ANNUAL REPORT 2017

Contents
Consolidated Financial Highlights
To Our Shareholders and Investors
Management’s Discussion and Analysis
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report
Board of Directors, Corporate Auditors and Executive Officers
Investor Information

1
2
5
7
9
10
11
13
14
34
35
35

Statements in this annual report with respect to Nisshin Steel Co., Ltd.’s plans, strategies, forecasts and other explanations thatare not historical facts are forward-looking statements that are based on management’s assumptions and beliefs derived frominformation currently available and invoke risks and uncertainties.
Factors that could cause actual results to differ materially from such statements include, without limitation, global economic
conditions, demand for and competitive pricing pressure on products and services, Nisshin Steel Co., Ltd.’s ability to continue
to win acceptance for its products and services in highly competitive markets, and currency exchange rate fluctuations.

Consolidated Financial Highlights
Nisshin Steel Co., Ltd. and its consolidated subsidiaries
Years ended March 31, 2017, 2016 and 2015

Net sales
Profit (loss) attributable toowners of parent
Total assets
Total net assets
Profit (loss) attributable toowners of parent per
share2
Cash dividends per share2

Millions of yen(except per share amounts)
2016
2017
¥ 547,026¥ 525,563¥

2015¥ 617,525

Percent change
2017/2016(3.9)%

1,672(6,613)

16,947-

706,418
226,223

708,167
217,978

770,591
271,997(0.2)%
3.8%

160.51-

40.00(87.5)%

15.26
5.00

¥

(60.33)
40.00¥

Thousands of U.S.
dollars1(except per shareamounts)2017$ 4,684,579
14,903
6,296,621
2,016,427

$

0.13
0.04

Notes: 1. Unless indicated otherwise, all dollar figures herein refer to U.S. currency. Yen amounts have been translated into U.S. dollars, forconvenience only, at ¥112.19=US$1, the effective rate of exchange at March 31, 2017.
2. Per share amounts are in yen and U.S. dollars.

1

To Our Shareholders and Investors
Overview of the Fiscal Year Ended March 31, 2017
During the first half of the fiscal year under review, the Japanese economy experienced a stall in consumption due to some
confusion in the financial markets, mainly caused by the yen’s appreciation and high stock prices. Nevertheless, corporate
earnings increased for three consecutive quarters to a new record high, while the favorable employment and income environment
continued. As a result, the economy made a gradual recovery through the second half, as noted with signs of a moderate pick-up
in personal spending.
In the steel industry, domestic demand was brisk, mainly thanks to construction activities getting into full swing for the Tokyo
Olympics and Paralympics, strong automobile production, and shift toward aggressive capital investment against a back drop of
stable corporate earnings. On the other hand, however, such factors as wild fluctuations in the raw materials market led asituation of insecurity to persist.
Under this operating environment prevailing through the fiscal year under review, which was the final period of the 24th
Medium-Term Consolidated Management Plan (“the 24th Medium-Term Plan”), the Nisshin Group worked to achieve the fullest
effects of the measures implemented, including the scheme to maximize synergies from the management integration with
Nippon Metal Industry Co., Ltd
First, with a view to strengthening our earning capabilities, we advanced our strategy to expand the Nisshin Group’s
profitable original core products (ZAM®, special steel, stainless steel, and pre-painted steel sheet), and earnestly promoted
measures to increase corporate value through unified Group management with closer coordination between the production, sales,and development divisions.
In terms of production, in 2015 we completed both the renewal work on the steelmaking equipment at the Shunan Works to
improve the production efficiency and quality of stainless steel, and the construction of the most-advanced ladle furnace (LF) at
the Kure Works to enable production of high-cleanliness steel. In the fiscal year under review, we made proactive efforts tocreate new demand and expand sales for our product lineup enhanced through the introduction of these cutting-edge facilities.
We also focused on developing new products. As innovative functional products, we launched “BLACK ZAM®,” a new itemfeaturing refined designability in our ZAM® series of highly corrosion-resistant hot-dip coated steel sheet, and commercialized“Pla-tight®,” a special surface modified steel sheet offering excellent adhesion to plastic in response to needs for multi-material
combination.
Furthermore, in April 2016 we set up Nisshin Steel A&C Co., Ltd. through the merger of our coating and building materials
businesses and our wholly owned subsidiary Nisshin A&C Co., Ltd., in a move for structural reform to facilitate us to boost sales anddevelopment programs in a position nearer to the market for proposing from a customer-centric perspective unique solutions not offeredby the conventional steel manufacturing sector. At Nisshin Stainless Steel Tubing Co., Ltd. (“NSST”), which was founded prior to thisas part of our reorganization of the Nisshin Group’s stainless steel tubing business, we completed consolidation of the operating bases to
the Amagasaki Works in July 2016, improving capacity utilization and streamlining personnel.

In our overseas businesses, we worked diligently to expand our business domains and earning capabilities with buttressed sales
abilities through starting new businesses and integrating our existing network of overseas bases. For example, July 2016 saw the
beginning of operations at our newly established special steel-sheet manufacturing base in China – Zhejiang Nisshin
Worthington Precision Specialty Steel Co., Ltd. Here, by drawing on advantages of the LF facility at the Kure Works, we arevigorously taking orders and moving ahead with production to meet our customers’ needs propped up by demand from China’s
automobile market, which is forecast to grow rapidly going forward. Likewise, in June 2016 we established Taiwan Nisshin
Precision Steel Co., Ltd. in Taiwan (Republic of China) to expand sales of high quality precision-rolled stainless steel products,
primarily for use in the automobile, electrical machinery, and IT equipment fields throughout East Asia and Southeast Asia. In
February 2017 with necessary production facilities acquired, the Taiwanese subsidiary was restarted as a company involved inboth manufacturing and sales.
On account of steady implementation of these measures, the ratio of core products to total product sales volume has exceeded
the target of the 24th Medium-Term Plan, and we have achieved our envisioned integration synergies with Nippon Metal
Industry.
Regarding rationalization and overall cost reduction programs to raise our price competitiveness, we have largely met our
initial target as a result of concerted company-wide efforts in manufacturing, sales, logistics, procurement, and other areas. At
the same time, by improving our profits we have bolstered our capital and generated cash flow to make a rated net debt to equity
ratio of 1.0 or less, thereby largely achieving the 24th Medium-Term Plan.
Furthermore, so as to enhance our corporate governance systems, which underpin our corporate activities, at the General
Meeting of Shareholders last year, we elected a second outside Director. In addition, we established an Executive Personnel andCompensation Committee in February 2017 as a body to enhance the objectivity and transparency of Board of Directors

2resolutions regarding basic policies on nomination of Directors and Auditors as well as their compensation.
Moreover, in February 2016 the Nisshin Group decided to initiate bold business reforms and discussions regarding theCompany becoming a subsidiary of Nippon Steel & Sumitomo Metal Corporation (“NSSMC”). Having obtained approvals fromthe relevant competition authorities, on March 13, 2017, NSSMC acquired 51% of the Company’s issued shares, including the
portion that it had previously owned, by means of a tender offer. In this way, NSSMC completed making the Company a
subsidiary and the Nisshin Group joined the NSSMC Group.
Turning to consolidated operating results for the fiscal year under review, the Nisshin Group steadily executed the strategiesof the 24th Medium-Term Plan as described above, and diligently worked to maximize the results. Nevertheless, the NisshinGroup faced a rapid surge in prices for raw materials such as coking coal and was unable to fully reflect all of the cost increases
in its sales prices. Other cost increase factors included prioritizing stable plant operations. Consequently, consolidated net sales
were ¥525,563 million, down ¥21,463 million year on year, ordinary profit was ¥5,998 million, down ¥208 million, and profit
attributable to owners of parent was ¥1,672 million, up ¥8,285 million.

Outlook for the Fiscal Year Ending March 31, 2018
Looking ahead, the Japanese economy is expected to continue along a gradual recovery path in line with the global trend.
However, there are concerns over the impact on corporate performance of fluctuations in the financial and foreign currency
markets associated with the policies and actions of the U.S. administration and the global spread of protectionism.
The steel industry is expected to see continued strength in demand supported with the ongoing recovery trend in the economy,
while the market situation may remain unpredictable, with the unresolved problem of overproduction in China and volatility in
raw materials prices, among other factors.
In this business climate, the Nisshin Group will join the NSSMC Group to combine NSSMC’s world-class technologicalexcellence, product response capabilities, cost competitiveness primarily in feedstock, and global readiness with the Company’s
strengths in customer and market response capabilities realized through detailed developmental marketing in line with customer
needs. Working together as one entity under the NSSMC Group’s common business policies, the two groups will aggressively
promote business operations in an integrated manner.
Under the new Group business structure, the Nisshin Group will further reinforce its strong suits in developmental marketing
based on a customer-centric approach in fields such as automobiles, electrical machinery, and construction. Toward this end, we
will perform timely and meticulous business activities tailored to customers’ needs, and pursue further development and sales
expansion of our core products. Through collaborative initiatives with Group companies such as Nisshin Steel A&C and NSST,
we will actively propose diverse and high-value added solutions matched to customers’ needs covering materials throughprocessing technologies. We will undertake product development aiming to “please” our customers as much as possible.
Furthermore, we will focus not only on sales of existing products, but also of new products such as BLACK ZAM® andPla-tight® and products that make full use of the features of the LF facility at the Kure Works and the new steelmaking
equipment at the Shunan Works. In doing so, we will diligently strive to pioneer new markets.
In our overseas businesses as well, we will increase our presence in markets such as China, Southeast Asia, and the U.S. bylinking our bases, including the newly established Taiwan Nisshin Precision Steel.
In response to rising costs associated with higher raw materials prices, we will continue our incessant efforts to rationalize
and reduce overall costs. These include expanding use of lower-priced raw materials, construction work in progress to switch thefuels for the heating furnace and to renew in-house power generation facilities at the Kure Works to slash costs of raw materials,
fuel and energy. At the same time, we will exert ourselves to improve profits, with steps such as winning customer understanding
so that we may reflect cost hikes in our sales pricing. In addition, by discussing and implementing coordinated measures with
NSSMC, we will pursue efficiency gains in the fields of operations, technology, facilities, raw materials and resource andmachinery procurement, and manufacturing management. Through these initiatives, we will bolster our cost competitivenessthat will enable us to succeed in the global arena.
Going forward, the Nisshin Group will accelerate business reforms through restructuring our core product group andintensifying our core product strategy, and raising value of the Kure Works. Specifically, we have redefined core products as“those to satisfy the two objectives of dramatically creating our customers’ value-addition and of significantly contributing to theCompany’s cash flow,” and we will seek to strengthen our stable earning capabilities by more distinctively distancing them fromthe price competition among general purpose products.
Meanwhile, we will cut down the investment burden of business reforms by way of shutting down the No. 2 blast furnace ofthe Kure Works, which would require early repair if left activated, and expanding and repairing the No. 1 blast furnace, andallocate the saved fund to investment resources for R&D and manufacturing in the Company’s strong fields of surface treatment,
stainless steel, and specialty steel. For value-addition to the Kure Works as a key location for the core product strategy, we will
promote measures to upgrade quality and operation efficiency.

