current:
Unrealized gain on available-forsale securities
Undistributed earnings of affiliates
Other
Total
Deferred tax assets—Non-current
Net deferred tax liabilities—Non-current

New tax reform laws enacted in 2016 in Japan changed the normal
effective statutory tax rate for the fiscal years beginning on April 1, 2016
and 2017, to approximately 30.9% and for the fiscal year beginningon or after April 1, 2018, to approximately 30.6%. The effect of thesechanges was to decrease deferred tax assets, net of deferred tax
liabilities, by ¥97 million ($864 thousand) and increase accumulated
other comprehensive income for unrealized gain on available for salesecurities by ¥59 million ($524 thousand) and to increase income
taxes—deferred in the consolidated statement of income for the year
then ended by ¥156 million ($1,387 thousand).
Additionally, the new tax legislation limited net operating loss
deductions. The current 65% limitation was reduced to 60% for the
fiscal year beginning on April 1, 2016, and to 55% for the fiscal year
beginning on or after April 1, 2017. The effect of these changes was
to decrease deferred tax assets by ¥7 million ($63 thousand) and toincrease income taxes—deferred in the consolidated statement ofincome for the year then ended by ¥7 million ($63 thousand) in the
consolidated balance sheet as of March 31, 2016.
At March 31, 2016, the Company has tax loss carryforwards
aggregating approximately ¥3,258 million ($28,907 thousand) which
are available to be offset against taxable income of such subsidiaries infuture years. These tax loss carryforwards, if not utilized, will expire as
follows:

Thousands of
U.S. Dollars
2016

2016

2015

¥ 333
512

$ 2,956
4,545

76

¥ 331
467
160
61

555

274

4,920

495
136
639
(332)
2,414
(257)
¥ 2,157

846
696
769
(727)
2,877
(308)
¥ 2,569

4,393
1,209
5,670
(2,946)21,422(2,287)$ 19,135

¥261
873
257

¥ 268
880
391

$ 2,314
7,744
2,282

198

209

1,758

2,688

2,733

23,854

59

63

519

872
322
(3,578)
1,952(1,364)
¥ 588

1,619
424
(4,044)2,543(1,854)
¥ 689

7,735
2,856
(31,745)
17,317(12,101)$ 5,216¥ (283)¥ (308)$ (2,507)

(283)
258
¥(25)

(308)
308

(2,507)2,288$ (219)¥(1,051)¥(1,514)$ (9,324)

(249)
(89)
(1,389)1,364¥ (25)(255)(115)(1,884)
1,854¥ (30)(2,208)(790)(12,322)
12,101$ (221)

675

Year Ending March 31
2019
2021
2022
Total

2016
33.1%

2015
35.6%

2.1

3.8

0.8
(5.4)

1.2
2.9

0.2

0.0

(6.0)

(5.1)

2.8

5.7

1.5
29.1%

(1.1)
43.0%

¥ 172
2,710
376
¥3,258

Thousands of
U.S. Dollars$ 1,523
24,0503,334$28,907

9 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Depreciation and amortization, research and development costs, net
periodic retirement benefit costs and amortization of goodwill for theyears ended March 31, 2016 and 2015, were as follows:2016¥1,1862015¥1,080Thousands of
U.S. Dollars
2016$10,521

6,479

5,515

57,492

489

640

4,338

370

370

3,282

Millions of Yen
Depreciation and amortization
Research and development
costs
Net periodic retirement benefit
costs
Amortization of goodwill

A reconciliation between the normal effective statutory tax rates andthe actual effective tax rates reflected in the accompanying consolidated
statement of income for the year ended March 31, 2016, with thecorresponding figures for 2015 is as follows:
Normal effective statutory tax rate
Expenses not deductible for income tax
purposes
Inhabitant tax on per capita basis
Unrealized intercompany profits
Difference in tax rates of foreignsubsidiaries
Less valuation allowance
Adjustment on deferred tax assets due tochange in income tax rate
Other—net
Actual effective tax rate

Millions of Yen

10 RELATED-PARTY DISCLOSURES
Transactions of the Group with unconsolidated subsidiaries and affiliates
for the years ended March 31, 2016 and 2015, were as follows:

