Co n s o lidate d B a la n ce S h e e t

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheet
March 31, 2018 and 2019

AssetsCurrent assets:
Cash on hand and in banks (Notes 6 and 18)
Notes and accounts receivable:
Unconsolidated subsidiaries and affiliates
Trade (Note 18)
Other
Less allowance for doubtful accounts
Inventories (Note 5)
Other current assets
Total current assets

Property, plant and equipment, at cost (Notes 7 and 9):Land
Buildings and structures
Machinery and equipment
Leased assets
Construction in progress
Less accumulated depreciation
Property, plant and equipment, net

Intangible assets

Investments and other assets:
Investments in unconsolidated subsidiaries and affiliates
Investment securities (Notes 18 and 19)
Long-term loans receivable
Retirement benefit asset (Note 21)
Deferred tax assets (Note 22)
Other assets
Less allowance for doubtful accounts
Total investments and other assets
Total assets

2018

Millions of yen

Thousands of
U.S. dollars(Note 4)

2019

2019

¥ 79,032¥ 74,304$

669,466

485
54,061757(142)
61,882
4,947
201,024

1,009
63,916223(137)
69,447
6,316
215,080

9,091
575,872
2,009(1,234)
625,705
56,906
1,937,832

10,33571,541
134,3192,701
288
218,905(185,868)
33,3178,250
70,519135,423
2,458
1,764
218,416(183,901)
34,51474,331
635,364
1,220,137
22,146
15,893
1,967,889(1,656,915)
310,965

1,774

2,226

20,056

1,144
34,129293
2,736
20,2163,131(402)
61,249¥ 297,365

1,268
28,412333
2,374
18,5663,091(397)
53,650¥ 305,471

11,424
255,987
3,000
21,389167,276
27,849(3,577)483,377$ 2,752,239

Liabilities and net assets
Current liabilities:
Short-term borrowings (Notes 11 and 18)
Current portion of long-term debt (Notes 11 and 18)
Notes and accounts payable:
Unconsolidated subsidiaries and affiliates
Trade (Note 18)
Other
Advances received for products
Accrued income taxes (Note 22)
Provision for loss on wind power generator business
Provision for business restructuring
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 11 and 18)
Accrued retirement benefits
For directors and corporate auditors
Retirement benefit liability (Note 21)
Deferred tax liabilities (Note 22)
Other long-term liabilities
Total long-term liabilities
Net assets:
Shareholders’ equity (Note 15)
Common stock:
Authorized — 200,000,000 shares
Issued— 74,309,108 shares
Capital surplus
Retained earnings
Treasury stock, at cost(803,082 shares in 2019 and 802,503 shares in 2018)
Total shareholders’ equity
Accumulated other comprehensive income:Unrealized holding gain (loss) on securities
Unrealized gain (loss) from hedging instruments
Translation adjustments
Remeasurement of retirement benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

2018

Millions of yen

Thousands of
U.S. dollars(Note 4)

2019

2019

¥ 12,004
625¥ 12,088
696$ 108,911
6,271

137
54,8191,184
18,843
2,296
3,365
6,389
15,752
115,418

205
55,374
3,685
16,619
3,326
1,887
5,295
13,290112,469

1,847
498,910
33,201
149,734
29,967
17,00247,707
119,741
1,013,326

40,01640,004360,42975
10,046100
13,107
63,34673
10,49490
12,511
63,174658
94,549811
112,722569,186

19,694
5,467
86,256

19,716
5,362
102,915

177,638
48,311
927,246(2,310)109,107(2,312)
125,682(20,831)
1,132,372

7,269
305
(21)
370
7,923
1,569
118,600¥297,365

3,290
(226)
(222)
(115)
2,725
1,419
129,827¥305,471

29,642(2,036)(2,000)(1,036)24,552
12,785
1,169,718$2,752,239

See notes to consolidated financial statements.

28

29

Co n s olidated Statement o f I n co me

Co ns o l idate d Statement o f Co m p re he ns ive I n co m e

Co n s o l idate d Statement o f C h a n g e s i n N e t As s e t s

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Income

Consolidated Statement of Changes in Net Assets

For the years ended March 31, 2018 and 2019

For the years ended March 31, 2018 and 20192018

Net sales
Cost of sales (Note 12)
Gross profit
Selling, general and administrative expenses (Note 12)
Operating income
Other income (expenses):
Interest and dividend income
Interest expense
Impairment loss (Note 9)
Other, net (Note 13)
Income before income taxes
Income taxes (Note 22):
Current
DeferredIncome (Note 28)
Profit attributable to non-controlling interests
Income attributable to shareholders of The Japan Steel Works, Ltd.

¥211,700
162,995
48,70528,126
20,578Millions of yen

Thousands of
U.S. dollars(Note 4)

2019

2019

¥220,153
166,62253,531
29,24024,290$1,983,539
1,501,234
482,305
263,447
218,849827(258)(1,352)(4,902)(5,686)
14,892903(246)(1,623)
5,992
5,027
29,3178,136(2,216)(14,623)
53,98745,292
264,141

3,633
307
10,951238¥ 10,712

5,335
3,791
20,190223¥ 19,966

48,06734,156
181,908
2,009$ 179,890

See notes to consolidated financial statements.

Millions of yen

Shareholders’ equity

Accumulated other comprehensive income

Treasury stock(Note 15)

Total
shareholders’equityUnrealized
holding gain
(loss) on
securities

Unrealized gain
(loss) fromhedging
instruments

Translation
adjustments¥ (2,308)¥ 100,601¥ 6,381¥ (301)¥ (170)Commonstock

CapitalsurplusRetainedearnings

Balance at April 1, 2017
Changes during the year
Cash dividends paid
Income attributable to shareholdersof The Japan Steel Works, Ltd.
Purchases of treasury stock
Disposal of treasury stock
Transfer of loss on disposalof treasury shares
Net changes in items other thanthose in shareholders’ equity
Total changes during the year
Balance at March 31, 2018

¥ 19,694¥ 5,467¥ 77,748—¥19,694—¥ 5,467

8,508¥ 86,256(2)¥ (2,310)

Balance at April 1, 2018
Changes during the year

¥19,694¥5,467¥ 86,256¥ (2,310)22

22Issuance of new shares
Cash dividends paid
Income attributable to shareholdersof The Japan Steel Works, Ltd.
Purchase of shares of consolidated
subsidiaries
Purchases of treasury stock
Net changes in items other thanthose in shareholders’ equity
Total changes during the year
Balance at March 31, 2019

¥ 5,698¥ 1,287¥ 107,587(2,204)(2,204)

10,712

10,712(2)
0

10,712
(2)
0

(2)
0

0

(0)

—

—

8,505
¥ 109,107

887
887¥ 7,269

606
606
¥ 305

149
149
¥ (21)

581
581
¥ 370

2,225
2,225
¥ 7,923282
282¥ 1,569

2,507
11,013¥ 118,600¥109,107¥7,269¥ 305¥ (21)¥ 370¥7,923¥1,569¥118,600(3,307)44(3,307)44(3,307)

19,966

19,966

19,966

(1)

(127)
(1)

(127)
(1)

(1)
¥ (2,312)

16,575¥125,682

(127)

(104)
¥5,362¥ (211)Total
net assets(2,204)(0)

22¥19,716

Total
Remeasurement accumulated
otherbenefit plansadjustments comprehensive Non-controllingincomeinterest(Note 21)

16,659¥102,915(3,978)(3,978)¥3,290(532)(532)¥(226)(200)(200)¥(222)(486)(486)¥(115)(5,197)(5,197)¥2,725(150)(150)¥1,419(5,348)
11,227¥129,827

Thousands of U.S. dollars (Note 4)

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Shareholders’ equity

Accumulated other comprehensive income

Consolidated Statement of Comprehensive Income
For the years ended March 31, 2018 and 20192018

IncomeOther comprehensive income:Unrealized holding gain (loss) on securities
Unrealized gain (loss) from hedging instruments
Translation adjustments
Remeasurement of retirement benefit plans
Total other comprehensive income (Note 14)
Comprehensive income
Total comprehensive income attributable to:Shareholders of The Japan Steel Works, Ltd.
Non-controlling interests

Millions of yen

Thousands of
U.S. dollars(Note 4)

2019

2019

¥10,951¥20,190$181,908

887
606
203
597
2,295
¥13,246(3,978)
(532)
(232)
(478)
(5,221)¥14,968(35,841)(4,793)(2,090)(4,307)(47,040)$134,859¥12,937¥ 308¥14,768¥ 200$133,057$ 1,802

Balance at April 1, 2018
Changes during the year
Issuance of new shares
Cash dividends paid
Income attributable to shareholdersof The Japan Steel Works, Ltd.
Purchase of shares of consolidated
subsidiaries
Purchases of treasury stock
Net changes in items other thanthose in shareholders’ equity
Total changes during the year
Balance at March 31, 2019

Total
shareholders’equityUnrealized
holding gain
(loss) on
securities

Unrealized gain
(loss) fromhedging
instruments

Translation
adjustments$777,151$(20,813) $ 983,035$65,492$ 2,748$ (189)(29,795)

396(29,795)

396(29,795)

179,890

179,890

179,890(1,144)(9)(1,144)(9)

Commonstock

CapitalsurplusRetainedearnings$177,439$49,257

198

198

Treasury stock(Note 15)

(1,144)(9)

198$177,638(937)$48,311

Total
Remeasurement accumulated
otherbenefit plansadjustments comprehensive Non-controllingincomeinterest(Note 21)150,095$927,246(9)
149,338$(20,831) $1,132,372(35,841)(35,841)$29,642(4,793)(4,793)$(2,036)(1,802)(1,802)$(2,000)$ 3,334(4,379)(4,379)$(1,036)$71,385(46,824)(46,824)$24,552$14,136

Total
net assets$1,068,565(1,351)(48,185)(1,351)
101,153$12,785 $1,169,718

See notes to consolidated financial statements.

