Annual Securities Report
88th term (from April 1, 2017 to March 31, 2018)

F.C.C. CO., LTD.

Table of Contents
A.

Company information ........................................................................................................................... 3
Overview of the Company ................................................................................................................ 3
1. Trends in selected financial data .................................................................................................. 3
2. Company history ........................................................................................................................... 5
3. Description of business.................................................................................................................. 6
4. Overview of subsidiaries and other affiliates .............................................................................. 8
5. Information about employees ..................................................................................................... 11
II. Overview of business ....................................................................................................................... 12
1. Management policy, management environment, issues to address, etc. ................................. 12
2. Business risks ............................................................................................................................... 13
3. Management analysis of financial position, operating results and cash flows ....................... 14
4. Critical contracts for operation .................................................................................................. 18
5. Research and development activities ......................................................................................... 18
III. Information about facilities ............................................................................................................ 20
1. Overview of capital investments, etc. ......................................................................................... 20
2. Major facilities ............................................................................................................................. 20
3. Planned additions, retirements, etc. of facilities ....................................................................... 22
IV. Information about reporting company.......................................................................................... 23
1. Information about shares, etc. .................................................................................................... 23
2. Dividend policy ............................................................................................................................ 25
3. Information about officers.......................................................................................................... 27
4. Status of corporate governance, etc. .......................................................................................... 32
V. Financial information ..................................................................................................................... 40
1. Consolidated financial statements, etc. ...................................................................................... 41
2. Non-consolidated financial statements, etc. .............................................................................. 86
VI. Overview of operational procedures for shares of the reporting company ................................ 97I.

1

Cover Page
Document title
Clause of stipulation
Place of filing
Filing dateFiscal year
Company nameCompany name in English
Title and name of representative
Address of registered headquarters
Telephone number
Name of contact person
Nearest place of contact
Telephone number
Name of contact person
Place for public inspection

Annual Securities Report
Article 24, paragraph 1 of the Financial Instruments andExchange Act
Director-General of the Tokai Local Finance Bureau
June 21, 2018
88th term (from April 1, 2017 to March 31, 2018)
株式会社エフ・シー・シー (Kabushiki Kaisha F.C.C.)
F.C.C. CO., LTD.
Toshimichi Matsuda, President and Representative Director
7000-36 Nakagawa, Hosoe-cho, Kita-ku, Hamamatsu-shi,
Shizuoka+81-53-523-2400 (Main)
Ryujiro Matsumoto, Director, Head of Management andAdministration
7000-36 Nakagawa, Hosoe-cho, Kita-ku, Hamamatsu-shi,
Shizuoka+81-53-523-2400 (Main)
Ryujiro Matsumoto, Director, Head of Management andAdministration
Tokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo)

2

A. Company information
I. Overview of the Company
1. Trends in selected financial data
(1) Summary of consolidated financial data
IFRS

Term
Fiscal year-end
Revenue

84th term

85th term

86th term

87th term

88th term

March 31,2014

March 31,2015

March 31,2016

March 31,2017

March 31,2018

(Millions of yen)

145,433

154,395

167,429

157,217173,174

Profit before income taxes (Millions of yen)

16,871

12,104

8,118

11,41914,083

Profit attributable to owners of parent(Millions of yen)

12,905

7,230

6,162

7,204

9,691

Comprehensive income(Millions of yen)

14,937

16,809(1,155)

7,027

7,935

Equity attributable to owners of parent(Millions of yen)

104,004

110,190

107,010

111,624

117,311

Total assets(Millions of yen)

139,195

163,819

159,212

162,708

170,302

Equity attributable to owners of parent per
share
(Yen)

2,072.27

2,195.52

2,132.18

2,224.12

2,337.43

Basic earnings per share(Yen)

257.13144.07122.79143.54193.11

Diluted earnings per share

(Yen)

–

–

–

–

–

Ratio of equity attributable to owners ofparent to total assets
(%)

74.72

67.26

67.21

68.60

68.88

Ratio of profit to equity attributable toowners of parent

13.27

6.75

5.67

6.59

8.47

Price earnings ratio (PER)(%)(Times)

7.14

13.03

15.49

15.48

15.48

Net cash flows from (used in) operating
activities(Millions of yen)

15,53013,002

25,10824,16524,120Net cash flows from (used in) investing
activities(Millions of yen)

(17,665)(20,308)(17,369)(15,846)(19,122)Net cash flows from (used in) financing
activities(Millions of yen)

(2,856)

4,106

96(7,641)(2,657)

Cash and cash equivalents at end of period(Millions of yen)

19,046

17,55723,45023,47425,230

7,235

7,603

7,893

8,189

8,555

[3,489][3,647][3,235][3,210][3,637]

Number of employees[Separately, average number of temporary
employees]

Notes: 1. Effective from the 85th term, the consolidated financial statements are prepared based on International Financial
Reporting Standards (hereinafter “IFRS”).
2. Revenue does not include consumption taxes.
3. Information on diluted earnings per share is omitted due to an absence of potential shares.

3

Japanese GAAP

Term
Fiscal year-end

84th term

85th term

March 31,2014

March 31,2015

Net sales(Millions of yen)

144,890

153,939

Ordinary profit(Millions of yen)

16,115

12,952

Profit attributable to owners of parent(Millions of yen)

13,1486,760

Comprehensive income(Millions of yen)

16,26916,702

Net assets(Millions of yen)

111,099

115,948

Total assets(Millions of yen)

137,909

162,348

Net assets per share(Yen)

2,075.83

2,195.73

Basic earnings per share(Yen)

261.99134.70

Diluted earnings per share

(Yen)

–

–

Equity ratio

(%)

75.54

67.88

Return on equity (ROE)

(%)

13.59

6.31

Price earnings ratio (PER)(Times)

7.01

13.93

Net cash provided by (used in) operating
activities(Millions of yen)

13,646

13,465

Net cash provided by (used in) investing
activities(Millions of yen)

(15,120)(21,783)

Net cash provided by (used in) financing
activities(Millions of yen)

(2,771)

4,129

Cash and cash equivalents at end of period(Millions of yen)

20,147

17,403

7,214

7,564

[3,444][3,676]

Number of employees[Separately, average number of temporary
employees]

Notes: 1. An audit pursuant to Article 193-2, paragraph 1 of the Financial Instruments and Exchange Act of Japan has notbeen conducted for the consolidated financial statements for the 85th term prepared in accordance with Japanese
GAAP.
2. Net sales do not include consumption taxes.
3. Information on diluted earnings per share is omitted due to an absence of potential shares.

42. Company history
Year

Month

Event

1939

June

1943
1982

March
February

1984
1988

July
July

1989

March

1992
1993

June
September
September

Fuji Lite Industries Co., Ltd. is established in Sato-cho, Hamamatsu-shi, Shizuoka.
The Company begins manufacturing clutch plates, gears and other products employing compression
molding of Bakelite resins.
Changes name to Fuji Chemical Co., Ltd.
Establishes Kyushu Fuji Chemical Industries Co., Ltd. (currently KYUSHU F.C.C. CO., LTD., aconsolidated subsidiary) in Matsubase-machi, Shimomashiki-gun, Kumamoto (currently Uki-shi,
Kumamoto).
Changes name to F.C.C. CO., LTD.
Establishes JAYTEC, INC. (currently FCC (INDIANA) LLC., a consolidated subsidiary) in Indiana,
U.S.A.
Establishes FCC (THAILAND) CO., LTD. (currently a consolidated subsidiary) in Bangkok,
Thailand.
Moves its corporate head office to the current address.
Makes equity investment in KWANG HWA SHING INDUSTRIAL CO., LTD. of Tainan, Taiwan.
Establishes FCC (PHILIPPINES) CORP. (currently a consolidated subsidiary) in Laguna,Philippines.
Acquires shares of TENRYU SANGYO CO., LTD. (currently a consolidated subsidiary)
Registers its shares for OTC trading with Japan Securities Dealers Association.
Establishes CHENGDU JIANG HUA. F.C.C. CLUTCHES. CO., LTD. (currently CHENGDUYONGHUA. F.C.C. CLUTCHES CO., LTD., a consolidated subsidiary) in Chengdu, Sichuan,
China.
Establishes CHU’S F.C.C. CO., LTD. (SHANGHAI) (currently a consolidated subsidiary) in
Shanghai, China.
Establishes FCC (EUROPE) LTD. in Milton Keynes, UK.
Establishes FCC RICO LTD. (currently FCC CLUTCH INDIA PRIVATE LTD., a consolidated
subsidiary) in Haryana, India.
Establishes FCC DO BRASIL LTDA. (currently a consolidated subsidiary) in Amazonas, Brazil.
Establishes FCC (North Carolina), INC. (currently FCC (North Carolina), LLC., a consolidated
subsidiary) in North Carolina, U.S.A.
Establishes PT. FCC INDONESIA (currently a consolidated subsidiary) in Karawang, Indonesia.
Establishes FCC (North America), INC. (currently a consolidated subsidiary) and FCC (INDIANA),
INC. (currently FCC (INDIANA) LLC., a consolidated subsidiary) in Indiana, U.S.A.
Lists its shares on the Second Section of the Tokyo Stock Exchange.
Establishes FCC (Adams), LLC. (currently a consolidated subsidiary) in Indiana, U.S.A.
Lists its shares on the First Section of the Tokyo Stock Exchange.
Increases investment in KWANG HWA SHING INDUSTRIAL CO., LTD. (currently FCC(TAIWAN) CO., LTD.), making the company a consolidated subsidiary.
Establishes FCC (VIETNAM) CO., LTD. (currently a consolidated subsidiary) in Hanoi, Vietnam.
Establishes CHINA FCC FOSHAN CO., LTD. (currently a consolidated subsidiary) in Foshan,
Guangdong, China.
Acquires 100% of shares of Tohoku Chemical Industries, Ltd. (currently a consolidated subsidiary).
Establishes F.C.C. (China) Investment Co., Ltd. (currently a consolidated subsidiary) in Chengdu,
Sichuan, China.
Completes liquidation of FCC (EUROPE) LTD.
Establishes FCC SEOJIN CO., LTD. in Siheung, Gyeonggi-do, Korea.
Establishes FCC AUTOMOTIVE PARTS DE MEXICO, S.A. DE C.V. (currently a consolidated
subsidiary) in San Luis Potosi, Mexico.
Establishes FCC CLUTCH INDIA PRIVATE LTD. (currently a consolidated subsidiary) in Haryana,
India.
Acquires 100% of shares of FCC RICO LTD. (currently FCC CLUTCH INDIA PRIVATE LTD., aconsolidated subsidiary).
FCC INDIA MANUFACTURING PRIVATE LTD. has been merged by FCC CLUTCH INDIA
PRIVATE LTD.
Acquires 100% of shares of Flint Co.,Ltd. (currently a consolidated subsidiary).

1994

October
AugustDecember

1995

March

1997

September
April

1998
2000

November
April

2001
2002

April
December

2003
2004
2005

February
May
March
June

2006

NovemberJanuary

2010
2012

November
September

2013

DecemberFebruary
June

2014

November
December

2015

November

2017

September5

3. Description of business
The Group, comprising the Company, 25 subsidiaries and two associates, is engaged primarily in the
manufacture and sale of clutches for motorcycles and automobiles.
The following breaks down the Group’s businesses into operating segments and indicates in which
segment each company falls. These operating segments are the same as those in “V. Financial
information, 1. Consolidated financial statements, etc., (1) Consolidated financial statements, Notes toconsolidated financial statements, 4. Segment information.”
Motorcycle clutches
This segment is engaged primarily in the manufacture and sale of motorcycles, scooters, all-terrain
vehicles (ATVs) and general-purpose clutches; it also manufactures and sells components and parts formotorcycles and automobiles.
Business
category

Principal companies

Sales

PT. FCC PARTS INDONESIA [Indonesia]

Manufacture andsales

The Company, KYUSHU F.C.C. CO., LTD., TENRYU SANGYO CO., LTD., Tohoku Chemical
Industries, Ltd., Flint Co.,Ltd, FCC (North Carolina), LLC. [U.S.], FCC (THAILAND) CO., LTD.
[Thailand], FCC (PHILIPPINES) CORP. [Philippines], CHENGDU YONGHUA. F.C.C. CLUTCHES
CO., LTD. [China], CHU’S F.C.C. CO., LTD. (SHANGHAI) [China], FCC (TAIWAN) CO., LTD.
[Taiwan], FCC CLUTCH INDIA PRIVATE LTD. [India], PT. FCC INDONESIA [Indonesia], FCC(VIETNAM) CO., LTD. [Vietnam], FCC DO BRASIL LTDA. [Brazil]

Automobile clutches
This segment is engaged primarily in the manufacture and sale of clutches for automatic and manualtransmission automobiles.
Business
category

Principal companies

Manufacture andsales

The Company, KYUSHU F.C.C. CO., LTD., FCC (INDIANA), LLC. [U.S.], FCC (North Carolina),
LLC. [U.S.], FCC (Adams), LLC. [U.S.], FCC AUTOMOTIVE PARTS DE MEXICO, S.A. DE C.V.
[Mexico], FCC (THAILAND) CO., LTD. [Thailand], FCC (PHILIPPINES) CORP. [Philippines],
CHENGDU YONGHUA. F.C.C. CLUTCHES CO., LTD. [China], CHINA FCC FOSHAN CO., LTD.
[China], FCC CLUTCH INDIA PRIVATE LTD. [India], PT. FCC INDONESIA [Indonesia], FCC(VIETNAM) CO., LTD. [Vietnam], FCC DO BRASIL LTDA. [Brazil]

6

Group business structure chart
The following Group business structure chart shows the matters described above.

Domestic* KYUSHU F.C.C. CO., LTD.
* TENRYU SANGYO CO., LTD.
* Tohoku Chemical Industries, Ltd.
* Flint Co.,Ltd<Administration company>* FCC (North America), INC.
* FCC (INDIANA), LLC.
* FCC (North Carolina), LLC.
* FCC (Adams), LLC.

The Company

Mexico* FCC AUTOMOTIVE PARTS DE MEXICO, S.A. DE C.V.
Thailand* FCC (THAILAND) CO., LTD.
Philippines* FCC (PHILIPPINES) CORP.
China<Administration company>* F.C.C.(China) Investment Co., Ltd.
* CHENGDU YONGHUA. F.C.C. CLUTCHES CO., LTD.
* CHINA FCC FOSHAN CO., LTD.
* CHU’S F.C.C. CO., LTD. (SHANGHAI)
Taiwan* FCC (TAIWAN) CO., LTD.
India
* FCC CLUTCH INDIA PRIVATE LTD.
Indonesia* PT. FCC INDONESIA* PT. FCC PARTS INDONESIA
Vietnam* FCC (VIETNAM) CO., LTD.
Brazil* FCC DO BRASIL LTDA.

* Consolidated subsidiaries○ Other affiliated company

Receiving and supplying materials and parts
Supplying products
Leasing land

7

Domestic/Overseas customers (○ Honda Motor Co., Ltd. and others)US4. Overview of subsidiaries and other affiliates
Name

Address

Issued capital

Principal contentsof business

Ratio of voting
rights holding(held) (%)(Note 3)

Relationship<Consolidated
subsidiaries>
Manufacturing the Company’s
product components and products.
100Interlocking officers and leasing
land.

KYUSHU F.C.C. CO.,LTD.

Uki-shi,
Kumamoto

Motorcycle and¥30,000,000 automobile
clutches

TENRYU SANGYO
CO., LTD.

Higashi-ku,
Hamamatsu-shi,
ShizuokaMotorcycle¥22,500,000
clutches

Tohoku Chemical
Industries, Ltd.

Nasukarasuyamashi, Tochigi¥125,000,000

Motorcycle
clutches

Purchasing Tohoku Chemical
100 Industries, Ltd.’s products.
Interlocking officers.

Flint Co.,Ltd

Ongatown, Ongagun, Fukuoka¥10,000,000

Motorcycle
clutches

Purchasing Flint Co.,Ltd’s
100 products.
Interlocking officers.

FCC (North America),
INC.
(Note 2)

Indiana, U.S.

Purchasing motorcycle,
automobile and general-purpose
80.22
components. Interlocking officers
and capital assistance.

Administration of
US$42,800,000 subsidiaries in the
U.S.

100

FCC (INDIANA), LLC.
Indiana, U.S.
(Notes 2, 4)

Automobile
US$17,800,000
clutches

Selling the Company’s products,
components and raw materials.
100
Purchasing FCC (INDIANA),[100]
LLC.’s products and components.
Interlocking officers.

FCC (North Carolina),
LLC.
(Note 2)Motorcycle andUS$10,000,000 automobile
clutches

Selling the Company’s products,
components and raw materials.
100
Purchasing FCC (North Carolina),[100]
LLC.’s products and components.
Interlocking officers.

North Carolina,
U.S.

Interlocking officers and capitalassistance.

FCC (Adams), LLC.
(Notes 2, 4)

Indiana, U.S.

US$15,000,000

Automobile
clutches

Selling the Company’s products,
components and raw materials.
100
Purchasing FCC (Adams), LLC.’s[100]
products and components.
Interlocking officers.

FCC AUTOMOTIVEPARTS DE MEXICO,S.A. DE C.V.
(Note 2)

San Luis Potosi,
Mexico

MXN500,000,000

Automobile
clutches

Selling the Company’s products,
100 components and raw materials.
[40.60] Interlocking officers and capitalassistance.

FCC (THAILAND) CO., Bangkok,
LTD.
ThailandMotorcycle and
THB60,000,000 automobile
clutches

Selling the Company’s products,
components and raw materials.
100
Purchasing FCC (THAILAND)[0.07]
CO., LTD.’s products andcomponents. Interlocking officers.

FCC (PHILIPPINES)
CORP.
(Note 2)

Laguna,Philippines

Motorcycle and
PHP200,000,000 automobile
clutches

Selling the Company’s products,
components and raw materials.
100 Purchasing FCC (PHILIPPINES)
CORP.’s products andcomponents. Interlocking officers.

F.C.C. (China)
Investment Co., Ltd.
(Note 2)

Sichuan, China

Administration of
US$30,000,000 subsidiaries in
China

100 Interlocking officers.

CHENGDU
YONGHUA. F.C.C.
Sichuan, China
CLUTCHES CO., LTD.
(Note 2)

CHU’S F.C.C. CO.,LTD. (SHANGHAI)(Note 2)

Shanghai, China

Motorcycle andUS$28,000,000 automobile
clutches

US$9,800,000

Motorcycle
clutches8

Selling the Company’s products,
components and raw materials.
Purchasing CHENGDU100
YONGHUA. F.C.C. CLUTCHES[71.43]
CO., LTD.’s products andcomponents. Interlocking officers
and capital assistance.
Selling the Company’s products,
components and raw materials.
Purchasing CHU’S F.C.C. CO.,100
LTD. (SHANGHAI)’s products
and components. Interlocking
officers.

Name

CHINA FCC FOSHAN
CO., LTD.
(Note 2)

FCC (TAIWAN) CO.,LTD.
(Note 2)FCC CLUTCH INDIA
PRIVATE LTD.
(Notes 2, 4)

PT. FCC INDONESIA(Notes 2, 4)

PT. FCC PARTSINDONESIAFCC (VIETNAM) CO.,LTD.
(Note 2)

FCC DO BRASIL
LTDA.
(Note 2)

Address

Guangdong, China

Tainan, Taiwan

Haryana, India

Karawang,Indonesia

Karawang,Indonesia

Issued capital

US$28,000,000

NT$195,000,000

Principal contentsof business

Ratio of voting
rights holding(held) (%)(Note 3)

Relationship

Automobile
clutches

Selling the Company’s products,
components and raw materials.
100 Purchasing CHINA FCC[61.43] FOSHAN CO., LTD.’s products
and components. Interlocking
officers.

Motorcycle
clutches

Selling the Company’s products,
components and raw materials.
70
Purchasing FCC (TAIWAN) CO.,
[15]
LTD.’s products and components.
Interlocking officers.

Motorcycle and
INR2,800,000,000 automobile
clutches

Selling the Company’s products,
components and raw materials.
Purchasing FCC CLUTCH
100
INDIA PRIVATE LTD.’s products
and components. Interlocking
officers and capital assistance.

Motorcycle andUS$11,000,000 automobile
clutches

Selling the Company’s products,
components and raw materials.
100
Purchasing PT. FCC[0.55]INDONESIA’s products andcomponents. Interlocking officers.

US$300,000

Motorcycle
clutches

Selling the Company’s products,
components and raw materials.
100
Purchasing PT. FCC PARTS[100]
INDONESIA’s products andcomponents.

Hanoi, Vietnam

Motorcycle andUS$25,000,000 automobile
clutches

Selling the Company’s products,
components and raw materials.
90 Purchasing FCC (VIETNAM)
CO., LTD.’s products andcomponents. Interlocking officers.

Amazonas, Brazil

Motorcycle and
BRL31,600,000 automobile
clutches

Selling the Company’s products,
components and raw materials.
100 Purchasing FCC DO BRASIL
LTDA.’s products andcomponents. Capital assistance.

Minato-ku, Tokyo

Manufacture andsales of¥86,067,000,000
automobiles andengines

Selling the Company’s products
21.69
and purchasing raw materials and(held)
components.

<Other affiliate>
Honda Motor Co., Ltd.
(Note 5)

Notes: 1. Descriptions in the “Principal contents of business” column are names of segments.
2. These companies are classified as “Specified Subsidiaries” under the Financial Instruments and Exchange Act ofJapan.
3. The figures in brackets in the “Ratio of voting rights holding” column are indirect holding ratio included in the
figures outside the brackets.

