Summary Report on Financial Results for Fiscal Year Ended March 2013
(Japan GAAP)May 15th, 2013
Listing: OSE-JASDAQ
Company name: Fukuda Denshi Co., Ltd.
Code No.:

6960 (http://www.fukuda.co.jp)

Representative:

Daijiro Shirai, President & COO

Inquiries:

Shuichi Fukuda, Executive Director / Senior Manager of Accounting & Finance Department– Senior Manager of Information Technology DepartmentTel:+81-3-3815-2121 (main)

Scheduled date for the ordinary general meeting of shareholders:
Scheduled date for commencement of dividend payment:
Scheduled date for filing the securities report:
Supplementary material development:
Financial results meeting:June 27th, 2013
June 28th, 2013
June 27th, 2013
Yes (for analysts)
Yes(Amounts less than one million yen are rounded down)(The number with parenthesis shows negative figure)1. Consolidated financial results for fiscal year ended March 2013 (April 1st, 2012 through March 31st, 2013)(1) Consolidated operating results
Net sales
million%yen
Year ended
96,2394.0
March 2013
Year ended
92,524
2.6
March 2012
(Note)Comprehensive income(% represent increases or decreases from the previous year)
Operating income
Ordinary income
Net income
million%million%million
%
yen
yen
yen
10,24011.4

10,435

10.7

6,462

22.7

9,192

14.6

9,423

17.2

5,266

28.1

Fiscal year ended March 2013: 6,982 million yen / 14.6%

Year ended
March 2013
Year ended
March 2012

Net income per
share

Fully diluted net
income per
share

yen

yen

Fiscal year ended March 2012: 6,091 million yen / 69.1 %Ratio of net
income toshareholders’equity%415.47

-

8.1

9.4

10.6

311.84

-

6.9

9.0

9.9

(Reference) Profit or loss on equity method investments:
Fiscal year ended March 2013: (321) million yen
Fiscal year ended March 2012:(2) Consolidated financial situation
Total assets
Year ended
March 2013
Year ended
March 2012%

Ratio ofoperatingincome to net
sales%

Ratio ofordinary income
to total assets

Shareholders’equity ratio

Net assets(16) million yen

Net assets
per share

million yen

million yen%

yen

114,646

82,082

71.6

5,306.30

107,025

77,84672.7

4,866.46(Reference) Shareholders’ equity:
Fiscal year ended March 2013: 82,082 million yen

Fiscal year ended March 2012: 77,846 million yen-1-(3) Consolidated cash flows statement
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

million yen

million yen

million yen

Cash and cash
equivalents at theend of the year
million yen

12,199(10,929)(2,396)

21,461

8,513(8,706)(3,512)

22,635

Year ended
March 2013
Year ended
March 2012
2. Dividends
End ofthefirstquarteryenYear ended
March 2012
Year ended
March 2013
Year ending
March 2014
(Forecast)

Annual Dividend
End of End of End of
the
the
the
secondthird
term
quarter quarteryen

Ratio of
Total
Payout ratio dividends todividends (for (consolidated)
net assets
Annualthe year)(consolidated)yenmillion yen

%

%

-

40.00

-

55.00

95.00

1,567

30.5

2.1

-

40.00

-

85.00

125.00

1,930

30.1

2.5

-

40.00

-

85.00

125.0031.2(Note)The detail of year-end dividend of Year ended March 2012; ordinary dividend 40.00 yen, extra dividend 15.00 yen
The detail of year-end dividend of Year ended March 2013; ordinary dividend 40.00 yen, extra dividend 45.00 yen
The detail of year-end dividend of Year ending March 2014 (Forecast); ordinary dividend 40.00 yen, extra dividend 45.00
yen

3. Forecast of consolidated financial results for fiscal year ending March 2014 (April 1st, 2013 through March
31st, 2014)(% represent increases or decreases from the previous year)

millionyen%

millionyen%

millionyen%

millionyen%Netincomeper shareyen

98,5002.3

10,3000.6

10,300

(1.3)

6,200

(4.1)

400.80Net sales

Full-year

Operating income

Ordinary income

Net income(Note)
Since the Group's operating results tend to take a peak at the fourth quarter and it is difficult to give a forecast
every six months based on rational calculation, the consolidated forecast at the second quarter is not disclosed.

-2-

4. Others(1) Changes in significant subsidiaries during the current fiscal year: None
(2) Changes in accounting policies and procedures(i) Changes in accounting policies associated with revision of accounting standards: Yes(ii) Changes other than (i) above: None(iii) Changes in accounting projections: Yes(iv) Restatement: None
(Note)
The case above falls under Article 14-7 of the “Ordinance on Terminology, Forms, and Preparation Methodsof Consolidated Financial Statements” (when it is difficult to distinguish changes in accounting policies
from changes in accounting projections). For details, please refer to “(5) Notes to consolidated financial
statements (Changes in accounting policies) under the section “4. Consolidated financial statements” onpage 29.
(3) Number of outstanding shares (common stock)(i) Number of outstanding shares at the year-end (including “Treasury stock”)
Fiscal year ended March 2013: 19,588,000 sharesFiscal year ended March 2012: 19,588,000 shares(ii) Number of shares of treasury stock at the year-end:
Fiscal year ended March 2013: 4,119,095 sharesFiscal year ended March 2012: 3,591,515 shares(ⅲ) Average number of shares during the period
Fiscal year ended March 2013: 15,553,736 sharesFiscal year ended March 2012: 16,888,899 shares(Reference) Summary of non-consolidated financial results
Non-consolidated financial results for fiscal year ended March 2013 (April 1st, 2012 through March 31st,
2013)(1) Non-consolidated operating results(% represent increases or decreases from the previous year)
Net sales
Operating income
Ordinary income
Net income
million%million%million%million
%
yen
yen
yen
yen
Year ended
59,638
6.3
5,031
46.0
6,893
38.2
4,805
41.3
March 2013
Year ended
56,111
0.5
3,445
8.3
4,988
11.0
3,401
11.0
March 2012

yen

Fully diluted net
income per shareyen

308.99-201.41-

Net income per share
Year ended
March 2013
Year ended
March 2012

-3-

(2)

Non-consolidated financial position
Total assets

Net assets

Shareholders’ equity
ratio%

Net assets per share

million yen
million yen
yenYear ended
95,34960,45063.4
3,907.89
March 2013
Year ended
88,27957,881
65.6
3,618.41
March 2012
(Reference) Shareholders’ equity:
Fiscal year ended March 2013: 60,450 million yen
Fiscal year ended March 2012: 57,881 million yen* Status of Auditing Processes
At the time of disclosure of this report, review procedures for the consolidated financial statements pursuant
to the Financial Instruments and Exchange Law had not been completed.
* Explanation about the appropriate use of the forecasts of financial results, and other noteworthy matters
1. The forecasted financial results described above are based on information available at the time ofannouncement. Actual results may differ from the results projected and presented hereby for a variety ofreasons.
2. With respect to the preconditions for the forecast of financial results, please refer to “(1) Analysis ofoperation results” under the “1. Operating results & financial situation" section on page 7.

-4-

Contents of the Attached Materials
1. Operating results & financial situation------------------------------------------------------------------

7(1) Analysis of operation results--------------------------------------------------------------------------

7(2) Analysis of financial situation------------------------------------------------------------------------

9(3) Basic policies for profit distribution, and dividends for fiscal year ended March 2013 andfiscal year ending 2014--------------------------------------------------------------------------------

10(4) Business risks10------------------------------------------------------------------------------------------

2. The Fukuda Denshi Group3. Management policy-------------------------------------------------------------------------------

12---------------------------------------------------------------------------------------

14(1) Basic policies for corporate management(2) Targeted management indices-----------------------------------------------------------

14-------------------------------------------------------------------------

14(3) Medium- to long-term management strategies(4) Issues to be addressed-----------------------------------------------------

14----------------------------------------------------------------------------------

15(5) Other important managerial matters of the Company-----------------------------------------------

15

4. Consolidated financial statements------------------------------------------------------------------------

16(1) Consolidated balance sheets-----------------------------------------------------------------------

16(2) Consolidated income statements (comprehensive) and consolidated statements ofcomprehensive income ------------------------------------------------------------------------------------

19(3) Consolidated statements of changes in net assets----------------------------------------------------

22----------------------------------------------------------------

25(4) Consolidated statements of cash flows(5) Notes to Consolidated Financial Statement-----------------------------------------------------------(Notes regarding the assumption for going concern)---------------------------------------------------(Basic significant matters regarding the preparation of consolidated financial statements)

27------

27-------------------------------------------------------------------------

29-----------------------------------------------------------------------------

29(Changes in accounting policies)(Consolidated balance sheets)

27(Consolidated statements of income)---------------------------------------------------------------------

30(Consolidated statements of comprehensive income)--------------------------------------------------

32(Consolidated statements of changes in net assets)-----------------------------------------------------

32-----------------------------------------------------------------

34(Lease transactions)-----------------------------------------------------------------------------------------

35(Financial Products)----------------------------------------------------------------------------------------

35------------------------------------------------------------------------------------ ---------------

35(Consolidated statements of cash flows)(Securities)(Derivative transactions)(Retirement benefits)-----------------------------------------------------------------------------------

35---------------------------------------------------------------------------------------

35

-5-

(Stock options, etc.)-----------------------------------------------------------------------------------------(Tax effect accounting)----------------------------------------------------------------------------------

35
35(Real estates including rentals)-------------------------------------------------------------------------

35(Segment information, etc.)-----------------------------------------------------------------------------

35(Transactions with related parties)---------------------------------------------------------------------

39---------------------------------------------------------------------------

39----------------------------------------------------------------------------------

39(Business combinations, etc.)(Per share information)(Significant subsequent events)------------------------------------------------------------------------

5. Non-consolidated financial statements(1) Balance sheets

39--------------------------------------------------------------

40-----------------------------------------------------------------------------------------

40(2) Statements of income---------------------------------------------------------------------------------

44(3) Statements of changes in net assets ----------------------------------------------------------------------

48(4) Notes to Non-consolidated Financial Statement-----------------------------------------------------

52(Notes regarding the assumption for going concern)---------------------------------------------------

52(Significant accounting policies)---------------------------------------------------------------------

52(Changes in accounting policies)-------------------------------------------------------------------------

54----------------------------------------------------------------------------------------------------

54

6. Others(1) Changes of directors---------------------------------------------------------------------------------

-6-

54

1. Operating results & financial situation(1) Analysis of operation results(i) Overview of the business for the current consolidated fiscal year
Year ended
Year ended
Comparison with the previous year
March 2012
March 2013
Rate of change
AmountAmountChange(%)
Net sales
92,52496,2393,714
4.0(million yen)
Operating income
9,192
10,240
1,048
11.4(million yen)
Ordinary income
9,423
10,435
1,011
10.7(million yen)
Net income
5,266
6,462
1,195
22.7
(million yen)
Net income per share
311.84415.47103.6333.2(yen)During the fiscal year ended March, 2013, an increase in stock prices and weakening of the yen wereobserved in the Japanese economy due to high expectations for the economic and financial policy implemented
by the new administration that took office at the end of 2012. Expectations for economic recovery have beenbuilding up since positive signs were observed in companies’ earnings and consumer spending.
However, overseas, the future of the economy remains uncertain due to the financial problems in Europe andconcern about an economic slowdown in emerging economies.
In the medical environment industry, the remuneration for medical treatments has increased slightly, but aneffective and efficient reformed management is still required to go forward.
As a result, the Group posted consolidated “Net sales” of 96,239 million yen (up 4.0% year-on-year basis)for this consolidated fiscal year. With regard to incomes, consolidated “Operating income” totaled 10,240
million yen (up 11.4% year-on-year basis) and consolidated “Ordinary income” totaled 10,435 million yen (up10.7% year-on-year basis) and the “Net income” totaled 6,462 million yen (up 22.7% on a year-on-year basis).
Consolidated “Net sales”, consolidated “Operating income”, consolidated “Ordinary income” and “Net
income” all marked a record high.

