YEAR ENDED MARCH 31, 2018

ICOM INCORPORATED

Financial Highlights
ICOM INCORPORATED AND SUBSIDIARIES
Years ended March 31, 2018, 2017 and 2016
Thousands of
U.S. dollars

Millions of yen

Net sales
Operating income
Income before income taxes
Net income
Net income attributable to owners of parent¥

Total assets¥

Amounts per share:
Net assets
Net income – basic
Net income – diluted
Cash dividends

2018
24,881
791
877
626
626
59,222¥

2017
24,092
732
724
474
474

¥

¥

58,324¥

2016
26,875
2,368
2,349
1,660
1,660

2018
$ 234,218
7,446
8,256
5,893
5,893

59,201$ 557,488

Yen¥ 3,654.65
42.26
–
30.00

U.S. dollars¥ 3,625.42
31.98
–
20.00

¥ 3,613.66
112.03
–
36.00

$

34.40
0.40
–
0.28

Notes:
1. All dollar amounts herein refer to U.S. dollars translated from Japanese yen at ¥106.23 = U.S.$1.00, the exchange rate prevailing on March 31, 2018.
2. Amounts shown in millions of yen and thousands of dollars are rounded off to the nearest million or thousand.

Net Sales

Operating Income(Millions of yen)

(Millions of yen)

2,368
28,00026,8752,500
2,000
24,881

26,0001,500

24,092

732

791

2017

2018

1,000

24,000500
022,000
2016

2017

2016

2018

Profit attributable to owners of parent

Total Assets(Millions of yen)

(Millions of yen)

2,000

1,660

59,201

58,3242016

2017

59,22260,00058,0001,500

56,000
626

1,000

474

54,00052,000500
50,00048,000

0
2016

2017

2018

2018

ICOM INCORPORATED ANNUAL REPORT 2018

1

Operating Highlights
GEOGRAPHICAL SEGMENT INFORMATION
Years ended March 31, 2018 and 2017
Millions of yen

Net sales
2018
2017¥ 21,758¥ 20,776
7,872
7,325
1,235
1,070
1,445
1,272
(7,429)(6,351)¥ 24,881¥ 24,092

Japan
North America
EuropeAsia & Oceania
Eliminations
Consolidated total

Thousands of U.S. dollars

Operating income (loss)
2018
2017
¥ 895
¥ 500
(27)
(37)
71
36
61
31
(209)
202
¥ 791
¥ 732

Net sales
2018$ 204,820
74,103
11,626
13,602(69,933)$ 234,218

Operating income(loss)
2018$ 8,425
(255)
669
574
(1,967)$ 7,446

Notes:
1. All dollar amounts herein refer to U.S. dollars translated from Japanese yen at ¥106.23 = U.S.$1.00, the exchange rate prevailing on March 31, 2018.
2. Amounts shown in millions of yen and thousands of dollars are rounded off to the nearest million or thousand.

Net Sales(Millions of yen)Japan

25,000

North America

21,758

20,776

Europe20,000Asia & Oceania

15,000
7,872

7,325

10,000

1,070

5,000

1,235 1,445

1,272

0
2017

2018

Operating Income (Loss)(Millions of yen)

Japan

895

North America

1,000Europe500

Asia & Oceania

500

36

31

△ 27 71 61

0

△ 37
(500)
2017

2018

ICOM INCORPORATED ANNUAL REPORT 20182

Operating Highlights
OVERSEAS SALES
Years ended March 31, 2018 and 2017
Millions of yen

2018 (Unaudited)¥ 7,154
28.8%
3,969
15.9
4,904
19.7
795
3.2
16,822
67.6
8,059
32.4
¥ 24,881
100.0%

North America
EuropeAsia & Oceania
Other
Overseas total
Domestic total
Consolidated total

Thousands of U.S. dollars

2017¥ 6,504
27.0%
3,592
14.9
5,345
22.2
680
2.8
16,121
66.9
7,971
33.1
¥ 24,092
100.0%

2018 (Unaudited)$ 67,344
37,362
46,164
7,484
158,354
75,864$ 234,218

Notes:
1. All dollar amounts herein refer to U.S. dollars translated from Japanese yen at ¥106.23 = U.S.$1.00, the exchange rate prevailing on March 31, 2018.
2. Amounts shown in millions of yen and thousands of dollars are rounded off to the nearest million or thousand.

Net Sales 2017

Europe14.9%

Overseas
Sales

North America
27.0%
Other
2.8%

Domestic Sales
33.1%

Asia &
Oceania
22.2%

Net Sales 2018

Overseas
Sales

Domestic Sales
32.4%

North America
28.8%

Other
3.2%

Europe
15.9%

Asia &
Oceania
19.7%

ICOM INCORPORATED ANNUAL REPORT 2018

3

ICOM INCORPORATED AND SUBSIDIARIES

Consolidated Balance Sheet
March 31, 2018

Thousands of
U.S. dollars(Note 1)Millions of yen

AssetsCurrent assets:
Cash and deposits (Notes 4, 6 and 12)
Marketable securities (Notes 4, 6 and 7)
Notes and accounts receivable (Notes 5 and 6)
Allowance for doubtful accounts

2018

2017

2018

Total current assets¥ 30,442
–
5,098
(19)
5,079
6,965
512
2,529
45,527¥ 31,091
300
4,686
(17)
4,669
6,422
331
1,766
44,579$ 286,567–
47,990(179)
47,811
65,565
4,820
23,807428,570

Property, plant and equipment:
Land
Buildings and structures
Machinery and equipment
Vehicles and otherConstruction in progress
Property, plant and equipment, at costLess accumulated depreciation
Property, plant and equipment, net (Note 16)

4,133
6,759
12,491203
1223,598(16,437)
7,161

4,150
6,800
12,693202
1123,856(16,377)
7,479

38,906
63,626
117,584
1,911
113
222,140(154,730)
67,410Investments and other assets:
Investments in securities (Notes 6 and 7)
Investments in affiliates
Other
Other investments
Deferred income taxes (Note 10)
Intangible assets (Note 16)
Allowance for doubtful accounts
Total investments and other assets
Total assets (Note 16)

74
3,299
2,663
428
125
(55)
6,534
¥ 59,222

96
2,788
2,713
578
146
(55)
6,266
¥ 58,324

697
31,05525,068
4,029
1,177
(518)
61,508$ 557,488

Inventories (Note 8)
Deferred income taxes (Note 10)
Other current assets

See accompanying Notes to consolidated financial statements.