See notes to consolidated financial statements.

30

31

N o te s to Co n s o lidate d Fi n a n c i a l Statements

Co ns o l idate d Statement o f Ca s h Fl ows

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Cash Flows

Notes to Consolidated Financial Statements

For the years ended March 31, 2018 and 2019

Operating activities
Income before income taxes
Depreciation and amortization
Impairment loss
Interest and dividend income
Interest expense
Equity in losses of affiliates(Gain) loss on valuation of investment securities(Gain) loss on sales of investment securities
Loss on disposal of tangible and intangible assets
Gain on sales of property, plant and equipment and intangible assets
Increase (decrease) in provision for warranties for completed construction
Increase (decrease) in provision for loss on construction contracts
Decrease in provision for loss on wind power generator business
Increase in provision for business restructuring
Changes in operating assets and liabilities:
Trade assets (Note 18)
Trade liabilities
Inventories (Note 5)
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Investing activities
Investments into time deposits
Proceeds from withdrawal of time deposits
Increase in tangible and intangible assets
Decrease in tangible and intangible assets
Proceeds from sale of investment securities
Purchases of investment securities
Reimbursement of long-term deposits on contracts
Payments of long-term loans receivableCollection of long-term loans receivable
Purchase of investments in subsidiaries
Payments for asset retirement obligations
Other
Net cash used in investing activities
Financing activities (Notes 11 and 18)
Net increase (decrease) in short-term borrowings
Increase in long-term debt
Decrease in long-term debt
Cash dividends paid
Acquisition of treasury stock
Repayments of finance lease obligations
Other
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents(Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year (Notes 16 and 18)

Millions of yen

Thousands of
U.S. dollars(Note 4)

2018

2019

2019

¥14,892
4,308
1,352
(827)
258
0
2
(789)
273
(1)
(1,027)(2,184)(1,289)6,389¥ 29,317
4,639
1,623
(903)
246
(89)
51
(263)
228
(3,900)(1,409)(553)(1,478)(1,093)$ 264,141
41,797
14,623(8,136)
2,216
(802)
460
(2,370)2,054(35,138)(12,695)(4,982)(13,317)(9,848)(2,848)
6,101
3,994
(252)
28,351827(257)(2,207)
26,712(13,217)(1,155)(7,618)
376
4,797
893
(265)
(4,334)
1,092(119,083)(10,406)(68,637)
3,388
43,2208,046(2,388)(39,049)
9,839

(607)
657
(6,549)
76
1,869
(12)
(89)
(300)
50
(147)
(15)
(8)
(5,077)(56)544(7,347)
6,057
272
(43)
(177)
(50)
10
(497)
(71)
25
(1,334)

(505)
4,901
(66,195)
54,572
2,451(387)(1,595)(450)
90(4,478)(640)
225(12,019)96
4,500(4,215)(2,204)
(2)
(621)
(9)
(2,457)30
19,20858,671¥77,879

83
250
(242)
(3,307)(1)(550)
9(3,758)(58)(4,059)77,879¥ 73,820

748
2,252(2,180)(29,795)(9)(4,955)
81(33,859)(523)(36,571)
701,676$ 665,105

1. Basis of Presentation
The Japan Steel Works, Ltd. (the “Company”) and its domestic subsidiaries maintain their books of account in conformity with thefinancial accounting standards of Japan, and its foreign subsidiaries maintain their books of account in conformity with those of
their respective countries of domicile.
The accompanying consolidated financial statements havebeen prepared in accordance with accounting principles generally
accepted in Japan, which are different in certain respects as to theapplication and disclosure requirements of IFRS, and have been
compiled from the consolidated financial statements prepared by
the Company as required by the Financial Instruments andExchange Law of Japan.
As permitted by the Financial Instruments and Exchange Law
of Japan, amounts of less than one million yen have been omitted.
As a result, the totals shown in the accompanying consolidated
financial statements (both in yen and in U.S. dollars) do not necessarily agree with the sums of the individual amounts.
Certain amounts in the prior year’s consolidated financial
statements have been reclassified to conform to the current year’s
presentation.
2. Summary of Significant Accounting Policies(a) Principles of consolidation and accounting for investments
in unconsolidated subsidiaries and affiliates
The accompanying consolidated financial statements include theaccounts of the Company and any significant companies controlled directly or indirectly by the Company.
Companies over which the Company exercises significant
influence in terms of their operating and financial policies havebeen accounted for by the equity method. All significant intercompany balances and transactions have been eliminated inconsolidation.
As of March 31, 2019, the numbers of consolidated subsidiaries, and subsidiaries and affiliates accounted for by the equity
method were 31 and 2 (31 and 1 in 2018), respectively.
As a result of the acquisition of additional shares of GM Engineering Co., Ltd., has been included as equity method affiliatesfrom the current fiscal year.
Certain foreign subsidiaries are consolidated on the basis of
fiscal years ended December 31, which differ from that of the Company. However, the necessary adjustments have been made if theeffect of the difference is material.
Investments in subsidiaries and affiliates which are neither
consolidated nor accounted for by the equity method are carriedat cost or less. Where there has been a permanent decline in thevalue of such investments, the Company has written them down.
Differences between the cost and the underlying net equity atfair value of investments in consolidated subsidiaries and in companies accounted for by the equity method have been amortizedby the straight-line method over five years after acquisition andare included in selling, general and administrative expenses.

(b) Foreign currency translation
The balance sheet accounts of the foreign consolidated subsidiaries are translated into yen at the rates of exchange in effect at thebalance sheet date, except for the components of net assets
excluding Non-controlling interests which are translated at their
historical exchange rates. Revenue and expense accounts aretranslated at the average rates of exchange in effect during theyear. Differences arising from the translation are presented astranslation adjustments and Non-controlling interests in the consolidated financial statements.
Revenue and expense items arising from transactions denominated in foreign currencies are generally translated into yen at therates of exchange in effect at the respective transaction dates.
All monetary assets and liabilities denominated in foreign currencies are translated into yen at the rates of exchange in effect atthe balance sheet date and differences arising from the translation
are included in the consolidated statements of income.
(c) Cash equivalents
Short-term investments with a maturity of three months or lesswhen purchased which can easily be converted to cash and are
subject to little risk of change in value are considered to be cash
equivalents.
(d) Inventories
Real estate held for sale, finished products and work in process arestated at the lower of cost or net realizable value determined principally by the specific identification method. Raw materials arestated at the lower of cost or replacement cost determined principally by the moving average method.
(e) Investment securities
Marketable securities classified as other securities are carried atfair value with changes in unrealized holding gain or loss, net ofthe applicable income taxes, included directly in net assets. Nonmarketable securities classified as other securities are carried atcost. Cost of securities sold is determined by the moving averagemethod.
(f) Allowance for doubtful accounts
The allowance for doubtful accounts is provided for possible bad
debts at an amount estimated based on the historical experience
with bad debts on normal receivables plus an additional allowance for specific uncollectible amounts determined by reference
to the collectability of individual doubtful accounts.
(g) Provision for warranties for completed construction
The Company provides a provision for warranties for completed
construction by estimating losses on possible future claims.
(h) Provision for loss on construction contracts
The Company provides a provision for loss on construction contracts, which has not been delivered by the fiscal year end, by estimating the amount of total losses anticipated in the following
fiscal year and thereafter to be incurred, when the amounts can bereasonably estimated.

See notes to consolidated financial statements.

32

33

N o te s to Co n s o l idate d Fi n a n c i a l Statements(i) Provision for loss on wind power generator business
The Company provides a provision for loss on wind power generator business by estimating the amount of total losses caused by
the defects of certain parts used in wind power generators.
(j) Provision for business restructuring
The Company provides a provision for the anticipated losses onwind power generators sold in previous years in order to restructure the wind power generator business.
(k) Property, plant and equipment and depreciation
Depreciation of property, plant and equipment is calculated by the
declining-balance method based on the estimated useful lives andthe residual value determined by the Company, except for certain
buildings which are depreciated by the straight-line method.
Significant renewals and additions are capitalized at cost.
Maintenance and repairs are charged to profit. The estimate useful
lives of the assets are as follows:
Buildings and structures:
6 to 65 years
Machinery, equipment and vehicles: 3 to 20 years(l) Intangible fixed assets
Amortization of intangible fixed assets is calculated using thestraight-line method.
Software products for internal use are amortized mainly overthe estimated useful lives of five years.
(m) Leases and depreciation
Finance lease transactions which do not stipulate the transfer ofownership of the leased assets to the lessee are accounted for aspurchase and sales transactions.
With regard to the depreciation method of leased assets, thestraight-line method is applied using the lease period as the estimated useful life and a residual value of zero.
(n) Retirement benefit
The retirement benefit obligation for employees is attributed toeach period by the benefit formula method.
Prior service cost is being amortized as incurred by thestraight-line method over ten years, which is shorter than the average remaining years of service of the eligible employees.
Actuarial gain or loss is amortized in the year following theyear in which the gain or loss is recognized by the straight-line
method over ten years, which is shorter than the average remaining years of service of the employees participating in the plans.
Certain subsidiaries use a simplified method in the calculationof their retirement benefit obligation.
(o) Income taxes
Deferred tax assets and liabilities have been recognized in the consolidated balance sheets with respect to the differences between
financial reporting and the tax bases of the assets and liabilities,
and are measured using the enacted tax rates and laws which will
be in effect when the differences are expected to reverse.

