ANNUAL REPORT 2015

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

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6
8
9
10
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13
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, 2015, 2014 and 2013

Net sales
Net income (loss)
Total assets
Total net assets
Net income (loss) per
share2
Cash dividends per share2

Millions of yen(except per share amounts)
2014
2015
¥ 576,447¥ 617,525
17,75916,947
741,750
770,591
215,958
271,997¥160.51
40.00¥

177.7215.00

2013¥ 518,981(37,398)694,250
179,253¥

Percent change
2015/2014
7.1
(4.6)
3.9
25.9

(393.32)

(9.7)

5.00

166.7

Thousands of U.S.
dollars1(except per shareamounts)
2015$ 5,138,761
141,025
6,412,507
2,263,435
$

1.33
0.33

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 ¥120.17=US$1, the effective rate of exchange at March 31, 2015.
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, 2015
During the fiscal year under review, the Japanese economy was firm overall, led by a continued recovery trend in the corporate
activity underpinned by such factors as an improved export environment due to the effect of the government’s economic policies
and the yen’s depreciation, as well as declining crude oil prices. However, demand declined in some sectors, notably
automobiles and housing and building materials, mainly due to sluggish private spending in the wake of the consumption tax
increase. Overseas, the U.S. economy continued to recover gradually, while concerns got stronger over the slowdown of
economic growth in Europe as well as China and other emerging countries.
In the steel industry, domestic demand was also impacted by the consumption tax hike, while overall demand stayed solid,
partly due to export growth driven by the yen’s depreciation. Meanwhile, the structural issue of a supply glut caused by surplus
production capacity in China remained, with the negative consequences on the steel market becoming apparent both in Japanand overseas.
Under this operating environment, the Nisshin Group worked to fully consolidate the gains from the merger of the threecompanies on April 1, 2014 and to improve the combined earnings of the Group, mainly through proactive sales expansion ofhigh value added original core products (ZAM®, special steel, stainless steel, and pre-painted steel sheets).
In product development and sales, ZAM®, our highly corrosion-resistant hot-dip coated steel sheet, continued to be well
accepted for a wide range of applications, including structural materials for housing, automotive components and bases for solar
power generators. We succeeded in expanding sales of the product by closely meeting customers’ needs. Such initiatives
included adding a new series to the product lineup in November 2014, featuring improved coating and low gloss characteristics.
In stainless steel, we conducted domestic sales focused on profitability watching demand trends, while in export we put
emphasis on improving earnings with increased price competitiveness on the back of the yen’s depreciation. In pre-painted steel
sheet, we expanded sales and developed demand for highly designable and highly processable products of our original invention,such as the metal siding material offering outstanding anti-stain and scratch resistance, which was jointly introduced with one of
our Group companies.
In materials procurement and production, we took vigorous steps to counter rising electricity costs and mounting imported
material costs due to the yen’s depreciation. In this regard, we promoted rationalization and total cost reduction programs
centered on expanding our use of lower-priced feedstocks in upstream processes and reducing procurement costs, as well as
capital expenditures and investments to improve productivity and adoption of energy-saving measures. Moreover, while
carefully selecting investment projects, we steadily advanced initiatives to ensure safe and stable operation of our productionlines, including measures to extend the life of No. 1 blast furnace at the Kure Works and upgrading the control systems for its
hot rolling line, and developing safe workplaces by implementing countermeasures to prevent recurrence of the fire accident (ofa few years ago). We will continue to step up our efforts in these areas going forward.
In overseas markets, Wheeling-Nisshin, Inc., a U.S. subsidiary that manufactures and sells surface-treated steel sheets,
achieved steady growth in production and sales volumes of ZAM®. In China, Nisshin Steel (Nantong) High-Tech Sheet Co., Ltd.
commenced operations in May 2014, as a subsidiary for manufacturing and selling electrolytic copper plated steel sheets to meet
local procurement needs of Japanese automakers’ transplants.
During the fiscal year under review, the Company procured funds by disposing of treasury stock and through a subordinatedloan, and made an early redemption of the 1st series unsecured, interest deferrable and early redeemable subordinated bonds
solely for qualified institutional investors (hybrid bond) issued in 2009. As a result, the Company increased its earnings powerwith reduction in fund procurement interest. At the same time, as we approach the second half of the 24th Medium-Term
Consolidated Management Plan (“the 24th Medium-Term Plan”) we will also strive to steadily execute the business strategies
that will become future earnings sources through further strengthening of the financial base.
Turning to consolidated operating results for the fiscal year ended March 31, 2015, there were a number of factors that
depressed profits, namely higher energy costs and lower demand associated with the consumption tax hike. However, theNisshin Group worked in concert to boost sales of core products and to rationalize and cut overall costs. As a result, on aconsolidated basis net sales were ¥617,525 million, up ¥41,078 million year on year, ordinary income was ¥19,697 million,
down ¥24 million year on year, and net income was ¥16,947 million, down ¥812 million year on year.

Outlook for the Fiscal Year Ending March 31, 2015
Looking ahead, the Japanese economy is expected to continue along a basic recovery path, mainly in the manufacturing industry
and thanks to the diminishing impact of the consumption tax increase and strong corporate earnings and demand for social
infrastructure development associated with the 2020 Tokyo Olympics (and Paralympics), as well as the brisk U.S. economy. On
the other hand, however, there are concerns about factors that could affect the economy, such as the direction of the European
economy, slowdowns in the economies of China and other emerging countries and intensifying geopolitical risks around theworld.

2

The steel industry is expected to enjoy firm activity in every demand sector. However, widespread uncertainties remain,
including the still-recovering demand in the housing construction and automobile fields and the adverse effects of foreignexchange fluctuations on the economy. Another factor is the worsening supply glut for steel in Asian markets and the resultant
prolonged slump there, for which there is still no sign of abatement.
Under this operating environment, the Nisshin Group will make a concentrated effort to ensure the success of the 24th
Medium-Term Plan, aiming to build a robust business base for coping with any environmental change, and to further strengthen
the earnings capabilities.
As a move to maximize the integration synergies, which is our main priority, we have already put our continuous casting line
up at the Shunan Works into operation as part of a renovation of our steelmaking facilities at the Works. We will strive to realize
such expected benefits early as larger coils, a wider range of manufacturing capability, and improved quality and productivity forstrengthening our competitiveness. In tandem with this, we will build an optimal production framework by gradually transferring
steelmaking processes from the Kinuura Works to the Shunan Works with plans to terminate such operations at the Kinuura
Works at the end of November, 2015. Furthermore, we have newly established the Stainless Production Division to oversee
those two Works, and will accelerate their integrated operational management across all aspects of production, quality, and cost.
With these initiatives, we will work to make the new production system fully workable at an early stage and to steadily capture
integration synergies.
In addition, the Nisshin Group will take steps to strengthen all aspects of the development capabilities towards realizing the
growth strategies. Through the Group Products Development Strategy Division established in April 2015, we will strengthen themutual links between the research and development departments. Then, by timely introducing and marketing highly functional
products that meet customers’ needs, we will aim to expand earnings through actively cultivating demand for our core products
and creating new markets.
With regard to special steel, we are proceeding with installation of a new ladle furnace (LF) at the Kure Works, scheduled tocome on stream in October 2015, which will enable us to manufacture high-cleanliness steel to meet customers’ increasing needs
for high quality. The facility is expected to enhance our brand in special steel even further. Moreover, in China, where continued
growth in demand for special steel is projected, we established Zhejiang Nisshin Worthington Precision Specialty Steel Co., Ltd.
as a joint venture with US and Japanese special steel makers in July 2014 and are in the process of constructing a new plant due
to start operations in mid-2016. We will combine the strengths that our Japanese and US joint venture partners have developed todate to devise a supply system that will meet the needs for local procurement, mainly among Japanese, European, and American
automakers. We intend to grow this venture into a new pillar of the Nisshin Group’s global business expansion and to harness
synergies with the above-mentioned LF to expand the special steel markets in and out of Japan.
With regard to highly-evaluated ZAM®, which is highly evaluated by customers, we will ramp up the production capacity ateach manufacturing base, and implement operational improvements to secure vertical elasticity for larger output towards
achieving a group-wide production system capable of turning out 100,000 tons per month. In stainless steel, we will make fulluse of the capacity of our new steelmaking facility at the Shunan Works to reinforce the competitive edge of our products, whileworking to develop original new products that will help enhance customer benefits. Moreover, by combining the special
processing and forming technologies of our Group companies with our materials development capabilities, we will proactively
propose solutions to our users as another approach to expand the market for high-value added products.
In addition to these initiatives, we will respond to immediate problems such as the significant increase in electricity costs byexerting concerted group-wide efforts on rationalization and overall cost reduction. Specifically, we will continue to raise
investments in energy saving projects, while promoting initiatives to reduce manufacturing costs such as conducting flexible
procurement following changes in the market conditions for feedstock and fuel, expanding our use of low-priced feedstock, andtrying different fuels for use. At the same time, we will work to reflect portions of these cost increases that we cannot absorb
through our own efforts into our sales prices, while seeking customers’ understanding.
Furthermore, the Nisshin Group will assiduously pursue structural reforms in the existing businesses for realizing sweeping
efficiency gains and streamlining. We will also execute concentrated reallocation of management resources in growth fields suchas promising overseas markets. Thus, we will strive to build a robust business foundation suited to cope with rapid changes
forecasted for the operating environment going forward.
Guided by our corporate philosophy to “realize our customers’ dreams and ideals with the use of steel,” we will cooperatewith our customers to create new markets. To this end, we will bring together the combined power of the Nisshin Group toaddress the management issues and attain the profit targets in our 24th Medium-term Plan to realize continued increase in our
corporate value. As we do so, we will pursue to evolve day by day as a corporate group that has the trust of its customers and astrong presence in the market.