(ii) Overview of each segment for the current consolidated fiscal year
Business segment

Physiologicaldiagnostic equipment
Patient monitoring
equipment
Medical treatment
equipment
Consumables and otherproducts
Total

Comparison with theprevious year
ChangeRate of(millionchangeyen)(%)

Year ended March 2012

Year ended March 2013

Amount(millionyen)

Ratio (%)

Amount(millionyen)

Ratio (%)

26,83729.0

27,602

28.7

765

2.9

8,741

9.5

9,264

9.6

523

6.0

37,30440.3

38,519

40.0

1,215

3.3

19,641

21.2

20,851

21.7

1,210

6.2

92,524100.0

96,239

100.0

3,714

4.0

-7-

A. Physiological diagnostic equipment segment
Sales of electrocardiographs and vascular screening systems continued to increase, sales of blood-cellcounters recovered.
As a result, consolidated “Net sales” were 27,602 million yen (up 2.9% year-on-year basis).
B. Patient monitoring equipment segment
Sales of patient monitoring equipment increased.
As a result, consolidated “Net sales” were 9,264 million yen (up 6.0% year-on-year basis).
C. Medical treatment equipment segment
The business of renting medical equipment for home treatment continued to increase. Sales ofventilators recovered in the fourth quarter to a level that made up for the decrease seen until thethird quarter. But the sales of Automated External Defibrillators (AEDs) and pacemakers decreased.
As a result, consolidated “Net sales” were 38,519 million yen (up 3.3% year-on-year basis).
D. Consumables and other products segment
In this segment, we mainly handle recording paper, disposable electrodes, and consumables used for
devices handled in the above segments, as well as maintenance and repair services.
Consolidated “Net sales” for this segment were 20,851 million yen (up 6.2% year-on-year basis).
(iii) Outlook for fiscal year ending March 2014
Year ended
Year ending
March 2013
March 2014
AmountNet sales(million yen)
Operating income(million yen)
Ordinary income(million yen)AmountComparison with the previous year
Rate of change(%)

Change96,23998,5002,260

2.3

10,24010,30059

0.6

10,435

10,300

(135)

(1.3)

Net income
6,462
6,200
(262)
(4.1)
(million yen)
Net income per share
415.47400.80(14.67)(3.5)(yen)
While the Japanese economy is expected to recover thanks to the effects of the government’s economic andfinancial policy, there is concern about the stagnation of the European economy and an economic slowdown inemerging economies, in addition to fears of a consumption tax hike and the risk of higher prices of importproducts as well as resources.
In the medical environment, difficult situations are expected to continue due to the shortage of doctors andnurses and also the change in patients’ needs.
Considering such circumstances, the Group will enhance cooperation among its affiliate companies more thanever and work on further improving the corporate value by maximizing the profit synergy.
The Group expects consolidated “Net sales” of 98,500 million yen, consolidated “Operating income” of
10,300 million yen, consolidated “Ordinary income” of 10,300 million yen, and consolidated “Net income” of
6,200 million yen for the fiscal year ending March 2014.
Forecast shown in this material are just an outlook judged or assumed based on the information available atthe moment, changes will be promptly disclosed when necessary.

-8-(2) Analysis of financial situation(i) Assets, liabilities and net assets“Total assets” increased 7,621 million yen from the end of the previous fiscal year to reach 114,646 million
yen. The main factors are the increase of 3,516 million yen in “Investment securities”, 1,947 million yen in“Buildings and structures, net” and 1,029 million yen in “Intangible assets”, despite a decrease of 1,482
million yen in “Securities”.
“Total liabilities” increased 3,384 million yen from the end of the previous fiscal year to reach 32,564
million yen. The main factors are the increase of 1,273 million yen in “Notes and accounts payable-trade”
and 1,247 million yen in “Income taxes payable”, despite a decrease of 72 million yen in “Provision for
product warranties”.
“Net assets” increased 4,236 million yen from the end of the previous fiscal year to reach 82,082 million
yen. The main factors are the increase of 4,962 million yen in “Retained earnings” and 504 million yen in“Valuation difference on available-for-sale securities” at the end of current period, despite the increase of
1,266 million yen in “Treasury stock”.
(ii) Consolidated cash flows
Year ended March
2012
Cash flows from operating
activities (million yen)
Cash flows from investing
activities (million yen)
Cash flows from financing
activities (million yen)
Effect of exchange rate changes(million yen)
Increase (decrease) in cash andcash equivalents (million yen)
Cash and cash equivalents at theend of the fiscal year (million
yen)Year ended March2013

Change8,513

12,1993,686(8,706)(10,929)(2,222)(3,512)(2,396)

1,115

(8)

(48)

(40)

(3,713)(1,174)

2,539

22,635

21,461(1,174)(Cash flows from operating activities)
In the consolidated fiscal year, the “Cash flows from operating activities” were 12,199 million yen, up
3,686 million yen from the previous year. Including “Income before income taxes” of 11,021 million yen and“Depreciation” of 5,539 million yen.
(Cash flows from investing activities)“The cash flows from investing activities” were minus 10,929 million yen, down 2,222 million yen fromthe previous year. Including purchase of “Property, plant and equipment” amounted to 7,108 million yen,purchase of “Securities” and “Investment securities” amount of 4,124 million yen.
(Cash flows from financing activities)“The cash flows from financing activities” were minus 2,396 million yen, up 1,115 million yen from theprevious year, mainly because of the payment of “Purchase of treasury stock” of 1,438 million yen and the“Cash dividends paid” of 1,498 million yen.
As a result, “Cash and cash equivalents at the end of the fiscal year” was 21,461 million yen, down 1,174
million yen compared to the end of the previous fiscal year.

-9-(Reference) Trends in cash flow indicators
Year ended
Year ended
March 2009
March 2010
Shareholders’ equity
73.9
73.9
ratio (%)
Market value-based
36.4
38.8
shareholders’ equity
ratio (%)
Years needed to repay
0.2
0.2
debts
Interest coverage ratio

275.5

419.6

Year ended
March 2011

Year ended
March 2012

Year ended
March 2013

73.4

72.7

71.6

42.8

37.1

45.9

0.1

0.3

0.2

589.6

389.3

450.8

Note: Shareholders’ equity ratio = Shareholders’ equity ÷ Total assets
Market value-based shareholders’ equity ratio = Market capitalization ÷ Total assets
Years needed to repay debts = Interest-bearing debts ÷ Operating cash flows
Interest coverage ratio = Operating cash flows ÷ Interest payments*Each indicator is calculated using consolidated financial data.
*Market capitalization is calculated by multiplying stock closing prices at the end of the fiscal year by the
number of outstanding shares (excluding treasury stock) at the end of the fiscal year.
*Interest-bearing debts represent total debts recorded in the consolidated balance sheets on which interest is
paid.
*For interest payments, data on interest expenses in the consolidated cash flow statement are used.
(3) Basic policies for profit distribution, and dividend for fiscal year ended March 2013 and fiscal year ending
2014
The Company regards the returning of profits to shareholders as one of its key managerial measures, andmakes it a basic policy to continuously provide shareholders with stable returns with 30% consolidated payout
ratio, by improving and reinforcing its corporate structure and expanding competitive businesses while
securing the necessary internal reserves.
Year-end dividend of 85 yen per share (ordinary dividend 55 yen, extra dividend 30 yen) will be paid for the
fiscal year ended March 2013. For the fiscal year ending March 2014, annual dividend per share is expected tobe 125 yen per share, including interim.
(4) Business risks(i) Effect of medical administration
The Japanese Government has been pushing forward with its policies of improving the quality of
medical care and curtailing the medical costs, and the remuneration for medical services, and the official
reimbursement prices for drugs and specific insurance medical materials are revised every two years.
Changes in the governmental health care policies may lead to intensified competition within the market
and lowered sales prices, thus adversely affecting the operating results and financial standing of the Group.
(ii) Legal regulations
The manufacture and sales of medical equipment are subject to regulations prescribed in the
Pharmaceutical Affairs Law, and it may take a certain period of time for a new medical equipment to beinvestigated and finally approved for sale. In addition, some medical equipment requires clinical trials,
thus taking a long period of time before it is launched in the market.
If the current regulations are revised, new ones are introduced, or any other unpredictable regulatorychange is made in the future, it is likely that this will adversely affect the operating results and financial
standing of the Group.
(iii) High dependence on certain business partners with which continuation of transactions is unsure
The Company imports and sells ventilators, pacemakers, defibrillators, heart catheters and other devices
and equipment. We strive to ensure that we can continue making transactions. If any problem arises thatwill make it impossible to continue stable transactions with the exporters, the operating results and- 10 -

financial standing of the Group will be adversely affected. To prevent this, sufficient care has been taken
not to depend too heavily on a few specific companies for the supply of those equipments.
(iv) Product quality
The Group manufactures the products under a rigorous quality control system that is strictly in
conformance with the international standards including ISO. If any quality problem arises due tounforeseen failure or defect of a product, suspension of sale and recall of such product may be ordered by
the authorities concerned, adversely affecting the operating results and financial standing of the Group.
(v) Risks accompanying overseas businesses
The Group not only supplies products to distributors overseas, but also has its own overseas sales,development and production bases. Hence, it is possible that unforeseen changes to laws and regulations inforeign countries, as well as terrorist acts, natural disasters, or other incidents could adversely affect theCompany’s business performance and financial position.
(vi) Effects to the group from the tremendous disaster
The Group has domestic and oversea bases; the impact to the business activities from the effect of theearthquake and electric-power shortages raised concerns. These may affect the Group's operating results
and financial condition.
(vii) Important business relationships between the Company and its executives or shareholders withvoting rights
Basic policy on relations with related parties
Relationship with Atomic Sangyo Co., Ltd.
Fukuda Denshi’s shareholder Atomic Sangyo Co., Ltd. holds 14.47% of the Company’s voting rights (asof March 31st, 2013). Kotaro Fukuda, director of the Company, and his close relatives own 100% of theshares in Atomic Sangyo.
Atomic Sangyo produces and sells electrocardiogram recording paper, and also engages in the businessof renting real estate. The Company purchases recording paper and accounting slips and rents offices from
Atomic Sangyo.
Decisions on the prices of recording paper and accounting slips are based on negotiations andconsideration of market prices, and payment terms are the same as those generally adopted in themarketplace.
Office rental contracts are based on actual transactions in nearby locations.

