Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy
between this translated document and the Japanese original, the original shall prevail.
The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising fromthe translation.

Securities Code: 6482
June 2, 2016
Dear Shareholders,

Notice of Convocation for
the 43 Ordinary General Meeting of Shareholdersrd

We would like to express our deepest condolences and sympathies to all those who have suffered andare suffering as a result of 2016 Kumamoto earthquake.
Notice is hereby given that the 43rd Ordinary General Meeting of Shareholders of Yushin Precision
Equipment Co., Ltd. will be held as set out below:
If you do not expect to attend the meeting in person, you may exercise your voting rights in writing.
Please refer to the enclosed Reference Documents for the General Meeting of Shareholders, use the Formfor Exercising Voting Rights to indicate your vote on agenda proposals and return it by 5 p.m. on Friday,
June 17, 2016 at the latest.
Details
Monday, June 20, 2016 at 10 a.m.
4th Floor Conference Room, No. 2 Factory
Head Office of Yushin Precision Equipment Co., Ltd.
11-260 Kogahonmachi, Fushimi-ku, Kyoto

1.
2.

Date and Time:
Place:

3.

Objectives of the Meeting:a)Matters to be reported:b)

Business Report and Consolidated Financial Statements for the
43rd Fiscal Year (from April 1, 2015 to March 31, 2016) as wellas the audit reports from the Accounting Auditor and the Boardof Corporate Auditors on the Consolidated Financial Statements
Report on the Non-Consolidated Financial Statements for the 43rd
Fiscal Year (from April 1, 2015 to March 31, 2016)

Agenda for resolution:
Proposal 1: Election of Six (6) Directors
Proposal 2: Election of One (1) Corporate Auditor
Proposal 3: Revision of the Remuneration for Directors and Corporate Auditors

Sincerely Yours,
Mayumi Kotani
President and Representative Director
Yushin Precision Equipment Co., Ltd.
11-260 Kogahonmachi, Fushimi-ku,
Kyoto, Japan
Notes:* You are kindly requested to present the enclosed “Form for Exercising Voting Rights” to the receptionist upon your arrival at
the Meeting.
* If any changes have been made to the matters appearing in the Reference Documents for the General Meeting of Shareholders,Business Report, Non-Consolidated Financial Statements or Consolidated Financial Statements, such changes will be posted
on our website: (http://www.yushin.com)–1–

(Submitted Documents)

Business Report(from April 1, 2015 to March 31, 2016)
1. Current Business Conditions of the Yushin Group(1) Progress and achievements
In the fiscal year ended March 31, 2016, the economy of the United States remained steady alongwith a recovery of cooperate sector’s performance as well as improvements of the employment
environment and the individual consumption. However, geographical risks in Europe and Middle East
were growing and the economic growth in China seemed as getting into a recession. The economy insome of South East Asian countries also slowed down. And then there were decline of crude oil prices
and volatility of financial market. In those complex factors, the world economy was unstable during theperiod.
Regarding the industries relating to the Yushin Group, demands on the industry of automotive andIT devices were strong but in the last half of the period, some of IT device manufacturers took
adjustments in the production and there was also a strong yen trend. Then these occasions influenced tothe market.
In these circumstances, the Yushin Group has strived to expand operation in a new business area, todevelop new products and to obtain new world-class customers toward the medium-term managementtargets of net sales of 30,000 million yen and ordinary income of 5,000 million yen or more for the
fiscal year ending March 31, 2019.
As the result, consolidated net sales increased by 18.8% year on year to 21,148 million yen which isa new record for the Yushin Group. Meanwhile, the Yushin Group decided to discontinue an
unprofitable business, manufacturing and sales of semiconductor-related equipment, and devaluatedinventories and disposed fixed assets relating to the business. Even after the disposition, Operating
income increased by 33.9% year on year to 3,086 million yen and Ordinary income increased by 14.9%
year on year to 2,921 million yen. And, Net income attributable to shareholders of the parent company
increased by 13.4% year on year to 1,908 million yen.
Consolidated net sales by product category(Thousands of yen)
Years ended March 31,
Product

2015
Amount2016%

AmountChange%%Take-out robots

13,092,125

73.5

13,923,022

65.8

6.3

Custom-ordered
equipment

1,794,951

10.1

3,997,845

18.9

122.7

Parts and maintenanceservice

2,911,943

16.4

3,227,723

15.3

10.8

Total

17,799,020

100.0

21,148,591

100.0

18.8

(2) Capital investment
The total amount of capital investment for the Yushin Group effectuated over the course of theperiod under review was 5,110 million yen mainly for the capital investment related to constructionof a new headquarters and factory valued at 4,583 million yen and building of a new ERP system
for headquarters valued at 231 million yen.
(3) Financing activities
No material items to report.

–2–(4) Assets and operating results 2013 - 2016
Years ended March 31,

2013

2014

2015

2016

Net sales(thousands of yen)

14,721,643

17,909,292

17,799,020

21,148,591

Ordinary income(thousands of yen)

1,746,573

3,095,258

2,542,871

2,921,754

Net income
attributable toshareholders of theparent company(thousands of yen)

1,114,801

1,893,027

1,683,479

1,908,626

63.74

108.2496.26

109.14

Total assets(thousands of yen)

23,744,465

26,252,009

29,463,773

29,409,602

Net assets(thousands of yen)

19,865,622

21,875,926

23,970,142

24,715,668

Net assets per share(yen)

1,131.63

1,243.88

1,357.36

1,401.54

Net income per share(yen)

Notes: The net income per share is calculated based on the average number of issued shares during the fiscal year and the net
assets per share are calculated based on the number of issued shares at the end of the fiscal year.

(5) Issues to be addressed
As for the business environment surrounding the Yushin Group, it is assumed to be a severe
environment in Japan under a strong yen trend in a foreign exchange market and a diminishment in
effectiveness of economic policies operated by Japanese government and monetary policies taken
by Bank of Japan. And as for the overseas, the economic growth in China is concerned to slow
down, although the economy of the United States is expected to remain strong. Therefore, the world
business environment will continue uncertain situation.
Under these circumstances, Yushin aims to develop itself further as a number-one company
across the board in the “take-out robot” industry with Yushin philosophy “To contribute widely tosociety through the creation of innovative technology that enables customers to rationalize theirproduction activities in plastic molding industry.”
As for company strategy, Yushin strengthens and conducts business even more aggressively in
the global market, and works on developing superior cost-effective products with its quality andperformance to meet our customer needs. And Yushin will also attract new customer for the takeout robots while promoting receiving orders for custom-ordered equipment in a new business area.
In addition, Yushin aims to improve productivities and promote operational efficiencies byconstruction and utilizing of a new headquarters and factory.
As for market strategy, Yushin has developed a sales and service network for take-out robots in
the U.S, Asia, and Europe. Yushin will continuously expand and strengthen the network in areas
where business is expected to grow, including South East Asia and Latin America, to develop a
global business that can adequately respond to worldwide customer purchases. Especially, Yushin
aims to develop new customers in emerging countries where labor costs are highly rising anddevelop world-class human resources who can sustain for expanding our presence around the world.
And Yushin maximally utilize the production and development capacity of Technical center to
respond to the sales increase in medical-related business and a new business area.
As for product strategy, Yushin developed a new take-out robot utilizing optimum design
technology in 2010. This technology has been applied hereafter to general purpose take-out robots.
It is the technology which can largely contribute to power-saving by reducing weight and power
consumption. Yushin will continuously offer this definitely-differentiated product by appealing theperformance superiority such as high-speed motion, vibration suppression and power-saving. In
order to establish multiple core businesses, Yushin must develop and bring new products to themarket in the business area where Yushin can manifest technological and/or sales synergies.

–3–(6) Status of major subsidiaries
Name
Yushin Korea Co., Ltd.
Yushin Precision Equipment(Taiwan) Co., Ltd.

Location
Siheung-Shi,
Gyeonggi-Do,
South Korea
Taipei City,
Taiwan(R.O.C.)

Percentage ofshareholding

Major operations

KRW350 million

100%

Sales and maintenance &repair of our products

NT$5 million

100%

Sales and maintenance &repair of our products

Capital stock

Yushin Precision Equipment
Trading (Shanghai) Co., Ltd.