2016¥6,508687

2015¥6,149633

Thousands of
U.S. Dollars
2016$57,744
6,093

1,310

1,229

11,628Millions of Yen
Sales
Purchases
Selling, general andadministrative expenses27

11 LEASESThe Group leases certain machinery, computer equipment, office spaceand other assets.
Total rental expenses including lease payments under finance leases
for the years ended March 31, 2016 and 2015, were ¥1,700 million($15,083 thousand) and ¥1,805 million, respectively.
Obligations under finance leases and future minimum payments
under noncancelable operating leases were as follows:
Millions of Yen

Due within
one year
Due after
one year
Total

Depreciation expense, interest expense and other information underfinance leases:
Millions of Yen
2016
Depreciation expense
Interest expense
Total
Lease payments

Thousands of
U.S. Dollars
2016
Finance Operating
LeasesLeases2016
Finance Operating
LeasesLeases2015
Finance Operating
LeasesLeases

¥ 490

¥163

¥ 825

¥177 $ 4,346$1,444

784

227

1,943

269

6,957

2,016

¥1,274¥390¥2,768¥446 $11,303$3,460Acquisition cost
Accumulated depreciation
Net leased property

Acquisition cost
Accumulated depreciation
Net leased property

Millions of Yen
2015
Machinery and Equipment
¥41
26
¥15

Acquisition cost
Accumulated depreciation
Net leased property

Thousands of U.S. Dollars
2016
Machinery and Equipment
Total
$362
$362
266
266
$ 96
$ 96

12 FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group Policy for Financial Instruments
The Group uses financial instruments, mainly long term debt includingbank loans and bonds to finance capital investment for scientificinstrument and industrial equipment. Cash surpluses, if any, are invested
in low risk financial assets. Bank loans are used to fund the Company’s
ongoing operations. Derivatives are used, not for speculative purposes,
but to manage exposure to financial risks as described in (2) below.

(2) N ature, Extent of Risks and Risk Management for Financial
Instruments
Receivables, such as trade notes and trade accounts, are exposed tocustomer credit risk. Although receivables in foreign currencies are
exposed to the market risk of fluctuation in foreign currency exchange
rates, the position, net of payables in foreign currencies, is hedged byusing forward foreign currency contracts. Investment securities, mainly
equity instruments of customers and suppliers of the Group, are exposedto the risk of market price fluctuations.
Payment terms of payables, such as trade notes and trade accounts,
are less than one year.
Maturities of bank loans, bonds and lease obligations are less than
five years after the consolidated balance sheet date. Although a part ofsuch bank loans and bonds are exposed to market risks from changes invariable interest rates, those risks are mitigated by using derivatives ofinterest rate swaps.
Derivatives mainly include forward foreign currency contracts andinterest rate swaps, which are used to manage exposure to market risks
from changes in foreign currency exchange rates of receivables, and fromchanges in interest rates of bank loans and bonds.
Derivative transactions entered into by the Group have been madein accordance with internal policies which regulate the authorizationand credit limit amount. Please see Note 13 for more details about
derivatives.

Total
¥41
30
¥11

Total
¥41
26
¥15

(3) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted prices in
active markets. If a quoted price is not available, another rational
valuation technique is used instead. The results of valuation may differ
in assumptions because the rational valuation techniques include
variable factors. Also, please see Note 13 for the details of fair value forderivatives.

Obligations under finance leases:
Millions of Yen
Due within one year
Due after one year
Total

2016
¥ 4
9
¥13

2015
¥ 4
13
¥17

¥4
1
¥5
¥5

Depreciation expense and interest expense, which are not reflected in theaccompanying consolidated statement of income, are computed by the
declining balance method and the interest method, respectively.

Pro forma Information of Leased Property Whose Lease Inception Was
before March 31, 2008
ASBJ Statement No. 13, “Accounting Standard for Lease Transactions”
requires that all finance lease transactions be capitalized to recognize
lease assets and lease obligations in the consolidated balance sheet.
However, ASBJ Statement No. 13 permits leases without ownershiptransfer of the leased property to the lessee and whose lease inception
was before March 31, 2008, to continue to be accounted for as
operating lease transactions if certain “as if capitalized” information
is disclosed in the notes to the consolidated financial statements. The
Company applied ASBJ Statement No. 13 effective April 1, 2008, andaccounted for such leases as operating lease transactions. Pro forma
information of leased property whose lease inception was before March
31, 2008, is as follows:
Millions of Yen
2016
Machinery and Equipment
¥41
30
¥11

2015
¥4
1
¥5
¥5

Thousands of
U.S. Dollars
2016
$33
6
$39
$41

Thousands of
U.S. Dollars
2016
$ 37
76
$113

28

(a) Fair value of financial instruments

Derivatives
Fair value information for derivatives is included in Note 13.

