Annual Report 2017
For the Year Ended 31st March 2017

PROFILE
Since its establishment in 1958, MARUDAI FOOD CO., LTD. has been dedicated tooffering delicious, high-quality meat products. In order to understand the latest
consumer trends and to meet the needs of modern lifestyles, we have continuously
strengthened our research, sales and production operations. Intending to become
Japan’s leading food company, we successfully listed our stock on the First Section ofboth the Tokyo and Osaka Stock Exchanges in 1972.
Starting as a ham and sausage producer, Marudai Food has steadily expanded its
range of products to include heat-processed, vacuum-packed food, cheese and freshmeats. Ham and sausage, however, remain an integral part of our product line andcontinue to account for almost half of our sales.
While pursuing a leading position in the ham and sausage market, Marudai Food waseager to explore new avenues by developing precooked and processed foods, which
went on sale in 1973. This long shelf-life food was developed to meet the specific needfor fast meal preparation. Containing absolutely no preservatives and requiring only
several minutes to prepare, Marudai precooked and processed foods have established astrong foothold in the market. Building on this success, we will make even greater
efforts to create new products that satisfy the increasingly discriminating tastes ofconsumers.

CONTENTSFINANCIAL HIGHLIGHTS ............................................................................... 1
TO OUR SHAREHOLDERS .............................................................................. 2
PRODUCTS ......................................................................................................... 3
CONSOLIDATED BALANCE SHEETS ............................................................ 5
CONSOLIDATED STATEMENTS OF INCOME .............................................. 7
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ............ 8CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS .............. 9
CONSOLIDATED STATEMENTS OF CASH FLOWS ................................... 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ......................... 11
INDEPENDENT AUDITOR’S REPORT .......................................................... 31
DIRECTORS AND STATUTORY AUDITORS ................................................ 32
OUTLINE OF THE COMPANY ....................................................................... 33

MARUDAI FOOD CO., LTD.

FINANCIAL HIGHLIGHTS
For the Years Ended 31st March 2017 and 2016
(Consolidated basis)Thousands of
U.S. dollars, except
per share amounts (Note)

Millions of yen,
except per share amounts
2017

2016

2017

Net sales ...................................................................................................

¥232,437¥229,544$2,071,816

Profit attributable to owners of parent ......................................................

3,285

2,617

29,281

Profit attributable to owners of parent (yen and dollars) ....................

25.00

19.85

0.22

Profit attributable to owners of parent, diluted (yen and dollars) .......

–

–

–

Dividends (yen and dollars) ...............................................................

8.00

7.00

0.07

Total assets ...............................................................................................

¥129,340¥124,522$1,152,866

Per share:

Note: U.S. dollar amounts are translated from yen for convenience only at the rate of ¥112.19 to U.S.$1.00.

1MARUDAI FOOD CO., LTD.

TO OUR SHAREHOLDERS

The Marudai Food Group’s Processed Food Products
business continued to operate in a challenging
environment. While customers are becoming increasingly
budget-minded, price competition further intensified
against the backdrop of a mature Japanese market.
Regarding the Meat Products business, while prices ofJapanese beef remained generally high compared withthe previous year owing to a decrease in shipments,
prices of U.S. beef were lower than the previous year’slevel. Meanwhile, prices of both Japanese pork and U.S.
pork were generally stable.
In these circumstances, the Marudai Food Groupadhered to its basic policies—strengthening the corebusiness, implementing a diversification strategy andpromoting low-cost operations—with the aim of gaining
recognition as an enterprise with a social mission, namely,
a comprehensive food products company offering
merchandise satisfying the highest standards of safety
and reliability.
As a result, consolidated net sales for the fiscal year
ended 31st March 2017 increased by 1.3% year on year to232,437 million yen. Operating income increased by 13.0%
to 4,710 million yen, and profit attributable to the ownersof the parent increased by 25.5% to 3,285 million yen.

With the issuance of our company’s 69th annual report,
we hope that our shareholders are enjoying health andprosperity. We would also like to take this opportunity to
express our deep appreciation for your continued
support.

Once again we would like to thank you, ourshareholders, for your support and trust that we can rely
on your continued confidence.

During the fiscal year ended 31st March 2017, theJapanese economy remained on a moderate recovery
path owing to improvements in the labour market andpersonal incomes, however, prospects for the Japanese
economy remained unclear because of uncertainties
regarding overseas economies and concerns about theJune 2017.

impact of foreign exchange rates on the Japanese
economy.

Tokuo Kudara
President and Representative Director

2

MARUDAI FOOD CO., LTD.

PRODUCTS

The following table shows an analysis of the consolidated sales of MARUDAI FOOD CO., LTD. and its consolidated subsidiaries(together, the “Companies”) by product categories for the years ended 31st March 2017 and 2016:

Millions of yen(percent of total net sales)

Processed Food Products .........................................................................

Meat Products ..........................................................................................

Other ........................................................................................................

Total ....................................................................................................

2017

2016

¥163,057¥161,953(70.1%)(70.5%)

69,21967,225(29.8%)(29.3%)

161366(0.1%)(0.2%)¥232,437¥229,544

2017

Note: U.S. dollar amounts are translated from yen for convenience only at the rate of ¥112.19 to U.S.$1.00.

3

Thousands of
U.S. dollars (Note)$1,453,400

616,980

1,436$2,071,816

Processed Food Products
The Ham & Sausage Products operations vigorously promoted various campaigns and worked to expand sales of mainstay
items such as the “Kunseiya-Ripened Pork Sausage,” which was redesigned and relaunched in April 2016. Sales of the popular
smoked top-grade “Ibushi Tokkyu Bacon” and “Aburi Bara Yakibuta,” Chinese-style barbecued pork, were robust. In addition, we
introduced new products, including the “Kinkun and Ginkun Pork Sausage” sausages made of Japanese pork. For midsummer andyear-end gift products, we endeavoured to expand sales of the “Ouha” and “Kousai” series of gift packages, consisting ofproducts that won the Monde Selection Grand Gold Quality Award in the food products category. Despite these measures, sales inthe Ham & Sausage Products operations decreased by 2.4% year on year because of a severe business environment characterized
by intensifying sales competition in a market where consumers were becoming increasingly budget-minded.
In the Precooked & Processed Foods operations, sales of the “Karaage Chicken with Algae Salt from Awaji Island,” featuring
specialty salt with the flavour of seaweed, were brisk. In addition, we strove to expand sales of various chicken dishes with
distinctive taste, including the “Yuzukosho Chicken,” which is fried chicken flavoured with a seasoning made from yuzu citronzest and chili peppers, and the “Wasabi Chicken,” which is fried chicken seasoned with wasabi. Sales of retort curry products
centring on the “Bistro Club Beef Curry” were robust. Regarding desserts and beverages, we executed sales promotion for the“SWEET CAFE” series and the “TAPIOCA TIME” series of beverages with black tapioca, and sales of desserts and beverages
grew strongly. As a result, sales in the Precooked & Processed Foods operations increased by 4.5% year on year.
Overall, sales in the Processed Food Products segment amounted to 163,057 million yen, an increase of 0.7% year on year.
Although prices of raw materials and energy costs decreased and we pursued cost reduction through rationalization, operating
income decreased by 20.7% to 2,849 million yen owing to a decrease in sales in the mainstay Ham & Sausage Products
operations.
Meat Products
With regard to beef, sales of Japanese beef were sluggish because there was little growth in sales volume, while prices in thedomestic market remained high. On the other hand, sales of U.S. chilled beef were strong, with an increase in sales volume owing
to vigorous sales promotion. Regarding pork, while prices were generally stable, we strove to expand sales volume of both
Japanese and imported pork, and overall sales of pork were higher than the previous year’s level.
Overall, sales in the Meat Products segment increased by 3.0% year on year to 69,219 million yen. Operating income greatly
increased from the previous year to 1,682 million yen because of improved profitability of imported frozen beef, whose prices had
plummeted in the previous year, and our initiatives to promote sales of highly profitable imported meat.
Other
Sales in the Other business decreased by 56.1% year on year to 161 million yen, but operating income increased by 18.4% to179 million yen.

4

MARUDAI FOOD CO., LTD.

CONSOLIDATED BALANCE SHEETS
31st March 2017 and 2016

Millions of yen
ASSETS
Current assets:
Cash and time deposits (Notes 3 and 16) ...........................................
Receivables:
Trade notes and accounts (Note 3) ...............................................
Other .............................................................................................
Allowance for doubtful accounts ..................................................
Inventories (Note 6) ............................................................................
Deferred tax assets (Note 10) .............................................................
Advances and other current assets .....................................................
Total current assets .......................................................................
Investments and other assets:
Investment securities (Notes 3 and 4)
Other .............................................................................................
Deferred tax assets (Note 10) .............................................................
Other ...................................................................................................
Allowance for doubtful accounts .......................................................
Total investments and other assets ................................................
Property, plant and equipment, at cost:
Land (Note 8) .....................................................................................
Buildings and structures (Note 8) ......................................................
Machinery and equipment (Note 8) ...................................................
Lease assets ........................................................................................
Construction in progress ....................................................................
Less accumulated depreciation ..........................................................
Net property, plant and equipment ...............................................
Intangible assets .....................................................................................
Total assets .........................................................................................
See accompanying Notes to Consolidated Financial Statements.