President & Chief Executive Officer3

Management’s Discussion and Analysis
Financial Position
Consolidated total assets at the close of the year ended March 31, 2015 stood at ¥770,591 million, up ¥28,840 million from theend of the previous year. This was due mainly to decrease in cash on hand and in banks (down ¥14,568 million) and increases
in investments in securities (up ¥14,933 million) and asset for retirement benefits (up ¥16,480 million).
Total liabilities declined ¥27,197 million to ¥498,594 million. This was due mainly to decrease in interest-bearing debt
(down ¥33,680 million).
Total net assets rose ¥56,038 million to ¥271,997 million. This was due mainly to increases in disposal of treasury stock (up¥9,253 million, of which ¥8,208 million of treasury stock and ¥1,044 million of additional paid-in capital), retained earnings(up ¥7,917 million, of which decrease of ¥7,544 million in revision of accounting standard for retirement benefits and ¥16,947
million of net income), and total accumulated other comprehensive income (up ¥37,915 million, of which increase in ¥7,971
million of unrealized gain or loss on available-for-sale securities, ¥10,461 million of foreign currency translation adjustment,and ¥19,165 million of retirement benefits asset and liability adjustments).

Cash FlowsNet cash provided by operating activities totaled ¥39,303 million. ¥24,173 million from depreciation and amortization and¥19,224 million in income before provision for income taxes were major contributors.
Net cash used in investing activities totaled ¥29,367 million, with ¥25,664 million spent on acquisition of property, plantand equipment.
Net cash used in financing activities totaled ¥26,078 million, mainly reflecting ¥33,512 million decrease in interest-bearing
debt and ¥9,253 million increase in disposal of treasury stock.
As a result of these developments, and including an increase in effect of foreign currency translation adjustment of cash andcash equivalents by ¥1,504 million, the consolidated balance of cash and cash equivalents at the end of the year ended March
31, 2015 decreased by ¥14,506 million to ¥26,187 million.

4

5

Consolidated Balance Sheets
Nisshin Steel Co., Ltd. and its consolidated subsidiaries
March 31, 2015 and 2014
Thousands of
U.S. dollars (Note 4)
2015

Millions of yen
2014
2015
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
Deferred assets
Total assets¥

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

626,30079,032
5,000
144,212
4,491
22,037(639)
280,433¥

40,86979,47010,000143,636
3,419
24,822(718)
301,500$

218,856
657,668
41,6071,200,066
37,372
183,381(5,317)2,333,635

137,766
2,823
43,247
29,162(614)
212,385

122,832
2,847
26,766
20,356(682)
172,121

1,146,425
23,491
359,881242,672(5,109)1,767,371

284,828
993,500
1,278,329(1,096,317)
182,01171,82813,850267,690

281,860
973,819
1,255,679(1,077,739)
177,940
72,3157,770
258,026

2,370,208
8,267,454
10,637,671(9,123,050)
1,514,612
597,719
115,253
2,227,594

10,081

9,969

83,889

㸫

132

㸫

741,750$ 6,412,507

770,591¥

Thousands of
U.S. dollars (Note 4)
2015

Millions of yen
2014
2015
LIABILITIESCurrent liabilities:
Notes and accounts payable (Note 19)
Short-term loans (Notes 7 and 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¥

NET ASSETS
Shareholders’ equity:
Common stock, no par value at March 31, 2015 and 2014
Authorized: 430,000 thousand shares at March 31, 2015 and 2014
Issued: 109,843 thousand shares at March 31, 2015 and 2014
(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
Minority interests in consolidated subsidiaries
Total net assets
Total liabilities and net assets¥

7

88,576
59,133
19,539189
43,719211,158¥

94,38560,69537,084
159
37,940230,265$

737,089
492,077
162,594
1,572
363,8091,757,160

211,161
15,332

225,735
13,331

1,757,185
127,585

386

424

3,212

13,911
1,119
42,552
2,971
287,435
498,594

13,722383
38,875
3,053
295,526
525,792

115,761
9,311
354,098
24,7232,391,903
4,149,072

30,00030,000249,646

91,09974,160(541)
194,719

90,05566,242(8,741)
177,556

758,084
617,125(4,501)
1,620,362

23,356191
388
17,741
26,521
68,1999,078
271,997

15,384
(95)
360
7,279
7,355
30,2848,117
215,958

194,357
1,589
3,228
147,632
220,695
567,52175,542
2,263,435

741,750$ 6,412,507

770,591¥

Consolidated Statements of Income
Nisshin Steel Co., Ltd. and its consolidated subsidiaries
Years ended March 31, 2015 and 2014

Net sales
Cost of sales (Note 5)
Gross profit
Selling, general and administrative expenses (Notes 11 and 12)
Operating income
Other income (expenses):
Interest and dividend income
Interest expense
Equity in earnings of unconsolidated subsidiaries and affiliates
Foreign exchange gain
Service cost of temporarily transferred employees
Commission paid
Other, net
Ordinary income
Special items:
Gain on abolishment of retirement benefit plan
Gain on sale of properties
Gain on sale of investments in securities
Special items, income and gain
Loss on sale and disposition of properties
Loss on impairment of fixed assets
Loss on fire
Loss on devaluation of other investments
Loss from instability experienced at blast furnace
Special items, expense and loss
Income before provision for income taxes
Provision for income taxes (Note 8):
Current
Deferred
Total provision for income taxes
Income before minority interests
Minority interests in earnings of consolidated subsidiaries
Net income

Millions of yen
2014
2015
¥ 576,447¥ 617,525
513,866
547,41262,581
70,112
46,02449,057
16,557
21,055

Thousands of
U.S. dollars (Note 4)2015$ 5,138,761
4,555,313
583,440
408,230
175,210

1,495(4,852)
3,195
3,782(1,912)(1,248)(1,819)19,697

5,280(5,494)
5,397
1,328(1,485)(1,861)
19,722

12,440(40,376)
26,58731,472(15,910)(10,385)(15,136)
163,909

1,722
1,722
1,006
428
760
2,195
19,224

4,322
3,536
7,858
1,553
1,530
271
1,646
5,003
22,577

14,32914,329
8,371
3,561
6,324
18,265
159,973

2,190
(521)
1,668
17,555608
16,947

4,066
(405)
3,661
18,916
1,156
17,75918,224(4,335)
13,880146,084
5,059
141,025¥¥

Yen
Net income per share
Cash dividends per share¥

Weighted average number of shares issued and outstanding(thousands)

160.51
40.00
105,585

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

8¥

177.72
15.00
99,932$

U.S. dollars (Note 4)
$
1.33
0.33

Consolidated Statements of Comprehensive Income
Nisshin Steel Co., Ltd. and its consolidated subsidiaries
Years ended March 31, 2015 and 2014

Income before minority interests
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 by the equity method
Other, net
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to :Shareholders of the Parent Company
Minority interests

Millions of yen
2014
2015
¥
18,916¥
17,555¥¥The accompanying notes are an integral part of these financial statements.