ICOM INCORPORATED ANNUAL REPORT 2018

4

ICOM INCORPORATED AND SUBSIDIARIES

Consolidated Balance Sheet
March 31, 2018

Thousands of
U.S. dollars(Note 1)Millions of yen

Liabilities and net assets
Current liabilities:
Accounts payable - trade (Note 6)
Accounts payable - otherAccrued income taxes (Note 10)
Accrued expenses
Accrued bonuses
Warranty reserves
Other current liabilities

2018

2017

2018

Total current liabilities¥ 1,409
585
376
572
445
52
115
3,554

¥ 1,154
442
26
558
396
48
122
2,746

$ 13,264
5,507
3,539
5,385
4,189
490
1,083
33,457Long-term liabilities:
Deferred income taxes (Note 10)
Liability for retirement benefits (Note 9)
Other long-term liabilities
Total long-term liabilities

18
936
562
1,516

21
1,268
568
1,857

169
8,811
5,289
14,2697,081
10,44936,516

7,081
10,44936,18766,657
98,362
343,745(105)
53,941(104)
53,613(988)
507,776

104
145
(38)
211
54,152¥ 59,222

22
338
(252)
108
53,721¥ 58,324

979
1,365
(358)
1,986
509,762$ 557,488

Net assets:
Shareholders’ equity (Note 11):
Common stock:
Authorized – 34,000,000 shares;
14,850,000 shares in 2018 and 2017
Issued –Capital surplus
Retained earnings (Note 18)
Less treasury stock, at cost:
32,543 shares in 2018 and 32,190 shares in 2017
Total shareholders’ equity
Accumulated other comprehensive income (Note 14):
Net unrealized holding gain on securities (Note 7)
Translation adjustments
Retirement benefit liability adjustments (Note 9)
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets
See accompanying Notes to consolidated financial statements.

ICOM INCORPORATED ANNUAL REPORT 2018

5

ICOM INCORPORATED AND SUBSIDIARIES

Consolidated Statement of Income
Year ended March 31, 2018
Thousands of
U.S. dollars(Note 1)Millions of yen

Net sales (Note 16)
Cost of sales (Notes 8 and 16)
Gross profit

2018¥ 24,881
14,366
10,5152017¥ 24,092
14,017
10,0752018$ 234,218
135,235
98,983

9,724
791

9,343
732

91,537
7,446

103
21
104
3
(160)
(21)
36
86
877

96
56
(57)
1
(146)
–
42
(8)
724

970
198
979
28
(1,506)
(198)
339
810
8,256

416
(165)
251
626
626

212
38
250
474
474

3,916
(1,553)
2,363$ 5,893$ 5,893

Selling, general and administrative expenses(Notes 13 and 16)
Operating income (Note 16)
Other income (expenses):
Interest and dividend income
Gain on sales of investment in securities, net (Note 7)
Foreign exchange gain (loss), net
Gain on sales of property, plant and equipment
Sales discounts
Equity in losses of affiliates
Other, net
Profit before income taxes
Income taxes (Note 10):
Current
DeferredProfitProfit attributable to owners of parent (Note 15)

¥
¥

¥
¥

See accompanying Notes to consolidated financial statements.

ICOM INCORPORATED ANNUAL REPORT 2018

6

ICOM INCORPORATED AND SUBSIDIARIES

Consolidated Statement ofComprehensive Income
Year ended March 31, 2018
Thousands of
U.S. dollars(Note 1)Millions of yen

ProfitOther comprehensive income (Note 14):
Net unrealized holding gain on securities
Translation adjustments
Retirement benefit liability adjustments
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:
Owners of parent

2018
¥ 626

2017
¥ 474

2018
$ 5,893

82
(193)
214
103
¥ 729

2
(58)
171
115
¥ 589

772
(1,817)2,014
969$ 6,862

¥ 729

¥ 589

$ 6,862

See accompanying Notes to consolidated financial statements.

ICOM INCORPORATED ANNUAL REPORT 2018

7

ICOM INCORPORATED AND SUBSIDIARIES

Consolidated Statement of
Changes in Net Assets
Year ended March 31, 2018
Millions of yen

Balance at April 1, 2016
Profit attributable toowners of parent
for the year
Cash dividends
Purchases of treasury
stock
Other changes
Balance at April 1, 2017
Profit attributable toowners of parent
for the year
Cash dividends
Purchases of treasury
stock
Other changes
Balance at March 31, 2018

Number ofshares in
issue

Commonstock

CapitalsurplusRetainedearnings

Treasurystock, at costNet
unrealized
holdinggain
on securities

14,850,000¥ 7,081¥ 10,449¥ 36,128¥ (104)

¥ 20

¥ 396

¥ (423)¥ 53,547

–
–

–
–

–
–

474
(415)

–
–

–
–

–
–

–
–

474
(415)

–
–

–
–

–
–

–
–

(0)
–

–
2

–
(58)

–
171

(0)
115

14,850,000¥ 7,081¥ 10,449¥ 36,187¥ (104)

¥ 22

¥ 338

¥ (252)¥ 53,721

–
–

–
–

–
–

626
(297)

–
–

–
–

–
–

–
–

626
(297)

–
–

–
–

–
–

–
–

(1)
–

–
82

–
(193)

–
214

(1)
103

14,850,000¥ 7,081¥ 10,449¥ 36,516¥ (105)

¥ 104

¥ 145

¥ (38)¥ 54,152

Translation
adjustments

Retirement
benefit liability
adjustments

Total net
assetsTranslation
adjustments

Retirement
benefit liability
adjustments

Total net
assetsThousands of U.S. dollars (Note 1)

Balance at April 1, 2017
Profit attributable toowners of parent
for the year
Cash dividends
Purchases of treasury
stock
Other changes
Balance at March 31, 2018

Commonstock

CapitalsurplusRetainedearnings

Treasurystock, at costNet
unrealized
holdinggain
on securities$ 66,657$ 98,362$ 340,648$ (979)$ 207$ 3,182$ (2,372)$ 505,705

–
–

–
–

5,893
(2,796)

–
–

–
–

–
–

–
–

5,893
(2,796)

–
–

–
–

–
–

(9)
–

–
772

–
(1,817)

–
2,014

(9)
969

$ 66,657$ 98,362$ 343,745$ (988)$ 979$ 1,365(358)$ 509,762$

See accompanying Notes to consolidated financial statements.

ICOM INCORPORATED ANNUAL REPORT 2018

8

ICOM INCORPORATED AND SUBSIDIARIES

Consolidated Statement of Cash Flows
Year ended March 31, 2018
Thousands of
U.S. dollars(Note 1)Millions of yen

2018
Operating activities:
Profit before income taxes
Adjustments for:
Depreciation and amortization
Interest and dividend income
Foreign exchange loss (gain), net(Increase) decrease in notes and accounts receivable
Increase in inventories
Increase (decrease) in accounts payable - trade
Other, net
Subtotal
Income taxes paid
Net cash provided by (used in) operating activities
Investing activities:
Increase in time deposits with original
maturities in excess of three months
Redemption of marketable securities
Purchases of property, plant and equipment
Purchases of intangible assets
Purchases of investments in securities
Proceeds from sales and redemption of investments insecurities
Interest and dividend income received
Other, net
Net cash used in investing activities
Financing activities:
Purchases of treasury stock
Cash dividends paid
Net cash used in financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 4)

¥

877

2017
¥

724

2018
$

8,256

935
(103)
51
(478)
(641)
335
86
1,062
(4)
1,058

987
(96)
(59)
432
(81)
(164)
(2,173)
(430)
(436)
(866)

8,802
(970)
480
(4,500)(6,034)
3,154
810
9,998
(38)
9,960

(79)
301
(660)
(57)
(844)

(1,276)
399
(675)
(58)
(645)

(744)
2,834
(6,213)(537)(7,945)

465
111
(591)
(1,354)

598
110
(407)
(1,954)

4,377
1,045
(5,563)(12,746)

(1)
(297)
(298)

(0)
(415)
(415)

(9)
(2,796)(2,805)(98)(692)
29,011¥ 28,31951(3,184)32,195¥ 29,011(923)(6,514)
273,096$ 266,582

See accompanying Notes to consolidated financial statements.