- 11 -

2. The Fukuda Denshi GroupThe Group consists of the company, 55 subsidiaries and 2 affiliates; the Fukuda Denshi Group is engaged
mainly in manufacturing, purchasing and sales of medical electronic equipment, and conducts related logistics
and services operations.
The relationship between Group companies and business segments are as follows:- Physiological diagnostic equipment segment
Production, purchase and sales of electrocardiographs; phonocardiographs; polygraphs; ultrasounddiagnostic imaging systems; and other items which convert physical phenomena generated by physiological
functions, such as electric potentials caused by heart action, cardiac sound, pulse waves, blood pressure,respiration, and organic movement, into electric signals which are then measured and recorded.
<Major companies involved>
Production: Fukuda Denshi Co., Ltd.; Fukuda Denshi Fine Tech Sendai Co., Ltd. and Beijing Fukuda
Denshi Medical Instruments Co., Ltd.
Purchase:

Fukuda Denshi Co., Ltd.

Sales:

Fukuda Denshi Co., Ltd.; Fukuda Life Tech Co., Ltd.; Fukuda Denshi Hokkaido and other sales
subsidiaries; Fukuda Denshi USA, Inc.; Beijing Fukuda Denshi Medical Instruments Co., Ltd.
and Fukuda Denshi Switzerland AG- Patient monitoring equipment segment
Production, purchase, and sales of patient monitors that monitor various physiological parameters over along period of time. They are used for serious cases after patients’ have undergone operations and forpatients with acute cardiac disease.
<Major companies involved>
Production: Fukuda Denshi Co., Ltd.; Fukuda Denshi Fine Tech Sendai Co., Ltd.; Beijing Fukuda Denshi
Medical Instruments Co., Ltd.
Purchase:

Fukuda Denshi Co., Ltd.

Sales:

Fukuda Denshi Co., Ltd.; Fukuda Denshi Hokkaido and other sales subsidiaries; Fukuda
Denshi USA, Inc.; Beijing Fukuda Denshi Medical Instruments Co., Ltd.

- Medical treatment equipment segment
Production, purchase and sales of defibrillators, which are used to resuscitate patients with cardiac arrest
and which treat abnormal heart rhythm by delivering electric impulses to the heart; pacemakers; ventilators,
which help patients with respiratory insufficiency breathe easier; and other equipment.
<Major companies involved>
Production: Fukuda Denshi Co., Ltd.; Fukuda Denshi Fine Tech Sendai Co., Ltd.
Purchase:

Fukuda Denshi Co., Ltd.

Sales:

Fukuda Denshi Co., Ltd.; Fukuda Life Tech Co., Ltd.; Fukuda Denshi Hokkaido and other sales
subsidiaries- Consumables and other products segment
Production, purchase and sales of recording paper, accessories and parts for medical electronic equipment<Major companies involved>
Production: Fukuda Denshi Co., Ltd.; Fukuda Denshi Fine Tech Sendai Co., Ltd.
Purchase:

Fukuda Denshi Co., Ltd.

Sales:

Fukuda Denshi Co., Ltd.; Fukuda Life Tech Co., Ltd.; Fukuda Denshi Hokkaido and other sales
subsidiaries- 12 -

Diagram of the Group’s business structure

Major customers
Japan

Overseas
Products andmerchandise

Products andmerchandise

Consolidated subsidiary
Fukuda Denshi USA,Inc.

RentalDomestic warehousemanagement andpacking/shipping

Consolidated subsidiary
Fukuda Denshi
Technology Service

Consolidated subsidiaries
Fukuda Logistics
CenterProducts andmerchandise

Entrustment of
warehousemanagement andpacking/shipping

Parts

Supply of materials

Repairs in Japan

Products and merchandise

Consolidated
subsidiary
Fukuda Life
Tech Co.,
Ltd.

Consolidated subsidiaryBeijing Fukuda
Denshi Medical
Instruments Co., Ltd.

Repairs

Products andmerchandise

Products and merchandise

RentalConsolidated
subsidiary
Fukuda Denshi
Switzerland AG

Entrustment ofresearch anddevelopment

Fukuda Denshi
Medical treatment
equipment segment

Outsourcing of processing

Patient monitoring
equipment segment
Supply of materials

Outsourcing of processing

Physiological diagnostic
equipment segment
Supply of materials

Products and merchandise

Consolidated subsidiaries
Fukuda Denshi Hokkaido and other sales subsidiaries

Products

Consumables and otherproducts segment

Supply ofmaterials

Unconsolidated subsidiaries
ME Times
Miyagi Prefecture Medical Information ResearchCenterNiigata Medical Information Development Center
IVAC
Okusonic
Breath Technology Co., Ltd.
Affiliated company not accounted of equity method
Fukuda Pulmo

Products*
Related party
Atomic Sangyo
Co., Ltd.

Consolidated subsidiary
Fukuda Denshi Fine Tech Sendai
Co., Ltd.
Publication, sales, and other processing of medical books

Products

Non-life insurance agency operations
Unconsolidated
subsidiaries
FukushinResearch and Development
Affiliated company accounted of equity method
Japan Stent Technology Co., Ltd.

* Related party Atomic Sangyo Co., Ltd. manufactures recording paper for medical electronic equipment and supplies
it to Fukuda Denshi’s other products and accessories segment.

- 13 -

3. Management policy(1) Basic policies for corporate management
Since established in 1939, the Company has contributed significantly to the advancement of people’s healththrough the production and sale of a wide range of medical equipment, centering on respiratory and circulatory
systems such as electrocardiographs, under our corporate philosophy to “Contribute to medical advances byfulfilling our social mission and developing medical equipment.”
Responding to significant changes in the social environment, medical equipment has increasingly been
expected to play roles not only in the conventional diagnostics and treatment of diseases but also in themaintenance and improvement of health and the enhancement of quality of life (QOL).
Against this backdrop, under the slogan of “safety, reliability and comfort,” the Company will make every
effort to raise the quality of products to offer to customers, develop products that provide differentiation fromour competitors, and carry out product strategies that meet varying medical needs, aiming to become acompany that is trusted by customers.
(2) Targeted management indices
The Company targets consolidated “Net sales” of 100,000 million yen or more and consolidated “Ratio of
ordinary income to net sales” of 8% or more by the fiscal year ending March 2015. The Company selects theconsolidated “Ratio of ordinary income to net sales” as its major management index in order to become ahigh-profit-earner. The Company plans to work on increasing the capital efficiency by continuously using
created cash flow for growth investment with the aim of improving the corporate value, and continue toprovide shareholders with stable returns.
(3) Medium to long-term management strategies
As its medium-term goal, the Group aims to contribute to the progress of an aging society by establishingbusiness strategy based on the customer-first principle and building a strong management structure with anefficient organizational operation management.
By continuously working on the Group’s issue and promoting innovation strategy based on the needs of themarket, we aim to support the community healthcare and improve the quality and efficiency of medical
services, leading us to further development.
The basic management strategies for the new three-year medium term business plan starting from the fiscal
year ending March 2014 are as follows:(i) Business strategies
Strategic investment to the field with high growth potential
Efficient and effective research and development by strengthening the cooperation between sales
department and development department
Promoting the expansion of businesses by domain; andImproving productivity with company-wide approach aiming for total optimization(ii) Sales strategies
Strengthening comprehensive support to acute care market and clinics; andStrengthening community-based support for homecare market;(iii) Improvement of the management system
To strengthen the corporate governance and compliance structure;
To revitalize the overall organization through personnel training and education for employees; andTo enhance the group management system.

- 14 -

(iv) Increase of the corporate value
To establish a stable earnings structure and return profits to shareholders;
Actively address environmental issues; andContribute for the society through the development of electronic medical equipment, and environmental
issues.
(4) Issues to be addressed
In Japan, various medical system reforms have been carried out, including: the revision of official
reimbursement prices for medical treatment fees, drug prices and specific medical materials covered byinsurance and an increasing adoption of the comprehensive medical fee payment system, called diagnosis
procedure combination (DPC).
Given the above and possible future reforms, we expect our market environment to remain severe. Against
this backdrop, the Company will continue to strive to raise its corporate value, develop products that provide
differentiation from our rivals, strengthen the maintenance service and supplies sales businesses, makeinvestments for enhancing the sales system, and reduce costs to become more price competitive than our rival
manufacturers at home and abroad.
Furthermore, the Company will continuously strengthen and maintain its quality control and safety
management systems so that customers can use our products without anxiety, and improve the internal control
system to ensure managerial soundness and transparency.
(5) Other important managerial matters of the Company
The Board of Directors approved on the acquisition of Fukuda Denshi’s own shares under the Article 156 of
the Companies Act of Japan applied as mutatis mutandis stipulated under the Article 165(3) of the same Law
during its meeting held on May 31st, 2012, and as of June 1st, 2012, 607,500 common shares have beenacquired through a fixed price trading at J-NET Market of Osaka Securities Exchange which amounted to1,437 million yen.
Also, in accordance with the resolution adopted at the meeting of the Board of Directors held on November
30th, 2012; 80,000 common shares which amounted to 191 million yen were disposed to The Chiba Kogyo
Bank, Ltd., by third-party allotment on December 17th, 2012.
As a result, the value of the “Treasury stock” was 8,847 million yen at the end of fiscal year under review.

- 15 -

4. Consolidated financial statements(1) Consolidated balance sheets(Million yen)Previous fiscal yearst
(as of March 31 , 2012)

Current fiscal yearst
(as of March 31 , 2013)

AssetsCurrent assets
Cash and deposits

24,267*3

Notes and accounts receivable-trade26,297

24,201*3

26,963

Securities

1,482

-

Merchandise and finished goods

6,624

6,916

142

165

Raw materials and supplies

1,455

1,981

Deferred tax assets

1,958

2,130

Other

1,370

1,955

Allowance for doubtful accounts

(36)

(49)

63,56264,265

8,886

11,117

Accumulated depreciation and impairment loss

(5,342)(5,625)

Buildings and structures, net

3,544

5,491

Machinery, equipment and vehicles

686

928

Accumulated depreciation and impairment loss

(467)

(530)

Machinery, equipment and vehicles, net

218

397

25,105

26,175(16,444)(17,156)

8,660

9,018

6,650

6,859

315

516

Accumulated depreciation and impairment loss

(178)

(260)

Lease assets, net

137

256

904

137

20,11722,160

1,378

2,408

Work in process

Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures

Tools, furniture and fixtures
Accumulated depreciation and impairment loss
Tools, furniture and fixtures, net
Land
Lease assets

Construction in progress
Total property, plant and equipment
Intangible assets
Investments and other assets*1

Investment securities
Deferred tax assets

8,583
2,572

- 16 -*1

12,103
2,480

Previous fiscal yearst
(as of March 31 , 2012)

Current fiscal yearst
(as of March 31 , 2013)

Insurance funds

5,803

7,863

Other

5,049

3,374

Allowance for doubtful accounts

(24)

(10)

Allowance for investment loss

(18)

-

21,96725,812

43,46350,381

107,025

114,646

Total investments and other assets
Total noncurrent assets
Total assets- 17 -

(Million yen)Previous fiscal yearst
(as of March 31 , 2012)

Current fiscal yearst
(as of March 31 , 2013)

