Annual Report
2016
OKUMURA CORPORATION
2-2-2, Matsuzaki-cho, Abeno-ku, Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6627-5295
http://www.okumuragumi.co.jp

OkumuraCorporation

Printed in JapanBoard of Directors

Investor Information(As of June 29, 2016)(As of March 31, 2016)
Okumura Corporation Annual Report 2016

Directors

Corporate Data

President and Representative Director
Takanori Okumura
Representative Director
Takaiku Hirako

EstablishedFebruary 22, 1907

Directors
Makoto Tsuchiya
Seiichi Fujioka
Yuichi Mizuno
Keiji Yamaguchi
Atsushi Tanaka

Capital¥19.8 billion

Director (Full-time Audit and Supervisory Committee Member)
Hironobu Kozai
Directors (Audit and Supervisory Committee Member)
Kiyoshi Saito
Kazuo Tsuji
Shuji Abe
Hiroyo Yashiro
Note: Kiyoshi Saito, Kazuo Tsuji, Shuji Abe and Hiroyo Yashiro are outside directors.

Okumura was established in 1907 based on two key
principles enshrined in the corporate mottos “steadfast
management” and “sincere operation.” The steady
growth achieved over the years has been made possible through the unflagging support of our customers.
Okumura’s main business activities include civilengineering projects for railways, roads, power station
facilities, sewage and water works, and others. In thearea of construction are projects such as houses, public
facilities, medical facilities, and office buildings. The
Company has developed technology at the highest
level, with achievements including the seismic isolation
system used to construct Japan’s first earthquakeabsorbing building. In the area of environment-related
technology, Okumura has developed techniques for
100% recycling of demolished concrete, and natural
greening of concrete surfaces on buildings.
Okumura understands what an important mission it is to provide a better environment for the future.
Accordingly, the Company is dedicated to contributing
to meaningful social infrastructure investment and toalways being a corporation regarded highly by society.
It will achieve this by continuing to develop as an allaround construction company based on steadfast business management.

Stock Information
Stock Exchange Listings
Tokyo
Transfer Agent
Sumitomo Mitsui Trust Bank, Limited

Shareholder

Executive Vice Presidents
Takaiku Hirako*
Makoto Tsuchiya*
Wataru Watanabe
Senior Managing Executive Officers
Hiroomi Iida
Seiichi Fujioka*
Yuichi Mizuno*
Keiji Yamaguchi*
Managing Executive Officers
Hirokazu Oishi
Toshio Kobayashi
Yutaka Maruyama
Hitoshi Miyamoto
Executive Officers
Takeshi Kurita
Takanori Hayashi
Noriyuki MachidaKenji Kotera
Osamu Harada
Atsushi Tanaka*

37

Group Employees
1,989

Major Shareholders

Executive Officers

Contents
1 Financial Highlights
2 To Our Shareholders
4 Review of Operations
6 Topics
8 Consolidated Balance Sheet
10 Consolidated Statement of Income
11 Consolidated Statement of Comprehensive Income
12 Consolidated Statement of Changes in Equity
13 Consolidated Statement of Cash Flows
14 Notes to Consolidated Financial Statements
34 Independent Auditor’s Report
35 Breakdown of Orders (Nonconsolidated)
36 Network
37 Board of Directors / Investor Information

Head Office	OKUMURA CORPORATION
2-2-2, Matsuzaki-cho, Abeno-ku, Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6627-5295

Syunso Iijima
Hiromu Miyazaki
Akira Tanaka
Masaaki Iwakura
Kaoru Kuniyuki

Note: Those officers marked with an asterisk (*) work as directors.

Shares held Percentage of(thousands)
total

Okumura Corporation(Treasury stock)

29,08912.74%

Japan Trustee Services Bank,
Ltd. (Trust Account)

12,127

5.31

Okumura Employees’
Shareholding Association

7,355

3.22

Northern Trust Co. (AVFC) Re
Silchester International Investors
International Value Equity Trust

7,151

3.13

The Master Trust Bank ofJapan, Ltd. (Trust Account)

6,656

2.92

Resona Bank, Limited.

6,074

2.66

Sumitomo Realty &Development Co., Ltd.

6,050

2.65

Sumitomo Mitsui Banking
Corporation

5,568

2.44

BBH Boston Custodian For Blackrock
Global Allocation Fund, Inc. 620313

5,152

2.26

Northern Trust Co. (AVFC) Re
U.S. Tax Exempted Pension Funds

4,248

1.86

Nippon Life Insurance Company

3,215

1.41

Financial Highlights
Okumura Corporation Annual Report 2016

For the years ended March 31

2014

2015

Consolidated:

2016

2016
Thousands of
U.S. dollars

Millions of yen¥193,025¥205,268¥205,291$1,821,736

Operating income

2,318

4,052

8,423

74,748Net income attributable to owners of the parent

3,755

4,922

8,626

76,543

Total assets

239,663

260,303

266,6812,366,500

Total equity

128,792

140,655

143,279

1,271,443

Net sales

Per Share:

Yen

U.S. dollars

Basic net income attributable to owners of parent¥18.80¥24.66¥43.28$0.38

Cash dividends applicable to the year

9.00

12.00

21.00

0.19

Note:	The U.S. dollar amounts included herein are presented solely for convenience of the reader. Such dollar amounts have been translated from yenat the approximate exchange rate in Tokyo on March 31, 2016, of ¥112.69=$1.

Net Sales

Net income attributable to owners of the parent(Millions of Yen)

250,000(Millions of Yen)

10,000200,000

8,000

150,000

6,000

100,000

4,000

Total Equity(Millions of Yen)

150,000

125,000

100,000

75,00050,00050,0002,000

025,000

0

0

2014

2015

2016

2014

2015

2016

2014

2015

2016

Disclaimer Regarding Forecasts and Projections
This Annual Report includes forecasts, projections and other predictive statements that represent Okumura’s assumptions and expectations in light of currently available information. These forecasts, etc., are based on industry trends, circumstances involving clients and other factors, and involve risks, variables and uncertainties.
The Okumura Group’s actual performance results may differ from those projected in this Annual Report. Consequently, no guarantee is presented or implied as tothe accuracy of specific forecasts, projections or predictive statements contained herein.

1

To Our Shareholders

2

We would like to thank our shareholders for their continuing support and encouragement, and wish each oneof them the greatest success in their endeavors.
A general overview of business performance for the period to March 2016 (April 1, 2015 to March 31,2016) is provided in the following sections.

Fiscal 2016 Results
During the period under review, the Japanese economy, despite improvements in corporate earnings, experienced a slowdown in its path towards recovery, weighted down by sluggish exports and weak personal
consumption. In such a climate, the operating environment surrounding the construction industry remained
firm overall supported by a recovery in private-sector capital investments, despite the declining trend in
public investments.
In these circumstances, the Company’s consolidated net sales increased slightly year on year to¥205,291 million. Meanwhile, profits increased significantly from the previous year as a result of an improvement in gross profit from construction work, as consolidated gross profit increased 29.3% year on year to¥22,650 million, operating income increased 107.9% year on year to ¥8,423 million and net income attributable to owners of the parent increased 75.3% year on year to ¥8,626 million.
The Company decided to pay a dividend of ¥21.00 per share for the period ended March 31, 2016
based on its basic policy regarding profit sharing.

Looking Ahead and Key Strategies
The Japanese economy is expected to continue its recovery albeit at a modest pace, thanks to improvementsin the employment and income environments and the effects of government policies. In the constructionindustry, while public investments experience moderate declines, private-sector investments are expected
to remain on a recovery trend and the business environment surrounding the industry is expected to remain
firm for the time being. Nevertheless, harsh conditions await the industry in the medium- to long-term, asa damper is expected to set in on new construction investments and the shortage in construction workers
further escalates.

Okumura Corporation Annual Report 2016

3

Under these circumstances, the Okumura Group will aim to increase its corporate value in themedium- to long-term by maintaining financial soundness while at the same time aiming for high-profitability
structure and enhancing its capital efficiency. To this end, the Okumura Group has formulated a new Medium
Term Business Plan, based on the basic policy of “Building a solid management base by anticipating changes
in the business environment and injecting management resources towards strengthening the earning capacity of the construction business and the expansion of business domains.”
Specifically, we intend to promote technology development that will lead to streamlining andlabor-saving, increase business efficiency through the utilization of ICT, and “increase the productivity of theconstruction business” through stepped-up human resources development, while at the same time reinforcing our capabilities for proposing solutions to our customers and design capabilities, promoting technology
development that meets the needs of our clients and “enhancing the construction business brand” throughthe refinement of our proprietary technology. Furthermore, in real estate operations, we will expand the rental
business while also engaging in measures to “diversify our source of income” through strategic investments innew businesses as the first step towards expanding our business domains.
For the future, Okumura will apply all of its resources with the aim of responding quickly and flexibly to thechanging operating environment, and thereby reinforcing and diversifying its earnings base in accordancewith its corporate philosophy, which has endured through the many years since the Company’s founding. This
will enable Okumura to maintain the trust and confidence of its shareholders.
In all its efforts, the Company looks forward to the continued support of its shareholders.
June 2016

Takanori Okumura
President and Representative Director

Review of Operations
Major Projects Completed
CIVIL ENGINEERING

4
Taipei MRT System Circular Line Contract CF 643A
Shield Tunnelling

Nakatsuyama Agriculture Irrigation Project,
Ushiroyachi Drainage Pump Station Construction

Work period: February 2012 to January 2016
Tunnel length: 1,058m (Both ways)
Shield machines : 2 units

Work period: April 2014 to March 2016
Pump station work, Control basin work, 2 reverse T-shaped
abutments
Upper bridge work (composite deck slab steel girder bridge) :24.6m
Structure: SteelNachikatsuura Road Yukawa No.2 Tunnel
Construction

Otsu-Shigaraki Road Left Bank Road Improvement

Work period: June 2013 to June 2015
Construction length: 336m
Tunnel length: 280m
1 abutment, 1 pierWork period: March 2014 to March 2016
Construction length: 669.7m
Excavation: 26,950m3
Embankment: 47,880m3

BUILDINGS

Ikoma City HospitalWork period: August 2013 to May 2015
Structure: Steel
Total floor space: 28,094.34m2

GLP Yachiyo(Distribution warehouse)
Work period: September 2014 toDecember 2015
Structure: PCaPC (seismic isolation
structure)
Total floor space: 71,938.97m2

Aisai City HallWork period: September 2013 toJanuary 2016
Extended wing: Structure: Steel (seismic isolation structure)
Total floor space: 7,812.68m2
Renovated wing:
Structure: Steel frame seismic reinforced and RC
Total floor space: 2,530.69m2

Shiga Prefecture Crisis
Management CenterWork period: December 2013 to June
2015
Structure: RC (seismic isolation structure)
Total floor space: 5,487.1m2

Okumura Corporation Annual Report 2016

Orders Received
CIVIL ENGINEERING

5
Hokuriku Shinkansen Hakusanmiyabo ElevatedBridgeYasumiyama Improvement Yasumiyama Tunnel
Construction Nagasako Section

Work period: December 2015 to February 2020
Construction length: 1,731m
84 RC piers, 79 RC beams, 7 PPCT beams

Work period: October 2015 to October 2017
Construction length: 920m
Tunnel length: 697m

Meiji Irrigation Headwork Earthquake Proofing Workof the Yahagigawa Integrated Agricultural Land
Disaster Prevention Project Phase II

Land Development for the New Plant of Takagi Co.,Ltd.