ICOM INCORPORATED ANNUAL REPORT 2018

9

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
March 31, 2018

1. Basis of Preparation
The accompanying consolidated financial statements of ICOM INCORPORATED (the “Company”) and its subsidiaries areprepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects as to the applicationand disclosure requirements of International Financial Reporting Standards, and have been compiled from the consolidated financial
statements prepared by the Company as required by the Financial Instruments and Exchange Act of Japan.
In preparing the accompanying consolidated financial statements, certain reclassifications have been made to the consolidated
financial statements issued domestically for the convenience of readers outside Japan.
In addition, the notes to the consolidated financial statements include certain information which is not required under accounting
principles generally accepted in Japan but is presented herein as additional information.
The translation of yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside Japan, as amatter of arithmetic computation only, and has been made at ¥106.23 = U.S.$1.00, the approximate rate of exchange in effect on
March 31, 2018. This translation should not be construed as a representation that yen have been, could have been, or could in the
future be, converted into U.S. dollars at the above or any other rate.

2. Summary of Significant Accounting Policies(a) Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company and the companies which it
controls directly or indirectly. Two companies over which the Company exercises significant influence in terms of theiroperating and financial policies have been included in the accompanying consolidated financial statements on an equity basis.
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealizedintercompany gains and losses among the Company and the subsidiaries have been entirely eliminated.
The financial statements of certain consolidated subsidiary whose fiscal year end is December 31 has been included inconsolidation on the basis of a full fiscal year closing on March 31 for consolidation purposes.

(b) Cash and cash equivalents
For purposes of the consolidated statements of cash flows, cash and cash equivalents consist of cash on hand, deposits withbanks withdrawable on demand, and short-term investments which are readily convertible to cash subject to an insignificant riskof any changes in their value and which were purchased with an original maturity of three months or less.

(c) Foreign currency translation
The balance sheet accounts of the overseas subsidiaries are translated into yen at the rates of exchange in effect at the balance
sheet date except that the components of net assets are translated at their historical exchange rates. Adjustments resulting fromtranslating accounts denominated in foreign currencies are not included in the determination of profit in the accompanying
consolidated financial statements, but are reported as “Translation adjustments,” a component of net assets.
Revenue and expense accounts are translated at the average rates of exchange in effect during the year.
All monetary assets and liabilities denominated in foreign currencies are translated into yen at the rates of exchange in effectat the balance sheet date, except that receivables hedged by qualified forward foreign exchange contracts are translated at thecorresponding contract rates. Gain or loss on each translation is credited or charged to income.

(d) Marketable securities and investments in securities
In general, securities are classified into three categories: trading securities, held-to-maturity debt securities or other securities.
Trading securities, consisting of debt and marketable equity securities, are stated at fair value. Gain or loss, both realized andunrealized, are credited or charged to income. Held-to-maturity debt securities are stated at their amortized cost. Marketablesecurities classified as other securities are carried at fair value with any changes in unrealized holding gain or loss, net of theapplicable income taxes, reported as a separate component of net assets. Non-marketable securities classified as othersecurities are carried at cost determined by the moving average method.
Securities held by the Company and its subsidiaries including investments in securities, which are not accounted for on an
equity basis, are all classified as “other securities” and have been accounted for as outlined above.

ICOM INCORPORATED ANNUAL REPORT 201710

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (continued)(e) Inventories
Inventories are mainly stated at the lower of cost or net selling value, cost being determined by the moving average method,
except for goods held by certain overseas subsidiaries which are valued at the lower of cost or market, cost being determined by
the moving average method.

(f) Property, plant and equipment (except for leased assets)
Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment in the Company and its
domestic subsidiaries is computed principally by the declining-balance method over the estimated useful lives of the respective
assets as prescribed in the Corporation Tax Law of Japan, except that the straight-line method is applied to buildings (other thanstructures attached to the buildings) acquired on or after April 1, 1998 and structures attached to buildings and other structuresacquired on or after April 1, 2017. The overseas consolidated subsidiaries calculate depreciation by the straight-line method.

(g) Intangible assets (except for leased assets)
Amortization of intangible assets is calculated by the straight-line method over the estimated useful lives of the respective
assets as prescribed in the Corporation Tax Law of Japan. Expenditures related to the development of computer software
intended for internal use are charged to income when incurred, except if it is anticipated that this software will contribute to thegeneration of income or to future cost savings. Such expenditures are capitalized as assets and amortized by the straight-line
method over an estimated useful life of 3 or 5 years.

(h) Leased assets
Leased assets are depreciated by the straight-line method over respective lease periods with no residual value.

(i) Allowance for doubtful accounts
The allowance for doubtful accounts is computed based on the historical ratio of bad debts and an estimate of certain
uncollectible amounts determined after an analysis of specific individual receivables.

(j) Accrued bonuses
Accrued bonuses are calculated based on the estimated amount to be paid to employees after the balance sheet date, which are
attributable to the current fiscal year.

(k) Warranty reserves
Warranty reserves for certain overseas subsidiaries are provided for anticipated future repair costs based on the historical ratio
calculated using product repair costs against net sales, which are attributable to the current fiscal year.

(l) Liability for retirement benefits
Liability for retirement benefits is provided mainly at an amount calculated based on the retirement benefit obligation less thefair value of the pension plan assets. The retirement benefit obligation is attributed to each period by the straight-line method
over the estimated remaining years of service of the eligible employees.
Actuarial gain or loss is being amortized in the year following the year in which the gain or loss is recognized by thestraight-line method over ten years, which is within the average remaining years of service of eligible employees.

ICOM INCORPORATED ANNUAL REPORT 201811

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (continued)(m) Hedge accounting
The Company utilizes derivative transactions in order to manage the risks arising from adverse fluctuation in foreign currency
exchange rates. In accordance with internal management rules, the Company enters into forward foreign exchange contracts
which fall within the Company’s foreign currency or foreign currency receivables holding limits. Derivative transactions are
not entered into for speculative purposes.
Under the accounting standard for financial instruments, gain or loss on derivatives designated as hedging instruments isdeferred until the loss or gain on the underlying hedged items is recognized. Forward foreign exchange contracts which meetcertain conditions are accounted for by a method under which the foreign currency deposits and receivables are translated attheir corresponding forward foreign exchange contract rates (“Allocation method.”)
The evaluation of effectiveness of such forward foreign exchange contracts is omitted because significant terms of thehedging instruments and underlying hedged items are the same and the Company assumes that movements in cash flows arecompletely offset.

(n) Distribution of retained earnings
Under the Companies Act of Japan and the Company’s Articles of Incorporation, the distribution of retained earnings withrespect to a given fiscal year end is made by resolution of the shareholders at a general meeting held subsequent to the close of
the financial period. The distribution of retained earnings with respect to interim financial periods is made by resolution of theBoard of Directors. (Please refer to Note 18.)