Liabilities
Current liabilities
Notes and accounts payable-trade

14,925

16,198

Short-term loans payable

1,700

1,850

79

88

Income taxes payable

1,347

2,594

Provision for bonuses

2,171

2,254

Provision for directors' bonuses

139

134

Provision for product warranties

484

411

Other

3,422

3,747

Total current liabilities

24,27027,279Long-term loans payable

742

1,038

Lease obligations

115

223

2,917

2,858

Provision for directors' retirement benefits

185

217

Other

948

946

4,909

5,285

29,17932,564

Capital stock

4,621

4,621

Capital surplus

10,027

10,047Retained earnings

70,18975,152

Treasury stock(7,580)(8,847)

Total shareholders' equity

77,25780,973

Valuation difference on available-for-sale securities

640

1,145

Foreign currency translation adjustment

(51)

(36)

Total accumulated other comprehensive income

588

1,108

77,84682,082

107,025

114,646

Lease obligations

Noncurrent liabilities

Provision for retirement benefits

Total noncurrent liabilities
Total liabilities
Net assets
Shareholders' equity

Accumulated other comprehensive income

Total net assets
Total liabilities and net assets- 18 -

(2) Consolidated income statements (comprehensive) and consolidated statements of comprehensive income(Million yen)Previous fiscal yearst

Current fiscal year

stst

(April 1 , 2011 to March 31 , 2012)

Net salesst(April 1 , 2012 to March 31 , 2013)

92,524*1

Cost of sales
Gross profit

49,071

96,239*1

43,452*2 *3

Selling, general and administrative expenses
Operating income

34,26050,91245,326*2 *3

35,085

9,192

10,240Interest income

71

74

Dividends income

126

144

Foreign exchange gains-

162

Compensation income

66

37

Other

157

203

Total non-operating income

422

621

Interest expenses

21

26

Foreign exchange losses

26-

Equity in losses of affiliates

16

321

Loss on investments in partnership

90

66

Other

35

10

Total non-operating expenses

190

425

9,423

10,435*4

4*4

Gain on sales of investment securities

4398

Subsidy income

-

116

373

70

9

-

392

587

*5

0

*5

0

38

*6

1

Non-operating income

Non-operating expenses

Ordinary income
Extraordinary income
Gain on sales of noncurrent assets

Surrender value of insurance
Other
Total extraordinary income

2

Extraordinary loss
Loss on sales of noncurrent assets*6

Impairment loss
Loss on valuation of investment securities
Loss on valuation of golf club membership*7

Loss on disasterOther- 19 -

307

-

1

-

61

-

42

-

(Million yen)Previous fiscal yearst

Current fiscal yearst

(April 1 , 2011 to March 31 , 2012)

Total extraordinary lossesstst(April 1 , 2012 to March 31 , 2013)

452

1

Income before income taxes and minority interests

9,363

11,021

Income taxes-current

3,301

4,445

Income taxes-deferred

795

114

Total income taxes

4,096

4,559

Income before minority interests

5,266

6,462

Net income

5,266

6,462

- 20 -

Consolidated statements of comprehensive income(Million yen)Previous fiscal yearst

Current fiscal yearst

(April 1 , 2011 to March 31 , 2012)

Income before minority interests

stst(April 1 , 2012 to March 31 , 2013)

5,266

6,462

697

504

Other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment

127*1

Total other comprehensive income

825

15
*1

520

Comprehensive income

6,091

6,982

Comprehensive income attributable toComprehensive income attributable to owners of
the parent

6,091

6,982

- 21 -

(3) Consolidated statements of changes in net assets(Million yen)Previous fiscal yearst

Current fiscal year

stst

(April 1 , 2011 to March 31 , 2012)

st(April 1 , 2012 to March 31 , 2013)

Shareholders' equity
Capital stock
4,621

4,621

－

－

4,621

4,621

9,982

10,027

Disposal of treasury stock45

19

Total changes of items during the period

45

19

10,027

10,04766,30370,189(1,375)(1,495)(5)(4)

Net income

5,266

6,462

Total changes of items during the period

3,885

4,962

70,18975,152(5,047)(7,580)Purchase of treasury stock(2,954)(1,438)

Disposal of treasury stock

422

171

(2,532)(1,266)(7,580)(8,847)75,85977,257(1,375)(1,495)(5)(4)

Net income

5,266

6,462

Purchase of treasury stock(2,954)(1,438)

Disposal of treasury stock

467

191

Balance at the beginning of current period
Changes of items during the period
Total changes of items during the period
Balance at the end of current period
Capital surplus
Balance at the beginning of current period
Changes of items during the period

Balance at the end of current period
Retained earnings
Balance at the beginning of current period
Changes of items during the period
Dividends from surplus
Employees' bonuses and welfare funds

Balance at the end of current period
Treasury stock
Balance at the beginning of current period
Changes of items during the period

Total changes of items during the period
Balance at the end of current period
Total shareholders' equity
Balance at the beginning of current period
Changes of items during the period
Dividends from surplus
Employees' bonuses and welfare funds- 22 -

(Million yen)Previous fiscal yearst

Current fiscal yearst

(April 1 , 2011 to March 31 , 2012)

st

st(April 1 , 2012 to March 31 , 2013)

1,398

3,716

77,25780,973

(57)

640

697

504

697

504

640

1,145

(179)

(51)

127

15

127

15

(51)

(36)

(236)

588

825

520

825

520

588

1,108

75,623

77,846(1,375)(1,495)(5)(4)

Net income

5,266

6,462

Purchase of treasury stock(2,954)(1,438)

Disposal of treasury stock

467

191

Net changes of items other thanshareholders' equity

825

520

2,223

4,236

Total changes of items during the period
Balance at the end of current period
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Balance at the beginning of current
periodChanges of items during the period
Net changes of items other thanshareholders' equity
Total changes of items during theperiodBalance at the end of current period
Foreign currency translation adjustment
Balance at the beginning of current
periodChanges of items during the period
Net changes of items other thanshareholders' equity
Total changes of items during theperiodBalance at the end of current period
Total accumulated other comprehensive
incomeBalance at the beginning of current
periodChanges of items during the period
Net changes of items other thanshareholders' equity
Total changes of items during theperiodBalance at the end of current period
Total net assets
Balance at the beginning of current period
Changes of items during the period
Dividends from surplus
Employees' bonuses and welfare funds

Total changes of items during the period- 23 -

(Million yen)Previous fiscal yearst

Current fiscal yearst

(April 1 , 2011 to March 31 , 2012)

77,846

Balance at the end of current periodstst(April 1 , 2012 to March 31 , 2013)82,082

Note for statements of changes in shareholders’ equity:
Bounties and welfare funds for employees were provided by a subsidiary in China in accordance with local
laws and regulations.

- 24 -

(4) Consolidated statements of cash flows(Million yen)
Current fiscal year

Previous fiscal year
st

st

st

(April 1 , 2011 to March 31 , 2012)

Net cash provided by (used in) operating
activities
Income before income taxes and minority
interests

st(April 1 , 2012 to March 31 , 2013)

9,363

11,021

5,963

5,539

Impairment loss

38

1

Loss on disaster

61

-

(300)

(18)

(15)

(2)

(18)

79

(6)

(5)

97

(72)

(240)

(59)

0

32

(198)

(218)

Interest expenses

21

26

Loss (gain) on sales of noncurrent assets

(4)

(1)

(4)

(398)

307

-

(373)

(70)

Subsidy income

-

(116)

Equity in (earnings) losses of affiliates

16

321

(3,699)

(602)

(852)

(767)

2,183

910

(33)

(161)

Other, net

574

(223)

Subtotal

12,881

15,216

Interest and dividends income received

184

201

Interest expenses paid

(21)

(27)

Payments for loss on disaster

(217)

-

(4,312)(3,190)Depreciation and amortization

Increase (decrease) in allowance forinvestment loss
Increase (decrease) in allowance for
doubtful accounts
Increase (decrease) in provision forbonuses
Increase (decrease) in provision for
directors' bonuses
Increase (decrease) in provision for productwarranties
Increase (decrease) in provision for
retirement benefits
Increase (decrease) in provision for
directors' retirement benefits
Interest and dividends income

Loss (gain) on sales of investment
securities
Loss (gain) on valuation of investment
securities
Loss (gain) on cancellation of insurance
contract

Decrease (increase) in notes and accounts
receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts
payable-trade
Increase (decrease) in accrued consumption
taxes

Income taxes paid

- 25 -

(Million yen)
Current fiscal year

Previous fiscal year
st

st

st

(April 1 , 2011 to March 31 , 2012)

Net cash provided by (used in) operating
activities
Net cash provided by (used in) investing
activities

st(April 1 , 2012 to March 31 , 2013)

8,513

12,199Decrease (increase) in time deposits(1,067)491

Purchase of property, plant and equipment(5,203)(7,108)

(535)

(934)

(2,977)(4,124)

1,704

2,500

(1,419)(2,178)Proceeds from maturity of insurance funds

827

198

Purchase of investments in subsidiaries

-

(79)

Payments of loans receivable

(132)

(38)

Proceeds from compensation-

116

Other, net

97

228

(8,706)(10,929)

300

150

121

295

(2,954)(1,438)466

191(1,371)(1,498)

(74)

(96)

(3,512)(2,396)(8)(48)(3,713)(1,174)

26,34822,635Purchase of intangible assets
Purchase of short-term and long term
investment securities
Proceeds from sales of short-term and longterm investment securities
Purchase of insurance funds

Net cash provided by (used in) investing
activities
Net cash provided by (used in) financing
activities
Net increase (decrease) in short-term loans
payableProceeds from long-term loans payable
Purchase of treasury stock
Proceeds from sales of treasury stock
Cash dividends paid
Repayments of lease obligations
Net cash provided by (used in) financing
activities
Effect of exchange rate change on cash andcash equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
period*1

Cash and cash equivalents at end of period- 26 -

22,635*1

21,461

(5) Notes to Consolidated Financial Statement(Notes regarding the assumption for going concern)
Not applicable(Basic significant matters regarding the preparation of consolidated financial statements)
1. Scope of consolidation(1) Number of consolidated subsidiaries: 49
Major consolidated subsidiaries are as follows:
Fukuda Life Tech Co., Ltd.
Fukuda Denshi Hokkaido(2) Names and other details of major unconsolidated subsidiaries
Of the subsidiaries, ME Times, Fukushin and four (4) other companies were not included in the scope of
consolidation, because their business sizes are small, and their “Total assets”, “Net sales”, ”Net income
and loss” (amount corresponding to the owned interest), “Retained earnings” (amount corresponding tothe owned interest) had no material effect on the consolidated financial statements.
2. Application of equity method(1) Number of affiliated companies accounted for by equity method : 1
Name of affiliated companies accounted for by equity method:

Japan Stent Technology Co., Ltd.
(2) Names and other details of unconsolidated subsidiaries and affiliates that are not accounted for by equity
methodThe six (6) unconsolidated subsidiaries and the affiliate company Fukuda Pulmo had no material effecton consolidated income and loss and “Retained earnings”, and they were not important as a whole in termsof material influence on the consolidated interim financial statements. Accordingly, we did not apply
equity method accounting to them.
3. Accounting period, etc. of consolidated subsidiaries
The accounts of consolidated subsidiaries Fukuda Denshi USA, Inc.; and Fukuda Denshi Switzerland AG
close on December 31 of each year. In the preparation of consolidated financial statements, consolidated
subsidiaries’ financial statements as of the said date were used, and with respect to significant transactions that
occurred between the said date and the consolidated book-closing, adjustments necessary for consolidation are
made.
4. Accounting standards(1) Valuation standards and methods for principle assets(i) Securities
Held-to-maturity securities;- Amortized cost method (straight-line method)
Other securities
Marketable securities;- Stated at fair value based on the market price as of the end of current fiscal year.
(Unrealized holding gains or losses are reported in a component of net assets, while the cost of
securities sold is calculated by the moving average method.)
Non-marketable securities;- Stated at cost based on the moving average method.
For investments in the investment enterprise limited Liability association and similar associations(deemed to be securities pursuant to Article 2, Paragraph 2 of the Financial Instruments andExchange Law), the net amount corresponding to the ownership percentage is used, based on themost recent financial statements available as of the reporting date and other material stipulated in
the partnership contract.
(ii) Inventories
The cost method (the amounts stated in the balance sheets are calculated by writing down the bookvalues based on lower profitability) is used as a valuation standard.