Work period: August 2015 to June 2018
4 steel pipe piles, 40 SC piles
Steel plate lining work: 3,046m2
Insertion of shear reinforcement
Renovation work of hoisting machine rooms : 8 places

Work period: November 2015 to June 2020
Development area: 297,000m2
Cut: 818,430m3
Embankment: 896,300m3
2 regulating reservoirs

BUILDINGSGLP Nagareyama II Project(Distribution warehouse)
Work period: November 2016 to June
2018
Structure: PCaPC (seismic isolation
structure)
Total floor space: 96,296.86m2

Imabari City Waste Treatment
Facility - Main Factory and
Annex
Work period: October 2015 to March
2018
Structure: Steel, RC and SRC
Total floor space: 17,712.54m2

Omura City Municipal HospitalWork period: July 2015 to February
2018
Structure: Steel
Total floor space: 15,896.99m2

The Nara Palace Site Exhibition
Hall of Nara Palace Site Historical
Park
Work period: August 2015 to July 2017
Structure: RC
Total floor space: 6,756m2

Topics

Secondary crusher
Primary crusher

Telescopic belt conveyor

Direction of drilling❶ Outline of high speed transport system for blasted rock❸ Inside the seminar hall

6

❷ Installing jacks to force horizontal movement of❷ State of the seismic isolation device (laminated rubber),the building

which undergoes deformation with the horizontal movement of the building❶ Development of a High-speed Transport System for Blasted Rock in
Mountain Tunnels

We developed a high-speed system for transporting muck (blastedrock) from the drilling site to the surface in the blasting work ofmountain tunnels.
This system, which effectively positions the crushers andthe telescopic belt conveyor to increase crushing and transport
efficiency, promises to significantly shorten the construction
period and cut back on costs, and will be used in the accelerated
construction of long-distance and large-section tunnels.
❷ Commencement of Experiments to Verify Changes Over Time in
Seismic Isolation Devices Using Japan’s First Practical Base Isolated Building

We commenced an experiment to verify the changes over time inseismic isolation devices using the Okumura Corporation TechnicalResearch Institute Management Building (Tsukuba-shi, Ibaraki),Japan’s first practical base isolated building, which was completed
30 years ago.
The experiment, which uses an actual building in use, tests
the safe performance and property fluctuations due to aging ofseismic isolation devices by jacking up the building and forcing it
to move horizontally, and then letting the building freely vibrate
upon releasing the pressure of the jack. Through the experiment,
valuable data leading to the development and refinement ofseismic isolation technology will be gathered and accumulated,
as well as utilized in the proposal of solutions, which, in turn,is expected to contribute significantly to the enhancement ofbuilding safety and increasing its asset values.
❸ Hosting of a Technical Seminar

On November 20, 2015, Okumura hosted the 27th TechnicalSeminar at the Tokyo International Forum in Tokyo’s Chiyoda Ward.

The seminar was attended by approximately 250 participants fromvarious fields, including clients of Okumura.
Okumura began hosting the seminar in 1988 as part ofthe collaboration among industrial, governmental and academic
sectors related to the construction industry. This year’s theme
was “Preparing for Major Water Disasters” with a keynote speechdelivered by Dr. Kotaro Takemura, Chair of the Japan Water
Forum. In addition, a panel discussion was held on the topic ofpreparations necessary to save lives and maintain urban functionsin the midst of major flooding and tidal waves resulting fromthe advent of super typhoons and repeated torrential rainsfrom various perspectives including meteorology, infrastructure
improvement and disaster prevention action plans.
❹ Recipients of the Okumura Environmental Construction Technology
Foundation Grant for the Fiscal Year Ended March 31, 2016 Are Announced

In 2007, the Company established a charitable trust fund, theOkumura Environmental Construction Technology Foundation
Grant, whose objective is to further promote the preservationand improvement of Japan’s environment by providing funds
to various research projects on construction technologies that
reduce the environmental load.
The steering committee – comprising experts such asuniversity professors – met on July 7, 2015 to select the recipientsand determine the amount of the grant awarded for the fiscal year
ended March 31, 2016. The foundation has ensured that all thosechosen for the fiscal year have received the grant.
Research themes of the recipients are as follows.
• Development of an innovative contaminated-soil purification
technology that is highly efficient, uses no chemicals and isenergy-saving• Environment-friendly manufacturing of high-intensity, functionalbuilding materials containing high concentrations of naturalzeolite and its application to environmental detoxification

Okumura Corporation Annual Report 2016

❸ Panel discussion

7❺ Irrigation channel converted into a pipeline❻ New Kyushu Branch Building• Development of integrated methods of monitoring sediment
movement for the entire basin using image information• Design and development of mobile, structural inspection
rotorcraft that is capable of sticking to ceilings and walls

environmentally friendly construction, and at the same timecompleting construction in time for full operations.

❺ The Kuzuryu River (Downstream Section): Second Stage of Agricultural Irriga-

The Company’s new Kyushu Branch, which commenced
construction in April 2015, was completed and commenced
operations from May 23, 2016.
As the base for the Kyushu region, the new branch ensuresbusiness continuity even in the event of an earthquake andhas been built to serve as a regional disaster prevention base.
The branch has a base isolated structure, which leverages theCompany’s strengths and enables the building to withstandearthquakes, and has adopted the mid-story seismic isolation
system, which installs seismic isolation devices in intermediate
floors, which, in turn, allows for the effective utilization of floor
space. Additionally, in order for visitors to experience firsthand thevarious seismic isolation technologies of the Company, a “Pioneer ofSeismic Isolation Technology,” a device, developed by the Company,
has been installed by the first-floor entrance for experiencing
both earthquakes recreated based on the seismic-wave data of
past earthquakes and the effects of seismic isolation during such
earthquakes.
Going forward the employees and officers of the Company
will continue to work together to support the safe and secure livesof the people by further expanding the Company’s businesses.

tion Project, Kawaiharuchika Irrigation Channel Construction Work Is Awarded
the “Bureau Chief Award for Outstanding Construction in Agriculture and Agricultural Communities” by the Hokuriku Regional Agricultural Administration
Office and the “Academic and Technological Grand Prix in Outstanding National
Land Improvement Works” by the Japanese Society of Irrigation, Drainage andRural Engineering (JSIDRE)
The Company’s Kuzuryu River (Downstream Section): Second
Stage of Agricultural Irrigation Project, Kawaiharuchika
Irrigation Channel Construction Work was awarded the “Bureau
Chief Award for Outstanding Construction in Agriculture andAgricultural Communities” by the Hokuriku Regional Agricultural
Administration Office on March 4, 2016, and the “Academic
and Technological Grand Prix in Outstanding National Land
Improvement Works,” the most prestigious award in the
agricultural and civil engineering fields, by the Japanese Society of
Irrigation, Drainage and Rural Engineering (JSIDRE) on March 29,
2016.
This project converted the Kawaiharuchika Irrigation
Channel, which was excavated in the Fukui Plains and Sakai Plains,
spreading over both banks of the Kuzuryu River, into a pipeline
extending 7.1 km in length. Providing a single vertical shaft midst,
the upstream side was constructed by the earth pressure balanced
shield tunnelling method while the downstream side was by slurryshield tunnelling method.
The awards recognized the Company’s efforts in cuttingback on costs while maintaining construction quality throughdrafting optimum construction plans, various technicalproposals for long-distance shield tunnelling and maintaining❻ Construction of the Company’s New Kyushu Branch Is CompletedConsolidated Balance Sheet
Okumura Corporation and Consolidated Subsidiaries
March 31, 2016

ASSETS

Millions of yen

Thousands of
U.S. dollars(Note 1)

2016

2015

2016

¥ 25,379¥ 27,728$ 225,211

475

204

4,212

Current assets:
Cash and cash equivalents (Note 12)
Time deposits (Notes 12 and 14)
Receivables:

8

Trade notes (Note 12)
Trade accounts (Note 12)
Unconsolidated subsidiaries and associated companies (Note 12)

4,430

2,251

39,314

104,379

99,136926,246

4,386

453

38,917

Other

9,748

8,711

86,503

Allowance for doubtful receivables (Note 12)(1,666)(1,584)(14,782)

8,617

9,057

76,463

41

46

362

Inventories (Note 4)
Deferred tax assets (Note 9)
Prepaid expenses and other

455

962

4,044

Total current assets

156,244

146,964

1,386,490

Property, plant and equipment (Notes 5 and 6):
Land (Note 14)30,11428,758267,229

Buildings and structures (Note 14)

19,26019,557

170,910

Machinery and equipment

2,995

2,897

26,580Furniture and fixtures

1,970

1,936

17,484

Lease assets (Note 11)

114

141

1,009

Construction in progress

1,163

55

10,323

Total
Accumulated depreciation
Net property, plant and equipment

55,61653,344

493,535(14,403)(14,326)(127,811)

41,21339,018

365,724

66,02371,496585,879

Investments and other assets:
Investment securities (Notes 3, 6, 12 and 14)
Investments in and advances to unconsolidated subsidiaries and associated companies (Notes 12 and 14)

323

318

2,863

Long-term loans receivable (Note 12)

86

107

762

Asset for retirement benefits (Note 7)

2,157

1,710

19,139Deferred tax assets (Note 9)
Other assets
Allowance for doubtful receivables (Note 12)
Total investments and other assets
Total
See notes to consolidated financial statements.