3. Accounting standards issued but not yet effective(a) Implementation Guidance on Tax Effect Accounting and Implementation Guidance on Recoverability ofDeferred Tax Assets(i) Overview
On February 16, 2018, the Accounting Standards Board of Japan (hereinafter referred to as the “ASBJ”) issued “Revised
Implementation Guidance on Tax Effect Accounting” (ASBJ Guidance No.28) and “Revised Implementation Guidance on
Recoverability of Deferred Tax Assets” (ASBJ Guidance No.26). The ASBJ made the following necessary revisions while
adhering fundamentally to the framework outlined in Practical Guidelines on Accounting Standards for Tax EffectAccounting.
The authority for providing related guidance has been transferred from the Japanese Institute of Certified Public
Accountants to the ASBJ.
(Major revised accounting treatments)
Accounting treatment of taxable temporary differences related to investments in subsidiaries, etc. when an
entity prepares separate financial statements
Accounting treatment related to the recoverability of deferred tax assets in entities that qualify as Category 1
was clarified(ii) Scheduled date of adoption
The Company expects to adopt the revised implementation guidance from the beginning of the fiscal year ending March
31, 2019.

(iii) Impact of the adoption of implementation guidance
The Company is currently evaluating the effect of the adoption of the revised implementation guidance on its
consolidated financial statements.

ICOM INCORPORATED ANNUAL REPORT 2018

12

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
3. Accounting standards issued but not yet effective (continued)(b) Accounting Standard and Implementation Guidance for Revenue Recognition(i) Overview
On March 30, 2018, the ASBJ issued “Accounting Standard for Revenue Recognition” (ASBJ Statement No.29) and“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No.30). The International
Accounting Standards Board (hereinafter referred to as the “IASB”) and the Financial Accounting Standards Board(hereinafter referred to as the “FASB”) in the United States co-developed comprehensive accounting standards for revenue
recognition and issued “Revenue from Contracts with Customers” (IFRS 15 by the IASB and Topic 606 by the FASB) in
May 2014. The ASBJ developed comprehensive accounting standards on revenue recognition and issued them inconjunction with the implementation guidance based on fact that IFRS 15 will be applied from fiscal years starting on orafter January 1, 2018 and Topic 606 will be applied from fiscal years starting after December 15, 2017.
As the basic policy in developing accounting standards for revenue recognition, the ASBJ defined the accounting
standard starting with incorporating the basic principles of IFRS 15 from a standpoint of comparability between financial
statements, which is one benefit of ensuring consistency with IFRS 15. Furthermore, the ASBJ added alternative
accounting treatment without impairing comparability when there are matters to be considered related to accounting
practices, etc. common in Japan.
(ii) Scheduled date of adoption
The Company expects to adopt the accounting standard and implementation guidance from the beginning of the fiscal
year ending March 31, 2022.
(iii) Impact of the adoption of accounting standard and implementation guidance
The Company is currently evaluating the effect of the adoption of the accounting standard and the implementation
guidance on its consolidated financial statements.

ICOM INCORPORATED ANNUAL REPORT 2018

13

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
4. Cash and Cash Equivalents
In the preparation of the consolidated statements of cash flows, the relationship between the items included in cash and cash
equivalents and the corresponding amounts reflected in the consolidated balance sheets at March 31, 2018 and 2017 is summarized asfollows:
Thousands of
U.S. dollars

Millions of yen

Cash and deposits
Marketable securities
SubtotalTime deposits with original maturities in excess of threemonthsMarketable securities with original maturities in excess of
three months
Cash and cash equivalents

¥
¥

¥

2018
30,442–30,442¥¥

2017
31,091300
31,391$$

2018
286,567–
286,567(2,123)(2,080)(19,985)–
28,319(300)
29,011–
266,582¥$

5. Notes Receivable Maturing on March 31, 2018
March 31, 2018, the end of the period, was a bank holiday. Notes receivable maturing on the day were settled on the following
business day. Therefore, notes in the amount of ¥8 million ($75 thousand) were included in the ending balance at March 31, 2018.

6. Financial Instruments(1) General informationi)

Policy for financial instruments
In consideration of plans for capital investment, which is mainly centered on radio manufacturing and sales, the Groupobtains necessary financing through its own funds. The Group manages surplus funds through financial assets that havehigh levels of liquidity. The Group uses derivatives for the purpose of reducing risk and does not enter into derivatives for
speculative or trading purposes.

ii) Types of financial instruments and related risk
Notes and accounts receivable are exposed to credit risk in relation to customers. In addition, the Group is exposed toforeign currency exchange rate fluctuation risk arising from trade receivables denominated in foreign currencies.
Marketable securities and investments in securities are exposed to market risk. Those securities are composed ofmainly corporate bonds in other securities and the shares of common stock of other companies with which it has business
relationships. Fair values of those securities are periodically reviewed and reported to board of directors meetings.
Most of trade accounts payable have payment due dates within two months. The Group is exposed to foreign currency
exchange rate fluctuation risk arising from those denominated in foreign currencies.
Regarding derivatives, the Group enters into forward foreign exchange contracts to reduce the foreign currency exchange
rate fluctuation risk arising from cash and deposits and receivables denominated in foreign currencies, and utilizes
compound financial instruments for the purpose of efficient management of surplus funds. Further information regarding
the method of hedge accounting, hedging instruments and hedged items, hedging policy, and the assessment of theeffectiveness of hedging activities can be found in “(m) Hedge accounting” in Note 2 “Summary of Significant Accounting
Policies”.

ICOM INCORPORATED ANNUAL REPORT 201814

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
6. Financial Instruments (continued)(1) General information (continued)iii) Risk management for financial instruments(a) Monitoring of credit risk (the risk that customers or counterparties may default)
In accordance with the internal policies for managing credit risk of the Group arising from trade receivables, thecredit department monitors credit worthiness of main customers periodically, in principle, and monitors due dates andoutstanding balances by customer. In addition, the Group is making efforts to identify and mitigate risks of bad debt
from customers who have financial difficulties.
In accordance with the internal policies for security management, the Group only acquires corporate bonds or othersecurities with high credit ratings. Accordingly, the Group believes that the credit risk deriving from such debt
securities is insignificant.
The Group also believes that the credit risk of derivatives is insignificant as the Group enters into derivativetransactions only with financial institutions with high credit ratings.
(b) Monitoring of market risks (the risks arising from fluctuations in foreign exchange rates, interest rates and others)
For cash and deposits denominated in foreign currencies, in principle, for a portion of receivables denominated inforeign currencies, the Group identifies the foreign currency exchange risk by each currency and enters into forward
foreign exchange contracts to hedge such risk.
For marketable securities and investments in securities, the Group periodically reviews the fair values of suchfinancial instruments and the financial position of the issuers. In addition, the Group continuously evaluates whether
securities should be maintained taking into account their fair values and the relationships with the issuers.
For derivative transactions, the accounting department of the Company enters into and manages transactions, and a
representative director, in advance, approves them within the limits reported at the Board of Directors meeting.
Results of derivative transactions are reported at the monthly Board of Directors meetings. The consolidated
subsidiaries do not enter into derivative transactions.
(c) Monitoring of liquidity risk (the risk that the Group may not be able to meet its obligations on the scheduled due dates)
Based on reports from each division, the accounting department of the Company prepares and updates its cash flowplans on a timely basis and maintains liquidity of assets for payment to manage liquidity risk. The consolidated
subsidiaries monitor liquidity risk in the same manner.
iv) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted
market price available, fair value is reasonably estimated. Since various assumptions and factors are reflected inestimating the fair value, different assumptions and factors could result in different fair values. In addition, the notionalamounts of derivatives in Note 12. “Derivatives and Hedging Activities” are not necessarily indicative of the actual
market risk involved in derivative transactions.