(q) Revenue and cost recognition
Revenues on sales of products are generally recognized at thetime of shipment.
Revenues and costs, of which the percentage of completioncan be reliably estimated, are recognized by the percentage-of-completion method. The percentage of completion is calculated at the cost incurred as a percentage of the estimated total
cost. The completed-contract method is applied to contracts forwhich the percentage of completion cannot be reliably estimated.
(r) Derivative financial instruments
Derivative financial instruments are carried at fair value. Gain orloss on derivatives designated as hedging instruments is deferred
as a component of net assets until the loss or gain on the underlying hedged items is recognized. Foreign currency receivables andpayables are translated at the applicable forward foreign exchange
rates when certain conditions are met. In addition, the related
interest differential paid or received under interest-rate swaps utilized as hedging instruments is recognized over the terms of theswap agreements as an adjustment to the interest expense of theunderlying hedged items when certain conditions are met.
(s) Consumption tax
Accounting treatment of consumption tax is the tax exclusion
method.
(t) Provision for directors’ bonuses
Provision for directors’ bonuses is provided based on estimatedamounts to be paid in the subsequent period that are applicableto the current year.
(u) Provision for directors’ retirement benefits
Provision for directors’ retirement benefits is provided based on
estimated amounts determined by internal rules.
(v) Standards issued but not yet effective
Accounting Standard and Implementation Guidance on Revenue
Recognition
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).
(1) Overview
This is a comprehensive accounting standard for revenue recognition. Specifically, the accounting standard establishes thefollowing five-step model that will apply to revenue from
customers:
1. Identify the contract(s) with a customer
2. Identify the performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to the performanceobligations in the contract
5. Recognize revenue when (or as) the entity satisfies a
performance obligation(2) Scheduled date of adoption
The Company expects to adopt the accounting standard andimplementation guidance from the beginning of the fiscal
year ending March 31, 2022.
(3) Impact of adoption of accounting standard andimplementation guidance
The Company is currently evaluating the effect of the adoptionof this accounting standard and implementation guidance on
its consolidated financial statements.
3. Accounting Changes(Disclosure for the year ended March 31, 2019)(a) Partial Amendments to Accounting Standard for Tax EffectAccounting
The Company and its consolidated subsidiaries have adopted “Partial Amendments to Accounting Standard for Tax Effect Accounting”(ASBJ Statement No. 28, February 16, 2018) (hereinafter, the“Partial Amendments”) from the beginning of the fiscal year ended
March 31, 2019. As such, deferred tax assets and deferred tax liabilities are included within investments and other assets and longterm liabilities, respectively, and related income tax disclosures
have been expanded.
As a result, ¥7,376 million of deferred tax assets in current
assets previously presented in consolidated balance sheet as ofMarch 31, 2018 have been reclassified and included within ¥20,216
million of deferred tax assets in investments respectively. In addition, deferred tax liabilities of fixed liabilities of ¥168 million
decreased by ¥68 million.
Also, “Note 22 Income Taxes” in the Notes to the consolidated
financial statements has been expanded in accordance with Article 8 and Article 9 of Interpretive Notes to Accounting for Tax EffectAccounting. However, comparative information for the year ended
March 31, 2018 has not been disclosed in Note 22 in accordancewith the transitional provisions set forth in Article 7 of the Partial
Amendments.
(b) Consolidated balance sheet
In the previous consolidated fiscal year, the assets related to thereal estate leasing business, which were included in inventory of
current assets, were changed to buildings and structures of fixed
assets due to a change in management method accompanying
the contraction of the real estate leasing business. It is reclassified
as a building and a structure land.
To reflect this change in presentation, the consolidated financial statements for the previous fiscal year have been reclassified.
As a result, in the consolidated balance sheet of the previous
consolidated fiscal year, inventory of current assets of ¥62,160 million, buildings and structures of fixed assets of ¥71,536 million,
and land of ¥10,059million Although the figure is stated at ¥10,000
million, it has been reclassified as Inventory of ¥61,882 million,
Buildings and structures of ¥71,541 million, and Land of ¥10,335
million.

(c) Consolidated statement of income
The income and expenses related to the real estate leasing business, which were included in sales, cost of sales, and selling, general and administrative expenses in the previous consolidated
fiscal year, are managed according to the contraction of the realestate leasing business. Due to the change, Gain on fixed assets in
Non-operating income has been reclassified.
To reflect this change in presentation, the consolidated financial statements for the previous fiscal year have been reclassified.
As a result, in the consolidated statement of income for theprevious consolidated fiscal year, sales of ¥212,957 million, cost of
sales of ¥163,455 million, Selling, and general administrative
expenses of ¥6,290 million Sales of ¥211,700 million, Cost of sales¥162,995 million, Selling , and general administrative expenses of¥6,236 million, Non-operating income: Rent income on non-current assets of ¥851 million.
4. U.S. Dollar Amounts
The translation of yen amounts into U.S. dollars is included solely
for convenience, as a matter of arithmetic computation only, at¥110.99 = U.S.$1.00, the approximate rate of exchange prevailingon March 31, 2019. This translation should not be construed as arepresentation that all amounts shown could be converted into
U.S. dollars at such rate.
5. Inventories
Inventories at March 31, 2019 and 2018 consisted of the following:

Finished products
Work in process
Raw materials andsupplies
Total

Millions of yen

Thousands of
U.S. dollars

2018

2019

2019

¥ 2,027
54,663¥ 2,767
61,004$ 24,930
549,635

5,191¥61,882

5,675¥69,447

51,131$625,705

Work in process related to construction contracts of which aloss is anticipated to be incurred was offset with a provision forloss on construction contracts of ¥852 million ($7,676 thousand) at
March 31, 2019 and ¥750 million at March 31, 2018.
6. Assets Pledged as Collateral
The assets pledged as collateral for derivative transactions etc., at
March 31, 2019 and 2018 were as follows:
Millions of yen

Time deposit

2018

2019

¥106

¥99

Thousands of
U.S. dollars

2019

$892

Note: The assets pledged as collateral have no corresponding obligations at
March 31, 2019.

(p) Research and development expenses
Research and development expenses are charged to income whenincurred.

34

35

N o te s to Co n s o lidate d Fi n a n c i a l Statements

7. Advanced Depreciation
Accumulated advanced depreciation related to government
grants received has been deducted directly from the acquisition
costs of certain tangible fixed assets (plant, machinery and equipment). Such accumulated depreciation at March 31, 2019 and2018 are summarized as follows:

Accumulated advanced
depreciation expense

Millions of yen

Thousands of
U.S. dollars

2018

2019

2019

¥1,306¥1,455

Millions of yen

Thousands of
U.S. dollars

2018

2019

2019

¥ 293

¥ 435

$ 3,919¥1,592¥1,836$16,542

¥ 242

¥ 941

$ 8,478

¥

3

¥

1

Use

Asset type$9

Property for rent
Land
Other Businesses:
Machinery, equipment andBusiness assets at
vehicles, etc.
investee subsidiary

Fuchu, Tokyo
Muroran,
Hokkaido andGuangdong,China(1) Grouping of assets
The Company and its consolidated subsidiaries (hereinaftercollectively known as the “Group”) determine whether to recognize an impairment loss and measure the loss by grouping
assets based on the smallest units used in management
accounting that generate cash flows which are largely independent and whose revenue and expenditures are identified
on an ongoing basis. Property for rent is grouped by the individual properties. However, the Group determines whether torecognize impairment and measures the impairment on an
individual asset basis if the asset is idle and not expected to be
used in the future.
(2) Circumstances that led to the recognition of
the impairment loss
Carrying amounts of non-current assets were reduced torecoverable amounts and the reduced amounts were recognized in extraordinary losses as impairment loss because
investment amounts were no longer expected to be recovered
due to a decrease in profitability.
Breakdown of the impairment loss is as follows:
Machinery, equipment andvehicles
Land
Other
Total

¥ 19 million
1,597
6¥1,623

Prior fiscal year (From April 1, 2017 to March 31, 2018)
The Group recorded an impairment loss on the following groupsof assets in the prior fiscal year:
Use

Asset type

10. Contingent Liabilities
Contingent liabilities at March 31, 2019 and 2018 consisted of thefollowing:
Millions of yen

Thousands of
U.S. dollars

2018

2019

2019

¥ 92

¥ 68

$ 613

305

243

2,189

Location

Location$13,109

8. Notes Receivable and Notes Payable Maturing at Fiscal
Year-End
Although March 31, 2019 was a bank holiday, notes maturing onthat date were accounted for as if they were settled on their maturity date. The corresponding amounts of notes receivable andnotes payable maturing on March 31, 2019 were as follows:

Trade notes and accounts
receivable
Trade notes and accounts
payableOther current
liabilities
Endorsed trade notes
receivable

9. Impairment Loss
Current fiscal year (From April 1, 2018 to March 31, 2019)
The Group recorded an impairment loss on the following groupsof assets in the current fiscal year:$ 171 thousand
14,38954$14,623(3) Calculation method for recoverable amounts
The property for lease is measured by the net selling price andis evaluated by the real estate appraisal value. For business-use
assets, the recoverable value is measured based on the value
in use, and is assessed based on the memorandum value.