94. For FCC (INDIANA) LLC., FCC (Adams), LLC., FCC CLUTCH INDIA PRIVATE LTD. and PT. FCC
INDONESIA, the percentage of their net sales (excluding internal sales between consolidated companies) toconsolidated net sales exceeded 10%. Key profit and loss information in each company’s financial statements
prepared under the generally accepted accounting standards in Japan is as follows:
Key profit and loss information• FCC (INDIANA), LLC.
(1) Net sales¥34,567 million(2) Ordinary profit¥1,320 million(3) Profit¥1,435 million(4) Net assets¥14,051 million(5) Total assets¥19,587 million• FCC (Adams), LLC.
(1) Net sales(2) Ordinary profit(3) Profit(4) Net assets(5) Total assets¥26,096 million¥409 million¥679 million¥4,410 million¥23,510 million• FCC CLUTCH INDIA PRIVATE LTD.
(1) Net sales¥23,984 million(2) Ordinary profit¥(38 million)(3) Profit¥(61 million)(4) Net assets¥3,101 million(5) Total assets¥17,047 million• PT. FCC INDONESIA(1) Net sales¥20,829 million(2) Ordinary profit¥2,412 million(3) Profit¥1,863 million(4) Net assets¥13,975 million(5) Total assets¥16,694 million
5. This company files its Annual Securities Report.
6. In addition to the above, there are six affiliates.

10

5. Information about employees(1) Consolidated companies
As of March 31, 2018
Segment name

Number of employees

Motorcycle clutches

4,529

Automobile clutches

3,537

[253]

8,066

[3,560]Total of reportable segments
Corporate (common)
Total[3,307]

489

[77]

8,555

[3,637]

Notes: 1. The number of employees indicates the number of working employees, and the average number of temporary
employees during the fiscal year under review is given in brackets separately.
2. The number in the Corporate (common) segment indicates employees in the administration department, the R&D
Division and the Manufacturing Technology Center.

(2) Reporting company
As of March 31, 2018
Number of employees

Average age

1,106 [134]Average years of service
40.5

Average annual salary (Yen)

16.3

Segment name6,586,357

Number of employees

Motorcycle clutches

225

[43]

Automobile clutches

392

[14]

Total of reportable segments

617

[57]

Administration (general operations)

489

[77]

1,106

[134]

Total

Notes: 1. The number of employees indicates the number of working employees, and the average number of temporary
employees during the fiscal year under review is given in brackets separately.
2. Average annual salary includes bonuses and surplus wages.
3. The number in the Administration (general operations) segment indicates employees in the administration
department, the R&D Division and the Manufacturing Technology Center.

(3) Status of labor union
The reporting company and some of its consolidated subsidiaries have labor unions. However, thesecompanies have no labor-management issues to note.

11II. Overview of business
1. Management policy, management environment, issues to address, etc.
Please note that matters concerning the future in this article were determined by the Group as of the filingdate of this Annual Securities Report.
(1) Basic corporate management policy
The Group’s fundamental policy of corporate philosophy is to “make a contribution to society bysupplying products that make the best of ideas and technology to satisfy customers in every way, andwhich are also safe and environmentally friendly.”In line with this corporate philosophy, the Group’s officers and employees “place safety and theenvironment first when conducting business,” “employ ingenuity and creative thinking for the greater
purpose of advancing our business,” “renew and improve ourselves and our business, every day,”“carry out our work in a speedy and timely manner” and “honor harmony among people and make ouroffices a place where people enjoy what they do in a bright working atmosphere.”(2) Medium- and long-term business strategy of the Company
Looking at the future business environment, the global economy is expected to recover modestly, butboth political and economic developments in the U.S. and China, as well as financial market
fluctuations, must continue to be watched. In the automotive industry, demand is expected to grow inboth the motorcycle and automobile markets over the medium to long term. However, in conjunction
with the measures to address fuel consumption regulations and the advances in technologies for theelectrification of cars, global competition among is expected to become increasingly fierce, not just in
the automotive industry, but including other industries as well.
Under such a management environment, the Group will ensure the implementation of the 10th
Medium-Term Management Plan starting in FY2017, and strive for sustainable growth and improved
corporate value.
The 10th Medium-Term Management Plan (FY2017 – FY2019)
Go! Reach beyond evolution.
Business policy
To promote sustainability and increase corporate value.
To build a business structure that has overwhelming competitive strength by progressing with thedetails of strengthening product development capabilities and on-site capabilities.
Performance targets (FY2019 revised targets)
Revenue:¥185.0 billion

ROE:

9.2%

Operating profit:¥16.5 billion

Dividend payout ratio:30%(3) Issues to address
The Company will ensure implementation of the priority measures set out in the 10th Medium-Term
Management Plan to build a business structure that has overwhelming competitive strength. In
particular, the Company will focus on increasing production in the U.S. and improving profitability.
The following are the principal issues to be addressed by each operating segment.
Motorcycle clutches
Expand production capacity in India
Automobile clutches
Increase production in the U.S., build a stable mass production structure, and improve productivity

12

2. Business risks
Of the items related to the overview of business and financial information described in this Annual
Securities Report, the following may have a considerable impact on the investment decisions ofinvestors.
Please note that matters concerning the future in this article were determined by the Group as of thefiling date of this Annual Securities Report.
(1) Business development centered on clutch products
The Group continues to evolve as a specialist in clutch products. Although the clutch products
currently manufactured and sold by the Group are important functional components of drive trains forautomobiles and motorcycles driven by internal combustion engines, there is no guarantee that areplacement for a clutch product will not be developed and put into general use in the future.
In addition, clutch products may become unnecessary as drive train components in next-generation
automobiles and motorcycles that are not driven by internal combustion engines.
(2) Dependence on certain industries and customers
Most clutch products manufactured and sold by the Group are for the automobile and motorcycle
industries. As a result, the financial performance of the Group may be affected by future trends inthese industries. In addition, the Group’s sales revenue from the Honda Motor Group accounted forapproximately 47% of the Group’s sales revenue in the fiscal year ended March 31, 2018. The
financial performance of the Group could be significantly affected, therefore, by the Honda Motor
Group’s future business strategy, procurement policies and other decisions.
(3) Development of overseas business
The Group operates globally, centering on Japan, the U.S. and Asia. Accordingly, the Group’s
financial performance could be affected by following factors: political and economic trends in various
countries; fluctuations in foreign exchange markets; unforeseen changes in laws and regulations;international tax-related risks, such as transfer pricing taxation; and the occurrence of natural disasters.
(4) Competition faced by the GroupInternational competition in the automobile and motorcycle industries has become extremely fierce.
While the Group is endeavoring to sustain and strengthen its competitiveness in various areas, ranging
from product development and manufacturing to quality assurance, certain obstacles may make it
difficult to do so in the future, in which case the Group’s market share and earnings capability could
decline.
(5) Compensation for product defects
Although the Group is doing all it can to ensure sufficient quality control, it is not possible tocompletely prevent defects and deficiencies in all products. In addition, large recalls by final
assemblers caused by defects in products supplied by the Group could result in enormous costs to theGroup, as well as in serious damage to its reputation. In such an event, product defect liability could
have a serious impact on both the Group’s financial performance and financial condition.
(6) Impacts of natural disasters and earthquakes, etc.
The Group is implementing measures to minimize potential risks of disruptions to its production lines
caused by major natural disasters. There is no guarantee, however, that it will be able to completely
avoid or reduce damage. In this respect, the Group’s principal manufacturing facilities areconcentrated notably in western Shizuoka, and this area lies within a region that is likely to beaffected by the widely predicted Tokai and Tonankai earthquakes. The occurrence of such a majordisaster could have an enormous impact on the Group’s manufacturing facilities and cause asignificant reduction in its production capacity.

13

3. Management analysis of financial position, operating results and cash flows(1) Overview of operating results, etc.
The Group’s financial position, operating results and cash flows for the fiscal year ended March 31,2018 were as follows.
1) Financial position and operating results
In the fiscal year ended March 31, 2018, the Japanese economy gradually recovered against a
backdrop of improved corporate earnings and stronger employment and income environments.
Overseas, despite uncertainty due to geopolitical risks, the economy continued its modest recovery
overall. The U.S. economy continued to recover steadily. In Asia, there were signs of a recovery in
China, while India maintained a high growth rate, centered on domestic demand.
In the automotive industry, in Japan, sales of registered vehicles declined in the automobile market,
but driven by an increase in sales of lightweight mini vehicles, the number of new vehicles soldincreased for the second consecutive year. Overseas, although sales of passenger cars in the U.S.
struggled, sales of light trucks remained solid. In China, sales by Japanese manufacturers remained
strong. In the motorcycle market, sales in India were significantly higher than in the previous fiscal
year, while a recovery trend was seen in the ASEAN countries as well.
Under these circumstances, the Group has worked to strengthen development capabilities and on-site
capabilities in the first year of the 10th Medium-Term Management Plan. In the motorcycle business,in the expanding Indian market, we improved profitability by expanding production capacity andreducing costs, including establishing a new plant in Ahmedabad, as well as developed newtechnologies on the development front, and actively made proposals to customers. In the automobile
business, amid the solid sales of light trucks in the U.S., we have worked to improve profitability byincreasing production of clutches for 10-speed ATs. In terms of development, we worked on
developing friction materials and adapting our products to the technologies related to theelectrification of cars.
Outside of the clutches business, we worked on the development of fuel cell systems, thin paper andthin film technologies based on our paper-making and catalyst technologies with an eye to the future,
As a result, during the fiscal year ended March 31, 2018, in addition to an increase in sales ofmotorcycle clutches in India, an increase in sales of automobile clutches for Ford in the U.S. and for
China led to revenue increasing by 10.1% from the previous fiscal year to ¥173,174 million, andoperating profit increasing by 25.1% from the previous fiscal year to ¥14,052 million. Profit before
income taxes increased by 23.3% from the previous fiscal year to ¥14,083 million. Profit attributableto owners of parent increased by 34.5% from the previous fiscal year to ¥9,691 million.
The following are the business results in each operating segment.
Motorcycle clutches
An increase in sales of motorcycle clutches in India and Vietnam led to revenue increasing by 13.2%
from the previous fiscal year to ¥82,936 million. Operating profit increased by 35.1% from theprevious fiscal year to ¥11,256 million.
Automobile clutches
In addition to an increase in sales of automobile clutches for Ford in the U.S., an increase in sales ofautomobile clutches in China led to revenue increasing by 7.5% from the previous fiscal year to¥90,238 million. Operating profit decreased by 3.7% from the previous fiscal year to ¥2,796 million
due to the recording of impairment loss in the automobiles business and an increase in expenses in
Mexico.
The financial position is as follows.
At the end of the fiscal year under review, total assets were ¥170,302 million, up ¥7,593 million
compared with the end of the previous fiscal year.
At the end of the fiscal year under review, total liabilities were ¥51,402 million, up ¥1,848 million
compared with the end of the previous fiscal year.

14

At the end of the fiscal year under review, equity was ¥118,900 million, up ¥5,745 million comparedwith the end of the previous fiscal year.
2) Cash flows
As of the end of the fiscal year under review, cash and cash equivalents (hereinafter “net cash”)
totaled ¥25,230 million.
Cash flow positions in the fiscal year under review and the factors thereof are as follows.
Cash flows from (used in) operating activities
Net cash flows from operating activities was ¥24,120 million.
This is mainly due to profit before income taxes of ¥14,083 million and depreciation andamortization expense of ¥12,766 million.
Cash flows from (used in) investing activities
Net cash used in investing activities was ¥19,122 million.
This is mainly due to purchase of property, plant and equipment of ¥14,199 million and payments
into time deposits of ¥3,887 million.
Cash flows from (used in) financing activities
Net cash used in financing activities was ¥2,657 million.
This is mainly due to cash dividends paid of ¥2,058 million and net increase (decrease) in short-termborrowings of ¥365 million.

3) Performance of production, orders received and salesi) Production performance
Production performance by segment for the fiscal year under review is as shown below.
Segment nameFiscal year ended March 31, 2018

Motorcycle clutches (Millions of yen)

Year-on-year comparison (%)

80,811

Automobile clutches (Millions of yen)
Total (Millions of yen)

109.9

87,694

103.9

168,505

106.7

Notes: 1. Amounts are based on sales prices.
2. Consumption taxes are not included in the above amounts.

ii) Performance of orders received
Performance of orders received by segment for the fiscal year under review is as shown below.
Orders received(Millions of yen)

Year-on-yearcomparison (%)

Order backlog(Millions of yen)

Year-on-yearcomparison (%)

Motorcycle clutches

84,400

115.7

7,224

125.4

Automobile clutches

91,772

110.2

7,603

125.3

176,173

112.7

14,828125.4

Segment name

Total

Notes: 1. Amounts are based on sales prices.
2. Consumption taxes are not included in the above amounts.

15

(iii) Sales performance
Sales performance by segment for the fiscal year under review is as shown below.
Segment nameFiscal year ended March 31, 2018

Motorcycle clutches (Millions of yen)
Automobile clutches (Millions of yen)
Total (Millions of yen)

Year-on-year comparison (%)

82,936113.2

90,238107.5

173,174

110.1

Notes: 1. The table below shows sales results by major transaction partner and the ratio of those sales results to total sales
results for the last two fiscal years.
Transaction partner

Fiscal year ended March 31, 2017

Fiscal year ended March 31, 2018

Amount(Millions of yen)Amount(Millions of yen)

Ratio (%)

Ratio (%)

Honda Motor Co., Ltd.

9,110

5.8

10,4366.0

Ford Motor Company

21,051

13.4

24,30114.0

2. Consumption taxes are not included in the amounts in the above table.

16(2) Details of analysis and considerations regarding the status of operating results etc., frommanagement’s perspective
The details of analysis and considerations regarding the status of operating results etc., frommanagement’s perspective are as follows. Please note that matters concerning the future in this article
were determined by the Group as of the filing date of this Annual Securities Report.
1) Significant accounting policies and estimates
The consolidated financial statements of the Company have been prepared in accordance with IFRS
pursuant to the provisions of Article 93 of the Ordinance on Terminology, Forms and Preparation
Methods of Consolidated Financial Statements. Estimates that are deemed necessary have been
made based on reasonable criteria.
Significant accounting policies applied in the consolidated financial statements of the Company areprovided in “V. Financial information, 1. Consolidated financial statements, etc., (1) Consolidated
financial statements, Notes to consolidated financial statements, 3. Significant accounting policies.”
2) Recognition as well as details and considerations of status of operating results etc., for the fiscal year
under review
Analysis of operating results
Please refer to “II. Overview of business, 3. Management analysis of financial position, operating
results and cash flows, (1) Overview of operating results, etc. 1) Financial position and operating
results.”
Analysis of financial position(Current assets)
At the end of the fiscal year under review, current assets were ¥76,892 million, up ¥5,271 million
compared with the end of the previous fiscal year. This is mainly due to increases of ¥1,869 million
in trade and other receivables and ¥1,756 million in cash and cash equivalents and ¥1,044 million inother financial assets.
(Non-current assets)
At the end of the fiscal year under review, non-current assets were ¥93,410 million, up ¥2,322
million compared with the end of the previous fiscal year. This is mainly due to increases of ¥3,171
million in other financial assets and ¥988 million in goodwill and intangible assets in spite of adecrease of ¥1,578 million in property, plant and equipment.
(Current liabilities)
At the end of the fiscal year under review, current liabilities were ¥41,143 million, up ¥5,491 million
compared with the end of the previous fiscal year. This is mainly due to increases of ¥2,913 million
in borrowings and ¥1,670 million in trade and other payables.
(Non-current liabilities)
At the end of the fiscal year under review, non-current liabilities were ¥10,258 million, down ¥3,643
million compared with the end of the previous fiscal year. This is mainly due to a decrease of ¥3,674
million in borrowings.
(Equity)
At the end of the fiscal year under review, equity was ¥118,900 million, up ¥5,745 million comparedwith the end of the previous fiscal year. This is mainly due to an increase of ¥7,920 million inretained earnings in spite of a decrease of ¥2,233 million in other components of equity.
Present conditions and outlook of business strategy
In terms of progress made in FY2017, the first year of the 10th Medium-Term Management Plan,
performance exceeded the plan both for motorcycle clutches and automobile clutches. Based onthese results, future demand trends, and other factors, the performance targets of the 10th MediumTerm Management Plan have been revised upwards.

17

The new performance targets are provided in “II. Overview of business, 1. Management policy,
management environment, issues to address, etc.”
Analysis of capital resources and funding liquidity
The Group’s financial policy is to maintain the sound balance sheet taking into account appropriate
liquidity, etc. in securing funds for business activities. The Group procures working funds and funds
for equipment from internal funds and bank borrowings, and believes that it has sufficiently secured
the level of funds currently required. Cash flows for the fiscal year under review are provided in “II.
Overview of business, 3. Management analysis of financial position, operating results and cash flows,(1) Overview of operating results, etc., 2) Cash flows.”(3) Information about differences in main items in the overview of operating results, etc.
The following are differences between main items in consolidated financial statements prepared inaccordance with IFRS and equivalent items in consolidated financial statements if prepared inaccordance with Japanese GAAP.
Fiscal year ended March 31, 2017
Certain development expense that was expensed under Japanese GAAP is capitalized under IFRS.
Consequently, goodwill and intangible assets in the consolidated statement of financial position
increased by ¥2,420 million.
In the consolidated statement of income, cost of sales increased by ¥489 million, and research anddevelopment expense included in selling, general and administrative expenses decreased by ¥1,153
million.
Fiscal year ended March 31, 2018
Certain development expense that was expensed under Japanese GAAP is capitalized under IFRS.
Consequently, goodwill and intangible assets in the consolidated statement of financial position
increased by ¥2,885 million.
In the consolidated statement of income, cost of sales increased by ¥603 million, and research anddevelopment expense included in selling, general and administrative expenses decreased by ¥1,068
million.
4. Critical contracts for operation
Not applicable.
5. Research and development activities
As a manufacturer of functional components for transportation vehicles, the Group has adopted thebasic R&D policy of identifying customer needs and providing products that give customers excellent
performance through the application of creative ideas and technologies. Accordingly, it carries out bothbasic research on friction materials for use in motorcycle, automobile and general-purpose clutches andR&D on the clutches themselves, including R&D on production technologies for use in their
manufacture.
The Group also develops new products by making improvements to existing products and using
technologies it has accumulated through experience in manufacturing clutches (and friction materials
employed in clutches). Among R&D activities aimed at protecting the environment, it is developing a
porous fiber catalytic sheet (paper catalyst), which it believes can be employed as a paper catalyst to
clean engine exhaust emissions.
During the fiscal year ended March 31, 2018, research and development expense (including expenses
recognized as development assets) amounted to ¥4,052 million.
18

The following is a summary of R&D activities by segment during the fiscal year ended March 31, 2018.
Motorcycle clutches
Research and development activities are underway to improve product appeal, including clutch
operability, and reduce costs. Research and development of wet friction materials for motorcycles anddry friction materials for scooters provided a foundation for these activities.
Principal achievements during the fiscal year ended March 31, 2018:
1) In ASEAN, began mass production of pulley assemblies and clutches for commuter-use
motorcycles targeting the global consumer market;
2) Expanded development of clutches for large-displacement sports model motorcycles incorporating
the Company’s proprietary A&S technology; and
3) Developed new friction materials with enhanced product appeal and durability.
In addition, the Company is conducting R&D activities aimed at expanding applications for paper
catalysts to clean engine exhaust emissions of general-purpose machinery, for which mass production
began in March 2011.
Research and development expense in the motorcycle clutches segment amounted to ¥1,852 million.
Automobile clutches
Research and development activities are underway to make clutches more compact and lightweight,
less expensive to manufacture, and more fuel efficient. Research and development of wet friction
materials for automatic transmissions (including ATs/CVTs) and dry friction materials for manualtransmissions provided a foundation for these activities.
Principal achievements during the fiscal year ended March 31, 2018:
1) Began mass production of clutch assemblies for ATs based on the following:• Elements of the Company’s proprietary segment method for manufacturing friction plates, and• Elements of the Company’s proprietary technologies that increase fuel efficiency and achieve
weight reductions;2) Began mass production of lock-up clutches featuring a new damper structure with excellent
damping properties; and
3) Developed new friction materials with enhanced product appeal and durability.
Research and development expense in the automobile clutches segment amounted to ¥2,200 million.

19

III. Information about facilities
1. Overview of capital investments, etc.
During the fiscal year ended March 31, 2018, the Company made total capital investments (including
investments on intangible assets) of ¥15,014 million. The principal capital investment details were:expanding production capacity for automobile clutches in the U.S.; and expanding production capacity
for motorcycle clutches in India. The breakdown of capital investments by business segment is ¥3,863
million for motorcycle clutches, ¥10,526 million for automobile clutches, and ¥625 million for thecommon segment.
(1) Reporting company
Acquisition of testing apparatus, etc. by R&D Division(2) Subsidiaries
Manufacturing facilities to produce new models and production capacity expansion at FCC (Adams),
LLC.
Manufacturing facilities to produce new models and production capacity expansion at FCC(INDIANA), LLC.
Manufacturing facilities to produce new models, production capacity expansion and acquisition ofbuildings at FCC CLUTCH INDIA PRIVATE LTD.
Manufacturing facilities to produce new models and production capacity expansion at FCC(VIETNAM) CO., LTD.
2. Major facilities
Major facilities of the Group are as follows:(1) Reporting company
As of March 31, 2018
Carrying amount (Millions of yen)
Name
(Location)

Segment nameFacilities

Buildings
andstructures

Machinery,equipment
andvehicles

Land
(m2)

Other

Total

Number of
employees

Hosoe Factory(Kita-ku, Hamamatsushi, Shizuoka)

Motorcycle and Manufacturing
automobile
facilities forclutches
clutches

148

329

270
(18,080)

21

771

104
[6]

Hamakita Factory(Kita-ku, Hamamatsushi, Shizuoka)

Motorcycle and Manufacturing
automobile
facilities forclutches
clutches

1,374

1,267

595
(85,261)

438

3,675

201
[4]

Watagashima Factory
Motorcycle and Manufacturing(Tenryu-ku, Hamamatsu- automobile
facilities for
shi, Shizuoka)
clutches
clutches

984

596

766
(61,268)

157

2,505

105
[4]

Motorcycle and Manufacturing
automobile
facilities forclutches
clutches

2,094

1,112

1,292
(75,130)

72

4,571

207
[51]

Testing
apparatus andmeasuring
instruments

422

723

216
(12,093)

67

1,429

193
[75]

Suzuka Factory(Suzuka-shi, Mie)R&D Division(Kita-ku, Hamamatsushi, Shizuoka)

Common20

(2) Domestic subsidiaries
As of March 31, 2018
Carrying amount (Millions of yen)
Name
(Location)
KYUSHU F.C.C. CO.,LTD.
(Uki-shi, Kumamoto)

Segment nameFacilities

Buildings
andstructures

Machinery,equipment
andvehicles

Land
(m2)

Other

Total

179

345

11
(20,474)103

638

Motorcycle and Manufacturing
automobile
facilities forclutches
clutches

Number of
employees

113
[29]

(3) Overseas subsidiaries
As of March 31, 2018
Carrying amount (Millions of yen)
Machinery,
Buildings
equipment
andandstructures
vehiclesSegment
nameFacilities

Motorcycle
andautomobile
clutches

Manufacturing
facilities forclutches

3,699

4,506

FCC (Adams), LLC. Indiana, U.S.