Shanghai,
China

US$200,000

100%

Sales and maintenance &repair of our products

Yushin Precision Equipment
Trading (Shenzhen) Co., Ltd.

Shenzhen,
Guangdong,
China

US$400,000

100%

Sales and maintenance &repair of our products

PT. Yushin Precision Equipment
Indonesia

Bekasi,Indonesia

IDR2,841million

99%

Sales and maintenance &repair of our products

Yushin Precision Equipment(Vietnam) Co., Ltd.

Hanoi,
Vietnam

US$300,000

100%

Sales and maintenance &repair of our products

Yushin Precision Equipment
Sdn. Bhd.

Selangor,
Malaysia

MYR1 million

100%

Sales and maintenance &repair of our products

Yushin Precision Equipment(Thailand) Co., Ltd.

Bangkok,Thailand

THB6 million

49%

Sales and maintenance &repair of our products

Yushin Precision Equipment(India) Pvt. Ltd.

Chennai, India

INR7.4 million

95%

Sales and maintenance &repair of our products

Yushin Automation Ltd.

Worcestershire,
U.K.

GBP150,000

95.6%

Sales and maintenance &repair of our products

Yushin America, Inc.

Rhode Island,
U.S.A.

US$8,000

100%

Sales and maintenance &repair of our products.
Manufacturing, sales andmaintenance & repair ofcustom-ordered equipment

Guangzhou Yushin Precision
Equipment Co., Ltd.

Guangzhou,
Guangdong,
China

RMB13.7million

100%

Manufacturing of our
products(7) Major operations (as of March 31, 2016)
The Yushin Group is mainly engaged in the development, manufacture and sale of take-out
robots for plastic injection Molding products and stock systems as well as factory automation
systems for molding plants.

–4–

(8) Main sales offices and factories (as of March 31, 2016)
Name

Location

Kyoto Head Office & Factories
No. 1, No. 2, No. 3, No. 5, No. 6 and Higashi Factory at
the Head site

Fushimi-ku, Kyoto-city

Technical Center

Minami-ku, Kyoto-city

Tokyo General Sales OfficeChuo-ku, Tokyo

Kita-Kanto General Sales OfficeKita-ku, Saitama-city

Chubu General Sales Office

Toyokawa-city, Aichi

Nishi-Nihon General Sales Office

Fushimi-ku, Kyoto-city

Tohoku Sales Office

Fukushima-city, Fukushima

Tsukuba Sales Office

Tsukuba-city, Ibaraki

Nishi-Kanto Sales Office

Atsugi-city, Kanagawa

Nagano Sales Office

Shiojiri-city, Nagano

Shizuoka Sales Office

Suruga-ku, Shizuoka-city

Nagoya-Nishi Sales Office

Kuwana-city, Mie

Toyama Sales OfficeToyama-city, Toyama

Hiroshima Sales Office

Nishi-ku, Hiroshima-city

Fukuoka Sales Office

Hakata-ku, Fukuoka-city

Philippines Representative Office

Makati City, Philippines

Note: Tokyo General Sales Office and Kita-Kanto General Sales Office were merged and renamed as Higashi-Nihon General
Sales Office on April 1, 2016.

(9) Employees (as of March 31, 2016)
Number of employees

Increase from the end of previous FY

636(62)35

Note: The number of employees represents full-timers only (including seconded employees to the Company). Part-timers andother irregular employees are represented separately as their average annual number indicated in parentheses ( ).

(10) Major creditors (as of March 31, 2016)
No items to report.
(11) Other important matters pertaining to the status of the Yushin GroupNo material items to report.

–5–

2.

Matters Pertaining to the Shares of the Company (as of March 31, 2016)(1) Number of shares authorized:
40,000,000(2) Total number of issued shares:
17,819,033(3) Number of shareholders:
4,314(4) Major shareholders:
Investment in the Company
Name

Number of shares held
(thousand)

Percentage ofshares held (%)

Yushin Industry Co., Ltd.

4,376

25.0

Mayumi Kotani

2,156

12.3

BNP Paribas Sec Services Luxembourg, Jasdec, Aberdeen
Global Client Assets

856

4.9

The Nomura Trust and Banking Co., Ltd. (Trust Account3071019)774

4.4

The Master Trust Bank of Japan, Ltd. (Retail Trust
Account 620021158)

774

4.4

The Kyoto Chuo Shinkin Bank, Ltd.

544

3.1

Japan Trustee Service Bank, Ltd. (Trust Accounts)

525

3.0

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

424

2.4

RBC IST 15 PCT Non Lending Account - Client Account

383

2.2

The Bank of Kyoto, Ltd.

352

2.0

Note: Percentage of shares held is calculated after deducting the number of treasury stock (331,208 shares).

–6–

3.

Matters Pertaining to Officers of the Company(1) Directors and Corporate Auditors (as of March 31, 2016)
Position

Responsibilities and representation ofother organization

Name

President and Representative
Director

Mayumi Kotani

Executive Managing Director

Satoshi KimuraManaging Director

Yasuharu Odachi

Head of Research & Development Dept. H.Q.

Managing Director

Yasushi Kitagawa

Head of Manufacturing Dept. H.Q. and Head of Quality
Assurance Dept. H.Q.

Director

Yasuo Nishiguchi

Chairman & CEO at Socionext Inc.
Director at NAGASE & CO., LTD.
Director at Zensho Holdings Co., Ltd.

Director

Hiroshi Matsuhisa

Professor emeritus at Kyoto University

Full-time Corporate Auditor

Shujiro Sawada

Corporate Auditor

Yasuhiro Orita

LawyerCorporate Auditor

Takao Yoshikawa

Professor emeritus at Osaka University

Corporate Auditor

Hiroho Kamakura

Certified Public Accountant
Corporate Auditor at Trusco Nakayama Corporation
Corporate Auditor at FUJIO FOOD SYSTEM CO., LTD.

Notes:
1. Directors, Yasuo Nishiguchi and Hiroshi Matsuhisa are Outside Directors stipulated in Item 15, Article 2 of the Companies
Act.
2. The following describes the activities of the Outside Directors during the period under review.
Director, Yasuo Nishiguchi
In the period under review, Yasuo Nishiguchi attended 13 of 15 Meetings of Board of Directors. Based on his wide
knowledge and experience across the running a company which he had cultivated through holding prominent corporate
positions such as President and Representative Director, and Chairman of the Board and Representative Director at
Kyocera Corporation, he asked questions to clarify ambiguities that arose with respect to matters reported or resolved, andprovided opinions.
Yasuo Nishiguchi is the Chairman and CEO at Socionext Inc. He is also the Outside Director at NAGASE & CO., LTD.
and Zensho Holdings Co., Ltd. There is no special relationship between the Company and Socionext Inc., NAGASE &CO., LTD. and Zensho Holdings Co., Ltd.
Director, Hiroshi Matsuhisa
In the period under review, Hiroshi Matsuhisa attended all of 15 Meetings of Board of Directors. Based on the specialized
knowledge by the person with academic standing in engineering of Kyoto University, he asked questions to clarify
ambiguities that arose with respect to matters reported or resolved, and provided opinions.
Hiroshi Matsuhisa is a professor emeritus at Kyoto University. There is no special relationship between the Company and
Kyoto University.
In addition to the frequency of convening meetings of the Board of Directors described above, there were 2 times of written
resolutions adopted, deeming that there have been resolutions of the Board of Directors Meetings pursuant to Article 370 of
the Companies Act and Article 24 of the Articles of Association.
3. Corporate Auditors, Yasuhiro Orita, Takao Yoshikawa and Hiroho Kamakura are Outside Corporate Auditors stipulated in
Item 16, Article 2 of the Companies Act.
4. The following describes the activities of the Outside Corporate Auditors during the period under review.
Corporate Auditor, Yasuhiro Orita
In the period under review, Yasuhiro Orita attended all of 15 Meetings of Board of Directors and all of 5 Meetings of theBoard of Corporate Auditors. Based on the specialized legal knowledge, he asked questions to clarify ambiguities that
arose with respect to matters reported or resolved, and provided opinions. Additionally, he perused the reports of theinternal auditing results, exchanged opinions concerning auditing, and participated in joint discussions on importantmatters. In addition to receiving the Accounting Auditor’s detailed report on regular basis, he also regularly exchanged
opinions with top management.

