Summary Report on Financial Results for Fiscal Year Ended March 2011(Japan GAAP)May 13th, 2011
Listing: Osaka Securities Exchange
Company name: Fukuda Denshi Co., Ltd.
Code No.:6960(http://www.fukuda.co.jp)
Representative: Kotaro Fukuda, President & CEO
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: June 29th, 2011
Scheduled date for commencement of dividend payment:
June 30th, 2011
Scheduled date for filing the securities report:
June 29th, 2011
Supplementary material development:
None
Financial results meeting:None(Amounts less than one million yen are discarded)
1. Consolidated financial results for year ended March 2011 (April 1 , 2010 through March 31st, 2011)(1) Consolidated operating results(percentages represent increases or decreases from the previous year)st

Net sales
millionyen%

Operating income
million%yen

Ordinary income
million%yen

Net income
millionyen

Year ended
90,169
2.3
8022
14.6
8,039
14.7
4,111
March 2011
Year ended
88,147
(1.6)
6,999
4.2
7,006
4.4
3,498
March 2010
(Note)Comprehensive income
Year ended March 2011: 3,602 million yen / (20.2) % Year ended March 2010: 4,516 million yen / - %Net income per
share

Fully diluted net
income per share

yen

yen

Year ended
March 2011
Year ended
March 2010

Ratio of net
income toshareholders’equity

%
17.5
(7.2)

Ratio of ordinary
income to total
assetsRatio of operating
income to net
sales

%

%

%

228.66

-

5.4

7.8

8.9

186.40

-

4.6

6.9

7.9

(Reference) Profit or loss on equity method investments:
Year ended March 2011: - million yen
Year ended March 2010: - million yen(2) Consolidated financial situation
million yen

million yen

Shareholders’ equity
ratio%

Year ended March 2011

103,056

75,62373.4

4,397.55

Year ended March 2010

102,909

76,04973.94,117.89

Total assets(Reference) Shareholders’ equity:Year ended March 2011: 75,623 million yen

Net assets

Year ended March 2010: 76,049 million yen-1-

Net assets per shareyen(3) Consolidated cash flows
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

Year ended March 201113,760(11,313)(4,038)26,348Year ended March 2010

12,195(7,516)(4,279)28,023

2. Dividends
Annual Dividend
End of
End of End of the End of
the first the second
thirdquarterquarterquarter the termyenYear ended
March 2010
Year ending
March 2011
Year ending
March 2012
(estimate)

AnnualRatio of
Total dividends Payout ratio dividends to net(for the year) (consolidated)assets(consolidated)

yen

yen

million yen

%

%

-

40.00

-

40.00

80.00

1,477

42.9

2.0

-

40.00

-

40.00

80.00

1,375

35.0

1.9

-

40.00

-

40.00

80.00

41.1

3. Forecast of consolidated financial results for fiscal year ending March 2012 (April 1st, 2011 through March 31st,2012)(percentages represent increases or decreases from the previous year for the full-year figures, and from the second
quarter of the previous year for the consolidated total sum of second quarter figures.)millionyen%

millionyen%

millionyen%

millionyen%

Net income
per shareyen

Consolidated second
quarter (Total)

40,000

(7.7)

2,800

(31.7)

2,800(32.2)

1,400(42.7)

77.87

Full-year

88,800

(1.5)

7,000

(12.7)

7,000(12.9)

3,500(14.9)

194.67

Net sales

Operating income

Ordinary income-2-

Net income

4. Others(1) Change in significant subsidiaries during the year under review: None
New: None
Exclusion: None
(2) Changes in accounting principles and procedures and display(i) Changes owing to adoption of revised accounting standards or such like: Yes(ii) Changes other than (i) above: None
(3) Number of outstanding issues (common stock)(i) Number of outstanding shares at the year-end (including treasury stock)
Year ended March 2011: 19,588,000 sharesYear ended March 2010: 19,588,000 shares(ii) Number of shares of treasury stock at the year-end:
Year ended March 2011: 2,391,355 sharesYear ended March 2010: 1,119,910 shares(ⅲ) Average number of shares during the period
Year ended March 2011: 17,979,094 sharesYear ended March 2010: 18,768,028 shares(Reference) Overview of non-consolidated financial results
1. Non-consolidated financial results for fiscal year ended March 2011 (April 1st, 2010 through March 31st, 2011)(1) Non-consolidated operating results(percentages represent increases or decreases from the previous year)

Year ended
March 2011
Year ended
March 2010

Net sales
millionyen%

55,832

2.2

3,181

54,622

(3.2)

2,780

Net income per share
yenYear ended
March 2011
Year ended
March 2010

Operating income
million%yen

Ordinary income
million%yen

Net income
million
yen

14.4

4,493

9.9

3,064

20.3

(18.2)

4,089(17.1)

2,546(15.0)

Fully diluted net
income per shareyen

170.45-135.68--3-%

(2) Non-consolidated financial situation
Total assets

Net assets

Shareholders’equity ratio

million yen
million yen%
Year ended
86,30057,645
66.8
March 2011
Year ended
84,80959,074
69.7
March 2010
(Reference) Shareholders’ equity:Year ended March 2011: 57,645 million yen Year ended March 2010: 59,074 million yen

Net assets per shareyen
3,352.16
3,198.72* Implementation status of quarterly review procedures
At the time of disclosure of this report, review procedures for the quarterly financial statements pursuant to the
Financial Instruments and Exchange Law had not been completed.
* Explanation about appropriate use of the forecasts of financial results, and other noteworthy matters
1. The forecasted financial results described above are based on information available as of May 13th, 2011. Actual
results may differ from the results projected and presented hereby for a variety of reasons.
2. With respect to the preconditions for the forecast of financial results, please refer to “(1) Analysis of operation
results” under the “1. Operating results" section on page 7-4-

Contents of the Attached Materials
1. Operating results-------------------------------------------------------------------------------------------------------

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

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

8(3) Basic policies for profit distribution, and dividends for fiscal year ended March 2010 and fiscal year
ending 2011----------------------------------------------------------------------------------------------------------

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------------------------------------------------------------------

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

14(5) Other important managerial matters of the Company ------------------------------------------------------------

15

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

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

16(2) Consolidated income statement and statement of comprehensive income （Consolidated statements ofincome） ------------------------------------------------------------------------------------------------------------------

18(3) Statements of changes in shareholders’ equity --------------------------------------------------------------------

20(4) Consolidated statements of cash flows -----------------------------------------------------------------------------

22(5) Events or conditions that may cast significant doubt upon the entity’s ability to continue as a going
concern -------------------------------------------------------------------------------------------------------------------

24(6) Basic significant matters regarding the preparation of consolidated financial statements ---------------------

24(7) Changes in basic significant matters regarding the preparation of consolidated financial statements

-----

31

(8) Changes in the presentation ------------------------------------------------------------------------------------------

32(9) Additional information-----------------------------------------------------------------------------------------------

32(10) Notes to Consolidated Financial Statement ----------------------------------------------------------------------

32(Consolidated balance sheets) ------------------------------------------------------------------------------------------

32(Consolidated statements of income)33(4) Issues to be addressed----------------------------------------------------------------------------------(Consolidated statements of comprehensive income)---------------------------------------------------------------

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

36(Consolidated statements of cash flows) ------------------------------------------------------------------------------

38(Lease transactions) ------------------------------------------------------------------------------------------------------

39(Financial Products) -----------------------------------------------------------------------------------------------------

39(Securities) ----------------------------------------------------------------------------------------------------------------

39(Statements of changes in shareholders’ equity)-5-

(Derivative transactions) ------------------------------------------------------------------------------------------------

39(Retirement benefits) ----------------------------------------------------------------------------------------------------

39(Stock options, etc.) ------------------------------------------------------------------------------------------------------

39(Tax effect accounting)39-----------------------------------------------------------------------------------------------(Real estates including rentals)--------------------------------------------------------------------------------------

39(Segment information etc.)-----------------------------------------------------------------------------------------

39(Transactions with related parties)----------------------------------------------------------------------------------

42---------------------------------------------------------------------------------------

42-----------------------------------------------------------------------------------------------

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

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

43---------------------------------------------------------------------------

44-----------------------------------------------------------------------------------------------------

44(2) Statements of income---------------------------------------------------------------------------------------------

47(3) Statements of changes in shareholders’ equity ---------------------------------------------------------------------

50(4) Events or conditions that may cast significant doubt upon the entity's ability to continue as a going
concern-------------------------------------------------------------------------------------------------------------

53(5) Significant accounting policies---------------------------------------------------------------------------------

53(6) Changes in accounting methods -----------------------------------------------------------------------------------

58

6. Others-----------------------------------------------------------------------------------------------------------------

59(1) Changes of officers --------------------------------------------------------------------------------------------------

59

-6-

1. Operating results(1) Analysis of operation results(i) Overview of performance for the consolidated fiscal year under review
Year ended March2010
AmountYear ended March2011
Amount88,147

90,169

2,022

2.3

6,999

8,022

1,022

14.6

7,006

8,039

1,033

14.7

3,498

4,111

612

17.5

186.40228.66

42.26

22.7

Net sales(million yen)
Operating income(million yen)
Ordinary income(million yen)
Net income(million yen)
Net income per share(yen)Comparison with the previous year
ChangeRate of change (%)

Although the Japanese economy shows signs of recovery in employment and income environment with an increase inexports and production during the fiscal year under review, the impact of the Great East Japan Earthquake which
occurred on March 11th 2011 was enormous and the future of the Japanese economy became uncertain.
In the medical equipment industry, the remuneration for medical services was positively changed for the first time inten years last spring, and the business environment surrounding medical institutions is expected to improve.
Under such economic circumstances, the Group posted a consolidated net sale of 90,169 million yen (up 2.3%
year-on-year) for the consolidated fiscal year under review. With regard to incomes, consolidated operating income
totaled 8,022 million yen (up 14.6% year-on-year) and consolidated ordinary income totaled 8,039 million yen (up14.7% year-on-year) respectively. Due to the Group appropriate 792 million yen for extraordinary losses related to theGreat East Japan Earthquake, a consolidated net income were 4,111 million yen (up 17.5% year-on-year).
(ii) Overview of performance for the consolidated fiscal year under review by segment
Business segment

Physiologicaldiagnostic equipment
Patient
monitoring
equipment
Medicaltreatment
equipment
Consumables and otherproducts
Total

Year ended March 2010

Year ended March 2011

Comparison with theprevious year
ChangeRate of(million yen) change (%)

Amount(million yen)

Ratio (%)

Amount(million yen)

Ratio (%)

24,61527.9

25,661

28.5

1,045

4.2

7,022

8.0

8,010

8.9

987

14.1

37,56442.6

36,771

40.8

(792)

(2.1)

18,94521.5

19,727

21.8

781

4.1

88,147100.0

90,169

100.0

2,022

2.3

A. Physiological diagnostic equipment segment
Sales of electrocardiographs, vascular screening systems and blood cell counters increased. But the sales ofultrasound diagnostic systems declined.
Sales of database system products increased due to the recovery of capital investment of the hospitals.
As a result, consolidated net sales were 25,661 million yen (up 4.2% year-on-year).
B. Patient monitoring equipment segment
During the final quarter of the consolidated term, sales increased domestically. On the other hand, sales overseas
decreased.
As a result, consolidated net sales were 8,010 million yen (up 14.1% year-on-year).