—

1

—

2,828

3,235

25,100(2,193)(2,546)(19,457)

69,22474,321

614,286¥266,681¥260,303$2,366,500

Okumura Corporation Annual Report 2016

Millions of yen

Thousands of
U.S. dollars(Note 1)

2016

2015

2016

Short-term bank loans including current portion of long-term debt (Notes 6, 11 and 12) ¥ 15,801¥ 13,689$ 140,214

LIABILITIES AND EQUITYCurrent liabilities:
Payables:Trade notes (Note 12)

5,381

6,571

47,750Trade accounts (Note 12)

48,65347,289431,742

648

405

5,754

Other

6,719

6,916

59,622

Income taxes payable

565

515

5,017

Allowance for warranty work on construction projects

696

1,120

6,176

Advances received on construction projects in progress

Allowance for losses on construction contracts

4,450

4,878

39,485

Other (Note 14)

21,927

17,843

194,584

104,840

99,226930,344

Total current liabilities
Long-term liabilities:
Long-term debt (Notes 6, 11, 12 and 13)

5,192

5,224

46,069Deferred tax liabilities (Note 9)

13,244

15,064

117,523

126

134

1,121

Other
Total long-term liabilities

18,562

20,422

164,713

Total liabilities

123,402

119,648

1,095,057

19,83919,839176,049

Commitments and contingent liabilities (Notes 11 and 14)

Equity (Notes 8, 15 and 16):
Common stock
authorized, 480,376,000 shares; issued, 228,326,133 shares
Capital surplus

25,32925,328

224,769

Retained earnings

80,24674,012712,089(12,634)(12,547)(112,114)

28,32931,869251,391

Treasury stock—at cost
29,089,225 shares in 2016 and 28,951,110 shares in 2015
Accumulated other comprehensive income:Unrealized gain on available-for-sale securities

2,170

2,154

19,259Total

30,49934,023

270,650

Total equity

143,279

140,655

1,271,443

Total¥266,681¥260,303$2,366,500

Defined retirement benefit plans

9Consolidated Statement of Income
Okumura Corporation and Consolidated Subsidiaries
Year ended March 31, 2016

Millions of yen

Thousands of
U.S. dollars(Note 1)

2016

2015

2016

¥205,291
182,641
22,650¥205,268
187,747
17,521$1,821,736
1,620,746
200,990

Selling, general and administrative expenses (Note 10)
Operating income

14,227
8,423

13,4694,052

126,242
74,748Other income (expenses):
Interest and dividend income
Interest expense
Other—net
Other income —net

1,115
(168)
(42)
905

1,056
(163)
426
1,319

9,892
(1,493)
(373)
8,026

Income before income taxes

9,328

5,371

82,774

798
(96)
702

628
(179)
449

7,083
(852)
6,231

Net sales
Cost of sales
Gross profit

10

Income taxes (Note 9):
Current
Deferred
Total income taxes
Net income
Net income attributable to owners of the parent

Per share of common stock (Notes 2.p and 16):
Basic net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

¥

¥

8,626
8,626

43.28
21.00

¥

¥

4,922
4,922

$

76,54376,543Yen

U.S. dollars(Note 1)

24.66
12.00

$ 0.380.19

Consolidated Statement of Comprehensive Income
Okumura Corporation and Consolidated Subsidiaries
Year ended March 31, 2016

Net income
Other comprehensive income (loss) (Note 15):
Unrealized gain (loss) on available-for-sale securities
Remeasurements of defined benefit plans
Total other comprehensive income (loss)
Comprehensive income
Total comprehensive income attributable to:
Owners of the parent
Noncontrolling interests
See notes to consolidated financial statements.

Okumura Corporation Annual Report 2016

Millions of yen

Thousands of
U.S. dollars(Note 1)

2016

2015

2016

¥ 8,626¥ 4,922$ 76,543(3,540)16(3,524)¥ 5,102

9,115
985
10,100¥15,022(31,410)146(31,264)$ 45,279¥ 5,102—¥15,022—$ 45,279—11Consolidated Statement of Changes in Equity
Okumura Corporation and Consolidated Subsidiaries
Year ended March 31, 2016

Thousands

Millions of yen
Accumulated othercomprehensive income

12

BALANCE, APRIL 1, 2014 (as previously
reported)
Cumulative effect of accounting change (Note 2.k)BALANCE, APRIL 1, 2014 (as restarted)
Net income attributable to owners of the parent
Cash dividends, ¥9 per share
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
BALANCE, MARCH 31, 2015
Net income attributable to owners of the parent
Cash dividends, ¥12 per share
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
BALANCE, MARCH 31, 2016

Number ofshares ofcommonstock
outstanding

Commonstock

CapitalsurplusRetainedearnings

199,659¥19,839¥25,326¥72,094 ¥(12,390) ¥22,754¥1,169¥128,792—
199,659
—
—
(300)
16
—
199,375
—
—
(146)
8
—
199,237—
19,839—————19,839—————¥19,839—(1,207)——25,32670,887 (12,390) 22,754
—
4,922
—
—
—
(1,797)
—
—
—
—
(164)
—
2
—
7
—
—
—
—
9,115
25,32874,012 (12,547) 31,869
—
8,626
—
—
—
(2,392)
—
—
—
—
(91)
—
1
—
4
—
—
—
—
(3,540)¥25,329 ¥80,246 ¥(12,634) ¥28,329

—
1,169
—
—
—
—
985
2,154
—
—
—
—
16
¥2,170(1,207)
127,585
4,922(1,797)(164)
910,100140,6558,626(2,392)(91)
5(3,524)¥143,279

Unrealized
gain onDefinedavailable retirement
Treasury
for-salebenefitstock securities
plans

Total
equityThousands of U.S. dollars (Note 1)
Accumulated othercomprehensive income

Unrealized
gain onDefinedavailable- retirement
Treasury
for-salebenefitstock securities
plans

Total
equity$176,049 $224,758 $656,777 $(111,337) $282,801 $19,113——
76,543————— (21,231)
—
—
—
—
—
—
(809)
—
—
—
11
—
32
—
—
—
—
—
— (31,410)
146$176,049 $224,769 $712,089 $(112,114) $251,391 $19,259$1,248,161
76,543(21,231)(809)
43(31,264)$1,271,443

Commonstock

BALANCE, MARCH 31, 2015
Net income attributable to owners of the parent
Cash dividends, $0.11 per share
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
BALANCE, MARCH 31, 2016
See notes to consolidated financial statements.

CapitalsurplusRetainedearnings

Consolidated Statement of Cash Flows
Okumura Corporation and Consolidated Subsidiaries
Year ended March 31, 2016

Okumura Corporation Annual Report 2016

Millions of yen

Thousands of
U.S. dollars(Note 1)

2016

2015

2016

¥ 9,328¥ 5,371$ 82,774

(818)
864

(394)
848

(7,257)
7,671(11,354)
255
204
1,138
(197)
(321)
1,935
(8,294)
1,034(7,148)2,757
278(2,037)(3,694)(1,101)
3,526(6,965)(1,594)(100,754)
2,265
1,810
10,093(1,752)(2,848)17,171(73,601)
9,173

Investing activities:
Net increase in time deposits
Payments for purchases of securities
Proceeds from sales of securities
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Investment in loans receivableCollection of loans receivable
Other—net
Net cash used in investing activities

(279)
(385)
807
(2,887)
5
(18)
87
(214)
(2,884)(150)(1,126)
2,685(2,586)
1(1,402)
1,652(140)(1,066)(2,475)(3,415)
7,160(25,615)
46
(163)
770
(1,901)(25,593)

Financing activities:
Increase in short-term bank loans—net
Proceeds from long-term debt
Repayments of long-term debt
Purchase of treasury stock
Disposal of treasury stock
Dividends paid
Other
Net cash provided by (used in) financing activities

1,020
1,100
(11)
(91)
5
(2,392)
(34)
(403)

6,135
—
(29)
(164)
9
(1,797)
(38)
4,116

9,051
9,762
(101)
(809)
43
(21,230)(289)(3,573)(96)(2,349)27,728¥ 25,379

27
1,483
26,245¥27,728(848)(20,841)
246,052$ 225,211

Operating activities:
Income before income taxes
Adjustments for:
Income taxes—paidDepreciation and amortization
Changes in assets and liabilities:
Increase in trade notes and accounts receivable
Decrease in accumulated costs of construction projects in progress
Decrease in other inventories
Increase (decrease) in trade notes and accounts payable
Decrease in advances received on construction projects in progress
Increase in asset for retirement benefits
Other—net
Total adjustments
Net cash provided by (used in) operating activities

Foreign currency translation adjustments on cash and cash equivalents
Net increase (decrease) 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.

13

Notes to Consolidated Financial Statements
Okumura Corporation and Consolidated Subsidiaries
Year ended March 31, 201614

1. Basis of Presentation of Consolidated Financial
Statements
The accompanying consolidated financial statements havebeen prepared in accordance with the provisions set forth in
the Japanese Financial Instruments and Exchange Act and its
related accounting regulations and in accordance withaccounting principles generally accepted in Japan, which are
different in certain respects as to the application and disclosure requirements of International Financial ReportingStandards.
In preparing these consolidated financial statements,
certain reclassifications and rearrangements have been madeto the consolidated financial statements issued domesticallyin order to present them in a form which is more familiar toreaders outside Japan. In addition, certain reclassifications
have been made in the 2015 consolidated financial statements to conform to the classifications used in 2016.
The consolidated financial statements are stated inJapanese yen, the currency of the country in which Okumura
Corporation (the “Company”) is incorporated and operates.
The translations of Japanese yen amounts into U.S. dollar
amounts are included solely for the convenience of readers
outside Japan and have been made at the rate of ¥112.69 to$1, the rate of exchange at March 31, 2016. Such translations should not be construed as representations that theJapanese yen amounts could be converted into U.S. dollars atthat or any other rate.
2. Summary of Significant Accounting Policies
a. Consolidation — The consolidated financial statements
as of March 31, 2016 and 2015 include the accounts of theCompany and its 2 (2 in 2015) significant subsidiaries(together, the “Group”).
Under the control and influence concepts, those companies in which the Company, directly or indirectly, is able toexercise control over operations are fully consolidated, andthose companies over which the Group has the ability to
exercise significant influence are accounted for by the equity
method.
Investments in 9 (9 in 2015) unconsolidated subsidiaries
and 3 (2 in 2015) associated companies are stated at cost. If
the equity method of accounting had been applied to theinvestments in these companies, the effect on the accompanying consolidated financial statements would not bematerial.
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 also eliminated.
b. Business Combinations — In October 2003, the BusinessAccounting Council issued a Statement of Opinion,“Accounting for Business Combinations,” and in December
2005, the Accounting Standards Board of Japan (the “ASBJ”)
issued ASBJ Statement No. 7, “Accounting Standard forBusiness Divestitures” and ASBJ Guidance No. 10, “Guidance

for Accounting Standard for Business Combinations andBusiness Divestitures.”
In December 2008, the ASBJ issued a revised accounting
standard for business 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 aresult, the pooling-of-interests method of accounting is nolonger allowed. (2) The previous accounting standard
required research and development costs to be charged toincome as incurred. Under the revised 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 amortizedover a period not exceeding 20 years. Under the revised standard, the acquirer recognizes the bargain purchase gain in
profit or loss immediately on the acquisition date after reassessing and confirming that all of the assets acquired and allof the liabilities assumed have been identified after a reviewof 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, “Guidanceon Accounting Standards for Business Combinations andBusiness 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 ownership interest in a subsidiary might change if
the parent purchases or sells ownership interests in its
subsidiary. The carrying amount of noncontrolling interest is adjusted to reflect the change in the parent’s
ownership interest in its subsidiary while the parent
retains its controlling interest in its subsidiary. Under theprevious accounting standard, any difference between
the fair value of the consideration received or paid andthe amount by which the noncontrolling interest is
adjusted is accounted for as an adjustment of goodwill
or as profit or loss in the consolidated statement ofincome. Under the revised accounting standard, suchdifference is accounted for as capital surplus as long as
the parent retains control over its subsidiary.
	(b) Presentation of the consolidated balance sheet—In
the consolidated balance sheet, “minority interest”
under the previous accounting standard is changed to“noncontrolling interest” under the revised accounting
standard.
	(c) Presentation of the consolidated statement ofincome—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”