- 27 -

Merchandise and finished goods-Mainly stated at cost determined by the first-in, first-out method.
Work in process-Mainly stated at cost based on the specific cost method.
Raw materials-Mainly stated at cost based on the gross average method.
Supplies-Stated at cost based on the last purchase price method.
(2) Depreciation method for significant depreciable assets(i) Property, plant and equipment (excluding lease assets)
Depreciated primarily by the declining balance method. However, buildings (except for building
attachments) acquired on or after April 1, 1998 were depreciated using the straight-line method.
In addition, the expected lifetime are as follows:
Buildings and structures:
3 to 60 years
Machinery and delivery equipment:
4 to 17 years
Tools, instruments and fixture:
2 to 20 years
Assets with an acquisition cost of 100,000 yen or more but less than 200,000 yen were evenly amortizedover a three-year period.
Of the tools, instruments and fixtures, the oxygen concentrator devices (assets for rental) weredepreciated using the straight-line method with the estimated rental period (four years) used as thenumber of depreciation years.
(ii) Intangible assets (excluding lease assets)
Depreciated by the straight-line method.
Software for internal use is amortized by the straight-line method over its useful life of five years.
As for software for sale in the market, the Company records the larger of an amortization based on
projected sales volume for the effective sales period (no longer than three years) or a uniform
amortization over the effective remaining sales period.
(iii) Lease assets
Lease assets in finance lease transactions
We adopted the same depreciation method applied to self-owned “Noncurrent assets”.
Lease assets in finance lease transactions that do not transfer ownership
The straight-line method is used, based on the assumption that the useful life is the lease term and theresidual value is zero.
Finance lease transactions that do not transfer ownership and for which the inception of the leasepredates March 31, 2008 continue to be accounted for in a similar manner with the ordinary rental
transactions.
(3) Basis for provision of allowances(i) Allowance for doubtful accounts
To prepare for losses incurred by bad debts, the amount of potential loss is calculated by using thehistorical loss ratio in the case of general loans or receivables. Potential loss for specific loans or
receivables, for which we have concerns regarding their collectability, is calculated by assessing thepossibility of collection for each individual account.
(ii) Provision for bonuses
To prepare for the payment of bonuses to employees, an amount corresponding to current fiscal year’s
portion of estimated bonus payments was reserved.
(iii) Provision for directors' bonuses
To prepare for the payment of bonuses to directors and corporate auditors, an amount corresponding tocurrent fiscal year’s portion of estimated bonus payments was reserved.
(iv) Provision for retirement benefits
To prepare for the payment of retirement benefits for employees, the amount recognized as accruing at
the end of current fiscal year was reserved, based on the estimated retirement benefit obligation andpension assets at the end of current fiscal year.
Prior service costs are amortized, using the straight-line method over a certain number of years (10years), which are less than the average remaining years of service of the employees when they incurred.

- 28 -

Actuarial differences are amortized, using the straight-line basis over a certain number of years (10years), which are less than the average remaining years of service of the employees when they incurred,from the fiscal year after the one in which they arise.
(v) Provision for directors' retirement benefits
To prepare for the payment of retirement benefits to directors and corporate auditors, some consolidated
subsidiaries reserve the estimated amount to be paid at the end of the fiscal year, in accordance with theinternal regulations.
(vi) Provision for product warranties
To prepare for the expenses incurred by the free repair to be implemented after the delivery of the
products, estimated amount of the repair expenses was reserved on the basis of the estimated proportionof such expenses to net sales and the estimated amount of such expenses for individual products.
(4) Standards for translation of important foreign currency-based assets or liabilities into Japanese yen
Monetary credits and debts denominated in foreign currencies are translated into yen based on thecurrent exchange rates at the end of each fiscal year. Differences arising from such translation are statedas profits or losses. Assets, liabilities, revenue and expenses of overseas subsidiaries, and other financial
items are translated into yen based on the current exchange rates at the end of each fiscal year. The
resulting differences are recorded as “Foreign currency translation adjustment” account and “Minority
interests”, under “Net assets”.
(5) Cash in consolidated cash flow statements
Cash (cash and cash equivalents) in the consolidated statements of cash flows consists of cash on hand,readily-available deposits, and short-term investments with a maturity not exceeding three months at thetime of purchase that are readily convertible to cash and not exposed to significant risk in value
fluctuations.
(6) Other important matters for preparation of consolidated financial statements
Accounting treatment of consumption tax and other taxes
Consumption tax and other taxes are excluded from profits and losses.
(Changes in accounting policies)(Change in accounting policies that are difficult to separate from changes in accounting projections)
According to the revision of the Corporation Tax Act, the Company and its consolidated subsidiaries in Japanchanged the method of depreciation to the one based on the revised Corporation Tax Act for “Property, plantand equipment” acquired after April 1st, 2012, effective from the first quarter under review.
The effect of this change on the “Operating income”, “Ordinary income” and “Net income before taxes” forfiscal year under review is minimal.
(Consolidated balance sheets)*1. Unconsolidated subsidiaries and affiliated companies:(Million yen)
Current fiscal year

Previous fiscal yearstst

(as of March 31 , 2012)

Investment securities(Stocks)(as of March 31 , 2013)

348

841

2. Discount on bills:(Million yen)
Current fiscal year

Previous fiscal yearstst

(as of March 31 , 2012)

Discount on export bills(as of March 31 , 2013)54- 29 -

38

*3. Accounting for matured notes:
Accounting for matured notes is based on the date when the notes have been exchanged. In addition, since
the last day for the consolidated financial accounting fiscal year was a Bank holiday, the next amount of
matured notes are included in this Consolidated Balance Sheets.
(Million yen)
Current fiscal year

Previous fiscal yearstst

(as of March 31 , 2012)

Notes receivable-trade(as of March 31 , 2013)

310

304

(Consolidated statements of income)*1. The year-end inventory balance is the amount after the devaluation of the book value arising from thedecline in profitability, and the next loss on valuation of inventories is included in cost of sales.
(Million yen)Previous fiscal yearst

Current fiscal year

stst

(April 1 , 2011 to March 31 , 2012)

st(April 1 , 2012 to March 31 , 2013)

13

81*2. Major items and amounts of Selling, general and administrative expenses are as follows:(Million yen)
Current fiscal year

Previous fiscal year
st

st

st

(April 1 , 2011 to March 31 , 2012)

Salaries, allowance, and other monies for
directors and employees
Bonuses and provision of allowance forbonuses
Provision of allowance for retirement
benefits to directors
Retirement benefit expenses
Depreciation
Provision of allowance for bonuses todirectorsst(April 1 , 2012 to March 31 , 2013)12,14012,386

3,193

3,278

38

39

720

918

1,471

922

130

134

*3. Research and development expenses included in the general and administrative expenses andManufacturing expenses:(Million yen)Previous fiscal yearst

Current fiscal year

stst

(April 1 , 2011 to March 31 , 2012)

st(April 1 , 2012 to March 31 , 2013)

3,332

3,400

*4. Breakdown of gains on sale of noncurrent assets:(Million yen)
Current fiscal year

Previous fiscal year
st

st

st

(April 1 , 2011 to March 31 , 2012)

Machinery and delivery equipment
Tools, instruments and fixtures
total- 30 -st(April 1 , 2012 to March 31 , 2013)

3

2

1

0

4

2

*5. Breakdown of losses on sale of noncurrent assets:(Million yen)
Current fiscal year

Previous fiscal year
st

st

st

(April 1 , 2011 to March 31 , 2012)

Buildings and structures
Machinery and delivery equipment
Tools, instruments and fixtures
Total

st

(April 1 , 2012 to March 31 , 2013)

-

0

0

0

-

0

0

0

*6. Impairment losses:
Previous fiscal year (April 1st, 2011 to March 31st, 2012)
The Group booked the following assets as “Impairment loss”.
Location of assets
Use of assets
Bunkyo-ku, Tokyo
Operational assets

Type of assets
Tools, instruments and fixtures

Nasu, Tochigi Prefecture

Land property

Idle assets

The Company groups its operations by business segment, and consolidated subsidiaries form theirgrouping with each company or office as one unit. “Impairment losses” on “Leased real estate” and “Idleassets” are recognized separately.
Because of a decrease in cash flows caused by a declined “Operating income” and a fall of the market
price, we have written down the book values of the above assets to recoverable values. These write-offs
have resulted in “Impairment losses” (of 38 million yen), which were booked as “Extraordinary losses”.
These “Impairment losses” consist of the losses on “Tools, instruments and fixtures” of 12 million yen, on“Land property” of 17 million yen, and on “Others” of 8 million yen.
The recoverable value was assessed according to the net sale value, and the market prices were evaluatedaccording to roadside land prices or the assessed value of “Noncurrent asset tax”, with reasonableadjustments.
Current fiscal year (April 1st, 2012 to March 31st, 2013)
The Group booked the following assets as impairment loss.
Location of assets
Use of assets
Bunkyo-ku, Tokyo
Operational assets

Type of assets
Tools, instruments and fixtures

The Company groups its operations by business segment, and consolidated subsidiaries form theirgrouping with each company or office as one unit. “Impairment losses” on “Leased real estate” and “Idleassets” are recognized separately.
Because of a decrease in cash flows caused by a declined “Operating income” and a fall of the market
price, we have written down the book values of the above assets to recoverable values. These write-offs
have resulted in “Impairment losses” (of 1 million yen), which were booked as “Extraordinary losses”.
These “Impairment losses” consist of the losses on “Tools, instruments and fixtures” of 1 million yen.
The recoverable value was assessed according to the net sale value, and the market prices were evaluatedaccording to roadside land prices or the assessed value of “Noncurrent asset tax”, with reasonableadjustments.
*7. Losses from disaster
Previous fiscal year (April 1st, 2011 to March 31st, 2012)“Losses from disaster” is the loss from the Great East Japan Earthquake which occurred in March 2011.
Please check the details below.
(Million yen)

Production transfer, development cost for
replacements, and others
total

61
61

- 31 -

Current fiscal year (April 1st, 2012 to March 31st, 2013)
Not applicable.
(Consolidated statements of comprehensive income)*1. Amount of Reclassification adjustments and Tax effects for other comprehensive income(Million yen)
Current fiscal year

Previous fiscal year
stst

(April 1 , 2011 to March 31 , 2012)