9

Thousands of
U.S. dollars (Note 4)2015$ 146,084

7,766
272
2,202
19,071

(76)
(734)
4,262
-

64,6252,263
18,324
158,700

8,752

9,154

72,83054
38,12055,676

133
12,73931,655449
317,217463,31054,940735¥¥

30,0151,640$$

457,185
6,116

Consolidated Statements of Changes in Net Assets
Nisshin Steel Co., Ltd. and its consolidated subsidiaries
Years ended March 31, 2015 and 2014
Millions of yen
Shareholders’ equity

Balance at April 1, 2013
Changes of items during the year
Cash dividends
Net income
Acquisition of treasury stock
Other, net
Items other than changes in shareholders’ equity
Total changes of items during the year
Balance at April 1, 2014
Cumulative effects of changes inaccounting policies
Restated balance at April 1,2014
Changes of items during the year
Cash dividends
Net income
Acquisition of treasury stock
Disposal of treasury stock
Change in scope of equity method
Increase 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 March 31, 2015

Balance at April 1, 2013
Changes of items during the year
Cash dividends
Net income
Acquisition of treasury stock
Other, net
Items other than changes in shareholders’ equity
Total changes of items during the year
Balance at April 1, 2014
Cumulative effects of changes inaccounting policies
Restated balance at April 1,2014
Changes of items during the year
Cash dividends
Net income
Acquisition of treasury stock
Disposal of treasury stock
Change in scope of equity method
Increase 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 March 31, 2015

Common stock¥
30,000¥¥Additional
paid-in capital¥
90,055Retainedearnings¥
49,797

Treasury stock,at cost¥(8,732)

Total
shareholders’equity¥ 161,120

–
–
–
–
–
–
90,055(500)
17,759–(814)–
16,444
66,242

–
–
(8)
–
–
(8)
(8,741)(500)
17,759(8)(814)–
16,436
177,556

–
–
–
–
–
–
30,000

¥

¥

¥

¥

–

–

(7,544)–(7,544)30,00090,05558,698(8,741)

170,012

–
–
–
–
–
–
–
–
–
30,000

–
–
–
1,044
–
–
–
–
1,044
91,099

–
–
(9)
8,208
–
–
–
–
8,199
(541)

¥

(1,501)
16,947
(9)
9,253
(68)
0
84
–
24,706
194,719(1,501)
16,947
–
–
(68)
0
84
–
15,462¥¥ 74,160¥
Millions of yen
Accumulated other comprehensive income

Unrealized
gain or loss
on availablefor-salesecurities

Deferredgain or loss
on hedges

Adjustmentonrevaluationof land

Foreigncurrencytranslation
adjustment

Retirement
benefits
asset andliability
adjustments

Total
accumulated
othercomprehensive income

Minority
interests inconsolidated
subsidiaries

Total net
assets¥ 15,366

¥

385

¥

360

¥ (5,305)¥–¥ 10,805¥

7,327¥ 179,253

¥

–
–
–
–
(480)
(480)
(95)

¥

–
–
–
–
–
–
360

–
–
–
–
12,585
12,585¥ 7,279

¥

–
–
–
–
7,355
7,355
7,355

–
–
–
–
19,47819,478¥ 30,284

¥

–
–
–
–
789
789
8,117

(500)
17,759(8)(814)
20,26836,704¥ 215,958

–
–
–
–
17
17
¥ 15,384
–

–

–

–

–

–

(1)

(7,545)

15,384

(95)

360

7,279

7,355

30,284

8,115

208,412

–
–
–
–
–
–
–
7,971
7,971
¥ 23,356

–
–
–
–
–
–
–
287
287
191

–
–
–
–
–
–
–
28
28
388

–
–
–
–
–
–
–
10,461
10,461¥ 17,741

–
–
–
–
–
–
–
19,165
19,165¥ 26,521

–
–
–
–
–
–
–
37,91537,915¥ 68,199

–
–
–
–
–
–
–
962
962
9,078

(1,501)
16,947
(9)
9,253
(68)
0
84
38,87863,584¥ 271,997

¥

10

¥

¥

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

Balance at April 1, 2014
Cumulative effects of changes inaccounting policies
Restated balance at April 1,2014
Changes of items during the year
Cash dividends
Net income
Acquisition of treasury stock
Disposal of treasury stock
Change in scope of equity method
Increase 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 March 31, 2015

Retainedearnings$ 551,235––(62,777)–(62,777)

249,646

749,396

488,458(72,738)

1,414,762

–
–
–
–
–
–
–
–
–
249,646

–
–
–
8,687
–
–
–
–
8,687
758,084(12,490)
141,025
–
–
(565)
–
699
–
128,667
617,125––(74)
68,303––––
68,228(4,501)(12,490)
141,025(74)
76,999
(565)
–
699
–
205,592$ 1,620,362

Common stock$ 249,646$

Total
shareholders’equity$ 1,477,540

Additional
paid-in capital$ 749,396$$

Treasury stock,at cost$ (72,738)$

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

Balance at April 1, 2014
Cumulative effects of changes inaccounting policies
Restated balance at April 1,2014
Changes of items during the year
Cash dividends
Net income
Acquisition of treasury stock
Disposal of treasury stock
Change in scope of equity method
Increase 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 March 31, 2015

Retirement
benefits
asset andliability
adjustments

Total
accumulated
othercomprehensive income

2,995 $ 60,572 $ 61,204$252,009

Unrealized
gain or loss
on availablefor-salesecurities

Deferredgain or loss
on hedges

Adjustmentonrevaluationof land$128,018

$

$

(790)

Foreigncurrencytranslation
adjustment

Minority
interests inconsolidated
subsidiaries

Total net
assets$67,545 $ 1,797,104

–

–

–

–

–

–

(8)

(62,786)

128,018

(790)

2,995

60,572

61,204

252,00967,5291,734,309

–
–
–
–
–
–
–
66,331
66,331$ 194,357

–
–
–
–
–
–
–
2,388
2,388
1,589

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
233
87,051
159,482233
87,051
159,482
3,228 $ 147,632 $ 220,695

–
–
–
–
–
–
–
315,511
315,511$ 567,521

$

11

$

–
(12,490)–
141,025–(74)–
76,999
–
(565)
–
–
–
699
8,005
323,525
8,005
529,117$ 75,542 $ 2,263,435

Consolidated Statements of Cash Flows
Nisshin Steel Co., Ltd. and its consolidated subsidiaries
Years ended March 31, 2015 and 2014
Thousands of
U.S. dollars (Note 4)
2015

Millions of yen
2014
2015
Cash flows from operating activities:
Income before provision for income taxes
Depreciation and amortization(Decrease) increase in liability for retirement benefits
Decrease (increase) in asset for retirement benefits
Increase in reserve for rebuilding furnaces
Equity in earnings of unconsolidated subsidiaries and affiliates
Interest and dividend income
Interest expense
Loss (gain) on sale and disposition of properties
Decrease (increase) in notes and accounts receivable
Decrease (increase) in inventories(Decrease) increase in notes and accounts payable
Other, net¥

22,57722,193
1,473(1,809)598(5,397)(5,280)5,494(2,768)(4,599)(4,853)
13,546(12,879)
28,294
5,537(5,579)(1,584)
26,668

Receipt of interest and cash dividends
Payment of interest
Payment of income taxes
Net cash provided by operating activities

19,224
24,173(1,832)324
188(3,195)(1,495)
4,852
1,009
1,439
387
(4,456)
6,092
46,711
4,239(6,384)(5,264)39,303

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(1,286)893(18)(25,664)502(3,794)(29,367)

(41)
9,332
(24)
186
(22,356)
5,408(11,757)(19,252)(10,701)
7,431
(149)
(213,564)
4,177(31,571)(244,378)

Cash flows from financing activities:
Decrease in short-term loans, net
Decrease in commercial paper, net
Proceeds from long-term debt
Repayment and redemption of long-term debt
Disposal of treasury stock
Acquisition of treasury stock
Cash dividends
Other, net
Net cash (used in) provided by financing activities(1,328)54,900(87,084)
9,253(9)(1,499)(310)(26,078)(7,029)(25,000)
70,988(49,059)
(8)
(508)
(992)
(11,609)(11,051)456,852(724,673)
76,999(74)(12,473)(2,579)(217,009)

Foreign currency translation adjustment of cash and cash
equivalents
Net decrease 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.