Millions of Yen
March 31, 2016
Cash and cash
equivalents
Time deposits
Receivables
Investment securities
Total
Short-term bank loans
PayablesLong-term debt
Total

Carrying Amount

Fair Value¥11,717¥11,717724
26,291
6,213¥44,945¥11,103
24,774
17,897¥53,774

724
26,291
6,213¥44,945¥11,103
24,77418,019¥53,896

Unrealized
Gain/Loss(b) Carrying amount of financial instruments whose fair value cannot
be reliably determined
Millions of Yen
Investments in equity
instruments that do nothave a quoted market pricein an active market

¥122
¥122

Cash and cash
equivalents
Time deposits
Receivables
Investment securities
Total
Short-term bank loans
PayablesLong-term debt
Total

Carrying Amount

Fair Value¥11,465¥11,465676
29,283
7,763¥49,187¥15,071
22,03918,503¥55,613676
29,283
7,763¥49,187¥15,071
22,03918,577¥55,687

Unrealized
Gain/Loss¥74¥74

Thousands of U.S. Dollars
March 31, 2016
Cash and cash
equivalents
Time deposits
Receivables
Investment securities
Total
Short-term bank loans
PayablesLong-term debt
Total

Carrying Amount

Fair Value$103,970$103,970

6,428
233,275
55,131$398,804$ 98,519
219,814
158,801$477,134

6,428
233,275
55,131$398,804$ 98,519
219,814
159,880$478,2132015¥2,373¥3,024$21,054(4) Maturity Analysis for Financial Assets and Securities with Contractual
Maturities

Millions of Yen
March 31, 2015

2016

Thousands of
U.S. Dollars
2016

March 31, 2016
Cash and cash equivalents
Time deposits
Receivables
Total

Millions of Yen
Due in 1 Year or Less
¥11,717724
26,291¥38,732

March 31, 2015
Cash and cash equivalents
Time deposits
Receivables
Total

Millions of Yen
Due in 1 Year or Less
¥11,465676
29,283¥41,424

March 31, 2016
Cash and cash equivalents
Time deposits
Receivables
Total

Thousands of U.S. Dollars
Due in 1 Year or Less
$103,970
6,428
233,275$343,673

Unrealized
Gain/Loss

Please see Note 5 for annual maturities of long term debt and Note 11
for obligations under finance leases.
$1,079$1,07913 DERIVATIVESThe Group enters into foreign currency forward contracts to hedge
foreign exchange risk associated with certain assets denominatedin foreign currencies. The Group also enters into interest rate swap
contracts to manage its interest rate exposures on certain liabilities.
All derivative transactions are entered into to hedge interest andforeign currency exposures incorporated within its business.
Because the counterparties to these derivatives are limited to majorinternational financial institutions, the Group does not anticipate any
losses arising from credit risk.
With respect to derivative transactions, basic policies are decided by
the Board of Directors. Derivative transactions are executed within thenecessary range and managed by the financial affairs division.

Cash and Cash Equivalents and Time Deposits
The carrying values of cash and cash equivalents and time deposits
approximate fair value because of their short maturities.
Investment Securities
The fair values of investment securities are measured at thequoted market price of the stock exchange for the equity
instruments, and at the quoted price obtained from the financial
institution for certain debt instruments. Fair value information forinvestment securities by classification is included in Note 3.
Receivables, Payables and Short Term Bank Loans
The fair values of receivables, payables and short term bank loans
are measured at the amount to be received or paid at maturity
discounted at the Group’s assumed corporate discount rate.
Long Term Debt
The fair value of long term debt is determined by discounting the
cash flows related to the debt at the Group’s assumed corporate
borrowing rate.