3

The Nisshin Group has entered a new stage in fiscal 2017. By producing synergies in collaboration with NSSMC, we will
work as a member of the NSSMC Group to further strengthen the business foundation while leveraging the technological andsolution-proposing prowesses that we have accumulated to date to reinforce the NSSMC Group’s position as the “Best
Steelmaker with World-Leading Capabilities,” and aim to achieve sustainable growth and increase our corporate value over the
medium to long term.
We are committed to upholding our corporate philosophy to “bring to life the dreams and visions of customers with the use ofsteel” by utilizing our combined power to create new markets in collaboration with our customers. To this end, we will mobilize
all the available resources of the entire Nisshin Group as we continue to evolve daily for enhancing the customer trust and ourpresence in the market.

Kinya Yanagawa
President & Chief Executive Officer
and Representative Director

4Management’s Discussion and Analysis
Financial Position
Consolidated total assets at the close of the year ended March 31, 2017 stood at ¥706,418 million, down ¥1,748 million from theend of the previous year. This was due mainly to decrease in cash on hand and in banks (down ¥14,723 million) and increase ininventories (up ¥7,363 million).
Total liabilities declined ¥9,993 million to ¥480,195 million. This was due mainly to decrease in interest-bearing debt (down¥34,492 million).
Total net assets rose ¥8,244 million to ¥226,223 million. This was due mainly to increase in unrealized gain or loss onavailable-for-sale securities (up ¥5,990 million).

Cash FlowsNet cash provided by operating activities totaled ¥57,591 million, with ¥27,819 million from depreciation and amortization.
Net cash used in investing activities totaled ¥37,570 million, with ¥31,580 million spent on acquisition of property, plant andequipment.
Net cash used in financing activities totaled ¥36,121 million, mainly reflecting ¥34,455 million decrease in interest-bearing
debt and ¥2,744 million in cash dividends.
As a result of these developments, and including an effect of foreign currency translation adjustment of cash and cash
equivalents, the consolidated balance of cash and cash equivalents at the end of the year ended March 31, 2017 decreased by¥10,713 million to ¥20,630 million.

5

6

Consolidated Balance Sheets
Nisshin Steel Co., Ltd. and its consolidated subsidiaries
March 31, 2017 and 2016

Millions of yen
2016
2017
ASSETS
Current assets:
Cash on hand and in banks (Notes 17 and 19)
Notes and accounts receivable (Note 19)
Marketable securities (Notes 19 and 20)
Inventories (Note 5)
Deferred income taxes (Note 8)
Other current assets
Allowance for doubtful accounts
Total current assets¥

Investments and long-term receivables:
Investments in securities (Notes 6, 13, 19 and 20)
Deferred income taxes (Note 8)
Asset for retirement benefits (Note 9)
Other (Note 6)
Allowance for doubtful accounts
Total investments and long-term receivables
Property, plant and equipment, at cost:
Buildings and structures
Machinery, equipment and vessels
Accumulated depreciation
Land
Construction in progress
Total property, plant and equipment
Other assets
Total assets¥

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

7

16,71760,588
4,625
132,139
4,711
39,537(514)
257,805¥

31,44077,581
124,776
5,811
20,248(457)
259,400

Thousands of
U.S. dollars (Note 4)2017$

149,006
540,048
41,224
1,177,814
41,991
352,411(4,581)
2,297,932

114,455
3,537
23,10820,849(728)
161,223

115,066
3,212
22,58529,813(735)
169,9421,020,188
31,526205,972
185,836(6,488)1,437,053

295,195
1,015,788
1,310,984(1,121,917)
189,066
71,803
12,445273,314290,061
1,006,929
1,296,990(1,108,722)
188,268
71,828
5,639
265,736

2,631,205
9,054,175
11,685,390(10,000,151)
1,685,230
640,012110,927
2,436,170

14,075

13,088125,456

708,167$ 6,296,621

706,418¥

Thousands of
U.S. dollars (Note 4)
2017

Millions of yen
2016
2017
LIABILITIESCurrent liabilities:
Notes and accounts payable (Note 19)
Short-term loans (Notes 7 and 19)
Commercial paper (Note 19)
Current portion of long-term debt (Notes 7 and 19)
Provision for environmental remediation
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 7 and 19)
Deferred income taxes (Note 8)
Allowance for retirement benefits for directors and corporate
auditors
Reserve for rebuilding furnaces
Provision for environmental remediation
Liability for retirement benefits (Note 9)
Other liabilities
Total long-term liabilities
Total liabilities¥

112,309
32,9537,000
39,75876
42,697
234,795¥

165,323
19,222NET ASSETS
Shareholders’ equity:
Common stock, no par value at March 31, 2017 and 2016
Authorized: 430,000 thousand shares at March 31, 2017 and 2016
Issued: 109,843 thousand shares at March 31, 2017 and 2016
(Note 15)Additional paid-in capital
Retained earnings
Treasury stock, at cost (Note 15)
Total shareholders’ equity
Accumulated other comprehensive income:Unrealized gain or loss on available-for-sale securities
Deferred gain or loss on hedges
Adjustment on revaluation of land (Note 14)
Foreign currency translation adjustment
Retirement benefits asset and liability adjustments
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets¥

887,43650,33835,693134
45,713219,316$ 1,001,060
293,724
62,394354,380677
380,577
2,092,833

193,495
16,437

1,473,598
171,334

265

244

2,362

8,590
1,181
48,191
2,624
245,399
480,195

8,590
1,165
48,3002,637
270,872
490,189

76,566
10,526
429,548
23,3882,187,351
4,280,194

30,00030,000267,403

76,345
77,107(565)
182,887

76,34578,214(549)
184,010680,497
687,289(5,036)
1,630,154

20,324(42)465
11,815(2,171)30,391
12,944
226,223

14,333(651)
405
15,698(2,102)
27,6846,283
217,978

181,156(374)
4,144
105,312(19,351)
270,888
115,375
2,016,427

708,167$ 6,296,621

706,418¥

Consolidated Statements of Income
Nisshin Steel Co., Ltd. and its consolidated subsidiaries
Years ended March 31, 2017 and 2016

Millions of yen
2016
2017
¥ 547,026¥ 525,563
489,145468,924
57,881
56,63947,794
48,805
10,087
7,834

Net sales
Cost of sales (Note 5)
Gross profit
Selling, general and administrative expenses (Notes 11 and 12)
Operating profit
Non-operating profit and loss:
Interest and dividend income
Interest expense
Earnings (losses) of unconsolidated subsidiaries and affiliates
accounted for using equity method
Foreign exchange loss
Gains on insurance
Gain on retirement adjustment
Service cost of temporarily transferred employees
Other, net
Ordinary profit
Special items:
Gain on sale of investments in securities
Reversal of reserve for rebuilding furnaces
Special gains
Loss on sale and disposition of properties
Loss on impairment of fixed assets
Loss on devaluation of investments in securities
Loss on sale of investments in securities
Special losses
Profit (loss) before provision for income taxes
Provision for income taxes (Note 8):
Current
Deferred
Total provision for income taxes
Profit (loss) attributable to :Non-controlling interests
Owners of parent

¥

1,587
(3,894)

2,310(4,208)

1,037(1,666)

9,243

(329)
2,682
583
(2,305)(1,199)
5,998

(153)
1,146
1,034
(2,026)
(318)
6,206

(2,932)
23,905
5,196(20,545)(10,687)
53,462

2,442
2,442
771
813
1,804
3,389
5,051

5,413
5,413
709
7,093
5,212
104
13,120(1,499)21,766
21,766
6,872
7,246
16,07930,20745,021

2,554
1,323
3,877
1,173
(498)
1,672

1,614
4,047
5,662
(7,162)(548)(6,613)22,764
11,792
34,557
10,455(4,438)14,903¥

Yen
Profit (loss) attributable to owners of parent per share
Cash dividends per share¥

Weighted average number of shares issued and outstanding(thousands)

15.26
5.00
109,615

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

9

Thousands of
U.S. dollars (Note 4)2017$ 4,684,579
4,179,730
504,848
435,020
69,827¥(60.33)
40.00
109,621

14,145(34,708)$

U.S. dollars (Note 4)
$
0.13
0.04

Consolidated Statements of Comprehensive Income
Nisshin Steel Co., Ltd. and its consolidated subsidiaries
Years ended March 31, 2017 and 2016

Profit (loss)
Other comprehensive income (Note 18) :Unrealized gain or loss on available-for-sale securities
Deferred gain or loss on hedges
Foreign currency translation adjustment
Retirement benefits asset and liability adjustments
Share of other comprehensive income of companies accounted
for using equity method
Other, net
Total other comprehensive income
Comprehensive income (loss)
Total comprehensive income (loss) attributable to :Owners of parent
Non-controlling interests

Millions of yen
2016
2017
¥
(7,162)
¥
1,173

¥

¥

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

10

Thousands of
U.S. dollars (Note 4)
2017$
10,455

6,104
523(1,741)(50)(9,004)(976)(1,875)(28,526)

54,407
4,661(15,518)(445)(2,616)(792)(23,317)

(59)
2,159
3,332

23
(41,151)(48,314)(525)
19,24429,699

4,263
(931)

¥

¥

(47,105)(1,208)$$37,998(8,298)

Consolidated Statements of Changes in Net Assets
Nisshin Steel Co., Ltd. and its consolidated subsidiaries
Years ended March 31, 2017 and 2016
Millions of yen
Shareholders’ equity