Manufacturing
Automobile
facilities forclutches
clutches

3,035

FCC (INDIANA),
LLC.

Indiana, U.S.

Manufacturing
Automobile
facilities forclutches
clutches

PT. FCCINDONESIA

Karawang,Indonesia

Motorcycle
andautomobile
clutches

FCC (THAILAND)
CO., LTD.

Bangkok,Thailand

CHENGDU
YONGHUA. F.C.C.
CLUTCHES CO.,LTD.

Sichuan,
China

Name

Location

Land
(m2)

Number of
employees

Other

Total

30
(366,274)

890

9,125

415
[28]

7,712

49
(161,880)

5,291

16,089

600
[23]

1,752

5,336

77
(246,263)

2,229

9,397

784
[5]

Manufacturing
facilities forclutches

548

1,238

–
(72,812)

107

1,894

1,228
[404]

Motorcycle
andautomobile
clutches

Manufacturing
facilities forclutches

804

1,043

638
(87,890)

423

2,909

423
[483]

Motorcycle
andautomobile
clutches

Manufacturing
facilities forclutches

396

957

–
(27,826)

292

1,645

337
[27]

FCC AUTOMOTIVE
San Luis
PARTS DE
Potosi,
MEXICO, S.A. DE
MexicoC.V.

Manufacturing
Automobile
facilities forclutches
clutches

1,164

1,820

144
(81,837)

750

3,879

394

FCC CLUTCHINDIA PRIVATELTD.

Motorcycle
andautomobile
clutches

1,010

2,762

1,359
(114,619)

654

5,787

770
[2,449]FCC (North
Carolina), LLC.

North
Carolina,
U.S.

Haryana,
India

Manufacturing
facilities forclutches

Notes: 1. The carrying amount of “Other” assets relates to tools, furniture and fixtures, leased assets and intangible assets
and includes construction in progress. The amounts shown above do not include consumption taxes.
2. Of the land of KYUSHU F.C.C. CO., LTD., 19,174 m2 was leased from the reporting company.
3. Of the land of FCC (North Carolina), LLC. of 366,274 m2, 11,266 m2 was leased.
4. The number of employees shown in brackets is the number of temporary employees at the end of the period.

21

3. Planned additions, retirements, etc. of facilities(1) Planned additions, etc. of important facilities
During the next fiscal year (from April 1, 2018 to March 31, 2019), the Company plans to make total
capital investments of ¥11,305 million.
The principal capital investment items will be manufacturing facilities to produce new models andexpansion of production capacity in the U.S., India, Japan and Vietnam. The breakdown of planned
capital investments by business segment will be ¥3,942 million for motorcycle clutches, ¥6,886
million for automobile clutches, and ¥477 million for the common segment.
• Reporting company
Production capacity expansion at Watagashima Factory and acquisition of testing apparatus, etc. at
the R&D Division• Subsidiaries
Manufacturing facilities to produce new models and production capacity expansion at FCC(Adams), LLC.
Manufacturing facilities to produce new models and production capacity expansion at FCC
CLUTCH INDIA PRIVATE LTD.
Manufacturing facilities to produce new models and production capacity expansion at FCC(VIETNAM) CO., LTD.
Manufacturing facilities to produce new models and production capacity expansion at FCC(INDIANA), LLC.
(2) Retirement, etc. of important facilities
The Company has no plan for the sales/retirement of important facilities, with the exception of theregular upgrading of facilities.

22IV. Information about reporting company
1. Information about shares, etc.
(1) Total number of shares, etc.
Total number of shares
Class

Total number of authorized shares (Shares)

Ordinary shares

90,000,000
Total

90,000,000(2) Changes in number of shares issued, issued capital, etc.

Date

Increase(decrease) in
total number ofshares issued(Shares)

April 1, 2006
(Note)

26,322,015

Balance of total
Increase
number of(decrease) inshares issued
issued capital(Shares)(Millions of yen)
52,644,030

Balance ofissued capital(Millions ofyen)

Increase(decrease) in
capital reserve(Millions ofyen)

Balance ofcapital reserve(Millions of
yen)

4,175

–

4,555

–

Note: This was due to a 2-for-1 share split.

(3) Shareholding by shareholder category
As of March 31, 2018
Shareholding status (Number of shares per share unit: 100 shares)
Category

Financial
Foreign investors
Financial instruments
Other
Individuals,
institutions
business corporations Companies, Individuals
etc.
etc.
operators

Publicsector

Total

Shares lessthan oneunit(Shares)Number ofshareholders

–

40

20

124

193

5

12,875

13,257–

Number ofshares held
(Units)–124,9822,286

144,090

138,9648

116,004

526,334

10,630Shareholding
ratio (%)

–

23.75

0.43

27.38

26.40

0.00

22.04

100.00–Notes: 1. 2,455,841 treasury shares are included in “Individuals, etc.” as 24,558 units and “Shares less than one unit” as 41
shares.
2. “Other corporations” column above includes 37 units of shares held in the name of Japan Securities Depository
Center, Incorporated.

23

(4) Major shareholders
As of March 31, 2018
Name

Address

Number of shares
held(Thousands ofshares)Shareholding ratio(excluding treasury
shares) (%)

Honda Motor Co., Ltd.

2-1-1 Minami-Aoyama, Minato-ku,
Tokyo10,881

21.69

SMBC Trust Bank Ltd. (Sumitomo
Mitsui Banking Corporation
Retirement Benefit Trust Account)

1-3-1, Nishi-Shimbashi, Minato-ku,
Tokyo

2,508

5.00

Y.A Co., Ltd.

38-28 Yamate-cho, Naka-ku,
Hamamatsu-shi, Shizuoka

2,019

4.02

The Master Trust Bank of Japan, Ltd. 2-11-3 Hamamatsu-cho, Minato-ku,(Trust Account)
Tokyo

1,765

3.52

Yoshihide Yamamoto

Naka-ku, Hamamatsu-shi, Shizuoka

1,525

3.04

Japan Trustee Services Bank, Ltd.
(Trust Account)

1-8-11 Harumi, Chuo-ku, Tokyo

1,434

2.86

Trust & Custody Services Bank, Ltd.
as trustee for Mizuho Bank
Harumi Island Triton Square Office
Retirement Benefit Trust Account re- Tower Z, 1-8-12 Harumi, Chuo-ku,
entrusted by Mizuho Trust andTokyo
Banking Co., Ltd.

1,315

2.62

Ei Yamamoto

Naka-ku, Hamamatsu-shi, Shizuoka

1,300

2.59

THE BANK OF NEW YORKMELLON 140044(Standing Proxy: Settlement &Clearing Services Department ofMizuho Bank, Ltd.)

225 LIBERTY STREET, NEW
YORK, NEW YORK, U.S.A.
(Shinagawa Intercity Tower A, 2-151 Konan, Minato-ku, Tokyo)

1,036

2.07

STATE STREET BANK AND
TRUST COMPANY 505019(Standing Proxy: Custody Division,
Tokyo branch of the Hong Kong andShanghai Banking Corporation
Limited)AIB INTERNATIONAL CENTRE
P.O.BOX 518 IFSC DUBLIN,
IRELAND (3-11-1 Nihombashi,
Chuo-ku, Tokyo)

901

1.80

Total

–

24,68949.19

Notes: 1. In addition to the above, the Company held 2,455 thousand treasury shares.
2. Of the above number of shares held, the number of shares in association with fiduciary activities is as follows:
SMBC Trust Bank Ltd. (Sumitomo Mitsui Banking Corporation Retirement Benefit
Trust Account)
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
Trust & Custody Services Bank, Ltd. as trustee for Mizuho Bank Retirement Benefit
Trust Account re-entrusted by Mizuho Trust and Banking Co., Ltd.

2,508 thousand shares
1,765 thousand shares
1,434 thousand shares
1,315 thousand shares

3. Mondrian Investment Partners Limited made the change report for the substantial shareholding report available forpublic inspection as of June 30, 2016, describing that this company held 2,663 thousand shares as of June 24, 2016.
Since the Company could not confirm the actual number of shares held by this company as of March 31, 2018, it
was not included in the above major shareholders.
Name
Mondrian Investment
Partners Limited

Address
Fifth Floor, 10 Gresham Street,
London EC2V 7JD, United
Kingdom

Number of shares,
etc. held(Shares)
Shares2,663,200

Shareholding ratio
(%)
5.06

4. Sumitomo Mitsui Asset Management Company, Limited and its joint holder, Sumitomo Mitsui Banking
Corporation made the change report for the substantial shareholding report available for public inspection as ofNovember 22, 2016, describing that each of these companies held shares as follows as of November 15, 2016.
Since the Company could not confirm the actual number of shares held by them as of March 31, 2018, they were
not included in the above major shareholders.

24

Name

Address

Number of shares,
etc. held(Shares)

Shareholding ratio(%)

Sumitomo Mitsui AssetManagement Company,
LimitedAtago Green Hills MORI Tower
28F, 2-5-1 Atago, Minato-ku, Tokyo

Shares

231,300

0.44

Sumitomo Mitsui Banking
Corporation

1-1-2 Marunouchi, Chiyoda-ku,
Tokyo

Shares2,508,000

4.76

5. NOMURA INTERNATIONAL PLC and its joint holder, Nomura Asset Management Co., Ltd., made thesubstantial shareholding report available for public inspection as of June 6, 2017, describing that each of thesecompanies held shares as follows as of May 31, 2017. Since the Company could not confirm the actual number ofshares held by them as of March 31, 2018, they were not included in the above major shareholders.
Name

Address

Number of shares,
etc. held(Shares)

Shareholding ratio(%)

NOMURA
INTERNATIONAL PLC

1 Angel Lane, London EC4R 3AB,
United Kingdom

Shares

143,828

0.27

Nomura Asset Management
Co., Ltd.

1-12-1 Nihombashi, Chuo-ku, Tokyo Shares

3,068,100

5.83

6. Mizuho Bank, Ltd. and its joint holders, Mizuho Securities Co., Ltd., Mizuho Trust & Banking Co., Ltd. andAsset Management One Co., Ltd. made the change report for the substantial shareholding report available forpublic inspection as of June 22, 2017, describing that each of these companies held shares as follows as of June 15,
2017. Since the Company could not confirm the actual number of shares held by them as of March 31, 2018, they
were not included in the above major shareholders.
Name

Address

Number of shares,
etc. held(Shares)

Shareholding ratio(%)

Mizuho Bank, Ltd.

1-5-5 Otemachi, Chiyoda-ku, Tokyo

Shares1,315,200

2.50

Mizuho Securities Co., Ltd.

1-5-1 Otemachi, Chiyoda-ku, Tokyo

Shares90,6000.17

Mizuho Trust & Banking
Co., Ltd.

1-2-1 Yaesu, Chuo-ku, Tokyo

Shares429,000

0.81

Asset Management One Co.,Ltd.

1-8-2 Marunouchi, Chiyoda-ku,
Tokyo

Shares1,034,700

1.97

2. Dividend policy
The Company considers returning profits to shareholders to be one of the top management issues. Ourbasic policy is to continue to pay a stable dividend from a comprehensive point of view based on
consolidated financial performance and dividend payout ratio, etc., while striving to improve corporate
value by making capital investments and carrying out research and development activities necessary for
future growth and thus maintaining and strengthening its competitiveness.
The Company’s basic policy on dividend payments is to pay dividends twice a year in the form ofinterim dividends and year-end dividends.
Decisions on year-end dividends are made by the General Meeting of Shareholders, and decisions on
interim dividends are made by the Board of Directors.
Based on the foregoing policy, the Company paid a total dividend for the fiscal year under review of¥42 per share (of which ¥21 was paid out as an interim dividend). This resulted in a dividend payout
ratio of 21.7%.
The Company uses internal reserves to make investments for future business expansion, etc.
The Company stipulates in the Articles of Incorporation that it is able to pay an interim dividend, with
September 30 as the record date, based on a resolution of the Board of Directors.

25

Dividends for the fiscal year under review were as follows.
Total amount ofdividends(Millions of yen)

Dividends per share(Yen)

Resolution at a Board of Directors meeting
held on October 27, 2017

1,053

21

Resolution at the Ordinary General Meetingof Shareholders held on June 19, 2018

1,053

21

Resolution date26

3. Information about officers
Men: 13, Women: – (Percentage of female officers: –%)Title

President andRepresentative
Director

SeniorManaging
Director

PositionName

Toshimichi
MatsudaIn charge ofSales and Head
Yoshitakaof business
Saito
operation in
China

Number ofshares held
(Hundreds ofshares)Date of birth

Career summary

Term ofofficeDecember 9,
1952

Mar. 1975 Joined the Company
Apr. 1996 President and Director of FCC(EUROPE) LTD.
Jun. 2001 Director and General Manager ofSales Division of the Company
Jun. 2005 Director, in charge of Sales andPurchasing of the Company
Jun. 2006 Director, in charge of Sales andPurchasing and Risk Management
Officer of the Company
Apr. 2007 Director, Head of Sales andPurchasing, Head of business
operation in China and Risk
Management Officer of theCompany
Jun. 2008 Managing Director, Head of Sales
and Purchasing and Head of
business operation in China of theCompany
Jun. 2010 Managing Director, Head of Sales
and Purchasing and Compliance
Officer of the Company
Jun. 2011 Managing Director, Head of Sales
and Compliance Officer of theCompany
Jun. 2012 Senior Managing Director, Head of
Sales and Compliance officer of theCompany
Apr. 2013 Senior Managing Director of theCompany
Jun. 2013 President and Representative
Director of the Company(incumbent)(Note 2)

106

Feb. 2009 Joined the Company
Jan. 2011 President and Director of FCC(INDIANA) Mfg., LLC. (currently
FCC (INDIANA), LLC.) and
President and Director of FCC(INDIANA), INC. (currently FCC(INDIANA), LLC.)
Jun. 2011 Director of the Company
Apr. 2012 Director and Head of business
operation in North America of theCompany
President and Director of FCC(North America), INC.
November 29, Jun. 2012 Managing Director and Head of(Note 2)
1973
business operation in North Americaof the Company
Apr. 2013 Managing Director and Head of
business operation of motorcycles
business of the Company
Apr. 2014 Managing Director, Head of
Purchasing, Head of business
operation in China and Risk
Management Officer of theCompany
Jun. 2018 Senior Managing Director, In chargeof Sales and Head of business
operation in China of the Company(incumbent)

148

27

TitleManaging
Director

Position

Name

Head ofbusiness
operation of
automobiles
Kazuhirobusiness and in
Itonagacharge of New
Business
Development
Division

Career summary

Term ofofficeNumber ofshares held
(Hundreds ofshares)Mar. 1982 Joined the Company
Apr. 2009 General Manager of R&D Divisionof the Company
Jun. 2009 Director and General Manager of
R&D Division of the Company
Jun. 2010 Director, Head of Research andDevelopment and General Manager
of R&D Division of the Company
Jun. 2013 Managing Director, Head of
Research and Development andGeneral Manager of R&D Divisionof the Company
Apr. 2015 Managing Director, Head of
business operation of automobiles
business and Head of Research andDevelopment of Automobile
Components of the Company
Apr. 2016 Managing Director, Head of
business operation of automobiles
business of the Company
Nov. 2016 Managing Director, Head of
business operation of automobiles
business and in charge of New
Business Development Division of
the Company (incumbent)(Note 2)21

Date of birth

March 11,1960

28

TitleManaging
Director

Position

Name

Head ofbusiness
operation of
motorcycles
business, Headof Productionof Motorcycle
Components, Kazuto
Head of
Suzukibusiness
operation in
ASEAN andSouth America
and RiskManagement
Officer

Term ofofficeNumber ofshares held
(Hundreds ofshares)Apr. 1984 Joined the Company
Apr. 2009 General Manager of Corporate
Planning Office of the Company
Jun. 2010 Director, Head of business operationin China and South America andGeneral Manager of Corporate
Planning Office of the Company
Jun. 2011 Director, Head of business operationin China and South America,
General Manager of Corporate
Planning Office and Risk
Management Officer of theCompany
Jan. 2012 Director, Head of business operationin China and South America andRisk Management Officer of theCompany
Apr. 2012 Director, Head of Production
Engineering, Head of business
operation in China and SouthAmerica and Risk Management
Officer of the Company
Jun. 2012 Director, Head of Production ofMotorcycle Components, Head of
Production Engineering and Head of
business operation in China andSouth America of the Company
Apr. 2013 Director, Head of business operationof motorcycles business in Japan,
Head of business operation in China
May 27, 1961
and South America and Risk
(Note 2)
Management Officer of theCompany
Apr. 2014 Director, Head of business operationof motorcycles business, Head of
business operation in ASEAN and
India and Head of business
operation in South America of theCompany
Apr. 2016 Director, Head of business operationof motorcycles business, Head of
Production of Motorcycle
Components, Head of business
operation in ASEAN and Head of
business operation in South Americaof the Company
Jun. 2017 Managing Director, Head of
business operation of motorcycles
business, Head of Production ofMotorcycle Components, Head of
business operation in ASEAN andHead of business operation in SouthAmerica of the Company
Jun. 2018 Managing Director, Head of
business operation of motorcycles
business, Head of Production ofMotorcycle Components, Head of
business operation in ASEAN andSouth America and Risk
Management Officer of theCompany (incumbent)

29

Date of birth

Career summary

29

TitleDirector

Director

Director

Director

Term ofofficeNumber ofshares held
(Hundreds ofshares)

December 5,
1960

Jul. 1989 Joined the Company
Jan. 2011 General Manager of Sales Divisionof the Company
Apr. 2013 Executive Officer, Head of Sales
and General Manager of Sales
Division of the Company
Apr. 2015 Senior Executive Officer, Head of(Note 2)
Sales and General Manager of Sales
Division of the Company
Jun. 2018 Director, Head of Sales andPurchasing and General Manager ofSales Division of the Company(incumbent)

35

Head ofManagement
andAdministration,
RyujiroComplianceMatsumoto
Officer and
Chief
Information
OfficerJune 4, 1962

Jul. 2005 Joined the Company
Jan. 2011 General Manager of FCC(THAILAND) CO., LTD.
Jun. 2011 Director, Head of Production ofMotorcycle Components and Headof business operation in Asia of theCompany
Jun. 2012 Director and Head of business
operation in Asia of the Company(Note 2)
Apr. 2013 Director, Head of Management andAdministration, General Manager ofCorporate Planning Office,Compliance Officer and Chief
Information Officer of the Company
Jun. 2013 Director, Head of Management andAdministration, Compliance Officer
and Chief Information Officer of theCompany (incumbent)

15

Head of
Production
Engineeringand Head ofEnvironment
and Safety

Apr. 1984 Joined the Company
Apr. 2012 Head of Production of Automobile
Components of the Company
Jun. 2012 Director and Head of Production ofAutomobile Components of theCompany
July 31, 1963 Apr. 2013 Director and Head of business(Note 2)operation of automobiles business of
the Company
Apr. 2015 Director, Head of Production
Engineering and Head ofEnvironment and Safety of theCompany (incumbent)

19

Apr. 1986 Joined the Company
Jan. 2012 General Manager of Corporate
Planning Office of the Company
Jun. 2012 Director, Head of Management andAdministration, General Manager ofCorporate Planning Office, Risk
Management Officer and Chief
Information Officer of the Company
Apr. 2013 Director, Head of business operation(Note 2)in North America of the Company
President and Director of FCC(North America), INC.
President and Director of FCC(INDIANA), LLC.
Apr. 2017 Director, Head of business operationin North America of the Company
President and Director of FCC(North America), INC. (incumbent)

46

Position

Name

Head of Sales
and Purchasing
Terufumi
and General
NishimuraManager ofSales Division

Atsuhiro
Mukoyama

Head ofbusiness
Satoshioperation in
NakayaNorth America

Date of birth

March 17,
1964

Career summary

30

TitleDirector

Director,
Audit andSupervisory
Committee
Member(full time)

Director,
Audit andSupervisory
Committee
MemberDirector,
Audit andSupervisory
Committee
MemberTerm ofofficeNumber ofshares held
(Hundreds ofshares)Head ofproduction in
North America
and Deputy
Tomoyuki
Head of
Goto
Production
Engineering(Casting)

Apr. 1987 Joined Honda Motor Co., Ltd.
Apr. 2017 Engineer of Power Train Strategy
Planning Department, Production
Operations of Honda Motor Co.,Ltd.
May 21, 1962 Apr. 2018 Joined the Company, Assistant to(Note 2)President
Jun. 2018 Director, Head of production in
North America and Deputy Head of
Production Engineering (Casting) of
the Company (incumbent)

15

Katsuyoshi
FukatsuMar. 1977 Joined the Company
Apr. 2009 President and Director of FCC(INDIANA) Mfg., LLC. (currently
FCC (INDIANA), LLC.)
Jun. 2009 Director and Head of business
operation in North America of theCompany
President and Director of FCC
November 30,(INDIANA), INC. (currently FCC(Note 3)
1954
(INDIANA), LLC.)
Jun. 2010 President and Director of FCC(North America), INC.
Jun. 2012 Audit & Supervisory Board Member(full time) of the Company
Jun. 2016 Director, Audit and Supervisory
Committee Member (full time) of
the Company (incumbent)