–7–Corporate Auditor, Takao Yoshikawa
In the period under review, Takao Yoshikawa attended all of 15 Meetings of Board of Directors and all of 5 Meetings ofthe Board of Corporate Auditors. Based on the specialized knowledge by the person with academic standing inengineering of Osaka University, he asked questions to clarify ambiguities that arose with respect to matters reported or
resolved, and provided opinions. Additionally, he perused the reports of the internal auditing results, exchanged opinions
concerning auditing, and participated in joint discussions on important matters. In addition to receiving the Accounting
Auditor’s detailed report on regular basis, he also regularly exchanged opinions with top management.
Takao Yoshikawa is a professor emeritus at Osaka University. There is no special relationship between the Company andOsaka University.
Corporate Auditor, Hiroho Kamakura
In the period under review, Hiroho Kamakura attended 13 of 15 Meetings of Board of Directors and 4 of 5 Meetings ofthe Board of Corporate Auditors. He is a Certified Public Accountant and has specialist knowledge in finance andaccounting. Based on the specialized knowledge as a CPA, he asked questions to clarify ambiguities that arose withrespect to matters reported or resolved, and provided opinions. Additionally, he perused the reports of the internal auditing
results, exchanged opinions concerning auditing, and participated in joint discussions on important matters. In addition toreceiving the Accounting Auditor’s detailed report on regular basis, he also regularly exchanged opinions with top
management.
Hiroho Kamakura is also the Corporate Auditor at Trusco Nakayama Corporation and at FUJIO FOOD SYSTEM CO.,LTD. There is no special relationship between the Company and Trusco Nakayama Corporation and FUJIO FOOD
SYSTEM CO., LTD.
In addition to the frequency of convening meetings of the Board of Directors described above, there were 2 times of written
resolutions adopted, deeming that there have been resolutions of the Board of Directors Meetings pursuant to Article 370 of
the Companies Act and Article 24 of the Articles of Association.
Change of Directors and Corporate Auditors during the period under review
At the close of the 42nd Ordinary General Meeting of Shareholders held on June 23, 2015, Yuji Tsujimoto retired due totermination of the term.
The Company has designated Director, Yasuo Nishiguchi, Director, Hiroshi Matsuhisa and Corporate Auditor, Takao
Yoshikawa as an Independent Corporate Officer as prescribed by the Tokyo Stock Exchange and submitted notices to thiseffect to the exchange.

5.
6.

(2) Total remuneration and other payments made to Directors and Corporate Auditors(Thousands of yen)
Number of Directors/
Corporate Auditors

Classification

Total amount

Directors

7

172,550

Corporate Auditors

4

20,40011

192,950

Total

Notes:
1. The 35th Ordinary General Meeting of Shareholders held on June 27, 2008 resolved total remuneration for all Directors
within 300,000 thousand yen per year and total remuneration for all Corporate Auditors within 50,000 thousand yen per year.
There are currently no Directors who have concurrent employment positions.
2. Total remuneration amounts provided above include the following amount in addition to fixed monthly compensation
amounts.
- Provision for directors’ bonuses: 29,960 thousand yen
3. With respect to the liability for retirement benefits to Directors and Corporate Auditors, the plan for retirement benefits for
Directors and Corporate Auditors was terminated at the 33rd Ordinary General Meeting of Shareholders held on June 29,
2006, and no additional provision has been recorded since then. Therefore, the balance as of March 31, 2016 (66,780
thousand yen) is provided in proportion to the term that present Directors and Corporate Auditors had been in their respective
positions before June 2006.
4. The total amount of remuneration for the two (2) Outside Directors is 10,800 thousand yen.
5. The total amount of remuneration for the three (3) Outside Corporate Auditors is 8,400 thousand yen.

4.

Matters Pertaining to Accounting Auditors(1) Name of Accounting Auditors: Deloitte Touche Tohmatsu LLC(2) Amount of compensation and other payments for the Accounting Auditors(Thousands of yen)
Item

Total payment

The amount of compensation and other payments payable to the Accounting
Auditors for the reporting year

33,200Total amount of monetary and other property benefits payable by the Company
and its subsidiaries

35,000Note 1: In the audit contract between the Company and the Accounting Auditor, audit fees pursuant to the Companies Act andthose pursuant to the Financial Instruments and Exchange Act are not clearly separated and this separation is practically
impossible. Therefore, the amount of compensation and other payments to the Accounting Auditor is represented as thetotal payment.
2: Upon receipt of the necessary materials and reports from the Directors, in-house related departments and Accounting
Auditors, the Board of Corporate Auditors acknowledged the details of the audit and status of the course of accounting
duties by the Accounting Auditors, the grounds for calculation of the estimated remuneration for auditing, and reviewsof the audit calculation. As a result, the Board of Corporate Auditors believes that the audit remuneration presented by
the Accounting Auditors was appropriate and gave consent under Paragraph 1, Article 399 of the Companies Act.
–8–

(3) Non-audit services
Advice and guidance on international operations.
(4) Policy for making decisions regarding the dismissal or non-reappointment of Accounting
Auditor
The Board of Corporate Auditors will determine the content of the proposals relating to thedismissal or non-reappointment of the Accounting Auditor, to be submitted to the General
Meeting of Shareholders, should the execution of the Accounting Auditor’s duties be impeded, isdeemed necessary by the Board of Corporate Auditors,
The Board of Corporate Auditors will dismiss the Accounting Auditor should it determine thatsame corresponds to the provisions in each item of Paragraph 1, Article 340 of the Companies Act,with the agreement of all the members of the Board of Corporate Auditors. In such a case, aCorporate Auditor appointed by the Board of Corporate Auditors will report the fact of and thereason for the dismissal of the Accounting Auditor to the first General Meeting of Shareholders
called after the dismissal.
(5) Overview of limited liability contract
The Company has entered into a contract with Deloitte Touche Tohmatsu LLC, the Accounting
Auditor, based on Paragraph 1, Article 427 of the Companies Act limiting the liability of same as
specified in Paragraph 1, Article 423 of the Act. The upper limit provided in the limited liability
contract is the minimum limited amount stipulated by laws and regulations.

5.

Matters Pertaining to the Development of Systems to Ensure a Properness of Operations
The Company has established the basic policy of Internal Control System for the development of asystem to ensure that the execution of duties by Directors conforms to laws and regulations, and the
Articles of Association as well as other systems that ensure the properness of operations of theCompany, as follows.
(1) System to ensure that business execution of Directors and employees complies with laws andregulations and the Articles of Association.
The Company raises the awareness for and holds training on legal compliance to increaseawareness of compliance as well as establishes “Whistle-Blowing Regulations” providing theprocedure for reporting violations.
(2) System for keeping and managing the information on business execution of the Company’s
Directors.
Information is kept and managed according to laws and regulations, and internal regulations(including “Document Regulations,” “Internal Information Management Regulations” and“Information System Management Regulations”).
(3) Regulations on and other systems for risk management of losses of the Company and our
subsidiaries.
Risk of currently estimated losses is managed by setting a committee and making discussion
according to degree of its significance. Events delivering losses to the Company would be reported
to Directors and Corporate Auditors by the Executive in charge and discussed and managed by all
executives.
(4) System to ensure effective business execution by Directors of the Company and our subsidiaries.
Effective business execution by Directors is ensured by followings.
[1] The Board of Directors determines significant matters and oversees business execution by
Directors.
[2] Information is shared among Directors, Executives, and Corporate Auditors at executive
meetings.
[3] Notice of significant matters on management, understanding of status and business
instructions are conducted at management meetings and YSM management conference.
[4] At the subsidiaries conference, the information is shared on the Company and our
subsidiaries and significant matters are discussed and determined.
–9–(5) The systems to ensure appropriate works of the corporate group consisting of the Company and its
subsidiaries, and to make reports to the Company on matters concerning business execution by
Directors of subsidiaries.
Internal Audit Office develops the Internal Control System. “Subsidiaries Management
Regulations” obligate subsidiaries to make periodic reports relating to business results, fiscal
conditions and other significant information of subsidiaries.
Significant matters are discussed to solve issues at the Board of Directors.
(6) System to ensure effective Corporate Auditors’ audit.
Corporate Auditors attend the Board of Directors meetings and required significant meetings
including management conference as well as read major approval documents and other significant
documents concerning business execution and receives explanation from Directors and employeesof the Company and Directors of subsidiaries as necessary.
(7) System on employees assisting works of the Company’s Corporate Auditors when Corporate
Auditors require allocation of the assisting employees.
Employees assisting the work of the Company’s Corporate Auditors can be allocated as staff asnecessary. Corporate Auditor has the authority to give instructions and orders to his or her
Corporate Auditor staff.
(8) System to ensure that those reporting to the Board of Corporate Auditors and Corporate Auditors,
etc. are not unfavorably treated for the reason of the report.
The Company ensures that executives and employees reporting to Board of Corporate Auditors
and Corporate Auditors are not treated unfavorably because of the report and thoroughly informthe whole company of this.
In the “Whistle-Blowing Regulations,” it is prescribed to prohibit dismissal and give otherunfavorable treatment for the reason of the report.
(9) Matters on the policy for dealing with expenses or debts resulting from business execution of theCompany’s Corporate Auditors.
The Company, when Corporate Auditors require the Company to make advance payment inrespect of business execution according to Article 388 of the Companies Act, immediately deals
with the relevant expenses and debts unless it is considered unnecessary to make advancepayments.
(10) Systems on Eliminating Anti-Social Forces
The Company assumes a resolute attitude to anti-social forces threatening order and security ofcivil society as well as closely exchanges information and cooperates with the relevant specialized
agencies including police against anti-social forces and thoroughly informs employees of theabove policy.
6.