Balance at April 1, 2015
Changes of items during the year
Transfer to retained earnings from additional
paid-in capital
Cash dividends
Loss attributable to owners of parent
Acquisition of treasury stock
Changes in subsidiaries’ equity
Change in scope of equity method
Decrease due to adjustment on revaluation of land
Other, net
Items other than changes in shareholders’ equity
Total changes of items during the year
Balance at April 1, 2016
Changes of items during the year
Cash dividends
Profit attributable to owners of parent
Acquisition of treasury stock
Change in scope of consolidation
Change in scope of equity method
Other, net
Items other than changes in shareholders’ equity
Total changes of items during the year
Balance at March 31, 2017

Additional paid-in
capitalRetained earnings¥
91,099¥ 74,160

Common stock¥
30,000

¥

–
–
–
–
–
–
–
–
30,000

¥

–
–
–
–
–
–
–
30,000Treasury stock,at cost
¥
(541)

Total
shareholders’equity¥ 194,719(12,310)

12,310–¥(4,391)
–
–
1,947
–
–
–
–
(14,754)
76,345¥(1,646)(6,613)
–
–
27
(0)
(23)
–
4,053
78,214¥(6,038)(6,613)
(8)
1,947
27
(0)
(23)
–
(10,708)
184,010

¥

–
–
–
–
–
–
–
76,345¥(2,744)
1,672
–
12
83
(130)
–
(1,106)
77,107¥(2,744)
1,672
(16)
12
83
(130)
–
(1,122)
182,887

¥

–
(8)
–
–
–
–
–
(8)
(549)

¥

–
(16)
–
–
–
–
(16)
(565)

Millions of yen
Accumulated other comprehensive income
Unrealized
gain or loss
on availablefor-salesecurities

Balance at April 1, 2015
¥ 23,356
Changes of items during the year
Transfer to retained earnings from additional–
paid-in capital
Cash dividends–
Loss attributable to owners of parent–
Acquisition of treasury stock–
Changes in subsidiaries’ equity–
Change in scope of equity method–
Decrease due to adjustment on revaluation of land–
Other, net–
Items other than changes in shareholders’ equity(9,022)
Total changes of items during the year
(9,022)
Balance at April 1, 2016
¥ 14,333
Changes of items during the year
Cash dividends–
Profit attributable to owners of parent–
Acquisition of treasury stock–
Change in scope of consolidation–
Change in scope of equity method–
Other, net–
Items other than changes in shareholders’ equity
5,990
Total changes of items during the year
5,990
Balance at March 31, 2017
¥ 20,324

Deferredgain or loss
on hedges

Adjustmentonrevaluationof land

Foreigncurrencytranslation
adjustment

Retirement
benefits
asset andliability
adjustments

Total
accumulated
othercomprehensive income

Noncontrollinginterests

¥

¥

388

¥ 17,741¥ 26,521¥ 68,199

¥

–

–

–

–

–

–

–

¥

–
–
–
–
–
–
–
(843)
(843)
(651)

¥

–
–
–
–
–
–
–
16
16
405

–
–
–
–
–
–
–
(2,043)(2,043)¥ 15,698

–
–
–
–
–
–
–
(28,623)(28,623)¥ (2,102)

–
–
–
–
–
–
–
(40,515)(40,515)¥ 27,684

–
–
–
–
–
–
–
(2,794)(2,794)¥ 6,283(6,038)(6,613)
(8)
1,947
27
(0)
(23)
(43,309)(54,018)¥ 217,978

¥

–
–
–
–
–
–
608
608
(42)

¥

–
–
–
–
–
–
59
59
465

–
–
–
–
–
–
(3,882)(3,882)¥ 11,815

–
–
–
–
–
–
(68)
(68)
¥ (2,171)

–
–
–
–
–
–
2,707
2,707
¥ 30,391

–
–
–
–
–
–
6,660
6,660
12,944(2,744)
1,672
(16)
12
83
(130)
9,367
8,244
¥ 226,223

191

11

¥

9,078

Total net
assets¥ 271,997

Thousands of U.S. dollars (Note 4)
Shareholders’ equity

Balance at April 1, 2016
Changes of items during the year
Cash dividends
Profit attributable to owners of parent
Acquisition of treasury stock
Change in scope of consolidation
Change in scope of equity method
Other, net
Items other than changes in shareholders’ equity
Total changes of items during the year
Balance at March 31, 2017

Common stock$ 267,403

Additional
paid-in capital$ 680,497

Retainedearnings$ 697,156

Treasury stock,at cost$(4,893)

Total
shareholders’equity$ 1,640,164

–
–
–
–
–
–
–
–
267,403

–
–
–
–
–
–
–
–
680,497(24,458)
14,903–106
739(1,158)–(9,858)687,289

–
–
(142)
–
–
–
–
(142)
(5,036)(24,458)
14,903
(142)
106
739
(1,158)–(10,000)$ 1,630,154

$

$

$

$

Thousands of U.S. dollars (Note 4)
Accumulated other comprehensive income

Balance at April 1, 2016
Changes of items during the year
Cash dividends
Profit attributable to owners of parent
Acquisition of treasury stock
Change in scope of consolidation
Change in scope of equity method
Other, net
Items other than changes in shareholders’ equity
Total changes of items during the year
Balance at March 31, 2017Retirement
benefits
asset andliability
adjustments

Total
accumulated
othercomprehensive income

Noncontrollinginterests$

3,609 $ 139,923 $ (18,736)$ 246,759$ 56,003 $ 1,942,936

$

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
525
(34,602)(606)
525(34,602)(606)
4,144 $ 105,312 $ (19,351)

–
–
–
–
–
–
24,12824,128$ 270,888–(24,458)–
14,903
–
(142)
–
106
–
739
–
(1,158)59,36383,49259,36373,482$ 115,375 $ 2,016,427

Unrealized
gain or loss
on availablefor-salesecurities

Deferredgain or loss
on hedges

Adjustmentonrevaluationof land$ 127,756$ (5,802)

–
–
–
–
–
–
53,39153,391$ 181,156

–
–
–
–
–
–
5,419
5,419
(374)

$

12

Foreigncurrencytranslation
adjustment

Total net
assetsConsolidated Statements of Cash Flows
Nisshin Steel Co., Ltd. and its consolidated subsidiaries
Years ended March 31, 2017 and 2016
Thousands of
U.S. dollars (Note 4)
2017

Millions of yen
2016
2017
Cash flows from operating activities:
Profit (loss) before provision for income taxes
Depreciation and amortization
Loss on impairment of fixed assets
Increase (decrease) in liability for retirement benefits
Increase in asset for retirement benefits
Decrease in reserve for rebuilding furnaces(Earnings) losses of unconsolidated subsidiaries and affiliates
accounted for using equity method
Interest and dividend income
Interest expense
Loss on sale and disposition of properties
Decrease in notes and accounts receivable(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable
Other, net

¥

5,051
27,819813
560(1,340)-¥(1,499)26,5397,093(376)(2,188)(5,320)$45,021
247,9637,246
4,991(11,944)-(1,037)

1,666(9,243)

Receipt of interest and cash dividends
Payment of interest
Refund (payment) of income taxes
Net cash provided by operating activities(1,587)3,894
769
17,020(7,279)24,665(11,455)
57,893
1,879(3,992)
1,811
57,591(2,310)
4,208
709
1,063
19,173(698)
3,755
51,815
4,285(4,236)(1,332)50,532(14,145)
34,708
6,854
151,706(64,881)219,850(102,103)
516,026
16,748(35,582)
16,142
513,334

Cash flows from investing activities:
Acquisition of investments in securities
Proceeds from sale of investments in securities
Acquisition of shares of subsidiaries and affiliates
Proceeds from sale of shares of subsidiaries and affiliates
Acquisition of property, plant and equipment
Proceeds from sale of property, plant and equipment
Other, net
Net cash used in investing activities(1,230)194(1,366)376(31,580)
224(4,187)(37,570)(2,385)
3,493
(291)
45
(24,813)402(4,732)(28,281)(10,963)1,729(12,175)
3,351(281,486)
1,996(37,320)(334,878)

Cash flows from financing activities:
Decrease in short-term loans, net
Increase in commercial paper, net
Proceeds from long-term debt
Repayment and redemption of long-term debt
Proceeds from share issuance to non-controlling interests
Acquisition of treasury stock
Cash dividends
Cash dividends paid to non-controlling interests
Other, net
Net cash used in financing activities(17,367)
7,000
11,600(35,688)1,343(9)(2,744)(73)(181)(36,121)(8,795)
20,400(21,911)(8)(6,024)(77)(161)(16,579)(154,799)
62,394
103,396(318,103)
11,970(80)(24,458)(650)(1,613)(321,962)

Foreign currency translation adjustment of cash and cash
equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Net increase in cash and cash equivalents from newly
consolidated subsidiaries
Cash and cash equivalents at end of year (Note 17)¥

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

13

(709)

(514)

(6,319)(16,810)
31,344

5,156
26,187(149,835)
279,383

6,097-

54,345

20,630¥31,344$

183,884

Notes to Consolidated Financial Statements
Nisshin Steel Co., Ltd. and its consolidated subsidiaries
Years ended March 31, 2017 and 2016

1. Basis of Presenting the Financial Statements
The accompanying consolidated financial statements have been prepared from the accounts maintained by the Nisshin Steel Co.,
Ltd. (hereinafter, the “Company”) and its subsidiaries in conformity with accounting principles generally accepted in Japan,
which are different in certain respects in so far as the application and disclosure requirements of International Financial
Reporting Standards.
Certain items presented in the consolidated financial statements submitted to the Director of the Kanto Finance Bureau in
Japan have been reclassified for the convenience of readers outside Japan.