-7-

C. Medical treatment equipment segment
The business of renting medical equipment for home treatment continued to increase. But the sales ofpacemakers and catheters decreased due to the revisions of the official reimbursement prices. Termination of
distribution agreement for intravascular ultrasound imaging diagnostic devices affected sales of catheters afterNovember 2010.
The sales of ventilators decreased due to the backlash of demand for the new type of influenza during previous
fiscal year.
Sales of Automated External Defibrillators (AEDs) declined, affected by the economic stagnation.
As a result, consolidated net sales were 36,771 million yen (down 2.1% year-on-year).
D. Consumables and other products segment
In this segment, recording paper, disposable electrodes, and consumables used for devices handled by the above
segments, as well as maintenance and repair services are included mainly.
Consolidated net sales for this segment were 19,727 million yen (up 4.1% year-on-year).
(iii) Outlook for fiscal year ending March 2012
Year ended
March 2011
AmountNet sales(million yen)
Operating income(million yen)
Ordinary income(million yen)
Net income(million yen)
Net income per share(yen)Year ending March2012
AmountComparison with the previous year
ChangeRate of change (%)

90,16988,800(1,369)

(1.5)

8,022

7,000

(1,022)(12.7)

8,039

7,000

(1,039)(12.9)

4,111

3,500

(611)

(14.9)

228.66

194.67(33.99)(14.9)

Outlook for fiscal year ending March 2012 is uncertain due to the Great East Japan Earthquake.
Group member Fukuda Denshi Tagajo Laboratory was affected by the earthquake and the tsunami and operations
remain suspended as of the present.
In addition, it is possible that some medical devices manufactured by Fukuda Denshi at the Shiroi Factory will be
subject to future delivery delays or supply disruptions for a period of time due to the damages to the companies that
supply us with certain electronic components and the predicted power consumption predicament this summer.
In consideration of such circumstances, the Group expects consolidated net sales of 88,800 million yen, consolidated
operating income of 7,000 million yen, consolidated ordinary income of 7,000 million yen, and consolidated net incomeof 3,500 million yen for the fiscal year ending March 2012.
(2) Analysis of financial situation(i) Assets, liabilities and net assets
Total assets increased 146 million yen from the end of the previous fiscal year to reach 103,056 million yen. The
main factors are the increase of 4,912 million yen in “investment securities” despite the decrease of 1,717 million yen
in “cash and deposits”, decrease of 1,510 million yen in “trade notes and accounts receivable” and the decrease of
1,023 million yen in “merchandise and products”.
Total liabilities increased 573 million yen from the end of the previous fiscal year to reach 27,433 million yen. The
main factors are the increase of 885 million yen in “income tax payable” and increase of 620 million yen in“long-term borrowings” despite a decrease of 1,076 million yen in “Trade notes and accounts payable”.
Net assets decreased 426 million yen from the end of the previous fiscal year to reach 75,623 million yen. The
decrease is primarily because of an increase of 2,546 million yen in “treasury stock” and decrease of 468 million yen
in “evaluation difference on other securities” despite an increase of 2,628 million yen in “retained earnings”.

-8-

(ii) Consolidated cash flows(million yen)

Cash flows from operating activities

Year ended March
2010
12,195

Year ended March
2011
13,760Cash flows from investing activities(7,516)(11,313)(3,796)

Cash flows from financing activities(4,279)(4,038)

240

(11)

(83)

(72)

388

(1,674)(2,063)28,023

26,348(1,674)

Effect of exchange rate changes
Increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at the end of the
fiscal years

Change1,564(Cash flows from operating activities)
In the consolidated fiscal year under review, net cash provided by operating activities was 13,760 million yen, up
1,564 million yen from the previous year. Included are “net income before taxes” of 7,679 million yen, “depreciation
costs” of 5,978 million yen and decrease in “trade receivables” of 1,456 million yen.
(Cash flows from investing activities)
Net cash used in investing activities was 11,313 million yen, down 3,796 million yen from the previous year.
Included are increase in “time deposits” amounted to 4,057 million yen, purchase of “acquisition of tangible fixed
assets” amounted to 5,262 million yen and purchase of “securities and investment securities” were 2,307 million yen.
(Cash flows from financing activities)
Net cash used in financing activities was 4,038 million yen, up 240 million yen, mainly because of the payment of“purchase of treasury stock” of 2,548 million yen and the payment of “dividends” of 1,477 million yen. As a result,the outstanding balance of cash and cash equivalents was 26,348 million yen at the end of the fiscal year, down 1,674
million yen compared to the end of the previous fiscal year.
(Reference) Trends in cash flow indicators

(%)

Year
ended
March 2007

Year
ended
March 2008

Year
ended
March 2009

Year
ended
March 2010

Year
ended
March 2011

Shareholders’ equity ratio

71.9

74.1

73.9

73.9

73.4

Marketvalue-based
shareholders’ equity ratio

76.8

47.2

36.4

38.8

42.8

Years needed to repay debts

0.4

0.6

0.2

0.2

0.1

124.3

69.1

275.5

419.6

589.6

Interest coverage ratio
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 ofoutstanding shares (excluding treasury shares) 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.

-9-(3) Basic policies for profit distribution, and dividends for fiscal year ended March 2010 and fiscal year ending 2011
The Company regards the returning of profits to shareholders as one of its key managerial measures, and makes it abasic policy to continuously provide shareholders with stable returns concretely more than 30% consolidated payout
ratio, by improving and reinforcing its corporate structure and expanding competitive businesses while securing thenecessary internal reserves. The Company has set the minimum trading unit at 100 shares, aiming to have its sharesspread further among investors and to have its shares more widely circulated on the market.
Year-end dividend of 40 yen per share will be paid for the fiscal year under review, making annual dividend 80 yen
per share as in the previous year inclusive of interim dividend of 40 yen per share.
(4) Business risks(i) Effect of medical administration
The Japanese Government has been pushing forward with its policies of improving the quality of medical careand 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 be investigated and finallyapproved 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 regulatory change ismade in the future, it is likely that this will adversely affect the operating results and financial standing of theGroup.
(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 andequipment. We strive to ensure that we can continue making transactions. If any problem arises that will make it
impossible to continue stable transactions with the exporters, the operating results and financial standing of theGroup 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 to unforeseen 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 Company 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 in foreigncountries, as well as terrorist acts, natural disasters, or other incidents could adversely affect the Company’sbusiness performance and financial position.
(vi) Effect of the company group by The Great East Japan Earthquake.
Group member Fukuda Denshi Tagajo Laboratory was affected by the earthquake and the tsunami and operations
remain suspended as of the present.
In addition, it might be possible that some medical devices manufactured by Fukuda Denshi at the Shiroi Factory
will be subject to future delivery delays or supply disruptions for a period of time due to the damages to thecompanies that supply us with certain electronic components and the predicted power consumption predicament
this summer. It may adversely affect the operating results and financial standing of the Group.
(ⅶ) Important business relationships between the Company and its executives or shareholders with voting 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 (as of- 10 -

March 31st, 2011). Kotaro Fukuda, director of the Company, and his close relatives own 100% of the shares in
Atomic Sangyo.
Atomic Sangyo produces and sells electrocardiogram recording paper, and also engages in the business of 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 and consideration ofmarket prices, and payment terms are the same as those generally adopted in the marketplace.
Office rental contracts are based on actual transactions in nearby locations.

- 11 -

2. The Fukuda Denshi GroupThe Company consists of 54 subsidiaries and 1 affiliate; 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; ultrasound diagnostic
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 Tagajo 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; and Beijing Fukuda Denshi Medical Instruments Co., Ltd.
- Patient monitoring equipment segment
Production, purchase, and sales of patient monitors that monitor various physiological parameters over a long
period of time. They are used for serious cases after patients’ have undergone operations and for patients with acutecardiac disease.
<Major companies involved>
Production: Fukuda Denshi Co., Ltd; Fukuda Denshi Tagajo Co., Ltd.; and 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; and 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 patientswith respiratory insufficiency breathe easier; and other equipment.
<Major companies involved>
Production: Fukuda Denshi Co., Ltd; Fukuda Denshi Tagajo 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 Tagajo 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.

RentalRepairs in Japan

Domestic warehousemanagement andpacking/shipping

Consolidated subsidiary
Fukuda Denshi
Technology Service

Consolidated subsidiaries
Fukuda Logistics
CenterProducts andmerchandise

Entrustment of
warehousemanagement andpacking/shipping

Parts

Supply of materials

Consolidated
subsidiary
Fukuda Life
Tech Co.,
Ltd.

Consolidated subsidiaryBeijing Fukuda
Denshi Medical
Instruments Co., Ltd.

Repairs

Products andmerchandise

Products and merchandise

Rental

Products and merchandise

Products and merchandise

Consolidated subsidiaries
Fukuda Denshi Hokkaido and other sales subsidiaries

Products

Consolidated
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

Supply of materials

Physiological diagnostic
equipment segment

Consumables and otherproducts segment

Supply ofmaterials

Unconsolidated subsidiaries
ME Times
Miyagi Prefecture Medical Information ResearchCenterNiigata Medical Information Development Center
IVAC
Okusonic
Affiliated company not accounted for by theequity method
Fukuda Pulmo

Products*
Related party
Atomic Sangyo
Co., Ltd.

Consolidated subsidiary
Fukuda Denshi Tagajo Co., Ltd.

Publication, sales, and other processing of medical books

Products

Non-life insurance agency operations
Unconsolidated
subsidiaries
Fukushin* 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 its foundation in 1935, 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 by fulfilling our social
mission and developing medical equipment.”
Responding to significant changes in the social environment, medical equipment has increasingly been expected toplay roles not only in the conventional diagnostics and treatment of diseases but also in the maintenance andimprovement 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 toraise the quality of products to offer to customers, develop products that provide differentiation from our competitors,
and carry out product strategies that meet varying medical needs, aiming to become a company that is trusted bycustomers.
(2) Targeted management indices
The Company basically aims for continued growth and securing certain profitability, targeting consolidated net salesof 100,000 million yen or more, ratio of consolidated ordinary income to consolidated net sales of 8% or more and apayout ratio of 30% or more by the year ending March 2015.
(3) Medium- to long-term management strategies
As its medium-term goal, the Company continuously formulates a three-year medium-term business plan, underwhich it examines group-wide issues when necessary, and implements solutions to the issues.
The basic management strategies for the new three-year medium term business plan starting from the year ending
March 2012 are as follows:(i) Policies of the medium-term business planTo establish a solid management structure based on the customer-first principle and, with an efficient organizational
operation management, responding to the progress of an aging society with fewer children in Japan.
(ii) Business strategies
To proactively make investments while focusing on efficient management;
To promote the expansion of businesses by domain;
To strengthen the corporate structure in order to improve the efficiency of development processes; andTo increase productivity by pursuing overall optimum solutions from development to production.
(iii) Sales strategies
To capture the acute care market;
To enhance operations in the homecare market; andTo expand the maintenance service business.
(iv) 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.
(v) Increase of corporate value
To establish a stable earnings structure and return profits to shareholders;
To actively tackle environmental issues; andTo contribute to society through medical equipment.
(4) Issues to be addressed
In Japan, various medical system reforms have been carried out, including: the revision of official reimbursement- 14 -

prices for medical treatment fees, drug prices and specific medical materials covered by insurance; an increasing
adoption of the comprehensive medical fee payment system, called diagnosis procedure combination (DPC); and theimplementation of a new medical insurance system for elderly persons aged 75 or over.
Given the above and possible future reforms, we expect our market environment to remain severe. Against thisbackdrop, the Company will continue to strive to raise its corporate value, develop products that provide differentiationfrom our rivals, strengthen the maintenance service and supplies sales businesses to secure profits, make investments
for enhancing the sales system, and reduce costs to become more price competitive than our rival manufacturers athome 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(i) Acquisition of treasury stock
The Board of Directors approved on the acquisition of Fukuda Denshi’s own shares under the Article 156 of theCompanies Act of Japan applied as mutatis mutandis stipulated under the Article 165 (3) of the same Law during its
meeting held on November 4th, 2010, and as of November 5th, 2010, 1,271,300 common shares have been acquired
through a fixed price trading, which amounted to 2,546 million yen.
(ii) Important contracts concerning management
A. Distribution agreement
In the third quarter of fiscal year, an important contract was terminated due to the expiration of the contract period:
Contractor

Partner

Terms

Fukuda Denshi

St .Jude Medical Inc.
(U.S.A)

Medical Electronics Devices (pacemaker)
exclusive distributorship agreement for Japan

Contract period or thecontract date
From: Jan 1st, 1997
To: Dec 31st,2010

Note: The distribution agreement was terminated on December 31st, 2010.
By termination of above agreement, a new important distribution agreement was concluded as follows.
Contractor
Fukuda Denshi

Partner
BostonJapanscientific

Terms
Medical Electronics Devices (pacemaker)
distributorship agreement for Japan

Contract period or thecontract date
January 19th,2011

B. Impact on Financial Results
The impact on financial performance in this fiscal year caused by the above termination and conclusion of the
distribution agreement is negligible.

