Financial Performance (Consolidated)
Operating Results
Net Sales

Cash Flow

Net sales totaled ¥212,469 million (US$1,893 million), down

At year-end, cash and cash equivalents stood at ¥58,671 million¥10,831 million, or 4.9% year on year. This was due to lower sales in(US$522 million), down ¥2,787 million from a year earlier.

the Steel and Energy Products Business, which contrasted with

Cash Flow from Operating Activities

higher sales in the Industrial Machinery Products Business.

Net cash provided by operating activities amounted to ¥12,023

Operating Income

million, compared with ¥19,721 million in the previous year. This

Operating income fell ¥2,082 million, or 14.4%, to ¥12,340 million

was mainly because depreciation and impairment loss exceeded(US$109 million, and the operating income margin edged down

the loss before income taxes.

0.7 point, to 5.8%.

Cash Flow from Investing Activities
Loss Attributable to Owners of Parent

Net cash used in investing activities totaled ¥13,580 million, com-

Loss attributable to owners of parent was ¥4,968 million (US$44

pared with ¥12,135 million in the previous year. This was due

million), compared with ¥16,600 million (US$147 million) in themainly to the purchase of property, plant and equipment andprevious fiscal year. This equates to loss of ¥67.61 for the year on aintangible assets.

per-share basis.

Sales by Region
The Japanese market accounted for sales of ¥103,575 million(US$923 million), the Chinese market for ¥40,852 million (US$364
million), with all other markets accounting for ¥68,041 million(US$606 million).

0

51.3

0

12,02330

152013 2014 2015 2016 2017

19,721

20,00010,00040,00002013 2014 2015 2016 2017

30,00045

108,89355.1
94,25692,752

115,472

80,00060

11,580

5,000

7,517

8,864

10,00012,34014,423120,000

122,996

16,68015,000160,000

48.4

20,000Millions of yen%

11,549Millions of yen

Net Cash Provided byOperating Activities% of total sales

23,735

Millions of yen

49.1

Overseas Sales

52.3

Operating Income02013 2014 2015 2016 2017

240825̲JSW̲AR2017̲BH.indd 24

2017/09/19 12:48

Fi nanci al Pe r fo r m an ce (Co n so lid ate d )Financial Position
Cash Flow from Financing Activities

As of March 31, 2017, total assets amounted to ¥275,315 million

Net cash used in financing activities was ¥1,203 million, compared(US$2,454 million), down ¥17,823 million from a year earlier. This

with net cash provided by financing activities of ¥4,788 million in

was due primarily to a decline in property, plant and equipment

the previous year. The main factors were cash dividends paid andstemming from impairment treatment of fixed assets owned by

repayments of finance lease obligations, which contrasted with an

the Muroran Plant, as well as decreases in cash and deposits, notes

increase in proceeds from long-term loans payable.

and accounts receivable, and other current assets.
Total liabilities stood at ¥167,727 million (US$1,495 million),
down ¥14,070 million from a year earlier. This was due mainly to adecrease in current liabilities, including advances received andInterest-Bearing Debt

provision for loss on the wind power generator business. Interestbearing debt was ¥52,453 million (US$467 million), up ¥1,112 mil-Millions of yenlion from a year earlier.
80,000Net assets amounted to ¥107,587 million (US$958 million),
down ¥3,753 million. This was due mainly to a decline in retained
earnings stemming from a loss attributable to owners of parent.
52,45351,341

41,34642,09240,00053,24260,00020,00002013 2014 2015 2016 2017

Net Assets

Equity Ratio

ROE

Millions of yen%%

40,000

−10

(4.6)

15

0

0

2013 2014 2015 2016 2017(13.5)

0

(3.9)

30

4.1

10

6.3

38.6

42.7

47.1

43.8

20

37.5

107,587

138,23445

111,340

80,000139,268

120,00060

134,368

160,000−20

2013 2014 2015 2016 20172013 2014 2015 2016 2017

250825̲JSW̲AR2017̲BH.indd 25

2017/09/19 12:48

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheet
March 31, 2017 and 2016

AssetsCurrent assets:
Cash on hand and in banks (Notes 6, 16 and 18)
Notes and accounts receivable:
Unconsolidated subsidiaries and affiliates
Trade (Note 18)
Other
Less allowance for doubtful accounts
Inventories (Note 5)
Deferred tax assets (Note 22)
Other current assets
Total current assets

Property, plant and equipment, at cost (Notes 8 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

2016

Millions of yen

Thousands of
U.S. dollars(Note 4)

2017

2017

¥ 62,018¥ 59,801$

533,033

257
52,493286(248)
67,195
7,120
6,451
195,574

237
49,194292(140)
66,152
6,473
4,555
186,565

2,112
438,488
2,603(1,248)589,643
57,69740,601
1,662,938

10,33477,287
134,348
3,206
3,530
228,707(179,991)
48,715

9,721
71,132
133,6232,863
235
217,577(185,343)
32,23386,648634,032
1,191,042
25,5192,095
1,939,362(1,652,046)
287,307

1,676

1,655

14,752

1,002
29,93963
1,872
12,1572,707(573)
47,171¥ 293,138

1,002
33,94153
2,472
15,041
2,805(455)
54,860¥ 275,315

8,931
302,531472
22,034
134,067
25,002(4,056)
488,992$ 2,454,007

260825̲JSW̲AR2017̲BH.indd 26

2017/09/19 12:48

Consolidated Balance Sheet

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
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 11 and 18)
Accrued retirement benefits
For directors and audit & supervisory board members
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— 74,292,607 shares
Capital surplus
Retained earnings
Treasury stock, at cost
(801,480 shares in 2017 and 3,995,515 shares in 2016)
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

2016

Millions of yen

Thousands of
U.S. dollars(Note 4)

2017

2017

¥ 12,569
940¥ 11,908
4,789$ 106,141
42,687

107
53,727
1,461
18,984
1,456
8,687
20,540118,475

153
47,5901,348
17,004866
4,655
20,072
108,3901,364
424,191
12,015
151,564
7,719
41,492
178,911966,129

37,83135,755

318,700

108
11,315230
13,83663,322

115
10,620175
12,671
59,337

1,025
94,661
1,560
112,942
528,897

19,694
5,467
84,554

19,694
5,467
77,748

175,541
48,730693,003(2,302)
107,413(2,308)100,601(20,572)
896,702

3,830
337
51
(1,609)2,609
1,318
111,340¥293,138

6,381
(301)
(170)
(211)
5,698
1,287
107,587¥275,315

56,877(2,683)(1,515)(1,881)50,78911,472
958,971$2,454,007

See notes to consolidated financial statements.