47

Yoshinori
Tsuji

Mar. 1986 Graduated from The Legal Training
and Research Institute of Japan
Apr. 1986 Registered as an attorney (Nagoya
Bar Association)
Apr. 1987 Transferred registration to the
Shizuoka Bar Association
Established Yoshinori Tsuji Law
April 17, 1959
(Note 3)
Office(to present)
Jun. 2007 Audit & Supervisory Board Memberof the Company
Jun. 2016 Director, Audit and Supervisory
Committee Member of the Company(incumbent)–

Masahide
SatoOct. 1992 Joined Showa Ota & Co. (currently
Ernst & Young ShinNihon LLC)
Apr. 1996 Registered as Certified Public
Accountant
Sep. 2005 Established Masahide Sato
Accounting Firm
(to present)(Note 3)
Jun. 2010 Audit & Supervisory Board Memberof the Company
Apr. 2015 Director of CRESTEC Inc.
(incumbent)
Jun. 2016 Director, Audit and Supervisory
Committee Member of the Company(incumbent)–

Position

Name

Date of birth

February 10,
1964

Career summary

31

TitlePosition

Director,
Audit andSupervisory
Committee
MemberName

Kazumoto
Sugiyama

Date of birth

Career summary

Term ofofficeNumber ofshares held
(Hundreds ofshares)Sep. 2006 Graduated from The Legal Training
and Research Institute of Japan
Oct. 2006 Registered as an attorney (Shizuoka
Bar Association)
Joined Toshio Sugiyama Law Office(currently Sugiyama Law Office)May 27, 1969
(Note 3)
Sep. 2008 President of Sugiyama Law Office(to present)
Jun. 2014 Director of the Company
Jun. 2016 Director, Audit and Supervisory
Committee Member of the Company(incumbent)
Total

–

481

Notes: 1. Mr. Yoshinori Tsuji, Mr. Masahide Sato and Mr. Kazumoto Sugiyama are Outside Directors.
2. One year from the conclusion of the Ordinary General Meeting of Shareholders held on June 19, 2018
3. Two years from the conclusion of the Ordinary General Meeting of Shareholders held on June 19, 2018

4. Status of corporate governance, etc.
(1) Status of corporate governance
Basic policy regarding corporate governance
Based on its corporate philosophy, the Company endeavors to enhance its corporate governance as
one of the top management issues, aiming to build trust of its stakeholders, including shareholders,customers, employees, and local communities, conduct an agile and decisive decision-making in afair and transparent way and pursue its continuous growth and an increase in corporate value overthe medium- to long-term.
< Corporate philosophy >“F.C.C. Co., Ltd. is committed to making a contribution to society by supplying products that makethe best of ideas and technology to satisfy customers in every way, and which are also safe andenvironmentally friendly.”1) System of corporate governancei) Summary of the system of corporate governancePartial amendments to the Articles of Incorporation have been resolved at the 86th Ordinary
General Meeting of Shareholders held on June 22, 2016. Consequently, the Company made thetransition to a Company with an Audit and Supervisory Committee on the same date.
The Board of Directors comprises 13 Directors, of whom three are Outside Directors. In addition to
making decisions on matters prescribed by laws and regulations and execution of important
operations, the Board of Directors oversees the execution of duties of the Directors. The Audit andSupervisory Committee is composed of four Directors who are Audit and Supervisory Committee
Members, of whom three are Outside Directors. In accordance with auditing policies, plans anddivision of responsibility established by the Audit and Supervisory Committee, each Audit andSupervisory Committee Member participates in meetings of the Board of Directors and otherimportant meetings, and audits and oversees the execution of duties of the Board of Directors andthe development and operation of the Company’s internal control system by examining the status ofoperations and assets of the Company. Accounting Auditor has concluded an audit contract with
Yasumori Audit Corporation pertaining to accounting audits in compliance with the Companies Act
and Financial Instruments and Exchange Act and undergoes its audit.
The following diagram shows the relationships among the Company’s organizations and internal
control as of June 21, 2018.

32

[Diagram of corporate governance system]
Election/Dismissal

General Meeting of Shareholders
Election/Dismissal

Election/Dismissal

Audit

Board of Directors
Directors(excluding Audit andSupervisory Committee
Members)

Audit, Oversight

ReportPoint of contact for
accepting proposals
for corporate ethics
improvement

CorporateethicsproposalAccounting
AuditorDirectors(Audit and Supervisory
Committee Members)

ReportInstruction

Compliance
Officer

Risk Management
OfficerCompliance
Committee

Risk Management
Committee

Compliance

Companywide CG
Secretariat

Audit and Supervisory
Committee

ReportAudit Office

Risk Management

Audit
Each division
Division CG Secretariatii) Reasons for adopting the system of corporate governance described above
With the aim of strengthening the oversight function of the Board of Directors, improving thetransparency and soundness of management and accelerating decision-making, the Company has
adopted an institutional design of a company with an Audit and Supervisory Committee. The
Company has a Board of Directors to oversee the execution of duties of the Directors. The Board of
Directors comprises Directors who are well versed in the operations of the Company and Outside
Directors with an objective, broad-ranging and in-depth perspective. In light of its business
contents and scale, the Company considers its current corporate structure as appropriate.
iii) Other matters regarding corporate governance
Basic policy regarding the internal control system
The Company resolved the following basic policy regarding the systems to ensure the proper
execution of operations prescribed in the Companies Act at a meeting of the Board of Directors.
• System to ensure that the execution of duties by Directors and employees of the Company andGroup companies complies with laws and regulations and the Articles of Incorporation
The Company shall establish a code of conduct that is shared by the entire Group and implement
it thoroughly to ensure that the execution of duties by Directors and employees complies withlaws and regulations and the Articles of Incorporation and earns the trust of society.
The Company shall establish a Compliance Committee in which a Compliance Officer serves as
Chairman as an organization to control compliance. In addition, the Company shall establish aninternal reporting system to promote compliance.
• System for storing and managing information on the execution of duties by the Company’s
Directors

33

The Company shall establish various regulations based on the basic policy for information
management, and appropriately store and manage information regarding the execution of duties
by the Directors.
• Regulations and other systems for managing risk of losses of the Company and Group companies
The management risk of the entire Group shall be acknowledged and evaluated at a meeting of theCompany’s Board of Directors. The Board of Directors of the Company shall elect Directors tomanage the acknowledged and evaluated management risk.
The Company shall establish a Risk Management Committee in which a Risk Management
Officer serves as Chairman as an organization that controls risk management. The Risk
Management Committee shall manage risks in daily operations and cross-functional risks of theentire Group.
• System to ensure the efficient execution of duties by Directors of the Company and Group
companies
A meeting of the Board of Directors of the Company shall be held once or more in three months
and on an extraordinary basis whenever necessary to take decisions on legally required mattersand important operations, and oversee the execution of duties by the Directors.
The Company shall expedite and increase the efficiency of the management decision-making
process using meetings such as management meetings and the executive officer system.
The Company shall draw up a medium-term management plan and annual business plan to
manage the progress of operations and promote the effective use of management resources of theentire Group.
The Company shall establish segregation of duties, reporting lines, and other organizational
standards in the regulations for executing duties, etc.
• System for reporting from Group companies to the Company and other systems to ensure theproper execution of operations within the corporate group comprising the Company and Group
companies
The Company shall establish subsidiary management regulations, with the aim of properly
managing Group companies in accordance with their scale of business and significance, etc.
The Company shall oblige Group companies to report to it on a regular basis and develop asystem for having them report specified important matters promptly.
The internal audit office of the Company shall audit the Company and Group companies regularlyor whenever necessary.
• Matters concerning Directors and employees who assist the Audit and Supervisory Committee of
the Company in its duties
The Company shall establish the internal audit office as an organization to assist the duties of the
Audit and Supervisory Committee. The Audit and Supervisory Committee shall have
responsibility for the internal audit office, and the appointment, dismissal, personnel change, andrevision of wages of employees in the internal audit office shall be determined by the Board of
Directors upon consent of the Audit and Supervisory Committee. The Company shall not have
Directors who assist the Audit and Supervisory Committee in its duties.
• System for reporting to the Audit and Supervisory Committee of the Company
Audit and Supervisory Committee Members shall attend meetings of the Board of Directors andother important meetings, and be allowed to request Directors and employees of the Company andGroup companies to report to them whenever necessary.
Upon receiving a request from the Audit and Supervisory Committee for a report, the Director or
employee shall report to it promptly and appropriately.
The Company shall establish an internal reporting system to ensure an appropriate system forreporting to the Audit and Supervisory Committee.

34

The Company shall develop a system to prohibit unfavorable treatment of a reporting party in its
operation rules for the internal reporting system.
• Matters regarding the policy for handling expenses and debts incurred for executing duties by the
Audit and Supervisory Committee Members of the Company
If the Audit and Supervisory Committee requests payment of expenses needed for executing its
duties, the Company shall pay such expenses promptly.
The Audit and Supervisory Committee shall factor expenses deemed necessary for executing its
duties into the budget in advance. Provided, however, that the Audit and Supervisory Committee
shall be allowed to request reimbursement of emergency or extraordinary expenses after the fact.
• Other systems to ensure audits by the Audit and Supervisory Committee of the Company are
conducted effectively
The Audit and Supervisory Committee shall exchange opinions with Representative Director,
Directors and Accounting Auditor regularly or whenever necessary.
The Audit and Supervisory Committee shall conduct audits effectively by cooperating closelywith the internal audit office.
iv) Overview of limited liability agreements
In accordance with the provisions of Article 427, paragraph 1 of the Companies Act, the Company
has concluded agreements limiting the extent of any liability for statutory compensation as
stipulated in Article 423, paragraph 1 of the said Act with the Directors who are Audit andSupervisory Committee Members. The limits on compensation stipulated in these agreements are
the minimum amounts prescribed in Article 425, paragraph 1 of the said Act.
2) Internal audits and audits by the Audit and Supervisory Committee• Internal audits
The Company has established the internal audit office as an organization to assist the duties of the
Audit and Supervisory Committee. The Audit and Supervisory Committee has responsibility for theinternal audit office, and the appointment, dismissal, personnel change, and revision of wages of
employees in the internal audit office are determined by the Board of Directors upon consent of the
Audit and Supervisory Committee.
The internal audit office audits the status of development and operations of internal controls of theentire Group with the aim of improving the effectiveness and efficiency of operations, increasing
the reliability of financial reporting, ensuring compliance with laws and regulations relating tobusiness activities, and protecting the Company’s assets.
This office’s six staff members, including the General Manager, carry out periodic and unscheduledaudits in collaboration with the Audit and Supervisory Committee.
• Audits by the Audit and Supervisory Committee
The Audit and Supervisory Committee Members audit and oversee the execution of duties by the
Directors, the development and operation of the Company’s internal control system, and otheraspects of operations by, among other things, attending meetings of the Board of Directors andother important meetings, and examining the operations and assets of the Company. Such audits arecarried out in accordance with auditing policies, plans, and division of responsibility established by
the Audit and Supervisory Committee. The Company has a system where Audit and Supervisory
Committee Members exchange opinions with Representative Director, Directors, and Accounting
Auditor regularly or whenever necessary, and collaborate with the internal audit office to ensure theeffectiveness of audits.
Outside Director Masahide Sato is a licensed CPA with considerable knowledge of finance andaccounting.

353) Accounting audits
The Company’s Accounting Auditor is Yasumori Audit Corporation. The following information
covers the names of the certified public accountants involved in accounting audits of the operationsof the Company and the number of assistant accountants who participated in audits.
• Names of CPAs who conducted audits:
Engagement partner: Satoru Saigusa
Engagement partner: Takashi Yamazaki• Assistant accountants who participated in accounting audits:
Ten CPAs
4) Outside Directors
The Company has three Outside Directors.
No conflict of interest of any personal, financial, or commercial nature exists between the Company
and Mr. Yoshinori Tsuji, Mr. Masahide Sato and Mr. Kazumoto Sugiyama.
The function and role of the Outside Directors in corporate governance of the Company is to provide
management with objective advice related to corporate management from the standpoint of experts
and objective viewpoints based on extensive experience.
Mr. Yoshinori Tsuji was elected as an Outside Director in the light of his specialized expertise andextensive experience of corporate legal affairs acquired as a lawyer.
Mr. Masahide Sato was elected as an Outside Director in the light of his specialized expertise andextensive experience of corporate finance and accounting affairs acquired as a certified public
accountant.
Mr. Kazumoto Sugiyama was elected as an Outside Director in the light of his specialized expertiseand extensive experience of corporate legal affairs acquired as a lawyer.
While the Company has not established any specific standards or policy regarding independence
when electing Outside Directors, the Company gives due consideration to ensure that no conflict ofinterest exists between them and the Company’s ordinary shareholders and that there isindependence from the Company in view of the Companies Act, the standards set by financial
instruments exchanges, and the like.
In accordance with the requirements of the Tokyo Stock Exchange, Mr. Yoshinori Tsuji, Mr.
Masahide Sato and Mr. Kazumoto Sugiyama are designated as independent officers and areregistered with the said stock exchange as such.
5) Remuneration, etc. for officersi) Total amount of remuneration, etc., total amount of remuneration, etc. by type and number ofpayees by category
Category

Total amount of
remuneration, etc.
(Millions of yen)

Total amount of remuneration, etc.
by type (Millions of yen)
Remuneration

BonusesNumber ofpayeesDirectors (excluding Directors who are
Audit and Supervisory Committee
Members)

214

176

37

8

Directors, Audit and Supervisory
Committee Members[Outside Directors]

59
[11]

59
[11]

–
[–]

5
[3]

Total
[Outside Directors]

273
[11]

236
[11]

37
[–]

13
[3]

Notes: 1. The amount of remuneration, etc. of Directors (excluding Directors who are Audit and Supervisory Committee
Members) does not include employee salaries paid to persons who are concurrently Directors and employees.

36

2. At the 86th Ordinary General Meeting of Shareholders held on June 22, 2016, remuneration of Directors(excluding Directors who are Audit and Supervisory Committee Members) was capped at ¥500 million per year
(which, however, does not include salaries paid for work performed as employees).
3. At the 86th Ordinary General Meeting of Shareholders held on June 22, 2016, remuneration of Directors who are
Audit and Supervisory Committee Members was capped at ¥90 million per year.

ii) Policy for determining remuneration amounts paid to officers and the method of calculating suchamount as well as the method of determination thereof
The Company sets remuneration, etc. for officers as an appropriate level for their duties andresponsibilities so that it shall serve as sound and proper incentives. The amounts paid to Directors(excluding Directors who are Audit and Supervisory Committee Members) comprise the officer’s
remuneration of fixed amount paid in exchange for executing duties and bonuses paid in
consideration of the Company’s financial performance and economic and industry trends during therelevant fiscal year and set based on the Medium-Term Management Plan. The amounts paid to
Directors who are Audit and Supervisory Committee Members consist solely of the officer’s
remuneration of fixed amount paid in exchange for executing duties. The amounts paid will bewithin the limit approved by resolution of the General Meeting of Shareholders. Those paid to
Directors (excluding Directors who are Audit and Supervisory Committee Members) will be basedon a resolution of the Board of Directors. Those paid to Directors who are Audit and Supervisory
Committee Members will be based on deliberations among the Directors who are Audit andSupervisory Committee Members.
With the aim of promoting the Company’s continuous growth and an increase in corporate value
over the medium- to long-term by sharing interests with shareholders through the holding of theCompany’s shares, Directors (excluding Directors who are Audit and Supervisory Committee
Members) contribute a portion of their fixed remuneration to Officers Stock Ownership Plan andacquire the Company’s shares, while continuing its holding during their term and for a year after
their retirement from office.
6) Share ownershipi) Number of issues and total amount of balance sheet amount for investment shares whose purposeof holding is other than for net investment
Number of issues:
Total amount of balance sheet amount:19¥1,635 million

37ii) Type of holding, issue, number of shares, balance sheet amount and purpose of holding forinvestment shares whose purpose of holding is other than for net investment
Fiscal year ended March 31, 2017
Specified investment shares
Issue

Number of shares(Shares)

Balance sheet amount(Millions of yen)

Reason for shareholding

KANEMATSU
CORPORATION

3,701,000

740

To maintain and strengthen business
relationships

SUZUKI MOTORCORPORATION

52,500242

To maintain and strengthen business
relationships

Mizuho Financial Group, Inc.

532,169108

To maintain and strengthen business
relationships

SHIMIZU CORPORATION

39,00038

To maintain and strengthen business
relationships

Sumitomo Mitsui Financial
Group, Inc.

5,755

23

To maintain and strengthen business
relationships

MUSASHI SEIMITSU
INDUSTRY CO., LTD.

6,000

17

To maintain and strengthen business
relationships

Nissin Kogyo Co., Ltd.

4,500

8

To maintain and strengthen business
relationships

YAMABIKOCORPORATION

4,556

5

To maintain and strengthen business
relationships

TANAKA SEIMITSU
KOGYO CO., LTD.

4,000

3

To maintain and strengthen business
relationships

Yutaka Giken Company
Limited1,000

2

To maintain and strengthen business
relationships

G-TEKT CORPORATION

2,400

4

To maintain and strengthen business
relationships

Fiscal year ended March 31, 2018
Specified investment shares
Issue

Number of shares(Shares)

Balance sheet amount(Millions of yen)

Reason for shareholding

KANEMATSU
CORPORATION

740,200

1,082

To maintain and strengthen business
relationships

SUZUKI MOTORCORPORATION

52,500300

To maintain and strengthen business
relationships

Mizuho Financial Group, Inc.

532,169101

To maintain and strengthen business
relationships

SHIMIZU CORPORATION

39,00037

To maintain and strengthen business
relationships

Sumitomo Mitsui Financial
Group, Inc.

5,755

25

To maintain and strengthen business
relationships

MUSASHI SEIMITSU
INDUSTRY CO., LTD.

6,000

21

To maintain and strengthen business
relationships

Nissin Kogyo Co., Ltd.

4,500

8

To maintain and strengthen business
relationships

YAMABIKOCORPORATION

5,039

7

To maintain and strengthen business
relationships

TANAKA SEIMITSU
KOGYO CO., LTD.

4,000

3

To maintain and strengthen business
relationships

Yutaka Giken Company
Limited1,000

2

To maintain and strengthen business
relationships

G-TEKT CORPORATION

2,400

4

To maintain and strengthen business
relationships

387) Matters normally requiring adoption of a resolution by the General Meeting of Shareholders, which
may be decided by the Board of Directors• Acquisition of own shares
To carry out capital policy in a flexible and timely manner in response to changes in the economic
environment, the Company provides in its Articles of Incorporation that, in accordance with theprovisions of Article 165, paragraph 2 of the Companies Act, it may acquire own shares throughmarket transactions, etc. based on a resolution of the Board of Directors.
• Interim dividends
To make a flexible return of profits to shareholders, the Company provides in its Articles ofIncorporation that, in accordance with Article 454, paragraph 5 of the Companies Act, it may pay
dividends of surplus (interim dividends) based on a resolution of the Board of Directors.
• Exemption of Directors from liability
To create an environment where Directors are able to fulfill their expected roles adequately, theCompany provides in its Articles of Incorporation that, pursuant to the provisions of Article 426,
paragraph 1 of the Companies Act, it may exempt Directors (including former Directors) fromliability as set forth in Article 423, paragraph 1 of the Companies Act within the limits stipulated bylaws and regulations based on a resolution of the Board of Directors.
8) Number of Directors
The Company states in its Articles of Incorporation that it shall have no more than 20 Directors (ofwhich, no more than 5 Directors are Audit and Supervisory Committee Members).
9) Requirements for election of Directors
The Company states in its Articles of Incorporation that adoption of resolutions for the election of
Directors shall require that at least one-third of the shareholders entitled to execute voting rights bepresent, and that an affirmative vote be cast by a majority of such shareholders present. The
Company also states in its Articles of Incorporation that cumulative voting shall not be used for theelection of Directors.
10) Requirements for the adoption of special resolutions by the General Meeting of Shareholders
With the aim of ensuring the smooth operation of the General Meeting of Shareholders, theCompany states in its Articles of Incorporation that the adoption of a special resolution based on
Article 309, paragraph 2 of the Companies Act shall require that at least one-third of theshareholders entitled to execute voting rights be present, and that an affirmative vote be cast by atleast two-thirds of such shareholders present.
(2) Details of audit fee, etc.
Details of remuneration to independent auditors
Fiscal year ended March 31, 2017
Category

Fees for audit
certification services(Millions of yen)

Fiscal year ended March 31, 2018

Fees for non-audit
services(Millions of yen)

Fees for audit
certification services(Millions of yen)

Fees for non-audit
services(Millions of yen)

Reporting company

53

–

53

–

Consolidated
subsidiaries

–

–

–

–

Total

53

–

53

–

39

V. Financial information
1. Preparation policy of the consolidated and non-consolidated financial statements(1) The consolidated financial statements of the Company are prepared in accordance with International
Financial Reporting Standards (hereinafter “IFRS”) pursuant to the provisions of Article 93 of theOrdinance on Terminology, Forms and Preparation Methods of Consolidated Financial Statements(Ordinance of the Ministry of Finance No. 28 of 1976).
(2) The non-consolidated financial statements of the Company are prepared in accordance with theOrdinance on Terminology, Forms and Preparation Methods of Financial Statements, etc. (Ordinanceof the Ministry of Finance No. 59 of 1963; hereinafter the “Ordinance on Financial Statements, etc.”).
The Company is qualified as a company submitting financial statements prepared in accordance withspecial provision and has prepared financial statements pursuant to the provisions of Article 127 of theOrdinance on Financial Statements, etc.
2. Audit certification
In accordance with the provisions of Article 193-2, paragraph 1 of the Financial Instruments andExchange Act, the consolidated financial statements and the non-consolidated financial statements forthe fiscal year ended March 31, 2018 were audited by Yasumori Audit Corporation.
3. Special efforts to ensure the appropriateness of consolidated financial statements, etc., anddevelopment of a system for fair preparation of consolidated financial statements, etc. inaccordance with IFRSThe Company is making special efforts to ensure the appropriateness of consolidated financial
statements, and developing a system for the appropriate preparation of consolidated financial
statements, in accordance with IFRS. The content thereof is as follows:(1) To develop a system for ensuring correct understanding of accounting standards, etc. andappropriate responses to any changes in accounting standards, etc., the Company has joined the
Financial Accounting Standards Foundation and attends seminars held by the foundation and audit
corporations.
(2) For the adoption of IFRS, the Company keeps up with the latest accounting standards by obtainingpress releases and standards published by the International Accounting Standards Board as needed.
To prepare appropriate consolidated financial statements, etc. under IFRS, the Company has
developed accounting policies of the Group in accordance with IFRS and performs accounting
procedures based on these policies.