Steel and Energy
Products:
Business assets

Buildings and structures,
Muroran,Machinery, equipment and Hokkaido
vehicles, Tools, furnitureand fixture, Construction inprogress, etc.
Other Businesses:
Machinery, equipment and Muroran,
Business assets
vehicles, Tools, furniture
Hokkaido
and fixture
Other Businesses:
Machinery, equipment and Muroran,
Business assets at
vehicles, Construction in
Hokkaido andinvestee subsidiary progress, etc.
Guangdong,China(1) Grouping of assets
The Group determines whether to recognize an impairment
loss and measures the loss by grouping assets based on thesmallest units used in management accounting that generatecash flows which are largely independent and whose revenue
and expenditures are identified on an ongoing basis.
However, the Group determines whether to recognize
impairment and measures the impairment on an individual
asset basis if the asset is idle and not expected to be used in
the future.
(2) Circumstances that led to the recognition of
the impairment loss
Carrying amounts of non-current assets were reduced torecoverable amounts and the reduced amounts were recognized in extraordinary losses as impairment loss because
investment amounts were no longer expected to be recovered
due to a decrease in profitability.
Breakdown of the impairment loss is as follows:
Buildings and structures
Machinery, equipment andvehiclesTools, furniture and fixtures
Construction in progress
Other
Total

¥ 145 million
718
129
174
184
¥1,352As endorsers of trade notes
receivable:
Endorsed to otherAs guarantors of loans:
Muroran Environmental
Plant Service Co., Ltd.
Obligation to guarantee
uncollected receivablesof leasing companies
Gotsu Wind Power
Co., Ltd
Employees and other

8

—

—

849
13

720
4

6,487
36

11. Short-Term Borrowings and Long-Term Debt
All short-term borrowings, with interest at annual rates ranging
from 0.2690% to 1.4750% at March 31, 2019 and 0.2454% to1.4750% at March 31, 2018, were unsecured.
Long-term debt at March 31, 2019 and 2018 were as follows:

Loans from banks andinsurance companies withinterest at annual rates
ranging from 0.1934% to0.9609%Less those maturing within
one yearLease obligations
Less those maturing within
one yearLong-term indebtedness
reflected in the
consolidated balance
sheetsMillions of yen

Thousands of
U.S. dollars

2018

2019

2019

¥39,401¥39,408$355,059

(132)
1,241

(199)
1,292

(1,793)
11,641

(493)

(496)

(4,469)¥40,016¥40,004$360,429(3) Calculation method for recoverable amounts
Recoverable amounts of the groups of assets are calculated atvalue in use. It is evaluated by memorandum value.

36

37

N o te s to Co n s o l idate d Fi n a n c i a l Statements

The aggregate annual maturities of long-term debt and leaseobligations subsequent to March 31, 2019 are summarized asfollows:
Millions of yen

Year ending March 31,

Thousands of
U.S. dollars Millions of yen

Long-term loans

Thousands of
U.S. dollars

14. 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, 2019 and 2018:

Lease obligations
2018

2020
2021
2022
2023
2024
2025 and thereafter

¥

199
5,000
1,800
15,7002,208
14,500$1,793
45,04916,218141,454
19,894130,642

¥496
346
234
148
63
2

$4,469
3,117
2,108
1,333
568
18

12. Research and Development Expenses
Research and development expenses included in manufacturingcosts, and selling, general and administrative expenses for theyears ended March 31, 2019 and 2018 were as follows:
Millions of yen

Thousands of
U.S. dollars

2019

2019

2018

Research and development
expenses¥4,369¥4,506$40,598

13. Other Income (Expenses)—Other, Net
The details of “Other, net” in “Other income (expenses)” for theyears ended March 31, 2019 and 2018 were as follows:
Millions of yen

Thousands of
U.S. dollars

2019

2019

2018

Foreign exchange
gain (loss)
Equity in gain (losses) ofaffiliates
Gain on sales of property,
plant and equipment
Gain on sales ofinvestment securities
Rent income on
non-current assets
Cancellation fee received
Loss on sales or disposal ofproperty, plant andequipment
Provision for businessrestructuring
Other, net
Total

38

¥ (115)

¥

38

$

342

(0)

89

802

30

3,933

35,436

791

263

2,370

851
33

786
1,186

7,082
10,686

(302)

(260)

(2,343)(6,389)197¥(4,902)(711)
666¥5,992(6,406)
6,001$53,987

Unrealized holding gain
(loss) on securities:
Amount arising during
the year
Reclassification
adjustments for gains
and losses realized in
net income
The amount of
unrealized holding gain
(loss) on securities
before tax effectTax effectUnrealized holding gain
(loss) on securities
Unrealized gain (loss) fromhedging instruments:
Amount arising during
the yearTax effectUnrealized gain (loss) fromhedging instruments
Translation adjustments:
Amount arising during
the yearTranslation adjustments
Remeasurement benefits
plans adjustments:
Amount arising during
the year
Reclassification
adjustments for gains
and losses realized in
net income
The amount of
unrealized holding gain
(loss) on securities
before tax effectTax effectRemeasurement benefits
plans adjustments
Total other comprehensive
incomeMillions of yen

Thousands of
U.S. dollars

2019

2019

15. Supplementary Information for Consolidated Statementof Changes in Net Assets
Year ended March 31, 2019(a) Information regarding the number and type of sharesissued and treasury stock:¥(5,750)$(51,806)

(793)

51

460

1,257
(369)

(5,699)1,720(51,347)
15,497887(3,978)(35,841)

Shares issued:
Common stock
Treasury stock:
Common stock(Notes 1 and 2)

(765)
233

(6,892)
2,099

606

(532)

(4,793)

203
203

(232)
(232)

(2,090)(2,090)(951)(8,568)

95

261

2,352

863
(265)

(689)
210

(6,208)
1,892

597

(478)

(4,307)¥2,295¥(5,221)$(47,040)

Decreaseduringthe yearYear ended
March 31,2019

16,501—

74,309,108

802,503

579—

803,082

Notes: 1. The increase in shares issued – common stock of 16,501 was due toissuance of new shares as restricted stock.
2. The increase in treasury stock – common stock of 579 was due to theacquisition of fractional shares of less than one unit.

(b) Dividends(i) Dividends paid to shareholders
Annual general meeting ofshareholders held on June 26, 2018
Common stock

Type of shares:
Total amount ofdividends:¥1,469 million ($13,235 thousand)
Dividends per share: ¥20.0 ($0.180)
Cut-off date:
March 31, 2018
Effective date:June 27, 2018

Note: Dividends per share include ¥2.5 of commemorative 110th anniversary
dividend.

Resolution:
767

Increaseduringthe year

74,292,607

Resolution:
874
(267)

Number of sharesYear ended
March 31,2017

Number of sharesYear ended
March 31,2018

¥2,050Year ended March 31, 2018(a) Information regarding the number and type of sharesissued and treasury stock:Meeting of Board of Directors held on
November 5, 2018
Common stock

Type of shares:
Total amount ofdividends:¥1,837 million ($16,551 thousand)
Dividends per share: ¥25.0 ($0.225)
Cut-off date:
September 30, 2018
Effective date:
December 5, 2018(ii) Dividends of which the cut-off date was in the year ended
March 31, 2019, but the effective date is in the following fiscal
year
Resolution:
Annual general meeting ofshareholders held on June 21, 2019
Type of shares:
Common stock
Total amount ofdividends:¥2,205 million ($19,867 thousand)
Dividends per share: ¥30.0 ($0.270)
Cut-off date:
March 31, 2019
Effective date:June 24, 2019
Source of dividends: Retained earnings

Shares issued:
Common stock
Treasury stock:
Common stock(Notes 1 and 2)

Increaseduringthe year

Decreaseduringthe yearYear ended
March 31,2018

74,292,607——

74,292,607

801,4801,055

32

802,503

Notes: 1. The increase in treasury stock – common stock of 1,055 was due to theacquisition of fractional shares of less than one unit.
2. The decrease in treasury stock – common stock of 32 was due to salesof fractional shares of less than one unit.

(b) Dividends(i) Dividends paid to shareholders
Resolution:

Annual general meeting ofshareholders held on June 27, 2017
Common stock

Type of shares:
Total amount ofdividends:¥918 million
Dividends per share: ¥12.5
Cut-off date:
March 31, 2017
Effective date:June 28, 2017
Resolution:

Meeting of Board of Directors held on
November 6, 2017
Type of shares:
Common stock
Total amount ofdividends:¥1,286 million
Dividends per share: ¥17.5
Cut-off date:
September 30, 2017
Effective date:
December 6, 2017(ii) Dividends of which the cut-off date was in the year ended
March 31, 2018, but the effective date is in the following fiscal
year
Resolution:

Annual general meeting ofshareholders held on June 26, 2018
Common stock

Type of shares:
Total amount ofdividends:¥1,469 million
Dividends per share: ¥20.0
Cut-off date:
March 31, 2018
Effective date:June 27, 2018
Source of dividends: Retained earnings

Note: Dividends per share include ¥2.5 of commemorative 110th anniversary
dividend.