270825̲JSW̲AR2017̲BH.indd 27

2017/09/19 12:48

Consolidated Statement of I n come

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Income
For the years ended March 31, 2017 and 2016

2016

Millions of yen

Thousands of
U.S. dollars(Note 4)

2017

2017

Net sales¥223,301¥212,469$1,893,832

Cost of sales (Note 12)

179,197

170,695

1,521,481

44,103

41,773372,342

29,68029,432

262,341

14,423

12,340109,992

Gross profit
Selling, general and administrative expenses (Note 12)
Operating income
Other income (expenses):
Interest and dividend income

772

653

5,820

Interest expense

(345)

(273)

(2,433)

Impairment loss (Note 9)(35,447)(17,874)(159,319)

Other, net (Note 13)(1,451)(687)(6,124)(36,472)(18,181)(162,055)(22,049)(5,841)(52,063)

Loss before income taxes
Income taxes (Note 22):
Current

3,357

2,819

25,127

Deferred(8,996)(3,706)(33,033)

Loss (Note 28)(16,409)(4,954)(44,157)

191

14

125

¥ (16,600)¥ (4,968)

Profit attributable to non-controlling interests
Loss attributable to shareholders of The Japan Steel Works, Ltd.

$(44,282)

See notes to consolidated financial statements.

280825̲JSW̲AR2017̲BH.indd 28

2017/09/19 12:48

Consolidated Statement of Comprehensive I n come

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Comprehensive Income
For the years ended March 31, 2017 and 2016

Loss

Millions of yen

Thousands of
U.S. dollars(Note 4)

2016

2017

2017

¥(16,409)¥(4,954)$(44,157)(5,364)

2,551

22,738531(638)(5,687)

Other 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)

(229)

(251)

(2,237)(1,231)

1,398

12,461(6,294)

3,059

27,266¥(22,703)¥(1,894)$(16,882)

Shareholders of The Japan Steel Works, Ltd.

¥(22,831)¥(1,879)$(16,748)

Non-controlling interests

¥

¥

$

Comprehensive income
Total comprehensive income attributable to:

127

(14)

(125)

See notes to consolidated financial statements.

290825̲JSW̲AR2017̲BH.indd 29

2017/09/19 12:48

Consolidated Statement of Changes in Net Assets

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Changes in Net Assets
For the years ended March 31, 2017 and 2016
Millions of yen

Shareholders’ equity

Commonstock

CapitalsurplusRetainedearnings

Balance at April 1, 2015
Changes during the year
Cash dividends paid
Loss attributable to shareholdersof The Japan Steel Works, Ltd.
Purchase of shares of
consolidated subsidiaries
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, 2016

¥19,694¥5,425¥103,330

Balance at April 1, 2016
Changes during the year
Cash dividends paid
Loss attributable to shareholdersof The Japan Steel Works, Ltd.
Purchase of shares of
consolidated subsidiaries
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, 2017

Accumulated other comprehensive income

Treasury stock(Note 15)

Total
shareholders’equityUnrealized
holding gain
(loss) on
securities

Unrealized gain
(loss) fromhedging
instruments

Translation
adjustments¥ (731)¥127,718¥ 9,195¥(194)

¥ 239

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

¥ (399)¥ 8,839¥1,676Total
net assets¥138,234(1,653)(1,653)(1,653)(16,600)(16,600)(16,600)45(2,940)842

45(2,940)
842

—

—

45
(2,940)
1,368

(525)
521

(521)

—
¥19,694

41¥5,467(18,775)¥ 84,554(1,571)¥(2,302)(20,305)¥107,413(5,364)(5,364)¥ 3,830

531
531
¥ 337

(187)
(187)
¥ 51

(1,210)(1,210)¥(1,609)(6,230)(6,230)¥ 2,609

(358)
(358)
¥1,318(6,588)(26,894)¥111,340¥19,694¥5,467¥ 84,554¥(2,302)¥107,413¥ 3,830

¥ 337

¥ 51

¥(1,609)¥ 2,609¥1,318¥111,340(1,837)(1,837)(1,837)(4,968)(4,968)(4,968)

—
(5)
0

—
(5)
0

—

—

(5)
0

(0)

—
¥19,6940(0)—¥5,467(6,806)¥ 77,748(5)¥(2,308)(6,811)¥100,601

2,551
2,551
¥ 6,381

(638)
(638)
¥(301)(222)(222)¥(170)

1,398
1,398¥ (211)

3,089
3,089
¥ 5,698(31)(31)¥1,287

3,058(3,753)¥107,587

Thousands of U.S. dollars (Note 4)

Shareholders’ equity

Balance at April 1, 2016
Changes during the year
Cash dividends paid
Loss attributable to shareholdersof The Japan Steel Works, Ltd.
Purchase of shares of
consolidated subsidiaries
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, 2017

Accumulated other comprehensive income

Commonstock

CapitalsurplusRetainedearnings

Treasury stock(Note 15)

Total
shareholders’equity$175,541$48,730$753,668$(20,519)$957,420

Unrealized gain
(loss) fromhedging
instruments

Translation
adjustments$34,139$ 3,004

$ 455

Total
Remeasurement accumulated
otherbenefit plansadjustments comprehensive Non-controllingincomeinterest(Note 21)$(14,342)$23,255$11,748

Total
net assets$992,424(16,374)(16,374)(16,374)(44,282)(44,282)(44,282)

—
(45)
0

—
(45)
0

—

—

(45)
0

(0)

—
$175,541

Unrealized
holding gain
(loss) on
securities

0

(0)

—
$48,730(60,665)$693,003(45)$(20,572)(60,710)$896,702

22,73822,738$56,877(5,687)(5,687)$(2,683)(1,979)(1,979)$(1,515)

12,461
12,461$ (1,881)

27,53427,534$50,789

(276)
(276)
$11,472

27,257(33,452)$958,971

See notes to consolidated financial statements.