29

16 OTHER COMPREHENSIVE INCOME
The components of other comprehensive income (loss) for the years
ended March 31, 2016 and 2015, were as follows:

Derivative Transactions to Which Hedge Accounting Is Applied
March 31, 2016
Hedged Item
Interest rate swaps (fixed rate
payment, floating rate receipt)

Long-term
debt

March 31, 2015
Hedged Item
Foreign currency forward
contracts—Selling €Interest rate swaps (fixed rate
payment, floating rate receipt)
March 31, 2016

Interest rate swaps (fixed rate
payment, floating rate receipt)

Millions of Yen
Contract
Contract Amount Due
Amountafter OneYear
¥10,175

Millions of Yen¥5,535

Unrealized (loss) gain on
available-for-sale securities:(Losses) gains arising during
the yearAmount before income tax
effectIncome tax effectTotal
Foreign currency translation
adjustments
Defined retirement benefit
plans:
Adjustments arising during
the year
Reclassification adjustments
to profit or loss
Amount before income tax
effect
Total
Share of other comprehensive(loss) income in unconsolidated
subsidiaries and affiliates—(Losses) gains arising during
the year
Total other comprehensive(loss) income

Millions of Yen
Contract
Contract Amount Due
Amountafter OneYear

Receivables¥

130

Long-term
debt

11,192¥9,115

Thousands of U.S. Dollars
Contract
Contract Amount Due
Hedged Item
Amountafter OneYear
Long-term$90,284$49,113debt

The fair value of derivative transactions is measured at the quoted priceobtained from the financial institution.
The above interest rate swaps which qualify for hedge accounting
and meet specific matching criteria are not remeasured at market value
but the differential paid or received under the swap agreements is
recognized and included in interest expense or income. In addition, thefair value of such interest rate swaps is included in that of hedged items(i.e., long term debt).

2016
Trade notes discounted
Guarantees of advancereceived and bank loans ofunconsolidated subsidiary
Guarantees of advancereceived of third party

2015¥4,822¥433

Thousands of
U.S. Dollars
2016

227

$3,845120

Year Ended March 31, 2016
Basic EPS—Net income
available to commonshareholders
Year Ended March 31, 2015
Basic EPS—Net income
available to commonshareholders

U.S.
Dollars

Yen
EPS¥4,09096,634¥42.32¥1,79596,636¥18.582015¥(1,550)¥1,974$(13,750)(1,550)1,974(13,750)463¥(1,087)(395)¥1,5794,112$ (9,638)¥ (389)¥ 247$ (3,448)¥ (727)¥ 225$ (6,452)

460

233

4,075

(267)

458

(2,377)¥ (267)¥ 458$ (2,377)¥ (225)¥ 138$ (1,997)¥(1,968)¥2,422$(17,460)(1) Description of Reportable Segments
The Group’s reportable segments are those for which separate financial
information is available and regular evaluation by the Company’s
management is being performed in order to decide how resources
are allocated among the Group. Therefore, the Group’s reportablesegments consist of the industry scientific instruments, industrial
equipment, and medical equipment. Industry scientific instruments
consist of Transmission Electron Microscopes, NMR Spectrometers,
Scanning Electron Microscopes, Mass Spectrometers, etc.; Industry
industrial equipment consists of Electron Beam Lithography Systems,
Wafer Inspection Systems, High Frequency Plasma Generators, etc.;
Industry medical equipment consists of Clinalyzers, etc.

15 NET INCOME PER SHARE
Reconciliation of the differences between basic and diluted net income pershare (“EPS”) for the years ended March 31, 2016 and 2015, is as follows:
Millions
Thousandsof Yenof Shares
Net Income
WeightedAttributable
Averageto Owners of
Sharesthe Parent

2016

17 SEGMENT INFORMATION
Under ASBJ Statement No. 17, “Accounting Standard for Segment
Information Disclosures” and ASBJ Guidance No. 20, “Guidance on
Accounting Standard for Segment Information Disclosures,” an entity
is required to report financial and descriptive information about its
reportable segments. Reportable segments are operating segments
or aggregations of operating segments that meet specified criteria.
Operating segments are components of an entity about which separate
financial information is available and such information is evaluatedregularly by the chief operating decision maker in deciding how toallocate resources and in assessing performance. Generally, segment
information is required to be reported on the same basis as is usedinternally for evaluating operating segment performance and deciding
how to allocate resources to operating segments.