401. Consolidated financial statements, etc.
(1) Consolidated financial statements
1) Consolidated statement of financial position(Millions of yen)

AssetsCurrent assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Goodwill and intangible assets
Investments accounted for using the equity
methodOther financial assets
Deferred tax assets
Other non-current assets

Notes

As of
March 31, 2017

As ofMarch 31, 2018

6, 26
7, 26
8, 26
9
10

23,47426,986
1,294
17,961
1,905

25,23028,8552,339
18,4282,038

71,62076,892

11, 13, 29
12, 2974,521
3,408

72,942
4,396

14

140

117

8, 26
15
10

9,389
2,983
644

12,561
2,734
657

Total non-current assets
Total assets

41

91,087

93,410162,708

170,302

(Millions of yen)

Liabilities and equity
Liabilities
Current liabilities
Trade and other payables
Borrowings
Other financial liabilities
Income taxes payable
Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Other financial liabilities
Defined benefit liability
Provisions
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
EquityIssued capital
Retained earnings
Treasury shares
Other components of equity
Total equity attributable to owners of parent
Non-controlling interests
Total equity

Notes

As of
March 31, 2017

As ofMarch 31, 201817, 2616, 268, 26
15
1014,373
13,266
103
2,095
5,812

16,044
16,179
128
2,784
6,006

35,652

41,14316, 26
8, 26
18
19
15
10

4,040
607
2,021
36
6,863
333
13,901
49,553

365
448
2,027
33
7,086
297
10,25851,402

20
20
20

4,175
104,908(3,409)5,949
111,624
1,530
113,155

4,175
112,828(3,409)3,716
117,311
1,589
118,900

162,708

170,302

Total liabilities and equity(Note) The accompanying notes are an integral part of these financial statements.

422) Consolidated statement of income(Millions of yen)
Notes
Sales revenue
Cost of sales

Fiscal year ended
March 31, 2017
157,217(132,648)

173,174(142,877)21
22
13, 22

24,568(13,109)766(989)

30,297(15,070)657(1,831)

4
23
23

11,236739(545)

14,052
808
(763)

14

(10)

(13)

15

11,419(3,921)

14,083(4,160)

Profit

7,498

9,923

Profit attributable to
Owners of parent
Non-controlling interests

7,204
294

9,691
231

7,498

9,923

143.54–193.11–Gross profit
Selling, general and administrative expenses
Other income
Other expense
Operating profit
Finance income
Finance costs
Share of profit (loss) in investments accounted forusing the equity method
Profit before income taxes
Income tax expense

4

Fiscal year ended
March 31, 2018

ProfitEarnings per share(Attributable to owners of parent)
Basic earnings per share (Yen)
Diluted earnings per share (Yen)25
25(Note) The accompanying notes are an integral part of these financial statements.

433) Consolidated statement of comprehensive income(Millions of yen)
Notes

Fiscal year ended
March 31, 2017

ProfitFiscal year ended
March 31, 2018

7,498

9,923

133

286

133

286

24

547

720

24

(1,097)(2,988)14, 24

(54)

(6)

(603)

(2,274)

Total other comprehensive income(470)(1,988)Comprehensive income

7,027

7,935

Comprehensive income attributable to
Owners of parent
Non-controlling interests

6,763
264

7,744
190

7,027

7,935

Other comprehensive income
Components that will not be reclassified to profit
or loss
Remeasurements of defined benefit plans

24

Total
Components that may be reclassified to profit orloss
Changes in fair value of available-for-salefinancial assets
Exchange differences of foreign operations
Share of other comprehensive income ofassociates accounted for using equity method
Total

Comprehensive income(Note) The accompanying notes are an integral part of these financial statements.

444) Consolidated statement of changes in equity
Equity attributable to owners of parent
Other components of equity
IssuedcapitalRetainedearnings

TreasurysharesExchangedifferencesof foreign
operations

Changes infair value ofavailablefor-salefinancialassetsMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions of
yen

4,175
–
–

99,7207,204–(3,408)
–
–

2,907
–
(1,114)

3,615
–
540

–
–
–

7,204
–
(2,007)–(0)–(1,114)
–
–

540
–
–

–

(141)

–

–

–

–

133

–

–

–

Total transactions with theowners–(2,016)(0)––Balance as of March 31, 2017
ProfitOther comprehensive income

4,175
–
–

104,908
9,691–(3,409)
–
–

1,792
–
(2,949)

4,156
–
716

–
–
–

9,691
–
(2,057)–(0)–(2,949)
–
–

716
–
–

–

–

–

–

–

–

286

–

–

–

Total transactions with theowners–(1,771)(0)––

Balance as of March 31, 2018

4,175

112,828(3,409)(1,156)

4,872

Note

Balance as of April 1, 2016
ProfitOther comprehensive income
Total comprehensive income
Purchase of treasury shares
Dividends
Increase (decrease) throughchanges in interests
Transfer from other componentsof equity

Total comprehensive income
Purchase of treasury shares
Dividends
Increase (decrease) throughchanges in interests
Transfer from other componentsof equity

20
20

20
20

45

Equity attributable to owners of parent
Other components of equity
Remeasurements ofNote
definedbenefit plans

Total

Total

Noncontrollinginterests

Total equity

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions of
yen

–
–
133

6,523
–
(440)

107,010
7,204
(440)

5,585
294
(30)

112,596
7,498
(470)

133
–
–

(440)
–
–

6,763
(0)
(2,007)264–(1,359)7,027(0)(3,366)

–

–

(141)

(2,960)(3,101)

(133)

(133)

–

–

–

Total transactions with theowners

(133)

(133)

(2,149)(4,319)(6,468)

Balance as of March 31, 2017
ProfitOther comprehensive income

–
–
286

5,949
–
(1,947)

111,624
9,691(1,947)

1,530
231
(41)

113,155
9,923(1,988)286––(1,947)
–
–

7,744
(0)
(2,057)

190
–
(131)

7,935
(0)
(2,189)

–

–

–

–

–

(286)

(286)

–

–

–

Total transactions with theowners

(286)

(286)

(2,057)(131)(2,189)Balance as of March 31, 2018

–

3,716

117,311

1,589

118,900

Balance as of April 1, 2016
ProfitOther comprehensive income
Total comprehensive income
Purchase of treasury shares
Dividends
Increase (decrease) throughchanges in interests
Transfer from other componentsof equity

Total comprehensive income
Purchase of treasury shares
Dividends
Increase (decrease) throughchanges in interests
Transfer from other componentsof equity

20
20

20
20

(Note) The accompanying notes are an integral part of these financial statements.

465) Consolidated statement of cash flows
Note
Cash flows from (used in) operating activities
Profit before income taxes
Depreciation and amortization expense
Impairment loss
Finance income and finance costs
Share of loss (profit) in investments accounted forusing the equity method
Loss (gain) on sales and retirement of non-current
assets(Increase) decrease in inventories(Increase) decrease in trade and other receivables
Increase (decrease) in trade and other payables
Increase (decrease) in defined benefit liability
Other
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Income taxes refund and interest on refund
received
Net cash flows from (used in) operating activities
Cash flows from (used in) investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant andequipment
Purchase of intangible assets
Proceeds from sales of intangible assets
Payments for acquisition of newly consolidated
subsidiaries
Proceeds from liquidation of subsidiaries andassociates
Payments of loans receivableCollection of loans receivable
Purchase of other financial assets
Proceeds from sales or redemption of otherfinancial assets
Other
Net cash flows from (used in) investing activities
Cash flows from (used in) financing activities
Net increase (decrease) in short-term borrowings
Payments for acquisition of interests in
subsidiaries from non-controlling interests
Purchase of treasury shares
Cash dividends paid
Cash dividends paid to non-controllingshareholders
Other
Net cash flows from (used in) financing activities

20

47(Millions of yen)
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2017
11,41912,182650(504)

14,083
12,766
1,454
(599)

10

13

59

133

(263)
(1,573)
261
134
1,756
24,132718(156)(2,436)(1,156)(2,619)
1,812
331
1,512
27,732649(207)(4,312)

1,907

259

24,16524,120(1,885)
1,505(14,650)(3,887)2,737(14,199)196

301(1,248)0(1,196)
4

–

(791)

377

–

(119)
170
(54)

(115)
196
(2,070)

0

–

(137)

(100)

(15,846)(19,122)(1,004)(365)(3,101)–(0)(2,006)(0)(2,058)(1,357)

(131)

(170)
(7,641)(101)(2,657)Note
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of exchange rate change on cash and cash
equivalents
Cash and cash equivalents at end of period

6

Fiscal year ended
March 31, 2017
677
23,450Fiscal year ended
March 31, 2018
2,340
23,474

(653)

(584)

23,47425,2306(Note) The accompanying notes are an integral part of these financial statements.

48

[Notes to consolidated financial statements]
1. Reporting entity
F.C.C. CO., LTD. (hereinafter the “Company”) is a public company incorporated under the laws ofJapan. The addresses of the registered headquarters and major business offices have been disclosed on
the website (http://www.fcc-net.co.jp/). The Company’s consolidated financial statements wereprepared with the end of the financial year on March 31, 2018 and consist of accounts of the Company
and its subsidiaries as well as interests in its associates (hereinafter the “Group”).
The Group is principally engaged in the sales and manufacture of motorcycle and automobile clutches.
2. Basis of preparation(1) Applicable accounting standards
The consolidated financial statements of the Group have been prepared in accordance with IFRS as
pursuant to the provisions of Article 93 of the Ordinance on Terminology, Forms and Preparation
Methods of Consolidated Financial Statements (Ordinance of the Ministry of Finance No. 28 of 1976),
since all the requirements of a “Specified Company under Designated International AccountingStandards” set forth in Article 1-2 of this Ordinance have been fulfilled.
These consolidated financial statements were approved by the Board of Directors on June 19, 2018.
(2) Basis of measurement
As described in the note “3. Significant accounting policies,” the consolidated financial statements of
the Group have been prepared on the basis of cost, except for certain financial instruments, etc. thatare measured at fair value.
(3) Functional currency and presentation currency
The consolidated financial statements of the Group are presented in Japanese yen, which is theCompany’s functional currency. All financial information presented is rounded down to the nearest
million yen.
(4) Accounting standards and interpretations that have been published but not yet applied.
The following accounting standards and interpretations were newly established or amended by theapproval date of the consolidated financial statements. The Group has not early applied thesestandards and interpretations.
The impact of application of these standards and interpretations is under consideration and cannot be
estimated at this point.
Mandatory
effective date(fiscal year
beginning on thedate)

Timing ofapplication by theGroup

Overview of the new standard oramendment

IFRS 9Financial
instruments

January 1, 2018

Fiscal year
ending March 31,
2019

Amendment concerning classification,measurement and recognition offinancial instruments, amendment ofhedge accounting, etc.

IFRS 15

Revenue fromcontracts withcustomers

January 1, 2018

IFRS 16

LeasesJanuary 1, 2019

IFRS

Fiscal year
ending March 31,
2019
Fiscal year
ending March 31,
2020

Amendment concerning accounting
treatment for revenue recognition
Amendment concerning accounting
treatment for leases(5) Significant accounting estimates and judgments
In preparing IFRS-compliant consolidated financial statements, the management makes judgments,
estimates and assumptions that may affect the application of accounting policies and the reported49

amounts of assets, liabilities, revenue and expenses. Because actual results may differ from theseestimates, such estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the accounting period in which the estimate isrevised and future periods that are affected.
Of items for which the management made estimates and judgments, those that have significant effects
on the amounts recognized in the consolidated financial statements are as follows:
Note 5. Business combinations
Note 13. Impairment loss
Note 15. Income taxes
Note 18. Employee benefits
3. Significant accounting policies(1) Basis of consolidation
1) Subsidiaries
Subsidiaries are entities that are controlled by the Group. The Group is deemed to control an entity
when the Group has exposures or rights to variable returns arising from the Group’s involvement in
the investee and has an ability to affect those returns through power over the investee.
The acquisition date is the date when the Group obtained control, and the entity is consolidated fromthat date to the date when the Group loses the control.
If any accounting policies applied by a subsidiary differ from those applied by the Group,
adjustments are made to the subsidiary’s financial statements where needed.
The Group’s balances of payables and receivables and transactions as well as unrealized gains orlosses arising from intra-group transactions are offset in preparing the consolidated financial
statements. Comprehensive income of subsidiaries is attributable to owners of parent and noncontrolling interests, even if the balance of non-controlling interests is negative.
Accounts of all subsidiaries that comprise the Group were reflected in the consolidated financial
statements with March 31 as the reporting date.
2) Associates
Associates are entities over which the Group has significant influence in terms of financial andmarketing policies but which the Group does not control or jointly control.
Investments in associates are recognized at cost at the time of acquisition and subsequently
accounted for using equity method.
(2) Business combinations
Business combinations are accounted for using the acquisition method. Considerations for acquisition
are measured as the total of fair values of assets transferred and liabilities assumed in exchange for thecontrol over the acquired entity and equity financial instruments on the acquisition date. If theconsideration for acquisition exceeds fair values of identifiable assets and liabilities, the excess isrecorded as goodwill in the consolidated statement of financial position. If the consideration for
acquisition is less than those fair values, the shortfall is immediately recorded as revenue. Any change
in ownership interests in subsidiaries that does not result in a loss of control is accounted for as equity
transaction.
(3) Foreign currency translation
1) Foreign currency transactions
Foreign currency transactions are translated into the functional currency of each entity in the Group
using the exchange rates at the date of the transactions. Monetary assets and liabilities denominatedin foreign currencies at the end of each fiscal year are translated into the functional currencies using
the exchange rates at that date.

50

Foreign exchange differences arising from the translation or settlement are recognized as profit orloss.
2) Financial statements of foreign operations
To prepare consolidated financial statements, assets and liabilities of the Group’s foreign subsidiaries,
etc. are translated into Japanese yen using exchange rates at the end of the fiscal year. Profit or loss
items are translated using the average exchange rate during the fiscal period, unless exchange rates
fluctuate significantly during that period. If there is any significant fluctuation in exchange rates, theexchange rate on the transaction date is used.
Exchange differences on translation are recognized as other comprehensive income in the
consolidated statement of comprehensive income and cumulative translation differences are included
in other components of equity in the consolidated statement of financial position.
Cumulative translation differences of a foreign operation are reclassified to profit or loss when theGroup loses control and significant influence over the foreign operation.
(4) Financial instruments
1) Financial assets(i) Initial recognition and measurement
The Group recognizes financial assets when the Group becomes a relevant contracting party andclassifies the financial assets into “financial assets at fair value through profit or loss,” “held-tomaturity investments,” “loans and receivables” or “available-for-sale financial assets.” This
classification is determined at initial recognition according to the nature and purpose for theacquisition.
Financial assets are measured at fair value at the time of initial recognition, and transaction costs
that are directly attributable to the acquisition are added except for financial assets at fair value
through profit or loss.
(a) Financial assets at fair value through profit or loss
When financial assets are designated as financial assets held for trading or at fair value throughprofit or loss, these financial assets are classified as “financial assets at fair value through profit orloss.”
Financial assets classified as “financial assets at fair value through profit or loss” are measured atfair value and any related changes are recognized as profit or loss.
(b) Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturities that theGroup has clear intention and ability to hold to maturity are classified as “held-to-maturity
investments.”
Held-to-maturity investments are measured by deducting impairment loss from amortized costusing the effective interest method, and interest income calculated using the effective interest
method is recognized in profit or loss.
The Group holds no financial assets classified as “held-to-maturity investments.”(c) Loans and receivables
Non-derivative financial assets with fixed or determinable payments for which there is no quoted
price in active markets are classified as “loans and receivables.”Loans and receivables are measured by deducting impairment loss from amortized cost using theeffective interest method, and interest income calculated using the effective interest method isrecognized in profit or loss.

51

(d) Available-for-sale financial assets
Non-derivative financial assets that are designated as “available-for-sale financial assets” or notclassified as any of “financial assets at fair value through profit or loss,” “held-to-maturity
investments” and “loans and receivables” are classified as “available-for-sale financial assets.”
Available-for-sale financial assets are measured at fair value with changes in fair value recognizedas other comprehensive income.
Dividend income on available-for-sale financial assets is recognized as profit or loss. When an
available-for-sale financial asset is derecognized or impairment loss is recognized, cumulative
gains or losses that were recorded as other comprehensive income are reclassified to profit or loss.
(ii) Impairment of financial assets
For financial assets other than “financial assets at fair value through profit or loss,” the Groupconsiders in each period whether there is objective evidence of impairment. When objective
evidence for a financial asset indicates that a loss event arose after the initial recognition andnegative effects of the loss event on estimated future cash flows of the financial asset can bereasonably predicted, impairment loss is recognized.
Objective evidence indicating that a financial asset is impaired includes significant financial
difficulties of the issuer or debtor, default or delinquency in interest or principal payments, and ahigher probability of bankruptcy or financial reorganization of the debtor. For equity financial
instruments classified as “available-for-sale financial assets,” in cases where the fair value falls
below the cost significantly or over a long period of time, it is also deemed that there is objective
evidence of impairment.
When there is objective evidence of impairment for “loans and receivables” or “held-to-maturity
investments,” a difference between the carrying amount of the asset and the present value after
discounting estimated future cash flows at the initial effective interest rate is recognized as
impairment loss in profit or loss.
For loans and receivables, impairment loss is recognized using allowance for credit losses. Whensubsequently the receivables are considered uncollectible, the carrying amount is directly reduced
by offsetting it with allowance for credit losses. If any event that reduces impairment loss occurs
after recognition of impairment loss, reversal of impairment loss is recognized in profit or loss.
When there is objective evidence of impairment for “available-for-sale financial assets,”
cumulative losses that were recognized as other components of equity are reclassified to profit orloss. If fair value of an equity financial instrument that was classified as “available-for-salefinancial assets” recovers after impairment, the amount of recovery is fully recognized as othercomprehensive income.
(iii) Derecognition of financial assets
If contractual rights to cash flows arising from a financial asset are extinguished, or if a financial
asset is transferred and substantially all risks and economic rewards relating to ownership of theasset are transferred, the financial asset is derecognized.
2) Financial liabilities
Financial liabilities are initially measured at fair value after the deduction of transaction costs, andsubsequently measured at amortized cost using the effective interest method.
When a financial liability is extinguished, that is, the debt is dismissed, cancelled or expired, theGroup derecognizes the financial liability.
3) Derivatives
The Group enters into currency swap contracts as risk management against fluctuations in foreignexchange rates.
As its policy, the Group does not conduct derivative transactions for speculative purposes.