300825̲JSW̲AR2017̲BH.indd 30

2017/09/19 12:48

Consolidated Statement of Cash Flows

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Cash Flows
For the years ended March 31, 2017 and 2016

Operating activities
Loss before income taxes
Depreciation and amortization
Impairment loss
Interest and dividend income
Interest expense
Equity in losses of affiliates
Gain on sales of property, plant and equipment and intangible assets
Loss on disposal of tangible and intangible assets
Gain on sales of investment securities
Decrease in provision for loss on wind power generator businessChanges 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
Decrease in short-term loans receivableCollection of long-term loans receivable
Payments for transfer of business
Purchase of investments in subsidiaries
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
Redemption of bonds
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 3)

2016

2017

2017

¥(22,049)
10,84335,447
(772)
345
0
(112)
892
(54)
(4,515)¥ (5,841)
8,058
17,874
(653)
273
0
(78)
150
—
(4,032)$ (52,063)
71,825
159,319(5,820)
2,433
0
(695)
1,337
—
(35,939)(11,637)
11,5572,363
122
22,431771(336)(3,144)
19,721(122)(2,987)1,022
1,393
15,056660(273)(3,420)12,023(1,087)(26,624)
9,110
12,416134,201
5,883(2,433)(30,484)
107,166(964)
757(9,976)
322
839
(11)
(378)
0
14
(531)
(2,293)
87(12,135)(1,001)
545(13,348)
131
0
(345)
(67)
0
10
—
—
494
(13,580)(8,922)
4,858(118,977)
1,168
0(3,075)
(597)
0
89
—
—
4,403
(121,045)

313
30,900(11,105)(10,000)(1,653)(2,940)
(724)
(1)
4,788
(68)
12,30649,152¥ 61,458

(660)
2,308
(320)
—
(1,837)
(5)
(673)
(16)
(1,203)(26)(2,787)61,458¥ 58,671(5,883)
20,572(2,852)—(16,374)(45)(5,999)(143)(10,723)(232)(24,842)
547,803$ 522,961

The accompanying notes are an integral part of these statements.

310825̲JSW̲AR2017̲BH.indd 31

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The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
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 notnecessarily 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, 2017, the numbers of consolidated subsidiaries, and subsidiaries and affiliates accounted for by the equity
method were 32 and 1 (32 and 1 in 2016), respectively.
Certain foreign subsidiaries are consolidated on the basis of
fiscal periods ended December 31, which differ from that of theCompany. However, the necessary adjustments have been made if
the effect 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 determinedprincipally 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.
(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.

320825̲JSW̲AR2017̲BH.indd 32

2017/09/19 12:48

Notes to Consolidated Financial Statements(j) 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(k) 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 theestimated useful life and a residual value of zero.
(l) 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 the year
in which the gain or loss is recognized by the straight-line method
over ten years, which is shorter than the average remaining yearsof service of the employees participating in the plans.
Certain subsidiaries use a simplified method in the calculationof their retirement benefit obligation.
(m) 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.
(n) Research and development expenses
Research and development expenses are charged to income whenincurred.
(o) 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-ofcompletion 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 for which thepercentage of completion cannot be reliably estimated.

(p) 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.
(q) Consumption tax
Accounting treatment of consumption tax is the tax exclusion
method.
(r) 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 period.
(s) Provision for directors’ retirement benefits
Provision for directors’ retirement benefits is provided based on
estimated amounts determined by internal rules.
(t) Accounting changes
The Company’s domestic consolidated subsidiaries adopted“Practical Solution on a change in depreciation method due to Tax
Reform 2016” (ASBJ PITF No.32, June 17, 2016) as a result of revisions to the Corporate Tax Act of Japan. Accordingly, the depreciation method for both facilities attached to buildings and othernon-building structures acquired on or after April 1, 2016 waschanged from the declining-balance method to the straight-line
method. The effect of this adoption on the accompanying consolidated financial statements for the year ended March 31, 2017 isimmaterial.

3. Additional Information
The Company and its domestic consolidated subsidiaries adopted“Revised Implementation Guidance on Recoverability of Deferred
Tax Assets” (ASBJ Guidance No. 26 of Mar 28, 2016) effective from
April 1, 2016.

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¥112.19 = U.S.$1.00, the approximate rate of exchange prevailingon March 31, 2017. This translation should not be construed as arepresentation that all amounts shown could be converted into
U.S. dollars at such rate.

330825̲JSW̲AR2017̲BH.indd 33

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5. Inventories
Inventories at March 31, 2017 and 2016 consisted of the following:
Millions of yen

Thousands of
U.S. dollars

2017

2017

2016

Real estate held for sale
Finished products
Work in process
Raw materials andsupplies
Total

¥

283
1,703
58,878

¥

278
2,080
58,037$2,478
18,540517,310

6,328¥67,195

5,755¥66,152

51,297$589,643

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 ¥191 million ($1,702 thousand) at
March 31, 2017 and ¥172 million at March 31, 2016.

6. Assets pledged as collateral
The assets pledged as collateral for issuance of Performance Bondat March 31, 2017 and 2016 were as follows:

Time deposit

Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

—

¥96

$856

Note: The assets pledged as collateral were no corresponding obligations at
March 31, 2017.