Overview of the Business Operations of Systems to Ensure a Properness of Operations
Major operational status of the Internal Control System executed by the Yushin Group in thecurrent consolidated fiscal year is as follows.
(1) Status of addressing compliance
The Company is endeavoring to spread awareness of compliance across the Yushin Groupthrough education and workshops. In addition, the Company has enacted “Whistle-Blowing
Regulations,” in which reporting procedures for any infringement are prescribed. And, compliancerequirements are thoroughly disseminated throughout the Yushin Group with regard to laws andregulations and internal regulations (including “Office Regulations,” “Internal Information
Management Regulations” and “Information System Management Regulations”).
(2) Status of addressing the risk management of losses
For the risk management overall, the Committee of Internal Control offers consultations for
implementation of companywide measures. If any events causing damage to the Company arise,
the Director in charge immediately makes a report to the Board of Directors and the Board of
Corporate Auditors, and all Directors offer consultations to take actions.
– 10 –

(3) Status of addressing to conducting proper and efficient execution of assigned duties
Assigned duties of the Directors are executed efficiently as described below.
[1] Significant matters are determined by the Board of Directors, and the Directors supervise thestatus of business execution.
[2] Significant matters are discussed among Directors, Executives and Corporate Auditors at theexecutive meetings thereby sharing such significant information.
[3] Significant matters relating to the corporate management are communicated at management
meetings. The operating status of the Company is monitored and necessary guidance isprovided.
(4) Status of addressing the proper operations of the business group consisting of the Company and its
subsidiaries
Establishing the Internal Control System is being promoted by the Committee of Internal
Control. The Company’s subsidiaries hold meetings three times a year so as to share information
relating to the Company and its subsidiaries. The Company also strives to strengthen subsidiarymanagement through monitoring status of business operations and confirming establishment ofrules and regulations of subsidiaries.
(5) Ensuring of effectiveness of Corporate Auditors’ audit
Corporate Auditors conduct audits pursuant to the audit policies and the audit schedule asprescribed by the Board of Corporate Auditors by attending the Board of Directors and executives,
management and other meetings. Corporate Auditors conduct interviews on the status of executionof duties by the Directors and the Internal Audit Office and then inspect significant decisions as
noted in the documentation, such as the approval documents, contracts and agreements. Corporate
Auditors also investigate the statuses of business operations, corporate properties and fraudulent
acts relating to the performance of Directors’ duties, infringement of rights and violations of laws
and regulations, and the Articles of Association. Meanwhile, Corporate Auditors coordinates withthe legal counsel such as the lawyers and the Certified Public Accountant, who are Outside
Corporate Auditors, and keeps internal coordination with the Internal Control Department. Other
than that, Corporate Auditors develops the standards and guidelines for the course of action by
Corporate Auditors conducting audits of the Company’s Internal Control System, including the“Audit Practice Standards relating to the Internal Control System,” and Corporate Auditors
conduct its audits pursuant to such practice standards.
7.

Policy Concerning Decisions on the Dividends of Surplus
The Yushin Group manages its businesses considering the return of profits to shareholders as
one of its important managerial issues.
To that effect, it is the basic policy of the Yushin Group to proactively return profits toshareholders by maintaining a stable operational base, improving its ROE and effectuating dividends
based on the performance results of each respective fiscal year. Specifically, the Yushin Group has atarget at the realization of 30% and more of dividend payout ratio to consolidated net income
attributable to shareholders of the parent company.
For this fiscal year, a full-year dividend is 36 yen per share, consisting of an interim dividend of
15 yen per share and a year-end dividend of 21 yen per share.

– 11 –

Consolidated Balance Sheets(as of March 31, 2016)(Thousands of yen)Account

AmountAccount

ASSETS
Current assets
Cash and deposits

AmountLIABILITIES
15,956,972

Current liabilities

4,392,694

5,341,166

Notes and accounts payable - trade

1,516,260

Notes and accounts receivable trade

6,026,195

Electronically recorded obligations- operating

652,843

Merchandise and finished goods

762,329

Accounts payable - other776,774

Work in process

625,413

Accrued expenses

139,5122,286,051

Income taxes payable

548,986

Prepaid expenses

123,535

Advances received

278,867

Deferred tax assets

625,342

Provision for bonuses

236,000

Other

197,419

Provision for directors’ bonuses

29,960Allowance for doubtful accounts(30,483)

Provision for product warranties

148,441

Raw materials and supplies

Non-current assets
Property, plant and equipment

13,452,630

Deferred tax liabilities

3,319

12,436,989

Other

61,728

Buildings

1,775,890

Structures

79,795

Provision for directors’ retirement
benefits

66,780Machinery and equipment

52,932

Net defined benefit liability

44,043

Vehicles

40,456

Deferred benefit liabilities

123,350

Tools, furniture and fixtures

107,654

Other

67,065Land
Leased assets
Construction in progress
Intangible assets

Long-term liabilities

5,779,928

Total liabilities

12,804

NET ASSETS

301,239

4,693,933

4,587,525

Shareholders’ equity

24,159,047

369,502

Capital stock

1,985,666

Telephone subscription right

11,430Capital surplus

2,023,903

Software64,319Retained earnings

20,502,208

Software in progress

217,782

Treasury stock(352,731)

Others75,970Investments and other assets

646,137

Investment securities

185,438

Net defined benefit asset

266,874

Deferred tax assets
Other

9,012

Total accumulated othercomprehensive income
Valuation difference on availablefor-sale securities
Foreign currency translation
adjustment
Remeasurements of defined benefit
plans

350,808

Non-controlling interests

205,81233,920266,643
50,245

184,827

Allowance for doubtful accounts
Total assets(14)
29,409,602– 12 –

Total net assets

24,715,668

Total liabilities and net assets

29,409,602

Consolidated Statements of Income(from April 1, 2015 to March 31, 2016)(Thousands of yen)Account

AmountNet sales

21,148,591

Cost of sales

12,705,822

Gross profit

8,442,768

Selling, general and administrative expenses

5,356,705

Operating income

3,086,063

Non-operating income

62,320Interest and dividends income

17,603Purchase discounts

14,270Other30,446

Non-operating expenses

226,629

Sales discounts

941

Foreign exchange losses

224,180

Other

1,507

Ordinary income

2,921,754

Extraordinary income

1,224

Gain on sales of non-current assets

120

Gain on sales of investment securities

1,104

Extraordinary loss

64,060Loss on sales and retirement of non-current assets

64,060

Income before income taxes

2,858,919

Income taxes - current

955,959

Income taxes - deferred(72,362)