5

Thousands of
U.S. dollars (Note 1)
2017

2017

2016

¥ 16,371¥ 17,001$ 145,922

25,926681(24)
14,8451,049
645
59,493

24,639518(39)
14,219945
1,419
58,702231,0906,070(214)132,3209,350
5,750
530,288

12,339
149
4,614
(144)
16,958

11,894
132
5,246
(246)
17,026109,983
1,328
41,128(1,284)
151,155

19,05649,71558,3007,770
327
135,168(83,362)
51,8061,083¥129,340

17,92747,97255,4206,892
825
129,036(80,980)
48,056738¥124,522

169,855
443,132
519,654
69,2582,915
1,204,814(743,044)
461,770
9,653$1,152,866

Millions of yen
2017
2016

LIABILITIES AND NET ASSETS

Thousands of
U.S. dollars (Note 1)
2017

Current liabilities:
Payables:Trade notes and accounts payable (Note 3) ..................................
Other .............................................................................................
Short-term borrowings (Notes 3, 7 and 8) ..........................................
Long-term debt due within one year (Notes 3, 7 and 8) ....................
Short-term lease obligations (Notes 3 and 7) .....................................
Accrued expenses ...............................................................................
Accrued income taxes ........................................................................
Other current liabilities ......................................................................
Total current liabilities ..................................................................

¥ 23,349
8,502
4,537
1,992
1,045
2,261
933
565
43,184¥ 21,859
7,196
5,399
2,745
819
2,204
751
1,489
42,462$ 208,120
75,78240,44017,756
9,315
20,1538,316
5,037
384,919

Long-term liabilities:
Long-term debt due after one year (Notes 3, 7 and 8) .......................
Long-term lease obligations (Notes 3 and 7) .....................................
Deferred tax liabilities (Note 10) .......................................................
Liabilities for retirement benefits (Note 9) ........................................
Other long-term liabilities ..................................................................
Total long-term liabilities .............................................................

2,638
3,771
1,736
1,297
423
9,865

2,848
2,785
1,008
2,515
581
9,737

23,51433,613
15,474
11,561
3,769
87,931

NET ASSETS (Note 12)
Shareholders’ equity:
Common stock
Authorised — 200,000,000 shares
Issued — 132,527,909 shares in 2017 (132,527,909 shares in 2016) �����
Capital surplus ....................................................................................
Retained earnings ...............................................................................
Treasury stock, at cost ........................................................................
Total shareholders’ equity �����������������������������������������������������������

6,716
22,086
43,679(513)
71,9686,716
22,086
41,306(512)
69,59659,863
196,862
389,331(4,573)
641,483

Accumulated other comprehensive income:Unrealised gains on securities ............................................................
Deferred gains (losses) on hedges ......................................................
Foreign currency translation adjustments ..........................................
Adjustments for retirement benefits ...................................................
Total accumulated other comprehensive income ..........................

5,040
1
38
(1,195)
3,884

4,423
(21)
(4)
(2,067)2,331

44,924
9339(10,652)
34,620439
76,291¥129,340

396
72,323¥124,522

3,913
680,016$1,152,866

Contingent liabilities (Note 11)

Non-controlling interests ����������������������������������������������������������������������
Total net assets ...................................................................................
Total liabilities and net assets .............................................................
See accompanying Notes to Consolidated Financial Statements.
6

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF INCOME
Years Ended 31st March 2017and 2016

Net sales ..................................................................................................
Cost of sales ............................................................................................

Millions of yen
2017
2016
¥232,437¥229,544
177,074
178,470

Thousands of
U.S. dollars (Note 1)
2017$2,071,816
1,590,784

Gross profit .........................................................................................
Selling, general and administrative expenses (Note 13) ......................

53,96749,25752,47048,301

481,032
439,050

Operating income ...............................................................................

4,710

4,169

41,982

305
(206)
670
(303)
(843)
(128)
567

323
(214)
99
(103)
–
(286)
(194)

2,719
(1,836)
5,972(2,701)(7,514)(1,141)
5,054

62

(375)

553

Income before income taxes ...................................................................

4,772

3,794

42,535

Income taxes (Note 10):
Current ................................................................................................
Deferred ..............................................................................................

1,464
(23)

1,290
(175)

13,049
(205)

1,441

1,115

12,844

3,331
(46)

2,679
(62)

29,691(410)

Other income (expenses):
Interest and dividend income .............................................................
Interest expense ..................................................................................
Gain on sale of securities, net (Note 4) ..............................................
Loss on disposal of property, plant and equipment, net .....................
Special retirement expenses ...............................................................
Loss on impairment of assets (Note 14) .............................................
Other, net ............................................................................................

Profit ........................................................................................................
Profit attributable to non-controlling interests ....................................
Profit attributable to owners of parent .................................................

¥

¥

3,285

2,617

Yen

$

29,281

U.S. dollars (Note 1)

Profit attributable to owners of parent per share (Note 2) ..................

¥25.00¥19.85$0.22

Profit attributable to owners of parent, diluted per share (Note 2) ....

–

–

–

Dividends per share ...............................................................................

¥ 8.00¥ 7.00$0.07

See accompanying Notes to Consolidated Financial Statements.

7

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended 31st March 2017 and 2016

Profit �������������������������������������������������������������������������������������������������������
Other comprehensive income:Unrealised gains on securities �����������������������������������������������������������
Deferred gains (losses) on hedges �����������������������������������������������������
Foreign currency translation adjustments �����������������������������������������
Adjustments for retirement benefits ��������������������������������������������������
Share of other comprehensive income of associates accounted for using equity method ���Total other comprehensive income (Note 17) �����������������������������
Comprehensive income �������������������������������������������������������������������������
Comprehensive income attributable to:
Owners of the parent �������������������������������������������������������������������������
Non-controlling interests �������������������������������������������������������������������
See accompanying Notes to Consolidated Financial Statements.

8

Millions of yen
2017
2016
¥3,331¥2,679Thousands of
U.S. dollars (Note 1)
2017$29,691

617
22
41
872
2
1,554
¥4,885

(353)
(30)
142
(347)
7
(581)
¥2,098

5,500
196
365
7,772
18
13,851$43,542¥4,839¥ 46¥2,036¥ 62$43,132$ 410

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Years Ended 31st March 2017 and 2016

Thousands of
U.S. dollars (Note 1)
2017

Millions of yen
2017
2016
Common stock:
Balance at beginning and end of the year �����������������������������������������

¥ 6,716¥ 6,716$ 59,863

Capital surplus:
Balance at beginning of the year �������������������������������������������������������
Purchase of shares of consolidated subsidiaries ��������������������������������
Balance at end of the year �����������������������������������������������������������������

¥ 22,086–¥ 22,086¥ 22,073
13¥ 22,086$ 196,862–$ 196,862

Retained earnings:
Balance at beginning of the year �������������������������������������������������������Cash dividends paid ��������������������������������������������������������������������������
Profit attributable to owners of parent ���������������������������������������������������
Increase resulting from exclusion of equity method affiliates ����������
Balance at end of the year �����������������������������������������������������������������

¥ 41,306
(920)
3,285
8
¥ 43,679¥ 39,616
(927)
2,617
–
¥ 41,306$ 368,179(8,200)29,28171$ 389,331¥¥$

Treasury stock, at cost:
Balance at beginning of the year �������������������������������������������������������
Purchase of treasury stock �����������������������������������������������������������������
Balance at end of the year �����������������������������������������������������������������
Unrealised gains on securities:
Balance at beginning of the year �������������������������������������������������������
Increase (decrease) for the year ���������������������������������������������������������
Balance at end of the year �����������������������������������������������������������������
Deferred gains (losses) on hedges:
Balance at beginning of the year �������������������������������������������������������
Increase (decrease) for the year ���������������������������������������������������������
Balance at end of the year �����������������������������������������������������������������
Foreign currency translation adjustments:
Balance at beginning of the year �������������������������������������������������������
Increase for the year ��������������������������������������������������������������������������
Balance at end of the year �����������������������������������������������������������������
Adjustments for retirement benefits:
Balance at beginning of the year �������������������������������������������������������
Increase (decrease) for the year ���������������������������������������������������������
Balance at end of the year �����������������������������������������������������������������
Non-controling interests:
Balance at beginning of the year �������������������������������������������������������
Increase (decrease) for the year ���������������������������������������������������������
Balance at end of the year �����������������������������������������������������������������
See accompanying Notes to Consolidated Financial Statements.

9

¥

(512)
(1)
(513)

¥

(10)
(502)
(512)

(4,564)(9)$ (4,573)¥ 4,423617¥ 5,040¥ 4,776(353)¥ 4,423$ 39,424
5,500$ 44,924

¥

¥

8
(29)
(21)

$

(153)
149
(4)

$

¥
¥
¥

(21)
22
1
(4)
42
38

¥
¥
¥

$

$

(187)
196
9
(36)
375
339

¥ (2,067)872¥ (1,195)¥ (1,720)(347)¥ (2,067)$ (18,424)
7,772$ (10,652)

¥

¥

$

¥

396
43
439

¥

402
(6)
396

$

3,530
383
3,913

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended 31st March 2017 and 2016

Thousands of
U.S. dollars (Note 1)
2017

Millions of yen
2017
2016
Cash flows from operating activities:
Income before income taxes ...............................................................
Depreciation and amortisation ...........................................................
Loss on impairment of assets .............................................................
Decrease in allowance for doubtful accounts .....................................
Decrease (increase) in liabilities for retirement benefits ....................
Special retirement expenses ...............................................................
Interest and dividend income .............................................................
Interest expense ..................................................................................
Gain on sale of securities, net ............................................................
Loss on valuation of investment securities .........................................
Loss on disposal of property, plant and equipment, net .....................
Increase in receivables ........................................................................
Decrease (increase) in inventories ......................................................
Increase in trade notes and accounts payable .....................................
Increase (decrease) in consumption tax payable ................................
Other, net ............................................................................................
Subtotal .........................................................................................
Interest and dividends received ..........................................................
Interest paid ........................................................................................
Income taxes paid ...............................................................................
Net cash provided by operating activities .....................................