ICOM INCORPORATED ANNUAL REPORT 2018

15

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
6. Financial Instruments (continued)(2) Estimated fair value of financial instruments
The carrying value, fair value and unrealized gain (loss) of the financial instruments on the consolidated balance sheets at
March 31, 2018 and 2017 are shown in the following table. The following table does not include financial instruments forwhich it is extremely difficult to determine the fair value. (Please refer to Note ii below).
Millions of yen

2018
Carrying
value

2017

Fair value

Unrealized
gain (loss)¥¥

Carrying
value

Fair value

Unrealized
gain (loss)¥¥

Assets(1) Cash and deposits(2) Notes and accounts
receivable(3) Marketable securities andinvestments in securities
Total assets

¥

3,237
38,777¥

3,237
38,777

¥

–
–

¥

2,926
38,703¥

2,926
38,703¥––Liabilities(1) Accounts payable - trade
Total liabilities

¥
¥

1,409
1,409

¥
¥

1,409
1,409

¥
¥

–
–

¥
¥

1,154
1,154

¥
¥

1,154
1,154

¥
¥

–
–

¥

30,442
5,098

30,442
5,098

–

¥

–

31,091
4,686

31,091
4,686––

Thousands of U.S. dollars

2018
Carrying
value

Fair value

Unrealized
gain (loss)$$

Assets(1) Cash and deposits(2) Notes and accounts
receivable(3) Marketable securities andinvestments in securities
Total assets$

30,472365,029$

30,472365,029$––

Liabilities(1) Accounts payable - trade
Total liabilities$$

13,264
13,264$$

13,264
13,264

$
$

–
–

$

286,567
47,990286,567
47,990––ICOM INCORPORATED ANNUAL REPORT 201816

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
6. Financial Instruments (continued)(2) Estimated fair value of financial instruments (continued)
Notes:i) Methods to determine the fair value of financial instruments are as follows:
Assets(1) Cash and deposits, and (2) Notes and accounts receivable
Since these items are settled in a short period of time, their carrying value approximate the fair value.
(3) Marketable securities and investments in securities
The fair value of equity securities is based on quoted market prices. The fair value of debt securities is based oneither quoted market prices or the prices provided by the financial institutions making markets for these securities.
For information on securities classified by holding purpose, please refer to Note 7.
Liabilities(1) Accounts payable - trade
Since this item is settled in a short period of time, its carrying value approximates the fair value.
ii) Financial instruments for which it is extremely difficult to determine the fair value are as follows:
Thousands of
U.S. dollars

Millions of yen

Unlisted equity securities

¥

2018
136

¥

2017
258

$

2018
1,280

Since there is no market price for unlisted equity securities and it is difficult to determine the fair value, they are notincluded in securities” in the preceding table estimated fair value.

ICOM INCORPORATED ANNUAL REPORT 201817

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
6. Financial Instruments (continued)(3) Redemption schedule
The redemption schedule for financial instruments receivable and marketable securities and investments in securities withmaturity dates is summarized as follows:
Millions of yen

Due within
one year
Cash and deposits
Notes and accounts
receivable
Marketablesecurities andinvestments insecurities:
Other securities
with maturity
dates
Corporate bonds
Other
Total

¥

¥

30,4422018
Due after
Due after
one yearfive years
throughthrough ten
five years
years
¥
–
¥
–

31,091

Due after
one yearthroughfive years
¥
–

2017
Due after
five years
through ten
years
¥
–

Due after ten
years

Due within
one year¥¥–

Due after ten
years
¥

–

5,098

–

–

–

4,686

–

–

–

–
–
35,540

400
–
400

1,300
–
1,300

1,000
–
1,000

200
100
36,077

400
–
400

900
–
900

1,000
–
1,000

¥

¥

¥

¥

¥

¥

¥

Thousands of U.S. dollars

Cash and deposits
Notes and accounts
receivable
Marketablesecurities andinvestments insecurities:
Other securities
with maturity
dates
Corporate bonds
Other
Total

Due after
Due within
one year
one yearthroughfive years$
286,567 $–
47,990$––334,557 $2018
Due after
five years
through ten
years
$
–

Due after ten
years
$

–

–

–

–

3,765
–
3,765

12,238–
12,238

9,414
–
9,414

$

$

ICOM INCORPORATED ANNUAL REPORT 201818

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
7. Marketable Securities and Investments in Securities
Marketable securities and investments in securities classified as other securities at March 31, 2018 and 2017 are summarized asfollows:
Millions of yen

Carrying
value
Securities whose carrying value
exceeds their acquisition cost:
Equity securities¥
Corporate bonds
Subtotal
Securities whose carrying value
does not exceed their acquisition cost:
Equity securities
Corporate bonds
Subtotal
Total
¥

221
1,826
2,047

180
1,010
1,190
3,237

2018
Acquisition
cost

Unrealized
gain (loss)

¥

¥

¥

136
1,755
1,891

180
1,013
1,193
3,084

¥

85
71
156

–
(3)
(3)
153

Carrying
value

¥

¥

170
1,892
2,062

147
717
864
2,926

2017
Acquisition
cost

Unrealized
gain (loss)

¥

¥

¥

136
1,851
1,987

182
721
903
2,890

¥

34
41
75

(35)
(4)
(39)
36

Thousands of U.S. dollars

Carrying
value
Securities whose carrying value
exceeds their acquisition cost:
Equity securities$ 2,080
17,189Corporate bonds
Subtotal
19,269Securities whose carrying value
does not exceed their acquisition cost:
Equity securities
1,694
Corporate bonds
9,509
Subtotal
11,203
Total$ 30,472

2018
Acquisition
cost

Unrealized
gain (loss)

$

$

1,280
16,521
17,801

1,694
9,537
11,231$ 29,032

$

800
668
1,468

–
(28)
(28)
1,440

Since there is no market price for unlisted equity securities and it is difficult to determine the fair value, unlisted equity securities of¥136 million ($1,280 thousand) and ¥258 million at March 31, 2018 and 2017, respectively, are not included in the above table.
Sales of other securities for the years ended March 31, 2018 and 2017 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

Sales
Aggregate gain

¥

2018
64
23

¥

2017
98
56

$

2018
602
217

ICOM INCORPORATED ANNUAL REPORT 2018

19

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
8. Inventories
Inventories at March 31, 2018 and 2017 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Merchandise and finished products
Work in process
Raw materials and supplies
Total

¥

¥

2018
2,862
77
4,026
6,965

¥

¥

2017
3,107
67
3,248
6,422

$

$

2018
26,942725
37,89865,565

Cost of sales included loss on devaluation of inventories of ¥98 million ($923 thousand) and ¥50 million for the years ended
March 31, 2018 and 2017, respectively.

9. Retirement Benefits Plans(1) Outline of retirement benefits for employees
The Company and its domestic subsidiaries have employees’ defined benefit plans, i.e., corporate pension plans and lump-sum
payment plans.
The Company and its domestic subsidiaries pay additional retirement benefits to employees under certain circumstances.
Certain consolidated subsidiaries calculate the liability for retirement benefits based on the simplified method. Under thesimplified method retirement benefit obligation has been calculated based on the amount which would be payable at the year end
if all eligible employees terminated their services voluntarily.