12$

159,973
201,156(15,245)
2,696
1,564
(26,587)(12,440)
40,376
8,396
11,9743,220(37,080)
50,694
388,70735,275(53,124)(43,804)
327,061

1,504

1,618

12,515(14,638)
40,694(2,575)43,269(121,810)
338,636

132

-

1,098

26,187¥

40,694$217,916

Notes to Consolidated Financial Statements
Nisshin Steel Co., Ltd. and its consolidated subsidiaries
Years ended March 31, 2015 and 2014

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 16 consolidated subsidiaries, listed below(together, the “Companies”):
Nisshin 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
Since the Company merged with Nisshin Steel Co., Ltd. and Nippon Metal Industry Co., Ltd., both wholly owned by theCompany, Nisshin Steel Co., Ltd. and Nippon Metal Industry Co., Ltd. were excluded from the consolidation scope in the year
ended March 31, 2015.
Tsukiboshi Art Co., Ltd., Osaka Stainless Center Co., Ltd., and Nisshin Stainless Steel Tubing Co., Ltd. became
consolidated subsidiaries in the year ended March 31, 2015 due to the increase of the materiality.
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 six foreign consolidated subsidiaries: Nisshin Holding, Nisshin Steel USA,
Wheeling-Nisshin, Nisshin Automotive Tubing, Nisshin France and NSA Metals (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 net
income (loss) of subsidiaries, subsequent to the date of acquisition, in the Consolidated Statements of Income and theConsolidated 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.
The number of unconsolidated subsidiaries accounted for using the equity method was 10 at March 31, 2015 and included:13

Nisshin Metal Working Co., Ltd.
Nisshin Steel (Nantong) High-Tech Sheet Co., Ltd. became an unconsolidated subsidiary accounted for using equity methodin the year ended 31, 2015 due to the increase of the materiality with the beginning of commercial production.
The number of affiliates accounted for using the equity method was 16 at March 31, 2015 and included:
Nihon Teppan Co., Ltd.
Sanko Metal Industrial Co., Ltd.
Canox Corporation
Ningbo Baoxin Stainless Steel Co., Ltd.
Acerinox, S.A.
An affiliate was excluded from the scope of the equity method due to the decrease of the materiality in the year ended
March 31, 2015.
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, 2015.
(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, 2015.
(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 mainly using the weighted average method (the amounts on the Consolidated Balance Sheetsreflect the decrease in their value due to their decrease in profitability, if any), except for supplies which are valued at themoving-average cost (the amounts on the Consolidated Balance Sheets reflect the decrease in their value due to their decrease inprofitability, if any).
Property, Plant and Equipment
Depreciation is computed using the straight-line method.
The cost of maintenance, repairs and minor renewals is charged to operating income 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.

14

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).
Deferred Assets
Significant bond issue costs, except for those that are not material, are deferred and amortized over a reasonable period of timethrough bond redemption.
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, 2015, the Nisshin Group recognized loss on impairment of fixed assets for the following asset
group.
Location
Hekinan, Aichi Prefecture

PurposeIdle properties (production facility of stainless steel pipes andtubes)

Type
Machinery andequipment, etc.

The Group principally groups assets by segment for management computing (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.
In the year ended March 31, 2015, for idle properties including those that will be dormant, the book value of the asset group ofwhich the fair value significantly decreased was reduced to the recoverable amount, and the amount of the reduction wasrecorded as loss on impairment of fixed assets (¥428 million (US$3,561 thousand)) in special loss. The loss on impairment of
fixed assets consisted of ¥418 million (US$3,478 thousand) of machinery and equipment and ¥10 million (US$83 thousand) ofothers.
Since it is difficult to divert or sell those assets, they were evaluated assuming that their net sales value was zero.
Loss on fireAn extraordinary loss has been recognized for restoration cost from the fire incident at the Kinuura Works polishing stainlessline in the year ended March 31, 2015. An extraordinary loss has been recognized for restoration cost from the fire incident at
the Sakai Works cold-rolling mill in the year ended March 31, 2014.
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.

15

Consumption Tax
In Japan, consumption tax was imposed on domestic consumption of goods and services at the rate of 5% until March 31, 2014,
and the rate was raised to 8% at April 1, 2014. The consumption tax imposed on the Companies’ sales to customers is withheldby the Companies at the time of sale and paid to the national government. The consumption tax withheld upon sale is notincluded in the amount of “Net sales” in the accompanying Consolidated Statements of Income but is recorded as a liability. Thebalances of consumption tax withheld and consumption tax paid (an asset item), which are paid by the Companies on thepurchase of products, merchandise and services from vendors, are offset, 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.
Net Income and Cash Dividends per Share
The computation of net income 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 net income of each year.
Standards Issued but not yet Effective(Accounting Standards for Business Combinations)
On September 13, 2013, the Accounting Standard Board of Japan (“ASBJ”) issued “Accounting Standard for Business
Combinations” (ASBJ Statement No. 21), “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No.
22), “Accounting Standard for Business Divestitures” (ASBJ Statement No. 7), “Accounting Standard for Earnings Per Share”(ASBJ Statement No. 2), “Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business
Divestitures” (ASBJ Guidance No. 10) and “Guidance on Accounting Standard for Earnings Per Share” (ASBJ Guidance No. 4).
(1) Overview
The Accounting Standards and Guidance were revised mainly with a focus on (i) the treatment of changes to a parent
company’s ownership of a subsidiary if control is maintained in the acquisition of additional shares of the subsidiary, etc., (ii)the treatment of acquisition-related costs, (iii) the presentation of net income and the change from minority interests inconsolidated subsidiaries to non-controlling interests, and (iv) the handling of tentative accounting treatment.
(2) Scheduled date of adoption
The revised Accounting Standards and Guidance are scheduled to be applied from the beginning of the year ending March 31,
2016. The handling of tentative accounting treatment is scheduled to be applied to business combinations carried out at orafter the beginning of the year ending March 31, 2016.
(3) Impact of adopting revised accounting standards and guidance
The impact of adopting these revised Accounting Standards and Guidance on these consolidated financial statements is being
evaluated.

3. Accounting Changes(Accounting Changes)
Concerning the “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26, May 17, 2012) and ͆Guidance on
Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, March 26, 2015), the Company adopted the provisions
described in the main clause of Clause 35 of the standard and in the main clause of Clause 67 of the guidance from the fiscal
year ended March 31, 2015, revising its calculation methods for the retirement benefit obligation and service costs. The methodof attributing expected retirement benefits to period has been changed from a straight-line basis to a benefit formula basis. In
addition, the method of determining the discount rate has been changed from one that uses a discount rate based on the averageremaining service period of employees to one that uses a single weighted average discount rate.
Concerning the application of the Accounting Standard for Retirement Benefits, based on the provisional treatment set out inClause 37 of the standard, at the beginning of the fiscal year ended March 31, 2015, the amount of change resulting from thecalculation methods for the retirement benefit obligation and service costs is added to or deducted from retained earnings.
As a result, retirement benefit assets decreased ¥1,607 million (US$13,372 thousand) at the beginning of the fiscal year ended16March 31, 2015, retirement benefit liability increased ¥6,039 million (US$50,253 thousand), and retained earnings decreased¥7,544 million (US$62,777 thousand). These accounting changes have an immaterial impact on operating income, ordinary
income, and income before provision for income taxes for the fiscal year ended March 31, 2015.

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 ¥120.17 = US$1, the effective rate of exchange at March 31, 2015. 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 ¥120.17 = US$1 or at any other rate.