Okumura Corporation Annual Report 2016

under the previous accounting standard is changed to“net income attributable to owners of the parent”
under the revised accounting standard.
	(d) Provisional accounting treatments for a businesscombination—If the initial accounting for a businesscombination is incomplete by the end of 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 the previous accounting standard
guidance, the impact of adjustments to provisionalamounts recorded in a business combination on profit
or loss is recognized as profit or loss in the year in which
the measurement 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 theprovisional amounts recognized at the acquisition date
to reflect new information obtained about facts and circumstances that existed as of the acquisition date andthat would have affected the measurement of theamounts recognized as of that date. Such adjustments
shall be recognized as if the accounting for the businesscombination had been completed at the acquisitiondate.
	(e) Acquisition-related costs—Acquisition-related costs
are costs, such as advisory fees or professional fees,
which an acquirer incurs to effect a business 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, acquisitionrelated 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
from the beginning of annual periods beginning on or after
April 1, 2014, except for (b) presentation of the consolidatedbalance sheet and (c) presentation of the consolidated statement of income. In the case of earlier application, allaccounting 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 therevised accounting standards and guidance for (a) transactions
with noncontrolling interest and (e) acquisition-related costs ispermitted. In retrospective application of the revised standards
and guidance, the accumulated effects of retrospective adjustments for all (a) transactions with noncontrolling interest and(e) acquisition-related costs which occurred in the past shall bereflected as adjustments to the beginning balance of capitalsurplus and retained earnings for the year of the first-time
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)presentation of the consolidated balance sheet and (c) presentation of the consolidated statement of income shall beapplied to all periods presented in financial statements containing the first-time application of the revised standards andguidance.
The revised standards and guidance for (d) provisional
accounting treatments for a business combination are effective for a business combination which occurs on or after the
beginning of annual periods beginning on or after April 1,
2015. Earlier application is permitted for a business combination which occurs on or after the beginning of annual periods
beginning on or after April 1, 2014.
The Company applied the revised 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 above, effective April 1, 2015,
and (d) provisional accounting treatments for a business combination above for a business combination which occurred on
or after April 1, 2015. The revised accounting standards andguidance for (a) transactions with noncontrolling interest and(e) acquisition-related costs were applied prospectively.
There was no impact from these accounting changes.
With respect to (b) presentation of the consolidated balance sheet and (c) presentation of the consolidated
statement of income, the applicable line items in the 2015
consolidated financial statements have been accordingly
reclassified and presented in line with those in 2016.
c. 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 and certificatesof deposit, all of which mature or become due within 3months of the date of acquisition.
d. Inventories — Construction projects in progress are stated at cost determined by the specific identification method.
Real estate held for sale and development projects inprogress are stated at the lower of cost determined by the
specific identification method or net selling value, which isdefined as the selling price less additional estimated manufacturing costs and estimated direct selling expenses.
e. Marketable and Investment Securities — Marketable
and investment securities are classified and accounted for,depending on management’s intent, as follows:(1) held-to-maturity debt securities, for which there is a positive intent and ability to hold to maturity, are reported atamortized cost and15

(2) available-for-sale securities, which are not classified as
held-to-maturity, are reported at fair value, with unrealized
gains and losses, net of applicable taxes, reported in a separate component of equity.
Nonmarketable available-for-sale securities are stated atcost determined by the moving-average method. For otherthan-temporary declines in fair value, investment securities
are reduced to net realizable value by a charge to income.

16

f. Property, Plant and Equipment — Property, plant andequipment are stated at cost. Depreciation, except for leaseassets, is computed by the declining-balance method basedon the estimated useful lives of the assets, while the straightline method is applied to buildings acquired on or after April
1, 1998, and lease assets. The range of useful lives is principally from 3 to 60 years for buildings and structures, from 4
to 17 years for machinery and equipment, and from 2 to 20
years for furniture and fixtures. Lease assets under financelease arrangements are depreciated using the straight-line
method over the terms of the respective leases without any
salvage value.
g. Long-Lived Assets — The Group reviews its long-lived
assets for impairment whenever events or 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 groupexceeds the sum of the undiscounted future cash flows
expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss
would be measured as the amount by which the carrying
amount of the asset exceeds its recoverable amount, which is
the higher of the discounted cash flows from the continued
use and eventual disposition of the asset or the net selling
price at disposition.
h. Allowance for Doubtful Receivables — The allowancefor doubtful receivables is stated in amounts considered to beappropriate based on the Group’s past credit loss experienceand an evaluation of estimated losses in the receivables outstanding.
i. Allowance for Warranty Work on Construction
Projects — The allowance for warranty costs for completed
work is provided at the amount of warranty costs based on
past loss experience.
j. Allowance for Losses on Construction Contracts —Allowance for losses on construction contracts is provided
with respect to construction projects for which eventual losses are reasonably expected and estimated.
k. Employees’ Retirement Benefits — The Company has acontributory funded pension plan covering substantially all of
its employees.
Liability for employees’ retirement benefits is recorded

based on the estimated present value of projected benefit
obligations and the fair value of plan assets at the end of the
fiscal year.
Unrecognized actuarial gains and losses are amortized
subsequent to the year in which they arise on a straight-line
basis over a period of 10 years, which is within the employees’ average remaining service years. Unrecognized past
service costs have been amortized on a straight-line basis
over a period of 10 years, which is within the employees’
average remaining service years.
In May 2012, the ASBJ issued ASBJ Statement No. 26,“Accounting Standard 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 theBusiness Accounting Council in 1998 with an effective dateof April 1, 2000, and the other related practical guidance,
and were followed by partial amendments from time to timethrough 2009.
	(a) Under the revised accounting standard, actuarial
gains and losses and past service costs that are yet to berecognized in profit or loss are recognized within equity(accumulated other comprehensive income), after
adjusting for tax effects, and any resulting deficit or surplus is recognized as a liability (liability for retirement
benefits) or asset (asset for retirement benefits).
	(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
the employees. However, actuarial gains and losses andpast service costs that arose in the current period andhave not yet been recognized in profit or loss are included in other comprehensive income and actuarial gains
and losses and past service costs that were recognizedin other comprehensive income in prior periods andthen recognized in profit or loss in the current period
shall be treated as reclassification adjustments (see Note15).
	(c) The revised accounting standard also made certain
amendments relating to the method of attributing
expected benefit to periods and relating to the discountrate 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 of annual periods beginning on or after April 1, 2015, subject to certain disclosure in
March 2015, both with earlier application being permitted
from the beginning of annual periods beginning on or after
April 1, 2013. However, no retrospective application of thisaccounting standard to consolidated financial statements inprior periods is required.
The Company applied the revised accounting standard

Okumura Corporation Annual Report 2016

and guidance 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 themethod of attributing the expected benefit to periods from astraight-line basis to a benefit formula basis, the method ofdetermining the discount rate from using the period whichapproximates the expected average remaining service period
to using a single weighted average discount rate reflecting
the estimated timing and amount of benefit payment, andrecorded the effect of (c) above as of April 1, 2014, inretained earnings. As a result, retained earnings as of April 1,
2014, decreased by ¥1,207 million.
l. Asset Retirement Obligations — In March 2008, the
ASBJ issued ASBJ Statement No. 18, “Accounting Standard
for Asset Retirement Obligations” and ASBJ Guidance No. 21“Guidance on Accounting Standard for Asset Retirement
Obligations.” Under this accounting standard, an asset retirement obligation is defined as a legal obligation imposed
either by law or contract that results from the acquisition,
construction, development and normal operation of 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 forthe future asset retirement and is recorded in the period inwhich the obligation is incurred if a reasonable estimate canbe made. If a reasonable estimate of the asset retirement
obligation cannot be made in the period the asset retirement
obligation is incurred, the liability should be recognized whena 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 the carrying amount of the related fixed asset
by the amount of the liability. The asset retirement cost is
subsequently allocated to expense through depreciation over
the remaining useful life of the asset. Over time, the liability
is accreted to its present value each period. Any subsequent
revisions to the timing or the amount of the original estimateof undiscounted cash flows are reflected as an adjustment tothe carrying amount of the liability and the capitalized
amount of the related asset retirement cost.
m. Construction Contracts — In December 2007, the ASBJ
issued ASBJ Statement No. 15, “Accounting Standard forConstruction Contracts” and ASBJ Guidance No. 18,“Guidance on Accounting Standard for Construction
Contracts.” Under this accounting standard, construction
revenue and construction costs should be recognized by thepercentage-of-completion method, if the outcome of a construction contract can be estimated reliably. When total
construction revenue, total construction costs and the stageof completion of the contract at the balance sheet date canbe reliably measured, the outcome of a construction contract
is deemed to be estimated reliably. If the outcome of a construction contract cannot be reliably estimated, thecompleted-contract method should be applied. When it isprobable that the total construction costs will exceed total
construction revenue, an estimated loss on the contract
should be immediately recognized by providing for a loss on
construction contracts.
The revenues recognized by the percentage-of-completion method for the years ended March 31, 2016 and 2015
were ¥190,041 million ($1,686,408 thousand) and ¥189,458
million, respectively.
n. Income Taxes — The provision for income taxes is computed based on the pretax income included in the
consolidated statements 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 basesof assets and liabilities. Deferred taxes are measured byapplying currently enacted income tax rates to the temporary
differences.
o. Derivatives and Hedging Activities — The Group uses
derivative financial instruments to manage its exposures tofluctuations in foreign exchange and interest rates. Currency
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.
Currency and interest rate swaps that qualify for hedge
accounting and meet specific matching criteria are notremeasured at market value, but the differential paid or
received under the swap agreements is recognized andincluded in interest expense or income, and hedge items
denominated in a foreign currency are translated at the contracted rates.
p. Per Share Information — Basic net income per share iscomputed by dividing net income attributable to commonshareholders by the weighted-average number of commonshares outstanding for the period, retroactively adjusted forstock splits.
Diluted net income per share is not disclosed because
there are no securities with a dilutive effect upon exercise orconversion into common stock.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends
applicable to the respective fiscal years, including dividends
to be paid after the end of the year.
q. Accounting Changes and Error Corrections — In
December 2009, the ASBJ issued ASBJ Statement No. 24,“Accounting Standard for Accounting Changes and Error
Corrections” and ASBJ Guidance No. 24, “Guidance on
Accounting Standard for Accounting Changes and Error
Corrections.” Accounting treatments under this standard andguidance are as follows:

17

18

(1) Changes in Accounting Policies:
When a new accounting policy is applied following revisionof an accounting standard, the new policy is applied retrospectively unless the revised accounting standard includes
specific transitional provisions, in which case the entity shallcomply with the specific transitional provisions.
(2) Changes in Presentation:
When the presentation of financial statements is changed,
prior-period financial statements are reclassified in accordance with the new presentation.
(3) Changes in Accounting Estimates:
A change in an accounting estimate is accounted for in the
period of the change if the change affects that period only,
and is accounted for prospectively if the change affects boththe period of the change and future periods.
(4) Corrections of Prior-Period Errors:
When an error in prior-period financial statements is discovered, those statements are restated.