39

N o te s to Co n s o lidate d Fi n a nc i al Statements

16. Cash Flow Information(a) Cash and cash equivalents
The reconciliation between cash and cash equivalents in theaccompanying consolidated statements of cash flows and cash on
hand and in banks in the accompanying consolidated balance
sheets at March 31, 2019 and 2018 are summarized as follows:
Millions of yen

Thousands of
U.S. dollars

2019

2019

2018

Cash on hand and in banks
in the consolidatedbalance sheet
Other current assets
Time deposits withmaturities of more than
three months
Cash and cash equivalentsin the consolidated
statement of cash flows¥79,032
156¥74,304
283$669,466
2,550(1,309)(768)(6,920)¥77,879¥73,820$665,105(b) Significant transactions without cash flows
Assets and liabilities corresponding to finance lease transactions
that have been recorded by the Company and its domestic
consolidated subsidiaries at March 31, 2019 and 2018 were as
follows:
Millions of yen

Lease assets
Lease obligations

2018

2019

¥402
433

¥557
601

Thousands of
U.S. dollars

2019$5,0185,415

17. Leases
Year ended March 31, 2019
Future minimum lease payments subsequent to March 31, 2019
under non-cancelable operating leases are summarized asfollows:
Year ending March 31,

Millions of yen

Thousands of
U.S. dollars

2020
2021 and thereafter
Total

¥110
179
¥289

$ 991
1,613
$2,604

Year ended March 31, 2018
Future minimum lease payments subsequent to March 31, 2018
under non-cancelable operating leases are summarized asfollows:
Year ending March 31,
20192020 and thereafter
Total

40

Millions of yen

¥ 72
145
¥217

18. Financial Instruments
Overview(a) Policy for financial instruments
In consideration of plans for operations and capital investment,
the Group utilizes funds provided by operating cash flows first. The
Group uses bond issuances and bank borrowings in order to raise
additional funds, if needed. The Company manages temporary
cash surpluses through low-risk financial assets. The Company
uses derivatives for the purpose of reducing risks and does notenter into derivative contracts for speculative or trading purposes.
(b) Types of financial instruments and related risk
Trade receivables – trade notes and accounts receivable – areexposed to credit risk in relation to customers. In addition, theCompany is exposed to foreign currency exchange risk arisingfrom receivables denominated in foreign currencies. The foreign
currency exchange risks deriving from the trade receivables
denominated in foreign currencies are hedged by forward foreignexchange contracts, if needed.
Investment securities are exposed to market risk. These
securities are mainly composed of the shares of common stock ofcompanies with which the Company has business relationships.
Trade payables – trade notes and accounts payable – havepayment due dates within one year. Since the Company is exposed
to foreign currency exchange risk arising from those payables
denominated in foreign currencies, forward foreign exchange
contracts are arranged to reduce the risk, if needed.
Loans payable are used to raise funds mainly in connection
with capital investments. The repayment dates of the long-term
debts extend up to nine years from the balance sheet date. Longterm debt with variable interest rates is exposed to interest rate
fluctuation risk and foreign currency exchange risk. However, toreduce such risk and fix the interest payments for long-term debt
with variable rates, the Company utilizes interest rate swap
transactions and interest-rate currency swaps as hedging
instruments.
Regarding derivatives, the Company enters into forward
foreign exchange contracts to reduce the foreign currency
exchange risk arising from the receivables and payables denominated in foreign currencies. The Company also enters into interest
rate swap transactions and interest-rate currency swaps to reduce
the fluctuation risk of interest payments for long-term debt withvariable rates.
Information regarding the method of hedge accounting,hedging instruments and hedged items, hedging policy, and theassessment of the effectiveness of hedging activities is found in
Note 2 (p).

(c) Risk management for financial instruments(i) Monitoring of credit risk (the risk that customers or
counterparties may default)
In accordance with the internal policies of the Company for
managing credit risk arising from receivables, each related
division monitors credit worthiness of their main customers
periodically, and monitors due dates and outstanding balances by individual customer. In addition, the Company ismaking efforts to identify and mitigate risks of bad debts from
customers who are having financial difficulties. The consolidated subsidiaries also manage credit risk using the Company’s
internal policies and methods.
The Company also believes that the credit risk of derivatives is insignificant as it enters into derivative transactions
only with financial institutions which have a high credit-rating.
(ii) Monitoring of market risk (the risk arising from fluctuations inforeign exchange rates, interest rates and others)
For trade receivables and payables denominated in foreign
currencies, the Company identifies the foreign currency
exchange risk for each currency on a monthly basis and enters
into forward foreign exchange contracts to hedge such risk. In
order to mitigate the interest rate risk for loans payable bearing interest at variable rates, the Company may also enter into
interest rate swap transactions and interest-rate currency
swaps.
For investment securities, the Company periodicallyreviews the fair values of such financial instruments and thefinancial position of the issuers. In addition, the Company continuously evaluates whether securities should be maintained
taking into account their fair values and relationships with theissuers.
In conducting derivative transactions, the division in
charge of each derivative transaction follows the internal policies, which set forth delegation of authority. Monthly reports
including actual transaction data are submitted to top management for their review. The consolidated subsidiaries also
conduct derivative transactions using the Company’s internal
policies.
(iii) Monitoring of liquidity risk (the risk that the Company may
not be able to meet its obligations on scheduled due dates)
Based on the report from each division, the Company preparesand updates its cash flow plans on a timely basis to manage
liquidity risk. The consolidated subsidiaries manage the liquidity risk using cash flow plans and report to the Company
periodically.
(d) Supplementary explanation of the estimated fair value offinancial instruments
The fair value of financial instruments is based on their quoted
market price, if available. When there is no available quoted market price, fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different
assumptions and factors could result in different fair value. In addition, the notional amounts of derivatives in Note 20 Derivative
Transactions are not necessarily indicative of the actual market risk
involved in derivative transactions.

Estimated Fair Value of Financial Instruments
Carrying value of financial instruments on the consolidated balance sheet as of March 31, 2019 and estimated fair value areshown in the following table. The following table does not include
financial instruments for which it is extremely difficult to determine the fair value (Please refer to Note (ii) below).
Year ended March 31, 2019
Millions of yen

AssetsCash on hand and inbanks
Trade notes andaccounts receivable
Securities:
Other securities
Total assets
Liabilities
Trade notes andaccounts payable
Short-term borrowings
Current portion of
long-term debt
Long-term debt
Total liabilities
Derivatives (*)

Carrying
amountEstimated
fair value

Difference¥ 74,304¥ 74,304¥ —64,92164,921(0)26,852¥166,078

26,852¥166,077—¥ (0)¥ 55,579
12,088¥ 55,579
12,088¥ ——199
39,208¥107,076
¥
(326)

199
39,723¥107,590
¥
(326)

0
514
¥514
—

Carrying
amountEstimated
fair value$ 669,466$ 669,466

584,927584,927

241,932$1,496,333

241,932$1,496,324$ 500,757
108,911$ 500,757
108,911

Thousands of U.S. dollars

AssetsCash on hand and inbanks
Trade notes andaccounts receivable
Securities:
Other securities
Total assets
Liabilities
Trade notes andaccounts payable
Short-term borrowings
Current portion of
long-term debt
Long-term debt
Total liabilities
Derivatives (*)

1,793
1,793
353,257
357,897$ 964,736 $ 969,367$(2,937) $(2,937)

Difference

$

—
(0)

$

$

—
(0)

—
—

0
4,631
$4,631—(*) The value of assets and liabilities arising from derivatives is shown at net value,with the amount in parentheses representing net liability position.

41

N o te s to Co n s o lidate d Fi n a n c i a l Statements

Year ended March 31, 2018
Millions of yen

Carrying
amountAssetsCash on hand and inbanks
Trade notes andaccounts receivable
Securities:
Other securities
Total assets
Liabilities
Trade notes andaccounts payable
Short-term borrowings
Current portion of
long-term debt
Long-term debt
Total liabilities
Derivatives (*)

Estimated
fair value

Difference¥ 79,032¥ 79,032¥ —54,54254,541(0)

32,589¥166,164

32,589¥166,163—¥ (0)¥ 54,957
12,004132
39,268¥106,362¥
436¥ 54,957
12,004
145
39,860¥106,967
¥
436

¥ —
—
12
591
¥604
—

(*) The value of assets and liabilities arising from derivatives is shown at net value,with the amount in parentheses representing net liability position.

(i) Method to determine the estimated fair value of financial
instruments and other matters related to securities andderivative transactions
AssetsCash on hand and in banks
The carrying amount is used for bank deposits without maturities, because the fair value approximates the carrying value.
The fair value of time deposits in banks with maturities is calculated based on the present value of the total principal andinterest discounted at a rate supposing a newly made deposit.
Trade notes and accounts receivables
The fair value is calculated by categories of the remaining
periods of the receivables based on the present value using
discount rates determined by the period to maturity and credit
risk.
Securities
The carrying amount is used for other securities with maturities, because the fair value approximates the carrying amount.
Quoted market price is used for other securities.
Liabilities
Trade notes and accounts payable and short-termborrowings
The carrying amount is used for these items because the fairvalue approximates the carrying amount.

42

Current portion of long-term debt and long-term debt
The fair values are calculated by applying a discount rate,
based on the assumed interest rate if a similar new debt isissued, to the total of the principal and interest. The current
portion of long-term debt and long-term debt with variableinterest rates are subject to the special treatment of interest
rate swaps or the integral treatment of interest rate currency
swaps and is calculated by applying a discount rate, based on
the assumed interest rate if a similar new debt is issued, to thetotal of the principal and interest including that of the interest
rate swap.
Derivative transactions
Please refer to Note 20 Derivative Transactions, of the notes tothe consolidated financial statements.
(ii) Financial instruments for which it is extremely difficult todetermine the fair value

2018

Unlisted stocks¥2,081Millions of yen

Thousands of
U.S. dollars

2019

2019

¥2,226$20,056

Because the fair values of these financial instruments are
extremely difficult to determine, given that they do not havequoted market prices and future cash flows cannot be estimated, they are not included in “Securities” in the precedingtable.