(2) Liability for retirement benefits for the years ended March 31, 2018 and 2017i) The changes in retirement benefit obligation are outlined as follows (except for retirement benefit obligation
calculated by simplified method):Thousands of
U.S. dollars

Millions of yen

Retirement benefit obligation at beginning of year
Service cost
Interest cost
Actuarial (gain) loss
Retirement benefits paid
Retirement benefit obligation at end of year

¥

¥

2018
5,583
230
46
(25)
(78)
5,756

¥

¥

2017
5,327
222
44
77
(87)
5,583

$

$

2018
52,556
2,165
433
(236)
(734)
54,184ii) The changes in plan assets at fair value are outlined as follows (except for retirement benefit obligation calculated bysimplified method):Thousands of
U.S. dollars

Millions of yen

Plan assets at fair value at beginning of year
Expected return on plan assets
Actuarial gainContributions by the employer
Retirement benefits paid
Plan assets at fair value at end of year

¥

¥

2018
4,687
68
241
311
(78)
5,229

¥

¥

2017
4,208
74
184
308
(87)
4,687

$

$

2018
44,121
640
2,269
2,927
(734)
49,223ICOM INCORPORATED ANNUAL REPORT 201820

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
9. Retirement Benefits Plans (continued)(2) Liability for retirement benefits for the years ended March 31, 2018 and 2017 (continued)iii) The changes in retirement benefits obligation calculated by simplified method are outlined as follows:
Thousands of
U.S. dollars

Millions of yen

Retirement benefit obligation at beginning of year
Retirement benefits expenses
Retirement benefits paid
Retirement benefit obligation at end of year

¥

¥

2018
372
47
(10)
409

¥

¥

2017
332
49
(9)
372

$

$

2018
3,502
442
(94)
3,850

iv) The balance of retirement benefit obligation and plan assets at fair value, liabilities and assets recognized in the
consolidated balance sheets are outlined as follows:
Thousands of
U.S. dollars

Millions of yen

Funded retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Net amount of liabilities and assets recognized inconsolidated balance sheets
Liability for retirement benefits
Net amount of liabilities and assets recognized inconsolidated balance sheets
v)

¥

2018
5,756
(5,229)
527
409

¥

2017
5,583
(4,687)
896
372

936
936
¥

936

$

1,268
1,268
¥

1,268

2018
54,184(49,223)
4,961
3,850
8,811
8,811

$

8,811

The components of retirement benefit expenses for the years ended March 31, 2018 and 2017 are outlined as follows:
Thousands of
U.S. dollars

Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization:
Actuarial loss
Retirement benefit expenses

¥

¥

2018
277
46
(68)
43
298

¥

¥

2017
271
44
(74)
139
380

$

$

2018
2,607
433
(640)
405
2,805

ICOM INCORPORATED ANNUAL REPORT 201821

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
9. Retirement Benefits Plans (continued)(2) Liability for retirement benefits for the years ended March 31, 2018 and 2017 (continued)vi) The component of retirement benefit liability adjustments included in other comprehensive income before tax effects
are outlined as follows:
Thousands of
U.S. dollars

Millions of yen

Actuarial gain

¥
¥

2018
309
309

¥
¥

2017
246
246

$
$

2018
2,909
2,909

vii) The balance of retirement benefit liability adjustments recognized in accumulated other comprehensive income
before tax effects is outlined as follows:
Thousands of
U.S. dollars

Millions of yen

Unrecognized actuarial loss
Total
viii)

¥
¥

2018
(54)
(54)

¥
¥

2017
(363)
(363)

$
$

2018
(508)
(508)

The plan assets by major category consist of the following:

Bonds
Equities
Cash and deposits
Other
Total

2018
67.0%
22.0%
2.0%
9.0%
100.0%

2017
52.0%
47.0%
1.0%
–
100.0%The expected long-term rate of return on plan assets is determined as a result of consideration of both the portfolio
allocation to each class at present and in the future, and long-term expected rate of return from multiple plan assets atpresent and in the future.
ix) The assumptions used in accounting for the defined benefit plans for the years ended March 31, 2018 and 2017 are as
follows:

Discount rates
Expected long-term rates of return on plan assets
Expected rate of compensation increases

2018
0.8%
1.5%
1.5%

2017
0.8%
1.8%
1.6%

ICOM INCORPORATED ANNUAL REPORT 201822

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
10. Income Taxes
Income taxes applicable to the Company and its domestic subsidiaries comprise corporation, enterprise and inhabitants’ taxes
which, in the aggregate, resulted in a statutory tax rate of approximately 30.8% for the years ended March 31, 2018 and 2017,
respectively. The overseas subsidiaries are subject to income taxes of the respective countries in which they operate.
Reconciliations of the statutory tax rate and effective tax rates for the years ended March 31, 2018 and 2017 as a percentage of
profit before income taxes are as follows:

Statutory tax rates
Non-deductible entertainment expenses and other for income tax purposes
Per capita portion of inhabitants’ taxes
Tax credit for research and development costs
Differences in tax rates applicable to overseas subsidiaries
Income taxes for prior period
Unrealized gain on inventories
Equity in earnings of affiliates
Effect of changes in corporate tax rates
Valuation allowance
Effect of Tax Cuts and Jobs Act of 2017 in U.S.
Other
Effective tax rates

2018
30.8%
2.8
2.4
(9.8)
(0.2)
0.0
(7.0)
0.8
0.2
0.7
8.5
(0.6)
28.6%

2017
30.8%
2.0
2.9
(4.4)
(1.4)
(2.6)
8.8
(0.5)
–
–
–
(1.0)
34.6%

The significant components of deferred tax assets and liabilities at March 31, 2018 and 2017 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2018
Deferred tax assets:
Unrealized gain on inventories
Long-term accounts payable - otherAccrued bonuses
Accrued enterprise tax
Deferred revenue
Liability for retirement benefits
Allowance for doubtful accounts
Write down of investments in securities
Accrued legal welfare expense on bonuses
Net operating loss carryforward
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Gain on sales of property, plant and equipment
Depreciation
Accrued interest
Other
Total deferred tax liabilities
Net deferred tax assets

¥

¥

258
154
134
41
11
284
20
26
20
116
95
1,159
(44)
1,115

(146)
–
(1)
(46)
(193)
922

2017
¥

¥

128
154
121
17
27
386
21
23
18
194
96
1,185
(41)
1,144

(234)
(10)
(1)
(11)
(256)
888

2018
$

$

2,429
1,449
1,262
386
104
2,673
188
245
188
1,092
894
10,910(414)
10,496(1,374)–(9)(433)(1,816)
8,680

ICOM INCORPORATED ANNUAL REPORT 201823

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
10. Income Taxes (continued)
Change in deferred tax assets and deferred tax liabilities due to reduction in U.S. corporate income tax rate
On December 22, 2017, the Tax Cuts and Jobs Act was enacted in the United States, effectively lowering the federal corporate
income tax rate effective fiscal years beginning on or after January 1, 2018. Consequently, the federal corporate income tax rateapplicable to the Company’s consolidated subsidiaries in the U.S. was reduced from 35% to 21%. In addition, a tax burden
pertaining to certain non-U.S. based retained earnings of subsidiaries in the United States was incurred.
As a result, as of and for the year ended March 31, 2018, deferred tax assets have decreased by ¥69 million ($650 thousand) andincome taxes-deferred have increased by ¥69 million ($650 thousand).