Okumura Corporation Annual Report 2016

3. Marketable and Investment Securities
Marketable and investment securities as of March 31, 2016 and 2015, consisted of the following:

Non-current:
Marketable equity securities
Government and corporate bonds
Non-marketable equity securities and other
Total

Millions of yen

Thousands of
U.S. dollars

2016

2015

2016

¥64,696
117
1,210¥66,023¥70,138118
1,240¥71,496$574,104
1,040
10,735$585,879

The costs and aggregate fair values of marketable and investment securities at March 31, 2016 and 2015, were as follows:
Millions of yen

March 31, 2016

Securities classified as:
Available-for-sale:
Equity securities
Held-to-maturity:
Debt securities

Cost

Unrealized
Gains

Unrealized
LossesFair
Value¥25,377¥39,580¥261¥64,696

117

9

—

126

¥25,451¥44,761¥ 74¥70,138

118

7

—

125

Cost

Unrealized
Gains

Unrealized
LossesFair
Value$225,193$351,225$2,314$574,104

1,040

76

—

1,116

March 31, 2015

Securities classified as:
Available-for-sale:
Equity securities
Held-to-maturity:
Debt securities

Thousands of U.S. dollars

March 31, 2016

Securities classified as:
Available-for-sale:
Equity securities
Held-to-maturity:
Debt securities

19

The information for available-for-sale securities which were sold during the years ended March 31, 2016 and 2015 is asfollows:
Millions of yen

Proceeds

Realized
Gains

Realized
Losses

¥805

¥334

¥—

Proceeds

Realized
Gains

Realized
Losses

¥263

¥159

¥—

March 31, 2016

Proceeds

Realized
Gains

Realized
LossesAvailable-for-sale:
Equity securities$7,142$2,959$—March 31, 2016

Available-for-sale:
Equity securities

Millions of yen

20

March 31, 2015

Available-for-sale:
Equity securities

Thousands of U.S. dollars

The impairment losses on available-for-sale equity securities for the years ended March 31, 2016 and 2015, were ¥10 million($86 thousand) and ¥23 million, respectively.
4. Inventories
Inventories at March 31, 2016 and 2015, consisted of the following:
Millions of yen

Construction projects in progress
Real estate held for sale
Development projects in progress
Other
Total

Thousands of
U.S. dollars

2016

2015

2016

¥4,707
564
2,823
523
¥8,617¥4,962
1,318
2,283
494
¥9,057$41,766
5,004
25,051
4,642$76,463

Okumura Corporation Annual Report 2016

5. Investment Property
In November 2008, the ASBJ issued ASBJ Statement No. 20, “Accounting Standard for Investment Property and Related
Disclosures” and issued ASBJ Guidance No. 23, “Guidance on Accounting Standard for Investment Property and Related
Disclosures.”
The Group owns certain rental properties such as residential buildings, warehouses, and land in Osaka and other areas.
Some rental warehouses, part of which the Company uses, are classified as rental properties in part.
The net of rental income and operating expenses for those rental properties was ¥2,736 million ($24,277 thousand) and¥2,635 million for the years ended March 31, 2016 and 2015, respectively.
In addition, the carrying amounts, changes in such balances and market prices of such properties were as follows:
Millions of yen
Fair Value

Carrying AmountRental properties
Rental properties in part
Total

April 1,
2015

Increase/
Decrease

March 31,2016

March 31,2016

¥30,800
844¥31,644

¥643
(15)
¥628

¥31,443829¥32,272¥51,416
6,602¥58,018
Millions of yen
Fair Value

Carrying AmountRental properties
Rental properties in part
Total

April 1,
2014

Increase/
Decrease

March 31,2015

March 31,2015

¥28,9101,112¥30,022¥1,890(268)¥1,622¥30,800
844¥31,644¥50,150
6,560¥56,710
Thousands of U.S. dollars
Fair Value

Carrying AmountRental properties
Rental properties in part
Total

April 1,
2015

Increase/
Decrease

March 31,2016

March 31,2016

$273,317
7,491$280,808$5,705(138)$5,567$279,022
7,353$286,375$456,264
58,584$514,848

Notes:(1) Carrying amount recognized in the consolidated balance sheets is net of accumulated depreciation and accumulated
impairment losses, if any.
(2) Fair value of properties as of March 31, 2016 and 2015, is measured in accordance with real-estate appraisal by real-estateappraisers for primary properties, and the amount measured by the Group is in accordance with its Real-Estate Appraisal
Standard for other properties (including those measured using indicators).

21

6. 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 to the short-term bank loans ranged from 0.5% to 1.5% at March 31, 2016 and 0.6% to 1.5% at March 31, 2015.
Long-term debt at March 31, 2016 and 2015, consisted of the following:

22

Loans from banks and other financial institutions, due serially to 2031
with interest rates ranging from 0.6% to 5.6%
Collateralized
Unsecured
Obligations under finance leases
Total
Less current portionLong-term debt, less current portion

Millions of yen

Thousands of
U.S. dollars

2016

2015

2016

¥2,007
4,274
45
6,326
(1,134)¥5,192¥2,009
3,184
74
5,267
(43)
¥5,224$17,81437,928398
56,140(10,071)$46,069

Annual maturities of long-term debt, excluding finance leases (see Note 11), at March 31, 2016, were as follows:Year Ending March 31

Millions of yen

Thousands of
U.S. dollars

2017
2018
2019
2020
2021
2022 and thereafter
Total¥1,113
4,010
9
9
1,108
32
¥6,281$ 9,877
35,586
81
78
9,836
284
$55,742

The carrying amounts of assets pledged as collateral for short-term bank loans of ¥3,000 million ($26,622 thousand) and theabove collateralized long-term debt at March 31, 2016, were as follows:
Property, plant and equipment—net of accumulated depreciation
Investment securities
Total

Millions of yen

Thousands of
U.S. dollars

¥ 164
6,104
¥6,268$ 1,454
54,171$55,625

As is customary in Japan, the Company maintains substantial deposit balances with banks with which it has borrowings. Suchdeposit balances are not legally or contractually restricted as to withdrawal.
General agreements with respective banks provide, as is customary in Japan, that additional collateral must be provided
under certain circumstances if requested by such banks and that certain banks have the right to offset cash deposited withthem against any long-term or short-term debt or obligation that becomes due and, in case of default and certain other specified events, against all other debt payable to the banks. The Group has never been requested to provide any additional
collateral.

Okumura Corporation Annual Report 2016

7. Employees’ Retirement Benefits
Most of the employees of the Company are covered by a contributory trusted pension plan.
The Company has a cash balance plan (pension plan linked to the market interest rates) based on the Defined Benefit
Corporate Pension Law.
(1) The changes in defined benefit obligations for the years ended March 31, 2016 and 2015, were as follows:

Balance at beginning of year (as previously reported)
Cumulative effect of accounting change
Balance at beginning of year (as restated)
Current service cost
Interest cost
Actuarial gains
Benefits paid
Balance at end of year

2016

Millions of yen
2015

Thousands of
U.S. dollars
2016¥23,667—
23,667
1,086
118
(258)
(2,214)¥22,399¥23,918
1,207
25,125
1,124
125
(365)
(2,342)¥23,667$210,017—
210,017
9,632
1,050(2,288)(19,644)$198,767

2016

Millions of yen
2015

Thousands of
U.S. dollars
2016¥25,377
229
160
1,004
(2,214)¥24,556¥24,353
268
1,205
1,893
(2,342)¥25,377$225,192
2,027
1,419
8,912
(19,644)$217,906(2) The changes in plan assets for the years ended March 31, 2016 and 2015, were as follows:

Balance at beginning of year
Expected return on plan assets
Actuarial gains
Contributions from the employer
Benefits paid
Balance at end of year

(3) Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit
obligation and plan assets

Defined benefit obligation
Plan assets
Total
Unfunded defined benefit obligation
Net asset arising from defined benefit obligation

Liability for retirement benefits
Asset for retirement benefits
Net asset arising from defined benefit obligation

2016

Millions of yen
2015

Thousands of
U.S. dollars
2016¥22,399(24,556)(2,157)—¥(2,157)¥23,667(25,377)(1,710)—¥(1,710)$198,767(217,906)(19,139)—$(19,139)

2016

Millions of yen
2015

Thousands of
U.S. dollars
2016

¥—
(2,157)¥(2,157)¥—(1,710)¥(1,710)$—(19,139)$(19,139)(4) The components of net periodic benefit costs for the years ended March 31, 2016 and 2015, were as follows:

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial gains
Amortization of past service costs
Amortization of transitional obligation
Net periodic benefit costs

2016

Millions of yen
2015

Thousands of
U.S. dollars
2016¥1,086
118
(229)
(271)
(21)
—
¥683

¥1,124
125
(268)
(113)
(21)
(55)
¥792

$9,632
1,050(2,027)(2,404)(188)—$6,06323

(5) 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

Actuarial gains
Past service costs
Transitional obligation
Total

24

2016

Millions of yen
2015

Thousands of
U.S. dollars
2016

¥147
(21)
—
¥126

¥1,456(21)(55)¥1,380$1,304(188)—$1,116(6) 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