¥ 4,772
5,442
128
(117)
(2)
843
(305)
206
(670)
1
303
(1,235)
(627)
1,478
(875)
446
9,788
322
(206)
(1,145)
8,759

Cash flows from investing activities:
Purchase of short-term investments and investment securities ...........
Proceeds from sale of short-term investments and investment securities ....
Purchase of property, plant and equipment ..................................................
Proceeds from sale of property, plant and equipment ........................
Other, net ............................................................................................
Net cash used in investing activities .............................................

(31)

(30)

(276)

1,145
(7,129)433(135)(5,717)341(3,476)326(105)(2,944)

10,206(63,544)
3,860(1,205)

(862)
1,787
(2,750)
(918)
(921)
(2)

(1,600)370(2,095)
(780)
(929)
(501)

(7,683)
15,928(24,512)(8,183)(8,209)(18)

Cash flows from financing activities:
Net decrease in short-term borrowings ..............................................
Proceeds from long-term debt ............................................................
Repayment of long-term debt .............................................................
Repayment of lease obligations .........................................................
Cash dividends paid ...........................................................................
Purchase of treasury shares ................................................................
Other, net ............................................................................................
Net cash used in financing activities .............................................
Effect of exchange rate changes on cash and cash equivalents ..........
Net increase (decrease) in cash and cash equivalents .........................
Cash and cash equivalents at beginning of year ..................................
Cash and cash equivalents at end of year (Note 16) ............................
See accompanying Notes to Consolidated Financial Statements.

10¥ 3,794
5,206
286
(80)
315
–
(323)
214
(99)
–
103
(666)
2,733
834
167
261
12,745317(214)(1,235)
11,613$ 42,535
48,5071,141(1,043)(18)
7,514(2,719)1,836(5,972)9
2,701(11,008)(5,589)13,174(7,799)3,976
87,2452,870(1,836)(10,206)
78,073(50,959)

(6)

(58)

(53)

(3,672)(5,593)(32,730)–(630)
17,001¥16,371

2
3,078
13,923¥17,001–(5,616)
151,538$145,922

MARUDAI FOOD CO., LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For years Ended 31st March 2017 and 2016

1. Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of MARUDAI FOOD CO., LTD. (the “Company”) and its consolidated
subsidiaries (together, the “Companies”) have been prepared in accordance with the provisions set forth in the Japanese Financial
Instruments and Exchange Law and its related accounting regulations and in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements fromInternational Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English from the consolidated
financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance
Bureau of the Ministry of Finance as required by the Japanese Financial Instruments and Exchange Act. Certain supplementary
information included in the statutory Japanese language consolidated financial statements, but not required for fair presentation, is
not presented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside
Japan, using the prevailing exchange rate at 31st March 2017, which was ¥112.19 to U.S. $1.00. These translations should not be
construed as representations that the Japanese yen amounts have been, could have been or could in the future be converted into
U.S. dollars at this or any other rate of exchange.
2. Significant accounting policies
Consolidation - The consolidated financial statements include the accounts of the Company and its 28 subsidiaries. ALL of
the Company’s subsidiaries have the same fiscal year end as the Company, 31st March.
All significant intercompany balances, transactions and profits have been eliminated. In the elimination of investments in
subsidiaries, the assets and liabilities of the subsidiaries, including the portion attributable to non-controling shareholders, areevaluated using the fair value at the time the Company acquired control of the respective subsidiary. The difference between thecost of an investment and the equity in the assets at the date of acquisition is amortized over five years. Equity method accounting
is applied to affiliates which are substantially controlled by the Company. Betagro MF Deli Co., Ltd. is being included in thescope of the Companies to which the equity method is applied.
Cash and cash equivalents - Cash on hand, readily available deposits and short-term highly liquid investments with maturities
not exceeding three months at the time of purchase are considered cash and cash equivalents.
Securities - Available-for-sale securities with available fair market value are stated at fair market value. Unrealized gains andlosses on these securities are reported, net of applicable income taxes, as a separate component of shareholders’ equity. Realized
gains and losses on the sale of such securities are computed using the moving average cost method. Debt securities with noavailable fair market value are stated at amortized cost, net of the amount considered not collectible. Other securities with noavailable fair market value are stated using the moving average cost method.
If the market value of equity securities or available-for-sale securities declines significantly, the difference between the fairmarket value and the carrying amount is recognized as loss in the period of the decline. If the fair market value of equity securities
is not readily available, such securities are written down to net asset value with a corresponding charge in the consolidated
statement of income in the event the net asset value declines significantly. In these cases, the fair market value or the net asset
value will be the carrying amount of the securities at the beginning of the next year.
Derivatives and hedge accounting - The Companies account for derivative financial instruments at fair value and recognizechanges in the fair value as gain or loss unless the derivative financial instrument is used for hedging purposes. If derivative
financial instruments are used as hedges and meet certain hedging criteria, the Companies defer recognition of gain or loss
resulting from changes in the fair value of the derivative financial instrument until the related loss or gain on the hedged item isrecognized. However, foreign monetary obligations denominated in foreign currencies for which foreign exchange forward
contracts are used to hedge foreign currency fluctuations are translated at the contracted rate if the forward contracts qualify forhedge accounting (“the alternative method”). Also, if interest rate swap contracts are used as hedges and meet certain hedging
criteria, the net amount to be paid or received under the interest rate swap contract is added to or deducted from the interest on theassets or liabilities for which the swap contract was executed (“the special treatment”).

11Allowance for doubtful accounts - An allowance for doubtful accounts is provided to cover possible losses on collection. With
respect to normal trade accounts receivable, it is stated at an amount based on the actual rate of historical bad debts. For certain
doubtful receivables, the uncollectible amounts are individually estimated.
Inventories - The Company and its domestic consolidated subsidiaries state inventories at the lower of average cost or net
realizable value.
Property, plant and equipment - Property, plant and equipment are stated at cost. Depreciation is computed primarily using thedeclining balance method. However, the straight-line method is applied for depreciation of buildings acquired on or after 1st April
1998 and facilities attached to buildings and structures acquired on or after 1st April 2016. The useful life of buildings andstructures ranges from 12 to 50 years. The useful life of machinery and equipment ranges from 4 to 10 years.
Software - The Company and its consolidated domestic subsidiaries include software in intangible assets and amortize it using
the straight-line method over the estimated useful life of 5 years.
Goodwill - Goodwill is amortized over a period of 5 years using the straight-line method.
Lease assets - Assets under finance leases that do not transfer ownership of the lease assets are amortized using the straightline method over the lease term with the assumption that the useful life coincides with the lease term and the residual value is
zero.
Research and development expenses - Research and development expenses for the improvement of existing products and thedevelopment of new products, including basic research and fundamental development costs, are charged to expenses as incurred.
Bonuses - The Company and its consolidated domestic subsidiaries follow the general Japanese practice of paying bonuses to
employees in July and December. Accrued bonus liabilities are determined based upon the estimated amounts to be paid in thesubsequent period and are included in accrued expenses.
Translation of foreign currencies - Short-term and long-term receivables and payables denominated in foreign currencies aretranslated into Japanese yen at year-end rates. Financial statements of consolidated overseas subsidiaries are also translated into
Japanese yen at year-end rates, except for shareholders’ equity accounts, which are translated at historical rates.
Accounting for Retirement Benefits - Projected benefit obligations are attributed to periods on a benefit formula basis indetermining retirement benefit obligations. Prior service costs are amortized by the straight-line method over a fixed period of 5
years, which is within the average remaining service years of the eligible employees, beginning in the fiscal year in which theprior service costs are recognized. Actuarial gains and losses are amortized by the straight-line method over a fixed period of 10
years, which is within the average remaining service years of the eligible employees, beginning in the fiscal year following theyear in which the gains and losses are recognized. In determining the amount of retirement benefit obligations and retirement
benefit costs, some small sized consolidated subsidiaries have adopted a simplified method in which the amount that would be
required if all the employees retired voluntarily at the fiscal year end is treated as retirement benefit obligation.
Income taxes - The asset-liability approach is used to recognize deferred tax assets and liabilities for tax loss carryforwards
and the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts used for income tax purposes.
Amounts per share - The computations of net income per share of common stock shown on the consolidated statements ofincome are based on the weighted average number of shares outstanding during each financial period. Cash dividends per share
shown in the consolidated statements of income are the amounts applicable to the respective years. Diluted net income is notdisclosed because the Company had no outstanding securities which might have diluted the per share amounts for the years ended
31st March 2017 and 2016.