11. Shareholders’ Equity
The Companies Act (the “Act”) provides that an amount equal to 10% of the amount to be disbursed as distributions of capitalsurplus (other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve and thelegal reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of the capital stock account. Such
distributions can be made at any time by resolution of the shareholders, or by the Board of Directors if certain conditions are met.
The Company’s legal reserve included in retained earnings at March 31, 2018 and 2017 amounted to ¥293 million ($2,758
thousand).
In addition, upon the issuance and sale of new shares of capital stock, the entire amount of the proceeds is required to be accounted
for as capital stock, although a company may, by resolution of the Board of Directors, account for an amount not exceeding one-halfof the proceeds of the sale of new shares as additional paid-in capital included in capital surplus.
Movements in treasury stock for the years ended March 31, 2018 and 2017 are summarized as follows:

April 1, 2017
Shares issued:
Common stock
Treasury stock:
Common stock

March 31, 2018

14,850,000––

14,850,000

32,190353–

32,543

April 1, 2016
Shares issued:
Common stock
Treasury stock:
Common stock

Number of shares
2018
Increase
Decrease

Number of shares
2017
Increase
Decrease

March 31, 2017

14,850,000––

14,850,000

32,083107–

32,190The increases in treasury stock were due to purchases of shares of less than one voting unit.

ICOM INCORPORATED ANNUAL REPORT 201824

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
12. Derivatives and Hedging Activities
There were no derivatives positions outstanding which qualify for hedge accounting at March 31, 2018.
The estimated fair value of the derivatives positions outstanding which qualify for hedge accounting at March 31, 2017 issummarized as follows:
Currency-related transactions
Millions of yen
2017
Method of hedge accounting
Allocation method forforward foreign exchange
contracts

Transaction
Forward foreignexchange
contracts
Sell:
EUR

Major
hedged item

Notional
amountMore than
one year

Fair value

Foreigncurrency
deposits

¥ 993

¥–

¥–

¥ 993

¥–

¥–

Total

The forward foreign exchange contracts that qualify for the allocation method and the underlying foreign currency deposits areaccounted for as a unit. Therefore, the fair value of the forward foreign exchange contracts is included in cash and deposits.

13. Research and Development Costs
Research and development costs included in selling, general and administrative expenses for the years ended March 31, 2018 and2017 are as follows:

Research and development costs¥

Millions of yen
2018
2017
3,412
¥
3,277

Thousands of
U.S. dollars
2018$32,119ICOM INCORPORATED ANNUAL REPORT 201825

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
14. Other Comprehensive Income
Reclassification adjustments and tax effects of other comprehensive income for the years ended March 31, 2018 and 2017 are as
follows:
Thousands of
U.S. dollars

Millions of yen

2018
Net unrealized holding gain on securities:
Amount arising during the year
Reclassification adjustments
Before tax effects
Tax effects
Net unrealized holding gain on securities

¥

2017

120
(2)
118
(36)
82

¥

2018

53
(50)
3
(1)
2

$

1,130
(19)
1,111
(339)
772

Translation adjustments:
Amount arising during the year

(193)

(58)

(1,817)Retirement benefit liability adjustments:
Amount arising during the year
Reclassification adjustments
Before tax effects
Tax effects
Retirement benefit liability adjustments
Total other comprehensive income

266
43
309
(95)
214
103

107
139
246
(75)
171
115

2,504
405
2,909
(895)
2,014
969

¥

¥

$

15. Amounts Per Share
Amounts per share at March 31, 2018 and 2017 and for the years then ended are as follows:Yen

Net assets
Profit attributable to owners of parent:
BasicCash dividends¥

2018
3,654.65
42.26
30.00

¥

U.S. dollars

20173,625.42
31.98
20.00

$

2018
34.40
0.40
0.28

Net assets per share is computed based on net assets and the number of shares of common stock outstanding at respective years end.
Basic profit attributable to owners of parent per share is computed based on the profit attributable to owners of parent available for
distribution to shareholders of common stock and the weighted-average number of shares of common stock outstanding during eachyear. Cash dividends per share represent the cash dividends declared as applicable to the respective fiscal years.

ICOM INCORPORATED ANNUAL REPORT 2018

26

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
16. Segment Informationi)Outline of segment information
The Company’s reporting segments are divisions of the Company for which separate financial information is available,
and whose operating results are reviewed regularly by the board of directors meeting of the Company (the highest
management decision making body) in order to allocate management resources and assess performance of operations.
The Company and its subsidiaries are primarily engaged in the manufacture and sale of telecommunications equipment.
The subsidiaries are independent business units and formulate comprehensive strategies for products and operate businessgeographically.
Therefore, the group consists of four segments based on sales by region. The four segments are “Japan,” “North
America,” which primarily includes the United States and Canada; “Europe,” which primarily includes Germany and Spain;and “Asia & Oceania,” which primarily includes Australia, Taiwan and China.

ii) Calculation methods used for sales, income or loss, assets and other items on each reporting segment
The accounting policies of the segments are substantially the same as those described in the significant accounting
policies in Note 2. Segment performance is evaluated based on operating income or loss. Intersegment sales arerecorded at the same prices applied in transactions with third parties.
iii) Information as to sales, income or loss, assets and other items on each reporting segment
Information by reporting segment for the years ended March 31, 2018 and 2017 are as follows:
Millions of yen

Japan
I. Net sales and operating income(loss)
Sales to third parties
Intersegment sales
Net sales
Operating expenses
Operating income (loss)
II. Total assets
III. Other items
Depreciation and amortization
Investments in affiliates
Increase in property, plant andequipment / intangible assets

North
America¥ 14,746
7,012
21,75820,863¥895¥

Europe

¥

¥

7,867
5
7,872
7,899
(27)

¥ 53,128

¥

¥

¥

821
74
651

2018
Asia &
Oceania

¥

¥

1,235
0
1,235
1,164
71

¥

1,033
412
1,445
1,384
61

5,693

¥

924

¥

1,866

100
–

¥

4
–

¥

10
–

27

2

6

Subtotal

Eliminations

Consolidated¥ 24,881
7,429
32,31031,310¥ 1,000¥¥¥–(7,429)(7,429)(7,220)(209)¥

24,881–
24,881
24,090791¥ 61,611¥(2,389)¥59,222

¥

¥

–
–

¥

935
74

935
74
686

–

ICOM INCORPORATED ANNUAL REPORT 2018

686

27

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
16. Segment Information (continued)iii) Information as to sales, profit or loss, assets and other items on each reporting segment (continued)
Millions of yen

North
AmericaJapan
I. Net sales and operating income(loss)
Sales to third parties
Intersegment sales
Net sales
Operating expenses
Operating income (loss)
II. Total assets
III. Other Items
Depreciation and amortization
Investments in affiliates
Increase in property, plant andequipment / intangible assets

¥

¥

¥

14,7805,996
20,776
20,276500¥

51,869¥2017
Asia &
Oceania

Europe

¥

¥

7,319
6
7,325
7,362
(37)