Unrecognized actuarial gains
Unrecognized past service costs
Total

2016

Millions of yen
2015

Thousands of
U.S. dollars
2016¥(2,788)(42)¥(2,830)¥(2,641)(64)¥(2,705)$(24,740)(376)$(25,116)(7) Plan assets
a. Components of plan assets
Plan assets as of March 31, 2016 and 2015, consisted of the following:
Debt investments
Equity investments
Life insurance general account assets
Others
Total

2016

2015

45%
9
32
14
100%

41%
13
32
14
100%

b. Method of determining the expected rate of return on plan assets
	
The expected rate of return on plan assets is determined considering allocation of plan assets which are expectedcurrently and in the future and the long-term rates of return which are expected currently and in the future from thevarious components of the plan assets.
(8) Assumptions used for the years ended March 31, 2016 and 2015, are set forth as follows:
Discount rate
Expected rate of return on plan assets

2016

2015

0.5%
0.9

0.5%
1.1

Okumura Corporation Annual Report 2016

8. 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:
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 that meet 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 ofthe directors being prescribed as one year rather than the normal two-year term by its articles of incorporation, the Board of
Directors may declare dividends (except for dividends-in-kind) at any time during the fiscal year if the Company has prescribed so in its articles of incorporation. However, the Company does not meet all the above criteria.
The Companies Act permits companies to distribute dividends-in-kind (noncash assets) to shareholders subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles ofincorporation of the Company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders,
but the amount of net assets after dividends must be maintained at no less than ¥3 million.
b. Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus), depending on the equity accountcharged upon the payment of such dividends, until the aggregate amount of legal reserve and additional paid-in capitalequals 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, other capital surplus and retained earnings can be transferred among the accounts within equity under certain conditions upon resolution of the shareholders.
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 resolutionof the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to theshareholders which is determined by a specific formula. Under the Companies Act, stock acquisition rights are presented as aseparate component of equity. The Companies Act also provides that companies can purchase both treasury stock acquisitionrights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted
directly from stock acquisition rights.

25

9. Income Taxes
The Group is subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of approximately 33.0% 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:

26

Deferred tax assets:
Tax loss carryforwards
Impairment losses on securities
Allowance for losses on construction contracts
Write-down of inventories
Allowance for doubtful accounts
Allowance for bonuses
Accrued expenses
Other
Less valuation allowance
Total
Deferred tax liabilities:
Net unrealized gains on available-for-sale securities
Retained earnings appropriated for special allowance
Asset for retirement benefits
Total
Net deferred tax liabilities

Millions of yen

Thousands of
U.S. dollars

2016

2015

2016

¥4,011
2,171
1,370
1,349
1,160
969
517
423
(11,929)41¥5,515
2,356
1,586
1,417
1,158
830
596
1,406
(14,817)47$35,597
19,264
12,16011,970
10,298
8,595
4,584
3,748
(105,854)
362(10,975)(1,609)(660)(13,244)¥(13,203)(12,802)(1,711)(551)(15,064)¥(15,017)(97,390)(14,276)(5,857)(117,523)$(117,161)

A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated statement of income for the year ended March 31, 2016, with the corresponding figures for 2015, is asfollows:
Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Non-taxable income
Inhabitant tax per capita
Special income tax credits
Valuation allowance
Effect of tax rate reduction
Other—net
Actual effective tax rate

2016

2015

33.0%
0.7
(0.8)
1.5
(1.3)
(25.1)
(0.9)
0.4
7.5%

35.6%
1.0
(3.0)
2.5
(1.7)
(23.0)
(3.3)
0.3
8.4%

New tax reform laws enacted in 2016 in Japan changed the normal effective statutory tax rate for the fiscal year beginning on or after April 1, 2016, to 30.8% and for the fiscal year beginning on or after April 1, 2018, to 30.6%. The effect ofthese changes was to decrease deferred tax liabilities, net of deferred tax assets, by ¥690 million ($6,126 thousand) andincrease accumulated other comprehensive income for unrealized gain on available-for-sale securities by ¥574 million ($5,092
thousand) and defined retirement benefit plan by ¥35 million ($306 thousand) in the consolidated balance sheet as of March
31, 2016, and to decrease income taxes-deferred in the consolidated statement of income for the year then ended by ¥82 million ($728 thousand).

Okumura Corporation Annual Report 2016

10. Research and Development Costs
Research and development costs charged to income were ¥788 million ($6,996 thousand) and ¥651 million for the years ended
March 31, 2016 and 2015, respectively.
11. Leases(1) Finance leases
The Group leases certain machinery and equipment, office space and other assets.
Total rental expenses including lease payments under finance leases for the years ended March 31, 2016 and 2015, were
¥25 million ($219 thousand) and ¥31 million, respectively.
Obligations under finance leases at March 31, 2016 and 2015, were as follows:
Millions of yen

Due within one year
Due after one year
Total

Thousands of
U.S. dollars

2016

2015

2016

¥22
23
¥45

¥32
42
¥74

$194
204
$398

(2) Operating leases
Future minimum lease receivables or payments under noncancelable operating leases at March 31, 2016 and 2015, were as
follows:

As a lessor:
Due within one year
Due after one year
Total
As a lessee:
Due within one year
Due after one year
Total

Millions of yen

Thousands of
U.S. dollars

2016

2015

2016

¥2,214
17,416¥19,630¥2,100
18,303¥20,403$19,648
154,545$174,193

¥101
847
¥948

¥

$

94
928
¥1,022898
7,513$8,411

12. Financial Instruments and Related Disclosures(1) Group policy for financial instruments
At the Group level, cash surpluses, if any, are invested in low-risk and capital-safe financial assets. Short-term bank loans areused to fund its ongoing operations. Derivatives are used, not for speculative purposes, but to manage its exposure to fluctuations in foreign currency exchange and interest rates.
(2) Nature and extent of risks arising from financial instruments
Receivables, such as trade notes and trade accounts, are exposed to customer credit risk. Marketable and investment securities, mainly held-to-maturity securities and equity instruments of customers and suppliers of the Group, are exposed to therisk of market price fluctuations.
Payment terms of payables, such as trade notes and trade accounts, are mostly less than one year.
(3) Risk management for financial instruments
Credit risk management
Credit risk is the risk of economic loss arising from a counterparty’s failure to repay or service debt according to the contractual terms. The Group manages its credit risk from receivables on the basis of internal guidelines, which include continuously
determining customers’ circumstances from the phase of accepting orders to that of collection of the receivables, along with
monitoring of payment term and balances of each transaction.
Market risk management (foreign exchange risk and interest rate risk)
Marketable and investment securities are managed by monitoring market values and financial position of issuers on a regularbasis. Also, the Group continuously reviews its possession of those securities except for held-to-maturity securities.

27

Long-term debt denominated in foreign currencies is exposed to fluctuations in market interest rates and foreign exchange
rates. The Group utilizes derivative instruments (currency and interest rate swaps contracts) as hedging instruments to manage these market risks. The hedge accounting method is described in Note 2.o.
Please see Note 13 for more details about derivatives.
Liquidity risk management
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on maturity dates. The Groupmanages its liquidity risk by making the appropriate cash schedule on a monthly basis.

28(4) Fair values of financial instruments
Fair values of financial instruments are based on quoted prices in active markets. If a quoted price is not available, anotherrational valuation technique is used instead.
(a) Fair value of financial instruments
Millions of yen

March 31, 2016

Carrying
AmountFair Value

Unrealized
Gain/Loss

Cash and cash equivalents and time deposits
Receivables—trade notes and accounts
Allowance for doubtful receivables
Net
Investment securities
Long-term loans receivable
Allowance for doubtful long-term loans receivable
Net
Total

¥25,854
113,191(1,591)
111,600
64,813101(1)100¥202,367¥25,854¥—

111,600
64,822—9

105¥202,381

5¥14

Short-term bank loans
Long-term bank loans
Payables—trade notes and accounts
Long-term debt—lease obligation including current portion
Total
Derivatives¥15,766
5,100
54,03445¥74,945¥—¥15,766
5,119
54,03444¥74,963
¥—

¥—
19
—
(1)
¥18
¥—
Millions of yen

March 31, 2015

Carrying
AmountFair Value

Unrealized
Gain/Loss

Cash and cash equivalents and time deposits
Receivables—trade notes and accounts
Allowance for doubtful receivables
Net
Investment securities
Long-term loans receivable
Allowance for doubtful long-term loans receivable
Net
Total

¥27,932
101,836(1,491)
100,345
70,255112(1)
111¥198,643¥27,932¥—100,330
70,262(15)
7

114¥198,6383¥(5)Short-term bank loans
Long-term bank loans
Payables—trade notes and accounts
Long-term debt—lease obligation including current portion
Total
Derivatives¥13,646
5,100
53,86074¥72,680¥—¥13,646
5,106
53,86072¥72,684
¥—

¥—
6
—
(2)
¥ 4
¥—

Okumura Corporation Annual Report 2016

Thousands of U.S. dollars

March 31, 2016

Carrying
AmountFair Value

Unrealized
Gain/Loss

Cash and cash equivalents and time deposits
Receivables—trade notes and accounts
Allowance for doubtful receivables
Net
Investment securities
Long-term loans receivable
Allowance for doubtful long-term loans receivable
Net
Total

$229,423
1,004,443(14,112)990,331
575,145
898
(10)
888
$1,795,787$229,423$—990,331575,221—76

932$1,795,907

44
$120

Short-term bank loans
Long-term bank loans
Payables—trade notes and accounts
Long-term debt—lease obligation including current portion
Total
Derivatives$139,905
45,257479,492398$665,052$—$ 139,905
45,430479,492388$665,215
$—

$ —
173
—
(10)
$163
$—

Amounts due from unconsolidated subsidiaries and associated companies are included in receivables-trade notes and accounts
and long-term loans receivable.
Cash and cash equivalents and time deposits
The carrying values of cash and cash equivalents and time deposits approximate fair value because of their shortmaturities.
Marketable securities and investment securities
The fair values of marketable securities and investment securities are measured at the quoted market price of thestock exchange for the equity instruments and at the quoted price obtained from the financial institution for certain
debt instruments. Fair value information for the marketable securities and the investment securities by classification
is included in Note 3.
Receivables—trade notes and accounts and long-term loans receivable
The fair values of receivables—trade notes and accounts and long-term loans receivable are measured at theamount to be received at maturity, discounted at the Group’s assumed corporate discount rate, such as the rate ofnational bonds to the maturity. Also, the amounts of the allowance for doubtful receivables are deducted from thefair values.
Payables—trade notes and accounts and short-term bank loans
The carrying values of payables—trade notes and accounts and short-term bank loans approximate fair value
because of their short maturities.
Long-term debt—lease obligation
The fair values of long-term debt—lease obligation are determined by discounting the cash flows related to the debt
at the Group’s assumed corporate borrowing rate.
Long-term bank loans
The fair values of long-term bank loans are determined by the present value calculated by discounting the total
amount of the principal and interest expense at the interest rate considering the remaining maturities of the loans
and credit risk of the Company. The carrying values of bank loans with floating interest rates approximate fair value
because they reflect market interest rates and the credit position of the Company does not change significantly after
the execution.
Derivatives
Fair value information for derivatives is included in Note 13.
(b) Carrying amount of financial instruments whose fair value cannot be reliably determined