Net income

1,975,321

Net income attributable to non-controlling interests

66,695

Net income attributable to shareholders of the parent company– 13 –

1,908,626

Consolidated Statements of Changes in Net Assets(from April 1, 2015 to March 31, 2016)(Thousands of yen)
Shareholders’ equity

Balance as of April 1, 2015

Capital stock

Capital surplus

1,985,666

2,023,903

Retainedearnings
19,205,664

Treasury stock

Total
shareholders’equity(352,005)

22,863,228

Changes in the current period
Dividends of surplus(612,081)(612,081)

Net income attributable toshareholders of the parent
company

1,908,626

1,908,626

Acquisition of treasury stock

(725)

(725)

Changes in items other thanshareholders’ equity, net
Total changes in the current
periodBalance as of March 31, 2016--

1,296,544(725)

1,295,818

1,985,666

2,023,903

20,502,208(352,731)

24,159,047

Total accumulated other comprehensive income

Balance as of April 1, 2015

Valuationdifference on
availablefor-salesecurities

Foreigncurrencytranslation
adjustments

Remeasurements ofdefinedbenefit plans

107,003658,809108,707

Total
Nonaccumulated controllinginterests
othercomprehensive
income874,520232,393

Total net
assets23,970,142

Changes in the current period
Dividends of surplus(612,081)

Net income attributable toshareholders of the parent
company

1,908,626

Acquisition of treasury stock
Changes in items other thanshareholders’ equity, net(725)(73,083)(392,165)(58,462)(523,711)(26,580)(550,292)

Total changes in the current
period(73,083)(392,165)(58,462)(523,711)(26,580)

745,526

Balance as of March 31, 2016

33,920266,643

50,245350,808

205,81224,715,668– 14 –

1.

Basis of Preparing Consolidated Financial Statements(1) Scope of consolidation
All 12 subsidiaries of the Company, provided below, fall within the scope of consolidation.
List of Subsidiaries
Yushin America, Inc.
Yushin Korea Co., Ltd.
Yushin Precision Equipment Sdn. Bhd.
Yushin Precision Equipment (Taiwan) Co., Ltd.
Yushin Precision Equipment (Thailand) Co., Ltd.
Yushin Automation, Ltd.
Yushin Precision Equipment Trading (Shenzhen) Co., Ltd.
Yushin Precision Equipment Trading (Shanghai) Co., Ltd.
Yushin Precision Equipment (India) Pvt. Ltd.
Guangzhou Yushin Precision Equipment Co., Ltd.
PT. Yushin Precision Equipment Indonesia
Yushin Precision Equipment (Vietnam) Co., Ltd.

(2) Application of the equity method
There is no non-consolidated subsidiary or affiliate company.
(3) Accounting policies
a. Valuation of important assetsi) Securities
Available-for-sale securities classified as other securities- Securities with available fair market values are reported at fair value on the consolidated
account closing date
(Unrealized gains or losses, net of applicable taxes, reported in a separate component ofequity. The cost of securities sold is principally determined by the moving average method)ii) Inventories- Merchandise and finished goods, Work-in-process
Principally carried at cost determined by the identified cost method (the carrying value on thebalance sheet is written down to reflect the effect of lower profit margins)- Raw materials
Principally carried at cost determined by the periodic average method (the carrying value on
the balance sheet is written down to reflect the effect of lower profit margins)- Supplies
Carried by the last purchase price methodb. Depreciationi) Property, plant and equipment (excluding leased assets): Principally computed by the decliningbalance method
The range of useful lives for major assets is as follows:
Buildings:
13 - 40 years
Machinery and equipment:
5 - 12 years
ii)

Intangible assets (excluding leased assets)- Software used internally: Straight-line method based on the expected useful lives- Other intangible assets: Straight-line methodiii) Leased assets: For leased assets under non-ownership transfer finance lease transactions, theCompany applies a straight-line method with the lease period as useful life and the residual
value as 0.
– 15 –

c. Estimation on important allowance and reservesi) Allowance for doubtful accounts:
To provide for possible bad debt losses, the amount deemed unrecoverable is accounted using
the loan loss ratio based on past experience for general claims and by examining the possibilityof recovery on an individual basis for specific claims with default possibility.
ii) Provision for bonuses:
In order to allocate the payment of employees’ bonuses, the Company provides the amountsubject to the fiscal year under review among the total estimated amount to be paid as
employees’ bonuses.
iii) Provision for directors’ bonuses:
The Company provides the projected payment amount to be allocated for the payment ofbonuses to Directors and Corporate Auditors.
iv) Provision for product warranties:
To provide for expenses incurred for free repairs related to product sales, an amount isaccounted based on historical experience.
v) Provision for directors’ retirement benefits:
The Company provides the estimated amount of retirement benefits to Directors and Corporate
Auditors which would be required if all Directors and Corporate Auditors retired at the balance
sheet date according to internal regulations. This plan was terminated on June 29, 2006 and no
additional provision has been recorded since then. Therefore, the balance as of March 31, 2016is provided in proportion to the term that present Directors had been in their respective positions
before June 2006.
d. Other significant matter for the preparation of Consolidated Financial Statementsi) Employees’ retirement benefits
To provide for employees’ retirement benefits, based on the projected benefit obligations at
year-end and the pension asset balance, the amount of pension assets surplus to projected benefit
obligations is recorded in the “Other” field under “Investments and other assets.” The net
actuarial loss or gain is subject to amortization from the next fiscal year of the recognition
thereof onward in an amount pro-rated by the straight-line method based on the averageremaining employee service period (10 to 16 years) at the time of the recognition of net actuarial
loss or gain in each fiscal year.
ii)

2.

Accounting for Consumption tax and local consumption tax
Consumption tax and local consumption tax are accounted for using the tax excluded method.

Changing in accounting policies(Adoption of Accounting Standard for Business Combination and Other Standards)
With regard to the “Revised Accounting Standards for Business Combination” (AccountingStandards Board of Japan(ASBJ) Accounting Standard – ASBJ Statement No. 21 dated September
13, 2013), the “Revised Accounting Standard for Consolidated Financial Statements” (AccountingStandards Board of Japan (ASBJ) Accounting Standard – ASBJ Statement No. 22 dated September
13, 2013) and the “Revised Accounting Standards for Business Divestitures” (AccountingStandards Board of Japan (ASBJ) Accounting Standard –ASBJ Statement No. 7 dated September
13, 2013) have been adopted from the current consolidated fiscal year under review. Accordingly,
the way in which net income is denoted has been changed, and the term minority interest has beenchanged to non-controlling interests.

3. Notes to Consolidated Balance Sheet
Accumulated depreciation of property, plant and equipment:– 16 –

4,160,969 thousand yen

4.

Notes to Consolidated Statement of Changes in Net Assets(1) Total number of issued sharesClass of shares

Number of shares atthe beginning ofcurrent FY

Number of increased
shares of current FY

Number of decreased
shares of current FY

Number of shares atthe end of current FY

Common stock

17,819,033--

17,819,033(2) Number of treasury stock
Class of shares

Number of shares atthe beginning ofcurrent FY

Number of increased
shares of current FY

Number of decreased
shares of current FY

Number of shares atthe end of current FY

Common stock

330,904304-

331,208

Note: The increase in the number of shares of treasury stock (304 shares) is due to the purchase of shares of less than one unit.

(3) Dividends of surplus
a. Payment of dividends
Resolution

Class of shares

Total dividend(Thousandsof yen)Dividend
per share(Yen)

Record date

The Board of Directors’Meeting on May 11, 2015

Common stock

349,762

20

March 31, 2015

June 9, 2015

The Board of Directors’Meeting on November 5,
2015

Common stock

262,31915

September 30,
2015

December 1,
2015

Effective dateb. Dividends whose record date falls within this consolidated fiscal year but comes into effect in
the next consolidated fiscal year
Resolution

Class ofsharesTotal dividend(Thousandsof yen)Dividend
funds

Dividend
per share(Yen)

The Board of
Directors’ Meetingon May 10, 2016

Commonstock

367,244

Retainedearnings

21

5.