14 CONTINGENT LIABILITIESAt March 31, 2016 and 2015, the Group had the following contingent
liabilities:
Millions of Yen

Thousands of
U.S. Dollars
2016

$0.38

(2) Methods of Measurement for the Amounts of Sales, Profit (Loss),
Assets and Other Items for Each Reportable Segment
The accounting policies of each reportable segment are consistent withthose disclosed in Note 2, “Summary of Significant Accounting Policies.”

For the years ended March 31, 2016 and 2015, diluted EPS is notdisclosed because the Company no longer has convertible securities.

30

The segment profit (loss) is based on operating income.

of the general administration section that is not attributable
to any reportable segment.
— Increase in property, plant and equipment and intangible
assets amounting to ¥118 million includes common assets
which are not distributed to any reportable segment.
2. S egment profit is the same as operating income in the
consolidated statement of income.

(3) Information about Sales, Profit (Loss), Assets and Other Items
Millions of Yen
2016
Reportable Segment
Scientific
Instruments

Industrial
Equipment

MedicalEquipment

Total¥73,909¥ 9,988¥23,476¥107,373

Reconciliations Consolidated

Sales:

Thousands of U.S. Dollars

Sales to externalcustomers

2016¥107,373
Reportable Segment

Intersegment sales ortransfers
Total¥73,909¥ 9,988¥23,476¥107,373¥107,373

Segment profit¥ 4,621¥ 1,504¥ 4,128¥ 10,253¥ (4,108) ¥ 6,145

Segment assets

64,063

10,061

18,34992,47321,028

Sales to externalcustomers

Other:
1,767

376

174

2,317

560

2,877

Increase in property,
plant and equipment
and intangible assets

2,216

200

302

2,718

141

2,859

Total

2015

Total

¥69,221¥7,436¥18,723¥95,380$655,800$88,628$208,307$952,735

Reconciliations Consolidated$ 952,735$655,800$88,628$208,307$952,735$ 952,735

Segment profit$ 41,005$13,347$ 36,626$90,978$(36,449) $ 54,529

Segment assets

568,444

89,273

162,811820,528

186,582

1,007,110

Depreciation

15,683

3,336

1,540

20,5594,968

25,527

Increase in property,
plant and equipment
and intangible assets

19,663

1,773

2,676

24,112

1,255

25,367

Notes: 1. Reconciliations of:— S egment profit amounting to $36,449 thousand (loss)
includes common costs which are not distributed to any
reportable segment. The common costs are mainly the backoffice expenses.
— Segment assets amounting to $186,582 thousand include
common assets which are not distributed to any reportablesegment. The common assets are mainly cash surplus (cashand cash equivalents and time deposits) and long term
investments (investment securities).
— D epreciation amounting to $4,968 thousand includes
depreciation of the general administration section that is not
attributable to any reportable segment.
— Increase in property, plant and equipment and intangible
assets amounting to $1,255 thousand includes common
assets which are not distributed to any reportable segment.
2. S egment profit is the same as operating income in the
consolidated statement of income.

Reportable Segment
MedicalEquipment

Total

Other:

Millions of Yen

Industrial
Equipment

MedicalEquipmentIntersegment sales ortransfers

Notes: 1. Reconciliations of:— Segment profit amounting to ¥4,108 million (loss) includes
common costs which are not distributed to any reportablesegment. The common costs are mainly the back office
expenses.
— S egment assets amounting to ¥21,028 million include
common assets which are not distributed to any reportablesegment. The common assets are mainly cash surplus (cashand cash equivalents and time deposits) and long term
investments (investment securities).
— Depreciation amounting to ¥560 million includes depreciationof the general administration section that is not attributable
to any reportable segment.
— Increase in property, plant and equipment and intangible
assets amounting to ¥141 million includes common assets
which are not distributed to any reportable segment.
2. S egment profit is the same as operating income in the
consolidated statement of income.