7. Depreciation
Depreciation expense on property, plant and equipment for theyears ended March 31, 2017 and 2016 were as follows:

Depreciation expense

Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

¥10,669¥7,858$70,0428. 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, 2017 and2016 are summarized as follows:

Accumulated advanced
depreciation expense

Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

¥1,283¥1,298

9. Impairment Loss
Current fiscal year (From April 1, 2016 to March 31, 2017)
The Group recorded an impairment loss on the following groupsof assets in the current fiscal year:
Use

Steel and Energy
Products:
Business assets

Steel and Energy
Products:
Business assets atinvestee subsidiary

Asset type

Location

Buildings, structures,
machinery andequipment, land,
construction inprogress, etc.
Buildings, structures,
machinery andequipment, land,etc.

Muroran, Hokkaido

Muroran, Hokkaido
and Guangdong,China(1) Grouping of assets
The Company and its consolidated subsidiaries (hereinaftercollectively known as the “Group”) determine whether to recognize an impairment loss and measures 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.
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 theimpairment 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¥ 8,882 million $ 79,169 thousand
Machinery, equipment andvehicles
6,761
60,264Tools, furniture and fixtures
352
3,138
Land
576
5,134
Leased assets (property,
plant and equipment)
336
2,995
Construction in progress
898
8,004
Leased assets (intangible
assets)
8
71
Other (intangible assets)
57
508
Total
¥17,874$159,319(3) Calculation method for recoverable amounts
Recoverable amounts of the groups of assets are calculated atvalue in use. It is evaluated by memorandum value.

$11,570340825̲JSW̲AR2017̲BH.indd 34

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Notes to Consolidated Financial Statements

Prior fiscal year (From April 1, 2015 to March 31, 2016)
The Group recorded an impairment loss on the following groupsof assets in the prior fiscal year:
Use

Steel and Energy
Products:
Business assets

Steel and Energy
Products:
Business assets atinvestee subsidiary

Asset type

10. Contingent Liabilities
Contingent liabilities at March 31, 2017 and 2016 consisted of thefollowing:
Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

75

¥ 87

$ 775

421

358

3,191

62

42

374

1,107
50

978
25

8,717
223

Location

Buildings, structures, Muroran, Hokkaido
machinery andequipment, land,
construction inprogress, etc.
Machinery and
Muroran, Hokkaido
equipment, etc.
and Guangdong,China(1) Grouping of assets
The Company and its consolidated subsidiaries (hereinaftercollectively known as the “Group”) determine whether to recognize an impairment loss and measures 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.
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 theimpairment 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¥19,744 million
Machinery, equipment andvehicles
10,764Tools, furniture and fixtures
401
Land
770
Leased assets (property,
plant and equipment)
232
Construction in progress
3,439
Leased assets (intangible
assets)16
Other (intangible assets)
79
Total¥35,447

As 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¥

11. Short-Term Borrowings and Long-Term Debt
All short-term borrowings, with interest at annual rates ranging
from 0.3073% to 1.4750% at March 31, 2017 and 0.3490% to
1.4750% at March 31, 2016, were unsecured.
Long-term debt at March 31, 2017 and 2016 were as follows:

Loans from banks andinsurance companies withinterest at annual rates
ranging from 0.0030% to
1.0960%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

2016

2017

2017

¥37,127¥39,116$348,659

(320)
1,644

(4,215)
1,428(37,570)
12,728

(620)

(574)

(5,116)¥37,831¥35,755$318,700(3) Calculation method for recoverable amounts
Recoverable amounts of the groups of assets are calculated atvalue in use. Future cash flows are discounted at 7.52%.

350825̲JSW̲AR2017̲BH.indd 35

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The aggregate annual maturities of long-term debt and leaseobligations subsequent to March 31, 2017 are summarized asfollows:
Millions of yen

Thousands of
U.S. dollars Millions of yen

Year ending March 31,

Long-term loans

2018
2019
2020
2021
2022
2023 and thereafter¥ 4,215
132
60
5,000
1,800
27,908

Thousands of
U.S. dollars$ 37,570
1,177
535
44,567
16,044
248,757

¥574
400
274
131
40
7

$5,116
3,565
2,442
1,168
357
62

Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

¥4,292¥4,237$37,766

13. Other Income (Expenses)—Other, Net
The details of “Other, net” in “Other income (expenses)” for theyears ended March 31, 2017 and 2016 were as follows:

Foreign exchange loss
Equity in losses of affiliates
Gain on sales of property,
plant and equipment
Gain on sales ofinvestment securities
Compensation expenses
Loss on sales or disposal ofproperty, plant andequipment
Other, net
Total

Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

¥(8,031)¥ 3,655$32,579

6——(8,024)
2,660

3,655
(1,104)32,579(9,840)(5,364)

2,551

22,738

774
(242)

(921)
282

(8,209)
2,514

531

(638)

(5,687)

(229)
(229)

(251)
(251)

(2,237)(2,237)(2,122)

1,023

9,118

381

1,004

8,949

(1,741)
509

2,028
(629)

18,076(5,607)(1,231)

1,398

12,461¥(6,294)¥ 3,059$27,266

Lease obligations

12. Research and Development Expenses
Research and development expenses included in manufacturingcosts, and selling, general and administrative expenses for theyears ended March 31, 2017 and 2016 were as follows:

Research and development
expenses

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, 2017 and 2016:

Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

¥ (205)(0)¥ (91)(0)$ (811)
(0)

117

93

829

126
(23)

—
(272)

—
(2,424)

(892)
(573)
¥(1,451)

(150)
(266)
¥(687)(1,337)(2,371)$(6,124)

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
income360825̲JSW̲AR2017̲BH.indd 36

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Notes to Consolidated Financial Statements

15. Supplementary Information for Consolidated Statementof Changes in Net Assets
Year ended March 31, 2017(a) Information regarding the number and type of sharesissued and treasury stock:
Number of sharesYear ended
March 31,2016

Shares issued:
Common stock 371,463,036
Treasury stock:
Common stock(Note 1 and 2)
3,995,515

Increaseduringthe year

Decreaseduringthe year— 297,170,429

5,589

3,199,624

Year ended
March 31,2017

74,292,607

801,480

Notes: 1. Decrease of 297,170,429 ordinary shares held in shares was attributableto carry out the share consolidation at the ratio of 5 shares to 1 shareeffective, October 1, 2016.
2. Increase of 5,589 ordinary shares held in treasury was attributable topurchase of less than one share unit.
3. Decrease of 3,199,508 ordinary shares held in treasury was attributableto carry out the share consolidation at the ratio of 5 shares to 1 shareeffective, October 1, 2016, and sale of 116 shares resulting from the saleof shares to shareholders at their request.