5. Inventories
Details of “Inventories” in the Consolidated Balance Sheets at March 31, 2015 and 2014 are as follows:
Millions of yen
2014
2015
¥
61,448¥62,76935,04237,26047,14644,182¥ 143,636¥ 144,212

Finished goods
Work in process
Raw materials and other supplies
Total

Thousands of
U.S. dollars
2015$ 522,335
310,060
367,662$ 1,200,066

The amounts of inventories on the Consolidated Balance Sheets at March 31, 2015 and 2014 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, 2015 and 2014
include ¥1,149 million (US$9,561 thousand) of such unrealized net loss of inventories and ¥3,839 million of such unrealized net
gain of inventories, respectively.

6. Investments in Unconsolidated Subsidiaries and Affiliates“Investments in securities” in the Consolidated Balance Sheets at March 31, 2015 and 2014 include investments inunconsolidated subsidiaries and affiliates are as follows:
Thousands ofMillions of yen
U.S. dollars
2014
2015
2015
Stocks of unconsolidated subsidiaries and affiliates¥
55,094¥59,759$ 497,287“Other” in “Investments and long-term receivables” in the Consolidated Balance Sheets at March 31, 2015 and 2014 include
investments in unconsolidated subsidiaries and affiliates as follows:
Thousands of
U.S. dollars
Millions of yen
2014
2015
2015
Equity in unconsolidated subsidiaries and affiliates¥
14,040¥22,101$ 183,914

7. Short-term Loans and Long-term Debt
Short-term loans at March 31, 2015 and 2014 consisted of the following:
Millions of yen
2014
2015
¥
60,695¥
59,133

Bank loans

It is a normal business custom in Japan for short-term loans to be rolled over.

17

Thousands of
U.S. dollars
2015$ 492,077

Long-term debt at March 31, 2015 and 2014 consisted of the following:

Loans from banks and other financial institutions
19th 2.20% unsecured bond of the Company due Jun. 2018
20th 1.64% unsecured bond of the Company due May 2014
1st series unsecured, interest deferrable and early redeemable
subordinated bonds solely for qualified institutional
investors*1
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*2

Millions of yen
2014
2015
¥ 142,819¥ 180,700
10,00010,000–20,000¥Thousands of
U.S. dollars
2015$ 1,503,703
83,215––50,000–20,00010,00010,000230,700

20,00010,00010,000262,819

166,430
83,215
83,215
1,919,780(19,539)(37,084)(162,594)

225,735$ 1,757,185

211,161¥*1. (1) From the day after October 9, 2009 – October 31, 2014: Annual rate 4.612 % (fixed rate)(2) From the day after October 31, 2014: 6-Month Yen London Interbank Offered Rate + 4.75% (floating rate)*2. 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, ¥23,529 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 the 1st series unsecured, interest deferrable and early redeemable subordinated bonds solely for
qualified institutional investors.
(2) “Ordinary income” 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, 2015, Nisshin Steel Co., Ltd. had not breached the financial covenants.

8. Income Taxes
The “Act for Partial Amendment of the Income Tax Act, etc.” (Act No. 9 of 2015) and the “Act for Partial Amendment of the
Local Tax Act, etc.”(Act No. 2 of 2015) were promulgated on March 31, 2015. As a result, the effective statutory tax rate used tomeasure the Company’s deferred tax assets and liabilities was changed from 35.5% to 32.9% and 32.1% for the temporary
differences expected to be realized or settled in the year beginning April 1, 2015, and for the temporary differences expected tobe realized or settled from April 1, 2016, respectively.
The effect of the announced reduction of the effective statutory tax rate was to decrease deferred tax liabilities, after offsetting
deferred tax assets, by ¥1,128 million (US$9,386 thousand), and income taxes-deferred by ¥199 million (US$1,655 thousand),and increase unrealized gain on available-for-sale securities by ¥911 million (US$7,580 thousand) and deferred gain on hedgesby ¥17 million (US$ 141 thousand) as of and for the year ended March 31, 2015.
Furthermore, under the amended rules for tax loss carry forward applicable to the fiscal year beginning on or after April 1,
2015, the tax deductible amount using tax loss carry forwards was changed to “up to 65% of taxable income for the year before
deducting tax loss carry forwards,” and under those applicable to the fiscal year beginning on or after April 1, 2017, the tax
deductible amount using tax loss carry forwards was changed to “up to 50% of taxable income for the year before deducting tax
loss carry forwards.” As a result, deferred tax assets decreased by ¥247 million (US$2,055 thousand) and deferred income tax
expense increased by ¥247 million (US$2,055 thousand).
Components of the Companies’ deferred income tax assets and liabilities at March 31, 2015 and 2014 are as follows:18

Millions of yen
2014
2015
Deferred income tax assets:
Tax loss carry forwards
Retirement benefit liability
Non-deductible portion of reserve for rebuilding furnaces
Loss on impairment of fixed assets
Loss on devaluation of investments in securities
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
Reserve for postponement of taxation on capital gains fromproperty
Other
Total deferred income tax liabilities
Net deferred income tax liabilities¥

40,621
10,524
4,240
2,702
2,436
9,463
69,987(62,135)
7,852¥

47,053
8,523
4,373
2,977
2,699
10,03575,663(68,198)
7,464

Thousands of
U.S. dollars
2015$

338,029
87,57535,28322,484
20,27178,746582,399(517,059)
65,340

8,874

7,170

73,845

1,758

1,979

14,6295,238
15,8708,017

5,379
14,5297,064

43,588132,062
66,713¥$

The reconciliation of the statutory tax rate to the income tax rate reflected in the Consolidated Statements of Income for theyears ended March 31, 2015 and 2014 are as follows.

Statutory tax rate
Reconciliation:
Valuation allowance
Equity in earnings of unconsolidated subsidiaries and affiliates
Other
Effective rate of income tax expense

9.

2015
35.5%

2014
37.8%

(18.8)
(5.9)
(2.1)
8.7%

(11.2)
(9.0)
(1.4)
16.2%

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.
The changes in the retirement benefit obligation during the years ended March 31, 2015 and 2014 are as follows.
Thousands of
U.S. dollars
Millions of yen
2014
2015
2015
Retirement benefit obligation at the beginning of the year¥
86,904¥85,804$ 714,021
Cumulative effects of changes in accounting policies–
7,646
63,626
Restated balance
86,90493,450777,648
Service cost
2,777
3,376
28,093
Interest cost
1,716
1,152
9,586
Actuarial gain
(698)
(403)
(3,353)Retirement benefit paid
(4,894)(4,739)(39,435)
Prior service cost–
(1,019)(8,479)Contribution by the Companies
(2)
(16)
(133)
Net increase from newly consolidated subsidiaries
–
213
1,772
Loss on abolishment–(8,707)(72,455)
Retirement benefit obligation at the end of the year¥
85,804¥
83,306$ 693,234

19

The changes in plan assets during the years ended March 31, 2015 and 2014 are as follows.
Millions of yen
2014
2015
¥
65,395¥73,695
1,300
1,465
8,348
18,9792,476
1,108(3,825)(3,193)–(8,053)¥73,695¥84,001

Plan assets at the beginning of the year
Expected return on plan assets
Actuarial gainContribution by the Companies
Retirement benefit paid
Loss on abolishment
Plan assets at the end of the year

Thousands of
U.S. dollars
2015$ 613,256
12,191
157,934
9,220(26,570)(67,013)$ 699,018

The funded status of the plans and the amounts recognized in the consolidated balance sheets at March 31, 2015 and 2014 for
the Company’s and the consolidated subsidiaries’ defined benefit plans are as follows.