12

Accounting changes
In line with the revisions to the Corporation Tax Act of Japan, the Company and its domestic subsidiaries applied the Practical
Solution on a Change in Depreciation Method Due to Tax Reform 2016 (Practical Issues Task Force (PITF) No. 32, 17th June2016) from the current fiscal year. Accordingly, the depreciation method for facilities attached to buildings and structures acquiredon or after 1st April 2016 was changed from the declining balance method to the straight-line method. As a result, operating
income, ordinary income and profit before taxes for the current fiscal year each increased by ¥64 million ($570 thousand).
The Company and its consolidated domestic subsidiaries adopted “Revised Accounting Standard for Business Combinations”(ASBJ Statement No. 21, 13th September 2013 (hereinafter, “Statement No. 21”)), “Revised Accounting Standard forConsolidated Financial Statements” (ASBJ Statement No. 22, 13th September 2013 (hereinafter, “Statement No. 22”)) and“Revised Accounting Standard for Business Divestitures” (ASBJ Statement No. 7, 13th September 2013 (hereinafter, “Statement
No. 7”)) (together, the “Business Combination Accounting Standards”), from the fiscal year ended 31st March 2016.
Accordingly, differences arising from changes in the Company’s ownership interests in subsidiaries over which the Company
retains control are recognized as capital surplus, and acquisition-related costs are recognized as expenses in the fiscal year of
incurrence. Regarding business combinations to be performed on or after the beginning of the fiscal year ended 31st March 2016,changes have been made whereby adjustments to the provisional amount arising from the finalization of the tentative accounting
treatment relating to the allocation of acquisition cost are recognized in the consolidated financial statements for the year in which
the business combination occurred. In addition, the Company and its consolidated domestic subsidiaries have changed thepresentation of net income and other related items, and the presentation of “minority interests” to “non-controlling interests.”
The Company and its consolidated domestic subsidiaries have adopted the Business Combination Accounting Standards, etc.
prospectively from the beginning of the fiscal year ended 31st March 2016, in accordance with the provisional treatments
prescribed in Article 58-2 (4) of Statement No. 21, Article 44-5 (4) of Statement No. 22 and Article 57-4 (4) of Statement No. 7.
In the consolidated statements of cash flows for the fiscal year ended 31st March 2016, cash flows related to purchase or saleof stocks of subsidiaries not resulting in change in scope of consolidation is recognized under cash flows from financing activities,
and cash flows related to acquisition-related costs arising from purchase of stocks of subsidiaries resulting in change in scope of
consolidation, or expenses arising from purchase or sale of stocks of subsidiaries not resulting in change in scope of consolidationis recognized under cash flows from operating activities. The effect of this change on profit (loss), financial position and amounts
per share was immaterial.
Reclassification
Certain prior year amounts have been reclassified to conform to the current year’s presentation.
Additional Information
The Company and its domestic subsidiaries applied the Revised Implementation Guidance on Recoverability of Deferred Tax
Assets (Accounting Standards Board of Japan (ASBJ) Guidance No. 26, 28th March 2016) from the current fiscal year.
3. Financial instruments(1) Current status of financial instruments① Policy concerning financial instruments
The Group makes it a policy to limit fund investments to bank deposits and other investments in which the principal
thereof is free from risk and raise funds principally through borrowings from financial institutions such as banks andissuance of corporate bonds. The Group uses derivatives to reduce foreign exchange and interest rate fluctuation risks but
does not engage in any speculative transactions.
② Details of financial instruments and their risks and the Group’s risk management system
The Group is exposed to credit risk arising from operating receivables such as trade notes and accounts receivable. To
limit the risk, the Company conducts due date and outstanding receivable management by customer in accordance with its
credit exposure management guidelines and has a grading system to evaluate the credit condition of its major customers
every six months. The consolidated subsidiaries manage credit risk similarly, following the Company’s credit exposure
management guidelines.

13

The policy on investment securities is to hold equities that will contribute to sustainable enhancement of the Company’s
corporate value from a medium to long-term perspective for the purpose of maintaining and strengthening business
relationships in accordance with the Procedures for Holding of Listed Securities. Investment securities are exposed to market
price fluctuation risks, and identified fair values are periodically reported to the Board of Directors.
Operating payables, such as trade notes and accounts payables, are generally payable within one year. Some arise inconnection with the import of raw materials and goods that are denominated in foreign currencies. The Company uses
foreign currency forward contracts to reduce foreign currency fluctuation risk that arises from operating payables in foreign
currencies.
The Group primarily uses loans to procure operating funds and lease receivables from finance leases to raise funds forcapital expenditure. When the loans have floating interest rates, the Company is exposed to interest rate fluctuation risk. For
most long-term loans with floating interest rates, the Company uses derivatives (interest rate swaps) for each individual loan
as a hedge instrument to fix interest payments. Since the requirements for special treatment for interest rate swaps are
satisfied, the Company uses the special treatment for the assessment of hedge effectiveness. To minimize counterparty risk,
the Company follows its derivative transaction rules and enters such transactions only with highly rated financial institutions.
The Company is exposed to liquidity risk arising from its operating obligations and loan payables. To minimize this risk,
the Accounting Department prepares statements of cash flows based on other divisions’ reports and regularly updates thestatements. The consolidated subsidiaries also manage liquidity risk in accordance with the methods used by the Company.
③ Supplementary explanation on fair values of financial instruments
The fair values of financial instruments include values based on market prices or reasonably calculated values whenmarket prices are not available. Because a variety of factors, some of which are variable, are taken into account whencalculating the values, the adoption of different assumptions may result in different values.
The contract amounts of the derivative transactions stated in “(2) Fair value of financial instruments” do not reflect themarket risk involved in the derivative transactions themselves.
(2) Fair value of financial instruments
The following table shows consolidated balance sheet amounts, fair value and any difference between book value and fairvalue as of 31st March 2017. However, financial instruments whose fair values were deemed difficult to determine are notincluded in the table (refer below to (※2)).
Millions of yen
Thousands of U.S. dollars (Note 1)
2017
Consolidated
Consolidatedbalance sheet Fair value
Difference balance sheet Fair value
Difference
amounts
amounts¥16,371¥16,371¥ –$145,922$145,922$  –① Cash and time deposits ���������������������������
25,92625,926–
231,090
231,090–② Trade notes and accounts receivable ��������
③ Investment securities
Available-for-sale securities ��������������������
12,296
12,296–109,600
109,600–
54,59354,593–
486,612486,612–
Total assets ��������������������������������������������
Trade
notes
and
accounts
payable23,34923,349–208,120
208,120–①������������
4,537
4,537
–
40,44040,440–② Short-term borrowings ����������������������������
4,630
4,636
6
41,27041,32353③ Long-term debt ��������������������������������������
4,816
4,838
22
42,92843,123195④ Lease obligations �����������������������������������
37,33237,36028
332,758
333,006
248
Total liabilities ���������������������������������������
1
1
–
9
9
–
Derivatives (*) ���������������������������������������
(*) Derivative assets and liabilities are presented on a net basis.

14

(※1) Determination of fair value for financial instruments and matters concerning securities and derivative transactions
ASSETS① Cash and time deposits and ② Trade notes and accounts receivable
The fair value of these items are stated at book value. Because these instruments are settled in a short period oftime, book value approximates fair value.
③ Investment securities
The fair value of these securities are based on prices on securities exchanges. For information on securities
classified by the purpose for which they are held, refer to Note 4,“Securities.”
LIABILITIES① Trade notes and accounts payable and ② Short-term borrowings
The fair value of these items are stated at book value. Because these instruments are settled in a short period oftime, book value approximates fair value.
③ Long-term debt and ④ Lease obligations
To calculate the fair value of these items, the combined amount of principal and interest is discounted by theinterest rate considered applicable to similar new loans or lease transactions. For the fair value of long-term debt withfloating interest rates subject to special treatment for interest rate swaps, the combined amount of principal and interest
processed as a single item with the interest swap is calculated by discounting a reasonably estimated interest rateconsidered applicable to similar new loans.
DERIVATIVES
Refer to Note 5, “Derivative financial instruments and hedging transactions.”(※2) Financial instruments whose fair values were deemed extremely difficult to determine
Millions of yen
Thousands of U.S. dollars (Note 1)
2017
Category
Consolidated balance sheet amounts Consolidated balance sheet amounts
Unlisted stocks ...................................................................
¥43
$383
–
–
Investments in capital of subsidiaries and associates..........
Since no market prices were available for the above financial instruments and their fair values were difficult to determine byan estimation of the future cash flows, these items were not included in “③ Investment securities-Available-for-sale securities.”(※3) Estimated redemption amounts of monetary assets and available-for-sale securities with maturity dates after the
consolidated balance sheet dateMillions of yen
Thousands of U.S. dollar (Note 1)2017
one year Over five
one year Over five
Within one OverWithin one Overbut within
but within
years
year
years
year
five years
five years
Cash and time deposits ..............................
Trade notes and accounts receivable .........
Investment securities
Available-for-sale securities withmaturity dates (bonds) .............................
Total ..........................................................

¥16,371
25,926––––$145,922
231,090

–
–

–
–

–
¥42,297

–
–

–
–

–
$377,012––––(※4) For estimated repayment amounts of long-term debt, lease obligations and other interest bearing debt, refer to Note 7,“Short-term borrowings, long-term debt and lease obligations.”