Valuation difference on available-for-salesecurities:
Amount incurred in current fiscal year
Amount of Reclassification adjustments
Before adjusting tax benefit
Amount of tax benefit
Valuation difference on
available-for-sale securities
Foreign currency translation adjustment：
Amount incurred in current fiscal year
Other comprehensive incomestst(April 1 , 2012 to March 31 , 2013)

832

312

249

-

1,082

312

(384)

192

697

504

127

15

825

520

(Consolidated statements of changes in net assets)
Previous fiscal year (from April 1st, 2011 to March 31st, 2012)
1. Type and total number of issued shares and type and number of shares of treasury stock
Number of shares at
Increase in number
Decrease in number Number of shares atthe beginning ofof shares forof shares forthe end of theprevious fiscal year
previous fiscal year
previous fiscal year
previous fiscal year
(1,000 shares)(1,000 shares)(1,000 shares)(1,000 shares)
Number ofissued shares
Common stock
19,58819,588
Total
19,58819,588Treasury stock
Common stock
2,391
1,400
200
3,591
(Note)
Total
2,391
1,400
200
3,591
th
Note: (i) At the meeting convened on November 14 , 2011 the Board of Directors issued a resolution
regarding the introduction of “Stock Benefit Trust (J-ESOP)” (hereinafter “the Plan”). With theintroduction of the Plan, we disposed 50 thousand shares of our “Treasury stock” to Trust &Custody Services Bank, Ltd. (hereinafter “Trust Account”), dated in 2 nd March, 2012. As of March
31st, 2012, according to the purpose, the 50 thousand shares which the Trust Account own, areincluded in the number of our “Treasury stock”.
(ii) The increase of 1,400 thousand shares in “Treasury stock” of common stock reflects the increase of
1,400 thousand shares of tender offer of “Treasury stock”, and 0 thousand shares owing to theacquisition of “Treasury stock”.
(iii) The decrease of 200 thousand shares in “Treasury stock” of common stock reflects the disposal by
third-party allotment.

2. Stock acquisition rights and treasury stock acquisition rights
Not applicable.

- 32 -

3. Dividends(1) Dividend payment amount(Resolution)
Ordinary General
Meeting of
Shareholders heldon June 29th, 2011
Board ofDirectors’ meeting
held on October
31st, 2011

Type of shares

Total dividend
amount(million yen)

Dividends
per share(in yen)Record date

Effective dateCommon
stock

687

40

March 31st,
2011

June 30th,
2011

Common
stock

687

40

September
30th, 2011

December 5th,2011(2) Of the dividends whose record date belongs to the current fiscal year, and those whose effective date of thedividends will be in the next fiscal year
Total
Dividends
Type of
Source for
Effective
dividend(Resolution)
pershare (inRecord dateamountsharesdividends
dateyen)(million yen)
Ordinary General
Meeting ofCommonRetained
March 31st,June 29th,
879
55
Shareholders held onstockearnings
2012
2012
June 28th, 2012
(Note): With the introduction of “Stock Benefit Trust (J-ESOP)”, the 50 thousand shares Trust & Custody
Services Bank, Ltd. owns are included in the number of our “Treasury stock”. According to theaccounting, 2 million yen are excluded from the total amount of dividend calculation.
Current fiscal year (from April 1st, 2012 to March 31st, 2013)
1. Type and total number of issued shares and type and number of shares of treasury stock
Number of shares at
Increase in number
Decrease in number Number of shares atthe beginning ofof shares for current of shares for current
the end of thecurrent fiscal year
fiscal year underfiscal year
current fiscal year
(1,000 shares)(1,000 shares)(1,000 shares)(1,000 shares)
Number ofissued shares
Common stock
19,58819,588
Total
19,58819,588Treasury stock
Common stock
3,591
607
80
4,119
(Note)
Total
3,591
607
80
4,119
st
Note: (i) As of March 31 , 2013, according to the purpose, the 50 thousand shares which the Trust Accountown, are included in the number of our “Treasury stock”.
(ii) The increase of 607 thousand shares in “Treasury stock” of common stock reflects the increase of
607 thousand shares of tender offer of “Treasury stock”, and 0 thousand shares owing to theacquisition of “Treasury stock”.
(iii) The decrease of 80 thousand shares in “Treasury stock” of common stock reflects the disposal by
third-party allotment.

2. Stock acquisition rights and treasury stock acquisition rights
Not applicable.

- 33 -

3. Dividends(1) Dividend payment amount(Resolution)

Type of shares

Total dividend
amount(million yen)

Dividends per
share(in yen)Record date

Effective dateOrdinary General
Meeting ofMarch 31st,June 29th,
Common stock
879
55
Shareholders held
2012
2012
on June 28th, 2012
Board of Directors’
September
December 10th,
meeting held on
Common stock
615
40
th
30 , 20122012
October 31st, 2012
(Note): With the introduction of “Stock Benefit Trust (J-ESOP)”, the 50 thousand shares Trust & Custody
Services Bank, Ltd. owns are included in the number of our “Treasury stock”. According to theaccounting, 2 million yen are excluded from the total amount of dividend calculation.
(2) Of the dividends whose record date belongs to the current fiscal year, and those whose effective date of thedividends will be in the next fiscal year
Total
Dividends
Type of
Source for
Effective
dividend(Resolution)
pershare (inRecord dateamountsharesdividends
dateyen)(million yen)
Ordinary General
Meeting ofCommonRetained
March 31st,June 28th,
1,314
85
Shareholders held onstockearnings
2013
2013
June 27th, 2013
(Note): With the introduction of “Stock Benefit Trust (J-ESOP)”, the 50 thousand shares Trust & Custody
Services Bank, Ltd. owns are included in the number of our “Treasury stock”. According to theaccounting, 4 million yen are excluded from the total amount of dividend calculation.
(Consolidated statements of cash flows)*1. Relationship between the balance of cash and cash equivalents at the end of the fiscal year and amounts
stated in the consolidated balance sheets:(Million yen)
Current fiscal year

Previous fiscal year
stst

(April 1 , 2011 to March 31 , 2012)

Cash and deposits
Time deposits with a deposit period ofover three months
Cash and cash equivalentsstst(April 1 , 2012 to March 31 , 2013)

24,267

24,201(1,631)(2,739)22,635

21,461

2. Details of important non-fund transactions:
The amounts of assets and liabilities in finance lease transactions(Million yen)
Current fiscal year

Previous fiscal year
stst

(April 1 , 2011 to March 31 , 2012)

The amounts of assets and liabilities infinance lease transactions

67- 34 -

stst(April 1 , 2012 to March 31 , 2013)

188

(Lease transactions)Disclosure of lease transactions is omitted, as there is no significant necessity of such disclosure in thesummary report on financial results.
(Financial Products)
Disclosure of financial products is omitted, as there is no significant necessity of such disclosure in thesummary report on financial results.
(Securities)
Disclosure of securities is omitted, as there is no significant necessity of such disclosure in the summary
report on financial results.
(Derivative transactions)
Previous fiscal year (from April 1st, 2011 to March 31st, 2012) and current fiscal year (from April 1st, 2012 toMarch 31st, 2013):
There are no applicable items, as the Group did not use derivative transactions.
(Retirement benefits)
Disclosure of retirement benefits is omitted, as there is no significant necessity of such disclosure in thesummary report on financial results.
(Stock options, etc.)
Previous fiscal year (from April 1st, 2011 to March 31st, 2012):
Not applicable.
Current fiscal year (from April 1st, 2012 to March 31st, 2013):
Not applicable.
(Tax effect accounting)Disclosure of tax effect accounting is omitted, as there is no significant necessity of such disclosure in thesummary report on financial results.
(Real estates including rentals)
Disclosure of real estates including rentals is omitted, as there is no significant necessity of such disclosurein the summary report on financial results.
(Segment information, etc)
a. Segment information
1. Reportable Segments
The reportable segments of the Fukuda Denshi Group are the constituent units of the Company forwhich separate financial information can be obtained, and they are the subject of regular examinations by
the Board of Directors aimed at helping the board to decide the allocation of management resources andevaluate the performance of the Group.
The Company has set up divisions for each product and service in the corporate headquarters, and eachof the divisions formulates comprehensive strategies for the product or service it handles, and develops its
own business activities.
We have 4 reportable segments based on our headquarter divisions which are “Physiological diagnostic
equipment segment”, “Patient monitoring equipment segment”, “Medical treatment equipment segment”,
and “Consumables and other products segment”.
In the “Physiological diagnostic equipment segment”, we mainly handle electrocardiographs, ultrasounddiagnostic imaging systems and blood cell counters. In the “Patient monitoring equipment segment”, wehandle patient monitors. In the ”Medical treatment equipment segment”, we mainly handle defibrillators,- 35 -

ventilators, pacemakers, catheters, and business of renting medical equipment for home treatment. In the“Consumables and other products segment”, we mainly handle consumables used for devices handled by
the above segments, as well as maintenance and repair services.
2. Methods to calculate the sales, gains (or losses), assets, liabilities and other numbers of the reportablesegments
The accounting policies for the reportable segments are basically the same as those described in “Basicsignificant matters regarding the preparation of consolidated financial statements”.
Reported segment profit is based on the amount of “Operating income”.
3. Information regarding sales, gains (or losses), assets, liabilities and other amounts by reportablesegments(i) Previous fiscal yearstst（Million yen)(from April 1 , 2011 to March 31 , 2012)
Reporting Segments
Total

Adjustments*1

Consolidated
financialstatements*2

19,641

92,524-

92,524

-

-

-

-

-

8,741

37,304

19,641

92,524-

92,524

Physiologicaldiagnostic
equipment

Patient
monitoring
equipment

Medicaltreatment
equipment

Consumables
and otherproducts

26,837

8,741

37,304--

26,837

Net sales
Sales toexternalcustomers
Internal sales
or transfers

Total
Segment profit
Segment
assetsOther items

2,295

612

4,576

1,707

9,192

-

9,192

13,601

5,602

26,78910,92956,92350,102

107,025

Depreciation

582

189

4,764

426

5,963

-

5,963

Equity inlosses ofaffiliates

-

-

(16)

-

(16)

-

(16)

Amount ofinvestment toaffiliatedcompany
accounted ofequity method

-

-

283

-

283

-

283

Increase in
Property, plantand equipment
and intangible
assets

770

250

4,146

563

5,731

-

5,731

*1.

Adjustment of segment assets of 50,102 million yen include extra investment funds (cash etc.), long-term investments(“Investment securities” etc.), and etc. which does not allocated to each reportable segments*2. Segment profit equals to “Operating income” of consolidated financial statements.

- 36 -

(ii) Current fiscal year

(from April 1st, 2012 to March 31st, 2013)
Reporting Segments

Physiologicaldiagnostic
equipment

Patient
monitoring
equipment

Medicaltreatment
equipment

Consumables
and otherproducts

27,602

9,264

38,519--27,602（Million yen)
Consolidated
financialstatements
*2

Total

Adjustments*1

20,851

96,239-96,239

-

-

-

-

-

9,264

38,51920,851

96,239-96,239Net sales
Sales toexternalcustomers
Internal sales
or transfers
Total

Segment profit
Segment
assetsOther items

2,658

771

4,941

1,868

10,240-

10,24015,2695,961

28,29911,95761,48853,158

114,646

Depreciation

409

137

4,683

309

5,539

-

5,539

-

-

(321)

-

(321)

-

(321)

-

-

681

-

681

-

681

1,406

472

6,492

1,062

9,434

-

9,434

Equity inlosses ofaffiliates
Amount ofinvestment toaffiliatedcompany
accounted ofequity method
Increase in
Property, plantand equipment
and intangible
assets*1.