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

Annual general meeting ofshareholders held on June 24, 2016
Common stock

Type of shares:
Total amount ofdividends:¥918 million ($8,183 thousand)
Dividends per share: ¥2.5 ($0.022)
Cut-off date:
March 31, 2016
Effective date:June 27, 2016
Resolution:

Meeting of Board of Directors held on
November 7, 2016
Common stock

Type of shares:
Total amount ofdividends:¥918 million ($8,183 thousand)
Dividends per share: ¥2.5 ($0.022)
Cut-off date:
September 30, 2016
Effective date:
December 7, 2016(ii) Dividends of which the cut-off date was in the year ended
March 31, 2016, but the effective date is in the following
fiscal year
Resolution:

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

Type of shares:
Total amount ofdividends:¥918 million ($8,183 thousand)
Dividends per share: ¥12.5 ($0.111)
Cut-off date:
March 31, 2017
Effective date:June 28, 2017
Source of dividends: Retained earnings

Note: The Company carried out the share consolidation at the ratio of 5 shares to
1 share effective October 1, 2016. In accordance with this, cash dividends
per share of which record date is March 31, 2017 is based on the shareconsolidation.

Year ended March 31, 2016(a) Information regarding the number and type of sharesissued and treasury stock:
Number of sharesYear ended
March 31,2015

Shares issued:
Common stock 371,463,036
Treasury stock:
Common stock(Note 1 and 2)
1,192,297

Increaseduringthe year—

5,177,789

Decreaseduringthe yearYear ended
March 31,2016

— 371,463,036

2,374,571

3,995,515

Notes: 1. Increase of 5,177,789 ordinary shares held in treasury was attributableto purchase of 5,173,000 shares under a resolution approved at theBoard of Directors meeting on May 26, 2015, purchase of 4,782 sharesthat was less than one share unit, and acquisition of 7 shares resulting
from fractional shares arising from an exchange of shares in making
Meiki Co.,Ltd. a wholly owned subsidiary of the Company.
2. Decrease of 2,374,571 ordinary shares held in treasury attributable tothe distribution of 2,373,831 treasury shares resulting from theexchange of shares for making Meiki Co.,Ltd. a wholly owned subsidiaryof the Company, and sale of 740 shares resulting from the sale of sharesto shareholders at their request.

370825̲JSW̲AR2017̲BH.indd 37

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

Annual general meeting ofshareholders held on June 24, 2015
Common stock

Type of shares:
Total amount ofdividends:¥740 million
Dividends per share: ¥2
Cut-off date:
March 31, 2015
Effective date:June 25, 2015
Resolution:

Lease assets
Lease obligations

Meeting of Board of Directors held on
November 2, 2015
Common stock

Type of shares:
Total amount ofdividends:¥912 million
Dividends per share: ¥2.5
Cut-off date:
September 30, 2015
Effective date:
December 3, 2015(ii) Dividends of which the cut-off date was in the year ended
March 31, 2016, but the effective date is in the following
fiscal year
Resolution:

Annual general meeting ofshareholders held on June 24, 2016
Common stock

Type of shares:
Total amount ofdividends:¥918 million
Dividends per share: ¥2.5
Cut-off date:
March 31, 2016
Effective date:June 27, 2016
Source of dividends: Retained earnings

Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

¥62,018322¥59,801189$533,033
1,685

(881)

(1,320)(11,766)¥61,458¥58,671$522,961

Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

¥581
631

¥438
465

$3,9044,145

17. Leases
Year ended March 31, 2017
Future minimum lease payments subsequent to March 31, 2017
under non-cancelable operating leases are summarized asfollows:
Year ending March 31,

Millions of yen

Thousands of
U.S. dollars

20182019 and thereafter
Total

¥132
195
¥327

$1,177
1,738$2,915

Year ended March 31, 2016
Future minimum lease payments subsequent to March 31, 2016
under non-cancelable operating leases are summarized asfollows:
Year ending March 31,

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, 2017 and 2016 are summarized as follows:

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(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, 2017 and 2016 were as
follows:

20172018 and thereafter
Total

Millions of yen

¥186
284
¥470

18. Financial Instruments
Overview(a) Policy for financial instruments
In consideration of plans for operations and capital investment,
the Company and its consolidated subsidiaries (collectively, the“Group”) utilize 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.

380825̲JSW̲AR2017̲BH.indd 38

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Notes to Consolidated Financial Statements(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 18 Derivative
Transactions are not necessarily indicative of the actual market risk
involved in derivative transactions.