52

Derivatives to which hedge accounting is not applied are classified as either “financial assets at fairvalue through profit or loss” or “financial liabilities at fair value through profit or loss” and they areaccounted for in accordance with the aforesaid classification.
(5) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, demand deposits, and short-term investments withmaturities or repayment terms of three months or less from the date of acquisition that are readily
convertible to cash and subject to an insignificant risk of changes in value.
(6) Inventories
Inventories are measured at cost, or if lower, at net realizable value. Net realizable value is calculated
by deducting estimated costs and estimated costs to sell required up to the completion from theestimated selling price in the normal course of business. The cost is calculated principally based on
the progressive average inventory method and includes material costs, labor costs and manufacturing
expenses.
(7) Property, plant and equipment
The cost model is applied in measurement of property, plant and equipment. Property, plant andequipment are recorded at the value calculated as cost less any accumulated depreciation and any
accumulated impairment loss.
The cost of property, plant and equipment includes cost directly incidental to the acquisition of assets,
and the initial estimated costs of dismantling and removing the assets and restoration costs for theplaces where the assets were located. Depreciation of these assets is started when the assets become
available for use.
Maintenance costs arising on a daily basis for property, plant and equipment are recognized in profit
or loss when incurred.
Depreciation expense for assets except for land and construction in progress is recorded by thestraight-line method over the following estimated useful lives.
Buildings and structures

5 to 31 years

Machinery, equipment and vehicles

3 to 9 years

Tools, furniture and fixtures

2 to 6 years(8) Goodwill and intangible assets
1) Goodwill
Goodwill is recorded at the value calculated as cost less any accumulated impairment loss. Goodwill
is not amortized. As a result of impairment test performed each fiscal year, impairment loss isrecorded if necessary. Impairment loss of goodwill is recognized in the consolidated statement ofincome and not reversed subsequently.
2) Intangible assets
The cost model is applied in measurement of intangible assets. Intangible assets are recorded at thevalue calculated as cost less any accumulated amortization and any accumulated impairment loss.
(i) Properties for development
Expenditure incurred in development activities are capitalized only if it can be verified that all thefollowing conditions are met:
• Technical practicability of completing the intangible asset so that the asset can be used or sold
• The entity’s intention to complete the intangible asset and then use or sell the asset• Ability to use or sell the intangible asset• Highly probable method for the intangible asset to generate future economic benefits• Usability of appropriate technical, financial and other resources necessary to complete
development of the intangible asset and then use or sell the asset53• Ability to reliably measure expenditure attributable to the intangible asset during thedevelopment period
The amount of initial recognition of properties for development is the total of expenses arising in
the period from the date when an intangible asset meets all the above recognition requirements forthe first time to the completion of development. Properties for development are amortized using thestraight-line method over a period in which funds spent for the development are expected to be
recovered. The amortization method and useful life are reviewed at the end of each fiscal year andrevised as needed.
(ii) Other intangible assets
Other intangible assets consist of software. Software is amortized using the straight-line method
over its estimated useful life of five years from the time when it becomes usable. The amortization
method and useful life are reviewed at the end of each fiscal year and revised as needed.
(9) Impairment
The Group assesses whether there is any indication of impairment at the end of each fiscal year for the
carrying amounts of non-financial assets except for inventories and deferred tax assets. If any such
indication exists, the recoverable amount of the asset is estimated. The recoverable amount of
goodwill is estimated at the same time in each fiscal period.
The recoverable amount of an asset or a cash-generating unit is the higher of its value in use or its fairvalue less costs to sell. In calculation of value in use, estimated future cash flows are discounted to thepresent value using the pretax discount rate that reflects time value of money and risks inherent to theasset. Assets that are not individually tested for impairment are integrated in the smallest cashgenerating unit that generates cash inflow substantially independent of cash inflow of other assets orasset groups through continued use. Impairment loss is recognized in profit or loss when the carrying
amount of the asset or cash-generating unit exceeds the estimated recoverable amount.
For previously recognized impairment loss, the Group assesses whether there is any indication of adecrease or disappearance of the loss at each end of fiscal year. For assets or cash-generating units forwhich there is any indication of reversal of impairment loss, the recoverable amount is estimated, andthe impairment loss is reversed if the recoverable amount exceeds the carrying amount. Reversal of
impairment loss is recognized in profit or loss to the extent that the carrying amount assuming that
impairment loss recognized for the asset in the past period had not existed is not exceeded.
Impairment loss relating to goodwill is not reversed.
(10) Employment benefits
1) Defined benefit plans
For defined-benefit retirement benefit plans, the net amount of the present value of defined benefit
obligations and the fair value of plan assets is recognized as liabilities or assets. The present value of
defined benefit obligations and related service costs are, as a general rule, calculated using the
projected unit credit method. The discount rate used to calculate the present value of defined benefit
obligations is, as a general rule, determined by reference to the market yield on high quality
corporate bonds as of the end of the fiscal year.
The Group recognizes remeasurements arising from defined-benefit retirement benefit plans as othercomprehensive income and immediately transfers the amounts to retained earnings.
2) Defined contribution plans
Expenses for defined-contribution retirement benefits are recognized as current expenses at theamount of contributions required.
3) Multi-employer plans
Multi-employer plans, for which the amount of plan assets corresponding to the entity’s own
contributions cannot be calculated reasonably, are accounted for in the same manner as defined
contribution plans.

544) Short-term employee benefits
Short-term employee benefits are expensed when an employee renders the related service.
Bonus accrual and paid absences are recognized as liabilities when the Group has legal orconstructive obligations to pay them and when a reliable estimate of the amount of obligations canbe made.
(11) Provisions
When there are present legal or constructive obligations as a result of past events, it is highly probablethat outflows of resources with economic benefits will be required to settle the obligations, andreliable estimates can be made of the amount of obligations, provisions are recognized by estimating
expenditure necessary to settle the present obligations taking into account uncertainties related to the
obligations at the end of the fiscal year.
If the time value of money for provisions is significant, the provisions are measured at discounted
present value.
(12) Revenue
The Group is principally engaged in the sales and manufacture of motorcycle and automobile clutches.
Revenue from the sales of these goods is recognized when the significant risks and economic value
incidental to ownership of the goods have been transferred to the buyer, the Group retains neither
continuing involvement nor effective control over the goods, it is probable that the future economic
benefits will flow to the Group, and such benefits and the corresponding cost can be measured reliably.
Normally, revenue is recognized at the time of delivery of goods.
Revenue is measured at fair value of the consideration received or receivable net of discounts, rebates
and consumption taxes, etc.
(13) Government grants
Government grants are measured at fair value and recognized when there is reasonable assurance that
the Group will comply with the conditions attached to the grants and that the grants will be received.
Grants for expenses incurred are recorded as revenue in the fiscal year during which the expenses
occurred. Grants for the acquisition of an asset are recorded as other income regularly over the usefullife of the asset, and unearned grant income is recorded as deferred income in liabilities.
(14) Finance income and finance costs
Finance income principally consists of interest income, dividend income, gains on sales of financial
assets and foreign exchange gains.
Interest income is recognized using the effective interest method when the income arises. Dividend
income is recognized when the Group’s right to receive the income is established.
Finance costs principally consist of interest expense, losses on sales of financial assets and foreignexchange losses. Interest expense is recognized using the effective interest method when incurred.
(15) Income taxes
Income taxes consist of current taxes and deferred taxes. These taxes are recognized in profit or loss,
except for those related to business combinations and items recognized directly in equity or othercomprehensive income.
Current taxes are measured at the amount of expected tax payment to or expected tax refund from tax
authorities. The amount of taxes is computed in accordance with tax rates and tax laws that are ineffect or substantially in effect by the end of the fiscal year in countries where the Group conducts
business activities and earns taxable profits or losses.
Deferred taxes are recognized for temporary differences between accounting carrying amounts ofassets and liabilities as of the reporting date and amounts of them for tax purposes, unused tax losses
and unused tax credits.

55

Deferred tax assets are recognized for deductible temporary differences to the extent that it is highly
probable that taxable profits will be available against which the deductible temporary differences
could be utilized. Deferred tax liabilities are recognized for taxable temporary differences.
The carrying amount of deferred tax assets is reviewed in every period, and reduced by the amount ofdeferred tax assets for which taxable profit sufficient to use all or part of the deferred tax assets areunlikely to be earned. Unrecognized deferred tax assets are reassessed in every fiscal period andrecognized to the extent that it is highly probable that deferred tax assets are realizable with futuretaxable profit.
Deferred tax assets and liabilities are not recorded for the following temporary differences:• Temporary differences arising from initial recognition of goodwill• Temporary differences arising from initial recognition of assets and liabilities which occur throughtransactions that affect neither accounting profit nor taxable profit for tax purposes, except forbusiness combinations• In cases where, for taxable temporary differences associated with investments in subsidiaries,
timing of reversal can be controlled and it is highly probable that such temporary differences are
not reversed in a foreseeable period
Deferred tax assets and liabilities are measured in accordance with tax rates and tax laws expected tobe applied in the period in which the assets are realized or the liabilities are settled based on tax rates
and tax laws that are in effect or substantially in effect at the end of the fiscal year.
Deferred tax assets and liabilities are offset if the Group has a legally enforceable right to offset
current tax assets against current tax liabilities, and they are related to income taxes levied by thesame taxation authority on the same taxable entity.
From the fiscal year under review, the Company and some of its domestic subsidiaries have applied
the consolidated taxation system.
(16) Earnings per share (attributable to owners of parent)
Basic earnings per share are calculated by dividing profit or loss for the year attributable to ordinary
equity holders of parent, by the weighted-average number of ordinary shares issued during the periodthat is adjusted by the number of treasury shares. Diluted earnings per share are not calculated
because there are no potential ordinary shares with dilutive effects.
(17) Shareholders’ equity
1) Ordinary shares
Ordinary shares issued by the Company are recorded at the issuance value in issued capital and sharepremium.
2) Treasury shares
When treasury shares are acquired, the consideration paid is recognized as deduction from equity.
When treasury shares are sold, the difference between the carrying amount and consideration at thetime of the sale is recognized as share premium.
4. Segment information(1) Overview of reportable segments
The Group’s reportable segments are components of the Group for which discrete financial
information is available, and whose operating results are regularly reviewed by the Board of Directors
to make decisions about managerial resources to be allocated to the segments and assess theirperformances. In the Group, principally the Head of business operation of motorcycles business andthe Head of business operation of automobiles business develop domestic and overseas
comprehensive strategies and build businesses for the motorcycle clutches business and theautomobile clutches business, respectively. Thus the Group has two reportable segments: “motorcycle
clutches” and “automobile clutches.” The motorcycle clutches segment manufactures clutches for56

motor cycles, scooters and ATVs and other products, while the automobile clutches segment
manufactures clutches for manual and automatic transmission automobiles and other products.
(2) Revenue and performance for reportable segments
Fiscal year ended March 31, 2017
Reportable segments
Motorcycle
clutches

Automobile
clutches

Total

Adjustments

Consolidated

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Millions of yen

73,294–

83,922–

157,217–––

157,217–73,294

83,922

157,217–

157,217(4,367)(7,814)(12,182)–(12,182)(60,594)(73,204)(133,799)–(133,799)

8,332

2,903

11,236–

11,236

Revenue
External revenue
Intersegment revenue
Total
Depreciation and amortization
expenseOther profit (loss)
Operating profit
Finance income
Finance costs
Share of profit (loss) in investments
accounted for using the equity method

739
(545)
(10)

Profit before income taxes

11,419Note: Other profit (loss) includes ¥650 million of impairment loss (¥650 million for automobile clutches).

Fiscal year ended March 31, 2018
Reportable segments

Revenue
External revenue
Intersegment revenue
Total

Motorcycle
clutches

Automobile
clutches

Total

Adjustments

Consolidated

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Millions of yen

82,936–

90,238–173,174–––

173,174–

82,936

90,238173,174–

173,174

Depreciation and amortization
expenseOther profit (loss)(4,685)(8,081)(12,766)–(12,766)(66,994)(79,360)(146,354)–(146,354)

Operating profit

11,256

2,796

14,052–

14,052Finance income
Finance costs
Share of profit (loss) in investments
accounted for using the equity method

808
(763)
(13)

Profit before income taxes

14,083

Note: Other profit (loss) includes ¥1,454 million of impairment loss (¥1,454 million for automobile clutches).

57

(3) Geographic information
The regional breakdown of revenue and non-current assets is as follows:
Revenue from external customers
Fiscal year ended March 31, 2017

Fiscal year ended March 31, 2018

Millions of yen

Millions of yen

Japan
U.S.
Indonesia
India
Other
Total

18,23560,236
16,482
19,38942,874

19,05162,591
17,461
23,69150,377

157,217173,174

Notes: 1. Revenue is classified by country based on the location of customers.
2. Major countries belonging to “Other” category are Thailand, China, Brazil and Vietnam.

Non-current assets
As ofMarch 31, 2017

As ofMarch 31, 2018

Millions of yen

Japan
U.S.
China
Other
Total

Millions of yen

22,627
34,1683,732
18,04622,07733,395
3,666
18,811

78,574

77,951

Notes: 1. Non-current assets are classified based on the location of assets and do not include financial assets, deferred tax
assets and defined benefit assets.
2. Main countries belonging to “Other” category are Indonesia, Thailand, India and Vietnam.

(4) Information about major customers
Counterparties of which revenue accounts for 10% or more of revenue of the entire Group
Related segment

Honda Motor Co., Ltd. and its group
Ford and its group

Motorcycle clutches
Automobile clutches
Automobile clutches

Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018

Millions of yen

Millions of yen

35,55543,29326,08239,58841,912
28,748

5. Business combinations
Fiscal year ended March 31, 2017(1) Summary of business combinations
The Company made an additional acquisition of 42% of shares in FCC (THAILAND) CO., LTD., aconsolidated subsidiary of the Company, to further strengthen cooperation within the Group. As aresult, the Group’s ratio of voting rights of the said company was increased to 100%.
The resulting change in ownership interest arising from the additional acquisition was recorded as adecrease in retained earnings. Consequently, retained earnings decreased by ¥145 million.

58

Fiscal year ended March 31, 2018
(1) Summary of business combinations
1) Name and business description of the acquired company
Company name:

Flint Co.,Ltd

Business description:

Design, production and processing of precision press metal molds

2) Primary reason for the business combination
In order to promote product evolution in the Group’s clutches business, and to promote thecommercialization of next-generation businesses, we acquired the all of the shares of Flint
Co.,Ltd, thereby making the company a wholly-owned subsidiary.
3) Date of the business combination
September 29, 20174) Legal form of the business combination
Share acquisition in exchange for cash5) Percentage of voting rights acquired
100%(2) Consideration for acquisition and breakdown thereof
CashMillions of yen
903

Total consideration for acquisition

903(3) Assets acquired and liabilities assumed
Current assets
Non-current assets

Millions of yen
305
398

Total assets

704

Current liabilities
Non-current liabilities

105
185

Total liabilities

290

Net assets

413

Goodwill

489(4) Impact on the Group’s business results
Details have been omitted due to the fact that this will have minimal impact on the consolidated
statement of income.
6. Cash and cash equivalents
Breakdown of Cash and cash equivalents
As ofMarch 31, 2017

As ofMarch 31, 2018

Millions of yen

Cash and deposits

Millions of yen

23,47425,230Note: Cash and cash equivalents recorded in the consolidated statement of financial position are equal to cash and cash
equivalents recorded in the consolidated statement of cash flows.

59

7. Trade and other receivables
Breakdown of trade and other receivables
As ofMarch 31, 2017

As ofMarch 31, 2018

Millions of yen

Millions of yen

Notes and accounts receivable - trade
Accounts receivable - other
Allowance for credit losses
Total

25,1681,847(29)

27,1041,780(29)

26,98628,855

Note: Information on management of credit risk and liquidity risk to “trade and other receivables” is provided in the note
“26. Financial instruments.”

8. Other financial assets and other financial liabilities
Breakdown of other financial assets
As ofMarch 31, 2017

As ofMarch 31, 2018

Millions of yen

Millions of yen

Other current financial assets
Loans and receivables

1,294

2,339

Other non-current financial assets
Financial assets at fair value through profit orloss (derivatives)
Loans and receivables
Allowance for credit losses
Available-for-sale financial assets

36

46

1,304
(55)
8,103

3,296
(60)
9,277

Total

9,389

12,561

Breakdown of other financial liabilities
As ofMarch 31, 2017

As ofMarch 31, 2018

Millions of yen

Millions of yen

Other current financial liabilities
Financial liabilities measured at amortized
cost
Lease obligations

103

128

Other non-current financial liabilities
Financial liabilities measured at amortizedcostLong-term accounts payable - other
Lease obligations

26
580

26
421

607

448

Total

60

9. Inventories
Breakdown of inventories
As ofMarch 31, 2017

As ofMarch 31, 2018

Millions of yen

Millions of yen

Finished goods
Work in process
Raw materials and supplies

3,442
2,961
11,5573,770
3,320
11,337

Total

17,961

18,428The amounts of write-down of inventories recognized as expenses and inventories recognized as
expenses
Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018

Millions of yen

Millions of yen

Amount of write-down
Amount of inventories

852
132,55561

882
142,87710. Other assets and liabilities
Breakdown of other assets
As ofMarch 31, 2017

As ofMarch 31, 2018

Millions of yen

Millions of yen

Other current assets
Accrued income taxes
Prepaid expenses
Suspense payments
Other
Total
Other non-current assets
Land use rights
Long-term prepaid expenses
Other
Total

961
433
103
406

1,301
325
32
379

1,905

2,038

605
38
–

561
50
45

644

657

Breakdown of other liabilities
As ofMarch 31, 2017

As ofMarch 31, 2018

Millions of yen

Millions of yen

Other current liabilities
Accruals
Accrued bonuses
Other

1,353
1,662
2,796

1,613
1,890
2,502

Total

5,812

6,006

Other non-current liabilities
Deferred income
Other

175
158

168
128

Total

333

297

62

11. Property, plant and equipment
Changes in cost and accumulated depreciation and impairment loss of property, plant and equipment,
and carrying amount thereof(1) Cost
Buildings
andstructures

Machinery,equipment
and vehicles

Tools,
furniture andfixturesLand

LeasedassetsConstructionin progress

Total

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

April 1, 2016
Acquisition
Disposal
Transfer of line items
Exchange differences ontranslation
Other

37,824116(1,187)
2,941

105,157
3,824(1,496)
8,666

14,625
1,292
(920)
769

7,456
197
–
766

–
749
–
–

10,05011,673(1,605)(13,145)

175,114
17,852(5,209)–(153)(3,249)

2,684

36

–

(245)

(928)

–

–

–

(248)

–

(0)

(249)

March 31, 2017
Acquisition
Disposal
Transfer of line items
Exchange differences ontranslation
Other

39,541
432
(143)
2,205

112,902
2,703(2,583)
4,495

18,450
708
(419)
890

8,208
613
(1,023)
19

749
–
–
–

6,727
11,358(331)(7,611)

186,579
15,815(4,501)–(1,080)(5,654)

(849)

(70)

(39)

(448)

(8,142)

(160)

914

21

43

–

(101)

718

March 31, 2018

40,795

112,778

18,801

7,791

710

9,592

190,469(2) Accumulated depreciation and impairment loss
Buildings
andstructures

Machinery,equipment
and vehicles

Tools,
furniture andfixturesLand

LeasedassetsConstructionin progress

Total

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

April 1, 2016
Depreciation expense
Impairment loss
DisposalExchange differences ontranslation
Other

17,751
1,514
218(1,122)

71,9698,547
1(1,246)

12,267
1,450
0
(864)

987
–
427
–

–
112
–
–

71
–
2
–

103,047
11,625650(3,233)(13)(2,777)

2,758

–

–

–

(32)

–

(0)

–

–

–

–

(0)

March 31, 2017
Depreciation expense
Impairment loss
DisposalExchange differences ontranslation
Other

18,348
1,572
683
109

76,495
8,729
629(2,172)

15,612
1,586
–
(391)

1,414
–
141
(427)

112
29
–
–

74
–
–
–

112,058
11,9181,454(2,880)(419)(4,386)

(778)

–

–

–

(5,584)

122

418

19

–

–

–

560

March 31, 2018

20,41779,715

16,048

1,128

142

74

117,52763

(3) Carrying amounts

Balance as of April 1,
2016
Balance as of March 31,
2017
Balance as of March 31,
2018

Buildings
andstructures

Machinery,equipment
and vehicles

Tools,
furniture andfixturesLand

LeasedassetsConstructionin progress

Total

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

20,072

33,187

2,358

6,469

–

9,979

72,066

21,19236,406

2,838

6,793

637

6,652

74,521

20,37733,063

2,752

6,662

568

9,518

72,942

Notes: 1. Depreciation expense of property, plant and equipment is recorded in “cost of sales” and “selling, general andadministrative expenses” in the consolidated statement of income.
2. Information on commitments related to purchase of property, plant and equipment is provided in the note “29.
Commitments.”

12. Goodwill and intangible assets
Changes in cost and accumulated amortization and impairment loss of goodwill and intangible assets,
and carrying amount thereof(1) Cost
Intangible assets
Goodwill
Millions of yen

SoftwareProperties fordevelopment

Total

Millions of yen

Millions of yen

Millions of yen

April 1, 2016
Acquisition
Increase due to internal
development
Disposal
Transfer of line items
Exchange differences ontranslation
Other

756
–

1,960
94

2,980
–

5,697
94

–

–

1,153

1,153

–
–

(1)
–

(646)
–

(647)
–

–

1

–

1

–

–

–

–

March 31, 2017
Acquisition
Increase due to internal
development
Disposal
Transfer of line items
Exchange differences ontranslation
Other

756
489

2,054
127

3,487
–

6,299
616

–

–

1,068

1,068

–
–

(91)
–

(482)
–

(574)
–

–

(2)

–

(2)

–

5

–

5

1,246

2,093

4,073

7,413

March 31, 201864

(2) Accumulated amortization and impairment loss
Intangible assets
Goodwill
Millions of yen

April 1, 2016
Amortization expense
Impairment loss
DisposalExchange differences ontranslation
Other
March 31, 2017
Amortization expense
Impairment loss
DisposalExchange differences ontranslation
Other
March 31, 2018

SoftwareProperties fordevelopment

Total

Millions of yen

Millions of yen

Millions of yen

–
–
–
–

1,756
67
–
(1)

1,224
489
–
(646)

2,981
556
–
(647)

–

0

–

0

–

–

–

–

–
–
–
–

1,823
88
–
(87)

1,067
603
–
(482)

2,890
691
–
(570)

–

0

–

0

–

4

–

4

–

1,828

1,187

3,016

(3) Carrying amounts
Intangible assets
Goodwill
Millions of yen

April 1, 2016
March 31, 2017
March 31, 2018

SoftwareMillions of yen

756
756
1,246

203
230
264

Properties fordevelopment

Total

Millions of yen

Millions of yen

1,755
2,420
2,885

2,716
3,408
4,396

Notes: 1. Amortization expense of software is recorded in “cost of sales” and “selling, general and administrative expenses”
in the consolidated statement of income, while amortization expense of properties for development is recorded in“cost of sales.”
2. Information on commitments related to purchase of intangible assets is provided in the note “29. Commitments.”65

13. Impairment loss
(1) Breakdown of assets for which impairment loss is recognized by type
Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018

Millions of yen

Millions of yen

Buildings and structures
Machinery and equipment, etc.
Land
Construction in progress

218
2
427
2

683
629
141
–

Total property, plant and equipment

650

1,454

Total impairment loss

650

1,454

Note: The impairment loss is included and recorded in “other expense” in the consolidated statement of income.

(2) Cash-generating unit
The Group groups assets based on the smallest unit of asset groups identifiable as a unit generating
cash inflow that is substantially independent of cash inflow of other assets or asset groups, bycompany and type of business. Idle assets that are not expected to be used in the future are determinedby individual asset unit.
(3) Impairment loss
Fiscal year ended March 31, 2017
The Group has been proceeding with reorganization of the domestic business units to increase
production efficiency and for risk management. As a result, due to transfer of the major manufacturing
process to other production bases, land and buildings, etc. for Tenryu Factory were reduced to therecoverable amount and recorded as impairment loss (¥650 million) in other expense.
The recoverable amount is calculated with the value in use, obtained by discounting the estimatedamount of cash flows based on the future business plan to the present value using the pretax weighted
average cost of capital for the cash-generating unit.
Fiscal year ended March 31, 2018
The Group has worked to improve production efficiency through the reorganization of domestic
production bases. However, after considering the business environment and profitability etc., of thedomestic automobiles business, buildings, machinery and equipment, and land were reduced to therecoverable amount and recorded as impairment loss (¥1,454 million) in other expense.
The recoverable amount is calculated with the value in use, obtained by discounting the estimatedamount of cash flows based on the future business plan to the present value using the pretax weighted
average cost of capital for the cash-generating unit.