Scientific
Instruments

Industrial
Equipment

Sales:

113,501

Depreciation

Scientific
Instruments

Reconciliations Consolidated

Sales:
Sales to externalcustomers

Related Information(1) Information about Products and Services
This information is omitted because it is provided as part of thereportable segment information.
(2) Information about Geographical Areasa. Sales¥95,380

Intersegment sales ortransfers¥69,221¥ 7,436¥18,723¥95,380

Segment profit

Total¥ 3,772¥ 478¥ 2,401¥ 6,651¥ (3,725)¥95,380¥ 2,926

Segment assets

65,353

10,67816,90992,94022,929115,869

Depreciation

1,790

234

174

2,198

520

2,718

Increase in property,
plant and equipment
and intangible assets

2,191

386

319

2,896

118

3,014

Other:

Notes: 1. Reconciliations of:— Segment profit amounting to ¥3,725 million (loss) includes
common costs which are not distributed to any reportablesegment. The common costs are mainly the back office
expenses.
— S egment assets amounting to ¥22,929 million include
common assets which are not distributed to any reportablesegment. The common assets are mainly cash surplus (cashand cash equivalents and time deposits) and long term
investments (investment securities).
— Depreciation amounting to ¥520 million includes depreciation

31

Japan
¥41,140

Millions of Yen
2016
U.S.A.
Other¥26,803¥39,430

Total¥107,373

Japan¥40,599

Millions of Yen
2015
U.S.A.
Other¥21,703¥33,078

Total¥95,380Japan$365,044

Thousands of U.S. Dollars
2016
U.S.A.
Other$237,823$349,868

Total$952,735

b. Property, plant and equipment
Millions of Yen
2016
Germany
Other¥1,321¥1,384

Japan¥10,332

Japan¥11,051

Millions of Yen
2015
Other
¥2,358

Total¥13,409

Thousands of U.S. Dollars
2016
Germany
Other$11,721$12,278

Japan$91,678

Total¥13,037

Total$115,677(3) Information about Major Customers

Name of Customers
SIEMENS HEALTHCAREDIAGNOSTICS INC.

2016
Millions of Yen Related Segment
Name
Sales
Medical¥12,649
equipment

Name of Customers
SIEMENS HEALTHCAREDIAGNOSTICS INC.

2016
Thousands of U.S.
Related Segment
Dollars
Name
Sales
Medical$112,238
equipment(4) Information about Impairment Loss of Fixed Assets by Reportable
Segment
There is no impairment loss for the years ended March 31, 2016 and2015.
(5) Information about Goodwill by Reportable Segment
Millions of Yen
2016
Reportable Segment
Scientific
Instruments

Industrial
Equipment

MedicalEquipment

Total

Reconciliations

Consolidated

Amortization of
goodwill

¥ 370

¥ 370

¥ 370

Goodwill at March
31, 2016

2,866

2,866

2,866

Millions of Yen
2015
Reportable Segment
Scientific
Instruments

Industrial
Equipment

MedicalEquipment

Total

Reconciliations

Consolidated

Amortization of
goodwill

¥ 370

¥ 370

¥ 370

Goodwill at March
31, 2015

3,236

3,236

3,236

Thousands of U.S. Dollars
2016
Reportable Segment
Scientific
Instruments

Industrial
Equipment

MedicalEquipment

Total

Reconciliations

Consolidated

Amortization of
goodwill$ 3,282$ 3,282$ 3,282

Goodwill at March
31, 2016

25,43625,43625,436(6) Information about Negative Goodwill by Reportable Segment
There is no negative goodwill.

32

Independent Auditor’s Report

33Corporate Outline

Corporate Name
Address
Establishment
Capital
Number of Employees(As of March 31, 2016)

JEOL Ltd.
1-2, Musashino 3-chome, Akishima, Tokyo 196-8558, Japan
TEL: +81-42-543-1111 FAX: +81-42-546-3353
May 30, 1949
¥10,038 million
Consolidated: 2,963 Non-consolidated: 1,903

Stock
Information

Authorized shares
Issued shares
Number of shareholders

Head Office andBranch Offices

Head Office: FactoryTokyo Office
Tokyo 2nd Office
Yokohama Office
Tokyo Branch Office
Sapporo Branch OfficeSendai Branch Office
Tsukuba Branch Office
Nagoya Branch OfficeOsaka Branch OfficeWest Japan Solution Center
Hiroshima Branch OfficeTakamatsu Branch Office
Fukuoka Branch Office200,000,000
97,715,600
6,599

JEOL TECHNICS LTD.
JEOL TECHNOSERVICE CO., LTD.
JEOL YAMAGATA CO., LTD.
JEOL INSTRUMENTS INC.
JEOL RESONANCE Inc.