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Estimated Fair Value of Financial Instruments
Carrying value of financial instruments on the consolidatedbalance sheet as of March 31, 2017 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, 2017
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¥ 59,801¥ 59,801¥ —49,42049,420(0)32,787¥142,009

32,787¥142,009—¥ (0)¥ 47,744
11,908¥ 47,744
11,908

¥ —
—

4,215
34,901¥ 98,768
¥
(472)

4,235
35,385¥ 99,274
¥
(472)

20
484
¥505
—

Carrying
amountEstimated
fair value$ 533,033$ 533,033

440,503

440,503292,245$1,265,790

292,245$1,265,790$ 425,564
106,141$ 425,564
106,141

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 (*)

37,57037,748311,088
315,402$ 880,364 $ 884,874$(4,207) $(4,207)

Difference

$

—
(0)

$

$

—
(0)

—
—

Year ended March 31, 2016
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¥ 62,018¥ 62,018¥—

52,73852,738(0)29,121¥143,878

29,121¥143,877—¥ (0)¥ 53,835
12,569¥ 53,835
12,569¥——320
36,807¥103,531¥
486

322
36,881¥103,608
¥
486

2
73
¥76
—

(*) 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 andcredit 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.

178
4,314
$4,501—(*) The value of assets and liabilities arising from derivatives is shown at net value,with the amount in parentheses representing net liability position.

400825̲JSW̲AR2017̲BH.indd 40

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Notes to Consolidated Financial Statements

Liabilities
Trade notes and accounts payable and short-termborrowings
The carrying amount is used for these items because the fairvalue approximates the carrying amount.
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 18, Derivative Transactions, of the notes tothe consolidated financial statements.
(ii) Financial instruments for which it is extremely difficult todetermine the fair value

2016

Unlisted stocks¥1,217

Millions of yen

Thousands of
U.S. dollars

2017

2017

¥1,552$13,834

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.

Thousands of U.S. dollars

Cash on hand andin banks
Trade notes andaccounts receivable
Total

Due inone yearor less

Due after
one yearthroughfive years$533,033$——

438,435$971,468

2,068$2,068——Due inone yearor less

Due after
one yearthroughfive years

Due after
five years¥ 62,018¥ ——52,576¥114,594

162
¥162

—
—

Year ended March 31, 2016
Millions of yen

Cash on hand andin banks
Trade notes andaccounts receivable
Total(iv) The redemption schedule for long-term debt
Year ended March 31, 2017
Millions of yen(iii) Redemption schedule for receivables and securities withmaturities at March 31, 2017 and 2016.
Year ended March 31, 2017
Millions of yen

Cash on hand andin banks
Trade notes andaccounts receivable
Total

Due inone yearor less

Due after
one yearthroughfive years

Due after
five years¥ 59,801¥ ——49,188¥108,989

232
¥232

—
—

Due after
five years

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 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

Long-term
loans

Lease
obligations¥ 4,215
132
60
5,000
1,800
27,908

¥574
400
274
131
40
7

Long-term
loans

Lease
obligations$ 37,570
1,177
535
44,567
16,044
248,757$5,116
3,565
2,442
1,168
357
62

41

0825̲JSW̲AR2017̲BH.indd 41

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Year ended March 31, 2016

March 31, 2016
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

¥

320
3,175
1,092
40
5,000
27,500

¥620
482
306
181
49
3

19. Securities
Other securities:
March 31, 2017
Millions of yen

Acquisition
cost

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

Carrying
amountUnrealized
gain (loss)

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

Acquisition
cost

Carrying
amountUnrealized
gain (loss)¥12,987¥21,432¥ 8,445

10,217¥23,204

7,283¥28,716(2,934)¥ 5,511When 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.

20. Derivative Transactions(a) Derivatives not subject to hedge accounting¥13,379¥24,189¥10,809

9,835¥23,215

8,194¥32,384(1,640)¥ 9,168

Acquisition
cost

Carrying
amountUnrealized
gain (loss)$119,253$215,607$ 96,345

87,664$206,926

73,037$288,653(14,618)$ 81,719

Thousands of U.S. dollars

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

Millions of yen

Leaseobligations

Year ended March 31, 2017
None applicableYear ended March 31, 2016
None applicable(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.

420825̲JSW̲AR2017̲BH.indd 42

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Notes to Consolidated Financial Statements(i) Currency-related transactions
Year ended March 31, 2017
Millions of yen

Hedge accounting method

Type of derivative

Principal items hedged

Allocation method

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

Accounts receivable

Contract
amountOver
one year

Fair value¥13,716689
3
10¥1,690174——¥(411)
6
(0)
(0)

¥

¥

¥

Accounts payable
82
272
359

23
—
236

0
0
(68)

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

Accounts receivable

Contract
amountOver oneyear

Fair value$122,257
6,141
27
89

$15,064
1,551——$(3,663)
53
(0)
(0)

$

$

$

Accounts payable
731
2,424
3,200

205
—
2,104

0
0
(606)

Note: Calculation of fair value is based on the forward exchange rates.

Year ended March 31, 2016
Millions of yen

Hedge accounting method

Type of derivative

Principal items hedged

Allocation method

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

Accounts receivable

Contract
amountOver oneyear

Fair value¥13,805
715
—

¥210
158
—

¥587
17
—

—
—
—
—

¥ (52)(21)(44)—

Accounts payable
¥

922
388
758
—

Note: Calculation of fair value is based on the forward exchange rates

430825̲JSW̲AR2017̲BH.indd 43

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(ii) Interest-related transactions
Year ended March 31, 2017
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¥29,000¥25,000

(*)

708

708

(*)

Contract
amountOver
one year

Fair value$258,490$222,836

(*)

6,311

6,311

(*)

Thousands of U.S. dollars

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(*) 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.

Year ended March 31, 2016
Millions of yen

Hedge accounting method

Type of derivative

Principal items hedged

Special treatment forinterest rate swaps

Receive/floating and pay/fixedLong-term borrowings

Contract
amountOver
one year

Fair value¥29,000¥29,000(*)(*) Since interest rate swap contracts accounted for by the special treatment for interest rate swaps are treated together with the long-term borrowings subject to hedging,
the estimated fair value of such interest rate swap contracts is included in the estimated fair value of the corresponding long-term borrowings.
Note: Calculation of fair value is based on the stated price by financial institutions.

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.