- 15 -

4. Consolidated financial statements(1) Consolidated balance sheets(Million yen)Previous fiscal year
(as of March 31st, 2010)

Fiscal year under review (as ofMarch 31st, 2011)

AssetsCurrent assets
Cash and deposits

28,63026,912

Trade notes and accounts receivable

24,082

22,572

Securities

1,099

1,199

Merchandise and products

6,920

5,897

86

40

Raw materials and supplies

Work in process

1,664

1,386

Deferred tax assets

1,874

2,391

Other

1,140

1,228

Allowance for doubtful accounts

(212)

(54)

Total current assets

65,28561,574

8,807

8,794

Accumulated depreciation and impairment losses(4,687)(5,126)

Buildings and structures (net)

4,120

3,668

Machinery and delivery equipment

665

528

Accumulated depreciation and impairment losses

(435)

(357)

Machinery and delivery equipment (net)

229

170

23,12024,549(13,506)(14,716)

9,613

9,833

5,938

5,883

291

265

Accumulated depreciation and impairment losses

(83)

(134)

Lease assets (net)

208

131

Fixed assets
Tangible fixed assets
Buildings and structures

Tools, instruments and fixtures
Accumulated depreciation and impairment losses
Tools, instruments and fixtures (net)Land
Lease assets

Construction in progress

34

0

Total tangible fixed assets

20,144

19,687

2,344

1,746

Intangible fixed assets
Investments and other assets*1 *3

Investment securities

7,422

*1

7,222

Deferred tax assets

3,326

3,319

Other

4,657

9,845

Allowance for doubtful accounts

(18)

(21)

Allowance for investment loss

(251)

(318)

Total investments and other assets

15,13420,047

Total fixed assets
Total assets- 16 -

37,623

41,481

102,909

103,056

(Million yen)Previous fiscal year
(as of March 31st, 2010)

Fiscal year under review(as of March 31st, 2011)

Liabilities
Current liabilities
Trade notes and accounts payable

13,836

12,760

Short-term borrowings

1,950

1,400

80

68

Income tax payable, etc.

1,497

2,383

Allowance for bonuses to employees

1,654

2,185

Allowance for bonuses to officers

117

145

Provision of allowance for product warranty

303

386

-

157

Other

2,754

2,949

Total current liabilities

22,19522,437

-

620

214

131

3,397

3,158

Allowance for retirement benefits to officers

173

184

Other

879

901

4,664

4,995

26,85927,433

Common stock

4,621

4,621

Capital surplus

9,982

9,982

Lease obligations

Allowance for disaster losses

Long-term liabilities
Long-term borrowings
Lease obligations
Allowance for retirement benefits

Total long-term liabilities
Total liabilities
Net assets
Shareholders’ equity

Retained earnings

63,67466,303

Treasury stock(2,501)(5,047)

Total shareholders’ equity

75,77775,859411(57)

Foreign currency translation adjustment account

(139)

(179)

Other total accumulated comprehensive income

272

(236)

-

-

76,04975,623102,909

103,056

Other accumulated comprehensive income
Evaluation difference on other securities

Minority interests
Total net assets
Total liabilities and net assets- 17 -

(2) Consolidated income statement and statement of comprehensive income （Consolidated statements of income）
Previous fiscal year

(Million yen)
Fiscal year under review (April(April 1st, 2009 to March 31st, 2010)

1st, 2010 to March 31st, 2011)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses*2 *3Foreign exchange losses
Provision for allowance for investment loss

Loss on investment in partnership
Other
Total non-operating expenses
Ordinary income
Extraordinary gains
Gains on sale of fixed assets
Gain on sale of investment securities
Gains on reversal of allowance for doubtful accounts
Gains on reversal of allowance for losses on restructuring
Gains on insurance surrender
Profit from insurance claim
OthersTotal extraordinary gains
Extraordinary losses
Losses from the prior-period adjustment
Losses on sale of fixed assets
Losses on disposal of fixed assets
Impairment losses
Loss on valuation of investment securities
Loss on valuation of golf club membership
Loss on adjustment for changes of accounting standard for
asset retirement obligations
Loss from disaster
Others88,14747,75440,39233,393
6,999

*1

*2 *3

90,16948,311
41,857
33,835
8,022

23
160
37
155
377

39
124
191
355

29
251
74
14
370
7,006

23
119
66
104
24
338
8,039

*4

*4

129
0
*7
18
*8
10
698
1

7
*7
14
*8
245
8
1

-

21

4
10
2
323
33
2
377

*5

*6

54

Total extraordinary losses

2
63
152
198
15
433

*6

*9

490
4

912

792

Net income before taxes

6,471

7,679

Corporate, inhabitants’ and enterprise taxes

2,823

3,764

Corporate tax adjustments

149

(195)

2,972

3,568

Net income before adjustment for minority

-

4,111

Minority interests in earnings of consolidated subsidiaries

0

-

3,498

4,111

Total income taxes

Net income- 18 -

Previous fiscal year

(Million yen)
Fiscal year under review (April(April 1st, 2009 to March 31st, 2010)

1st, 2010 to March 31st, 2011)

Income before minority interests

-

4,111

Valuation difference on available-for-sale securities

-

(468)

Foreign currency translation adjustments

-

(39)

Other total comprehensive income

-

(508)

-

3,602

-

3,602

-

-

Other comprehensive income

Comprehensive income(Breakdown)Comprehensive
shareholders

incomerelatedtoparentcompany

Comprehensive income relating to minority shareholders- 19 -

(3) Statements of changes in shareholders’ equity(Million yen)Previous fiscal year

Fiscal year under review(April 1st, 2009 to March 31st, 2010)(April 1st, 2010 to March 31st, 2011)

4,621

4,621

-

-

4,621

4,621

9,982

9,982

Disposal of treasury stock

(0)

(0)

Total changes during the fiscal year

(0)

(0)

9,982

9,982

61,693

63,674(1,508)(1,477)(8)(4)

Net income

3,498

4,111

Total changes during the fiscal year

1,980

2,628

63,67466,303(766)(2,501)(1,735)(2,547)00(1,735)(2,546)(2,501)(5,047)75,53175,777(1,508)(1,477)(8)(4)

Net income

3,498

4,111

Acquisition of treasury stock(1,735)(2,547)

0

0

245

82

75,77775,859

Shareholders’ equity
Common stock
Balance at the end of the previous fiscal year
Changes during the fiscal year
Total changes during the fiscal year
Balance at the end of the fiscal year
Capital surplus
Balance at the end of the previous fiscal year
Changes during the fiscal year

Balance at the end of the fiscal year
Retained earnings
Balance at the end of the previous fiscal year
Changes during the fiscal year
Dividends paid
Bounties and welfare funds for employee

Balance at the end of the fiscal year
Treasury stock
Balance at the end of the previous fiscal year
Changes during the fiscal year
Acquisition of treasury stock
Disposal of treasury stock
Total changes during the fiscal year
Balance at the end of the fiscal year
Total shareholders’ equity
Balance at the end of the previous fiscal year
Changes during the fiscal year
Dividends paid
Bounties and welfare funds for employee

Disposal of treasury stock
Total changes during the fiscal year
Balance at the end of the fiscal year

- 20 -

(Million yen)Previous fiscal year

Fiscal year under review(April 1st, 2009 to March 31st, 2010)(April 1st, 2010 to March 31st, 2011)

(595)

411

1,006

(468)

1,006

(468)

411

(57)

(149)

(139)

10

(39)

10

(39)

(139)

(179)

(745)

272

1,017

(508)

1,017

(508)

272

(236)

9

-

(9)

-

(9)
-

-

74,79576,049(1,508)(8)
3,498(1,735)0(1,477)(4)
4,111(2,547)
0

1,008

(508)

1,253

(426)

76,04975,623

Other accumulated comprehensive income
Evaluation difference on other securities
Balance at the end of the previous fiscal year
Changes during the fiscal year
Changes in items other than shareholders’ equity
during the fiscal year (net)Total changes during the fiscal year
Balance at the end of the fiscal year
Foreign currency translation adjustment accountBalance at the end of the previous fiscal year
Changes during the fiscal year
Changes in items other than shareholders’ equity
during the fiscal year (net)Total changes during the fiscal year
Balance at the end of fiscal year
Other total accumulated comprehensive income
Balance at the end of the previous fiscal year
Changes during the fiscal year
Changes in items other than shareholders’ equity
during the fiscal year (net)Total changes during the fiscal year
Balance at the end of the fiscal year
Minority interests
Balance at the end of the previous fiscal year
Changes during the fiscal year
Changes in items other than shareholders’ equity during
the fiscal year (net)Total changes during the fiscal year
Balance at the end of the fiscal year
Total net assets
Balance at the end of the previous fiscal year
Changes during the fiscal year
Dividends paid
Bounties and welfare funds for employee
Net income
Acquisition of treasury stock
Disposal of treasury stock
Changes in items other than shareholders’ equity during
the fiscal year (net)Total changes during the fiscal year
Balance at the end of the fiscal year

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 andregulations.

- 21 -

(4) Consolidated statements of cash flows(Million yen)
Fiscal year under review

Previous fiscal year
(April 1st, 2009 to March 31st, 2010)(April 1st, 2010 to March 31st, 2011)

Net income before taxes

6,471

7,679

Depreciation and amortization

5,813

5,978

(3)

-

Impairment losses

10

245

Losses from disaster-

490

Increase (decrease) in allowance for investment loss

251

66

Increase (decrease) in allowance for doubtful accounts

(28)

(154)

Increase (decrease) in allowance for
employees

(84)

533

Increase (decrease) in allowance for bonuses to officers

427

Increase (decrease) in provision of allowance for productwarranties

303

83

Increase (decrease) in allowance for retirement benefits toemployees

166

(238)

Increase (decrease) in allowance for retirement benefits toofficers(18)

10Interest and dividend income

(183)

(164)

Interest expenses

29

23

Losses (gains) from sale of fixed assets(4)4Losses on disposal of fixed assets

18

14

Losses(gains) on investment securities

-

(63)

Losses (gains) on valuation of investment securities

698

8

Losses (gains) on insurance surrender

(323)

(198)

Decrease (increase) in accounts receivable

(778)

1,456

Decrease (increase) in inventories

1,504

1,180

Increase (decrease) in accounts payable

854

(883)

Increase (decrease) in consumption tax payable, etc.