Year ended March 31, 201819. Securities(a) Other securities
Millions of yen

Due after
one yearthroughfive years

Due after
five years¥ 79,032¥ ——53,980¥133,012

561
¥561

—
—

Due inone yearor less

Cash on hand andin banks
Trade notes andaccounts receivable
Total

March 31, 2019
Millions of yen(iv) The redemption schedule for long-term debt
Year ended March 31, 2019

Carrying amountexceeding theacquisition cost:
StocksCarrying amount notexceeding theacquisition cost:
Stocks
Total

Acquisition
cost

Carrying
amountUnrealized
gain (loss)¥14,079¥21,598¥ 7,519

8,041¥22,120

5,253¥26,852(2,787)¥ 4,731

Acquisition
cost

Carrying
amountUnrealized
gain (loss)$126,849$194,594$ 67,745

72,448$199,297

47,329$241,932(25,110)$ 42,625

Acquisition
cost

Carrying
amountUnrealized
gain (loss)¥13,441¥25,824¥12,382

8,721¥22,163

6,765¥32,589(1,956)¥10,425

Thousands of U.S. dollars

Millions of yen

Long-termloans

Due in 1 year or lessDue after 1 year through 2 years
Due after 2 years through 3 years
Due after 3 years through 4 years
Due after 4 years through 5 years
Due after 5 years(iii) Redemption schedule for receivables and securities withmaturities at March 31, 2019 and 2018

¥

199
5,000
1,800
15,7002,208
14,500Lease
obligations

¥496
346
234
148
63
2

Thousands of U.S. dollars

Long-term
loans

Lease
obligations

Carrying amountexceeding theacquisition cost:
StocksCarrying amount notexceeding theacquisition cost:
StocksTotal
March 31, 2018

Millions of yen

Year ended March 31, 2019
Millions of yen

Due after
one yearthroughfive years

Due after
five years¥ 74,304¥ ——64,593¥138,898

327
¥327

—
—

Due inone yearor less

Cash on hand andin banks
Trade notes andaccounts receivable
Total

$

1,793
45,04916,218141,454
19,894130,642$4,469
3,117
2,108
1,333
568
18

Year ended March 31, 2018

Thousands of U.S. dollars

Cash on hand andin banks
Trade notes andaccounts receivable
Total

Due in 1 year or lessDue after 1 year through 2 years
Due after 2 years through 3 years
Due after 3 years through 4 years
Due after 4 years through 5 years
Due after 5 years

Due inone yearor less

Due after
one yearthroughfive years$ 669,466$—

Due after
five years—

Millions of yen

Long-termloans

Due in 1 year or lessDue after 1 year through 2 years
Due after 2 years through 3 years
Due after 3 years through 4 years
Due after 4 years through 5 years
Due after 5 years

¥

132
60
5,000
1,800
15,70016,708Lease
obligations

¥493
366
218
114
43
4

Carrying amountexceeding theacquisition cost:
StocksCarrying amount notexceeding theacquisition cost:
Stocks
Total

When their fair values have declined by 50% or more, impairment
losses are recorded on those securities. When their fair values havedeclined by 30% up to 50%, impairment losses are recorded on
those securities on an individual basis to the values considered tobe recoverable.
(b) Impairment of investment securities
For the year ended March 31, 2019

581,971$1,251,446

2,946$2,946——

Other securities
Stock

Millions of yen¥51

Thousands of
U.S. dollars

$460

43

N o te s to Co n s o lidate d Fi n a n c i a l Statements

20. Derivative Transactions(a) Derivatives not subject to hedge accounting

Year ended March 31, 2018
Millions of yen

Year ended March 31, 2019
None applicableYear ended March 31, 2018
None applicable

Hedge accounting method

Type of derivative

Principal items hedged

Allocation method

Foreign exchange forward contracts
Sell:
U.S. dollars
Euros
Canadian dollars
Thai baht
JPY
Foreign exchange forward contracts
Buy:
U.S. dollars
Euros
Sterling pound

Accounts receivable(b) Derivatives subject to hedge accounting
The contract amounts or the amount corresponding to principal as specified by the contract as of the date of the closing of the consolidated
accounts is shown below by type of hedge accounting method.
(i) Currency-related transactions
Year ended March 31, 2019

Contract
amountOver
one year

Fair value¥10,853
1,688
75
33
31

¥1,258
185
—
—
—

¥473
11
5
(1)
2

¥

¥

—
—
125

¥ (22)(5)(27)

Contract
amountOver
one year

Fair value¥25,000¥25,000

(*)

708

708

(*)

Contract
amountOver
one year

Fair value$225,246$225,246

(*)

6,379

6,379

(*)

Accounts payable
617
852
255

Millions of yen

Hedge accounting method

Type of derivative

Principal items hedged

Allocation method

Foreign exchange forward contracts
Sell:
U.S. dollars
Euros
JPY
Foreign exchange forward contracts
Buy:
U.S. dollars
Euros
Sterling pound

Accounts receivable

Contract
amountOver
one year

Fair value¥17,161
1,557
41¥2,670131—¥(266)
30(0)Note: Calculation of fair value is based on the forward exchange rates.

(ii) Interest-related transactions

Accounts payable
¥

853
2,661
124

¥

—
682
—

¥

8
(84)
(14)

Thousands of U.S. dollars

Hedge accounting method

Type of derivative

Principal items hedged

Allocation method

Foreign exchange forward contracts
Sell:
U.S. dollars
Euros
JPY
Foreign exchange forward contracts
Buy:
U.S. dollars
Euros
Sterling pound

Accounts receivable

Contract
amountOver oneyear

Fair value$154,618
14,028369$24,056
1,180—$(2,397)
270
(0)

$

$

$

Year ended March 31, 2019
Millions of yen

Hedge accounting method

Type of derivative

Principal items hedged

Special treatment forinterest rate swaps
Integral treatment forinterest rate currency swaps:(Special treatment andallocation method)

Receive/floating and pay/fixedLong-term borrowings

Receivable USD and floating rate/
payable JPY and fixed rateLong-term borrowings

Thousands of U.S. dollars

Accounts payable
7,685
23,975
1,117

—
6,145
—

72
(757)
(126)

Hedge accounting method

Type of derivative

Principal items hedged

Special treatment forinterest rate swaps
Integral treatment forinterest rate currency swaps:(Special treatment andallocation method)

Receive/floating and pay/fixedLong-term borrowings

Receivable USD and floating rate/
payable JPY and fixed rateLong-term borrowings

Note: Calculation of fair value is based on the forward exchange rates.
(*) Interest rate swaps subject to the special treatment for interest rate swaps and interest rate currency swaps subject to integral treatment for interest rate currency swaps
are accounted for together with the long-term debt, accordingly the fair value of the interest rate swaps is included in the fair value of the corresponding long-term debt.
Note: Calculation of fair value is based on the stated price by financial institutions.

4445

N o te s to Co n s o lidate d Fi n a n c i a l Statements

Year ended March 31, 2018
Millions of yen

Hedge accounting method

Type of derivative

Principal items hedged

Special treatment forinterest rate swaps
Integral treatment forinterest rate currency swaps:(Special treatment andallocation method)

Receive/floating and pay/fixedLong-term borrowings

Receivable USD and floating rate/
payable JPY and fixed rateLong-term borrowings

Contract
amountOver
one year

Fair value

Millions of yen¥25,000

708¥25,000

708(*)

Note: Calculation of fair value is based on the stated price by financial institutions.

The changes in the retirement benefit obligation for the years
ended March 31, 2019 and 2018 are as follows:

Balance at the beginningof the year
Service cost
Interest cost
Actuarial gain and loss
Retirement benefit paid
Prior service cost
Balance at the endof the year

Millions of yen

Thousands of
U.S. dollars

2018

2019

2019

¥20,128
1,119
120
(237)
(1,338)—¥19,792
996
112
438(1,328)20$178,322
8,974
1,009
3,946
(11,965)
180¥19,792¥20,031$180,476

The changes in plan assets for the years ended March 31, 2019 and2018 are as follows:

2018

Balance at the beginningof the year
Expected return on plan
assetsActuarial gain and loss
Contributions by theCompany
Retirement benefits paid
Balance at the end
the year

Millions of yen

Thousands of
U.S. dollars

2019

2019

¥14,969¥15,517$139,805

299
529

310
(493)

2,793
(4,442)

479
(760)

475
(885)

4,280
(7,974)¥15,517¥14,924$134,463

The changes in retirement benefit liability accounted for using thesimplified method for the years ended March 31, 2019 and 2018
are as follows:

Balance at the beginningof the year
Retirement benefit
expenses
Retirement benefits paid
Contributions
Balance at the end
the year

2018

(*)

(*) Interest rate swaps subject to the special treatment for interest rate swaps and interest rate currency swaps subject to integral treatment for interest rate currency swaps
are accounted for together with the long-term debt, accordingly the fair value of the interest rate swaps is included in the fair value of the corresponding long-term debt.

21. Retirement Benefit Plans
The Company and its consolidated subsidiaries have either fundedor unfunded defined benefit plans and/or defined contributionplans.
The Company and its domestic consolidated subsidiaries havedefined benefit plans, i.e. lump-sum payment plans, defined benefit plans, welfare pension fund and tax-qualified pension plans,
covering substantially all employees who are entitled to lump-sum
or annuity payments, the amounts of which are determined by reference to their basic rates of pay, length of service, and the conditions under which termination occurs.