Record date

Effective date

March 31,2016

June 3, 2016

Notes to Financial Instruments(1) Conditions of financial instruments
a. Management policy
The Yushin Group has a policy of limiting investments of unused funds to short-term deposits,
certificates of deposits and similar instruments and never using these funds for speculation.
Internal resources are used to meet all working capital requirements. Derivative instruments may
be used to hedge exposure to foreign exchange rate risk but will never be used for speculation.
b. Details of financial instruments and their risks
Operating receivables consisting of Notes and accounts receivable - trade are generally exposedto the credit risk of customers, while foreign currency denominated operating receivables atforeign operations are exposed also to the foreign exchange risk.
Investment securities are available-for-sale securities and are exposed to risk associated withmarket price volatility.
Operating debt consisting of Notes and accounts payable - trade and Electronically recorded
obligations - operating are largely due four months or less. Accounts payable - other and Income
taxes payable are due one year or less.
c. Risk management system for financial instruments
Payment dates and balances of outstanding are supervised for each customer based on rules forthe management of trade receivables and credit. In addition, there is a system for monitoring thefinancial soundness of customers.
For Investment securities, there are measures to periodically monitor the fair values of thesesecurities and the financial soundness of issuers of these securities.
– 17 –

(2) Fair value of financial instruments
The carrying value on the consolidated balance sheets, fair value, and their differences as ofMarch 31, 2016 are shown as follows.
Carrying value(thousands of yen)
(1)
(2)
(3)

(1)
(2)
(3)
(4)

Cash and deposits
Notes and accounts receivable - trade
Investment securities
Other securities

Fair value(thousands of yen)

Differences(thousands of yen)

5,341,166
6,026,195

5,341,166
6,026,195-

185,438

185,438-

Assets total

11,552,800

11,552,800-

Notes and accounts payable - trade
Electronically recorded obligations - operating
Accounts payable - other
Income taxes payable

1,516,260
652,843776,774
548,986

1,516,260
652,843776,774
548,986-

Liabilities total

3,494,864

3,494,864-(Note) Matters concerning determination of fair value of financial instruments and marketable securities.

(Assets)(1) Cash and deposits, and (2) Notes and accounts receivable - trade.
Fair value of the above financial instruments is deemed to be equal to their carrying value
because they are settled within a short period of time.
(3) Investment securities
Fair value of the above financial instruments such as stocks is determined by prices at stock
exchanges.
(Liabilities)(1) Notes and accounts payable - trade, (2) Electronically recorded obligations - operating, (3)Accounts payable - other and (4) Income taxes payable
Fair value of the above financial instruments is deemed to be equal to their carrying value
because they are settled within a short period of time.
(3) The amount of money claims scheduled to be redeemed subsequent to the consolidatedbalance sheet dateCash and deposits
Notes and accounts receivable - trade
Total

Due within
one year

Due after one year
through five years

Due after five
years throughten years

Due after
ten years(thousands of yen)(thousands of yen)(thousands of yen)(thousands of yen)

5,341,166
6,026,195---

11,367,362

-

-

-

6. Per Share Information(1) Net assets per share:(2) Net income per share:

1,401.54 yen
109.14 yen

Note: Amounts less than one thousand yen are truncated.

– 18 –

Balance Sheets(as of March 31, 2016)
Account

AmountAccount

ASSETS
Current assets

LIABILITIES
12,605,465

Cash and deposits

3,188,986

Notes receivable - trade

1,081,421

Accounts receivable - trade

5,160,361

Merchandise and finished goods
Work in process(Thousands of yen)AmountCurrent liabilities
Notes payable - trade
Electronically recorded obligations operating
Accounts payable - trade

3,537,649
47,272652,843
1,325,768

341,968

Accounts payable - other

523,060

515,241

Accrued expenses

100,737

1,346,537

Income taxes payable

435,890

Prepaid expenses

65,557

Advances received

60,734

Consumption taxes receivable

102,232

Deposits received

25,154

Deferred tax assets

361,596

Provision for bonuses

236,000

Other

442,261

Provision for directors’ bonuses

29,960(700)

Provision for product warranties

96,000

Other

4,227

Raw materials and supplies

Allowance for doubtful accounts
Non-current assets

13,510,482

Property, plant and equipment

11,500,607

Buildings

1,246,341

Structures

79,795

Machinery and equipment
VehiclesTools, furniture and fixtures
Land
Leased assets
Construction in progress
Intangible assets

Non-current liabilities

76,74066,78021,000

Lease obligations
Provision for directors’ retirement
benefits
Long-term guarantee deposited

9,300

391

Total liabilities

3,614,390

61,794

NET ASSETS

660

5,490,953

Shareholders’ equity

22,467,637

12,804

Capital stock

1,985,666

4,587,525

Capital surplus

2,023,903

282,797

Legal capital surplus

Telephone subscription right

11,430Software53,585

Legal retained earnings

286,314

Other retained earnings

18,524,484

Software in progress

217,782

Investments and other assets

1,727,078

Investment securities
Stocks of subsidiaries andaffiliates
Investments in capital ofsubsidiaries and affiliates
Guarantee deposits
Deferred tax assets

72,643

Other

338,417

Allowance for doubtful accounts
Total assets

Retained earnings

2,023,903
18,810,799

Reserve for dividend equalization

1,000,000

185,438

General reserve

8,700,000

805,760

Retained earnings brought forward

8,824,484

297,873

Treasury stock

26,960

Valuation and translation adjustments
Valuation difference on available-forsale securities(14)
26,115,948– 19 –(352,731)
33,92033,920Total net assets

22,501,557

Total liabilities and net assets

26,115,948

Statements of Income(from April 1, 2015 to March 31, 2016)(Thousands of yen)Account

AmountNet sales

15,520,101

Cost of sales

10,235,848

Gross profit

5,284,252

Selling, general and administrative expenses

3,778,892

Operating income

1,505,359

Non-operating income

773,135

Interest and dividends income

735,568

Purchase discounts

14,270Other

23,296

Non-operating expenses

11,225

Sales discounts

941

Foreign exchange losses

8,928

Other

1,355

Ordinary income

2,267,269

Extraordinary income

1,104Gain on sales of investment securities

1,104

Extraordinary loss

63,801

Loss on sales and retirement of non-current assets

63,801

Income before income taxes

2,204,572

Income taxes - current

656,218

Income taxes - deferred(128,401)

Net income

1,676,755– 20 –

Statements of Changes in Net Assets(from April 1, 2015 to March 31, 2016)(Thousands of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Capital stock

Balance as ofApril 1, 2015
Changes in thecurrent period
Dividends ofsurplus1,985,666

Legal capitalsurplus

Total capitalsurplusLegalretainedearnings

2,023,903

2,023,903

286,314

Reserve fordividend
equalization

Generalreserve

Retainedearnings
brought
forwardTotal
retainedearnings

1,000,000

8,700,000

7,759,810

17,746,125(612,081)(612,081)

1,676,755

1,676,755

Net income
Acquisition oftreasury stock
Changes in items
other thanshareholders’equity, net
Total changes in thecurrent period
Balance as ofMarch 31, 2016

-

-

-

-

-

-

1,064,673

1,064,673

1,985,666

2,023,903

2,023,903

286,3141,000,000

8,700,000

8,824,484

18,810,799

Shareholders’ equity
Treasury stock
Balance as of April 1, 2015

(352,005)

Valuation and translation adjustments

Totalshareholders’equity21,403,689

Valuationdifference on
available-for-salesecurities

Total valuation andtranslation
adjustments

107,003

107,003

Total net assets

21,510,693

Changes in the current period
Dividends of surplus(612,081)(612,081)

Net income

1,676,755

1,676,755

(725)

(725)

Acquisition of treasury stock(725)

Changes in items other thanshareholders’ equity, net
Total changes in the current
period(725)

Balance as of March 31, 2016

(352,731)(73,083)(73,083)(73,083)

1,063,948(73,083)(73,083)

990,864

22,467,637

33,92033,92022,501,557– 21 –

1. Summary of Significant Accounting Policies(1) Valuation of important assets
a. Stocks of subsidiaries and affiliates
Carried at cost determined by the moving average method
b. Available-for-sale securities classified as other securities- Securities with available fair market values are reported at fair value on the closing date
(Unrealized gains or losses, net of applicable taxes, reported in a separate component ofequity. The cost of securities sold is principally determined by the moving average method)c. Inventories- Merchandise and finished products, Work in process:
Carried at cost determined by the identified cost method (the carrying value on the balance
sheet is written down to reflect the effect of lower profit margins).
- Raw materials:
Carried at cost determined by the periodic average method (the carrying value on the balance
sheet is written down to reflect the effect of lower profit margins)- Supplies:
Carried by the last purchase price method(2) Depreciationa. Property, plant and equipment (excluding leased assets): Declining balance method
The range of useful lives for major assets is as follows:
Buildings:
13 - 38 years
Machinery and equipment:
12 yearsb.

c.