(35)

79

Other

138

371

Subtotal

14,804

16,549Interest and dividends received

172

152

Interest paid

(29)

(23)

Insurance received

68-

Payment for disaster losses

-

(35)

Corporate tax, etc. paid

(2,820)(2,882)

Net cash provided by operating activities

12,195

13,760Cash flows from operating activities

Increase (decrease)
restructuringinallowanceforlossesonbonuses to- 22 -

(Million yen)
Fiscal year under review

Previous fiscal year
(April 1st, 2009 to March 31st, 2010)(April 1st, 2010 to March 31st, 2011)(16)(4,057)

Acquisition of tangible fixed assets(5,149)(5,262)Acquisition of intangible fixed assets

(502)

(311)

Purchase of securities and investment securities(2,168)(2,307)

Proceeds from sale of securities and investment securities

1,000

1,587

Payments for insurance reserve(915)(1,206)

Proceeds from reversal of insurance reserve

256

437

Payments for loans

(100)

(120)

78

(72)

(7,516)(11,313)

(900)

(500)

Proceeds from long-term borrowings-

620

Repayment of long-term borrowings

(66)

(50)

(1,735)(2,548)00(1,508)(1,477)

Repayments of lease obligations

(67)

(83)

Dividends paid to minority shareholders(1)-(4,279)(4,038)

Effect of exchange rate changes on cash and cash
equivalents

(11)

(83)

Increase(decrease) in cash and cash equivalents

388(1,674)

27,63428,02328,023

26,348Cash flows from investing activities
Net decrease (increase) in time deposits

Other
Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings

Purchase of treasury stock
Sale of treasury stock
Dividends paid

Net cash used in financing activities

Cash and cash equivalents at the beginning of the fiscal year
*1

Cash and cash equivalents at the end of the fiscal year

- 23 -

(5)Events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern
Not applicable(6)Basic significant matters regarding the preparation of consolidated financial statements

1. Scope
consolidation

2. Application
equity methodofofPrevious fiscal year
(April 1st, 2009 to March 31st, 2010)(1) Number of consolidated subsidiaries: 51
Major consolidated subsidiaries are as
follows:
Fukuda Life Tech Co., Ltd.
Fukuda Denshi Hokkaido
Fukuda Cardiac Laboratory Co., Ltd.
went into liquidation as of November
2nd, 2009, and was excluded from thescope of consolidation.

(2) Names and other details of major
unconsolidated subsidiaries
Of the subsidiaries, ME Times, Fukushin
and two other companies were notincluded 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 to the owned
interest) had no material effect on the
consolidated financial statements.

Fiscal year under review(April 1st, 2010 to March 31st, 2011)(1) Number of consolidated subsidiaries: 49
Major consolidated subsidiaries are as
follows:
Fukuda Life Tech Co., Ltd.
Fukuda Denshi Hokkaido
West Japan Fukuda Cardiac LaboratoryCo., Ltd. went into liquidation as ofAugust 31st, 2010, and East Japan
Fukuda Cardiac Laboratory Co., Ltd.
went into liquidation as of September
25th, 2010, and was excluded from thescope of consolidation.
(2) Names and other details of major
unconsolidated subsidiaries
Of the subsidiaries, ME Times, Fukushin
and three other companies were notincluded in the scope of consolidation,
because their business sizes are small, andtheir total assets, net sales, net income andloss (amount corresponding to the owned
interest), retained earnings (amountcorresponding to the owned interest) had
no material effect on the consolidated
financial statements.

(1) Numberofaffiliatedcompanies
accounted for by equity method＿(1) Numberofaffiliatedcompanies
accounted for by equity method＿(2) Namesandotherdetailsof
unconsolidated subsidiaries and affiliatesthat are not accounted for by equity
methodThe four unconsolidated subsidiaries andthe affiliate company Fukuda Pulmo had
no material effect on consolidated
income and loss and retained earnings,
and they were not important as a wholein terms of material influence on the
consolidated
interimfinancialstatements. Accordingly, we did not
apply equity method accounting to them.

(2) Namesandotherdetailsof
unconsolidated subsidiaries and affiliatesthat are not accounted for by equity
methodThe five unconsolidated subsidiaries andthe affiliate company Fukuda Pulmo had
no material effect on consolidated
income and loss and retained earnings,
and they were not important as a wholein terms of material influence on the
consolidated
interimfinancialstatements. Accordingly, we did not
apply equity method accounting to them.

- 24 -

3. Accounting period,
etc. of consolidated
subsidiaries

4. Accounting
standards(1) Valuation
standards andmethods
forprinciple assets

Previous fiscal year
(April 1st, 2009 to March 31st, 2010)
The accounts of consolidated subsidiaries
Fukuda Denshi USA, Inc.; and Fukuda
Denshi Switzerland AG close on December
31st of each year. In the preparation of
consolidated
financialstatements,
consolidated
subsidiaries’
financialstatements as of the said date were used, andwith respect to significant transactions that
occurred between the said date and theconsolidated book-closing, adjustments
necessary for consolidation were made.

Fiscal year under review(April 1st, 2010 to March 31st, 2011)
Same as on the left(i) Securities
Held-to-maturity securities
Same as on the left(i) Securities
Held-to-maturity securities- Amortized cost method
Other securities

Other securities

Marketable securities- Stated at fair value based on the market
price as of the end of this fiscal year.
(Unrealized holding gains or losses arereported in a component of net assets,
while the cost of securities sold is
calculated by the moving average method.)Marketable securities

Non-marketable securities- Stated at cost based on the moving averagemethod.
For investments in the investment
enterprise limited Liability association andsimilar associations (deemed to be
securities pursuant to Article 2, Paragraph
2 of the Financial Instruments andExchange Law), the net amountcorresponding to the ownership percentage
is used, based on the most recent financial
statements available as of the reporting
date and other material stipulated in thepartnership contract.

Non-marketable securities- 25 -

Same as on the left

Same as on the left

Previous fiscal year
(April 1st, 2009 to March 31st, 2010)(ii) Inventories
The cost method (the amounts stated in thebalance sheets are calculated by writing
down the book values based on lower
profitability) is used as a valuation standard.

Fiscal year under review(April 1st, 2010 to March 31st, 2011)(ii) Inventories
Same as on the left

Merchandise and products-Mainly stated at cost determined by the
first-in, first-out method.
Work in progress-Mainly stated at cost based on the specificcost method.
Raw materials-Mainly stated at cost based on the grossaverage method.
Supplies-Stated at cost based on the last purchaseprice method.

(2) Depreciation
method forsignificant
depreciable
assets(i) Tangible fixed assets
Depreciated primarily by the decliningbalance method.
However, buildings(except for building attachments) acquiredon or after April 1st, 1998 were depreciatedusing the straight-line method.
Major useful life:
Buildings and structures: 3–60 years
Machinery and delivery equipment:4–12
years
Tools, instruments and fixture:
2–20 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, theoxygen concentrator devices (assets forrental) were depreciated using thestraight-line method with the estimatedrental period (four years) used as thenumber of depreciation years.

- 26 -(i) Tangible fixed assets (excluding leaseassets)Same as on the left

(3) Basisprovision
allowances

forofPrevious fiscal year
(April 1st, 2009 to March 31st, 2010)(ii) Intangible fixed assets
Depreciated by the straight-line method.
Software for internal use is amortized by thestraight-line method over its useful life of
five years.
As for software for sale in the market, theCompany records the larger of anamortization based on projected sales
volume for the effective sales period (nolonger than three years) or a uniform
amortization over the effective remaining
sales period.

Fiscal year under review(April 1st, 2010 to March 31st, 2011)(ii) Intangible fixed assets (excluding leaseassets)(iii) Lease assets
Lease assets in finance lease transactions
We adopted the same depreciation method
applied to self-owned fixed 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 thelease term and the residual value is zero.
Finance lease transactions that do nottransfer ownership and for which the
inception of the lease predates March 31st,
2008 continue to be accounted for in asimilar manner with the ordinary rental
transactions.

(iii) Lease assets(i) Allowance for doubtful accounts
To prepare for losses incurred by bad debts,
the amount of potential loss is calculated byusing the historical loss ratio in the case ofgeneral loans or receivables. Potential loss
for specific loans or receivables, for which
we have concerns regarding theircollectability, is calculated by assessing thepossibility of collection for each individual
account.

(i) Allowance for doubtful accounts(ii) Allowance for bonuses to employees
To prepare for the payment of bonuses to
employees, an amount corresponding to thisfiscal year’s portion of estimated bonus
payments was reserved.

(ii) Allowance for bonuses to employees(iii) Allowance for bonuses to officers
To prepare for the payment of bonuses todirectors and corporate auditors, an amountcorresponding to this fiscal year’s portion of
estimated bonus payments was reserved.

(iii) Allowance for bonuses to officers- 27 -

Same as on the left

Same as on the left

Same as on the left

Same as on the left

Same as on the left

Previous fiscal year
(April 1st, 2009 to March 31st, 2010)(iv)Allowance for retirement benefits toemployees
To prepare for the payment of retirement
benefits to employees, the amountrecognized as accruing at the end of thisfiscal year was reserved, based on theestimated retirement benefit obligation andpension assets at the end of this fiscal year.
Prior service costs are amortized, using thestraight-line method over a certain numberof years (10 years), which are less than the
average remaining years of service of theemployees when they incurred.
Actuarial differences are amortized, using
the straight-line basis over a certain numberof years (10 years), which are less than the
average remaining years of service of theemployees when they incurred, from thefiscal year after the one in which they arise.

Fiscal year under review(April 1st, 2010 to March 31st, 2011)(iv) Allowance for retirement benefits toemployees(Changes in accounting policies)
The Partial Revision of the “AccountingStandards for Retirement Benefits”, Part 3(ASBJ Statement No. 19, announced on July
31st, 2008) has been applied starting from theconsolidated fiscal year under review.
This does not affect the operating income,ordinary income, or net income before taxes.

＿(Additional information)
Fukuda Denshi revised the retirement pension
system on October 1st, 2009, and moved fromthe approved retirement annuity system to thedefined benefit corporate pension system(contract-type) based on the relevant act.
The company applied the “Accounting
methods related to shift between retirement
pension schemes” (ASBJ Guidance No.1 forapplying corporate standards) for theaccounting operations associated with thismove.
In addition, the influence according to thisrevision is negligible.

＿- 28 -

Same as on the left

Previous fiscal year
(April 1st, 2009 to March 31st, 2010)(v) Allowance for retirement benefits toofficers.
To prepare for the payment of retirement
benefits to directors and corporate auditors,some consolidated subsidiaries reserve theestimated amount to be paid at the end of
the fiscal year, in accordance with theinternal regulations.

Fiscal year under review(April 1st, 2010 to March 31st, 2011)(v) Allowance for retirement benefits to officers
Same as on the left(vi) Provision of allowance for productwarranty
To prepare for the expenses incurred by thefree repair to be implemented after thedelivery of the products, estimated amountof the repair expenses was reserved on thebasis of the estimated proportion of such
expenses to net sales and the estimatedamount of such expenses for individual
products.

(vi) Provision of allowance for productwarranty(Changes in accounting policies)
Previously, the expenses for the free repair
were booked as they arose. Following theimplementation of the ERP system, it has
been made possible to make a reasonableestimation of the expenses to be incurred in
the future on the basis of the previous
records of such expenses. To optimize theperiod of profit/loss and make the financial
structure healthier, the estimated amount ofexpenses to be incurred in the future wasreserved as allowance starting from theconsolidated fiscal year under review.
As a result of this change, 303 million yen
was reserved as provision of allowance for
product warranty in the consolidated fiscal
year under review.
Consequently, gross profit, operating
income, ordinary income, and net income
before taxes decreased by 303 million yen,respectively.
As a reasonable estimation of the above
expenses was made possible at the end of
the consolidated fiscal year under review,
allowance for product warranty was not
calculated for the previous consolidated
fiscal year and the first three quarters of theconsolidated fiscal year under review.