2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its 18 consolidated subsidiaries, listed below(together, the “Companies”):
Nisshin Steel A&C Co., Ltd.
Nisshin Kokan Co., Ltd.
Shinwa Kigyo Co., Ltd.
Tsukiboshi Logistics Co., Ltd.
Nisshin Stainless Steel Tubing Co., Ltd.
Nisshin Stainless Steel Trading Co., Ltd.
Nisshin Koki Co., Ltd.
Tsukiboshi Art Co., Ltd.
Osaka Stainless Center Co., Ltd.
Tsukiboshi Shoji Co., Ltd.
Nisshin Holding, Inc.
Nisshin Steel USA, LLC
Wheeling-Nisshin, Inc.
Nisshin Automotive Tubing LLC
Nisshin France S.A.
NSA Metals Proprietary Limited
Zhejiang Nisshin Worthington Precision Specialty Steel Co., Ltd.
Taiwan Nisshin Precision Steel Co., Ltd.
Effective from fiscal year ended March 31, 2017, Taiwan Nisshin Precision Steel Co., Ltd. has been included in the scopeof consolidation following its establishment. In addition, Zhejiang Nisshin Worthington Precision Specialty Steel Co., Ltd. has
been included in the scope of consolidation due to the increase of materiality with the beginning of commercial production.
The fiscal year periods and the closing dates thereof for the financial statements of consolidated subsidiaries are inagreement with those of the Company, except for the eight foreign consolidated subsidiaries: Nisshin Holding, Nisshin Steel
USA, Wheeling-Nisshin, Nisshin Automotive Tubing, Nisshin France, NSA Metals, Zhejiang Nisshin Worthington and Taiwan
Nisshin (with fiscal years ending on December 31). In consolidating these foreign subsidiaries, the Company makes adjustments
for any material transactions subsequent to December 31.
Regarding the elimination of investments in the stock of consolidated subsidiaries, together with the underlying equity inthe net assets of such subsidiaries, the Company follows the step-by-step acquisition approach to include equity in the profit(loss) of subsidiaries, subsequent to the date of acquisition, in the Consolidated Statements of Income and the Consolidated
Statements of Changes in Net Assets.
Valuation of the assets and liabilities of consolidated subsidiaries is made at their fair values in proportion to the parent
company’s equity in the subsidiaries upon each acquisition.
The difference between the cost of an investment in a subsidiary and the amount of underlying equity in the net assets of thesubsidiary is deferred as an asset or a liability as the case may be and amortized over a period of five years on a straight-line
basis.
Investments in unconsolidated subsidiaries and affiliates are accounted for using the equity method, except for those valued
at cost due to the lack of materiality.

14

The number of unconsolidated subsidiaries accounted for using the equity method was 10 at March 31, 2017 and included:
Nisshin Metal Working Co., Ltd.
One unconsolidated subsidiary which completed liquidation during the fiscal year ended March 31, 2017 was excluded
from the scope of application of the equity method.
The number of affiliates accounted for using the equity method was 16 at March 31, 2017 and included:
Nihon Teppan Co., Ltd.
Sanko Metal Industrial Co., Ltd.
Canox Corporation
Ningbo Baoxin Stainless Steel Co., Ltd.
Acerinox, S.A.
Foreign Currency Translation
Foreign currency transactions are generally translated using foreign exchange rates prevailing at the respective transaction dates.
Receivables and payables in foreign currencies are translated at the foreign exchange rates prevailing at the respective balance
sheets dates.
The assets and liabilities of overseas subsidiaries are translated into yen at the foreign exchange rates prevailing at therespective balance sheets dates, whereas net assets are translated at historical rates.
Investments in Securities
Investments in securities are classified into four categories:(1) Trading securities are valued at their fair values on the balance sheets date, and any unrealized gain or loss is charged toincome. The Companies had no trading securities at March 31, 2017.
(2) Held-to-maturity securities are stated at cost after the amortization of premiums or discounts on acquisition, which areamortized over the period to maturity. The Companies had no held-to-maturity securities at March 31, 2017.
(3) Investments in unconsolidated subsidiaries and major affiliates are accounted for using the equity method, except for thosevalued at cost due to their lack of materiality.
(4) Available-for-sale securities are valued at their fair values except for those valued at cost due to a lack of fair value
information. Applicable unrealized net-of-tax gains and losses are included in accumulated other comprehensive income.
Inventory Valuation
Inventories are valued at cost using the weighted average method (the amounts on the Consolidated Balance Sheets reflect thedecrease in their value due to their decrease in profitability, if any), except for supplies which are valued at the moving-average
cost (the amounts on the Consolidated Balance Sheets reflect the decrease in their value due to their decrease in profitability, ifany).
Property, Plant and Equipment
Depreciation is computed using the straight-line method.
The cost of maintenance, repairs and minor renewals is charged to operating profit as incurred. Major renewals andimprovements are capitalized. The cost of property, plant and equipment retired or otherwise disposed of and the corresponding
accumulated depreciation are eliminated from the related accounts, and the resulting profit or loss is reflected in income.
Leased Assets
Finance leases which do not involve the transfer of ownership rights are depreciated with the straight-line method, adopting thelease period as the useful life and assuming a residual value of zero.
Other Assets
Amortization of intangible assets including software is computed using the straight-line method. Software is amortized over theinternally estimated useful life, i.e., five years.
Allowance for Doubtful Accounts
The allowance for doubtful accounts is evaluated based on the actual bad debt rate in the past. For doubtful receivables, etc., thelikelihood of collection is evaluated in accounting for the allowance.

15

Employees’ Retirement Benefits
The retirement benefit obligation for employees is attributed to each period by the straight-line method over the estimated yearsof service of the eligible employees.
Actuarial gain or loss is recognized in expenses using the straight-line method over mainly 18 years. Prior service cost isrecognized in expenses using the straight-line method over mainly 18 years.
Allowance for Retirement Benefits for Directors and Corporate Auditors
The allowance for retirement benefits for directors and corporate auditors is calculated based on internal rules.
Reserve for Rebuilding Furnaces
Blast furnaces, including related machines, periodically require substantial component replacements and repairs. Such work
occurs normally every 10 years after blast furnaces are put into operation. The estimated future costs of such work are provided
for and charged to income on a straight-line basis over the periods to the date of the anticipated replacements and repairs. The
difference between such estimated costs and the actual costs is charged or credited to income at the time the work takes place. In
estimating such future costs for a specific furnace, the general price level increase and other economic factors are taken into
consideration.
Provision for Environmental Remediation
The provision for environmental remediation is estimated and recorded to provide for future potential costs, such as waste
management costs for stored PCB (polychlorinated biphenyl).
Sales Recognition
Sales of finished goods are generally recognized when goods are shipped to the customers.
Loss on impairment of fixed assets
In the year ended March 31, 2017, the Nisshin Group recognized loss on impairment of fixed assets for the following asset
group.
Location

PurposeShimotsuma, Ibaraki Prefecture

Business assets (production facilities of building material)

Type
Machinery andequipment

Machinery andequipment, etc.
The Group principally categorizes assets by segment for managerial accounting (by product group) for which cash flows continue
to be measured. Idle properties that are not expected to be used in the future are measured at an individual asset group level.
For the year ended march 31, 2017, their book value has been reduced to recoverable amounts largely due to deteriorated
profitability arising from sudden change in the business environment. Recoverable amounts have been calculated by estimating
the value in use, and the difference between the book values and the recoverable amounts has been recorded as loss on
impairment of fixed assets (¥813 million (US$7,246 thousand)) in special loss. The loss on impairment of fixed assets consistedof ¥788 million (US$7,023 thousand) of machinery and equipment and ¥24 million (US$213 thousand) of buildings andstructures.
Value in use is calculated by applying a discount rate of 7% to future cash flows.
Versailles, Kentucky, U.S.A.

Business assets (stainless steel pipe & tube line)

In the year ended March 31, 2016, the Nisshin Group recognized loss on impairment of fixed assets for the following asset
group.
Location

PurposeType

Ichikawa, Chiba Prefecture

Business assets (production facilities of building material)

Machinery andequipment

Kure, Hiroshima Prefecture

Business assets (No. 2 blast furnace and related facilities)

Machinery andequipment, etc.

Machinery andequipment, etc.
The Group principally categorizes assets by segment for managerial accounting (by product group) for which cash flows continue
to be measured. Idle properties that are not expected to be used in the future are measured at an individual asset group level.
Shunan, Yamaguchi Prefecture

Business assets (continuous casting facilities)

16

For the year ended march 31, 2016, their book value has been reduced to recoverable amounts largely because the Companies
have decided to discontinue use of some facilities in the future in accordance with business reforms. Recoverable amounts havebeen calculated by estimating the value in use, and the difference between the book values and the recoverable amounts has beenrecorded as loss on impairment of fixed assets (¥7,093 million) in special loss. The loss on impairment of fixed assets consistedof ¥6,166 million of machinery and equipment, ¥488 million of buildings and structures and ¥437 million of others.
Value in use is calculated by applying a discount rate of 7% to future cash flows.
Income Taxes
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequencesof temporary differences between the carrying amounts and the tax basis of assets and liabilities.
Consumption Tax
In Japan, consumption tax is imposed on domestic consumption of goods and services at the rate of 8%. The consumption tax
imposed on the Companies’ sales to customers is withheld by the Companies at the time of sale and paid to the national
government. The consumption tax withheld upon sale is not included in the amount of “Net sales” in the accompanying
Consolidated Statements of Income but is recorded as a liability. The balances of consumption tax withheld and consumption tax
paid (an asset item), which are paid by the Companies on the purchase of products, merchandise and services from vendors, areoffset, and the net balance is included in “Other current liabilities” in the Consolidated Balance Sheets.
Cash and Cash Equivalents
Cash and cash equivalents included in the Consolidated Statements of Cash Flows comprise cash on hand and in banks, deposits
that can be withdrawn upon demand and easily cashable short-term investments with a three-month or shorter redemption termthat carry a negligible risk of fluctuation in value.
Profit (loss) and Cash Dividends per Share
The computation of profit (loss) per share is based on the weighted average number of common shares issued and outstanding
during each year. Cash dividends per share shown for each year in the accompanying Consolidated Statements of Income arebased on cash dividends applicable to the profit (loss) of each year.

3. Accounting Changes(Changes in Accounting Estimates)
The Company’s steel plate production and sales business which engages in the coatings and building materials market andincludes the Ichikawa Works, was succeeded to the Company’s consolidated subsidiary, Nisshin Steel A&C Co., Ltd. on April 1,
2016. In light of this, we made a comprehensive evaluation of the business environment surrounding Nisshin Steel A&C Co.,
Ltd., and the residual value of a portion of the facilities owned by that company has been changed to the memorandum value
since the fiscal year ended March 31, 2017.
As a result of the change, for the fiscal year ended March 31, 2017, depreciation increased by ¥433 million (US$3,859 thousand),
operating profit decreased by ¥386 million (US$3,440 thousand), and ordinary profit and profit before provision for income
taxes decreased by ¥425 million (US$3,788 thousand), respectively, compared with those by the previous method.
(Additional Information)(Application of Implementation Guidance on Recoverability of Deferred Tax Assets)
Effective from the fiscal year ended March 31, 2017, the Company and its domestic subsidiaries have applied the“Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26, March 28, 2016).