15

The following table shows consolidated balance sheet amounts, fair value and any difference between book value and fairvalue as of 31st March 2016. However, financial instruments whose fair values were deemed difficult to determine are notincluded in the table (refer below to (※2)).
Millions of yen
2016
Consolidated
Difference
balance sheet Fair value
amounts¥17,001¥ –¥17,001① Cash and time deposits ........................
24,63924,639–② Trade notes and accounts receivable ....
③ Investment securities
11,84011,840–Available-for-sale securities ................
Total assets ...........................................
53,480–53,48021,85921,859–① Trade notes and accounts payable .......
5,399
5,399
–
② Short-term borrowings .........................
5,593
5,577
(16)
③ Long-term debt ....................................
3,669
65
3,604
④ Lease obligations .................................
Total liabilities .....................................
36,50449
36,455(31)
Derivatives (*) ......................................
(31)–(*) Derivative assets and liabilities are presented on a net basis.
(※1) Determination of fair value for financial instruments and matters concerning securities and derivative transactions
ASSETS① Cash and time deposits and ② Trade notes and accounts receivable
The fair value of these items are stated at book value. Because these instruments are settled in a short period oftime, book value approximates fair value.
③ Investment securities
The fair value of these securities are based on prices on securities exchanges. For information on securities
classified by the purpose for which they are held, refer to Note 4, “Securities.”
LIABILITIES① Trade notes and accounts payable and ② Short-term borrowings
The fair value of these items are stated at book value. Because these instruments are settled in a short period oftime, book value approximates fair value.
③ Long-term debt and ④ Lease obligations
To calculate the fair value of these items, the combined amount of principal and interest is discounted by theinterest rate considered applicable to similar new loans or lease transactions. For the fair value of long-term debt withfloating interest rates subject to special treatment for interest rate swaps, the combined amount of principal andinterest processed as a single item with the interest swap is discounted by the price provided by the financial
institution.
DERIVATIVES
Refer to Note 5, “Derivative financial instruments and hedging transactions.”(※2) Financial instruments whose fair values were deemed extremely difficult to determine
Millions of yen
2016
Category

Consolidated balance sheet amounts

Unlisted stocks .....................................................................
Investments in capital of subsidiaries and associates ................

¥54
0

Since no market prices were available for the above financial instruments and their fair values were difficult to determine byan estimation of the future cash flows, these items were not included in “③ Investment securities-Available-for-sale securities.”16

(※3) Estimated redemption amounts of monetary assets and available-for-sale securities with maturity dates after the
consolidated balance sheet dateMillions of yen
2016
one year Over five
Within one Overbut within
years
year
five years
Cash and time deposits ...................................
Trade notes and accounts receivable ..............
Investment securities
Available-for-sale securities withmaturity dates (bonds) .................................
Total ...............................................................

¥17,001
24,639

–

–

–

–

–

–

–

¥41,640––(※4) For estimated repayment amounts of long-term debt, lease obligations and other interest bearing debt, refer to Note 7,“Short-term borrowings, long-term debt and lease obligations.”
4. Securities
The following tables summarize historical costs and book values (fair values) of available-for-sale securities with available
fair market values as of 31st March 2017 and 2016.
Securities with book values
exceeding historical cost:

Millions of yen

TypeHistorical
cost

2017
Book
value

Equity securities ........................
Bonds ........................................
Others ........................................
Total ..........................................

¥4,574––¥4,574¥11,803––¥11,803

Historical
cost

2017
Book
value

Securities with book values
not exceeding historical cost:
Type
Equity securities ......................
Bonds .......................................
Others .......................................
Total ..........................................

¥579
–
–
¥579

¥493
–
–
¥493

Thousands of U.S. dollars (Note 1)

Gain

Historical
cost

2016
Book
value

¥7,229––¥7,229¥4,780––¥4,780¥11,207––¥11,207

Historical
cost

2016
Book
Value

Loss
¥(86)
–
–
¥(86)

¥807
–
–
¥807

¥633
–
–
¥633

Gain

Historical
cost

2017
Book
value

¥6,427––¥6,427$40,770––$40,770$105,206––$105,206

Loss

Historical
cost

2017
Book
value

¥(174)––¥(174)$5,161––$5,161$4,394––$4,394Gain$64,436––$64,436

Loss$(767)––$(767)

Unlisted stocks (carrying amount of ¥43 million ($383 thousand)) as of 31st March 2017 and unlisted stocks (carrying amountof ¥54 million) as of 31st March 2016 were not included in the above table as no market prices for these securities were available
and their fair values were deemed extremely difficult to determine by an estimation of the future cash flows.
Available-for-sale securities
sold during the year:

Millions of yen

TypeProceeds

Equity securities ....................
Bonds ....................................
Total ......................................

¥1,145–¥1,1452017
Gains
on salesLosseson salesProceeds

¥670
–
¥670

–
–
–

¥341
–
¥341
17

Thousands of U.S. dollars (Note 1)
2016
Gains
on salesLosseson salesProceeds

¥99
–
¥99

–
–
–

$10,206–$10,2062017
Gains
on salesLosseson sales$5,972–$5,972–––

The Group recognized impairment loss on investment securities categorised as other securities with market value in theamount of ¥1 million ($9 thousand) for the year ended 31st March 2017.
There was no impairment of investment securities during the fiscal year ended 31st March, 2016.
When the value of stocks depreciated from 30% to 50%, the Company determined impairment loss by analyzing theoperational performance of the issuing entities based on prevailing financial data and market value information such as
discrepancies between the book value and the highest or lowest market value during the year.
5. Derivative financial instruments and hedging transactions
Derivative financial instruments and hedging transactions at 31st March 2017 were as follows:(1) Currency related
Millions of yen
Hedge accounting
methodAlternative method

Thousands of U.S. dollars (Note 1)
2017
Contract
amounts

Due overone year

Fair
value

(※)¥1$3,922–$9¥1$3,922–$9Transaction types

Major hedged
items

Contract
amounts

Due overone year

Fair
value

Foreign exchange trading
On purchased
U.S. dollar
Total

Accounts
payable

¥440

–

¥440

–

※ Fair value is based on information provided by financial institutions at the end of the fiscal year.

(2) Interest related
Millions of yen
Hedge accounting
methodSpecial treatment

Transaction types

Major hedged
items

Contract
amounts

Due overone yearInterest rate swaps
Pay fixed,
receive floating
Total

Long-term
debt¥1,348¥934¥1,348¥934

Thousands of U.S. dollars (Note 1)
Fair
value

(※)

2017
Contract
amounts

Due overone year

Fair
value

–

$12,015$8,325––$12,015$8,325–※ According to the special treatment for interest rate swaps as applied to integrated and long-term debt, the fair value of thederivative financial instrument is included in the fair value of the long-term debt.

Derivative financial instruments and hedging transactions at 31st March 2016 were as follows:(1) Currency related
Millions of yen
Hedge accounting
methodAlternative method

Transaction types

Major hedged
items

Contract
amounts2016
Due overone year

Foreign exchange trading
On purchased
U.S. dollar
Total

Accounts
payable¥1,213–¥1,213

– 

Fair
value
(※)¥(31)¥(31)※ Fair value is based on information provided by financial institutions at the end of the fiscal year.

18

(2) Interest related
Millions of yen
Hedge accounting
methodSpecial treatment

Transaction types

Major hedged
items

Contract
amounts2016
Due overone yearInterest rate swaps
Pay fixed,
receive floating
Total

Long-term
debt¥2,706¥2,106¥2,706¥2,106

Fair
value
(※)

–
–

※	According to the special treatment for interest rate swaps as applied to integrated and long-term debt, the fair value of thederivative financial instrument is included in the fair value of the long-term debt.
6. Inventories
Inventories at 31st March 2017 and 2016 consisted of the following:Thousands of
U.S. dollars (Note 1)

Millions of yen
Finished goods and merchandise ������������������������������������������������������������
Work in progress �������������������������������������������������������������������������������������
Raw materials and supplies ���������������������������������������������������������������������

2017

2016

2017

¥ 8,094403
6,348¥14,845¥ 7,713432
6,074¥14,219$ 72,145
3,592
56,583$132,320

7. Short-term borrowings, long-term debt and lease obligations
Short-term borrowing at 31st March 2017 and 2016 consisted of short-term notes, which generally mature within one year,with average interest rates of 0.41% and 0.47%, respectively.
Long-term debt at 31st March 2017 and 2016 consisted of the following:
Millions of yen
2017
2016
Loans from banks, insurance companies and otherfinancial institution at 0.16% to 1.15% maturing through 2028
Secured ����������������������������������������������������������������������������������������������������
Unsecured �����������������������������������������������������������������������������������������������
Less current portion ��������������������������������������������������������������������������������

19

¥

617
4,013
4,630
(1,992)¥ 2,638

¥

727
4,866
5,593
(2,745)¥ 2,848

Thousands of
U.S. dollars (Note 1)
2017

$

5,500
35,77041,270(17,756)$ 23,514

The aggregate annual maturities of long-term debt as of 31st March 2017 were as follows:
Millions of yen
Years ending 31st March,2018 ������������������������������������������������������������������������������������������������
2019 ������������������������������������������������������������������������������������������������
2020 ������������������������������������������������������������������������������������������������
2021 ������������������������������������������������������������������������������������������������
2022 ������������������������������������������������������������������������������������������������
2023 and thereafter �������������������������������������������������������������������������

2017

Thousands of U.S. dollars (Note 1)
2017¥1,992
1,179
773
293
293
100
¥4,630$17,756
10,509
6,890
2,612
2,612
891
$41,270