__- 29 -

Same as on the left

Previous fiscal year
(April 1st, 2009 to March 31st, 2010)(vii) Allowance for investment loss
To prepare for the loss expected to be
incurred in the investment activities,
allowance for investment loss was reserved
taking into account the financial standing
and other data of the companies in whichinvestment is being made.

Fiscal year under review(April 1st, 2010 to March 31st, 2011)(vii) Allowance for investment loss
Same as on the left

(viii) Allowance for disaster losses
To prepare for the loss expected to be
incurred from the Great East Japan
Earthquake, the estimated expenses was
summed up by the end of the fiscal year
towards restoration.

__(4) Standards
fortranslationofimportantforeigncurrency-based
assetsor
liabilities into
Japanese yen

Monetary credits and debts denominated inforeign currencies are translated into yen
based on the current exchange rates at theend of each fiscal year. Differences arisingfrom such translation are stated as profits orlosses.
Assets, liabilities, revenue andexpenses of overseas subsidiaries, and otherfinancial items are translated into yen basedon the current exchange rates at the end ofeach fiscal year. The resulting differences
are recorded as Foreign currency translation
adjustment account and Minority interests,
under Net assets.

(5) Range of thecapitalinconsolidated
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 amaturity not exceeding three months at thetime of purchase that are readily convertible
to cash and not exposed to significant risk invalue fluctuations.

(6) Other importantmattersforpreparation of
consolidated
financialstatements

Accounting treatment of consumption tax
and other taxes
Consumption tax and other taxes are
excluded from profits and losses.

Accounting treatment of consumption tax
and other taxes

5. Valuation of assets
and liabilities of
consolidated
subsidiaries

Assets and liabilities ofsubsidiaries
arevaluedfull-fair-value method.

consolidated
using
the

- 30 -

Same as on the left

Same as on the left__

6. Cash in consolidated
cash flow statements

Previous fiscal year
(April 1st, 2009 to March 31st, 2010)
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 amaturity not exceeding three months at thetime of purchase that are readily convertible
to cash and not exposed to significant risk invalue fluctuations.

Fiscal year under review(April 1st, 2010 to March 31st, 2011)__(7) Changes in basic significant matters regarding the preparation of consolidated financial statements
Previous fiscal year
(April 1st, 2009 to March 31st, 2010)(Accounting principles of expenses for research anddevelopment)
Previously, expenses for the development of new products
in research and development activities were posted as costof sales. However, effective from the first quarter underreview, such expenses are treated as general andadministrative expenses, with a view to appropriately
grasping the costs corresponding to sales and more
properly indicating profit/loss for the period, more
properly taking advantage of the building of a system tomanage expenses incurred in developing new products,
since the development of new products has come to be
regarded less as cost, and more as research anddevelopment as it involves the development of newtechnologies and new mechanisms.
As a result of this change, cost of sales decreased 1,512
million yen and gross profit increased by the same amountfor the consolidated year under review compared with thefigures under the previous method, while operating
income and ordinary income each declined 6 million yen
due to an increase of 1,505 million yen in selling, generaland administrative expenses.
Net income before taxes decreased 122 million yen, since
129 million yen, equivalent to research and development
expenses in indirect manufacturing cost, which were
included in beginning inventories, was posted as
extraordinary losses.

Fiscal year under review(April 1st, 2010 to March 31st, 2011)（Accounting principles of asset retirement obligations）
From this fiscal year, the company applies “Financial
Accounting Standard for Asset Retirement Obligations”(ASBJ Statement No.18, announced on March 31st, 2008))
and the “Guidance on Financial Accounting Standard for
Asset Retirement Obligations” (ASBJ Guidance No.21,
announced on March 31st, 2008)).
The effect of this change on consolidated operating income,ordinary income and net income before taxes for the fiscal
year under review is insignificant.

- 31 -

(8) Changes in the presentation
Fiscal year under review(April 1st, 2010 to March 31st, 2011)
Starting with the fiscal year under review, the Company
applies the “Cabinet Office Ordinance on Partial
Amendment of the Regulations on Terminology, Format
and Preparation Method of Financial Statements, etc.”(Cabinet Office Ordinance No. 5, March 24th, 2009) basedon the “Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No. 22, announced on
December 26th, 2008), and therefore now records “Net
income before minority interests in earnings ofconsolidated subsidiaries” as an independent accounting
item.

Previous fiscal year
(April 1st, 2009 to March 31st, 2010)＿(9)Additional information
Previous fiscal year
(April 1st, 2009 to March 31st, 2010)

Fiscal year under review(April 1st, 2010 to March 31st, 2011)
Starting with the fiscal year under review, the Company
applies “Accounting Standard for Presentation ofComprehensive Income” (ASBJ Statement No. 25,
announced on June 30th, 2010). However, the amounts of“Other accumulated comprehensive income” and “Other
total accumulated comprehensive income” in the previous
fiscal year are recorded as the amounts of “Valuation andtranslation adjustments” and “Total valuation andtranslation adjustments.”＿(10) Notes from Consolidated Financial Statement(Consolidated balance sheets)
Previous fiscal year
(as of March 31st, 2010)*1. Notes to unconsolidated subsidiaries and affiliatedcompanies
Unconsolidated subsidiaries and affiliated companies:
Investment securities:
46 million yen(Stocks)

Fiscal year under review(as of March 31st, 2011)*1. Notes to unconsolidated subsidiaries and affiliatedcompanies
Unconsolidated subsidiaries and affiliated companies:
Investment securities:
64 million yen(Stocks)*2. Discount on bills:(Discount on export bills)*2. Discount on bills:(Discount on export bills)

90 million yen*3. Notes to unconsolidated subsidiaries and affiliatedcompanies
The amount of investment securities includes 420
million yen of advance on subscription for new stock
paid in connection with the purchase of stocks issued
by The Dai-ichi Life Insurance Co., Ltd., which wasdemutualized as of April 1st, 2010.

- 32 -

92 million yen＿

(Consolidated statements of income)*2 Major items and amounts of selling, general andadministrative expenses are as follows:
Salaries, benefits, and other monies to officers andemployees:
11,601 million yen
Bonuses and provision of allowance for bonuses:
2,660 million yen
Provision of allowance for retirement benefits toofficers:
39 million yen
Retirement benefit expenses: 892 million yen
Depreciation:
1,571 million yen
Provision of allowance for bonuses to officers: 117
million yen

Fiscal year under review(April 1st, 2010 to March 31st, 2011)
The year-end inventory balance is the amount after thedevaluation of the book value arising from the decline inprofitability, and the next loss on valuation of inventories
is included in cost of sales.
446 million yen*2. Major items and amounts of selling, general andadministrative expenses are as follows:
Salaries, benefits, and other monies to officers andemployees:
11,867 million yen
Bonuses and provision of allowance for bonuses:
2,996 million yen
Provision of allowance for retirement benefits toofficers:
32 million yen
Retirement benefit expenses: 655 million yen
Depreciation:
1,508 million yen
Provision of allowance for bonuses to officers:
145 million yen*3. Research and development expenses included in the
Generalandadministrative
expensesand
Manufacturing expenses for this fiscal year are 3,216
million yen.

*3. Research and development expenses included in the
Generalandadministrative
expensesand
Manufacturing expenses for this fiscal year are 3,216
million yen.

*4 Breakdown of Gains on sale of fixed assets
Machinery and delivery equipment:
4 million yen
Tools, instruments and fixtures:
0 million yen
Total
4 million yen*5. Losses from the prior-term adjustment
Because the accounting method for expenses incurred in
the development of new products under the researchand development activities was changed starting fromthe consolidated fiscal year under review, 129 million
yen of research and development expenses among
indirect manufacturing cost, which was included ininventories at the beginning of the fiscal year, wasbooked as loss on prior period adjustment in
extraordinary losses.

*4 Breakdown of Gains on sale of fixed assets
Machinery and delivery equipment:
1 million yen
Tools, instruments and fixtures:
1 million yen
Total
2 million yen*6. Breakdown of Losses on sale of fixed assets
Machinery and delivery equipment:
0 million yen
Total
0 million yen*6. Breakdown of Losses on sale of fixed assets
Machinery and delivery equipment:
1 million yen
Tools, instruments and fixtures:
5 million yen
Total
7 million yen*7 Breakdown of Losses on disposal of fixed assets
Buildings and structures:
2 million yen
Machinery and delivery equipment:
4 million yen
Tools, instruments and fixtures:
10 million yen
Intangible fixed assets:
0 million yen
Total
18 million yen*7 Breakdown of Losses on disposal of fixed assets
Buildings and structures:
3 million yen
Machinery and delivery equipment:
1 million yen
Tools, instruments and fixtures:
9 million yen
Intangible fixed assets:
0 million yen
Total
14 million yen

Previous fiscal year
(April 1st, 2009 to March 31st, 2010)＿＿- 33 -

Previous fiscal year
(April 1st, 2009 to March 31st, 2010)*8. Impairment losses
The Company groups its operations by businesssegment, and consolidated subsidiaries form theirgrouping with each company or office as one unit.
Impairment losses on leased real estate and idle assets
are recognized separately.
Because of a decrease in cash flows caused by adeclined operating income and a fall of the market
price, we have written down the book values of thefollowing assets to recoverable values. These
write-offs have resulted in impairment losses (of 10
million yen), which were booked as extraordinary
losses.
These impairment losses consist of the losses on land
property of 4 million yen, on lease assets of 5 million
yen, and on other assets of 0 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 valueof fixed asset tax, with reasonable adjustments.
Use of assets
Idle assets

Operational
assetsLocation ofassetsNasu County,
Tochigi
Prefecture
Sapporo City,
Hokkaido

Type ofassetsLand
property
Lease
andlease assets

Amount(million yen)
4
5

Fiscal year under review(April 1st, 2010 to March 31st, 2011)*8. Impairment losses
The Company groups its operations by businesssegment, and consolidated subsidiaries form theirgrouping with each company or office as one unit.
Impairment losses on leased real estate and idle assets
are recognized separately.
Because of a decrease in cash flows caused by adeclined operating income and a fall of the market
price, we have written down the book values of thefollowing assets to recoverable values. These
write-offs have resulted in impairment losses (of 245
million yen), which were booked as extraordinary
losses.
These impairment losses consist of the losses onbuildings and structures of 192 million, on land
property of 49 million yen, on tools, instruments andfixtures of 2 million yen, and on other assets of 0
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 valueof fixed asset tax, with reasonable adjustments.
Use of assets
Operational
assetsOperational
assetsOperational
assetsLocation ofassetsTagajo,MiyagiPrefecture
Tagajo,MiyagiPrefecture
Sapporo City,
Hokkaido

Type of assets
Buildings
structures

Amount(million yen)

and
192

Land property
49
Tools,
instruments andfixtures2*9.Losses from disaster is the loss from the Great East
Japan Earthquake which occurred in March 2011. Pleasecheck the details below. Loss from disaster includes theamount for provision for loss on disaster of 157 million
yen.
Provision for credit losses and allowance for doubtful
accounts: 7 million yen
Equipment removal and repair costs:
31 million yen
Losses on inventory valuation: 89 million yen
Losses on asset valuation:
211 million yen
Relief money and supplies:
58 million yen
Other:
91 million yen
Total
490 million yen- 34 -

（Consolidated statements of comprehensive income)Fiscal year under review （April 1st, 2010 to March 31st 2011）*1 Comprehensive income for the previous fiscal year
Comprehensive income related to holding company
4,515 million yen
Comprehensive income related to minority shareholders
0 million yen
Total
4,516 million yen*2 Other comprehensive income for the previous fiscal year
Valuation difference on available-for-sale securities
1,006 million yen
Foreign currency translation adjustments
10 million yen
Total
1,017 million yen- 35 -