66

14. Investments accounted for using the equity method
Summary of financial information aggregating accounts of associates accounted for using the equity
methodAs ofMarch 31, 2017

As ofMarch 31, 2018

Millions of yen

Total carrying amountMillions of yen

140
Fiscal year ended
March 31, 2017117
Fiscal year ended
March 31, 2018

Millions of yen

Millions of yen

ProfitOther comprehensive income

(10)
(54)

(13)
(6)

Comprehensive income

(64)

(19)

Note: There is no associate that has quoted market prices of its shares.

6715. Income taxes(1) Deferred tax assets and liabilities
Breakdown of and changes in deferred tax assets and deferred tax liabilities by major cause
Fiscal year ended March 31, 2017
April 1,
2016

Recognizedthrough
profit orloss

Recognizedin othercomprehensive income

Recognizeddirectly inequityOther

March 31,2017

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

Deferred tax assets
Inventories
Accrued bonuses
Accruals
Non-current assets
Defined benefit liability
Other

834
414
92
1,814
514
978

(33)
(12)
(13)
(218)
(5)
156

–
–
–
–
(49)
–

–
–
–
–
–
–

134
–
137
(3)
70
(94)

935
402
216
1,593
529
1,041

Total

4,650

(126)

(49)

–

244

4,718

(5,332)

(16)

–

–

(431)

(5,779)(1,557)

–

(245)

–

–

(1,802)

(215)

(771)

–

–

–

(986)

Deferred tax liabilities
Non-current assets
Available-for-salefinancial assets
Retained surplus ofoverseas consolidated
subsidiaries
Other

(107)

112

–

–

(34)

(30)

(7,212)

(675)

(245)

–

(466)

(8,598)

April 1,
2017

Recognizedthrough
profit orloss

Recognizedin othercomprehensive income

Recognizeddirectly inequityOther

March 31,2018

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

Deferred tax assets
Inventories
Accrued bonuses
Accruals
Non-current assets
Defined benefit liability
Other

935
402
216
1,593
529
1,041

(229)
9
0
402
278
(360)

–
–
–
–
(89)
–

–
–
–
–
–
–

(2)
–
0
0
0
1

703
411
216
1,996
717
681

Total

4,718

100

(89)

–

(1)

4,727

(5,779)

1,940

–

–

34

(3,804)(1,802)

–

(310)

–

–

(2,112)(986)(2,061)–––(3,047)

Total

Fiscal year ended March 31, 2018

Deferred tax liabilities
Non-current assets
Available-for-salefinancial assets
Retained surplus ofoverseas consolidated
subsidiaries
Other
Total

(30)

(84)

–

–

0

(114)

(8,598)

(205)

(310)

–

35

(9,079)68

The amounts of unused tax losses and deductible temporary differences for which deferred tax assets
have not been recognized are as follows:
As ofMarch 31, 2017

As ofMarch 31, 2018

Millions of yen

Unused tax losses
Deductible temporary differences
Total

Millions of yen

5,025
195

5,875
762

5,220

6,638

Expiration of unused tax losses for which deferred tax assets have not been recognized is as follows:
As ofMarch 31, 2017

As ofMarch 31, 2018

Millions of yen

1st year
2nd year
3rd year
4th year
5th year and onward
Total

Millions of yen

–
–
–
–
5,025

–
–
–
–
5,875

5,025

5,875

The total amount of taxable temporary differences associated with investments in subsidiaries forwhich deferred tax liabilities have not been recognized were ¥52,473 million as of March 31, 2017and ¥40,501 million as of March 31, 2018. For these taxable differences, deferred tax liabilities havenot been recognized since the Group may control timing of their reversal and there is high possibility
that the temporary differences will not be reversed within a foreseeable period.
(2) Breakdown of income tax expense
Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018

Millions of yen

Current tax expense
Deferred tax expense
Total

Millions of yen

3,119
801

4,055
104

3,921

4,160

Fiscal year ended March 31, 2018
In accordance with the tax reform act enacted in the U.S. in December 2017, the federal corporate tax
rate has been reduced to 21% from 2018. As a result, deferred tax liabilities decreased by ¥1,600
million.
In addition, deferred tax liabilities increased by ¥2,202 million as a result of additional recognition of
taxable temporary differences associated with investments in subsidiaries, etc. for some overseas
subsidiaries.

69

(3) Factors of differences between the effective statutory tax rate and the effective tax rate
Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018%%

Effective statutory tax rate
Non-deductible expenses in calculation of
taxable profits
Unrecognized deferred tax assets
Tax credits
Difference from the applicable tax rate ofoverseas subsidiaries
Other

30.2

30.2

2.5

1.7

1.7
1.5

5.4
(0.5)

(7.9)

(8.4)

6.3

1.1

Effective tax rate

34.3

29.5

16. Borrowings
Breakdown of borrowings

Current
Financial liabilities measured
at amortized cost
Current borrowings
Current portion of longterm borrowings

As ofMarch 31, 2017

As ofMarch 31, 2018

Average interest
rate

Millions of yen

Millions of yen

%

Due

8,894

12,556

1.06

–

4,371

3,623

0.82

–

13,266

16,179Long-term borrowings

4,040

365

1.37

April 2019 toApril 2021

Total

4,040

365

Total
Non-current
Financial liabilities measured
at amortized cost

Notes: 1. “Average interest rate” shows weighted average interest rate on the balance as of March 31, 2018.
2. “Due” shows the repayment due for the balance as of March 31, 2018.
3. For the breakdown of the balance of borrowings by due date, refer to the note “26. Financial instruments, (3)Financial risk management, 2) Liquidity risk management.”

17. Trade and other payables
Breakdown of trade and other payables
As ofMarch 31, 2017

As ofMarch 31, 2018

Millions of yen

Notes and accounts payable - trade
Factoring payables
Accounts payable - other
Total

70

Millions of yen

11,306
1,679
1,388

12,268
1,119
2,656

14,373

16,044

18. Employee benefits
To provide for retirement benefits of employees, the Group has adopted funded and unfunded defined
benefit plans and defined contribution plans and has joined Nihon Jidosha Buhin Kogyo Kosei Nenkin
Kikin, which is a multi-employer corporate pension fund.
(1) Defined benefit plans
Under defined benefit plans, a lump-sum benefit or pension is granted based on salaries and periodsof service.
1) Amounts recognized in the consolidated statement of financial position
The year-end balances of defined benefit obligations and plan assets, and defined benefit
liability and defined benefit asset recognized in consolidated statement of financial position
As ofMarch 31, 2017

As ofMarch 31, 2018

Millions of yen

Millions of yen

Funded defined benefit obligations
Plan assets

8,250(7,308)

8,847(7,773)

Subtotal
Unfunded defined benefit obligations

941
1,079

1,074
907

Net amount of liabilities and assets recognizedin consolidated statement of financial position

2,021

1,981

Defined benefit liability
Defined benefit asset

2,021
–

2,027
(45)

Net amount of liabilities and assets recognizedin consolidated statement of financial position

2,021

1,981

Note: Defined benefit assets are included in “other non-current assets” in the consolidated statement of financial position.

2) Amounts recognized as retirement benefit expenses
Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018

Millions of yen

Millions of yen

Retirement benefit expenses for defined benefit
plans

762

776

3) Reconciliation of defined benefit obligations
Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018

Millions of yen

Millions of yen

Defined benefit obligations at beginning of
periodService cost
Interest costRemeasurement
Retirement benefits paid
Exchange differences on translation
Defined benefit obligations at end of period

8,969

9,329

687
112
(56)
(377)
(4)

805
139
(112)
(315)
(91)

9,329

9,755

Note: The weighted average duration of defined benefit obligations was 13.3 to 23 years as of March 31, 2017 and 12.8 to21 years as of March 31, 2018.

714) Reconciliation of plan assets
Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018

Millions of yen

Millions of yen

Plan assets at beginning of period
Interest income
Remeasurement
Contributions by the employer
Retirement benefits paid
Exchange differences on translation

7,065
36
131
367
(288)
(3)

7,308
48
217
393
(174)
(20)

Plan assets at end of period

7,308

7,773

5) Composition of plan assets
As ofMarch 31, 2017

As ofMarch 31, 2018

Millions of yen

Debentures
SharesOther
Total

Millions of yen

2,289
2,023
2,995

3,937
1,852
1,983

7,308

7,773

6) Major actuarial assumptions
As ofMarch 31, 2017

As ofMarch 31, 2018%%

Discount rate (Japan)
Discount rate (Overseas)

0.5
4.0 to 8.6

0.4
2.8 to 7.77) Sensitivity analysis
The impact of 0.5% changes in the key actuarial assumption on defined benefit obligations is asfollows:
As ofMarch 31, 2017

As ofMarch 31, 2018

Millions of yen

0.5% increase in the discount rate
0.5% decrease in the discount rate

Millions of yen

(545)
596

(536)
582

Note: The sensitivity analysis is calculated in a manner that keeps assumptions other than variable factors constant and does
not take into account interdependencies between the assumptions.

(2) Defined contribution plans
Amounts recognized as expenses for defined contribution plans
Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018

Millions of yen

Amount recorded as expenses

Millions of yen

235

72

252

(3) Multi-employer plan
To the multi-employer plan, the amount calculated by multiplying salaries in the period employees
rendered services by a constant rate is contributed and contributions during the fiscal period arerecognized as retirement benefit expenses in profit or loss.
The total amount of expenses recognized for the employees’ pension fund that is a multi-employer
plan, which is accounted for in the same manner as defined contribution plans, was ¥178 million in
the previous fiscal year and ¥181 million in the fiscal year under review.
1) Latest funding position of multi-employer plan
As of March 31, 2016

As of March 31, 2017

Millions of yen

Millions of yen

Plan assets
Total of actuarial obligations for the purpose ofpension financing calculation and minimum
liability reserve

187,558

178,928

188,657

178,704(1,099)223

Difference

2) Proportion of contributions by the Group to total contributions of the multi-employer plan
As of March 31, 2016

As of March 31, 2017%%

Proportion of contributions by the Group

5.7

5.9

19. Provisions
Breakdown of and changes in provisions
Asset retirement
obligations
Millions of yen

April 1, 2016
Interest expense during the period in
discounting
Decrease during the period (intended use)
Decrease during the period (reversal)

36

March 31, 2017
Interest expense during the period in
discounting
Decrease during the period (intended use)
Decrease during the period (reversal)

36

March 31, 2018

33

0
–
–
0
–
(3)

Note: To prepare for removal of toxic substances related to buildings, the Group recognizes and measures the provision by
estimating asset retirement obligations based on the period in which the building is expected to be used in light ofuseful lives of fixtures inside the building and other factors, taking into account the status of each property
individually and specifically. The payment is made in a period after one year or more passed from the end of eachfiscal year.

7320. Equity and other equity items(1) Issued capital
Breakdown of changes in number of shares authorized, number of shares issued and issued capital
Number of sharesauthorized

Number of sharesissuedIssued capitalMillions of yen

SharesShares

As of April 1, 2016
Change during the period

90,000,000–

52,644,030
–

4,175
–

As of March 31, 2017
Change during the period

90,000,000–

52,644,030
–

4,175
–

As of March 31, 2018

90,000,000

52,644,030

4,175

Note: All shares issued by the Company are ordinary shares with no rights limitations and without par value. Issued sharesare fully paid up.

(2) Retained earnings
Retained earnings consist of earned reserve and unappropriated retained surplus. Retained earnings
include the amount of remeasurements of defined benefit plans recognized in other comprehensive
income when the amount arose and immediately transferred to retained earnings, and cumulative
exchange differences of foreign operations as of the date of transition to IFRS.
(3) Treasury shares
Changes in the number and the amount of treasury shares are as follows:
Number of shares

AmountSharesMillions of yen

As of April 1, 2016
Change during the period

2,455,724
85

3,408
0

As of March 31, 2017
Change during the period

2,455,809
32

3,409
0

As of March 31, 2018

2,455,841

3,409

Note: Changes during the period are due to purchase of shares less than one unit.

74

(4) Dividends
Fiscal year ended March 31, 2017
Resolution date

Total amount ofdividends

Dividends per share

Millions of yen

Yen

June 22, 2016
Ordinary General Meetingof Shareholders
October 31, 2016
Board of Directors
meeting

Record date

Effective date

1,003

20.00

March 31, 2016

June 23, 2016

1,003

20.00

September 30, 2016

November 28, 2016

Record date

Effective dateFiscal year ended March 31, 2018
Resolution date

Total amount ofdividends

Dividends per share

Millions of yen

Yen

June 20, 2017
Ordinary General Meetingof Shareholders
October 27, 2017
Board of Directors
meeting

1,003

20.00

March 31, 2017

June 21, 2017

1,053

21.00

September 30, 2017

November 27, 2017

• Dividends for which record date is in the current fiscal year with effective date in the following fiscal
year
Fiscal year ended March 31, 2017
Resolution date

Total amount ofdividends

Dividends per share

Millions of yen

Yen

June 20, 2017
Ordinary General Meetingof Shareholders

1,003

20.00

Record date

Effective date

March 31, 2017

June 21, 2017

Record date

Effective date

March 31, 2018

June 20, 2018

Fiscal year ended March 31, 2018
Resolution date

Total amount ofdividends

Dividends per share

Millions of yen

Yen

June 19, 2018
Ordinary General Meetingof Shareholders

1,053

21.00

21. Selling, general and administrative expenses
Breakdown of selling, general and administrative expenses
Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018

Millions of yen

Millions of yen

Packing and shipping expenses
Personnel expenses
Depreciation and amortization expense
Research and development expense
Other
Total

75

1,588
4,568
391
2,559
4,000

1,721
4,941
435
2,984
4,987

13,10915,07022. Other income and expense(1) Breakdown of other income
Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018

Millions of yen

Millions of yen

Gain on sales of non-current assets
Grant income
Other
Total

133
0
632

49
11
596

766

657

(2) Breakdown of other expense
Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018

Millions of yen

Millions of yen

Loss on sales and retirement of non-current
assetsImpairment loss
Other
Total

193

182

650
145

1,454
194

989

1,831

Note: Refer to the note “13. Impairment loss” for impairment loss.

23. Finance income and finance costs(1) Breakdown of finance income
Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018

Millions of yen

Millions of yen

Interest income
Cash and cash equivalents, loans andreceivables
Dividend income
Available-for-sale financial assets
Other
Total

487

558

214
36

236
13

739

808

(2) Breakdown of finance costs
Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018

Millions of yen

Millions of yen

Interest expense
Borrowings
Other
Foreign exchange losses
Total

76

96
101
347

166
29
568

545

763

24. Other comprehensive income
Amount arising during year, reclassification adjustments to profit or loss and tax effects for eachcomponent of other comprehensive income
Fiscal year ended March 31, 2017
Amountarising

Reclassification
adjustments

Before tax
effects

Tax effects

Net of tax
effects

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Millions of yen

183

–

183

(49)

133

183

–

183

(49)

133

792

–

792

(245)

547

(1,097)–(1,097)–(1,097)

(54)

–

(54)

–

(54)

Subtotal

(358)

–

(358)

(245)

(603)

Total

(175)

–

(175)

(294)

(470)

Amountarising

Reclassification
adjustments

Before tax
effects

Tax effects

Net of tax
effects

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Millions of yen

375

–

375

(89)

286

375

–

375

(89)

286

1,030

–

1,030

(310)

720

(2,988)–(2,988)–(2,988)

(6)

–

(6)

–

(6)

Subtotal(1,964)–(1,964)(310)(2,274)

Total(1,588)–(1,588)(399)(1,988)Components that will not bereclassified to profit or loss
Remeasurements of defined benefit
plans
SubtotalComponents that may be reclassified
to profit or loss
Changes in fair value of availablefor-sale financial assets
Exchange differences of foreign
operations
Share of other comprehensive
income of associates accounted forusing equity method

Fiscal year ended March 31, 2018

Components that will not bereclassified to profit or loss
Remeasurements of defined benefit
plans
SubtotalComponents that may be reclassified
to profit or loss
Changes in fair value of availablefor-sale financial assets
Exchange differences of foreign
operations
Share of other comprehensive
income of associates accounted forusing equity method7725. Earnings per share
Basis of calculating basic earnings per share attributable to ordinary equity holders
Fiscal year ended
March 31, 2017
Profit attributable to ordinary equity holders ofparent (Millions of yen)
Weighted-average number of ordinary shares(Thousands of shares)
Basic earnings per share (Yen)

Fiscal year ended
March 31, 2018
7,204

9,691

50,18850,188143.54193.11

Note: Information on diluted earnings per share is omitted due to an absence of potential shares.

26. Financial instruments(1) Capital management
The Group’s basic policy for capital risk management is to build and maintain the stable financialbase in order to firmly maintain soundness and efficiency of the management and achieve sustainablegrowth. In line with this policy, the Group returns profits to shareholders through investments in effect,
dividends and other means based on operating cash flows.
(2) Classification of financial assets and financial liabilities
As ofMarch 31, 2017

As ofMarch 31, 2018

Millions of yen

Millions of yen

Financial assets
Financial assets at fair value through profit orloss (derivatives)
Other financial assets
Loans and receivables
Trade and other receivables
Other financial assets
Available-for-sale financial assets
Other financial assets
Cash and cash equivalents

36

46

26,9862,543

28,8555,575

8,103
23,474

9,277
25,230Total financial assets
Financial liabilities
Financial liabilities at amortized cost
Trade and other payables
Borrowings
Other financial liabilities

61,144

68,986

14,373
17,306710

16,044
16,545576

Total financial liabilities

32,391

33,166(3) Financial risk management
The Group is exposed to financial risks (credit risks, liquidity risks and market risks) in the course ofbusiness activities. In order to avoid or mitigate these risks, the Group conducts risk management
under certain policies. As its policy, the Group does not conduct derivative transactions for speculative
purposes.
1) Credit risk management
Credit risks are risks that result in financial losses incurred by the Group when a customer
becomes in default for contractual obligations.
Most clutch products manufactured and sold by the Group are for the automobile and motorcycle
industries.
78

The certain customer group accounts for a large percentage of the Group’s revenue. For the risks,
the Group has a system where it manages due dates and outstanding balances for each business
partner and periodically grasps information on the credit status of major business partners inaccordance with its credit management regulations.
The carrying amount of financial assets after impairment loss presented in the consolidated
financial statements is the maximum amount of exposure to credit risks to financial assets of theGroup when the appraisal value of collateral obtained is not taken into account.
Age analysis of financial assets that were past due but not impaired as of the end of fiscal year
As of
March 31, 2017

As ofMarch 31, 2018

Millions of yen

Millions of yen

Within one month past due
Over one month and within six months past due
Over six months and within one year past due
Over one year past due

359
124
21
19

579
65
12
11

Total

524

668

The Group examines recoverability of trade receivables, etc. according to the credit status ofbusiness partners and recognizes allowance for credit losses. Changes in allowance for credit
losses are as follows:
Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018

Millions of yen

Millions of yen

Balance at beginning of period
Increase during the period
Decrease during the period (intended use)
Decrease during the period (reversal)
Other changes

92
4
(10)
(0)
(1)

84
21
(14)
(1)
(0)

Balance at end of period

84

89

79

2) Liquidity risk management
Liquidity risks are risks of failure to make payments on the due date in situations when the Groupis required to fulfill its repayment obligations for financial liabilities due. The Group manages
liquidity risks by securing credit lines available at any time in financial institutions andcontinuously monitoring a cash flow plan and actual performance while raising appropriate funds
for repayment.
Breakdown of the balances of financial liabilities by due date
As of March 31, 2017

Trade and otherpayablesBorrowings
Other financial
liabilities
Total

Carrying
amountContractual
amountDue within
one year

Due after
one yearwithintwo years

Due after
two years
withinthree years

Due after
three years
withinfour years

Due after
four years
withinfive years

Due after
five years

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

14,373

14,373

14,373

–

–

–

–

–

17,306

17,454

13,386

3,719

348

–

–

–

710

843

132

159

171

180

13

187

32,391

32,672

27,892

3,878

520

180

13

187

Carrying
amountContractual
amountDue within
one year

Due after
one yearwithintwo years

Due after
two years
withinthree years

Due after
three years
withinfour years

Due after
four years
withinfive years

Due after
five years

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

16,044

16,044

16,044

–

–

–

–

–

16,545

16,651

16,283

348

18

1

–

–

576

675

150

162

171

12

12

164

33,16633,371

32,478

510

190

14

12

164

As of March 31, 2018

Trade and otherpayablesBorrowings
Other financial
liabilities
Total

80

3) Market risk management(i) Exchange risks
Because the Group has business operations on a global basis, it is exposed to risks thattransactions denominated in currencies other than its functional currency may affect profit andloss and cash flows and risks that equity and profit or loss may be affected when equity andprofit or loss denominated in currencies other than its functional currency are translated into thefunctional currency, both due to currency fluctuations. The Group strives to mitigate these risks
due to currency fluctuations by monitoring currency fluctuations.
• Sensitivity analysis of foreign exchange
For financial instruments held by the Group as of the reporting date, the impact of a 1%
depreciation of Japanese yen against US dollars and renminbi on profit before income taxes in
the consolidated statement of income is as follows.
The effects of translation of financial instruments denominated in the functional currency,
assets and liabilities and revenue and expenses of foreign operations into yen are not included.
This analysis is based on the assumption that other variable factors are constant.
Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018

Millions of yen

US dollar
RMB

Millions of yen

145
35

147
39

(ii) Price fluctuation risks
Although the Group is exposed to risks of fluctuations in share prices, which arising from equity
financial instruments (shares), these instruments are shares in companies with which the Grouphas business relationships and the Group grasps information on market prices of the sharesquarterly.
• Sensitivity analysis on market prices
The impact of a 10% fluctuation in market prices of equity financial instruments held by theGroup as of the end of fiscal year on other comprehensive income (before tax effects) was¥734 million in the previous fiscal year and ¥836 million in the fiscal year under review.
This analysis is based on the assumption that other variable factors are constant.
(iii) Interest rate risks
Since borrowings are raised with fixed interest rates and interest rate risks are consideredinsignificant to the Group, the sensitive analysis of interest rates has not been performed.
(4) Fair value of financial instruments
1) Method of fair value measurement
Financial assets and liabilities at fair value through profit or loss
The fair value of derivatives to which hedge accounting is not applied is obtained from thecounterparty financial institutions.
Loans and receivables
The carrying amounts of loans and receivables reasonably approximate the fair values, since theperiod to maturity is short or there is no significant difference between the contracted interest rate
and the rate assumed if a similar contract is newly executed.