Investments in equity instruments that do not have a quoted market price in an
active market

Millions of yen

Thousands of
U.S. dollars

2016

2015

2016

¥1,438¥1,460$12,75829

(5) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
Millions of yen

March 31, 201630

Cash and cash equivalents and time deposits
Receivables—trade notes and accounts
Investment securities
Available-for-sale securities with contractual maturities
Long-term loans receivable
Total

Due in 1 Yearor Less

Due after
1 Year through5 Years

Due after
5 Years through10 Years

Due after
10 Years¥25,854
107,231

¥—
5,960

¥ —
—

¥—
—

—
—
¥133,085—
66¥6,026

124
87
¥211

—
27
¥27

Due in 1 Yearor Less

Due after
1 Year through5 Years

Due after
5 Years through10 Years$ 229,423
951,558$
—52,885

$

—
—

$ —
—

—
—
$1,180,981—
592$53,4771,101
768$1,869—240$240

Thousands of U.S. dollars

March 31, 2016

Cash and cash equivalents and time deposits
Receivables—trade notes and accounts
Investment securities
Available-for-sale securities with contractual maturities
Long-term loans receivable
Total

Please see Note 6 for annual maturities of long-term debt and Note 11 for obligations under finance leases.

Due after
10 Years

Okumura Corporation Annual Report 2016

13. Derivatives
The Group enters into derivatives, in the normal course of business, to reduce the exposure to fluctuations in foreign exchange
rates and interest rates. The primary classes of derivatives used by the Group are foreign currency forward contracts, currency
and interest rate swaps.
The Group does not hold or issue derivatives for trading purposes.
Because the counterparties to these derivatives are limited to major financial institutions, the Group does not anticipate
any losses arising from credit risk.
Derivative transactions entered into by the Group have been made in accordance with internal policies which regulate theauthorization and credit limit amount.
Derivative transactions to which hedge accounting is not applied:
There were no derivative transactions to which hedge accounting is not applied at March 31, 2016 and 2015.
Derivative transactions to which hedge accounting is applied:
Millions of yen

March 31, 2016

Hedged item

Contract
amountContract
amount due
after one year

Currency and interest rate swaps
Floating-rate receipt, fixed-rate payment
Receipt in U.S. dollars, payment in yen

Long-term
debt¥2,000¥2,000Fair value

Note

Fair value

Note

Millions of yen

March 31, 2015

Hedged item

Contract
amountContract
amount due
after one year

Currency and interest rate swaps
Floating-rate receipt, fixed-rate payment
Receipt in U.S. dollars, payment in yen

Long-term
debt¥2,000¥2,000Fair value

Note

Thousands of U.S. dollars

March 31, 2016

Hedged item

Contract
amountContract
amount due
after one year

Currency and interest rate swaps
Floating-rate receipt, fixed-rate payment
Receipt in U.S. dollars, payment in yen

Long-term
debt$17,748$17,748

Note:Currency and interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured atmarket value but the differential paid or received under the swap agreement is recognized and included in interest expense or
income. The fair value of such currency and interest rate swaps is included in those of the hedged items (i.e., long-term debt) in
Note 12.

31

32

14. Commitments and Contingent Liabilities
Land in the amount of ¥21 million ($185 thousand) is pledged for the deposit received from lessee related to the fixed-term
land leasehold at March 31, 2016. Land in the amount of ¥1,461 million ($12,968 thousand) and buildings in the amount of¥1,337 million ($11,865 thousand) are pledged as construction assistance funds pursuant to building lease contracts at March
31, 2016. Time deposits in the amount of ¥49 million ($433 thousand) are pledged for the guarantee against defect of construction contracts at March 31, 2016. Investment securities in the amounts of ¥117 million ($1,040 thousand), ¥16 million($140 thousand) and ¥111 million ($982 thousand) are pledged as collateral for the guarantee against defect of house construction, contract performance obligation of private finance initiative (PFI) business and the loans of an affiliate, respectively, atMarch 31, 2016.
15. Other Comprehensive Income (Loss)
The components of other comprehensive income (loss) for the years ended March 31, 2016 and 2015, were as follows:
Millions of yen

Thousands of
U.S. Dollars

2015

2016

¥(5,104)(264)(5,368)
1,828¥(3,540)¥11,878(136)
11,742(2,627)¥9,115$(45,288)(2,341)(47,629)
16,219$(31,410)¥ 418
(292)
126
(110)
¥ 16
¥(3,524)¥1,570
(190)
1,380
(395)
¥ 985¥10,100$3,707(2,591)
1,116(970)$ 146$(31,264)2016

Unrealized gain on available-for-sale securities
Gains arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Defined retirement benefit plans
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Total other comprehensive income (loss)

16. Subsequent EventAppropriation of Retained Earnings
The following appropriation of retained earnings at March 31, 2016, was approved at the Company’s shareholders’ meeting
held on June 29, 2016.
Year-end cash dividends, ¥21 ($0.19) per share

Millions of yen

Thousands of
U.S. dollars¥4,184$37,128

17. Segment Information
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 reportable segments consist of “Civil engineering,” “Architectural construction,” and “Realestate.”2.	Methods of measurement for the amounts of sales, profit (loss), assets, liabilities and other items for each reportablesegment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of Significant
Accounting Policies.”Okumura Corporation Annual Report 2016

3. Information about sales, profit (loss), assets, liabilities and other items is as follows:
Millions of yen
2016

Reportable segment

Sales
Sales to externalcustomers
Intersegment
sales or transfers
Total
Segment profit
Other:
Depreciation

Civil
engineering

Architectural
construction

Real estate

Total

Other
(Note 1)

Total

Reconciliations(Note 2)

Consolidated(Note 3)¥80,258¥114,920¥5,194¥200,372¥4,919¥205,291¥—¥205,291—
80,258
1,947—
114,920
3,248

27
5,221
3,111

27
200,399
8,306

655
5,574
107

682
205,973
8,413

(682)
(682)
10

—
205,291
8,423¥ 207

¥257

¥391

¥855

¥16

¥871

¥(7)

¥864
Millions of yen
2015

Reportable segment

Sales
Sales to externalcustomers
Intersegment
sales or transfers
Total
Segment profit (loss)
Other:
Depreciation

Civil
engineering

Architectural
construction

Real estate

Total

Other
(Note 1)

Total

Reconciliations(Note 2)

Consolidated(Note 3)

¥82,514¥112,238¥4,967¥199,719¥5,549¥205,268¥—¥205,268—
82,514
4,725—
112,238(3,787)

22
4,989
2,878

22
199,741
3,816

329
5,878
225

351
205,619
4,041

(351)
(351)
11

—
205,268
4,052¥ 243

¥236

¥368

¥847

¥8

¥

¥(7)

¥848

855

Thousands of U.S. dollars
2016

Reportable segment

Sales
Sales to externalcustomers
Intersegment
sales or transfers
Total
Segment profit
Other:
Depreciation

Civil
engineering

Architectural
construction

Real estate

Total

Other
(Note 1)

Total

Reconciliations(Note 2)

Consolidated(Note 3)$712,198$1,019,793$46,087$1,778,078$43,658$1,821,736$—$1,821,736—
712,198
17,275—
1,019,793
28,822245
46,332
27,607245
1,778,323
73,704

5,808
49,466951

6,053
1,827,789
74,655(6,053)(6,053)93—
1,821,736
74,748$ 3,473$$$7,733$(62)$$ 1,838 $

2,277

7,588

145

7,671

Notes:
1. Other is a business segment which is not included in any reportable segment and includes business related to manufacturing
and sales of construction machinery and materials.
2.	Reconciliations to segment profit (loss) in the amount of ¥10 million ($93 thousand) and ¥11 million for the years ended
March 31, 2016 and 2015, respectively, include eliminations of intersegment transactions.
3. Consolidated amounts of segment profit (loss) above correspond to the amounts of operating income in the consolidated
statements of income.

33

Independent Auditor‘s Report
Deloitte Touche Tohmatsu LLC
Yodoyabashi Mitsui Building
4-1-1, Imabashi, Chuo-ku
Osaka 541-0042
Japan
Tel: +81 (6) 4560 6000
Fax: +81 (6) 4560 6001
www.deloitte.com/jp

INDEPENDENT AUDITOR’S REPORTTo the Board of Directors of Okumura Corporation:34

We have audited the accompanying consolidated balance sheet of Okumura Corporation and its consolidated subsidiaries as ofMarch 31, 2016, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows
for the year then ended, and a summary of significant accounting policies and other explanatory information, all expressed inJapanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance withaccounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable
the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, theauditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Okumura Corporation and its consolidated subsidiaries as of March 31, 2016, and the consolidated results of
their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted inJapan.
Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made in accordance with the basis stated in Note 1 to the consolidated financial statements. Such U.S.
dollar amounts are presented solely for the convenience of readers outside Japan.