(Statements of changes in shareholders’ equity)
Previous fiscal year (from April 1st, 2009 to March 31st, 2010)
1. Type and total number of issued shares and type and number of shares of treasury stock
Number of shares at
Increase in number of
Decrease in number
the end of previous
shares for fiscal yearof shares for fiscal
fiscal year
under review
year under review(1,000 shares)(1,000 shares)(1,000 shares)
Number of issued
sharesCommon stock
19,588
Total
19,588Treasury stock
Common
stock
339
780
0
(Note)
Total
339
780
0

Number of shares atthe end of the fiscal
year under review(1,000 shares)

19,58819,5881,119
1,119

Note: The increase of 780 thousand shares in treasury stock of common stock reflects the increase of 779 thousand
shares and 0 thousand shares owing to the acquisition of treasury stock and repurchase of shares less than the
trading unit, respectively, in accordance with the provisions of Article 156 as applied pursuant to the provisionsof Article 165(3) of the Companies Act.
The decrease of 0 in treasury stock of common stock reflects the decrease owing to the disposal of shares lessthan the trading unit.
2. Stock acquisition rights and treasury stock acquisition rights
Not applicable.
3. Dividends(1) Dividend payment amount(Resolution)
Ordinary
GeneralMeetingof
Shareholders held on
June 26th, 2009
Board of Directors’
meeting held on
October 29th, 2009

Type of shares

Total dividend
amount(million yen)

Common stock

769

Common stock

738

Dividends
per share(in yen)Record date

Effective date40

March 31st, 2009

June 29th,
2009

40

September 30th,
2009

December 5th,2009(2) Of the dividends whose record date belongs to the fiscal year under review, and those whose effective date of thedividends will be in the current fiscal year
Total
Dividends
Effective
Source forType ofdividend
per share
Record date
(Resolution)amountdate
dividends
shares(in yen)(million yen)
Ordinary
GeneralMeetingofJune 30th,
CommonRetained
March 31st,738
40
Shareholders held on
2010
2010
stock
earnings
June 29th, 2010

- 36 -

Fiscal year under review (from April 1st, 2010 to March 31st, 2011)
1. Type and total number of issued shares and type and number of shares of treasury stock
Number of shares at
Increase in number of
Decrease in number
the end of previous
shares for fiscal yearof shares for fiscal
fiscal year
under review
year under review(1,000 shares)(1,000 shares)(1,000 shares)
Number of issued
sharesCommon stock
19,588
Total
19,588Treasury stock
Common
stock
1,119
1,271
0
(Note)
Total
1,119
1,271
0

Number of shares atthe end of the fiscal
year under review(1,000 shares)

19,58819,5882,391
2,391

Note: The increase of 1,271 thousand shares in treasury stock of common stock reflects the increase of 1,271 thousand
shares and 0 thousand shares owing to the acquisition of treasury stock.
The decrease of 0 in treasury stock of common stock reflects the decrease owing to the disposal of shares lessthan the trading unit.
2. Stock acquisition rights and treasury stock acquisition rights
Not applicable.
3. Dividends(1) Dividend payment amount(Resolution)
Ordinary
GeneralMeetingof
Shareholders held on
June 29th, 2010
Board of Directors’
meeting held on
October 29th, 2010

Type of shares

Total dividend
amount(million yen)

Dividends per
share(in yen)Common stock

738

Common stock

738

Record date

Effective date40

March 31st, 2010

June 30th,
2010

40

September 30th,
2010

December 6th,
2010(2) Of the dividends whose record date belongs to the fiscal year under review, and those whose effective date of thedividends will be in the current fiscal year
Total
Dividends
Effective
Source forType ofdividend
pershare (inRecord date
(Resolution)amountdate
dividends
sharesyen)(million yen)
Ordinary
GeneralMeetingofMarch 31st,
Retained
June 30th,
Common40
687
earnings
Shareholders held on
2011
2011
stock
June 29th, 2011

- 37 -

(Consolidated statements of cash flows)
Previous fiscal year
(April 1st, 2009 to March 31st, 2010
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(as of March 31st, 2010)
Cash and deposits:
28,630 million yen
Time deposits with a deposit(606 million yen)period of over three months:
Cash and cash equivalents:
28,023 million yen

Fiscal year under review(April 1st, 2010 to March 31st, 2011
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(as of March 31st, 2011)
Cash and deposits:
26,912 million yen
Time deposits with a deposit(564 million yen)period of over three months:
Cash and cash equivalents:
26,348 million yen

2. Details of important no fund transactions
The amounts of assets and liabilities in finance leasetransactions which are newly recognized for the fiscal
year under review are 145 million yen each.

2. Details of important nonfund transactions
The amounts of assets and liabilities in finance leasetransactions which are newly recognized for the fiscal
year under review are 21million yen each.

- 38 -

(Lease transactions)Disclosure of lease transactions is omitted, as there is no significant necessity of such disclosure in the summary
report on financial results.
(Financial Products)
Disclosure of lease transactions is omitted, as there is no significant necessity of such disclosure in the summary
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, 2009 to March 31st, 2010) and fiscal year under review (from April 1st, 2010 toMarch 31st, 2011):
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 the summary
report on financial results.
(Stock options, etc.)
Previous fiscal year (from April 1st, 2009 to March 31st, 2010):
Not applicable.
Fiscal year under review (from April 1st, 2010 to March 31st, 2011):
Not applicable.
(Tax effect accounting)Disclosure of tax effect accounting is omitted, as there is no significant necessity of such disclosure in the summary
report on financial results.
(Real estates including rentals)
Disclosure of tax effect accounting is omitted, as there is no significant necessity of such disclosure in the summary
report on financial results.
(Segment information etc.)
a. Segment information by business typePrevious fiscal year (from April 1st, 2009 to March 31st, 2010)
Segment information by business type is omitted because the amounts of sales, operating income and assets ofthe medical electronic equipment business account for over 90 percent of the total sales, total operating income andtotal assets of all segments.
b. Segment information by geographical area
Previous fiscal year (from April 1st, 2009 to March 31st, 2010)
Segment information by geographical area is omitted because the amounts of sales and assets in Japan accountfor over 90 percent of the total sales and total assets of all segments.

- 39 -

c. Overseas sales
Previous fiscal year (from April 1st, 2009 to March 31st, 2010)
Overseas sales are omitted because such sales accounted for less than 10 percent of consolidated sales.
d. Segment information
Fiscal year under review (from April 1st, 2010 to March 31st, 2011)
1. Reportable Segments
The reportable segments of the Fukuda Denshi Group are the constituent units of the Company for which 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 and evaluate the performance of theGroup.
The Company has set up divisions for each product and service in the corporate headquarters, and each of thedivisions formulates comprehensive strategies for the product or service it handles, and develops its own businessactivities.
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 andother products segment.
In the physiological diagnostic equipment segment, we mainly handle electrocardiographs, ultrasound diagnostic
imaging systems and blood cell counters. In the patient monitoring equipment segment, we handle patient monitors.
In the medical treatment equipment segment, we mainly handle defibrillators, ventilators, pacemakers, catheters,
and business of renting medical equipments 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 reportable segments
The accounting policies for the reportable segments are basically the same as those described in ”Basic significant
matters regarding the preparation of consolidated financial statements”.

- 40 -

3. Information regarding sales, gains (or losses), assets, liabilities and other amounts by reportable segments（Million yen)Previous fiscal year (from April 1st, 2009 to March 31st, 2010)
Physiologicaldiagnostic
equipment
Net sales
Sales to externalcustomers

Reportable Segments
Patient
Medicalmonitoring
treatment
equipment
equipment

Consumables
and otherproducts

Total

Adjustment*1

Consolidated
financialstatements*2

24,615

7,022

37,564

18,94588,147-

88,147

-

-

-

-

-

-

-

24,615

7,022

37,564

18,94588,147-

88,147

Segment profit

1,570

405

3,564

1,477

6,999

-

6,999

Segment assets

12,5504,340

28,36010,65655,90747,001

102,909

601

171

4,576

463

5,813

-

5,813

Internal sales ortransfers
Total

Other items
Depreciation
Increase in fixed
366
104
5,388
281
6,140
6,140
assetsandintangible assets*1. Adjustment of segment assets of 47,001 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.

Fiscal year under review (from April 1st, 2010 to March 31st, 2011)
Physiologicaldiagnostic
equipment

Reportable Segments
Patient
Medicalmonitoring
treatment
equipment
equipment

Consumables
and otherproducts（Million yen)
Consolidated
Adjustments
financial*1statements
*2

Total

Net sales
25,661

8,010

36,771

19,727

90,169-90,169

-

-

-

-

-

-

-

25,661
2,095
12,189

8,010
561
4,543

36,771
3,937
25,396

19,727
1,428
10,20090,1698,022
52,33050,72590,1698,022
103,056

Depreciation

602

187

4,724

463

5,978

-

5,978

Increase in fixed
assets andintangible assets

306

95

4,907

235

5,544

-

5,544

Sales to externalcustomers
Internal sales ortransfers
Total
Segment profit
Segment assets
Other items*1.

Adjustment of segment assets of 50,725 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.

e. Related Information
Fiscal year under review (from April 1st, 2010 to March 31st, 2011)
1. Information about each products and services
Information about each products and services is omitted, as categories of products and services are identical tosegment information.

- 41 -

2. Information by geographical area
(1) Sales
Information about sales is omitted because our domestic sales accounted for more than 90% of consolidated sales.
(2) Tangible fixed assets
Information about tangible fixed assets is omitted because domestic tangible fixed assets accounted for more than
90 % of tangible fixed assets of consolidated fixed assets.
3. Information by each major customer
Information about each major customer is omitted because sales for each major customer accounted for less than 10
percent of consolidated sales.
f. Information about impairment loss for fixed assets by reportable segments
Fiscal year under review (from April 1st, 2010 to March 31st, 2011)
PhysiologicalPatient
MedicalConsumables
diagnostic
monitoring
treatment
and otherequipment
equipment
equipment
products
Impairment
0
0
1
0
loss

（Million yen)

Elimination/ Corporate
242

Total
245

g. Information about amortization and depreciation expense on goodwill of each reportable segment
Fiscal year under review (from 2010 to March 31st, 2011)
Not applicableh. Information about gain on negative goodwill of each reportable segment
Fiscal year under review (from 2010 to March 31st, 2011)
Not applicable(Additional information)
From this fiscal year, the company applies “Financial Accounting Standard for Segment Information Disclosure”(ASBJ Statement No.17, announced on March 27th, 2009) and the “Guidance on Financial Accounting Standard for
Segment Information Disclosure” ( ASBJ Guidance No.20, announced on March 21st, 2008).
(Transactions with related parties)
Disclosure of transactions with related parties is omitted, as there is no significant necessity of such disclosure in thesummary report on financial results.
(Business combinations etc.)
Previous fiscal year (from April 1st, 2009 to March 31st, 2010):
Not applicable.
Fiscal year under review (from April 1st, 2010 to March 31st, 2011):
Not applicable.