¥

¥

1,070
–
1,070
1,034
36

¥

5,737

¥

880 ¥
96

95
–

¥

589

93

Subtotal

¥

¥

923
349
1,272
1,241
31

756

¥

4
–

¥

1

¥

24,092
6,351
30,44329,913
530

1,915

¥

8
–

¥

11

Eliminations¥

Consolidated¥¥–(6,351)(6,351)(6,553)
202¥

24,092–24,092
23,360732

60,277¥(1,953)¥58,324

987
96

¥

–
–

¥

987
96

694

–

694

Thousands of U.S. dollars

Japan
I. Net sales and operating income(loss)
Sales to third parties
Intersegment sales
Net sales
Operating expenses
Operating income (loss)
II. Total assets
III. Other items
Depreciation and amortization
Investments in affiliates
Increase in property, plant andequipment / intangible assets

Europe$ 11,626
011,626
10,957
$
669

$

9,724
3,878
13,602
13,028$574$$ 17,566$$ 138,812
66,008204,820
196,395
$
8,425

$

$

74,056
47
74,10374,358(255)$ 500,122$

53,591

$

8,698

$

$

941
–

$

38
–

7,729
697
6,128

2018
Asia &
Oceania

North
America

254

19

94
–
56

Subtotal

Eliminations$$

234,218
69,933
304,151
294,738
9,413$

579,977

$

8,802
697
6,457

Consolidated$– $(69,933)(69,933)(67,966)(1,967) $234,218–
234,218
226,772
7,446$(22,489) $557,488

$

– $
–

8,802
697

–

6,457

ICOM INCORPORATED ANNUAL REPORT 201828

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
16. Segment Information (continued)iv) Geographical information(a) Sales
Sales categorized by country and region based on locations of customers by the Group for the years ended March 31,2018 and 2017 were summarized as follows:
Millions of yen

Japan
USA
North America (except for theUSA)
EuropeAsia & Oceania
Other
Total

¥

¥

2018
8,059
5,816

¥

Thousands of U.S. dollars

2017
7,971
5,391

2018
75,86454,749

$

1,338

1,113

12,595

3,969
4,904
795
24,881

3,592
5,345
680
24,09237,362
46,164
7,484
234,218¥$(b) Property, plant and equipment
Property, plant and equipment categorized by country and region at March 31, 2018 and 2017 were summarized asfollows:
Millions of yen

Japan
USA
North America (except for theUSA)
EuropeAsia & Oceania
Total

¥

¥

2018
5,887
1,097

¥

Thousands of U.S. dollars

2017
6,068
1,218

$

2018
55,417
10,327

10

13

94

7
160
7,161

9
171
7,479

66
1,506
67,410¥$Disclosure of the information by product and service for the years ended March 31, 2018 and 2017 has been omitted as
sales of products and services to external customers in a single segment account for more than 90% of net sales in the
consolidated statement of income.
Disclosure of the information by major customers for years ended March 31, 2018 and 2017 has been omitted as sales
to each customer were less than 10% of consolidated net sales.

ICOM INCORPORATED ANNUAL REPORT 2018

29

ICOM INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
17. Significant Subsidiaries and Affiliates
The Company’s subsidiaries and significant affiliates at March 31, 2018 are presented as follows:
Ownership
Interest
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%

United States of America
Germany
Australia
Spain
Taiwan
China
Japan
Japan
United States of America
CanadaConsolidated subsidiary
Consolidated subsidiary
Consolidated subsidiary
Consolidated subsidiary
Consolidated subsidiary
Consolidated subsidiary
Consolidated subsidiary
Consolidated subsidiary
Consolidated sub-subsidiary
Consolidated sub-subsidiary

100.0%

BrazilConsolidated sub-subsidiary

Comforce Inc.

49.0%

Japan

Position Co., Ltd.

33.3%

Japan

Name
Icom America, Inc.
Icom (Europe) GmbH
Icom (Australia) Pty., Ltd.
Icom Spain, S.L.
Asia Icom Inc.
PURECOM CO., LTD.
Wakayama Icom Inc.
Icom Information Products Inc.
Icom America License Holding LLC
ICOM CANADA HOLDINGS INC.
ICOM DO BRASIL
RADIOCOMUNICACAO LTDA.

Country of Incorporation

Subsidiaries/Affiliate

Affiliate accounted for by theequity method
Affiliate accounted for by theequity method

18. Subsequent Event
The following distribution of retained earnings of the Company, which has not been reflected in the accompanying consolidated
financial statements for the year ended March 31, 2018, was approved at the Company’s general shareholders’ meeting held on June
26, 2018:
Thousands of
U.S. dollars

Millions of yen

Cash dividends (¥20 = U.S.$0.19 per share)

¥

2018
296

¥

2017
148

$

2018
2,786

ICOM INCORPORATED ANNUAL REPORT 201830

BOARD OF DIRECTORSAND AUDITORSTokuzo Inoue
Chairman and Representative Director

Masataka Harima
President and Representative Director

Nobuo Ogawa
Executive Managing Director

Hiroshi Shimizu
Director

Kenichi Kojiyama
Director

Haruyuki Yoshizawa
Outside Director

Akifumi Honda
Outside Director

Toshihiko Sano
AuditorHiroshi Umemoto
Outside Auditor

Katsunori Sugimoto
Outside Auditor

EXECUTIVE OFFICERS
Hiroshi Nakaoka
Takashi Tsujiuchi
Shinichi Matsuo
Shigeyoshi Tanabe
Yoshiteru Yano
Yoshiki Enomoto
Shu Kitaguchi
Kenichi Noda

SUBSIDIARIESTRANSFER AGENT

Icom America, Inc.
Icom (Europe) GmbH
Icom (Australia) Pty., Ltd.
Icom Spain, S.L.
Asia Icom Inc.
PURECOM CO., LTD
Wakayama Icom Inc.
Icom Information Products Inc.
Icom America License Holding LLC
ICOM CANADA HOLDINGS INC.
ICOM DO BRASIL
RADIOCOMUNICACAO LTDA.

Mitsubishi UFJ Trust and Banking
Corporation
Tokyo Office:4-5, Marunouchi 1-chome,
Chiyoda-ku, Tokyo 100-8212, Japan
Osaka Office:6-3, Fushimimachi 3-chome
Chuo-ku, Osaka, 541-0044, Japan

AFFILIATES
Comforce Inc.
Position Co., Ltd.

HEAD OFFICE DIRECTORY
1-1-32, Kamiminami, Hirano-ku,
Osaka, 547-0003, Japan
Phone: 81-6-6793-5301
Fax: 81-6-6793-5305
URL http://www.icom.co.jp/

INVESTOR RELATIONS
Keiichi Uehata
General Manager of Business
Management Department
1-1-32, Kamiminami, Hirano-ku,
Osaka, 547-0003, Japan
Phone: 81-6-6793-5301
Fax: 81-6-6793-5305

CORPORATE FACTS(As of March 31, 2018)
Established: July 1964
Employees: 625
Paid-in capital: ¥7,081 million
Authorized shares: 34,000,000
Issued and outstanding shares:
14,850,000
Shareholders: 8,522
Stock listing: Tokyo Stock Exchange(As of March 31, 2018)
Major shareholders
Tokuzo Inoue
State Street Bank and Trust Company
Gigapalace Inc.
The Icom Foundation
JVC KENWOOD Corporation
The Master Trust Bank of Japan, Ltd.
Meiji Yasuda Life Insurance Company
GOLDMAN, SACHS & CO. REG,
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Hiroshima Bank, Ltd.

Thousands of shares
1,868
1,621
1,472
1,000
445
436
326
258
243
240