440825̲JSW̲AR2017̲BH.indd 44

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Notes to Consolidated Financial Statements

The changes in the retirement benefit obligation for the years
ended March 31, 2017 and 2016 are as follows:

2016

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

Millions of yen

Thousands of
U.S. dollars

2017

2017

¥20,489
1,030
197
1,097
(1,804)¥21,011
1,153
109
(627)
(1,518)$187,281
10,277972(5,589)(13,531)¥21,011¥20,128$179,410

The changes in plan assets for the years ended March 31, 2017 and2016 are as follows:

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

2016

2017

2017

¥16,101¥14,729$131,286

322(1,025)

294
396

2,621
3,530

422
(1,091)

467
(918)

4,163
(8,183)¥14,729¥14,969$133,425

The changes in retirement benefit liability accounted for using thesimplified method for the years ended March 31, 2017 and 2016
are as follows:

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

Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

¥3,436¥3,161$28,175

686
(757)
(203)

646
(629)
(187)

5,758
(5,607)(1,667)¥3,161¥2,989$26,642

The following table sets forth the funded status of the plans andthe amounts recognized in the consolidated balance sheets as ofMarch 31, 2017 and 2016 for the Company’s and the consolidated
subsidiaries’ defined benefit plans:

2016

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¥ 20,145(15,769)
4,375

Millions of yen

Thousands of
U.S. dollars

2017

2017

¥ 19,201 $ 171,147(16,079) (143,319)
3,121
27,819

5,067

5,026

44,799

9,442
11,315(1,872)

8,148
10,620(2,472)

72,627
94,661(22,034)¥ 9,442¥ 8,148$ 72,627

The components of retirement benefit expense for the years
ended March 31, 2017 and 2016 are as follows:

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

Thousands of
U.S. dollars

2016

2017

2017

¥1,030197¥1,153
109$10,277
972

(322)

(294)

(2,621)

397

1,019

9,083

702
49

646
39

5,758
348

¥2,054¥2,673$23,826450825̲JSW̲AR2017̲BH.indd 45

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The components of retirement benefits plans adjustments
included in other comprehensive income (before tax effect) for theyears ended March 31, 2017 and 2016 are as follows:

Actuarial gain and loss
Total

Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

¥(1,741)¥(1,741)¥2,028¥2,028$18,076$18,076

The components of retirement benefits plans adjustments
included in accumulated other comprehensive income (before tax
effect) as of March 31, 2017 and 2016 are as follows:

Unrecognized actuarial
gain and loss
Total

Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

¥(2,359)¥(2,359)¥(331)¥(331)$(2,950)$(2,950)

The fair value of plan assets, by major category, as a percentage of
total plan as of March 31, 2017 and 2016 as follows:
March 31,

Bonds
StocksCash on hand and in banks
General account
Other
Total

2016

2017

31%
38
0
20
11
100%

30%
42
0
18
10
100%

Retirement benefit trust set for the lump-sum and corporate pension plans accounts for 19% and 17% of the total plan assets, forthe years ended March 31, 2017 and 2016, respectively.
The expected return on assets has been estimated based on the
anticipated allocation to each asset class and the expected longterm 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

2016

2017

0.59%
2.00

0.68%
2.00

Contributions made to defined contribution plans for the years
ended March 31, 2017 and 2016 were ¥59 million ($526 thousand)and ¥61 million, respectively.

22. Income Taxes
The significant components of the Company’s deferred tax assets
and liabilities at March 31, 2017 and 2016 were as follows:
Millions of yen

Thousands of
U.S. dollars

2017

2017

138 $
912
685

1,230
8,129
6,106

2016

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
Less allowance for doubtful
accounts
Asset retirement obligations
Percentage-ofcompletion method
Tax loss carry forwards
Unrealized loss on
investment securities
Deferred loss on hedges
Unrealized gain on
intercompany transactions
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Reserve for advanced
depreciation
Reserve for special
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

¥

176
951
1,081

¥

105

105

936

1,018

1,036

9,234

193
11,0264,921

194
15,3504,363

1,729
136,82138,889

670

884

7,879

390

911

8,120

2,667

1,429

12,737

216
393

155
400

1,382
3,565

544
2,217

483
2,327

4,305
20,742

886
100

500
172

4,457
1,533

720
704
28,986(4,194)
24,792677
793
31,525(4,288)27,236

6,034
7,068
280,997(38,221)242,767

1,342

1,279

11,400

181
937

51
765

455
6,819

232

230

2,050

2,579
250
221
5,744
¥19,048

3,298
29,397
39
348
232
2,068
5,897
52,563¥21,338 $190,195460825̲JSW̲AR2017̲BH.indd 46

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Notes to Consolidated Financial Statements

The reconciliation between the effective tax rates reflected in the
consolidated statement of income and the statutory tax rates forthe years ended March 31, 2017 and 2016 were as follows:
2016

No reconciliation items areapplicable for the year as theCompany recorded net loss
before income taxes

24. Asset Retirement Obligations
The following table presents the changes in asset retirement obligations for the years ended March 31, 2017 and 2016:
Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

¥1,295¥1,307$11,650

—
21
(2)
(6)

16
21
(23)
(1)

143
187
(205)
(9)

¥1,307¥1,320$11,766

2017

No reconciliation items areapplicable for the year as theCompany recorded net loss
before income taxes

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

23. Business Combinations
None applicable

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, 2017 and2016.

26. Segment Information
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 Real Estate and Other
Businesses segment includes regional development.