81

Available-for-sale financial assets
The fair values of listed shares are measured based on market prices at the end of the fiscal year. The
fair values of unlisted shares are measured by a reasonable method.
Cash and cash equivalents
The carrying amounts of cash and cash equivalents reasonably approximate the fair values, since theperiod to maturity is short.
Financial liabilities measured at amortized cost
The fair values of borrowings are measured by the discounted cash flow method using the interest
rate for the case where funds are borrowed under the same conditions with the same remaining
period. The carrying amounts of liabilities other than the above reasonably approximate the fairvalues since they are principally settled in a short period of time.
2) Fair value hierarchy
The fair value hierarchy of financial instruments is categorized as follows:
Level 1:

Fair value measured at the quoted price in active markets

Level 2:

Fair value, other than Level 1, that is determined by directly or indirectly using theobservable price

Level 3:

Fair value that is determined using a valuation technique including unobservable inputs

When multiple inputs are used for fair value measurement, the level of the fair value is determinedbased on the lowest level of significant input in the entire measurement of the fair value.
Transfers between levels of the fair value hierarchy are recognized as if they had occurred at the
beginning of each quarter.
3) Carrying amount and fair value of financial instruments
As ofMarch 31, 2017
Carrying amount
Fair value
Long-term borrowings (Note 1)

As ofMarch 31, 2018
Carrying amount
Fair value

Millions of yen

Millions of yen

Millions of yen

Millions of yen

8,411

8,425

3,988

3,982

Notes: 1. Include current portion of long-term borrowings.
The fair value of long-term borrowings is in Level 2.
2. Financial instruments measured at fair value and financial instruments of which the fair value extremely
approximates the carrying amount are not included in the above table.

824) Financial instruments measured at fair value on a recurring basis
Classification of financial instruments measured at fair value on a recurring basis based on the fairvalue hierarchy is as follows:
As of March 31, 2017
Level 1

Level 2

Level 3

Total

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Financial assets
Financial assets at fairvalue through profit orloss (derivatives)
Available-for-salefinancial assets
Listed shares
Unlisted shares
Other
Total

–

36

–

36

7,340
–
–

–
–
–

–
758
4

7,340
758
4

7,340

36

762

8,140

As of March 31, 2018
Level 1

Level 2

Level 3

Total

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Financial assets
Financial assets at fairvalue through profit orloss (derivatives)
Available-for-salefinancial assets
Listed shares
Unlisted shares
Other
Total

–

46

–

46

8,368
–
–

–
–
–

–
904
4

8,368
904
4

8,368

46

909

9,324

Note: No transfers between Level 1, Level 2 and Level 3 were made in one year ended March 31, 2017 and one year ended
March 31, 2018.

Changes in financial instruments classified as Level 3 are as follows:
Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018

Millions of yen

Millions of yen

Balance at beginning of period
Acquisition
Total gains and losses
Other comprehensive income

719
–

762
78

43

68

Balance at end of period

762

909

Notes: 1. Gains and losses included in other comprehensive income relate to shares, etc. held as of the reporting date thatwere not traded at a market. These gains and losses are included in “changes in fair value of available-for-salefinancial assets” and “exchange differences of foreign operations” in the consolidated statement of comprehensive
income.
2. Financial assets classified as Level 3 mainly consist of unlisted shares. The fair values of unlisted shares are
principally measured by valuation techniques based on net asset value, and results of the fair value measurement
are approved by an appropriate authorized person.

8327. Important subsidiaries
Status of important subsidiaries at the end of the fiscal year under review
Name

Location

Principal contents ofbusiness
Motorcycle andautomobile clutches
Motorcycle clutches
Motorcycle clutches
Motorcycle clutches
Administration ofsubsidiaries in theU.S.

KYUSHU F.C.C. CO., LTD.

JapanTENRYU SANGYO CO., LTD.
Tohoku Chemical Industries, Ltd.
Flint Co.,Ltd

Japan
Japan
Japan

FCC (North America), INC.

U.S.

FCC (INDIANA), LLC.

U.S.

Automobile clutches

FCC (North Carolina), LLC.

U.S.

Motorcycle andautomobile clutches

FCC (Adams), LLC.

U.S.

Automobile clutches

FCC AUTOMOTIVE PARTS DE MEXICO, S.A. DE
C.V.

MexicoAutomobile clutches

FCC (THAILAND) CO., LTD.

ThailandFCC (PHILIPPINES) CORP.

Philippines

F.C.C. (China) Investment Co., Ltd.

China

China

Motorcycle andautomobile clutches
Motorcycle andautomobile clutches
Administration ofsubsidiaries in China
Motorcycle andautomobile clutches
Motorcycle clutches

CHINA FCC FOSHAN CO., LTD.

China

Automobile clutches

FCC (TAIWAN) CO., LTD.

TaiwanMotorcycle clutches

FCC CLUTCH INDIA PRIVATE LTD.

India

PT. FCC INDONESIA

Indonesia

FCC (VIETNAM) CO., LTD.

Vietnam

FCC DO BRASIL LTDA.

BrazilCHENGDU YONGHUA. F.C.C. CLUTCHES CO.,LTD.
CHU’S F.C.C. CO., LTD. (SHANGHAI)

China

Motorcycle andautomobile clutches
Motorcycle andautomobile clutches
Motorcycle andautomobile clutches
Motorcycle andautomobile clutches

Ratio of voting rights
holding (%)
100
80.22
100
100
100
100
[100]
100
[100]
100
[100]
100
[40.60]100[0.07]
100
100
100[71.43]100
100[61.43]
70
[15]
100
100
[0.55]
90
100

Note: The figures in brackets in the “Ratio of voting rights holding” column are indirect holding ratio included in the
figures outside the brackets.

8428. Related parties(1) Related party transactions
Fiscal year ended March 31, 2017Type
Other affiliate

Name
Honda Motor Co., Ltd.

Description of relationship with therelated party
Sale of the Company’s products

Transaction
amountUnsettledamountMillions of yen

Millions of yen

9,110

1,550

Transaction
amountUnsettledamountMillions of yen

Millions of yen

10,436

1,748

Note: Related party transactions are conducted on the basis of arm’s length transactions.

Fiscal year ended March 31, 2018Type
Other affiliate

Name
Honda Motor Co., Ltd.

Description of relationship with therelated party
Sale of the Company’s products

Note: Related party transactions are conducted on the basis of arm’s length transactions.

(2) Remuneration for key management personnel
Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018

Millions of yen

Remuneration and bonuses

Millions of yen

304

312

Note: For the basic policy, etc. for remuneration of key management personnel, refer to “A. Company information, IV.
Information about reporting company, 4. Status of corporate governance, etc., (1) Status of corporate governance, 5)
Remuneration, etc. for officers.”

29. Commitments
Breakdown of commitments related to expenditures at and after the end of the fiscal year
As of
March 31, 2017

As ofMarch 31, 2018

Millions of yen

Millions of yen

Property, plant and equipment and intangible
assets4,089

30. Subsequent events
Not applicable.

Opinion of independent auditors
Auditors: Yasumori Audit Corporation
Opinion: unqualified

85

2,469

2. Non-consolidated financial statements, etc.
(1) Non-consolidated financial statements
1) Non-consolidated balance sheet(Millions of yen)

AssetsCurrent assets
Cash and deposits
Notes receivable - trade
Electronically recorded monetary claims operating
Accounts receivable - trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Prepaid expenses
Short-term loans receivable from subsidiaries andassociates
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Structures
Machinery and equipment
VehiclesTools, furniture and fixtures
Land
Construction in progress
Total property, plant and equipment
Intangible assets
Software
Software in progress
Other
Total intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Bonds of subsidiaries and associates
Investments in capital
Investments in capital of subsidiaries andassociates
Long-term loans to employees
Long-term loans receivable from subsidiaries
and associates
Long-term prepaid expenses
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

86

As of March 31, 2017

As of March 31, 2018

938
3

1,267
0

154

186

7,694
835
839
2,119
62

7,956
1,026
802
2,283
60

19,17020,425

604
2,197
(4)
34,616

535
2,692
(4)
37,232

4,791
343
5,334
44
928
4,679
1,335
17,458

4,819
411
4,348
44
784
3,943
135
14,487

103
47
4
155

139
6
0
146

1,235
26,672
5,846
4

3,629
26,129
5,846
4

3,069

3,069

147

130

5,581

3,594

12
703
(46)
43,22860,842
95,4580688(31)43,062
57,697
94,930(Millions of yen)

Liabilities
Current liabilities
Notes payable - trade
Accounts payable - trade
Factoring liabilities
Short-term loans payable
Accounts payable - otherAccrued expenses
Income taxes payable
Advances received
Deposits received
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Total capital surpluses
Retained earnings
Legal retained earnings
Other retained earnings
Reserve for dividends
Reserve for advanced depreciation of noncurrent assets
General reserve
Retained earnings brought forward
Total retained earnings
Treasury shares
Total shareholders’ equity
Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

87

As of March 31, 2017

As of March 31, 2018

379
2,658
1,679
13,266
734
378
145
27
46
1,143
75
20,536

234
3,104
1,119
16,160
590
396
132
2
122
1,175
47
23,085

4,040
1,632
661
32
27
6,395
26,931

327
1,325
750
29
27
2,459
25,545

4,175

4,175

4,555
10
4,566

4,555
10
4,566

1,043

1,043

1,600

1,600

969

968

48,5007,527
59,640(3,409)64,97350,5005,748
59,861(3,409)65,193

3,553

4,191

3,553
68,52795,458

4,191
69,38594,930

2) Non-consolidated statements of income(Millions of yen)
Fiscal year ended
March 31, 2017
Net sales
Cost of sales
Beginning finished goods
Cost of products manufactured
Purchase of finished goods
Total
Ending finished goods
Cost of finished goods sold
Gross profit
Selling, general and administrative expenses
Packing and delivery expenses
Salaries and allowances
Provision for bonuses
Retirement benefit expenses
Depreciation
Research and development expenses
Other
Total selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Interest on capital receivable
Interest on securities
Dividend income
Rental income
Commissions on equipment sales
Technical advisory fee
Other
Total non-operating income
Non-operating expenses
Interest expenses
Rent expenses
Foreign exchange losses
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of non-current assets
Transfer pricing taxation adjustment
Total extraordinary income
Extraordinary losses
Loss on sales and retirement of non-current assets
Impairment loss
Loss on valuation of shares of subsidiaries andassociates
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit88

Fiscal year ended
March 31, 201836,756

39,663

777
27,393
1,112
29,282835
28,447
8,308

835
28,327890
30,052
1,026
29,026
10,636

779
1,542
213
160
49
3,713
1,717
8,176
131

808
1,568
257
179
70
4,052
1,722
8,659
1,977

408
60
522
3,275
49
111
95
74
4,597

521
41
555
3,136
35
371
133
79
4,874

159
29
267
13
469
4,259

173
28
739
13
954
5,897

48
–
48

2
255
257

108
650

13
1,454

–

2,031

758
3,549
805
(162)
643
2,905

3,499
2,655
890
(512)
377
2,278

3) Non-consolidated statements of changes in shareholders’ equity
Fiscal year ended March 31, 2017
(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Capitalstock

Balance at beginningof current period
Changes of items
during period
Reversal of reserve
for advanced
depreciation of
non-current assets
Provision ofgeneral reserve
Dividends ofsurplusLegalcapitalsurplus

4,175

Other
capitalsurplus

4,555

Total
capitalsurplus10

Legalretainedearnings

4,566

1,043

Reservefordividends

Reserve foradvanceddepreciationof noncurrent
assetsGeneralreserve

Retainedearnings
brought
forward

1,600

969

46,5008,628

58,7420–(2,000)–(2,007)(2,007)

2,905

2,905

(0)
2,000

ProfitPurchase oftreasury shares
Net changes of
items other thanshareholders’equityTotal changes of
items during period
Balance at end ofcurrent period

Total
retainedearnings

–

–

–

–

–

–

(0)

2,000

(1,100)

898

4,175

4,555

10

4,566

1,043

1,600

969

48,5007,527

59,64089

Valuation and translation
adjustments
Valuation
Total
difference
Totalvaluationonshareholders’andavailableequity
translation
for-saleadjustments
securities

Shareholders’ equity

TreasurysharesBalance at beginningof current period
Changes of items
during period
Reversal of reserve
for advanced
depreciation of
non-current assets
Provision ofgeneral reserve
Dividends ofsurplus(3,408)

ProfitPurchase oftreasury shares
Net changes of
items other thanshareholders’equityTotal changes of
items during period
Balance at end ofcurrent period(0)64,075

3,056

Total net
assets

3,056

67,131––––(2,007)(2,007)

2,905

2,905

(0)

(0)
497

497

497

(0)

898

497

497

1,395

(3,409)64,973

3,553

3,553

68,52790

Fiscal year ended March 31, 2018
(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Capitalstock

Balance at beginningof current period
Changes of items
during period
Reversal of reserve
for advanced
depreciation of
non-current assets
Provision ofgeneral reserve
Dividends ofsurplus

OthercapitalsurplusLegalcapitalsurplus

4,175

4,555

Total
capitalsurplus10

Legalretainedearnings

4,566

1,043

Reservefordividends

Reserve foradvanceddepreciationof noncurrent
assetsGeneralreserve

Retainedearnings
brought
forward

1,600

969

48,5007,527

59,6400–(2,000)–(2,057)(2,057)

2,278

2,278

(0)
2,000

ProfitPurchase oftreasury shares
Net changes of
items other thanshareholders’equityTotal changes of
items during period
Balance at end ofcurrent period

Total
retainedearnings

–

–

–

–

–

–

(0)

2,000

(1,778)

220

4,175

4,555

10

4,566

1,043

1,600

968

50,5005,748

59,86191

Valuation and translation
adjustments
Valuation
Total
difference
Totalvaluationonshareholders’andavailableequity
translation
for-saleadjustments
securities

Shareholders’ equity

TreasurysharesBalance at beginningof current period
Changes of items
during period
Reversal of reserve
for advanced
depreciation of
non-current assets
Provision ofgeneral reserve
Dividends ofsurplus(3,409)ProfitPurchase oftreasury shares
Net changes of
items other thanshareholders’equityTotal changes of
items during period
Balance at end ofcurrent period(0)64,973

3,553

Total net
assets

3,553

68,527––––(2,057)(2,057)

2,278

2,278

(0)

(0)
637

637

637

(0)

220

637

637

858

(3,409)65,193

4,191

4,191

69,38592

[Notes to non-consolidated financial statements]
Significant accounting policies
1. Valuation basis and methods for assets(1) Valuation basis and methods for securities
Shares of subsidiaries and associates
Stated at cost determined by the weighted-average method
Available-for-sale securities (securities classified as other securities under Japanese GAAP)
Securities with readily determinable fair value
Stated at fair value based on market price and others as of the fiscal year-end date (unrealized
gains and losses, net of applicable taxes, are recognized in a separate component of net assets,
and costs of securities sold are determined by the weighted-average method).
Securities without readily determinable fair value
Stated at cost determined by the weighted-average method.
(2) Valuation basis and methods for inventories
Finished goods and work in process
Stated at cost determined by the weighted-average method (the carrying amounts in the nonconsolidated balance sheet are calculated by the method in which carrying amounts are written
down due to a decline in profitability of assets)
Raw materials and supplies
Stated at cost determined by the first-in, first-out method (the carrying amounts in the nonconsolidated balance sheet are calculated by the method in which carrying amounts are written
down due to a decline in profitability of assets)
2. Depreciation methods for non-current assets(1) Property, plant and equipment
The straight-line method is applied.
Major useful lives are as follows:
Buildings

10 to 38 years

Machinery and equipment

9 years(2) Intangible assets
The straight-line method is applied.
For software for internal use, the straight-line method based on the estimated usable period (fiveyears) in the Company is applied.
3. Recognition of reserves(1) Allowance for doubtful accounts
To cover losses from bad debts for trade receivables, loans, etc., allowance for doubtful accounts isprovided in the amount expected to be uncollectible based on historical experience of bad debts forgeneral receivables and individual collectability for specific receivables such as doubtful receivables.
(2) Provision for bonuses
To prepare for bonus payments to employees, provision for bonuses is provided based on theestimated amount of payments.
93

(3) Provision for retirement benefits
To prepare for payment of retirement benefits to employees, provision for retirement benefits isprovided based on the estimated amounts of retirement benefit obligations and plan assets at the endof the fiscal year under review.
1) Method of attributing expected retirement benefits to periods
In calculation of retirement benefit obligations, the benefit formula basis is applied to attributeexpected retirement benefits to periods up to the end of the fiscal year under review.
2) Amortization of actuarial gains or losses and past service cost
Past service cost is amortized on a straight-line basis from the fiscal year in which the cost
occurred over a period equal to or less than the average remaining service period of eligible
employees (five years) at the time of occurrence.
Actuarial gains or losses are amortized by the declining-balance method from the fiscal year inwhich the gains or losses occurred over a period equal to or less than the average remaining
service period of eligible employees (mainly 16 years) at the time of occurrence in each fiscal
year.
4. Other significant matters for preparing financial statements(1) Accounting for retirement benefits
Accounting treatment for unrecognized actuarial gains or losses and unrecognized past service costfor retirement benefits are different from accounting treatment for them in the consolidated financial
statements.
(2) Application of consolidated taxation system
From the fiscal year under review, the Company has applied the consolidated taxation system inJapan with the Company as the consolidated taxpayer parent company.

944) Supplementary statements[Detailed schedule of property, plant and equipment and others](Millions of yen)
Category

Intangible
assetsInvestments
and otherassets(Note 2)

Increase in
the period

Decrease in
the period

Depreciation
during theperiodBuildings

4,791

1,231

895
[683]

308

4,819

7,249

Structures

343

114

7

39

411

1,174

Machineryandequipment

5,334

874

816
[629]

1,043

4,348

18,636

Vehicles

44

15

1

13

44

127

Tools,
furniture andfixtures

928

287

15

416

784

5,374

Land

4,679

–

736
[141]

–

3,943

–

Constructionin progress

1,335

754

1,954

–

135

–

Total

17,458

3,278

4,426
[1,454]

1,822

14,48732,562

Telephonesubscription
right

3

–

3

–

–

–

Right ofusing water
facilities

0

–

–

0

0

3

Software

103

87

–

50

139

344

Software in
progress

47

7

48

–

6

–

Total

155

94

51

51

146

348

Long-term
prepaid
expenses

12

–

11

–

0

–

Type of assets

Property,plant andequipment(Note 1)

Balance at
beginning of
periodBalance at
Accumulatedend of period depreciation

The figure in brackets in the “Decrease in the period” column, which shows the number included in the figure
outside the brackets, represents the amount of impairment loss recorded in the fiscal period.
Principal increases and decreases in the period are as follows:

Property, plant and equipment[Increase]
Buildings

Watagashima Factory

New establishment andrefurbishment of Watagashima
Factory¥1,212 million

Machinery and equipment

R&D Division

Testing apparatus and measuring
instruments¥394 million

Suzuka Factory

Manufacturing facilities forclutches¥194 million95

[Decrease]
Buildings

Machinery and equipment

Hamakita Factory

Impairment loss in accordance withthe accounting standard for
impairment loss of non-current
assets¥421 million

Watagashima Factory

Impairment loss in accordance withthe accounting standard for
impairment loss of non-current
assets¥262 million

Hamakita Factory

Impairment loss in accordance withthe accounting standard for
impairment loss of non-current
assets¥372 million[Detailed schedule of allowances]
Category
Allowance for
doubtful accounts
Provision for bonuses(Millions of yen)
Balance at end of
periodBalance at beginning of
periodIncrease in the period

Decrease in the period

51

0

14

36

1,143

1,175

1,143

1,175

Opinion of independent auditors
Auditors: Yasumori Audit Corporation
Opinion: unqualified
96

VI. Overview of operational procedures for shares of the reporting company
Fiscal year

From April 1 to March 31

Ordinary General Meeting of
Shareholders

June

Record date

March 31

Record dates for dividends ofsurplus

September 30
March 31

Number of shares per share unit

100 shares

Purchase of shares less than one
unit
Office for handlingbusiness
Shareholder register
administrator
Forwarding officeHandling charge for purchase(Special account)
1-2-1 Yaesu, Chuo-ku, Tokyo
Securities Agent Department, Head Office, Mizuho Trust & Banking Co., Ltd.
(Special account)
1-2-1 Yaesu, Chuo-ku, Tokyo
Mizuho Trust & Banking Co., Ltd.
—The amount separately stipulated as the amount equivalent to share brokerage fees

Method of public noticeElectronic public notice will be made. However, if it is impossible to publish public
notices electronically because of an accident or other unavoidable circumstances, thepublic notices shall be made by publication in the Nihon Keizai Shimbun.
The Company’s URL for public notice: http://www.fcc-net.co.jp/

Special benefits for shareholders• Content of the shareholder special benefit plan
Regional goodies worth ¥2,500 are offered to each shareholder holding 200 shares ormore who is on the list of shareholders as of March 31 and September 30 every year.

Note: Pursuant to the provision of the Company’s Articles of Incorporation, the Company’s shareholders may not exercise
any right, in relation to their holding shares less than one unit, other than rights set forth in each item of Article 189,
paragraph 2 of the Companies Act.

97