The aggregate annual maturities of lease obligations as of 31st March 2017 were as follows:
Millions of yen

Thousands of U.S. dollars (Note 1)

Years ending 31st March,2018 ������������������������������������������������������������������������������������������������
2019 ������������������������������������������������������������������������������������������������
2020 ������������������������������������������������������������������������������������������������
2021 ������������������������������������������������������������������������������������������������
2022 ������������������������������������������������������������������������������������������������
2023 and thereafter �������������������������������������������������������������������������

2017

2017
¥1,045
775
769
422
389
1,416
¥4,816$ 9,315
6,908
6,854
3,762
3,467
12,622$42,928

8. Pledged assets
Assets were pledged as collateral for short-term borrowings of ¥200 million ($1,783 thousand), the current portion of longterm debt of ¥229 million ($2,041 thousand) and long-term debt of ¥388 million ($3,458 thousand) as of 31st March 2017 and forshort-term borrowings of ¥200 million, the current portion of long-term debt of ¥227 million and long-term debt of ¥500 million
as of 31st March 2016. The assets pledged are summarized as follows:
Thousands ofMillions of yen
U.S. dollars (Note 1)
2017
2016
2017
Land ��������������������������������������������������������������������������������������������������������
¥ 468
¥ 468
$ 4,172
Buildings and structures ��������������������������������������������������������������������������
805
848
7,175
174
89
1,551
Machinery and equipment �����������������������������������������������������������������������
¥1,447¥1,405$12,89820

9. Retirement benefits(1) Outline of retirement benefit plans adopted
The Company and its consolidated subsidiaries have defined benefit corporate pension plans (fund type) and lump-sum
retirement allowance plans as well as defined contribution plans. In the case of certain defined contribution plans, employees canselect a defined contribution plan or advanced payment of retirement benefits. The Company transitioned part of the defined
benefit plan (fund type) to a defined contribution plan on April 1, 2016. In some cases, additional severance benefits may be paid
to the employees upon retirement.
(2) Defined Benefit Obligation① The changes in retirement benefit obligation for the fiscal years ended 31st March 2017 and 2016 (excluding those for which
the simplified method was applied) were as follows:

Beginning balance of retirement benefit obligation ��������������������������������
Service cost - benefits earned during the year ����������������������������������������
Interest cost on projected benefit obligation �������������������������������������������
Actuarial gains and losses �����������������������������������������������������������������������
Retirement benefits paid �������������������������������������������������������������������������
Loss on abolishment of retirement benefit plan ��������������������������������������
Decrease by abolishment of retirement benefit plan �������������������������������
Ending balance of retirement benefit obligation �������������������������������������

Millions of yen
2017
2016
¥23,572¥23,282
387
737
117
186
358
151
(1,119)(945)–
161(8,941)–¥14,374¥23,572

Thousands of
U.S. dollars (Note 1)
2017$210,108
3,449
1,043
3,191
(9,974)–(79,695)$128,122② The changes in plan assets for the fiscal years ended 31st March 2017 and 2016 (excluding those for which the simplified
method was applied) were as follows:
Thousands ofMillions of yen
U.S. dollars (Note 1)
2017
2016
2017
Beginning balance of plan assets ������������������������������������������������������������
¥22,084¥22,517$196,845
Expected return on plan assets ����������������������������������������������������������������
428
676
3,815
(90)
(836)
(802)
Actuarial gains and losses �����������������������������������������������������������������������
Contribution from the employer �������������������������������������������������������������
352
544
3,137
(764)
(817)
(6,810)Retirement benefits paid �������������������������������������������������������������������������
(7,823)–(69,730)
Decrease by abolishment of retirement benefit plan �������������������������������
Ending balance of plan assets �����������������������������������������������������������������
¥14,187¥22,084$126,455③ The changes in liabilities for retirement benefits of the plans for which the simplified method was applied for the fiscal years
ended 31st March 2017 and 2016 were as follows:
Thousands ofMillions of yen
U.S. dollars (Note 1)
2017
2016
2017
Beginning balance of liabilities for retirement benefits ��������������������������
¥1,027¥ 963$9,154Retirement benefit expenses �������������������������������������������������������������������
118
102
1,052
(35)
(38)
(312)
Retirement benefits paid �������������������������������������������������������������������������
Ending balance of liabilities for retirement benefits �������������������������������
¥1,110¥1,027$9,89421

④ Reconciliation between the ending balance of projected benefit obligation and plan assets and liability and asset for
retirement benefits recorded in the consolidated balance sheet

Funded retirement benefit obligation ������������������������������������������������������
Plan assets �����������������������������������������������������������������������������������������������
Unfunded retirement benefit obligation ��������������������������������������������������
Net liability (asset) for retirement benefits recordedin the consolidated balance sheet �����������������������������������������������������������
Liabilities for retirement benefits ������������������������������������������������������������
Net liability (asset) for retirement benefits recordedin the consolidated balance sheet �����������������������������������������������������������

Millions of yen
2017
2016
¥14,374¥23,572(14,187)(22,084)
187
1,488
1,110
1,027

Thousands of
U.S. dollars (Note 1)
2017$128,122(126,455)
1,667
9,894

1,297
1,297

2,515
2,515

11,561
11,561¥1,297¥ 2,515$ 11,561

Millions of yen
2017
2016
¥386
¥736
117
186
(428)
(676)
544
508
2
7
118
102
¥739
¥863
–
¥161
¥843
–

Thousands of
U.S. dollars (Note 1)2017$3,441
1,043(3,815)
4,848
18
1,052
$6,587–$7,514

Note: The plans to which the simplified method is applied are included.
⑤ The components of retirement benefit expenses were as follows:

Service cost - benefits earned during the year ����������������������������������������
Interest cost on projected benefit obligation �������������������������������������������
Expected return on plan assets ����������������������������������������������������������������
Amortisation of actuarial differences ������������������������������������������������������
Amortisation of prior service costs ���������������������������������������������������������
Retirement benefit expenses calculated using the simplified method �����
Retirement benefit expenses on defined benefit plans ����������������������������
Loss on abolishment of retirement benefit plan (※) ������������������������������
Special retirement expenses (※) ������������������������������������������������������������

※	Recorded under other expenses. In addition, special retirement expenses for the fiscal year ended 31st March 2017 consisted of
lump-sum payments to employees who were transferred to a consolidated subsidiary.
⑥ Adjustments for retirement benefits
The components of adjustments for retirement benefits (before tax effect) were as follows:

Prior service cost �������������������������������������������������������������������������������������
Actuarial gains and losses �����������������������������������������������������������������������
Total ��������������������������������������������������������������������������������������������������������

Millions of yen
2017
2016
¥3
¥7
1,214
(480)
¥1,217¥(473)Thousands of
U.S. dollars (Note 1)
2017
$
27
10,821$10,848

Note: The amounts of prior service costs and actuarial gains and losses for the fiscal year ended 31st March 2017 include
reclassification adjustments of ¥1 million yen ($9 thousand) for prior service costs and ¥1,117 million yen ($9,956
thousand) for actuarial gains and losses in line with the transition to a defined contribution plan.

22

⑦ Accumulated adjustments for retirement benefits
The components of accumulated adjustments for retirement benefits (before tax effect) were as follows:

Unrecognised prior service costs ������������������������������������������������������������
Unrecognised actuarial gains and losses �������������������������������������������������
Total ��������������������������������������������������������������������������������������������������������

Millions of yen
2017
2016
–
¥
3
1,672
2,885
¥1,672¥2,888

Thousands of
U.S. dollars (Note 1)
2017–
14,903¥14,903

2017

2016

⑧ Plan assets
The components of plan assets were as follows:
Debt securities ���������������������������������������������������������������������������������
Alternatives �������������������������������������������������������������������������������������
Equity securities ������������������������������������������������������������������������������
General account ������������������������������������������������������������������������������
Short-term assets �����������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������

44.4%
23.9
21.5
7.9
2.3
100.0%

41.8%
22.2
17.4
6.9
11.7
100.0%

Note: Regarding alternatives, hedge fund investments are made for the purpose of risk diversification.
Method of determining long-term expected rate of return
The long-term expected rate of return on plan assets is determined by taking into consideration allocation of plan assets
which are expected currently and in the future and the long-term rates of return which are expected currently and in the
future from the various components of the plan assets.
⑨ Assumptions used for actuarial calculations for the fiscal years ended 31st March 2017 and 2016 were as follows:
2017
2016
Discount rate �����������������������������������������������������������������������������������
0.8%
Long-term expected rate of return ��������������������������������������������������
3.0
Expected rate of salary increase:
Defined benefit plans (fund type) ���������������������������������������������������
–4.6
Lump-sum payment plans ��������������������������������������������������������������

0.8%
3.0
1.0
4.8

Note: The expected rate of salary increase is calculated by taking the average of the salary increase index of each plan.
Additionally, with the conversion of a part of the defined benefit plan (fund type) to a defined contribution plan, the defined
benefit plan (fund type) became purely a fixed amount system (point system) based on number of years of service.
Accordingly, an expected rate of salary increase was not used for the calculation of retirement benefit obligation for the
fiscal year ended 31st March 2017.
(3) Define Contribution Plans
The amount of required contribution to the defined contribution plans of the Companies was ¥333 million ($2,968 thousand)for the year ended 31st March 2017 and ¥49 million for the year ended 31st March 2016.