4. U.S. Dollar Amounts
U.S. dollar amounts included in the consolidated financial statements and notes thereto represent the arithmetical results oftranslating yen into dollars on the basis of ¥112.19 = US$1, the effective rate of exchange at March 31, 2017. The inclusion ofsuch dollar amounts is solely for convenience and is not intended to imply that the yen amounts have been or could be readily
converted, realized or settled in dollars at ¥112.19 = US$1 or at any other rate.

17

5. Inventories
Details of “Inventories” in the Consolidated Balance Sheets at March 31, 2017 and 2016 are as follows:
Millions of yen
2016
2017
¥
49,953¥51,15537,84640,96536,97540,018¥ 124,776¥ 132,139

Finished goods
Work in process
Raw materials and other supplies
Total

Thousands of
U.S. dollars
2017$ 455,967
365,139
356,698$ 1,177,814

The amounts of inventories on the Consolidated Balance Sheets at March 31, 2017 and 2016 reflect the decrease in their value
due to their decrease in profitability (after setting off the reversal amount of reducing the book value at the end of the previous
consolidated fiscal year). “Cost of sales” in the Consolidated Statements of Income for the year ended March 31, 2017 and 2016
include ¥1,379 million (US$12,291 thousand) of such unrealized net profit of inventories and ¥2,665 million of such unrealized
net loss of inventories, respectively.

6. Investments in Unconsolidated Subsidiaries and Affiliates“Investments in securities” in the Consolidated Balance Sheets at March 31, 2017 and 2016 include investments inunconsolidated subsidiaries and affiliates as follows:
Thousands ofMillions of yen
U.S. dollars
2016
2017
2017
Stocks of unconsolidated subsidiaries and affiliates¥
57,696¥57,192$ 509,778“Other” in “Investments and long-term receivables” in the Consolidated Balance Sheets at March 31, 2017 and 2016 include
investments in unconsolidated subsidiaries and affiliates as follows:
Thousands of
U.S. dollars
Millions of yen
2016
2017
2017
Equity in unconsolidated subsidiaries and affiliates¥
23,134¥
14,485$ 129,111

7. Short-term Loans and Long-term Debt
Short-term loans at March 31, 2017 and 2016 consisted of the following:
Millions of yen
2016
2017
Bank loans¥
50,338¥32,953
It is a normal business custom in Japan for short-term loans to be rolled over.

Thousands of
U.S. dollars
2017$ 293,724

Long-term debt at March 31, 2017 and 2016 consisted of the following:

Loans from banks and other financial institutions
19th 2.20% unsecured bond of the Company due Jun. 2018
21st 0.62% unsecured bond of the Company due Jun. 2017
22nd 0.33% unsecured bond of the Company due Mar. 2017
23rd 0.64% unsecured bond of the Company due Mar. 2019
Total long-term debt
“Current portion of long-term debt” in the Consolidated
Balance Sheets“Long-term debt” in the Consolidated Balance Sheets*1

Millions of yen
2016
2017
¥ 179,188¥ 165,081
10,00010,00020,00020,00010,00010,00010,000229,188
205,081

Thousands of
U.S. dollars
2017$ 1,471,441
89,134
178,269
89,134
1,827,979(35,693)(354,380)

193,495$ 1,473,598(39,758)¥

165,323¥*1. The following is the financial covenants in the syndicated loan contract that the Company agreed with a group of financial institutes(signed on September 28, 2012, ¥11,764 million included in long-term debt).
(Financial Covenants)(1) The amount of shareholders’ equity in the Consolidated Balance Sheets at March 31, 2013, at the end of the following fiscal years,
and at the end of the following second quarters shall be maintained at least 75% of the amount at the end of the latest fiscal year orof the latest second quarter. Note that the above shareholders’ equity includes a portion judged as equity credit attributes by theJapan Credit Rating Agency of early redeemable subordinated bonds solely for qualified institutional investors.

18

(2)

“Ordinary profit” in the Consolidated Statements of Income for the fiscal year ended March 31, 2013 and for the following fiscal
years shall not record loss for two consecutive years.
At March 31, 2017 Nisshin Steel Co., Ltd. had not breached the financial covenants.

8. Income Taxes
Components of the Companies’ deferred income tax assets and liabilities at March 31, 2017 and 2016 are as follows:

Millions of yen
2016
2017
Deferred income tax assets:
Tax loss carry forwards
Retirement benefit liability
Loss on devaluation of investments in securities
Loss on impairment of fixed assets
Investment book value adjustment
Non-deductible portion of reserve for rebuilding furnaces
Other
Preliminary deferred income tax assets
Valuation allowance
Total deferred income tax assets¥

Deferred income tax liabilities:
Unrealized gain or loss on available-for-sale securities
Loss on securities contribution to employees’ retirement
benefits trust
Reserve for postponement of taxation on capital gains fromproperty
Other
Total deferred income tax liabilities
Net deferred income tax liabilities¥

39,04015,554
6,532
4,506
4,114
2,637
8,195
80,583(69,792)
10,790¥38,890
16,106
5,864
4,645
829
2,637
7,802
76,776(65,155)
11,620Thousands of
U.S. dollars
2017$

347,981
138,639
58,22240,16436,66923,50473,045718,272(622,087)
96,176

7,495

5,317

66,806

6,367

6,557

56,751

1,578

1,629

14,065

6,321
21,763
10,972

5,530
19,034
7,413

56,341
193,983
97,798¥$The reconciliation of the statutory tax rate to the income tax rate reflected in the Consolidated Statements of Income for the
fiscal year ended March 31, 2017 is as follows:2017
Statutory tax rate
30.7%
Reconciliation:
Permanent non-taxable income
17.1
Permanent difference
2.0
Equity in earnings of unconsolidated subsidiaries and affiliates(6.3)
Valuation allowance
29.9
Other
3.4
Effective rate of income tax expense
76.8%
The reconciliation of the statutory tax rate to the income tax rate reflected in the Consolidated Statements of Income for the
fiscal year ended March 31, 2016 is omitted because the Company recorded a loss before provisions for income taxes.

9.

Employees’ Retirement Benefits(Defined benefit plan)
The Company and most of its domestic consolidated subsidiaries have defined benefit plans, i.e., lump-sum severance benefit
payments and defined benefit pension plans.

19

The changes in the retirement benefit obligation during the years ended March 31, 2017 and 2016 are as follows:
Thousands ofMillions of yen
U.S. dollars
2016
2017
2017
Retirement benefit obligation at the beginning of the year¥
83,306¥
92,462$ 824,155
Service cost
3,127
3,716
33,122
Interest cost
1,000
277
2,469
Actuarial loss
11,112308
2,745
Retirement benefit paid
(6,360)(5,957)(53,097)
Prior service cost
87
775
Contribution by the Companies
(16)
(2)
(17)
Other
291
240
2,139
Retirement benefit obligation at the end of the year¥
92,462¥
91,131$ 812,291
The changes in plan assets during the years ended March 31, 2017 and 2016 are as follows:
Millions of yen
2016
2017
¥
84,001¥
66,747
1,672
1,325(16,651)
823
565
264
(3,193)(3,352)352
240¥
66,747¥66,048Plan assets at the beginning of the year
Expected return on plan assets
Actuarial gain (loss)
Contribution by the Companies
Retirement benefit paid
Other
Plan assets at the end of the year

Thousands of
U.S. dollars
2017$ 594,946
11,8107,335
2,353(29,877)
2,139$ 588,715

The funded status of the plans and the amounts recognized in the consolidated balance sheets at March 31, 2017 and 2016 for
the Company’s and the consolidated subsidiaries’ defined benefit plans are as follows:
Thousands of
U.S. dollars
Millions of yen
2016
2017
2017
Funded retirement benefit obligation¥
44,605¥43,278$ 385,756
Plan assets at fair value(66,747)(66,048)(588,715)(22,141)(22,769)(202,950)
Unfunded retirement benefit obligation
47,85647,853
426,535
Net balance of liability and asset recognized
25,71525,083
223,576on the Consolidated Balance Sheets
Liability for Retirement benefits
Asset for retirement benefits
Net balance of liability and asset recognizedon the Consolidated Balance Sheets

48,300(22,585)

48,191(23,108)¥

25,083¥25,715429,548(205,972)$

223,576

The components of retirement benefit expense for the years ended March 31, 2017 and 2016 are as follows:
Millions of yen
2016
2017
¥
3,127
¥
3,716
1,000
277
(1,672)(1,325)
(307)
376
(975)
(970)
11
¥
1,183
¥
2,074

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service cost
Other
Retirement benefit expense

Thousands of
U.S. dollars
2017$33,122
2,469(11,810)
3,351(8,646)$18,486

Note: Retirement benefit expense for consolidated subsidiaries adopting the simplified method are included in “Service cost.”

20

The components of retirement benefit liability adjustments included in other comprehensive income (before tax effect) at March
31, 2017 and 2016 are as follows:
Thousands ofMillions of yen
U.S. dollars
2016
2017
2017
Prior service cost
¥
(975)
¥
(1,058)$(9,430)
Actuarial difference(27,998)
891
7,941
Total
¥ (28,974)
¥
(166)
$
(1,479)The components of retirement benefit liability adjustments included in accumulated other comprehensive income (before tax
effect) at March 31, 2017 and 2016 are as follows:
Thousands of
U.S. dollars
Millions of yen
2016
2017
2017
Unrecognized prior service cost
¥
3,495
¥
2,437
$
21,722
Unrecognized actuarial difference(6,103)(5,211)(46,447)
Total¥(2,607)¥(2,774)$ (24,725)
The fair value of plan assets by major category as a percentage of total plan assets at March 31, 2017 and 2016 are as follows:
Millions of yen
2016
2017
Stocks
64%
67%
Bonds
22
21
Cash on hand and in banks
6
4
Other
8
8
Total
100%
100%
Assumptions used in the calculation of the above information are as follows:
2016
0.3%
2.0%

2017
0.3%
2.0%

Discount rate:
Expected rate of return on plan assets:(Defined Contribution plan)
The required contribution of the consolidated subsidiaries of the Company amounts to ¥121 million (US$1,078 thousand) and¥125 million for the years ended March 31, 2017 and 2016.

10. Contingent Liabilities
Contingent liabilities at March 31, 2017 and 2016 are as follows:

Guarantee of bank loans for employees
Guarantee of loans for others in the ordinary course ofbusiness
The Companies issued letters of guarantee for the future forothers in the ordinary course of businessMillions of yen
2016
2017
¥
385
¥
282

Thousands of
U.S. dollars
2017
$
2,513

2,293

4,712

20,438

19

17

169

11. Research and Development Expenses
Research and development expenses for the years ended March 31, 2017 and 2016 totaled ¥3,851 million (US$34,325 thousand)and ¥3,941 million, respectively. They were included in manufacturing cost, selling, general and administrative expenses.