Intangible assets (excluding leased assets)- Software used internally: Straight-line method based on the expected useful lives- Other intangible assets: Straight-line method
Leased assets: For leased assets under non-ownership transfer finance lease transactions, theCompany applies a straight-line method with the lease period as useful life and the residual
value as 0.

(3) Estimation on allowance and reserves
a. Allowance for doubtful accounts:
To provide for possible bad debt losses, the amount deemed unrecoverable is accounted using
the loan loss ratio based on past experience for general claims and by examining the possibilityof recovery on an individual basis for specific claims with default possibility.
b. Provision for bonuses:
In order to allocate the payment of employees’ bonuses, the Company provides the amountsubject to the fiscal year under review among the total estimated amount to be paid as
employees’ bonuses.
c. Provision for directors’ bonuses:
The Company provides the projected payment amount to be allocated for the payment ofbonuses to Directors and Corporate Auditors.
d. Provision for product Warranties:
To provide for expenses incurred for free repairs related to product sales, an amount isaccounted based on historical experience.
e. Provision for directors’ retirement benefits:
The Company provides the estimated amount of retirement benefits to Directors and Corporate
Auditors which would be required if all Directors and Corporate Auditors retired at the balance
sheet date according to internal regulations. This plan was terminated on June 29, 2006 and no
additional provision has been recorded since then. Therefore, the balance as of March 31, 2016is provided in proportion to the term that present Directors had been in their respective positions
before June 2006.

– 22 –

(4) Employees’ retirement benefits
To provide for employees’ retirement benefits, based on the projected benefit obligations at
year-end and the pension asset balance, the amount of pension assets surplus to projected benefit
obligations is recorded in the “Other” field under “Investments and other assets.” The net actuarial
loss or gain is subject to amortization from the next fiscal year of the recognition thereof onward inan amount pro-rated by the straight-line method based on the average remaining employee service
period (10 to 16 years) at the time of the recognition of net actuarial loss or gain in each fiscal year.
(5) Other basic significant matter for the preparation of Financial Statements
Consumption tax and local consumption tax are accounted for using the tax excluded method.
(6) Changes in presentation(Balance Sheet)“Claims provable in bankruptcy, claims provable in rehabilitation and other,” which was
separately presented until previous fiscal year, is reported in “Other” in Investments and otherassets from this fiscal year under review, because its materiality decreased. “Claims provable inbankruptcy, claims provable in rehabilitation and other” in this fiscal year is 14 thousand yen.
“Lease obligations,” which was separately presented until previous fiscal year, is reported in“Other” in Current liabilities from this fiscal year under review, because its materiality decreased.
“Lease obligations” in this fiscal year is 4,218 thousand yen.

2. Notes to Balance Sheet(1) Accumulated depreciation of property, plant and equipment:(2) Monetary credit and debts to affiliates
a. Short-term monetary credit:b. Short-term monetary debts:

3. Notes to Statements of Income
Transactions with subsidiaries and affiliates
a. Net sales:b. Purchases:c. Selling, general and administrative expenses:
d. Non-operating transactions:– 23 –

3,404,006 thousand yen
2,192,287 thousand yen
44,098 thousand yen

4,723,700 thousand yen
11,663 thousand yen
312,715 thousand yen
722,248 thousand yen

4. Notes to Statement of Changes in Net Assets
Number of treasury stock
Class of shares

Number of shares atthe beginning ofcurrent FY

Number of increased
shares of current FY

Number of decreased
shares of current FY

Number of shares atthe end of current FY

Common stock

330,904304-

331,208

Note: The increase in the number of shares of treasury stock (304 shares) is due to the purchase of shares of less than one unit.

5. Notes on Tax-effect Accounting(1) Breakdown by cause of deferred tax assets and liabilities
Deferred tax assets
Inventories
Depreciation of Buildings
SoftwareProvision for bonuses
Accrued enterprise taxes
Provision for product warranties
Provision for directors’ retirement benefit
Other
Subtotal deferred tax assets
Valuation reserve
Total deferred tax assets
Deferred tax liabilities
Prepaid pension costs
Valuation difference on available-for-sale securities
Total deferred tax liabilities
Net deferred tax assets(Thousands of yen)
207,673
81,536
61,72672,452
29,292
29,472
20,367
24,625527,146(20,367)
506,778
59,346
13,192
72,538434,240

Note: Net deferred tax assets are included in following balance sheet items.
(Thousands of yen)
Current assets
361,596
Fixed assets
72,643(2) Change in Deferred tax assets and liabilities due to the change in corporate tax rates.
The “Act for Partial Revision of the Income Tax Act etc.”(Act No. 15 of 2016) and the “Actfor Partial Revision of the Local Taxes Act etc.”(Act No. 13 of 2016) were enacted in the Diet on
March 29, 2016 and Corporation taxes are lowered from the fiscal year beginning on or after
April 1, 2016.
With this change of tax rates, the amount of Deferred tax assets (net amount, deducted
Deferred tax liabilities) decreased by 32,643 thousand yen and the amount of Income taxes deferred increased by 33,864 thousand yen.

– 24 –

6. Transactions with Related Parties
Subsidiaries, etc.
Type

Subsidiary

Name

% of
votingrights held

YushinAmerica,Inc.

100%
Directly
held by theCompany

YushinKorea Co.,
Ltd.

100%
Directly
held by theCompany

Guangzhou
YushinPrecision
Equipment
Co., Ltd.

100%
Directly
held by theCompany

Relationship
Concurrent
Business
Directors,
relationshipetc.
Sale ofCompany
products andConcurrent
manufacture
Directors: 2
and sale oflabor saving
machines
Sale ofCompany
products andConcurrent
manufacture
Directors: 2
and sale oflabor saving
machines

Concurrent
Directors: 3

Manufactureof Company
products

Type oftransactions

Transaction
amount(thousands ofyen)

Account

Year-endbalance(thousands ofyen)Sale ofproducts

1,540,806

Accounts
receivable- trade463,029

Sale ofproducts

1,175,437

Accounts
receivable- trade418,223

Sale ofproducts

504,565

Accounts
receivable- trade590,798

Transaction terms or method of determining transaction terms(Note) For sale of products, prices are determined by negotiations considering local market prices.

7. Per Share Information(1) Net assets per share:(2) Net income per share:

1,286.70 yen
95.88 yen

Note: Amounts less than one thousand yen are truncated.

– 25 –

(TRANSLATION PURPOSE ONLY)[Certified copy of the Accounting Auditors’ Report concerning consolidated statutory report]

Independent Auditors’ Report
May 13, 2016
To the Board of Directors of
Yushin Precision Equipment Co., Ltd.:
Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:Takeshi Nishimura [SEAL]
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:
Mitsuhiro Takasaki [SEAL]
Pursuant to the fourth paragraph of Article 444 of the Companies Act, we have audited theconsolidated financial statements, namely, the consolidated balance sheet as of March 31, 2016 of Yushin
Precision Equipment Co., Ltd. (the “Company”) and its consolidated subsidiaries, and the related
statements of income and changes in net assets for the fiscal year from April 1, 2015 to March 31, 2016,
and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in conformity with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order todesign audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Audit Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of the Company and its consolidated subsidiaries as of March 31, 2016, andthe results of their operations for the year then ended in conformity with accounting principles generally
accepted in Japan.
Interest
Our firm and the engagement partners do not have any interest in the Company for which disclosure
is required under the provisions of the Certified Public Accountants Act.