23

10. Income taxes
Income taxes applicable to the Company and its domestic consolidated subsidiaries comprise corporate taxes, inhabitants
taxes and enterprise taxes which, in the aggregate, resulted in a statutory tax rate of 33.1% for the year ended 31st March 2016.
The following table summarises the significant differences between the statutory income tax rate and the Companies’ effective
tax rate for financial statement purposes for the years ended 31st March 2017 and 2016.
2017
Statutory tax rate ��������������������������������������������������������������������������������������������������������������������
Non-deductible expenses, including entertainment expenses ������������������������������������������
Non-taxable income, including dividend received �����������������������������������������������������������
Per capita inhabitants tax �������������������������������������������������������������������������������������������������
Changes in valuation allowance ���������������������������������������������������������������������������������������
Tax credit for testing and research expenses ��������������������������������������������������������������������
Amortization of goodwill �������������������������������������������������������������������������������������������������
Tax rate difference between the Company and consolidated subsidiaries �����������������������
Adjustments of deferred tax assets and liabilities due to a change in the corporate income tax rate ���Other ���������������������������������������������������������������������������������������������������������������������������������
Effective tax rate ��������������������������������������������������������������������������������������������������������������������

–
–
–
–
–
–
–
–
–
–
–

2016
33.1%
1.3
(0.5)
3.0
(10.6)
(1.2)
1.6
1.5
0.9
0.3
29.4%

Note: In the fiscal year ended 31st March 2017, the note has been omitted because the difference between the statutory tax rate
and the effective tax rate after application of deferred tax accounting was less than 5% of the effective statutory tax rate.
Significant components of the Companies’ deferred tax assets and liabilities as of 31st March 2017 and 2016 were as follows:
Thousands ofMillions of yen
U.S. dollars (Note 1)
Deferred tax assets:
2017
2016
2017
Loss on impairment of assets ������������������������������������������������������������
¥ 1,113¥ 1,164$ 9,921
Liabilities for retirement benefits ������������������������������������������������������
397
738
3,539
320
272
2,852
Accounts payable on distribution expenses ��������������������������������������
Accrued bonuses �������������������������������������������������������������������������������
314
313
2,799
271
221
2,416
Loss carryforwards ����������������������������������������������������������������������������
215
215
1,916
Long-term trade receivables ��������������������������������������������������������������
Allowance for doubtful accounts ������������������������������������������������������
55
93
490
669
709
5,963
Other �������������������������������������������������������������������������������������������������
Total deferred tax assets ��������������������������������������������������������������������������
¥ 3,354¥ 3,725$ 29,896(1,537)(1,579)(13,700)
Valuation allowance ��������������������������������������������������������������������������
Net deferred tax assets ����������������������������������������������������������������������������
1,817
2,146
16,196
Deferred tax liabilities:
Unrealised gains on securities �����������������������������������������������������������
Reserve for property, plant and equipment ���������������������������������������
Other �������������������������������������������������������������������������������������������������
Total deferred tax liabilities ��������������������������������������������������������������������
Net deferred tax assets ����������������������������������������������������������������������������

24(2,106)(31)(218)(2,355)¥ (538)(1,832)(31)(214)(2,077)¥ 69(18,772)(276)(1,944)(20,992)$ (4,796)

Adjustments of deferred tax assets and liabilities due to a change in the corporate income tax rate:
Following the enactment of the “Act for Partial Amendment to the Consumption Tax Act and for the Drastic Reform of theTaxation System for Ensuring Stable Financial Resources for Social Security” and the “Act for Partial Revision to the Local Tax
Act and Local Allocation Tax Act for the Drastic Reform of the Taxation System for Ensuring Stable Financial Resources forSocial Security” by the Diet on November 18, 2016, the statutory tax rate used for the calculation of deferred tax assets anddeferred tax liabilities for the fiscal year ended 31st March 2017 was changed from that for the previous fiscal year. As a result,deferred tax assets, net of deferred tax liabilities increased by ¥18 million ($160 thousand) and deferred income taxes decreasedby ¥18 million ($160 thousand).
11. Contingent liabilities
There are no matters to be reported.
12. Net assets
Under the Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock.
However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the price ofthe new shares as additional paid-in capital, which is included in capital surplus. Under the Japanese Corporate Law (“the Law”),
in cases in which a dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or the excess,if any, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve must be set aside asadditional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying
consolidated balance sheets. Under the Law, both of these appropriations generally require a resolution of the shareholders’meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, all additional paid-in
capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which arepotentially available for dividends. The maximum amount that the Company can distribute as dividends is calculated based on thenonconsolidated financial statements of the Company in accordance with Japanese laws and regulations.
At the general shareholders’ meeting held on 29th June 2017, appropriations of retained earnings for year-end dividends
applicable to the year ended 31st March 2017 were duly approved as follows:
Millions of yen
Cash dividends: ¥8.00 ($0.07) per share �����������������������������������������

¥1,051Thousands of U.S. dollars$9,368

13. Research and development expenses
Research and development expenses included in selling, general and administrative expenses for the years ended 31st March2017 and 2016 were ¥848 million ($7,559 thousand) and ¥743 million, respectively.

25

14. Loss on impairment of assets
The Company recorded impairment loss on certain asset groups for the year ended 31st March 2017. The Company classified
fixed assets into four categories: business assets, rental assets, idle assets and artwork. The Company groups its business assets bycash generating units and rental assets, idle assets and artwork by individual asset as these represent the smallest identifiable
assets generating cash inflows. The Company records impairment loss for idle assets and artwork when the original carrying
amount is below the estimated recoverable amount. The total impairment loss for the year ended 31st March 2017 consisted of¥86 million ($767 thousand) for real estate for investment, ¥29 million ($258 thousand) for tools, furniture and fixtures and ¥13
million ($116 thousand) for structures.
The recoverable amounts for idle assets were measured based on value in exchange, which was determined using independent
appraisals. The recoverable amounts for artwork were calculated based on independent appraisals obtained from third-party art
experts and others. The Company records impairment loss on artwork when the carrying amount is significantly below theestimated recoverable amount.
The Company recorded impairment loss on certain asset groups for the year ended 31st March 2016. The Company classified
fixed assets into three categories: business assets, rental assets and idle assets. The Company groups its business assets by cash
generating units and rental assets and idle assets by individual asset as these represent the smallest identifiable assets generating
cash inflows. The Company records impairment loss for property, plant and equipment when the original carrying amount isbelow the estimated recoverable amount based on projected future cash flows. The total impairment loss for the year ended 31st
March 2016 consisted of ¥260 million for real estate for investment, ¥18 million for leased assets and ¥8 million for others. The
recoverable amounts were measured based on value in use for property, plant and equipment, value in use or exchange for rental
assets and value in exchange for idle assets. Value in exchange was determined using independent appraisals. Value in use wascalculated based on estimated future cash flows and was discounted at the rate of 2.4%.
15. Segment information(1) Overview of the reportable segments① Method for determining reportable segments
The Group’s reportable segments are determined based on the availability of separate financial information for suchsegments that are examined periodically by the Board of Directors to make decisions regarding the allocation of management
resources and to assess business performance. The Group has divided its business operations into two reportable segments
and an “Other” segment. Its reportable segments are “the Processed Food Products” segment and “the Meat Products”
segment.
② Description of the businesses that constitute each reportable segment
In the Processed Food Products segment, the Company purchases, manufactures and sells ham, sausage and cooked andprocessed foods. In the Meat Products segment, the Company purchases, manufactures and sells meat products.
(2) Methods of measurement for sales, profit (loss), assets, liabilities and other items for each reportable segment
Accounting policies adopted by the reportable segments are identical to those described in Note 2, “Significant Accounting
Policies. ”
As described in the change in the accounting policy in line with revisions to the Corporation Tax Act of Japan, theCompany changed the depreciation method for facilities attached to buildings and structures acquired on or after 1st April
2016 from the declining balance method to the straight-line method. The same change in depreciation method is used for theCompany’s reportable segments. As a result of this change, segment income of the Processed Food Products segment and thatof the Meat Products segment increased by ¥63 million ($561 thousand) and ¥1 million ($9 thousand), respectively, comparedwith the amounts calculated by the previous method.