Funded retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Net balance of liability and asset recognizedon the Consolidated Balance Sheets
Retirement benefit liability
Asset for retirement benefits
Net balance of liability and asset recognizedon the Consolidated Balance Sheets

Millions of yen
2014
2015
¥
50,066¥40,784(73,695)(84,001)(23,628)(43,216)
35,73742,522Thousands of
U.S. dollars
2015$ 339,385(699,018)(359,623)
353,848(694)

12,109(5,775)42,552(43,247)

38,875(26,766)

354,098(359,881)

¥

(694)

¥

12,109$(5,775)The components of retirement benefit expense for the years ended March 31, 2015 and 2014 are as follows.
Millions of yen
2014
2015
¥
2,557
¥
3,155
1,716
1,152
(1,300)(1,465)
2,070
906(1,140)(1,005)–(1,722)
¥
3,905
¥
1,019

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

Thousands of
U.S. dollars
2015$
26,254
9,586(12,191)
7,539(8,363)(14,329)$
8,479

Note: Retirement benefit expense for consolidated subsidiaries adopting the simplified method are included in “Service cost”.
Prior service cost and actuarial loss included in other comprehensive income (before tax effect) at March 31, 2015 and 2014 are
as follows.
Thousands of
U.S. dollars
Millions of yen
2014
2015
2015
–
Prior service cost
¥
$
108
¥
13
–
Actuarial loss
159,940
19,220Total¥–¥
19,234$ 160,056
Unrecognized prior service cost and unrecognized actuarial loss included in accumulated other comprehensive income (before
tax effect) at March 31, 2015 and 2014 are as follows.
Thousands of
U.S. dollars
Millions of yen
2014
2015
2015
Unrecognized prior service cost
¥
4,458
¥
4,471
$
37,205
Unrecognized actuarial loss
2,674
21,895
182,200
Total
¥
7,132
¥
26,367$ 219,414

20

The fair value of plan assets by major category as a percentage of total plan assets at March 31, 2015 and 2014 are as follows:
Millions of yen
2014
2015
Stocks
68%
74%
Bonds
28
16
Cash on hand and in banks
1
6
Other
3
4
Total
100%
100%
Assumptions used in the calculation of the above information are as follows:
2014
2.0%
2.0%

2015
1.2%
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 ¥106 million (US$882 thousand) and ¥98
million for the years ended March 31, 2015 and 2014.

10. Contingent Liabilities
Contingent liabilities at March 31, 2015 and 2014 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 businessNotes discounted

Millions of yen
2014
2015
¥
596
¥
511

Thousands of
U.S. dollars
2015
$
4,252

8,338

63,368

23

19

191

–

688

–

7,615

11. Research and Development Expenses
Research and development expenses for the years ended March 31, 2015 and 2014 totaled ¥3,975 million (US$33,078 thousand)and ¥3,665 million, respectively. They were included in manufacturing cost, selling, general and administrative expenses.

12. Selling, General and Administrative Expenses
Principal selling, general and administrative expenses for the years ended March 31, 2015 and 2014 are as follows:
Thousands ofMillions of yen
U.S. dollars
2014
2015
2015
Freight out¥
17,239¥17,946$ 149,338
Salaries, bonuses and allowances
10,16810,44686,926
Research and development expenses
3,639
3,975
33,078Retirement benefit expense
796
731
6,083

13. Mortgaged Properties
Breakdown of properties pledged as collateral at March 31, 2015 and 2014 are as follows:
Thousands of
U.S. dollars
2015

Millions of yen
2014
2015
Properties pledged as collateral:
Investments in securities

¥

16

¥

16

$

133

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 gain at March 31, 2015 has been recorded as aseparate component of accumulated other comprehensive income.

21

15. Net Assets
Number and types of stock at March 31, 2015 and 2014 are as follows:
Thousands of shares
Number of common
Number of treasury
stocks, issued
stocks109,843
9,915
–
7
–
9,703
109,843
219

March 31, 2014
Increase during the year
Decrease during the year
March 31, 2015

Increase in the number of treasury stocks consists of seven thousand shares due to purchase of shares of less than one unit.
The decrease of 9,703 thousand shares in treasury stock consists of 8,435 thousand shares due to the sales of treasury stock
through public offering, 1,265 thousand shares due to the sales of treasury stock through third-party allocation, two thousand
shares due to the change of the ownership ratio for an affiliate accounted for using the equity method, and less than one thousand
shares due to the sales of the shares less than one unit by the Company upon requests by its shareholders.

16. Cash Dividends
Cash dividends declared are as follows:
Cash dividends payment in the year ending March 31, 2016
Amount of cash
Cash dividends
dividends paid
per share¥4,391 million¥40.0
May 15, 2015 Board of Directors’ Meeting
US$36,539 thousand
US$0.33
Cash dividends payment in the year ended March 31, 2015
Amount of cash
dividends paid
May 19, 2014 Board of Directors’ Meeting¥1,501 million

Cash dividends
per share¥15.0

Record date

Effective dateMar. 31, 2015

Jun. 3, 2015

Record dateMar. 31, 2014

Effective dateJun. 9, 201417. Supplementary Cash Flow Information
The reconciliation of “Cash on hand and in banks” in the Consolidated Balance Sheets at March 31, 2015 and 2014 to “Cash andcash equivalents at end of year” in the Consolidated Statements of Cash Flows for the years then ended are as follows:
Thousands of
U.S. dollars
Millions of yen
2014
2015
2015
Cash on hand and in banks¥
40,869¥26,300$ 218,856
Time deposits and short-term investments with deposit terms
(5)
(5)
(41)
or maturity periods exceeding three months
Other
(170)
(107)
(890)
Cash and cash equivalents at end of year¥
40,694¥
26,187$ 217,916

22

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, 2015 and 2014:
Thousands ofMillions of yen
U.S. dollars
2014
2015
2015
Unrealized gain or loss on available-for-sale securities:
Amount arising during the year
¥
4,548
¥
10,012$
83,315
Reclassification adjustments for gains and losses included––(3,536)in net income
Amount before tax effect
1,011
10,012
83,315
Tax effect(1,087)(2,245)(18,681)
Unrealized gain or loss on available-for-sale securities
(76)
7,766
64,625
Deferred gain or loss on hedges:
Amount arising during the year
Reclassification adjustments for gains and losses included
in net income
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 net income
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 net income
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 net income
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 net income
Amount before tax effectTax effect
Other, net
Total other comprehensive income

23

2,135

3,991

¥

33,211

(1)

(37)

(8)

(3,595)
395
(122)
272

(3,288)(1,190)456(734)(29,915)
3,287(1,015)
2,263

2,202

4,262

18,324

–

–

–

2,202
–
2,202

4,262
–
4,262

18,324–
18,324

20,347–

169,318(1,113)–(9,261)

19,234(163)
19,071–––160,056(1,356)
158,700

9,089

8,838

75,634(336)

316(2,796)

8,752

9,154

72,830

82

208

682

2

2

16

85
(30)
54
38,120

210
(77)
133
12,739

707
(249)
449
317,217¥$

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
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, 2015 and 2014 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, 2015)(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

24

Book value¥ 26,300
79,032Millions of yen
Estimated fairvalue
¥ 26,300
79,032

Unrealized gain
(loss)¥––

42,02768,304(88,576)(59,133)(50,000)

85,07368,304(88,576)(59,133)(50,759)

43,046–––(759)(180,700)
674(185,719)
674(5,018)–(Year ended March 31, 2015)
Thousands of U.S. dollars
Estimated fair
Unrealized gain
Book value
value(loss)$ 218,856$ 218,856$–
657,668
657,668–(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

349,729568,394(737,089)(492,077)(416,077)

707,938
568,394(737,089)(492,077)(422,393)

358,209–––(6,316)(1,503,703)
5,608(1,545,468)
5,608(41,757)–

Book value¥ 40,869
79,470Millions of yen
Estimated fairvalue
¥ 40,869
79,470

Unrealized gain
(loss)¥––

34,833
63,123(94,385)(60,695)(120,000)

69,452
63,123(94,385)(60,695)(121,883)

34,619–––(1,883)(142,819)
279(143,273)
279

(454)
–

(Year ended March 31, 2014)(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

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 and (5) Short-term loans
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.
(6) 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.
(7) 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.
(8) Derivative transactions
Please refer to Note “21. Derivative transactions”.