- 42 -

(Per share information)
Previous fiscal year

Fiscal year under review(April 1st, 2009 to March 31st, 2010)(April 1st, 2010 to March 31st, 2011)

Net assets per share

4,117.89 yen

4,397.55 yen

Net income per share

186.40 yen

228.66 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

Fiscal year under review(April 1st, 2009 to March 31st, 2010)(April 1st, 2010 to March 31st, 2011)

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

- 43 -

3,498

4,111

-

-

3,498

4,111

18,76817,979

5. Non-consolidated financial statements(1) Balance sheets(Million yen)Previous fiscal year
(as of March 31st, 2010)

Fiscal year under review(as of March 31st, 2011)

AssetsCurrent assets
Cash and deposits

16,87914,3902980

Accounts receivable

20,53921,202

Securities

1,099

1,199

Merchandise and products

3,082

2,216

48

10

Trade notes receivable

Work in progress
Raw materials and supplies

1,372

1,095

Advance payments

122

265

Prepaid expenses

252

310

Deferred tax assets

757

936

Short-term loans to affiliates

3,751

3,507

Other accounts receivable

198

263

Other

313

188

Allowance for doubtful accounts(1,036)(1,261)

Total current assets

47,41044,405

6,255

6,308

Accumulated depreciation(3,252)(3,432)

Buildings (net)

3,003

2,876

Fixed assets
Tangible fixed assets
Buildings

Structures

314

316

(247)

(257)

66

59

95

96

Accumulated depreciation

(53)

(61)

Machinery and equipment (net)41

34

Accumulated depreciation
Structures (net)
Machinery and equipment

Vehicles

54

53

(44)

(47)

9

6

Tools, instruments and fixtures

21,233

22,790

Accumulated depreciation(11,996)(13,231)

9,237

9,558

4,964

4,923

83

83

Accumulated depreciation

(27)

(43)

Lease assets (net)

56

39

Construction in progress

34

0

Total tangible fixed assets

17,414

17,498

Accumulated depreciation
Vehicles (net)

Equipment (net)Land
Lease assets- 44 -

(Million yen)Previous fiscal year
(as of March 31st, 2010)

Fiscal year under review(as of March 31st, 2011)

Intangible fixes assets
Leasehold rights

55Software

1,859

1,204

Other

214

300

2,079

1,510

Investment securities

7,375

7,157

Stocks of affiliates

3,227

3,077

Investments in capital

1

1

Investments in affiliates

423

423

Long-term loans

2559Long-term loans to employees

40Long-term loans to affiliates

636

727

Long-term prepaid expenses

11

11

2,408

2,528

Total intangible fixed assets
Investments and other assets

Deferred tax assets
Long-term deposits

-

4,100

Insurance reserves

3,830

4,825

Other

241

274

Allowance for doubtful accounts

(3)

(3)

Allowance for investment loss

(277)

(300)

Total investments and other assets

17,90422,885

Total fixed assets

37,39841,894

Total assets

84,80986,300Trade notes payable

839-

Accounts payable

10,214

10,354

Short-term borrowings

1,900

1,400

17

17

Other accounts payable

1,508

2,428

Income tax payable, etc.

435

928

Advances received

61

85

Deposits received

7,830

9,222

Allowance for bonuses to employees

520

881

Allowance for bonuses to officers

45

50

Provision of allowance for product warranties

285

367

Allowance for disaster losses

-

45

Other

64

211

23,72325,993Liabilities
Current liabilities

Lease obligations

Total current liabilities- 45 -

(Million yen)Previous fiscal year
(as of March 31st, 2010)

Fiscal year under review(as of March 31st, 2011)

Long-term liabilities
Long-term debt-

620

Lease obligations

41

24

Allowance for retirement benefits to employees
Long-term other accounts payable

1,142
827

1,188
827

Total long-term liabilities

2,011

2,660

25,73428,654

4,621

4,621

Total liabilities
Net assets
Shareholders’ equity
Common stock
Capital surplus
Capital reserves

8,946

8,946

Other capital surplus

1,036

1,036

Total capital surplus

9,982

9,982

1,171

1,171

Reserve for business expansion
Reserve for advanced depreciation of fixed assets
Special reserves
Retained earnings brought forward

300
49
37,500
7,539

300
49
37,5009,126

Total retained earnings

46,56048,147

Treasury stock(2,501)(5,047)

Total shareholders’ equity

58,66357,703

410
410

(57)
(57)

59,07457,64584,80986,300Retained earnings
Legal income reserves
Other retained earnings

Valuation and translation adjustments
Evaluation difference on other securities
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets- 46 -

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

Fiscal year under review(April 1st, 2009 to March 31st, 2010)(April 1st, 2010 to March 31st, 2011)

Net sales
Sales of products

13,216

14,410

Sales of merchandise

32,78132,310

Other sales

8,624

9,111

Total net sales

54,622

55,832

Cost of sales
Product inventories at the beginning of the fiscal year

1,336

878

Product manufacturing costs

9,329

10,334

Total

10,665

11,212

Products transfer to/from other account

2,287

2,142

Finished product inventories at the end of the fiscal year

878

987

Cost of sales of products
Merchandise inventories at the beginning of the fiscal
year
Purchases of merchandise

7,500

8,082

1,600

2,204

26,85425,516

Total

28,45427,721

29

57

Merchandise inventories at the end of the fiscal year

2,204

1,228

Cost of sales of merchandise

26,22026,434Merchandise transfer to/from other account

Other costs

4,226

4,170

Total cost of sales

37,947

38,687

16,674

17,144Advertising expenses

765

691

Gross profit
Selling, general and administrative expenses
Packing and freight charges

581

588

Service and repair expenses

441

465

Provision of allowance for doubtful accounts

56

224

2,017

2,090

Bonuses284

320

Provision of allowance for bonuses

309

549

Retirement benefit expenses

192

234

Provision of allowance for bonuses to officers

45

50

1,285

764

Premiums

736

680

Lease expenses

224

230

Research and development expenditures

3,190

3,189

Depreciation

1,156

1,179

Other

2,608

2,702

Total selling, general and administrative expenses

13,894

13,963

2,780

3,181

Salaries and benefits

Commission expenses

Operating income- 47 -

(Million yen)Previous fiscal year

Fiscal year under review(April 1st, 2009 to March 31st, 2010)(April 1st, 2010 to March 31st, 2011)

Interest income

88

94

Dividend income

1,230

1,162

Real estate rent

279

273

Foreign exchange gains

43

-

Other

81

118

1,724

1,649

Interest income

60

59

Foreign exchange losses-

109

Provision of allowance for investment loss

277

48

Loss on investment in partnership

74

104

Other

2

14

415

336

4,089

4,493

Gain on sales of fixed assets

41Gain on sale of investment securities

-

63

552

-

2

-

323

198

-

22

883

286

Loss on prior period adjustment

129-

Losses on disposal of fixed assets-

5Losses on sale of fixed assets

108

Non-operating income

Total non-operating income
Non-operating expenses

Total non-operating expenses
Ordinary income
Extraordinary gains

Gain on liquidation of affiliates
Reversal of reserve for loss on liquidation of affiliates
Gains on insurance surrender
Other
Total extraordinary gains
Extraordinary losses

Impairment loss-

41

Loss on valuation of investment securities

698

8

Loss on valuation of affiliates stock prices

359

24

Loss from disaster

-

94

Other

44

2

1,242

184

Net income before taxes

3,729

4,596

Corporate, inhabitants’ and enterprise taxes

1,104

1,516

78

15

Total income taxes

1,183

1,531

Net income

2,546

3,064

Total extraordinary losses

Corporate tax adjustments- 48 -

Manufacturing statement

Item

Note
No.

Previous fiscal year

Fiscal year under review(April 1st, 2009 to March 31st, 2010)(April 1st, 2010 to March 31st, 2011)

Amount(million yen)

Ratio (%)

Amount(million yen)

Ratio (%)

I.

Materials expenses

7,823

60.7

8,237

59.3

II.

Labor expenses

2,359

18.3

2,474

17.8

3,187

22.9

13,899100.0

III. Other expenses
Subcontracted designing expenses
and trial manufacture expenses
Others

1,380

1,617

1,332

Total manufacturing expenses
Work in progress inventories at the
beginning of the fiscal year
Transfer from other accounts

*2

Total
Work-in-progress inventories at theend of the fiscal year
Transfer to other accounts*3

Product manufacturing costs

2,713

21.0

12,896

100.0

1,570

12

48

98

171

13,006

14,119

48

10

3,628

3,774

9,329

10,334(Footnotes)
Fiscal year under review(April 1st, 2010 to March 31st, 2011)

Previous fiscal year
(April 1st, 2009 to March 31st, 2010)

1.

Cost calculation method
The Company calculates cost of products by way of
job-order cost system (projection). Cost variances areallocated to cost of sales, products and work in progress at
the end of the fiscal year.

1. Cost calculation method*2 Breakdown of transfer from other accounts
Current assets and others(Trial manufacture and research
97 million yen
in progress)
Others0 million yen
98 million yen*2 Breakdown of transfer from other accounts
Current assets and others(Trial manufacture and research
171 million yen
in progress)
Others0 million yen
Total
171 million yen*3 Breakdown of transfer to other accounts
Researchanddevelopment
2,780 million yen
expenses
Current assets and others(Trial manufacture and research
171 million yen
in progress)*3 Breakdown of transfer to other accounts
Research and development
2,800 million yen
expenses
Current assets and others(Trial manufacture and research
41 million yen
in progress)

Others

676 million yen

Others932 million yen

Total

3,628 million yen

Total

3,774 million yen

Total

Same as on the left

- 49 -

(3) Statements of changes in shareholders’ equity(Million yen)Previous fiscal year

Fiscal year under review(April 1st, 2009 to March 31st, 2010)(April 1st, 2010 to March 31st, 2011)

4,621

4,621

-

-

4,621

4,621

8,946

8,946

Shareholders’ equity
Common stock
Balance at the end of the previous fiscal year
Changes during the fiscal year
Total changes during the fiscal year
Balance at the end of the fiscal year
Capital surplus
Capital reserve
Balance at the end of the previous fiscal year
Changes during the fiscal year
Total changes during the fiscal year
Balance at the end of the fiscal year

-

-

8,946

8,946

1,036

1,036

Other capital surplus
Balance at the end of the previous fiscal year
Changes during the fiscal year
Disposal of treasury stock

(0)

(0)

Total changes during the fiscal year

(0)

(0)

1,036

1,036

9,982

9,982

Disposal of treasury stock

(0)

(0)

Total changes during the fiscal year

(0)

(0)

9,982

9,982

1,171

1,171

Balance at the end of the fiscal year
Total capital surplus
Balance at the end of the previous fiscal year
Balance at the end of the fiscal year

Balance at the end of the fiscal year
Retained earnings
Legal reserve
Balance at the end of the previous fiscal year
Changes during the fiscal year
Total changes during the fiscal year
Balance at the end of the fiscal year

-

-

1,171

1,171

300

300

-

-

300

300

49

49

-

-

49

49

Other retained earnings
Reserve for business expansion
Balance at the end of the previous fiscal year
Changes during the fiscal year
Total changes during the fiscal year
Balance at the end of the fiscal year
Reserve for advanced depreciation of fixed assets
Balance at the end of the previous fiscal year
Changes during the fiscal year
Total changes during the fiscal year
Balance at the end of the fiscal year

- 50 -

(Million yen)Previous fiscal year

Fiscal year under review(April 1st, 2009 to March 31st, 2010)(April 1st, 2010 to March 31st, 2011)

37,50037,500--37,50037,500

6,501

7,539

Dividends paid

(1,508)(1,477)

Net income

2,546

3,064

Total changes during the fiscal year

1,037

1,587

7,539

9,126

45,523

46,560

Dividends paid

(1,508)(1,477)

Net income

2,546

3,064

Total changes during the fiscal year

1,037

1,587

46,56048,147(766)(2,501)(1,735)(2,547)00(1,735)(2,546)(2,501)(5,047)59,361

58,663

Dividends paid

(1,508)(1,477)

Net income

2,546

3,064

Acquisition of treasury stock(1,735)(2,547)

0

0

(697)

(959)

58,66357,703Special reserves
Balance at the end of the previous fiscal year
Changes during the fiscal year
Total changes during the fiscal year
Balance at the end of the fiscal year
Retained earnings brought forward
Balance at the end of the previous fiscal year
Changes during the fiscal year

Balance at the end of the fiscal year
Total retained earnings
Balance at the end of the previous fiscal year
Changes during the fiscal year