Adjustment of segment assets of 53,158 million yen include extra investment funds (cash etc.), long-term investments(“Investment securities” etc.), and etc. which does not allocated to each reportable segments*2. Segment profit equals to “Operating income” of consolidated financial statements.

b. Related Information(i) Previous fiscal year (from April 1st, 2011 to March 31st, 2012)
1. Information about each products and services
Information about each products and services is omitted, as categories of products and services are
identical to segment information.
2. Information by geographical area
(1) Sales
Information about “Sales” is omitted because our domestic “Sales” accounted for more than 90% ofconsolidated “Sales”.

- 37 -

(2) Property, plant and equipment
Information about “Property, plant and equipment” is omitted because domestic “Property, plant andequipment” accounted for more than 90 % of “Property, plant and equipment” of consolidated “Property,
plant and equipment ".
3. Information by each major customer
Information about each major customer is omitted because “Sales” for each major customer accounted
for less than 10 % of consolidated “Sales”.
(ii) Current fiscal year (from April 1st, 2012 to March 31st, 2013)
1. Information about each products and services
Information about each products and services is omitted, as categories of products and services are
identical to segment information.
2. Information by geographical area
(1) Sales
Information about “Sales” is omitted because our domestic “Sales” accounted for more than 90% ofconsolidated “Sales”.
(2) Property, plant and equipment
Information about “Property, plant and equipment” is omitted because domestic “Property, plant andequipment” accounted for more than 90 % of “Property, plant and equipment” of consolidated “Property,
plant and equipment”.
3. Information by each major customer
Information about each major customer is omitted because “Sales” for each major customer accounted
for less than 10 % of consolidated “Sales”.
c. Information about impairment loss for noncurrent assets by reportable segments(i) Previous fiscal year (from April 1st, 2011 to March 31st, 2012)（Million yen)Physiologicaldiagnostic
equipment
Impairment
loss

Patient
monitoring
equipment

6

Medicaltreatment
equipment
2

Consumables
and otherproducts
8

Elimination/ Corporate

4

Total

17

38

(ii) Current fiscal year (from April 1st, 2012 to March 31st, 2013)（Million yen)Physiologicaldiagnostic
equipment
Impairment
loss

0

Patient
monitoring
equipment

Medicaltreatment
equipment
0Consumables
and otherproducts
0

Elimination/ Corporate0d. Information about amortization and depreciation expense on goodwill of each reportable segment(i) Previous fiscal year (from April 1st, 2011 to March 31st, 2012)
Not applicable- 38 -

Total-

1

(ii) Current fiscal year (from April 1st, 2012 to March 31st, 2013)
Not applicablee. Information about gain on negative goodwill of each reportable segment(i) Previous fiscal year (from April 1st, 2011 to March 31st, 2012)
Not applicable(ii) Current fiscal year (from April 1st, 2012 to March 31st, 2013)
Not applicable(Transactions with related parties)
Disclosure of transactions with related parties is omitted, as there is no significant necessity of suchdisclosure in the summary report on financial results.
(Business combinations, etc)
Current fiscal year (from April 1st, 2012 to March 31st, 2013)
Not applicable(Per share information)
Previous fiscal year

Current fiscal year

(April 1st, 2011 to March 31st, 2012)(April 1st, 2012 to March 31st, 2013)

Net assets per share

4,866.46 yen

5,306.30 yen

Net income per share

311.84 yen

415.47 yen

Not stated, as there is no potential
dilution.

Not stated, as there is no potential
dilution.

Fully diluted net income per
share

Note: The basis for calculation of net income per share:
Item

Previous fiscal year

Current fiscal year

(April 1st, 2011 to March 31st, 2012)(April 1st, 2012 to March 31st, 2013)

5,266

6,462

-

-

5,266

6,462

16,88815,553

Net income (million yen)Amount not belonging toordinary shareholders (million
yen)
Net income in relation tocommon stock (million yen)
Average number of shares
during the fiscal year (1,000
shares)(Significant subsequent events)
Not applicable.

- 39 -

5. Non-consolidated financial statements(1) Balance sheets(Million yen)Previous fiscal yearst
(as of March 31 , 2012)

Current fiscal yearst
(as of March 31 , 2013)

AssetsCurrent assets
12,137

11,59331

22

Accounts receivable-trade

22,31524,072

Securities

1,482

-

Merchandise and finished goods

2,978

2,973

35

32

Raw materials and supplies

1,149

1,479

Advance payments-trade

156

214

Prepaid expenses

375

436

Deferred tax assets

658

735

3,239

1,935

Accounts receivable-other

225

541

Other

170

204

Allowance for doubtful accounts(1,348)(1,072)

Total current assets

43,606

43,168

6,397

8,433

Accumulated depreciation(3,607)(3,826)

Buildings, net

2,789

4,607

319

489

(266)

(285)

52

203

114

181

Accumulated depreciation

(68)

(81)

Machinery and equipment, net

45

100

54

68

(49)

(43)

5

25

Tools, furniture and fixtures

23,306

24,372

Accumulated depreciation(14,894)(15,670)

Cash and deposits
Notes receivable-trade

Work in process

Short-term loans receivable fromsubsidiaries and affiliates

Noncurrent assets
Property, plant and equipment
Buildings

Structures
Accumulated depreciation
Structures, net
Machinery and equipment

VehiclesAccumulated depreciation
Vehicles, net- 40 -

(Million yen)Previous fiscal yearst
(as of March 31 , 2012)

Current fiscal yearst
(as of March 31 , 2013)
8,411

8,701

5,691

5,691

83

83

Accumulated depreciation

(60)

(77)

Lease assets, net

22

6

904

137

17,924

19,474

5

5

880

731

-

1,226

302

302

1,188

2,265

Investment securities

8,235

11,275

Stocks of subsidiaries and affiliates

3,677

4,475

1

1

Investments in capital of subsidiaries
and affiliates

423

423

Long-term loans receivable

124

88

5

7

1,369

2,976

19

23

Deferred tax assets

1,937

1,827

Long-term time deposits

4,100

2,500

Insurance funds

5,803

7,644

Other

263

260

Allowance for doubtful accounts

(102)

(762)

Allowance for investment loss

(300)

(300)

Total investments and other assets

25,56030,441

44,672

52,18088,27995,349

11,633

12,918Tools, furniture and fixtures, net
Land
Lease assets

Construction in progress
Total property, plant and equipment
Intangible assets
Leasehold right
Software
Software in progress
Other
Total intangible assets
Investments and other assets

Investments in capital

Long-term loans receivable from
employees
Long-term loans receivable fromsubsidiaries and affiliates
Long-term prepaid expenses

Total noncurrent assets
Total asset
Liabilities
Current liabilities
Accounts payable-trade- 41 -

(Million yen)Previous fiscal yearst
(as of March 31 , 2012)

Current fiscal yearst
(as of March 31 , 2013)
1,700

1,850

17

6

Accounts payable-other

2,133

2,467

Income taxes payable

208

1,585

Advances received

76

53

Deposits received

10,458

11,681

Provision for bonuses

833

885

Provision for directors' bonuses

49

53

Provision for product warranties

462

385

Other

107

22

27,68031,908

742

1,038

6

-

Provision for retirement benefits

1,149

1,132

Long-term accounts payable-other

819

819

2,717

2,989

30,39734,898

4,621

4,621

Legal capital surplus

8,946

8,946

Other capital surplus

1,081

1,100

Total capital surpluses

10,027

10,047

1,171

1,171

Reserve for business expansion

300

300

Reserve for advanced depreciation of
noncurrent assets

53

53

General reserve

37,50037,500Retained earnings brought forward

11,14814,45950,17353,484(7,580)(8,847)

Short-term loans payable
Lease obligations

Total current liabilities
Noncurrent liabilities
Long-term loans payable
Lease obligations

Total noncurrent liabilities
Total liabilities
Net assets
Shareholders' equity
Capital stock
Capital surplus

Retained earnings
Legal retained earnings
Other retained earnings

Total retained earnings
Treasury stock- 42 -

(Million yen)Previous fiscal yearst
(as of March 31 , 2012)
Total shareholders' equity

Current fiscal yearst
(as of March 31 , 2013)57,24159,305

639

1,144

639

1,144

57,88160,45088,27995,349Valuation and translation adjustments
Valuation difference on
available-for-sale securities
Total valuation and translation
adjustments
Total net assets
Total liabilities and net assets- 43 -

(2) Statements of income(Million yen)Previous fiscal yearst

Current fiscal year

st

st

st

(April 1 , 2011 to March 31 , 2012)(April 1 , 2012 to March 31 , 2013)

Net sales of finished goods

14,01915,609Net sales of goods

32,212

33,340

Other sales

9,879

10,688

Total net sales

56,111

59,638987

1,246

Cost of products manufactured

10,488

11,168

Total

11,476

12,415

Finished goods transfer to other account

1,785

2,628

Ending finished goods

1,246

1,451

Cost of finished goods sold

8,443

8,335

Beginning goods

1,228

1,731

Cost of purchased goods

26,81627,216

Total

28,04428,947

172

72

Ending goods

1,731

1,521

Cost of goods sold

26,141

27,352Other cost

4,226

4,765

Total cost of sales

38,81140,453

17,30019,185Advertising expenses

589

626

Packing and transportation expenses

575

580

Service and repair expenses

548

632

Provision of allowance for doubtful
accounts

193

384

2,121

2,178

Bonuses261

316

Provision for bonuses

576

617

Retirement benefit expenses

190

207

Provision for directors' bonuses

49

53

Commission fee

702

895

Insurance expenses

784

819

Net sales

Cost of sales
Beginning finished goods

Goods transfer to other accountGross profit
Selling, general and administrative expenses

Salaries and allowances- 44 -

(Million yen)Previous fiscal yearst

Current fiscal year

st

st

st

(April 1 , 2011 to March 31 , 2012)(April 1 , 2012 to March 31 , 2013)

254

233

Research and development expenses

3,256

3,333

Depreciation

1,194

636

Other

2,553

2,638

Total selling, general and administrative
expenses

13,854

14,154

3,445

5,031

Interest income

104

103

Dividends income

1,217

1,227

Real estate rent

280

320

Foreign exchange gains

29

232

Other

94

121

1,726

2,006

Interest expenses

67

75

Loss on investments in partnership

90

66

Other

26

1

Total non-operating expenses

183

143

4,988

6,893

Gain on sales of noncurrent assets

00Gain on sales of investment securities

4398

Surrender value of insurance

373

70

Total extraordinary income

378

468

Loss on sales of noncurrent assets－

0

Impairment loss

17-

Loss on valuation of investment securities

307-

Loss on disaster

43

-

Other

41

-

Total extraordinary losses

409

0Income before income taxes

4,956

7,361

Income taxes-current

1,070

2,330

Income taxes-deferred

485

226

Rent expenses

Operating income
Non-operating income

Total non-operating income
Non-operating expenses

Ordinary income
Extraordinary income

Extraordinary loss

- 45 -

(Million yen)Previous fiscal yearst

Current fiscal year

st

st

st

(April 1 , 2011 to March 31 , 2012)(April 1 , 2012 to March 31 , 2013)

Total income taxes

1,555

2,556

Net income

3,401

4,805

- 46 -

Manufacturing statement
Previous fiscal yearst

Current fiscal year

stst

(April 1 , 2011 to March 31 , 2012)

Item

Note
No.