The following table sets forth the funded status of the plans andthe amounts recognized in the consolidated balance sheets as ofMarch 31, 2019 and 2018 for the Company’s and the consolidated
subsidiaries’ defined benefit plans:Millions of yen

Thousands of
U.S. dollars

2018

2019

2019

¥2,989¥3,034$27,336

592
(361)
(185)

642
(473)
(191)

5,784
(4,262)(1,721)¥3,034¥3,012$27,138

Funded retirement benefit
obligation
Plan assets at the value
Unfunded retirement
benefit obligation
Net liability for retirement
benefits in the balance
sheet
Retirement benefit liability
Retirement benefit assets
Net liability for retirement
benefits in the balance
sheet¥ 19,587(16,717)
2,869

2019

Thousands of
U.S. dollars¥ 19,804 $ 178,430(16,180) (145,779)
3,623
32,643
4,496

40,5087,309
10,046(2,736)

8,119
10,494(2,374)73,151
94,549(21,389)¥ 8,119$ 73,151

The components of retirement benefit expense for the years
ended March 31, 2019 and 2018 are as follows:
Millions of yen

Service cost
Interest cost
Expected return on plan
assetsAmortization of actuarial
gain and loss
Amortization of priorservice cost
Simplified method for
retirement benefit
expenses
Other
Retirement benefit
expenseMillions of yen

2019

4,439

¥ 7,309

The components of retirement benefits plans adjustments
included in other comprehensive income (before tax effect) for theyears ended March 31, 2019 and 2018 are as follows:

Thousands of
U.S. dollars

2018

2019

2019

¥1,119
120

¥ 996
112

$ 8,974
1,009

(299)

(310)

(2,793)

95

261

2,352

—

2

18

592
45

642
42

5,784
378

¥1,674¥1,747$15,740

Prior service costs
Actuarial gain and loss
Total

Thousands of
U.S. dollars

2018

2019

2019

¥ —
863
¥863

¥ (18)(670)¥(689)$ (162)(6,037)$(6,208)

The components of retirement benefits plans adjustments
included in accumulated other comprehensive income (before tax
effect) as of March 31, 2019 and 2018 are as follows:

Unrecognized prior service
costs
Unrecognized actuarial
gain and loss
Total

Millions of yen

Thousands of
U.S. dollars

2018

2019

2019

¥ —

¥ (18)$ (162)

531
¥531

(138)
¥(157)(1,243)$(1,415)

The fair value of plan assets, by major category, as a percentage of
total plan as of March 31, 2019 and 2018 is as follows:
March 31,

Bonds
StocksCash on hand and in banks
General account
Other
Total

2018

2019

29%
44
0
16
11
100%

30%
44
0
17
9
100%

Retirement benefit trust set for the lump-sum and corporate pension plans accounts for 20% and 20% of the total plan assets, forthe years ended March 31, 2019 and 2018, respectively.
The expected return on assets has been estimated based on
the anticipated allocation to each asset class and the expectedlong-term returns on assets held in each category.
The assumptions used in accounting for the above plans are as
follows:
March 31,

Discount rates
Expected rates of return on plan assets

2018

2019

0.62%
2.00

0.51%
2.00

Contributions made to defined contribution plans for the years
ended March 31, 2019 and 2018 were ¥64 million ($577 thousand)and ¥68 million, respectively.

46

47

N o te s to Co n s o lidate d Fi n a n c i a l Statements

22. Income Taxes
The significant components of the Company’s deferred tax assets
and liabilities at March 31, 2019 and 2018 were as follows:
Millions of yen

Thousands of
U.S. dollars

2019

2019

2018

Deferred tax assets:
Accrued enterprise taxes
Accrued bonuses
Depreciation
Amortization of long-term
prepaid expenses
Loss on revaluation of
inventory items
Loss on revaluation offinancial instruments
Impairment loss
Retirement benefit liability
Provision for warranties forcompleted construction
Provision for loss on
construction contracts
Provision for loss on wind
power generator business
Provision for businessrestructuring
Less allowance for doubtful
accounts
Asset retirement obligations
Percentage-of-completion
methodTax loss carry forwards
Unrealized loss on
investment securities
Deferred loss on hedges
Unrealized gain on
intercompany transactions
Other
Gross deferred tax assets
Valuation allowance for tax
loss carryforwards
Valuation allowance for the
total of future deductible
temporary differences etc.
Total valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Reserve for advanced
depreciation
Net defined benefit asset
Disposal cost with asset
retirement obligations
Unrealized gain on
investment securities
Deferred gain on hedges
Other
Total deferred tax liabilities
Net deferred tax assets

48

¥

184
955
938

¥

245 $
1,105
890

2,207
9,956
8,018

105

105

946

1,656

1,216

10,956

189
13,5894,381

184
12,383
4,468

1,658
111,569
40,256

528

137

1,234

239

86

775

1,026

575

5,181

1,948

1,615

14,551

133
416

131
397

1,180
3,577

16
2,189

280
1,630

2,523
14,686

596
26

849
120

7,649
1,081

499
1,158
30,782624
1,113
28,163

5,622
10,028
253,744—(1,465)(13,199)—(4,132)
26,650(2,584)(4,049)24,113(23,281)(36,481)217,254

1,220
839

2,051
712

18,479
6,415

233

230

2,072

3,764
160
316
6,534
¥20,116

2,296
20,687
20
180
326
2,937
5,637
50,788¥18,475 $166,456

Tax loss carry forward and its deferred tax asset carry forward due
date at March 31, 2019 were as follows:
Millions of yen

Tax losscarryforwards

Due in 1 year or lessDue after 1 year through2 years
Due after 2 years through3 years
Due after 3 years through4 years
Due after 4 years through5 years
Due after 5 years
Total

¥ 234

24. Asset Retirement Obligations
The following table presents the changes in asset retirement
obligations for the years ended March 31, 2019 and 2018:

Valuation Deferred tax
allowance
assets

¥

—

(74)

¥159

—

—

33

(33)

—

358

(357)

0

569
434
¥1,630(569)(430)¥(1,465)—3¥164

Balance at beginningof yearLiabilities incurred dueto the acquisition ofproperty, plant andequipment
Accretion expense
Liabilities settled
Other
Balance at end of year

Millions of yen

Thousands of
U.S. dollars

2018

2019

2019

¥1,320¥1,364$12,289

35
22
(15)
2
¥1,364

2
22
(71)
(9)
¥1,308

18
198
(640)
(81)
$11,785

Thousands of U.S. dollars

Tax losscarryforwards

Valuation Deferred tax
allowance
assets$ 2,108$

Due in 1 year or lessDue after 1 year through2 years
Due after 2 years through3 years
Due after 3 years through4 years
Due after 4 years through5 years
Due after 5 years
Total

—

(667)

$1,433

—

—
—

297

(297)

3,226

(3,217)

0

5,127
3,910
$14,686(5,127)(3,874)$(13,199)—27$1,478Change in deferred tax assets and deferred tax liabilities due toreduction in corporate income tax rate
2018

Statutory tax rates
Effect of:Permanent differences(Expense)
Permanent differences(Benefits)
Tax credit
Evaluation reserve amount
Retained earnings ofoverseas subsidiaries
Tax effect not recognizedon unrealized income
Other
Effective tax rates
23. Business Combinations
None applicable2019

30.7% Notes are omitted
because the difference
between the statutory
0.9 effective tax rate andthe tax burden rate after(0.5) application of tax effect(2.1) accounting is less than
(5.3) 5% of the statutory
effective tax rate.
1.0
0.5
1.3
26.5%

25. Investment and Rental Properties
The Company has omitted the disclosure of investment and rental properties due to immateriality for the years ended March 31, 2019 and2018.
26. Segment Information
Beginning this current period, the management system has been reviewed in line with the organizational revision and together with the
reduction of the real estate leasing business, As a result, “Real Estate and Other Business” has been changed to “Other Businesses”.
In conjunction with this change, the business segment of the consolidated subsidiary that handles the film deposition business previously included in the “Industrial Machinery Products Business” has been changed to “Other Businesses”. Wind power generators and crystals
that were included in the “Steel and Energy Products Business”. Change the business segment of the consolidated subsidiary that handles thebusiness to “Other business”. Sales and cost of sales for the real estate leasing business previously included in “real estate and other business”
were reclassified to non-operating income and non-operating expenses previously.
The segment information for the previous consolidated fiscal year has been reclassified to the reportable segment classification for thecurrent consolidated fiscal year.
The reportable segments of the Group are components for which discrete financial information is available and whose operating results
are regularly reviewed by the Executive Committee to make decisions about resource allocation and to assess performance.
The Steel and Energy Products segment includes steel castings and forgings, steel plates, pressure vessels and steel structures. The Industrial Machinery Products segment includes injection molding machines, film and sheet machinery, blow molding machines, magnesium
injection molding machines, waste treatment equipment and manufacturing equipment for electronic products. The Other Businesses
segment includes crystal business and wind power generation equipment.
Millions of yen

Reportable segments

Year ended March 31, 2019

Sales and operating income:Sales to third parties
Intra-segment sales and transfers
Total sales
Operating income
Assets, depreciation,and capital expenditures:
Total assets
Depreciation and amortization
Capital expenditures

Industrial
Machinery
Products

Steel andEnergyProducts

Other
Businesses

Total

AdjustmentsandEliminations

Consolidated¥173,648
1,038
174,687¥ 23,599¥41,251
4,159
45,410¥ 2,676¥5,252
3,740
8,993
¥ 343

¥220,153
8,938
229,091¥ 26,618¥—(8,938)(8,938)¥ (2,328)¥220,153—
220,153¥ 24,290¥149,979
3,450
7,171

¥39,347
239
2,033¥8,041477
520¥197,369
4,166
9,725

¥108,102257
219¥305,471
4,424
9,945

49

N o te s to Co n s o lidate d Fi n a n c i a l Statements

Thousands of U.S. dollars

Reportable segments

Year ended March 31, 2019

Sales and operating income:Sales to third parties
Intra-segment sales and transfers
Total sales
Operating income
Assets, depreciation,and capital expenditures:
Total assets
Depreciation and amortization
Capital expenditures

Industrial
Machinery
Products

Steel andEnergyProducts$1,564,537
9,352
1,573,899$ 212,623$371,664
37,472
409,136$ 24,110

Other
Businesses$47,320
33,69781,025$ 3,090

AdjustmentsandEliminations

Total$1,983,539
80,5302,064,069$ 239,823

Consolidated$—(80,530)(80,530)$ (20,975)$1,983,539—
1,983,539$ 218,849$1,351,284
31,08464,609$354,509
2,153
18,317$72,448
4,298
4,685

$1,778,259
37,53587,621$973,980
2,316
1,973

$2,752,239
39,85989,603

Millions of yen

Reportable segments
Industrial
Machinery
Products

Sales and operating income:Sales to third parties
Intra-segment sales and transfers
Total sales
Operating income
Assets, depreciation,and capital expenditures
Total assets
Depreciation and amortization
Capital expenditures

Steel andEnergyProducts¥169,000
1,002
170,002¥ 23,691

Other
Businesses¥36,287
4,215
40,503¥ (1,019)¥ 6,412
3,691
10,104¥ (310)AdjustmentsandEliminations