June 29, 2016

Member of
Deloitte Touche Tohmatsu Limited

Breakdown of Orders (Nonconsolidated)
Okumura Corporation
Year ended March 31, 2016

Okumura Corporation Annual Report 2016

Construction Orders Awarded

2016

Millions ofyen

Civil engineering:
Domestic:
Public sector
Private sector
Overseas
SubtotalArchitectural construction:
Domestic:
Public sector
Private sector
Overseas
Subtotal
Total:
Domestic:
Public sector
Private sector
Overseas
Total

56.7

41,427
72,775
53
114,255

100 %

98,766
97,976
1,087¥197,829

Composition
ratio

Millions of
yen

39.9%

¥ 62,781
16,964
2,769
82,51457.2

47,38264,218638
112,238

97.1
2.9
100 %

110,163
81,182
3,407
194,7525,426¥200,178

Composition
ratio

Millions of
yen

48.0%

¥ 84,212
20,761
26
104,999

52.0

58,94560,203561
119,709100 %

143,157
80,964587¥224,708

114,293
107,948
393¥222,634
2016

Millions ofyen¥ 60,833
19,413
12
80,25835,37079,085465
114,920
96,20398,498477
195,178
5,929¥201,107

Year-end Backlog¥ 96,505
24,202
405
121,11264,742
66,212
98
131,052
161,247
90,414503¥252,164

Composition
ratio

Thousands of
U.S. dollars

42.2%$ 648,911
202,805
3,464
855,18057.8

365,315755,11721
1,120,453

100 %1,014,226
957,922
3,485$1,975,633

Composition
ratio

Thousands of
U.S. dollars

41.2%$ 539,825
172,271102
712,19856.1

313,866
701,795
4,132
1,019,793

97.3
2.7
100 %

853,691874,066
4,234
1,731,991
52,613$1,784,604

Composition
ratio

Thousands of
U.S. dollars

46.7%$ 856,379
214,760
3,594
1,074,733

53.3

574,514587,562868
1,162,944

100 %

1,430,893
802,322
4,462$2,237,677

2016

2015

2016

Millions ofyen

Civil engineering:
Domestic:
Public sector
Private sector
Overseas
SubtotalArchitectural construction:
Domestic:
Public sector
Private sector
Overseas
Subtotal
Total:
Domestic:
Public sector
Private sector
Overseas
Total

43.3%

¥ 57,339
25,201
1,034
83,574

41,16785,094
3
126,264

Net Sales

Projects completed:
Civil engineering:
Domestic:
Public sector
Private sector
Overseas
SubtotalArchitectural construction:
Domestic:
Public sector
Private sector
Overseas
Subtotal
Subtotal:
Domestic:
Public sector
Private sector
Overseas
Subtotal
Real estate and other
Total

Millions ofyen¥ 73,126
22,854390
96,3702016

2015

Composition
ratio

2016

2015

35

Network

Head and Branch Offices

36

Consolidated Subsidiaries

Head Office
2-2-2, Matsuzaki-cho, Abeno-ku,
Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6627-5295

Hokuriku Office2-3-26, Higashi Ohdori, Chuo-ku,
Niigata 950-0087, Japan
TEL: +81-25-241-6160 FAX: +81-25-241-6364

Tokyo Head Office
5-6-1, Shiba, Minato-ku,
Tokyo 108-8381, Japan
TEL: +81-3-3454-8111 FAX: +81-3-5427-8103

Nagoya Branch
29-8, Takebashi-cho, Nakamura-ku,
Nagoya 453-8555, Japan
TEL: +81-52-451-1101 FAX: +81-52-452-4331

Technical Research Institute387, Ohsuna, Tsukuba 300-2612, Japan
TEL: +81-29-865-1521 FAX: +81-29-865-1522

Kansai Branch
26F ABENO HARUKAS,1-1-43 Abenosuji,
Abeno-ku, Osaka 545-6026, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6621-1921

East Japan Branch Office
5-6-1, Shiba, Minato-ku,
Tokyo 108-8381, Japan
TEL: +81-3-3454-8111 FAX: +81-3-5427-8111

Nara Office38-3 Takama-cho, Nara 630-8241, Japan
TEL: +81-742-22-5001 FAX: +81-742-27-0192

West Japan Branch Office
2-2-2, Matsuzaki-cho, Abeno-ku,
Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6623-7692

Kobe Office2-2-16, Isobe dori, Chuo-ku,
Kobe 651-0084, Japan
TEL: +81-78-221-9355 FAX: +81-78-251-3374

West Japan Branch Office (HARUKAS Office)
26F ABENO HARUKAS,1-1-43 Abenosuji,
Abeno-ku, Osaka 545-6026, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6621-1921

Hiroshima Branch
1-7-22, Kokutaiji-machi, Naka-ku,
Hiroshima 730-0042, Japan
TEL: +81-82-241-2246 FAX: +81-82-243-1416

Sapporo Branch
2-1-18, Kita Shijo Nishi,
Chuo-ku, Sapporo 060-0004, Japan
TEL: +81-11-261-9261 FAX: +81-11-251-5345

Shikoku Branch
1-8-41, Nishiki-machi,
Takamatsu 760-0020, Japan
TEL: +81-87-851-9008 FAX: +81-87-822-9286

Tohoku Branch
2-25, Tsutsumi dori, Amamiya-machi,
Aoba-ku, Sendai 981-8525, Japan
TEL: +81-22-274-1231 FAX: +81-22-273-9805

Kyushu Branch
2-19-1, Sanno, Yahata Higashi-ku,
Kitakyushu 805-8531, Japan
TEL: +81-93-671-3131 FAX: +81-93-661-1543

Tokyo Branch
5-6-1, Shiba, Minato-ku,
Tokyo 108-8381, Japan
TEL: +81-3-3454-8111 FAX: +81-3-5427-8116

Fukuoka Office
1-13-8, Yakuin, Chuo-ku,
Fukuoka 810-0022, Japan
TEL: +81-92-741-4431 FAX: +81-92-741-4740

Higashikanto Office18-14, Shinmachi, Chuo-ku,
Chiba 260-0028, Japan
TEL: +81-43-241-2255 FAX: +81-43-244-5911

Taiwan Branch
7F., No.82, Sungchiang.Rd.,
Zhongshan Dist., Taipei City 104, Taiwan(R.O.C.)TEL: +886-2-2567-5010 FAX: +886-2-2567-5171

Yokohama Office
60, Nihon Ohdori, Naka-ku,
Yokohama 231-0021, Japan
TEL: +81-45-662-1361 FAX: +81-45-641-3502

Singapore Rep. Office
175A Bencoolen Street, #05-06 Burlington
Square, Singapore 189650
TEL: +65-6884-6830 FAX: +65-6884-6831

Okumura Machinery Corporation
3-5-26, Himejima, Nishiyodogawa-ku,
Osaka 555-0033, Japan
TEL: +81-6-6472-3461 FAX: +81-6-6477-6801
Business line:Design, manufacture, sales, andrepair of construction/industrial machines anddevices
Taihei Real Estate Corporation[Head Office]5-6-1, Shiba, Minato-ku,
Tokyo 108-8381, Japan
TEL: +81-3-5439-5401 FAX: +81-3-5439-5402[Osaka Branch]
2-2-2, Matsuzaki-cho, Abeno-ku,
Osaka 545-8555, Japan
TEL: +81-6-6625-3959 FAX: +81-6-6629-3938
Business line: Real estate, land and building
management

Board of Directors

Investor Information(As of June 29, 2016)(As of March 31, 2016)
Okumura Corporation Annual Report 2016

Directors

Corporate Data

President and Representative Director
Takanori Okumura
Representative Director
Takaiku Hirako

EstablishedFebruary 22, 1907

Directors
Makoto Tsuchiya
Seiichi Fujioka
Yuichi Mizuno
Keiji Yamaguchi
Atsushi Tanaka

Capital¥19.8 billion

Director (Full-time Audit and Supervisory Committee Member)
Hironobu Kozai
Directors (Audit and Supervisory Committee Member)
Kiyoshi Saito
Kazuo Tsuji
Shuji Abe
Hiroyo Yashiro
Note: Kiyoshi Saito, Kazuo Tsuji, Shuji Abe and Hiroyo Yashiro are outside directors.

Okumura was established in 1907 based on two key
principles enshrined in the corporate mottos “steadfast
management” and “sincere operation.” The steady
growth achieved over the years has been made possible through the unflagging support of our customers.
Okumura’s main business activities include civilengineering projects for railways, roads, power station
facilities, sewage and water works, and others. In thearea of construction are projects such as houses, public
facilities, medical facilities, and office buildings. The
Company has developed technology at the highest
level, with achievements including the seismic isolation
system used to construct Japan’s first earthquakeabsorbing building. In the area of environment-related
technology, Okumura has developed techniques for
100% recycling of demolished concrete, and natural
greening of concrete surfaces on buildings.
Okumura understands what an important mission it is to provide a better environment for the future.
Accordingly, the Company is dedicated to contributing
to meaningful social infrastructure investment and toalways being a corporation regarded highly by society.
It will achieve this by continuing to develop as an allaround construction company based on steadfast business management.

Stock Information
Stock Exchange Listings
Tokyo
Transfer Agent
Sumitomo Mitsui Trust Bank, Limited

Shareholder

Executive Vice Presidents
Takaiku Hirako*
Makoto Tsuchiya*
Wataru Watanabe
Senior Managing Executive Officers
Hiroomi Iida
Seiichi Fujioka*
Yuichi Mizuno*
Keiji Yamaguchi*
Managing Executive Officers
Hirokazu Oishi
Toshio Kobayashi
Yutaka Maruyama
Hitoshi Miyamoto
Executive Officers
Takeshi Kurita
Takanori Hayashi
Noriyuki MachidaKenji Kotera
Osamu Harada
Atsushi Tanaka*

37

Group Employees
1,989

Major Shareholders

Executive Officers

Contents
1 Financial Highlights
2 To Our Shareholders
4 Review of Operations
6 Topics
8 Consolidated Balance Sheet
10 Consolidated Statement of Income
11 Consolidated Statement of Comprehensive Income
12 Consolidated Statement of Changes in Equity
13 Consolidated Statement of Cash Flows
14 Notes to Consolidated Financial Statements
34 Independent Auditor’s Report
35 Breakdown of Orders (Nonconsolidated)
36 Network
37 Board of Directors / Investor Information

Head Office	OKUMURA CORPORATION
2-2-2, Matsuzaki-cho, Abeno-ku, Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6627-5295

Syunso Iijima
Hiromu Miyazaki
Akira Tanaka
Masaaki Iwakura
Kaoru Kuniyuki

Note: Those officers marked with an asterisk (*) work as directors.

Shares held Percentage of(thousands)
total

Okumura Corporation(Treasury stock)

29,08912.74%

Japan Trustee Services Bank,
Ltd. (Trust Account)

12,127

5.31

Okumura Employees’
Shareholding Association

7,355

3.22

Northern Trust Co. (AVFC) Re
Silchester International Investors
International Value Equity Trust

7,151

3.13

The Master Trust Bank ofJapan, Ltd. (Trust Account)

6,656

2.92

Resona Bank, Limited.

6,074

2.66

Sumitomo Realty &Development Co., Ltd.

6,050

2.65

Sumitomo Mitsui Banking
Corporation

5,568

2.44

BBH Boston Custodian For Blackrock
Global Allocation Fund, Inc. 620313

5,152

2.26

Northern Trust Co. (AVFC) Re
U.S. Tax Exempted Pension Funds

4,248

1.86

Nippon Life Insurance Company

3,215

1.41

Annual Report
2016
OKUMURA CORPORATION
2-2-2, Matsuzaki-cho, Abeno-ku, Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6627-5295
http://www.okumuragumi.co.jp

OkumuraCorporation

Printed in Japan