2112. Selling, General and Administrative Expenses
Principal selling, general and administrative expenses for the years ended March 31, 2017 and 2016 are as follows:
Thousands ofMillions of yen
U.S. dollars
2016
2017
2017
Freight out¥
16,769¥16,962$ 151,189
Salaries, bonuses and allowances
10,2509,977
88,929Research and development expenses
3,941
3,851
34,325Retirement benefit expense
558
636
5,668

13. Mortgaged Properties
Breakdown of properties pledged as collateral at March 31, 2017 and 2016 are as follows:
Thousands of
U.S. dollars
2017

Millions of yen
2016
2017
Properties pledged as collateral:
Investments in securities

¥

16

¥

16

$

142

14. Adjustment on Revaluation of Land
At March 31, 2002, some of the affiliates accounted for using the equity method revalued land in accordance with the Law
concerning Revaluation of Land. The Company’s share of a net-of-tax unrealized gains at March 31, 2017 and 2016 have beenrecorded as a separate component of accumulated other comprehensive income.

15. Net Assets
Number and types of stock at March 31, 2017 and 2016 are as follows:
Thousands of shares
Number of common
Number of treasury
stocks, issued
stocks109,843225–8–
0109,843
233

March 31, 2016
Increase during the year
Decrease during the year
March 31, 2017

Increase in the number of eight thousand shares in treasury stock consists of six thousand shares due to purchase of shares lessthan one unit, and one thousand shares due to the change of the ownership ratio for an affiliate accounted for using the equity
method of the Company.
Decrease in the number of treasury stocks consists of less than one thousand shares due to the sales of the shares less than one
unit by the Company upon requests by its shareholders.
Number and types of stock at March 31, 2016 and 2015 are as follows:
Thousands of shares
Number of common
Number of treasury
stocks, issued
stocks109,843219–
6–
0109,843
225

March 31, 2015
Increase during the year
Decrease during the year
March 31, 2016

Increase in the number of treasury stocks consists of six thousand shares due to purchase of shares of less than one unit.
The decrease of less than one thousand shares in treasury stock consists of less than one thousand shares due to the change of theownership ratio for an affiliate accounted for using the equity method and less than one thousand shares due to the sales of theshares less than one unit by the Company upon requests by its shareholders.

2216. Cash Dividends
Cash dividends declared are as follows:
Cash dividends payment in the year ending March 31, 2018
Amount of cash
Cash dividends
dividends paid
per share¥548 million¥5.0
May 12, 2017 Board of Directors’ Meeting
US$4,884 thousand
US$0.04
Cash dividends payment in the year ended March 31, 2017
Amount of cash
Cash dividends
dividends paid
per share¥2,744 million¥25.0
May 13, 2016 Board of Directors’ Meeting
US$24,458 thousand
US$0.22
Cash dividends payment in the year ended March 31, 2016
Amount of cash
dividends paid
¥4,391 million
May 15, 2015 Board of Directors’ Meeting
Nov. 13, 2015 Board of Directors’ Meeting¥1,646 million

Cash dividends
per share
¥40.0
¥15.0

Record date

Effective dateMar. 31, 2017

Jun. 6, 2017

Record date

Effective dateMar. 31, 2016

Jun. 3, 2016

Record dateMar. 31, 2015
Sep. 30, 2015

Effective dateJun. 3, 2015
Nov. 30, 201517. Supplementary Cash Flow Information
The reconciliation of “Cash on hand and in banks” in the Consolidated Balance Sheets at March 31, 2017 and 2016 to “Cash andcash equivalents at end of year” in the Consolidated Statements of Cash Flows for the years then ended are as follows:
Thousands ofMillions of yen
U.S. dollars
2016
2017
2017
Cash on hand and in banks¥
31,440¥16,717$ 149,006
Time deposits and short-term investments with deposit terms
(5)
(5)
(44)
or maturity periods exceeding three months
Securities due within three months
4,135
36,857
Other
(91)
(217)
(1,934)
Cash and cash equivalents at end of year¥
31,344¥
20,630$ 183,88423

18. Other Comprehensive Income
The following table presents reclassification adjustments and tax effects allocated to each component of other comprehensive
income for the years ended March 31, 2017 and 2016:
Thousands ofMillions of yen
U.S. dollars
2016
2017
2017
Unrealized gain or loss on available-for-sale securities:
Amount arising during the year
¥ (12,932)¥
10,734$
95,676
Reclassification adjustments for gains and losses included384(21,766)(2,442)in profit (loss) attributable to owners of parent
Amount before tax effect(12,547)
8,292
73,910Tax effect
3,543(2,188)(19,502)
Unrealized gain or loss on available-for-sale securities(9,004)
6,104
54,407
Deferred gain or loss on hedges:
Amount arising during the year
Reclassification adjustments for gains and losses included
in profit (loss) attributable to owners of parent
Acquisition adjustment
Amount before tax effectTax effect
Deferred gain or loss on hedges
Foreign currency translation adjustment:
Amount arising during the year
Reclassification adjustments for gains and losses included
in profit (loss) attributable to owners of parent
Amount before tax effectTax effectForeign currency translation adjustment
Retirement benefits asset and liability adjustments:
Amount arising during the year
Reclassification adjustments for gains and losses included
in profit (loss) attributable to owners of parent
Amount before tax effectTax effect
Retirement benefits asset and liability adjustments
Share of other comprehensive income of companies
accounted for with the equity method:Amount arising during the year
Reclassification adjustments for gains and losses included
in profit (loss) attributable to owners of parent
Share of other comprehensive income of companies
accounted for with the equity method
Other, net:
Amount arising during the year
Reclassification adjustments for gains and losses included
in profit (loss) attributable to owners of parent
Amount before tax effectTax effect
Other, net
Total other comprehensive income

(901)

(115)

¥

(1,025)

13

(54)

115

857
755
(231)
523

(474)
(1,430)
453
(976)

7,638
6,729
(2,059)4,661(1,741)(1,875)(15,518)–––(1,741)–(1,741)(1,875)–(1,875)(15,518)–(15,518)427(27,691)

3,806

(594)

(1,283)(5,294)

(166)
116
(50)

(28,974)448(28,526)(1,479)
1,033
(445)

(2,512)(680)(22,390)

(103)

(111)

(918)

(2,616)(792)(23,317)

(104)

33

(926)

9

3

80

(94)
35
(59)
2,159

36
(13)
23
(41,151)

(837)
311
(525)
19,244¥$

19. Financial Instruments
1. Status of financial instruments(1) Policy regarding financial instruments
The Companies’ cash is put mainly into short-term deposits, and temporary surplus is invested in highly secure financial
assets.
The Company obtains funds, which are deemed necessary according to its loan and investment plan, mainly from bankloans and bond issues. It also obtains short-term operating funds from bank loans and commercial paper. A group cash

24

management system has been implemented among the Company and major subsidiaries, which enables lending andborrowing of funds in both directions in a recurrent and continuous manner.
Derivatives are used to avoid interest rate risk for loans and foreign exchange risk for transactions in foreign currency.
The policy on derivatives of the Company and its consolidated subsidiaries restricts the use of derivative transactions to thoserelated to actual demands and forbids their use for the purpose of speculation.
(2) Types of financial instruments, their risk and risk management system
The Company is exposed to credit risk of customers arising from notes and accounts receivable. In order to manage such risk,
due dates and account balances of customers are controlled in accordance with the corporate management rules. The credit
status of major customers is also monitored in necessity.
Marketable securities and investment in securities are exposed to market value risk. Such securities are mainly those of
the corporations with which the Company has a business relationship. The Company monitors the market value as well as
financial situations of the issuing companies on a regular basis.
As loans and bonds have interest rate risk, the Company uses interest rate swap transactions for some loans, which meetthe exceptional requirements defined in Japanese generally accepted accounting principles for financial instruments.
Derivative transactions are made in accordance with the corporate management rules. The Company makes transactions
only with financial institutions with high ratings in order to reduce credit risk.
Liquidity risk of operating credit and loans is managed according to a method in which each group company prepares its
own cash-flow projections on a timely basis, etc.
2. Estimated fair value of financial instruments
Book value, estimated fair value and unrealized gains (losses) of financial instruments on the Consolidated Balance Sheets at
March 31, 2017 and 2016 are as follows. The table below does not include financial instruments for which it is extremely
difficult to determine the fair value.
(Year ended March 31, 2017)(1) Cash on hand and in banks(2) Notes and accounts receivable(3) Marketable securities and investments in securities
Available-for-sale securities(4) Notes and accounts payable(5) Short-term loans(6) Commercial paper(7) Bonds(8) Long-term loans
Loans from banks and other financial institutions

Book value¥ 16,717
60,588Millions of yen
Estimated fairvalue
¥ 16,717
60,588

Unrealized gain
(loss)¥––

54,600(112,309)(32,953)(7,000)(40,000)

54,600(112,309)(32,953)(7,000)(40,356)

–
–
–
–
(356)

(165,081)(169,441)(4,359)(Year ended March 31, 2017)
Thousands of U.S. dollars
Estimated fair
Unrealized gain
Book value
value(loss)$ 149,006$ 149,006$–
540,048
540,048–(1) Cash on hand and in banks(2) Notes and accounts receivable(3) Marketable securities and investments in securities
Available-for-sale securities(4) Notes and accounts payable(5) Short-term loans(6) Commercial paper(7) Bonds(8) Long-term loans
Loans from banks and other financial institutions

25

486,674(1,001,060)(293,724)(62,394)(356,538)

486,674(1,001,060)(293,724)(62,394)(359,711)––––(3,173)(1,471,441)(1,510,303)(38,853)

(Year ended March 31, 2016)(1) Cash on hand and in banks(2) Notes and accounts receivable(3) Marketable securities and investments in securities
Stocks of subsidiaries and affiliates
Available-for-sale securities(4) Notes and accounts payable(5) Short-term loans(6) Bonds(7) Long-term loans
Loans from banks and other financial institutions(8) Derivative transactions

Book value¥ 31,440
77,581Millions of yen
Estimated fairvalue
¥ 31,440
77,581

Unrealized gain
(loss)¥––

41,721
52,631(87,436)(50,338)(50,000)

56,38852,631(87,436)(50,338)(50,696)