Total¥211,700
8,909
220,610¥ 22,360

Consolidated¥—(8,909)(8,909)¥ (1,782)¥211,700—
211,700¥ 20,578

Steel andEnergyProducts¥169,000¥125,768
3,248
3,244

¥35,500
176
1,549¥ 8,689
359
1,519¥169,958
3,785
6,313

¥127,407
312
123¥297,365
4,097
6,436

(a) Product and service information
Thousands of U.S. dollars

Millions of yen

Year ended
March 31,2019

Industrial
Machinery
Products

Steel andEnergyProducts

Other
Businesses

Sales tothird parties¥173,648¥41,251¥5,252

Total

Year ended
March 31,2019

Industrial
Machinery
Products

Steel andEnergyProducts¥220,153

Sales tothird parties $1,564,537$371,664

Other
Businesses

Total$47,320 $1,983,539

Millions of yen

Total

Year ended
March 31,2018

Industrial
Machinery
Products

Steel andEnergyProducts¥6,412¥211,700

Impairment
loss—¥1,331Millions of yen

Thousands of
U.S. dollars

2019

2019

Other
Businesses¥36,287(b) Geographical information(i) Sales

Adjustments
Other
and
Businesses Eliminations

¥21

—

Total

¥1,352(e) Amortization and balance of goodwill
The following table presents the amortization and balance of negative goodwill arising from business combinations on or prior to
March 31, 2010 as of and for the years ended March 31, 2019 and2018 by reportable segment:
Millions of yen

Japan
China
OthersConsolidated¥103,501
48,04360,156¥211,700¥103,898 $ 936,102
54,318489,395
61,936
558,032¥220,153 $1,983,539

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

(ii) Tangible assets
The Company has omitted the disclosure of tangible assets bycountry or region as of March 31, 2019 and 2018 because theamount of tangible assets in Japan accounted for more than
90% of the carrying amount in the consolidated balance sheet.
(c) Significant customer information
The Company has omitted the disclosure of significant customer
information for the years ended March 31, 2019 and 2018 because
no individual customer accounted for more than 10% of net sales
in the consolidated statement of income.
(d) Information on loss on impairment of fixed assets
Impairment losses on fixed assets by reportable segment for theyears ended March 31, 2019 and 2018 are summarized as follows:
Millions of yen

Notes: 1. Adjustments and eliminations for segment profit of ¥1,782 million ($16,773 thousand) include elimination of inter-segment profit on inventories and corporate
general administration expense which are not allocable to a reportable segment.
2. Adjustments and eliminations for segment assets of ¥127,407 million ($1,199,238 thousand) include offset of inter-segment debt and credit, and corporate assets
which are not allocable to a reportable segment.
3. Adjustments and eliminations for depreciation and amortization of ¥312 million ($2,937 thousand) include depreciation and amortization for corporate assets.
Adjustments and eliminations for capital expenditures of ¥123 million ($1,158 thousand) include capital expenditures for corporate assets.

50

Sales tothird parties

Industrial
Machinery
Products

2018

Notes: 1. Adjustments and eliminations for segment profit of ¥2,328 million ($20,975 thousand) include elimination of inter-segment profit on inventories and corporate
general administration expense which are not allocable to a reportable segment.
2. Adjustments and eliminations for segment assets of ¥108,102 million ($973,980 thousand) include offset of inter-segment debt and credit, and corporate assets
which are not allocable to a reportable segment.
3. Adjustments and eliminations for depreciation and amortization of ¥257 million ($2,316 thousand) include depreciation and amortization for corporate assets.
Adjustments and eliminations for capital expenditures of ¥219 million ($1,973 thousand) include capital expenditures for corporate assets.

Year ended March 31, 2018

Millions of yen

Year ended
March 31,2018

Year ended
March 31,2019

Industrial
Machinery
Products

Steel andEnergyProducts

Impairment
loss

—

—

Year ended
March 31,2019

Industrial
Machinery
Products

Steel andEnergyProducts

Impairment
loss

—

—

Adjustments
and
Other
Businesses Eliminations¥25¥1,597

Industrial
Machinery
Products

Steel andEnergyProducts

¥215

—

—

—

¥215

268

—

—

—

268

Year ended
March 31,2019

Industrial
Machinery
Products

Steel andEnergyProducts

Amortization
Balance as ofMarch 31

$1,937———$1,937

2,415

—

—

—

2,415

Year ended
March 31,2018

Industrial
Machinery
Products

Steel andEnergyProducts

¥211

—

—

—

¥211

509

—

—

—

509

Amortization
Balance as ofMarch 31

Adjustments
Other
and
Businesses Eliminations

Total

Thousands of U.S. dollars

Adjustments
and
Other
Businesses Eliminations

Total

Millions of yen

Amortization
Balance as ofMarch 31

Adjustments
Other
and
Businesses Eliminations

Total(f) Information on gain on negative goodwill¥1,623

Year ended March 31, 2019
None applicableThousands of U.S. dollars

Adjustments
Other
and
Businesses Eliminations

Year ended
March 31,
2019

Total

Year ended March 31, 2018
None applicable

Total$225 $14,389 $14,623

27. Shareholders’ Equity
The Corporation Law of Japan 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 reserveand the legal reserve, respectively, until the sum of the capitalreserve and the legal reserve equals 25% of the capital stock
account. Such distributions can be made at any time by resolutionof the meeting of shareholders, or by the Board of Directors if
certain conditions are met.

51

N o te s to Co ns o l idate d Fi na n c i a l Statements

I ndependent Au di to r ’s R e p o r t

Independent Auditor’s Report
28. Amounts per ShareProfit (loss) attributable to owners of parent per share is calculated
based on the Profit (loss) 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 the year. Net assets per share are calculated based on thenumber of shares of common stock outstanding at year end.
Amounts per share at March 31, 2019 and 2018 and for the years
then ended were as follows:

Profit (loss) attributableto owners of parent
Net assets

Yen

U.S. dollars

2018

2019

2019

¥ 145.77
1,592.47¥ 271.69
1,746.91$ 2.4515.74

29. Subsequent Events(Significant subsequent events)
1. Mergers and acquisitions of consolidated subsidiaries
Based on a resolution of the board of directors meeting held on
January 29, 2019, the company absorbed its consolidated
subsidiary, Nikko Information Systems Co., Ltd. on April 1, 2019.
(1) Overview of transactions(a) The names and business details of the Constituent
Enterprises
Name of the Company: Nikko Information Systems Co., Ltd.
Business details:
Computer system consulting,contract development, technicalguidance, etc.
(b) Date of business combination
April 1, 2019(c) Legal form of business combination
An absorption-type merger where the Company becomes
the surviving company and Nikko Information Systems Co.,
Ltd. becomes the marged company(d) The name of the Combined Enterprise
The Japan Steel Works, Ltd.
(e) Matters concerning the outline of other transactions
Since its establishment in April 1990 as a wholly-owned subsidiary of the company, Nikko Information Systems Co., Ltd.
has been in charge of the Company‘s information system
operation and management as well as the entrusted development business. However, given that advanced information technology (Machine learning, etc.) is an importantelement for the enhancement of the Company‘s productand service values, Nikko Information Systems Co., Ltd. hasdecided to merge with Our Company to strengthen its
functions.
(2) Overview of accounting
Accounting will be conducted as a transaction under common
control in accordance with “Accounting Standard for Business
Combinations” (ASBJ Statement No. 21 of January 16, 2019) and“Application Guidelines for Accounting Standards for Business
Combinations and Accounting Standards for Business
Divestitures” (ASBJ Guidance No. 10 of January 16, 2019).

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2. Making an affiliate a subsidiary by acquiring additional
equity interests
At the meeting of the Board of Directors held on March 19, 2019,
Our Group resolved to make GM Engineering Co., Ltd., a former
affiliate, a subsidiary. As a result, shares were acquired on April 1,
2019.
(1) Overview of business combinations(a) The name of the Acquired Enterprise and the nature of its
business
Name of recipient company: GM Engineering Co., Ltd.
Nature of business:
Design, manufacture, and saleof plastic sheet equipment,
extruders, etc.; design, manufacture, and sale of dies andauxiliary equipment(b) The main reasons for the business combination
Strengthen and expand sheet equipment business(c) Date of business combination
April 1, 2019(d) Legal form of business combination
Stock acquisition in exchange for cash(e) The name of the Combined Enterprise
There is no change in the name of the combined company.
(f ) Percentage of voting rights acquired
21.75% of the voting rights held immediately before thebusiness combination
60.5% of the voting rights additionally acquired on the dateof the business combination
82.25% of total voting rights after acquisition(g) Main basis for determining acquiring companies
Our Company acquired the shares in exchange for cash.
(2) Acquisition costs of acquired enterprises and their breakdown
Consideration for acquisition: ¥131 million in cash
Acquisition cost:¥131 million(3) Details and amounts of major acquisition-related expenses¥5 million for advisory expenses(4) The difference between the acquisition cost of the AcquiredEnterprise and the total amount of the acquisition cost for eachtransaction leading to the acquisition
Loss on phased acquisition: ¥89 million(5) The amount of negative goodwill that occurred, and the cause
for the occurrence(a) The amount of negative goodwill that occurred¥360 million(b) Cause of occurrenceThis was because the net assets at market value of GM
Engineering Co., Ltd. exceeded the acquisition cost.
(6) The amount of assets accepted and liabilities assumed on thedate of the Business Combination, and the major breakdown
thereofCurrent assets:¥1,722 million
Fixed assets:¥654 million
Total assets:¥2,377 million
Current liabilities:
Fixed liabilities:
Total liabilities:¥1,275 million¥503 million¥1,778 million

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