Balance at the end of the fiscal year
Treasury stock
Balance at the end of the previous fiscal year
Changes during the fiscal year
Acquisition of treasury stock
Disposal of treasury stock
Total changes during the fiscal year
Balance at the end of the fiscal year
Total shareholders’ equity
Balance at the end of the previous fiscal year
Changes during the fiscal year

Disposal of treasury stock
Total changes during the fiscal year
Balance at the end of the fiscal year

- 51 -

(Million yen)Previous fiscal year

Fiscal year under review(April 1st, 2009 to March 31st, 2010)(April 1st, 2010 to March 31st, 2011)

(596)

410

Changes in items other than shareholders’ equity
during the fiscal year (net)

1,006

(468)

Total changes during the fiscal year

1,006

(468)

410

(57)

(596)

410

Changes in items other than shareholders’ equity
during the fiscal year (net)

1,006

(468)

Total changes during the fiscal year

1,006

(468)

410

(57)

58,76459,074

Dividends paid

(1,508)(1,477)

Net income

2,546

3,064

Acquisition of treasury stock(1,735)(2,547)

0

0

1,006

(468)

309

(1,428)59,07457,645

Valuation and translation adjustments
Evaluation difference on other securities
Balance at the end of the previous fiscal year
Changes during the fiscal year

Balance at the end of the fiscal year
Total valuation and translation adjustments
Balance at the end of the previous fiscal year
Changes during the fiscal year

Balance at the end of the fiscal year
Total net assets
Balance at the end of the previous fiscal year
Changes during the fiscal year

Disposal of treasury stock
Changes in items other than shareholders’ equity during
the fiscal year (net)Total changes during the fiscal year
Balance at the end of the fiscal year

- 52 -

(4) Events or conditions that may cast significant doubt upon the entity's ability to continue as a going concern
Not applicable(5) Significant accounting policies
Item
1. Valuation standards andmethods for securities

Previous fiscal year

Fiscal year under review(from April 1st, 2009 to March 31st, 2010)(from April 1st, 2010 to March 31st, 2011)(1) Held-to-maturity bonds- Amortized cost method(1) Held-to-maturity bonds
Same as on the left

(2) Shares of subsidiaries and affiliates- Stated at cost based on the moving
average method.

(2) Shares of subsidiaries and affiliates
Same as on the left

(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 arereported in a component of net assets,with the cost of securities sold is
calculated by the moving averagemethod.)(3) Other securities
Marketable securities

Non-marketable securities- Stated at cost based on the moving
average method.
For investments in the investment
enterprise limited Liability associationand similar associations (deemed to be
securities pursuant to Article 2,
Paragraph 2 of the Financial
Instruments and Exchange Law), thenet amount corresponding to theownership percentage is used, based on
the most recent financial statements
available as of the reporting date andother materials stipulated in thepartnership contract.

- 53 -

Same as on the left

Non-marketable securities
Same as on the left

Item
2. Valuation standards andmethods for inventories

Previous fiscal year

Fiscal year under review(from April 1st, 2009 to March 31st, 2010)(from April 1st, 2010 to March 31st, 2011)

The cost method (the amounts stated in
the balance sheets are calculated bywriting down the book values based onlower profitability) is used as a valuation
standard.

Same as on the left

Merchandise and products- Stated at cost determined by the first-in,
first-out method.
Raw materials- Stated at cost determined by the grossaverage method.
Work in progress- Stated at cost based on the specific cost
method.
Supplies- Stated based on the last purchase pricemethod.
3. Depreciation method for
fixed assets(1) Tangible fixed assets
Depreciated by the declining balancemethod. However, buildings (except forbuilding attachments) acquired on or after
April 1st, 1998 were depreciated using thestraight-line method.
Major useful life:
Buildings: 3–50 years
Structures: 10–60 years
Machinery and equipment: 8–12 years
Vehicles and delivery equipment:
4–6 years
Tools, instruments and fixtures:
2–20 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, theoxygen concentrator devices (assets forrental) were depreciated by thestraight-line method with the estimatedrental period (four years) as a depreciationyear.

- 54 -(1) Tangible fixed assets (excluding leaseaseets)Same as on the left

Item

Previous fiscal year

Fiscal year under review(from April 1st, 2009 to March 31st, 2010)(from April 1st, 2010 to March 31st, 2011)(2) Intangible fixed assets
Depreciated by the straight-line method.
Software for internal use is amortized by
the straight-line method over its useful lifeof five years.
As for software for sale in the market, theCompany records the larger of anamortization based on projected sales
volume for the effective sales period (nolonger than three years) or a uniform
amortization over the effective remaining
sales period.

(2) Intangible fixed assets (excluding
lease assets)
Same as on the left

(3) Lease assets(3) Lease assets
Lease assets in finance lease transactions
Same as on the leftthat do not transfer ownership
The straight-line method is used, based on
the assumption that the useful life is thelease term and the residual value is zero.
Finance lease transactions that do nottransfer ownership and for which the
inception of the lease predates March 31st,
2008 continue to be accounted for in asimilar manner with the ordinary rental
transactions.
4. Basis for provision of (1) Allowance for doubtful accounts(1) Allowance for doubtful accounts
allowances
To prepare for losses incurred by bad
Same as on the leftdebts, the amount of potential loss iscalculated by using the historical 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 the possibility of collection
for each individual account.
(2) Allowance for bonuses for employees
To prepare for the payment of bonuses to
employees, we reserve an amountcorresponding to this fiscal year’s portionof estimated bonus payments toemployees.

(2) Allowance for bonuses for employees(3) Allowance for bonuses for officers
To prepare for the payment of bonuses for
directors and corporate auditors, wereserve an amount corresponding to thisfiscal year’s portion of estimated bonus
payments to directors and corporate
auditors.

(3) Allowance for bonuses for officers- 55 -

Same as on the left

Same as on the left

Item

Previous fiscal year

Fiscal year under review(from April 1st, 2009 to March 31st, 2010)(from April 1st, 2010 to March 31st, 2011)(4) Allowance for retirement benefits for
employees
To prepare for the payment of retirement
benefits for employees, the amountrecognized as accruing at the end of thisfiscal year was reserved, based on
estimated retirement benefit obligation andpension assets at the end of this fiscal year.
Past service liabilities are amortized, using
the straight-line basis over a certain
number of years (10 years), which are lessthan the average remaining years ofservice of the employees when they
incurred.
Actuarial differences are amortized, using
the straight-line basis over a certain
number of years (10 years), which are lessthan the average remaining years ofservice of the employees when they
incurred, from the fiscal year after the one
in which they arise.

(4) Allowance for retirement benefits for
employees(Changes in accounting policies)
The Partial Revision of the “AccountingStandards for Retirement Benefits”, Part 3(ASBJ Statement No. 19, announced on
July 31st, 2008) has been applied startingfrom the fiscal year under review.
This does not affect the operating income,ordinary income, or net income before
taxes.

＿(Additional information)
Fukuda Denshi revised the retirement
pension system on October 1st, 2009, andmoved from the approved retirement
annuity system to the defined benefit
corporate pension system (contract-type)based on the relevant act.
The company applied the “Accounting
methods related to shift between retirement
pension schemes” (ASBJ Guidance No.1
for applying corporate standards) for theaccounting operations associated with thismove.
In addition, the influence according to thisrevision is negligible.

＿- 56 -

Same as on the left

Item

Previous fiscal year

Fiscal year under review(from April 1st, 2009 to March 31st, 2010)(from April 1st, 2010 to March 31st, 2011)(5) Allowance for product warranty
To prepare for the expenses incurred byfree repair to be implemented after thedelivery of the products, an estimatedamount of the repair expenses wasreserved on the basis of the estimatedproportion of such expenses to net sales
and the estimated amount of such expenses
for individual products.
(Changes in accounting policies)
Previously, the expenses for the free repair
were booked as they arose. Following
the implementation of the ERP system, it
has been made possible to make areasonable estimate of expenses to be
incurred in the future on the basis of theprevious records of such expenses. To
optimize the period profit/loss and makethe financial structure healthier, theestimated amount of expenses to be
incurred in the future was reserved asallowance starting from the fiscal year
under review.
As a result of this change, 285 million yen
was reserved as provision of allowance for
product warranty in the fiscal year underreview.
Consequently, gross profit, operating
income, ordinary income, and net income
before taxes decreased by 285 million yen,respectively.
As a reasonable estimation of the above
expenses became possible at the end of the
fiscal year under review, the allowance for
product warranty was not calculated until
the previous fiscal year and the first threequarters of the fiscal year under review.
(6) Allowance for investment loss
To prepare for the loss expected to be
incurred in the investment activities,
allowance for investment loss was reserved
taking into account the financial standing
and other data of the companies in whichinvestment is being made.
＿(5) Allowance for product warranty
Same as on the left＿

(6) Allowance for investment loss
Same as on the left

(7)Allowance for disaster losses
To prepare for the loss expected to be
incurred from the Great East Japan
Earthquake, the estimated expenses was
summed up by the end of the fiscal year
towards restoration.

- 57 -

Previous fiscal year

Fiscal year under review(from April 1st, 2009 to March 31st, 2010)(from April 1st, 2010 to March 31st, 2011)

Accounting treatment of consumption tax,
and other taxes, etc.
The Consumption tax and other taxes, etc.
are excluded from profits and losses.

Accounting treatment of consumption tax
and other taxes, etc.

Item
5. Other important mattersforpreparationoffinancial statements

Same as on the left

(6) Changes in accounting method
Previous fiscal year
(April 1st, 2009 to March 31st, 2010)(Accounting principles of expenses for research anddevelopment)
Previously, expenses for the development of new products
in research and development activities were posted as costof sales. However, effective from the first quarter underreview, such expenses are treated as general andadministrative expenses, with a view to appropriately
grasping the costs corresponding to sales and more
properly indicating profit/loss for the period, more
properly taking advantage of a system to manage
expenses incurred in developing new products, since thedevelopment of new products has come to be regarded
less as cost, and more as research and development as it
involves the development of new technologies and newmechanisms.
As a result of this change, cost of sales decreased 1,512
million yen and gross profit increased by the same amountfor the year under review compared with the figures under
the previous method, while operating income and ordinary
income each declined 6 million yen due to an increase of
1,505 million yen in selling, general and administrative
expenses.
Net income before taxes decreased 122 million yen, since
129 million yen, equivalent to research and development
expenses in indirect manufacturing cost, which were
included in beginning inventories, was posted as
extraordinary losses.

Fiscal year under review(April 1st, 2010 to March 31st, 2011)（Accounting principles of asset retirement obligations）
From this fiscal year, the company applies “Financial
Accounting Standard for Asset Retirement Obligations”(ASBJ Statement No.18 , announced on March 31st, 2008)
and the “Guidance on Financial Accounting Standard for
Asset Retirement Obligations” (ASBJ Guidance No.21,
announced on March 31st, 2008).
The effect of this change on consolidated operating
income, ordinary income and net income before taxes forfiscal year under review is insignificant.

- 58 -

6. Others(1)Changes of officers(i) Representative Director
Not applicable(ii) Other officers
・Candidate for auditor to be newly appointed(Full-time) Auditor: Mr. Yutaka Yasuda (current position is corporate adviser)(Part-time) Auditor: Mr. Isamu Suzuki
・Auditor to retire(Full-time) Auditor: Mr. Yoshimasa Ogawa(Part-time) Auditor: Mr. Yoshinori Okamoto
・Candidate for reserve auditor to be newly appointed
Reserve auditor (Outside corporate auditor): Mr. Hisatoshi Fujito (Lawyer: Shiba Business Law Office)(iii) Scheduled appointment dateJune 29th, 2011

- 59 -