Domestic
Subsidiaries
and AffiliatedCompanies

11 Dearborn Road Peabody, MA 01960, USA
TEL. 1-978-535-5900
Espace Claude Monet 1 Allée de Giverny 78290 Croissy Sur Seine, France
JEOL (EUROPE) SAS [France]
TEL. 33-13015-3737
JEOL House, Silvercourt, Watchmead, Welwyn Garden City, Herts AL7 1LT, England
JEOL (U.K.) LTD. [U.K.]
TEL. 44-1707-377117
Lireweg 4 2153 PH Nieuw-Vennep, The Netherlands
JEOL (EUROPE) B. V. [the Netherlands]
TEL. 31-252-623-500
Hammarbacken 6A, P.O. BOX 716, 191 27 Sollentuna, Sweden
JEOL (SKANDINAVISKA) A.B. [Sweden]
TEL. 46-8-28-2800
Gute Änger 30 85356 Freising, Germany
JEOL (GERMANY) GmbH [Germany]
TEL. 49-8161-9845-0
Palazzo Pacinotti Milano 3 City Via Ludovico il Moro, 6/A 20080 Basiglio (MI), Italy
JEOL (ITALIA) S.p.A. [Italy]
TEL. 39-02-9041431
2 Corporation Road #01-12 Corporation Place, Singapore 618494
JEOL ASIA PTE. LTD. [Singapore]
TEL. 65-6565-9989
JEOL TAIWAN SEMICONDUCTORS LTD. 2F-2, No.192,Dongguang Rd. East Dist., Hsinchu City 30069 TAIWAN (R.O.C.)[Taiwan]
TEL. 886-3-571-5656
JEOL (AUSTRALASIA) PTY. LTD.
Suite 1, L2 18 Aquatic Drive Frenchs Forest NSW 2086, Australia[Australia]
TEL. 61-2-9451-3855
Arkansas 11 Piso 2 Colonia Napoles Delegacion Benito Juarez C.P.03810, Mexico D.F.
JEOL DE MEXICO S.A. DE C.V. [Mexico]
TEL. 52-5-55-211-4511
3275 1ere Rue, Local #8, St-Hubert, QC J3Y-8Y6, Canada
JEOL CANADA, INC. [Canada]
TEL. 1-450-676-8776
JEOL BRASIL Instrumentos
Av. Jabaquara, 2958-5°andar-cj 52 04046-500 Sao Paulo SP, Brazil
Cientificos Ltda. [Brazil]
TEL. 55-11-5070-4000
508, Block A, Level 5 Kelana Business Center 97, Jalan SS 7/2 Kelana Jaya Petaling Jaya 47301, Selangor, Malaysia
JEOL (MALAYSIA) SDN BHD [Malaysia]
TEL. 60-3-7492-7722
Zhongkeziyuan Building South Tower 2F, Zhongguancun Nansanjie Street No. 6, Haidian District, Beijing 100190, China
JEOL (BEIJING) CO., LTD. [China]
TEL. 86-10-6804-6321
JEOL Shanghai Semiconductors Ltd.
2F, Bl.12 Dream Valley, No. 589 QuWu Rd, Shanghai, 200241, China[China]TEL. 86-21-6888-0770
JEOL DATUM Shanghai Co., Ltd.
Room 1507&1508 Ben Ben Mansion, No. 300 Xikang Road, Jingan Area, Shanghai 200040, China[China]TEL. 86-21-5836-6350
Krasnoproletarskaya Street 16, Bld. 2, 127473, Moscow, Russian Federation
JEOL (RUS) LLC [Russia]
TEL. 7-495-748-7791
Elegance Tower, Level 2, 212B Old Mathura Road, Jasola Business District, Jasola, New Delhi-110025, Delhi, India
JEOL INDIA PVT. LTD. [India]
TEL. 91-11-6472-2578
P.O. Box No. 371107 Dubai Airport Free Trade Zone East Wing 5EA No. 404, Dubai, UAE
JEOL GULF FZE [UAE]TEL. 971-4-609-1497
Dongwoo Bldg. 7F, 1443, Yangjae Daero, Gangdong-Gu, Seoul, 134-814, Korea
JEOL KOREA LTD. [Korea]
TEL. 82-2-511-5501
JEOL USA, INC. [USA]Overseas
Subsidiaries

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