Amount(million yen)st(April 1 , 2012 to March 31 , 2013)

Ratio
(%)

Amount(million yen)

Ratio
(%)

I.

Materials expenses

8,749

62.0

9,318

60.8

II.

Labor expenses

2,457

17.4

2,632

17.2

3,362

22.0

15,312

100.0

III. Other expenses
Subcontracted designing
expenses and trial
manufacture expenses

1,503

Others

1,405

1,938

2,908

20.6

Total manufacturing expenses

14,115100.0Work in process inventories atthe beginning of the fiscal
year

10

35

41

22

14,167

15,370

35

32

3,643

4,169

10,488

11,168Transfer from other accounts

*1

Total
Work in process inventories atthe end of the fiscal year
Transfer to other accounts*2

Product manufacturing costs

1,423

Cost calculation method
The Company calculates cost of products by way of job-order cost system (projection). Cost
variances are allocated to “Cost of sales”, “Products” and “Work in process” at the end of the fiscal year.
*1. Breakdown of transfer from other accounts（Million yen)Previous fiscal year

Current fiscal year

(April 1st, 2011 to March 31st, 2012)(April 1st, 2012 to March 31st, 2013)

Current assets and others(Trial manufacture andresearch in progress)

41

22

Others

0

0

Total

41

22

*2. Breakdown of transfer to other accounts（Million yen)Previous fiscal year

Current fiscal year

(April 1st, 2011 to March 31st, 2012)(April 1st, 2012 to March 31st, 2013)

2,659

3,038

22

36

Others

961

1,093

Total

3,643

4,169

Research and development
expenses
Current assets and others(Trial manufacture andresearch in progress)- 47 -

(3) Statements of changes in net assets(Million yen)Previous fiscal year

Current fiscal year

(April 1st, 2011 to March 31st, 2012)(April 1st, 2012 to March 31st, 2013)

Shareholders' equity
Capital stock
4,621

4,621

－

－

4,621

4,621

8,946

8,946

－

－

8,946

8,946

1,036

1,081

Disposal of treasury stock45

19

Total changes of items during the period

45

19

1,081

1,100

9,982

10,027

Disposal of treasury stock45

19

Total changes of items during the period

45

19

10,027

10,047

1,171

1,171

－

－

1,171

1,171

300

300

Balance at the beginning of current period
Changes of items during the period
Total changes of items during the period
Balance at the end of current period
Capital surplus
Legal capital surplus
Balance at the beginning of current period
Changes of items during the period
Total changes of items during the period
Balance at the end of current period
Other capital surplus
Balance at the beginning of current period
Changes of items during the period

Balance at the end of current period
Total capital surplus
Balance at the beginning of current period
Changes of items during the period

Balance at the end of current period
Retained earnings
Legal retained earnings
Balance at the beginning of current period
Changes of items during the period
Total changes of items during the period
Balance at the end of current period
Other retained earnings
Reserve for business expansion
Balance at the beginning of current
period- 48 -

(Million yen)Previous fiscal year

Current fiscal year

(April 1st, 2011 to March 31st, 2012)(April 1st, 2012 to March 31st, 2013)

Changes of items during the period
Total changes of items during theperiod－－Balance at the end of current period

300

300

49

53

4

-

4

-

53

53

37,50037,500Total changes of items during theperiod－－Balance at the end of current period

37,50037,5009,126

11,148Dividends from surplus(1,375)(1,495)

Net income

3,401

4,805

(4)

-

2,021

3,310

11,14814,45948,14750,173

Dividends from surplus(1,375)(1,495)

Net income

3,401

4,805

Total changes of items during the period

2,025

3,310

50,17353,484(5,047)(7,580)Reserve for advanced depreciation of
noncurrent assets
Balance at the beginning of current
periodChanges of items during the period
Amount of change in reserve assets due
to tax rate changes compression
Total changes of items during theperiodBalance at the end of current period
General reserve
Balance at the beginning of current
periodChanges of items during the period

Retained earnings brought forward
Balance at the beginning of current
periodChanges of items during the period

Amount of change in reserve assets due
to tax rate changes compression
Total changes of items during theperiodBalance at the end of current period
Total retained earnings
Balance at the beginning of current period
Changes of items during the period

Balance at the end of current period
Treasury stock
Balance at the beginning of current period- 49 -

(Million yen)Previous fiscal year

Current fiscal year

(April 1st, 2011 to March 31st, 2012)(April 1st, 2012 to March 31st, 2013)

Changes of items during the period
Purchase of treasury stock(2,954)(1,438)

Disposal of treasury stock

422

171

(2,532)(1,266)(7,580)(8,847)57,70357,241Dividends from surplus(1,375)(1,495)

Net income

3,401

4,805

Purchase of treasury stock(2,954)(1,438)

Disposal of treasury stock

467

191

Total changes of items during the period

(461)

2,063

57,24159,305(57)

639

Net changes of items other thanshareholders' equity

697

504

Total changes of items during the period

697

504

639

1,144

(57)

639

Net changes of items other thanshareholders' equity

697

504

Total changes of items during the period

697

504

639

1,144

57,64557,881Dividends from surplus(1,375)(1,495)

Net income

3,401

4,805

Purchase of treasury stock(2,954)(1,438)

Total changes of items during the period
Balance at the end of current period
Total shareholders' equity
Balance at the beginning of current period
Changes of items during the period

Balance at the end of current period
Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Balance at the beginning of current period
Changes of items during the period

Balance at the end of current period
Deferred gains or losses on hedges
Balance at the beginning of current period
Changes of items during the period

Balance at the end of current period
Total net assets
Balance at the beginning of current period
Changes of items during the period- 50 -

(Million yen)Previous fiscal year

Current fiscal year

(April 1st, 2011 to March 31st, 2012)(April 1st, 2012 to March 31st, 2013)

Disposal of treasury stock

467

191

Net changes of items other than shareholders'equity697

504

Total changes of items during the period

235

2,568

57,88160,450

Balance at the end of current period- 51 -

(4) Notes to Non-consolidated Financial Statement(Notes regarding the assumption for going concern)
Not applicable(Significant accounting policies)
1. Valuation standards and methods for securities(1) Held-to-Maturity Securities- Amortized cost method (straight-line method)(2) Shares of subsidiaries and affiliates- Stated at cost based on the moving average method(3) Other securities
Marketable securities- Stated at fair value based on the market price as of the end of the fiscal year.
(Unrealized holding gains or losses are reported in a component of “Net assets”, with the cost of“Securities” sold is calculated by the moving average method.)
Non-marketable securities- Stated at cost based on the moving average method.
For investments in the investment enterprise limited Liability association and similar
associations (deemed to be “Securities” pursuant to Article 2, Paragraph 2 of the Financial
Instruments and Exchange Law), the net amount corresponding to the ownership percentage isused, based on the most recent financial statements available as of the reporting date and othermaterials stipulated in the partnership contract.
2. Valuation standards and methods for inventories
The cost method (the amounts stated in the balance sheets are calculated by writing down the bookvalues based on lower profitability) is used as a valuation standard.
Merchandise and finished goods- Stated at cost determined by the first-in, first-out method.
Work in process- Stated at cost based on the specific cost method.
Raw materials- Stated at cost determined by the gross average method.
Supplies- Stated based on the last purchase price method.
3. Depreciation method for noncurrent assets(1) Property, plant and equipment (excluding lease assets)
Depreciated by the declining balance method. However, buildings (except for building
attachments) acquired on or after April 1, 1998 were depreciated using the straight-line method.
In addition, the lifetime are as follows:
Buildings:
3 to 50 years
Structures:
10 to 60 years
Machinery and equipment:
8 to 17 years
Vehicles and delivery equipment: 4 to 6 years
Tools, instruments and fixtures:
2 to 20 years
Assets with an acquisition cost of 100,000 yen or more but less than 200,000 yen were evenly
amortized over a three-year period.
Of the tools, instruments and fixtures, the oxygen concentrator devices (assets for rental) weredepreciated by the straight-line method with the estimated rental period (four years) as adepreciation year.

- 52 -

(2) Intangible assets (excluding “Lease assets”)
Depreciated by the straight-line method.
Software for internal use is amortized by the straight-line method over its useful life of five years.
As for software for sale in the market, the Company records the larger of an amortization based on
projected sales volume for the effective sales period (no longer than three years) or a uniform
amortization over the effective remaining sales period.
(3) Lease assets“Lease assets” in finance lease transactions that do not transfer ownership
The straight-line method is used, based on the assumption that the useful life is the lease term andthe residual value is zero.
4. Basis for provision of allowances(1) Allowance for doubtful accounts
To prepare for losses incurred by bad debts, the amount of potential loss is calculated by using thehistorical loss ratio in the case of general loans or receivables. Potential losses for specific loans or
receivables, for which we have concerns regarding their collectability, are calculated by assessing thepossibility of collection for each individual account.
(2) Provision for bonuses
To prepare for the payment of bonuses to employees, we reserve an amount corresponding to current
fiscal year’s portion of estimated bonus payments to employees.
(3) Provision for director’s bonuses
To prepare for the payment of bonuses for directors and corporate auditors, we reserve an amountcorresponding to current fiscal year’s portion of estimated bonus payments to directors and corporate
auditors.
(4) Provision for retirement benefits
To prepare for the payment of retirement benefits for employees, the amount recognized as accruingat the end of current fiscal year was reserved, based on estimated retirement benefit obligation andpension assets at the end of current fiscal year.
Past service liabilities are amortized, using the straight-line basis over a certain number of years (10years), which are less than the average remaining years of service of the employees when they
incurred.
Actuarial differences are amortized, using the straight-line basis over a certain number of years (10years), which are less than the average remaining years of service of the employees when they
incurred, from the fiscal year after the one in which they arise.
(5) Provision for product warranties

To prepare for the expenses incurred by free repair to be implemented after the delivery of the
products, an estimated amount of the repair expenses was reserved on the basis of the estimatedproportion of such expenses to net sales and the estimated amount of such expenses forindividual products.
(6) Allowance for investment loss
In view of the financial position of subsidiaries, the Company recorded an allowance for investment
loss in preparation for any loss expected to be incurred by investing in subsidiaries.

- 53 -

5. Other important matters for preparation of financial statements
Accounting treatment of consumption tax, and other taxes, etc.
The Consumption tax and other taxes, etc. are excluded from profits and losses.
(Changes in accounting policies)(Change in accounting policies that are difficult to separate from changes in accounting projections)
According to the revision of the Corporation Tax Act, the Company changed the method of depreciation
to the one based on the revised Corporation Tax Act for “Property, plant and equipment” acquired after
April 1st, 2012, effective from fiscal year under review.
The effect of this change on the “Operating income”, “Ordinary income” and “Net income before taxes”
for fiscal year under review is minimal.

6. Others(1)Changes of directors(i) Representative Director
Not applicable(ii) Other directors
・Director to retire
Director: Mr. Kenji Ozaki (Office of the president)*This English translation is for reference purposes only. The original Japanese version will prevail as theofficial authoritative version.

- 54 -