14,667–––(696)(179,189)(755)(186,566)(755)(7,376)–

Notes:
1. Methods to determine the estimated fair value of financial instruments and other matters related to securities and derivativetransactions(1) Cash on hand and in banks and (2) Notes and accounts receivable
Since these are settled in a short period of time and their fair value is almost equal to the book value, they are based on thebook value.
(3) Marketable securities and investments in securities
Fair value of stocks is based on the price presented by stock exchanges, while bonds are based on the price presented bystock exchanges or financial institutions.
(4) Notes and accounts payables, (5) Short-term loans and (6) Commercial paper
Since these are settled in a short period of time and their fair value is almost equal to the book value, they are based on thebook value.
(7) Bonds
Fair value of bonds is based on the market price. The fair value of the 1st Series Unsecured, Interest Deferrable and Early
Redeemable Subordinated Bonds Solely for Qualified Institutional Investors is calculated by discounting the principal andinterest payments by the assumed discount rate for bonds of the same rating.
(8) Long-term loans
Fair value of long-term loans is calculated by discounting the principal and interest payments by the assumed discount rates
for similar new loans.
2. Financial instruments for which it is extremely difficult to determine the fair value
In “(3) Marketable securities and investments in securities: Available-for-sale securities,” the fair value for unlisted stocks(¥2,662 million (US$23,727 thousand) and ¥4,738 million in the Consolidated Balance Sheets at March 31, 2017 and 2016
respectively.) and others (¥0 million (US$0 thousand) and ¥0 million in the Consolidated Balance Sheets at March 31, 2017and 2016, respectively.) does not have to be disclosed because there is no market price for them, their future cash flow cannot
be estimated, and because it is deemed very difficult to determine their fair value.
The redemption schedule for receivables and marketable securities with maturities at March 31, 2017 and 2016 are as follows:(Year ended March 31, 2017)
Millions of yen
Over one year
Over five years
and within five
and within ten
Within one year
years
years
Over ten years
Cash on hand and in banks
¥
–
¥
–
¥
–
¥ 16,621
Notes and accounts receivable–––
60,588Marketable securities and investments insecurities
National and local governmental bonds, etc.
–
–
4
11
Total
¥
–
¥
–
¥ 77,214¥
11

26

(Year ended March 31, 2017)

Cash on hand and in banks
Notes and accounts receivable
Marketable securities and investments insecurities
National and local governmental bonds, etc.
Total

Thousands of U.S. dollars
Over one year
Over five years
and within five
and within ten
years
years
$
–
$
–
–
–

Within one year
$ 148,150
540,04835$ 688,243––$

Over ten years
$
–
–

98
98

$

–
–

$

(Year ended March 31, 2016)

Cash on hand and in banks
Notes and accounts receivable
Marketable securities and investments insecurities
National and local governmental bonds, etc.
Total

Millions of yen
Over one year
Over five years
and within five
and within ten
years
years
¥
–
¥
–
–
–

Within one year
¥ 31,233
77,581–¥ 108,814

44¥Over ten years
¥
–
–

11
11

¥

–
–

¥

20. Securities
Available-for-sale securities(Year ended March 31, 2017)

Securities whose book value exceeds
their acquisition cost:
Stocks
Bonds
National and local governmental
bonds, etc
Subtotal
Securities whose book value does notexceed their acquisition cost:
Stocks
Bonds
National and local governmental
bonds, etc
Other
Subtotal
Total

Millions of yen
Acquisition UnrealizedBook value
costgain (loss)

Thousands of U.S. dollars
Acquisition UnrealizedBook value
costgain (loss)¥

48,278$ 430,323¥¥

20,284¥27,99348,290

¥

0

106

98

0

20,295¥27,994$ 430,430$ 180,898$ 249,523

¥

6,039

¥

6,706

¥

$

$

4

4

266
6,310
54,600

¥
¥

267
6,979
27,274

¥
¥

12

11

27

(667) $
(0)¥¥53,828$ 180,800

59,773$ 249,514(5,945)

35

35

0

(1)
2,370
(669) $ 56,243
27,325 $ 486,674

2,379$ 62,206$ 243,105(8)$ (5,963)$ 243,560

(Year ended March 31, 2016)
Millions of yen
Acquisition UnrealizedBook value
costgain (loss)
Securities whose book value exceeds
their acquisition cost:
Stocks
Bonds
National and local governmental
bonds, etc
Subtotal
Securities whose book value does notexceed their acquisition cost:
Stocks
Bonds
National and local governmental
bonds, etc
Other
Subtotal
Total¥

41,873¥20,92412¥

11

20,9490¥41,886¥

20,935¥

20,950¥10,373¥12,090¥(1,717)4¥¥367
10,74552,6314¥¥401
12,49633,432

(0)
¥
¥

(33)
(1,750)19,199Regarding available-for-sale securities for which fair value information was not available, their aggregate book value on theConsolidated Balance Sheets was ¥2,662 million (US$23,727 thousand) and ¥4,738 million at March 31, 2017 and 2016,
respectively.
Sale of securities classified as available-for-sale securities and the aggregate gain and loss for the years ended March 31, 2017and 2016 are as follows:(Year ended March 31, 2017)
Thousands ofMillions of yen
U.S. dollars
Sale proceeds¥
11,001$ 98,056
Aggregate gain
2,442
21,766Aggregate loss
(Year ended March 31, 2016)
Millions of yen
¥
1,677
8
104

Sale proceeds
Aggregate gain
Aggregate loss

21. Derivative Transactions
The policy on derivatives of the Company and its consolidated subsidiaries restricts the use of derivative transactions to thoserelated to actual demands and forbids their use for the purpose of speculation. The Company and its consolidated subsidiaries
use derivative transactions for the purpose of reducing the impact on earnings caused by future market fluctuations, hedging
losses, reducing procurement costs and fixing costs. In the years ended March 31, 2017 and 2016, the Company and its
consolidated subsidiaries used interest rate swaps, forward exchange contracts and currency options to hedge the risk against rate
fluctuations or reduce the interest rates of bank loans, bonds and other means of financing.
Under the hedge accounting method, hedging instruments and hedged items for the year ended March 31, 2017 and 2016
are as follows:• The deferral hedge accounting method is adopted for hedging transactions. As for interest swaps, when the amounts, index
and period meet the conditions for hedged items, the exceptional method defined in Japanese generally accepted accounting
principles for financial instruments is applied.
• Hedging instruments are interest rate swaps, forward exchange contracts, currency options and currency swaps.
• Hedged items are the interest of bank loans, bonds and other means of financing and forecasted foreign currency
denominated transactions.

28

(1) Currency-related transactions(Year ended March 31, 2017)
No relevant information.
(Year ended March 31, 2016)

Deferral hedge
accounting*

Principle
hedged items
Forward exchange
Forecasted
contracts andforeign currency
currency options
denominated
Buy: U.S. dollars transactions

Millions of yen
Contract
Contract amountamountover one year

Fair value

¥

–

¥

(755)

–

¥

(755)

14,685¥

Total¥ 14,685¥
Measurement method for fair value
Fair values are calculated based on price presented by correspondent financial institutions.

(2) Interest-related transactions(Year ended March 31, 2017)

Special treatment forinterest rate swaps*

Principle
hedged items
Interest of bank
Interest rate swaps:
loans, bonds andReceive floating/payother means of
fixed
financing

Millions of yen
Contract
Contract amountamountover one year

Fair value¥¥

30,184¥29,764*

Total¥ 30,184¥ 29,764¥*
Fair value of interest rate swaps which are accounted for using special treatment is included in that of corresponding
hedged long-term borrowings as those interest rate swaps are recorded as an adjustment to interest expense of hedged
instruments under the special treatment.

(Year ended March 31, 2017)

Special treatment forinterest rate swaps

Principle
hedged items
Interest of bank
Interest rate swaps:
loans, bonds andReceive floating/payother means of
fixed
financing

Total

Thousands of U.S. dollars
Contract
Contract amountamountover one year

Fair value$ 269,043$ 265,299$*$ 269,043$ 265,299$*(Year ended March 31, 2016)

Special treatment forinterest rate swaps*

Principle
hedged items
Interest of bank
Interest rate swaps:
loans, bonds andReceive floating/payother means of
fixed
financing

Millions of yen
Contract
Contract amountamountover one year

Fair value¥¥

36,407¥

36,107*

Total¥ 36,407¥ 36,107¥*
Fair value of interest rate swaps which are accounted for using special treatment is included in that of corresponding
hedged long-term borrowings as those interest rate swaps are recorded as an adjustment to interest expense of hedged
instruments under the special treatment.

2922. Segment Information
The Companies operate solely in the steel business segment, so the disclosure of business segment information has been omitted.
Products and services information(Year ended March 31, 2017)
Millions of yen
Other¥ 30,785

Steel Products¥ 494,777

Sales to third parties

Total¥ 525,563(Year ended March 31, 2017)
Steel Products$ 4,410,170

Sales to third parties

Thousands of U.S. dollars
Other
Total
$ 274,400$ 4,684,579(Year ended March 31, 2016)
Millions of yen
Other¥ 32,617

Steel Products¥ 514,409

Sales to third parties

Total¥ 547,026

Geographical information(Year ended March 31, 2017)
Millions of yen

Sales to third partiesJapan¥ 417,373

North
America¥ 55,313

Other
20,713Total¥ 525,563

Japan$ 3,720,233

Thousands of U.S. dollars
North
America
East Asia
Other$ 493,029$ 286,674$ 184,624

Total$ 4,684,579

East Asia¥ 32,162¥(Year ended March 31, 2017)

Sales to third parties

Notes: Net sales information above is based on customer location.

(Year ended March 31, 2016)
Millions of yenJapan¥ 435,422

Sales to third parties

North
America¥ 51,505

East Asia¥ 35,566¥

Other
24,532

Total¥ 547,026

23. Related Party Transactions
Material transactions of the Company with related companies and individuals, excluding transactions with consolidated
subsidiaries which are removed from the consolidated financial statements and other than those disclosed elsewhere in thesefinancial statements, for the years ended March 31, 2017 and 2016 are as follows:(1) Transactions with the parent company(Year ended March 31, 2017)
Millions of yen/Thousands of U.S. dollars
Resulting accounting balance
Transaction
Name ofRelatedcompany

Paid-in capital

Nippon Steel & ¥419,524 million
Sumitomo Metal $3,739,406
thousandCorporation

Principal
business
Manufacturing
and sales ofsteel products,
etc.