25

2. Financial instruments for which it is extremely difficult to determine the fair value
In “(3) Marketable securities and investments in securities: Stocks of subsidiaries and affiliates”, the fair value for unlisted
stocks (¥17,732 million (US$147,557 thousand) and ¥20,260 million in the Consolidated Balance Sheets at March 31, 2015
and 2014, 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.
In “(3) Marketable securities and investments in securities: Available-for-sale securities”, the fair value for unlisted
stocks (¥14,702 million (US$122,343 thousand) and ¥14,615 million in the Consolidated Balance Sheets at March 31, 2015
and 2014 respectively.) and others (¥0 million (US$0 thousand) and ¥0 million in the Consolidated Balance Sheets at March
31, 2015 and 2014, 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, 2015 and 2014 are as follows:(Year ended March 31, 2015)
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
¥
–
¥
–
¥
–
¥
26,119Notes and accounts receivable–––
79,032Marketable securities and investments insecurities
Certificate of deposit
5,000
–
–
–
National and local governmental bonds, etc.
–
–
4
11
Total
¥
–
¥ 110,151¥
4¥
11(Year ended March 31, 2015)

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

Within one year
$ 217,350
657,668

41,607–$ 916,626

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

$

–
33
33

$

–
91
91

Over ten years
$
–
–

$

–
–
–

(Year ended March 31, 2014)

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

Within one year
¥ 40,422
79,470¥10,000–129,893

26

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

¥

4
4

¥

11
11

Over ten years
¥
–
–

¥

–
–

20. Securities
Available-for-sale securities(Year ended March 31, 2015)

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
Other
Other
Subtotal
Total

Millions of yen
Acquisition UnrealizedBook value
costgain (loss)

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

32,084$ 518,690$ 251,693$ 266,988

0

133

133

0

32,085$ 518,823$ 251,826$ 266,996$$

62,331¥

30,246

16

¥

16

¥

62,347¥30,262

¥

¥

534

¥

767

¥

¥
¥

421
5,000
5,956
68,304

¥
¥

470
5,000
6,237
36,500¥¥(232) $

4,443

(48)
3,503
–
41,607(280) $ 49,563
31,804 $ 568,394

6,382

3,911
41,607$ 51,901$ 303,736(1,930)(399)–$ (2,330)$ 264,658(Year ended March 31, 2014)
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
Other
Other
Subtotal
Total¥

45,278¥22,14116¥

16

23,136
0¥45,295¥

22,157¥

23,137

¥

6,657

¥

7,648

¥

(990)

¥
¥

1,170
10,00017,82863,123¥¥

1,301
10,00018,94941,107

¥
¥

(130)
–
(1,121)22,015Regarding available-for-sale securities for which fair value information was not available, their aggregate book value on theConsolidated Balance Sheets was ¥14,702 million (US$122,343 thousand) and ¥14,615 million at March 31, 2015 and 2014,
respectively.
Sale of securities classified as available-for-sale securities and the aggregate gain and loss for the years ended March 31, 2015
and 2014 are as follows:(Year ended March 31, 2015)
Thousands ofMillions of yen
U.S. dollars
Sale proceeds
¥
893
$
7,431
Aggregate gain––
Aggregate loss––
(Year ended March 31, 2014)
Millions of yen
¥
9,332
3,536
–

Sale proceeds
Aggregate gain
Aggregate loss

27

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, 2015 and 2014, 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, 2015 and 2014
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.
(1) Currency-related transactions(Year ended March 31, 2015)

Deferral hedge
accounting*

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

Millions of yen
Contract
Contract amountamountover one year

Fair value¥¥

24,867

¥

45

–

–

Total
¥
24,913¥
Measurement method for fair value
Fair values are calculated based on price presented by correspondent financial institutions.

–

675

(0)
¥

674

(Year ended March 31, 2015)

Deferral hedge
accounting

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

Total

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

Fair value$ 206,931

$

$

374
$

207,314

–

–
$

–

5,617

(0)
$

5,608

(Year ended March 31, 2014)

Deferral hedge
accounting*

Forward exchange
contracts andcurrency options
Buy: U.S. dollars

Principle
hedged items
Forecasted
foreign currency
denominatedtransactions

Millions of yen
Contract
Contract amountamountover one year

Fair value

¥

–

¥

279

–

¥

279

23,790¥Total¥
23,790¥Measurement method for fair value
Fair values are calculated based on price presented by correspondent financial institutions.

28

(2) Interest-related transactions(Year ended March 31, 2015)

Special treatment forinterest rate swaps*

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

Millions of yen
Contract
Contract amountamountover one year

Fair value¥¥

42,329¥2,000

42,129

–

*

*

Total
¥
44,329¥42,129¥*Fair value of interest rate swaps which are accounted 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, 2015)

Special treatment forinterest rate swaps

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

Total

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

Fair value$ 352,242$ 350,578$

16,643–$368,885$

350,578**$*(Year ended March 31, 2014)

Special treatment forinterest rate swaps*

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

Millions of yen
Contract
Contract amountamountover one year

Fair value¥¥

41,9402,000¥

41,640

2,000

*

*

Total
¥
43,940¥43,640¥*Fair value of interest rate swaps which are accounted 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.

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, 2015)
Steel Products¥ 583,603

Sales to third parties

29

Millions of yen
Other¥ 33,922

Total¥ 617,525

(Year ended March 31, 2015)
Steel Products$ 4,856,478

Sales to third parties

Thousands of U.S. dollars
Other
Total
$ 282,283$ 5,138,761(Year ended March 31, 2014)
Steel Products¥ 541,972

Sales to third parties

Millions of yen
Other¥ 34,474

Total¥ 576,447

Geographical information(Year ended March 31, 2015)
Millions of yen

Sales to third partiesJapan¥ 484,356

North
America¥ 56,057

Other27,378Total¥ 617,525

Japan$ 4,030,589

Thousands of U.S. dollars
North
America
East Asia
Other$ 466,480$ 413,855$ 227,827

Total$ 5,138,761

East Asia¥ 49,733¥(Year ended March 31, 2015)

Sales to third parties

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

(Year ended March 31, 2014)
Millions of yen
North
America¥ 41,466

Japan¥ 464,206

Sales to third parties

East Asia¥ 46,088¥

Other
24,686

Total¥ 576,447

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 year ended March 31, 2015 is as follows:(Year ended March 31, 2015)
Millions of yen/Thousands of U.S. dollars
Resulting accounting balance
Transaction

Name ofRelatedcompany

Paid-in capital

Principal
business

Equity ownership
percentage by the
consolidated
subsidiary atMar. 31, 2015

Nihon TeppanCo., Ltd.

¥1,300 million
Sale of$10,818 thousand coated steel

50.0%

Canox
Corporation¥2,310 million
Sale of$19,222 thousand coated steel

16.1%

Description of theconsolidated
subsidiary’s
transactions
Sale of the Company’s
coated steel products
to the related party
Sale of the Company’s
coated steel products
to the related party

2015

Account

2015¥71,794$597,436

Accounts receivable¥4,576$38,079¥41,646$346,559

Accounts receivable¥4,837$40,251

Material 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, 2015 and 2014 are as follows:30

(Year ended March 31, 2015)
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$10,818 thousand coated steel

Equity ownership
percentage by the
consolidated
subsidiary atMar. 31, 2015
50.0%

Description of theconsolidated
subsidiary’s
transactions
Purchase of thesteel products by
Tsukiboshi Shoji
Co., Ltd.

2015

Account

2015¥19,255$160,231

Accounts payable¥7,581$63,085(Year ended March 31, 2014)
Transaction

Name ofRelatedcompany
Nihon TeppanCo., Ltd.

Canox
Corporation

Paid-in capital¥1,300 million¥2,310 million

Principal
business
Sale ofcoated steel

Sale ofcoated steel

Equity ownership
percentage by the
consolidated
subsidiary atMar. 31, 2014
50.0%

16.1%

Description of theconsolidated
subsidiary’s
transactions
Sale of the Nisshin
Steel’s coated steel
products to the related
party

Millions of yen
Resulting accounting balance

2014

Account

2014¥68,127

Accounts receivable¥4,300Purchase of thesteel products by
Tsukiboshi Shoji Co.,Ltd.