Millions of yen

Reportable segments

Year ended March 31, 2017

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

Industrial
Machinery
Products

Real Estate
and OtherBusinesses¥51,207
5,551
56,759¥ (2,794)¥159,378
858
160,236¥ 15,183¥ 1,883
3,751
5,635
¥ 959

¥212,469
10,161
222,630¥ 13,349¥—(10,161)(10,161)¥ (1,008)¥212,469—
212,469¥ 12,340¥37,561
4,142
4,574

¥123,743
3,418
4,742

¥11,878206
44¥173,183
7,767
9,361

¥102,13191
140¥275,315
7,858
9,502

Total

AdjustmentsandEliminations

Consolidated

470825̲JSW̲AR2017̲BH.indd 47

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Thousands of U.S. dollars

Reportable segments

Year ended March 31, 2017

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

Industrial
Machinery
Products

Real Estate
and OtherBusinesses

AdjustmentsandEliminations

Total$456,431
49,479505,919$ (24,904)$1,420,608
7,648
1,428,256$ 135,333$ 16,784
33,43450,227$ 8,548$1,893,832
90,5701,984,401$ 118,986$—(90,570)(90,570)$ (8,985)$1,893,832—
1,893,832$ 109,992$334,798
36,92040,770$1,102,977
30,46642,268$105,874
1,836
392$1,543,658
69,231
83,439$910,340
811
1,248$2,454,007
70,042
84,696

Consolidated

Notes: 1. Adjustments and eliminations for segment profit of ¥1,008 million ($8,985 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 ¥102,131 million ($910,340 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 ¥91 million ($811 thousand) include depreciation and amortization for corporate assets.
Adjustments and eliminations for capital expenditures of ¥140 million ($1,248 thousand) include capital expenditures for corporate assets.

Millions of yen

Reportable segments

Year ended March 31, 2016

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

Industrial
Machinery
Products

Real Estate
and OtherBusinesses¥74,854
4,684
79,539¥ 699¥144,358
1,883
146,242¥ 12,391¥ 4,087
3,362
7,449¥ 2,018¥223,301
9,930
233,232¥ 15,109¥—(9,930)(9,930)¥ (685)¥223,301—
223,301¥ 14,423¥60,256
7,294
9,053

¥124,383
3,009
4,940

¥12,055271
67¥196,694
10,576
14,062¥96,44392(51)¥293,138
10,66914,010Total

AdjustmentsandEliminations

Consolidated

Notes: 1. Adjustments and eliminations for segment profit of ¥685 million 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 ¥96,443 million 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 ¥92 million include depreciation and amortization for corporate assets.
Adjustments and eliminations for capital expenditures of ¥51 million include capital expenditures for corporate assets.

48

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Notes to Consolidated Financial Statements(a) Product and service information
Millions of yen

Year ended
March 31,2017

Steel andEnergyProducts

Industrial
Machinery
Products

Real Estate
and OtherBusinesses¥51,207¥159,378¥1,883

Year ended
March 31,2017

Steel andEnergyProducts

Industrial
Machinery
Products

Real Estate
and OtherBusinesses

Sales tothird parties$456,431 $1,420,608

Sales tothird parties

Total¥212,469(c) Significant customer information
The Company has omitted the disclosure of significant customer
information for the years ended March 31, 2017 and 2016 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, 2017 and 2016 are summarized as follows:
Millions of yen

Thousands of U.S. dollars

Year ended
March 31,2017

Steel andEnergyProducts

Impairment
loss¥17,874

Total

Year ended
March 31,2017

Steel andEnergyProducts¥223,301

Impairment
loss$159,319

Total$16,784 $1,893,832

Industrial Real Estate
Machinery and Other
Products Businesses—

Sales tothird parties

Steel andEnergyProducts¥74,854

Industrial
Machinery
Products

Real Estate
and OtherBusinesses¥144,358¥4,087¥17,874

Thousands of U.S. dollars

Millions of yen

Year ended
March 31,
2016

—

Total

Industrial Real Estate
Machinery and Other
Products Businesses

—

—

Total

$159,319
Millions of yen(b) Geographical information(i) Sales

2016

Japan
China
OthersConsolidated¥100,304
30,29992,697¥223,301

Millions of yen

Thousands of
U.S. dollars

2017

2017

Year ended
March 31,2016

Steel andEnergyProducts

Impairment
loss¥35,447

Industrial Real Estate
Machinery and Other
Products Businesses

—

—

Total

¥35,447¥103,575 $ 923,211
40,852
364,132
68,041
606,480¥212,469 $1,893,832

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, 2017 and 2016 because theamount of tangible assets in Japan accounted for more than
90% of the carrying amount in the consolidated balance sheet.

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Notes to Consolidated Financial Statements(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, 2017 and2016 by reportable segment:
Millions of yen

Year ended
March 31,2017

Amortization
Balance as ofMarch 31

Steel andEnergyProducts

Industrial
Machinery
Products

Real Estate Adjustments
and OtherandBusinesses Eliminations

—

¥199

—

—

¥199

—

657

—

—

657

Total

Thousands of U.S. dollars

Year ended
March 31,2017

Amortization
Balance as ofMarch 31

Steel andEnergyProducts

Industrial
Machinery
Products

Real Estate Adjustments
and OtherandBusinesses Eliminations—$1,774——$1,774

—

5,856

—

—

5,856

Total

Millions of yen

Year ended
March 31,2016

Amortization
Balance as ofMarch 31

Steel andEnergyProducts

Industrial
Machinery
Products

Real Estate Adjustments
and OtherandBusinesses Eliminations

—

¥174

—

—

¥174

—

912

—

—

912

Total

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, 2017 and 2016 and for the years
then ended were as follows:
Yen

U.S. dollars

2017

2017

¥ (226.62) ¥ (67.61)
1,497.04
1,446.44$ (0.60)
12.89

2016

Profit (loss) attributableto owners of parent
Net assets

Note: The Company carried out the share consolidation at the ratio of 5 shares to
1 share effective October 1, 2016. In accordance with this, net assets per
share and profit (loss) attributable to owners of parent per share are calculated based on the assumption that the share consolidation had been
carried out at the beginning of fiscal 2016.

29. Subsequent Events(Significant subsequent events)
None applicable(f) Information on gain on negative goodwill
Year ended March 31, 2017
None applicableYear ended March 31, 2016
None applicable

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.

50

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I n d e p e n d e n t Au d ito r ’s R e p o r t

Independent Auditor’s Report

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