Equity ownership
percentage at
Mar. 31, 201751.3%

(Year ended March 31, 2016)
No relevant information.

30

Description of thetransactions
Purchase of steel
billets, etc.

2017
¥
$

̽
̽

Account
Accounts payable

2017
¥583
$5,196

(2) Transactions with unconsolidated subsidiaries and associates(Year ended March 31, 2017)
Millions of yen/Thousands of U.S. dollars
Resulting accounting balance
Transaction
Name ofRelatedcompany

Paid-in capital

Principal
business

Equity ownership
percentage at
Mar. 31, 2017

Nihon TeppanCo., Ltd.

¥1,300 million
Sale of$11,587 thousand coated steel

50.0%

Canox
Corporation¥2,310 million
Sale of$20,590 thousand coated steel

16.0%

Description of thetransactions
Sale of the Company’s
coated steel products
to the related party
Sale of the Company’s
coated steel products
to the related party

2017

Account

2017¥48,205$429,672

Accounts receivable¥2,670$23,798¥34,680$309,118

Accounts receivable¥1,522$13,566(Year ended March 31, 2016)
Transaction
Name ofRelatedcompany

Paid-in capital

Principal
business

Equity ownership
percentage at
Mar. 31, 2016

Nihon TeppanCo., Ltd.

¥1,300 million

Sale ofcoated steel

50.0%

Canox
Corporation¥2,310 million

Sale ofcoated steel

16.0%

Description of thetransactions
Sale of the Company’s
coated steel products
to the related party
Sale of the Company’s
coated steel products
to the related party

Millions of yen
Resulting accounting balance
2016

Account

2016¥64,296

Accounts receivable¥7,608¥37,973

Accounts receivable¥4,425Material transactions of the Company and the consolidated subsidiaries with related companies and individuals, excludingtransactions with consolidated subsidiaries which are removed from the consolidated financial statements and other than those
disclosed elsewhere in these financial statements, for the years ended March 31, 2017 and 2016 are as follows:(Year ended March 31, 2017)
Millions of yen/Thousands of U.S. dollars
Resulting accounting balance
Transaction
Name ofRelatedcompany
Nihon TeppanCo., Ltd.

Paid-in capital

Principal
business¥1,300 million
Sale of$11,587 thousand coated steel

Equity ownership
percentage at
Mar. 31, 2017
50.0%

Description of thetransactions
Purchase of thesteel products by
Tsukiboshi Shoji
Co., Ltd.

2017

Account

2017¥17,162$152,972

Accounts payable¥7,178$63,980(Year ended March 31, 2016)
Millions of yen/Thousands of U.S. dollars
Resulting accounting balance
Transaction
Name ofRelatedcompany
Nihon TeppanCo., Ltd.

Paid-in capital¥1,300 million

Principal
business
Sale ofcoated steel

Equity ownership
percentage at
Mar. 31, 2016
50.0%

Description of thetransactions
Purchase of thesteel products by
Tsukiboshi Shoji
Co., Ltd.

31

2016

Account¥18,232

Accounts payable2016¥6,855

The significant related company in the year ended March 31, 2017 and 2016 is Acerinox, S.A. Summary of the consolidated
financial condition of Acerinox, S.A. are as follows:
Millions of euros
2016
2017
Total current assets
€
1,808
€
2,079
Total non-current assets
2,317
2,297
Total current liabilities
1,106
1,095
Total non-current liabilities
995
1,191
Total equity
2,023
2,090
Revenues
Profit from ordinary activities
Net profit attributable to the Group

3,968
126
79

4,221
66
32

24. Business Combinations(Transactions under Common Control)
1.

2.

Outline of the company split(1) Name of the Combined Entity and nature of its business operations
The Company’s steel plate production and sales business which engages in the coatings and building materials market
and includes the Ichikawa Works(2) Date of the business combination
April 1, 2016
(3) Legal form of the business combination
Absorption-type company split whereby the Company is the splitting company, and Nisshin A&C Co., Ltd. is the
succeeding company in the absorption-type split(4) New trade nameNisshin Steel A&C Co., Ltd.
(5) Main reason for the business combination
The business combination is being undertaken so that in the steel plate production and sales business serving thecoatings and building materials market, which is the Company’s founding business, the Company will be able toswiftly address needs and create a business structure that makes product and market development possible. To that end,
the Group will strengthen the Combined Entity’s cost competitiveness, development prowess and marketing strengths,
by launching a company that provides one-stop solutions which enlist the materials development prowess, costcompetitiveness and sales channels of the Combined Entity held by the Company, and accordingly bringing suchstrengths together with Nisshin A&C Co., Ltd.’s capacity for serving manufacturers of housing materials through its
light-gauge steel shapes, and its appeal to building contractors and other such entities, which it has amassed through its
operations involving sales of metal siding.
The newly launched company will create construction demand on its own by offering new forms of value tocustomers, and will accordingly strive to act as an innovative steel building materials manufacturer that conceives newfeatures and added value with respect to buildings.
Accounting Method
This acquisition is accounted for as transactions under common control pursuant to the “Accounting Standard for Business
Combination” (ASBJ Statement No. 21, September 13, 2013) and the “Revised Guidance on Accounting Standard forBusiness Combinations and Accounting Standard for Business Divestitures” (ASBJ Guidance No. 10, September 13, 2013).

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25. Other
Information on the consolidated cumulative and quarterly results for the year ended March 31, 2017 is as follows:
Millions of yen(except per share)
1Q
2Q
3Q
Cumulative results
Net sales¥ 119,408¥ 251,700¥ 381,708¥
Profit (loss) before provision for income taxes(1,445)692
1,971
Profit (loss) attributable to owners of parent(1,544)32
231
Profit (loss) attributable to owners of parent¥(14.09)
¥
0.30
¥
2.11
¥
per share*1
Quarterly results
Profit (loss) attributable to owners of parent¥(14.09)
¥
14.39
¥
1.82
¥
per share*1
Thousands of U.S. dollars(except per share)
2Q
3Q

1Q
Cumulative results
Net sales
Profit (loss) before provision for income taxes
Profit (loss) attributable to owners of parent
Profit (loss) attributable to owners of parent
per share*1
Quarterly results
Profit (loss) attributable to owners of parent
per share*1

4Q
525,563
5,051
1,672
15.26
13.15

4Q

$ 1,064,337(12,879)(13,762)$ 2,243,515
6,168
285

$ 3,402,335
17,5682,059$ 4,684,579
45,021
14,903$(0.12)

$

0.00

$

0.01

$

0.13

$

(0.12)

$

0.12

$

0.01

$

0.11

*1. Per share amounts are in yen and U.S. dollars.

26. Major Subsequent Events(Company split)
On April 1, 2017, the Company conducted an absorption-type company split in which the assets, liabilities, and rights andobligations related to the Company’s stainless steel pipe and tube production business were split and succeeded to its wholly
owned subsidiary, Nisshin Stainless Steel Tubing Co., Ltd.
Transactions under Common Control
1. Outline of the company split(1) Name of the Combined Entity and nature of its business operations
The assets, liabilities, and rights and obligations related to the Company’s stainless steel pipe and tube production
business(2) Date of the business combination
April 1, 2017(3) Legal form of the business combination
Absorption-type company split whereby the Company is the splitting company and Nisshin Stainless Steel Tubing Co.,
Ltd. is the succeeding company(4) New trade nameNisshin Stainless Steel Tubing Co., Ltd.
(5) Other items related to the outline of the transaction
To respond to the drastically changing steel business environment, we further enhance the competitiveness of theGroup’s stainless steel pipe and tube business by succeeding the assets, etc. related to the stainless steel pipe and tube
production business owned by the Company to Nisshin Stainless Steel Tubing Co., Ltd., which was newly launched on
April 1, 2014 by spinning off the stainless steel pipe and tube business, one of the Company’s core businesses, as anindependent company.
2. Summary of planned accounting method
This acquisition will be accounted for as transactions under common control pursuant to the “Accounting Standard forBusiness Combination” (ASBJ Statement No. 21, September 13, 2013) and the “Revised Guidance on Accounting Standard
for Business Combinations and Accounting Standard for Business Divestitures” (ASBJ Guidance No. 10, September 13,2013).

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34

Board of Directors, Corporate Auditors and Executive Officers(As of June 27, 2017)
Directors

Kinya Yanagawa *1

Toshinori Miki
1

Audit and Supervisory Board Members

Katsuhisa Miyakusu *Hideo Tanaka *1

Nobuhiro Miyoshi *1

Naoki Konno

Toshiaki Naganuma

Tetsuo Kaharu

Sonoko Hatchoji

Isao Endo

Kazuhisa Obama *2

Yukihiro Ito

Tatsu Katayama

Manabu Uehara

President and Chief Executive Officer

Kinya Yanagawa

Vice-President and Executive Officers

Katsuhisa Miyakusu

Hideo Tanaka

Nobuhiro Miyoshi
Managing Executive Officers

Naoki Konno

Toshiaki Naganuma

Tetsuo Kaharu

Masahiro Sasaki

Takayuki Kondo

Junya Hayakawa

Shigeru Matsunaga

Kiyoshi Yasui

Atsushi Tsuchiya

Yoichi Tsunoda*1 Representative Director*2 Senior Audit and Supervisory Board Member

Investor Information
Nisshin Steel Co., Ltd.
Registered Head Office

Shin Kokusai Building, 4-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo
100-8366, Japan
Telephone: (81)-3 3216-5566 Facsimile: (81)-3 3216-5546

Year of Establishment

2012

Common Stock

Authorized: 430,000 thousand shares(As of March 31, 2017)

Issued: 109,843 thousand shares
Capital: ¥30,000,000 thousand

Common Stock Price Range(Tokyo Stock Exchange)

2017

2016

High

Low

High

Low

First Quarter¥ 1,539¥ 1,238¥ 1,757¥ 1,423

Second Quarter

1,387

1,213

1,559

991

Third Quarter

1,553

1,308

1,425

1,049

Fourth Quarter

1,660

1,406

1,446

1,077

Note: Years ended March 31.
Number of Shareholders

37,283

Independent Certified Public Accountants

Ernst & Young ShinNihon LLC

Inquiries:
Secretariat & Public Relations Team
General Administration Department
Nisshin Steel Co., Ltd.
Shin Kokusai Building, 4-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo 100-8366, Japan
Telephone: (81)-3 3216-5566 Facsimile: (81)-3 3216-5546

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