¥20,914

Accounts payable¥8,833

Sale of the Nisshin
Steel’s coated steel
products to the related
party¥40,867

Accounts receivable¥4,737The significant related company in the year ended March 31, 2015 and 2014 is Acerinox, S.A. Summary of the consolidated
financial condition of Acerinox, S.A. are as follows:
Millions of euros
2014
2015
Total current assets
€
1,790
€
2,159
Total non-current assets
2,200
2,270
Total current liabilities
1,447
1,293
Total non-current liabilities
990
1,279
Total equity
1,553
1,856
Revenues
Profit from ordinary activities
Net profit attributable to the Group

4,380
243
136

3,966
33
22

24. Business Combinations(Transactions under Common Control)(1) Outline of the business combination(i) Name and business of combined entities
Name and business of the acquiring company
Name:
Nisshin Steel Holdings Co., Ltd.
Business: Business management of subsidiaries engaged in manufacture, processing and sales of steel and non-ferrous
metals and business incidental and relating to the foregoing
Names and businesses of the acquired companies
Name:
Nisshin Steel Co., Ltd.
Business: Manufacture, processing and sales of steel products
Name:Business:

Nippon Metal Industry Co., Ltd.
Manufacture, processing and sales of stainless steel and other metal products

31

(ii) Date of the business combination
April 1, 2014(iii) Legal form of the business combination
An absorption-type merger with Nisshin Steel Holdings Co., Ltd. being the surviving company, and Nisshin Steel andNippon Metal Industry being the absorbed companies. Both Nisshin Steel and Nippon Metal were dissolved.
(iv) New trade nameNisshin Steel Co., Ltd.
(v) Main reason for the business combination
On October 1, 2012, the management of Nisshin Steel and Nippon Metal Industry was consolidated and Nisshin Steel
Holdings Co., Ltd. was established as a holding company aiming at forming an organization which would enable thegroup companies to acquire actual consolidated merits as early as possible, such as consolidation of sales departments, inorder to adapt to structural changes in the business environment and to survive against severe competition.
Such management consolidation had been considered with a view to a merger among Nisshin Steel Holdings Co., Ltd.,
Nisshin Steel and Nippon Metal Industry as a further organizational restructuring for the next step to maximize
consolidation merits. Therefore, while the management resources were consolidated, the three companies’ merger
proposals have been examined and investigated in a concrete manner.
In light of further integration in the manufacturing departments and eliminating overlapping functions in theadministration departments so as to maximize consolidation merits, an absorption-type merger was determined to be
consummated under which Nisshin Steel Holdings Co., Ltd. will be the absorption-type merger subsisting company andNisshin steel and Nippon Metal Industry will be the absorbed companies with the effective date being April 1, 2014. At
the same time, the renaming of Nisshin Steel Holdings Co., Ltd. to “Nisshin Steel Co., Ltd.” was also decided.
(2) Accounting Method
This acquisition was accounted for as transactions under common control pursuant to the “Accounting Standard for Business
Combination” (ASBJ Statement No.21, revised on December 26, 2008) and the “Revised Guidance on Accounting Standard
for Business Combinations and Accounting Standard for Business Divestitures” (ASBJ Guidance No.10, revised on
December 26, 2008).

25. Other(1) Information on the consolidated cumulative and quarterly results for the year ended March 31, 2015 is as follows:
Millions of yen(except per share)
1Q
2Q
3Q
4Q
Cumulative results
Net sales¥ 151,058¥ 310,830¥ 459,731¥ 617,525
Income before provision for income taxes
1,110
7,404
15,934
19,224Net Income
33
5,258
12,93016,947
Net income per share*1
¥
0.34
¥
51.79
¥
124.04¥160.51
Quarterly results
Net income per share*1
¥
0.34
¥
50.65
¥
69.98
¥
36.65
Thousands of U.S. dollars(except per share)
2Q
3Q

1Q
Cumulative results
Net sales
Income before provision for income taxes
Net Income
Net Income per share*1
Quarterly results
Net Income per share*1

4Q$ 1,257,035
9,236
274
$
0.00

$ 2,586,585
61,61243,754$
0.43$ 3,825,671
132,595
107,597$
1.03$ 5,138,761
159,973
141,025
$
1.33

$

$

$

$

0.00

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

32

0.42

0.58

0.30

(2) Significant lawsuits and claims, etc.
The Company filed a suit with the Tokyo High Court to rescind the decision rendered by the Japan Fair Trade Commissionthat dismissed the Company’s hearing request regarding a cease and desist order and surcharge payment order issued by theCommission which found the Company’s act in violation of the antimonopoly law in connection with the sale of prepainted
hot dip zinc coated steel sheets and steel bands for building material manufacturers. On December 13, 2013, the Company
received a judgment which dismissed the Company’s claim. Since the Company is dissatisfied with the said judgment, it
filed a final appeal with the Supreme Court on December 26, 2013.

26. Major Subsequent Events(Transfer of additional paid-in capital to the account of retained earnings)
At the Board of Directors’ meeting held on May 15, 2015, the Company resolved to appropriate the Company’s surplus andtransfer additional paid-in capital to retained earnings as follows.
1. Purpose of appropriation of surplus
The Company was established as Nisshin Steel Holdings Co., Ltd. on October 1, 2012 and merged with Nisshin Steel Co., Ltd.
and Nippon Metal Industry Co., Ltd. effective as of April 1, 2014 with the Company being as the surviving company. As aresult of this, the previous retained earnings were transferred to additional paid-in capital. As of the end of March 2015, theCompany’s additional paid-in capital amounted to ¥134,267 million (US$1,117,308 thousand), while its retained earnings
were in a deficit of ¥12,310 million (US$102,438 thousand).
To redress this imbalance of the capital structure, the Company decided to appropriate surplus and transfer additional paid-in
capital to retained earnings by resolution of the Board of Directors in accordance with the provisions of Article 452 andArticle 459 of the Companies Act.
2. Outline of appropriation of surplus
Other additional paid-in capital, which is included in total additional paid-in capital of ¥134,267 million (US$1,117,308
thousand) as of the end of March 2015, is reduced by ¥12,310 million (US$102,438 thousand), and the amount of the
reduction in other additional paid-in capital is transferred to other retained earnings (retained earnings brought forward)
included in retained earnings.
Pursuant to the provision of Article 459, Paragraph 1 of the Companies Act, the Company has stipulated in the Articles ofIncorporation that the Board of Directors may decide on this matter.
(1) Account and amount of surplus decrease
Other additional paid-in capital of ¥12,310 million (US$102,438 thousand) included in additional paid-in capital(2) Account and amount of surplus increase
Other retained earnings (retained earnings brought forward) of ¥12,310 million (US$102,438 thousand) included inretained earnings

33

34

Board of Directors, Corporate Auditors and Executive Officers(As of June 24, 2015)
Directors

Toshinori Miki*1

Yukio Nariyoshi *1
1

Audit and Supervisory Board Members

Koji Mizumoto *Katsuhisa Miyakusu *1

Kenji Minami

Yukio Uchida

Masahiro Sasaki

Hideo Tanaka

Nobuhiro Miyoshi

Isao Endo

Kazuhisa Obama *2

Yukihiro Ito

Koichi Muraoka

Yoichiro Yamakawa

Makoto Haya
President and Chief Executive Officer

Toshinori Miki

Vice-President and Executive Officers

Yukio Nariyoshi

Koji Mizumoto

Katsuhisa Miyakusu
Managing Executive Officers

Kenji Minami

Yukio Uchida

Masahiro Sasaki

Hideo Tanaka

Nobuhiro Miyoshi

Hiroshi Takahashi

Takayuki Kondo

Junya Hayakawa

Junichi Higurashi

Tatsuji Tomiyasu

Shigeru Matsunaga

Kiyoshi Yasui

Toshiaki Naganuma

Atsushi Tsuchiya

Tetsuo Kaharu*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, 2015)

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

Common Stock Price Range(Tokyo Stock Exchange)

2015
High
First Quarter¥ 1,358

Second Quarter
Third Quarter
Fourth Quarter

Low

1,452

991

1,388

777

1,240

823

1,508

1,194

1,690

1,052

1,267

834

47,600Independent Certified Public Accountants

Ernst & Young ShinNihon LLC

Inquiries:
Public & Investor Relations Team
General Administration Department
Nisshin Steel Co., Ltd.
Shin Kokusai Building, 4-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo 100-8366, Japan¥High¥ 1,196

Number of Shareholders

35

Low
875

Note: Years ended March 31.

Telephone: (81)-3 3216-5566 Facsimile: (81)-3 3216-5546

2014

¥

653