26

(3) Segment information for the years ended 31st March 2017 and 2016
Segment information as of and for the fiscal year ended 31st March 2017 was as follows:
Millions of yen
2017
Reporting segments
Processed
Meat
Food Products
Products

Sales:
Sales to third parties ...................... ¥163,057–
Intersegment sales and transfers���
163,057
Net sales ���������������������������������������
2,849
Segment income ���������������������������
77,677
Segment assets �����������������������������
Other items:
5,122
Depreciation and amortization (*4)...
Increase in property, plant andequipment and intangible fixed
9,652
assets (*4)��������������������������������������

Total

Other
(*1)

Total

Adjustments(*2)

Consolidated
(*3)

–
(904)
(904)
–
34,830¥232,437–
232,437
4,710
129,340¥69,219–
69,2191,682
16,535¥232,276–
232,276
4,531
94,212

¥ 161
904
1,065
179
298

¥232,437
904
233,341
4,710
94,510

¥

302

5,424

18

5,442

–

5,442

201

9,853

28

9,881

2

9,883

Adjustments(*2)

Consolidated
(*3)

$

–
(8,058)(8,058)–
310,455$2,071,816–
2,071,816
41,982
1,152,866

Thousands of U.S. dollars (Note 1)
2017
Reporting segments
Processed
Meat
Food Products
Products

Sales:
Sales to third parties ��������������������� $1,453,400–
Intersegment sales and transfers���
Net sales ��������������������������������������� 1,453,400
25,394
Segment income ���������������������������
692,370
Segment assets �����������������������������
Other items:
45,655
Depreciation and amortization (*4)��
Increase in property, plant andequipment and intangible fixed
86,033
assets (*4)��������������������������������������

Total

Other
(*1)

Total

$616,980–
616,980
14,992
147,384$2,070,380–
2,070,380
40,386
839,754$ 1,436
8,058
9,494
1,596
2,657

$2,071,816
8,058
2,079,874
41,982
842,411

2,692

48,347160

48,507–48,507

1,792

87,825249

88,07418

88,092(*1) The “Other” segment is business other than that of the reporting segments and includes the insurance agency business.
(*2)	Adjustments for total assets of ¥34,830 million ($310,455 thousand) indicate assets not attributed to any other segments and comprisemainly cash and deposits, investments in securities and rental properties.
(*3)	Total segment income of the reporting segments and “Other” is equal to the operating income in the consolidated statements ofoperations.
(*4)	Depreciation and amortisation and increase in property, plant and equipment and intangible fixed assets include long-term prepaid
expenses.

27

Segment information as of and for the fiscal year ended 31st March 2016 was as follows:
Millions of yen
2016
Reporting segments
Processed
Meat
Food Products
Products

Sales:
Sales to third parties ���������������������
Intersegment sales and transfers���
Net sales ���������������������������������������
Segment income ���������������������������
Segment assets �����������������������������
Other items:
Depreciation and amortization (*4)��
Increase in property, plant andequipment and intangible fixed
assets (*4)��������������������������������������

Other
(*1)

Total

Total

Adjustments(*2)

Consolidated(*3)–(1,061)(1,061)–35,695¥229,544–
229,544
4,169
124,522¥161,953–
161,953
3,590
73,046¥67,225–
67,225427
15,432¥229,178–
229,178
4,017
88,478

¥ 366
1,061
1,427
152
349

¥229,544
1,061
230,605
4,169
88,827

¥

4,869

315

5,184

22

5,206

–

5,206

5,518

131

5,649

28

5,677

98

5,775

(*1) The “Other” segment is business other than that of the reporting segments and includes the insurance agency business.
(*2)	Adjustments for total assets of ¥35,695 million indicate assets not attributed to any other segments and comprise mainly cash anddeposits, investments in securities and rental properties.
(*3)	Total segment income of the reporting segments and “Other” is equal to the operating income in the consolidated statements ofoperations.
(*4)	Depreciation and amortisation and increase in property, plant and equipment and intangible fixed assets include long-term prepaid
expenses.

(4) Information about loss on impairment of assets by reportable segment
Information about loss on impairment of assets by reportable segments as of and for the fiscal year ended 31st March 2017
was as follows:
Millions of yen
2017
Reporting segments
Processed
Meat
Food Products
Products

Loss on impairment of assets �������

–

Other

Total

–

–

Total
–

–

Adjustments

Consolidated

¥128

¥128

Adjustments

Consolidated$1,141$1,141Thousands of U.S. dollars (Note 1)
2017
Reporting segments
Processed
Meat
Food Products
Products––
Loss on impairment of assets �������

28

Other

Total
–

Total
–

–

Information about loss on impairment of assets by reportable segment as of and for the fiscal year ended 31st March 2016
was as follows:
Millions of yen
2016
Reporting segments
Processed
Meat
Food Products
Products¥26–
Loss on impairment of assets �������

Total

Other

¥26

Total
–

¥26

Adjustments

Consolidated

¥260

¥286

(5) Information about amortisation and balance of goodwill by reportable segment
Information about amortisation and balance of goodwill by reportable segment as of and for the fiscal year ended 31st
March 2017 was as follows:
Millions of yen
2017
Reporting segments
Processed
Meat
Food Products
Products¥108–
Amortisation of goodwill �������������
8–
Balance of goodwill ���������������������

Total

Other

¥108
8

Total
–
–

¥108
8

Adjustments

Consolidated

–
–

¥108
8

Adjustments

Consolidated

–
–

$963
71

Thousands of U.S. dollars (Note 1)
2017
Reporting segments
Processed
Meat
Food Products
Products$963–
Amortisation of goodwill �������������
71–
Balance of goodwill ���������������������

Total

Other

$963
71

Total
–
–

$963
71

Information about amortisation and balance of goodwill by reportable segment as of and for the fiscal year ended 31st
March 2016 was as follows:
Millions of yen
2016
Reporting segments
Processed
Meat
Food Products
Products

Amortisation of goodwill �������������
Balance of goodwill ���������������������

Total

Other

Total

Adjustments

Consolidated

¥183

–

¥183

–

¥183

–

¥183

116

–

116

–

116

–

116

16. Cash flow information
The reconciliation of cash and time deposits in the consolidated balance sheets and cash and cash equivalents in the
consolidated statements of cash flows as of 31st March 2017 and 2016 was as follows:
Thousands ofMillions of yen
U.S. dollars (Note 1)
2017
2016
2017
¥16,371¥17,001$145,922
Cash and time deposits in the consolidated balance sheets ��������������������Cash and cash equivalents in the consolidated statements of cash flows ����
¥16,371¥17,001$145,922

29

17. Comprehensive income
Amounts reclassified to net income in the current period that were recognised in other comprehensive income in the current or
previous periods and the tax effects for each component of other comprehensive income were as follows:
Thousands of
U.S. dollars (Note 1)
2017

Millions of yen
2017
2016
Unrealised gains on securities:
Increase (decrease) during the year ....................................................
Reclassification adjustments ..............................................................
Amount before tax effect ....................................................................
Tax effect ............................................................................................
Subtotal ..............................................................................................
Deferred gains (losses) on hedges:
Increase (decrease) during the year ....................................................
Amount before tax effect ....................................................................
Tax effect ............................................................................................
Subtotal ..............................................................................................
Foreign currency translation adjustments:
Increase during the year .....................................................................
Reclassification adjustments ..............................................................
Subtotal ..............................................................................................
Adjustments for retirement benefits:
Decrease during the year ....................................................................
Reclassification adjustments ..............................................................
Amount before tax effect ....................................................................
Tax effect ............................................................................................
Subtotal ..............................................................................................
Share of other comprehensive income of associates accounted for using equity method:
Increase during the year .....................................................................
Total other comprehensive income ..........................................................

30¥1,555
(665)
890
(273)
617

¥(484)
(99)
(583)
230
(353)

$13,860(5,927)
7,933(2,433)
5,500

32
32
(10)
22

(43)
(43)
13
(30)

285
285
(89)
196

–
41
41

19
123
142

–
365
365

(448)
1,665
1,217
(345)
872

(987)
514
(473)
126
(347)

(3,994)
14,841
10,847(3,075)7,772

2¥1,5547¥(581)

18$13,851

31

DIRECTORS AND STATUTORY AUDITORS(As of 30th June 2017)
President andRepresentative Director:

Tokuo Kudara

Senior Executive andManaging Director:

Yoshio Kuramori

Managing Director:

Yasushi Sawada

Directors:

Wataru Fukiage
Nobuyoshi Katoh
Shigeyoshi Chiba
Shigeki Fukushima

Outside Directors:

Susumu Shimadzu
Hideo Yano

Statutory Auditor:

Yoshikazu Sawanaka

Outside Statutory Auditors:

Takuji OkudairaMotoaki Nishimura

32

OUTLINE OF THE COMPANY(As of 31st March 2017)
Established:

10th June 1958

Major Subsidiaries:
Hokkaido Marudai Food Co., Ltd.

Stated Capital:¥6,716 million

Tohoku Marudai Food Co., Ltd.
Shin-etsu Marudai Food Co., Ltd.

Number of Employees: 2,046

Chubu Marudai Food Co., Ltd.
Chu-Shikoku Marudai Food Co., Ltd.

Head Office:21-3 Midori-cho, Takatsuki-shi,

Kyushu Marudai Food Co., Ltd.

Osaka, Japan

Toda Foods Co., Ltd.
Azumino Food Co., Ltd.

Branch Office:4-7-5 Tsukiji, Chuou-ku, Tokyo,

Marushin Foods Co., Ltd.

Japan

Pioneer Foods Co., Ltd.
Umeya Co., Ltd.

Sales Offices:

The sales headquarters at the

Yahata Food Co., Ltd.

Company’s head office in Osaka

Hornmeier Co., Ltd.

controls 10 distribution centers andMarudaifood Co., Ltd.

3 regional sales departments which

Marudai Meat Co., Ltd.

service 37 local outlets.

Meat Supply Co., Ltd.
Marbest Trading Co., Ltd.

Plants:Hokkaido, Iwate,

Marudai Service Co., Ltd.

Niigata, Kanto,

10 Other subsidiaries

Ibaraki, Yokosuka, Shounan,
Shizuoka, Matsusaka,

Associated Company:

Takatsuki, Okayama,

Betagro MF Deli Co., Ltd.

Hiroshima, Karatsu

Overseas Office:

Chicago, U.S.A

33

Head Office: 21-3 Midori-cho, Takatsuki-shi, Osaka, Japan
Telephone: 81-726-61-2518 Fax: 81-726-61-5006