The above represents a translation, for convenience only, of the original report issued in the Japanese language.
– 26 –

(TRANSLATION PURPOSE ONLY)[Certified copy of the Accounting Auditors’ Report concerning non-consolidated statutory report]

Independent Auditors’ Report
May 13, 2016
To the Board of Directors of
Yushin Precision Equipment Co., Ltd.:
Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:Takeshi Nishimura [SEAL]
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:
Mitsuhiro Takasaki [SEAL]
Pursuant to the first item, second paragraph of Article 436 of the Companies Act, we have audited thefinancial statements, namely, the balance sheet as of March 31, 2016 of Yushin Precision Equipment Co.,
Ltd. (the “Company”), and the related statements of income and changes in net assets for the 43rd fiscal
year from April 1, 2015 to March 31, 2016, and a summary of significant accounting policies and otherexplanatory information, and the accompanying supplemental schedules.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements andthe accompanying supplemental schedules in conformity with accounting principles generally accepted inJapan, and for such internal control as management determines is necessary to enable the preparation offinancial statements and the accompanying supplemental schedules that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements and the accompanying
supplemental schedules based on our audit. We conducted our audit in accordance with auditing standards
generally accepted in Japan. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements and the accompanying supplemental
schedules are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements and the accompanying supplemental schedules. The procedures selected dependon the auditor’s judgment, including the assessment of the risks of material misstatement of the financial
statements and the accompanying supplemental schedules, whether due to fraud or error. In making thoserisk assessments, the auditor considers internal control relevant to the entity’s preparation and fairpresentation of the financial statements and the accompanying supplemental schedules in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the financial statements and theaccompanying supplemental schedules.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Audit Opinion
In our opinion, the financial statements and the accompanying supplemental schedules referred toabove present fairly, in all material respects, the financial position of the Company as of March 31, 2016,
and the results of its operations for the year then ended in conformity with accounting principles generally
accepted in Japan.
Interest
Our firm and the engagement partners do not have any interest in the Company for which disclosure
is required under the provisions of the Certified Public Accountants Act.
The above represents a translation, for convenience only, of the original report issued in the Japanese language and "theaccompanying supplemental schedules" referred to in this report are not included in the attached financial documents.
– 27 –

(TRANSLATION PURPOSE ONLY)<Certified copy of the audit report concerning non-consolidated statutory report>

Audit Report
Regarding the performance of duties by the Directors for the fiscal year from April 1, 2015 to March 31,
2016, the Board of Corporate Auditors hereby submits its audit report, which has been prepared throughdiscussions based on the audit report prepared by each Corporate Auditor.
1.

Auditing Methods adopted by the Corporate Auditors and Board of Corporate Auditors and Details of
Such Methods(1) The Board of Corporate Auditors established auditing policies, allocation of duties, and otherrelevant matters, and received reports from each Corporate Auditor regarding his or her audits andresults thereof, as well as received reports from the Directors, other relevant personnel, and the
Accounting Auditors regarding performance of their duties, and requested explanations as necessary.
(2) Each Corporate Auditor complied with the auditing standards of Corporate Auditors established by
the Board of Corporate Auditors, followed the auditing policies, allocation of duties, and otherrelevant matters, communicated with the Directors, the Internal Audit Office, other employees, andany other relevant personnel, and made efforts to optimize the environment for informationcollection and audit, and conducted audits as follows.
[1] Participated in the Board of Directors’ Meetings and other important meetings, received reports
from the Directors, employees, and other relevant personnel regarding performance of theirduties, requested explanations as necessary, examined important authorized documents andassociated information, and studied the operations and financial positions at the head office andprincipal offices. In addition, with respect to subsidiaries, we communicated and exchanged
information with Directors, Corporate Auditors, and other relevant personnel of thesubsidiaries, and received business reports from subsidiaries as necessary.
[2] We received periodic reports and requested explanations as necessary from the Directors, otherrelevant personnel and expressed our opinion about conditions of construction and applicationon the content of the resolution of the Board of Directors and system actually placed as“Internal Control System” in accordance to this resolution, which is stipulated in Paragraphs 1
and 3, Article 100 of the Enforcement Regulation of the Companies Act as a system required toensure the compliance of laws and regulations, and the Articles of Association in the executionof businesses by the Directors and necessity to ensure a properness of operation in the businessgroup consisting of the Company and its subsidiaries written in the business report.
[3] We monitored and verified whether the Accounting Auditors maintained their independence
and implemented appropriate audits, and we received reports from the Accounting Auditors
regarding the performance of their duties and requested explanations as necessary. In addition,
we received notice from the Accounting Auditors that “the system for ensuring that duties are
performed properly” (matters set forth in each Item of Article 131 of the Company Accounting
Rules) is appropriately established in accordance with “Quality Control Standard on Audit”(Business Accounting Council, October 28, 2005) and requested explanations as necessary.
Based on the above methods, we examined the business report and its supporting schedules, the nonconsolidated financial statements (Balance Sheets, Statements of Income, and Statements of Changes
in Net Assets) and its supporting schedules, and the consolidated financial statements (Balance Sheets,Statements of Income, and Statements of Changes in Net Assets) related to the relevant business year.

– 28 –

2.

Audit Results(1) Results of Audit of Business Report and Other Relevant Documents[1] In our opinion, the business report and supporting schedules are in accordance with therelated laws and regulations and Articles of Association, and fairly represent the Company’s
condition.
[2) With regard to the performance of duties by the Directors, we have found no evidence ofwrongful action or material violation of related laws and regulations, nor of any violation withrespect to the Articles of Association.
[3] In our opinion, resolutions of the Board of Directors for the Internal Control System arefair. And also the contents of the business report about the Internal Control System, and the
Director’s activities and implementation have no issues to be pointed out.
(2) Results of Audit of Financial Statements and Supporting Schedules
In our opinion, the methods and results employed and rendered by the Accounting Auditors,
Deloitte Touche Tohmatsu LLC, are fair and reasonable.
(3) Results of Audit of Consolidated Financial Statements
In our opinion, the methods and results employed and rendered by the Accounting Auditors,
Deloitte Touche Tohmatsu LLC, are fair and reasonable.

May 18, 2016
Board of Corporate Auditors,
Yushin Precision Equipment Co., Ltd.
Full-time Corporate Auditor
Outside Corporate Auditor
Outside Corporate Auditor
Outside Corporate Auditor

Shujiro Sawada [SEAL]
Yasuhiro Orita [SEAL]
Takao Yoshikawa [SEAL]
Hiroho Kamakura [SEAL]

End of submitted documents– 29 –

Reference Documents for the General Meeting of Shareholders
Proposal 1: Election of Six (6) Directors
The terms of office of all the currently serving six (6) Directors will expire at the conclusion of thisMeeting. Shareholders are asked to vote for these six (6) candidates for Directors.
The candidates for the position of Directors are as follows:
No.

Name
(Date of birth)

Career summary, position, areas of responsibility, and representation ofother organizations
October 1973
October 1982
February 1989
March 1993

Mayumi Kotani(January 12, 1947)

December 2002
April 2006

1
March 2011

2

3

Joined the Company
Director
Executive Vice President and Director
Executive Vice President and Director, Head of Sales
H.Q.
President and Representative Director
President and Head of Sales and Customer Service
H.Q.
President and Representative Director
To the present

Number ofshares held

2,156,601
sharesReasons for appointment:
Mayumi Kotani has been engaged in management since the establishment of the Company and exercising strong
leadership as a President and Representative Director for many years. She has extensive experience in business
management. Because of the expectation that the functions of decision-making and oversight by the Board of
Directors should be strengthened, she is a candidate for a Director of the Company.
April 2005
Joined the Company as Executive Officer andGeneral Manager of Purchase Dept.
October 2005
Executive Officer and Head of Purchase Dept.
April 2006
Senior Executive Officer and Head of Purchase H.Q.
Satoshi Kimura
June
2006
Managing Director and Head of Purchase H.Q.
1,100 shares(April 1, 1954)
June 2008
Executive Managing Director and Head of Purchase
H.Q.
March 2010
Executive Managing Director
To the present
Reasons for appointment:
Having been engaged in management and operations of purchasing and administration, Satoshi Kimura has
extensive experiences and performance. Because of the expectation of continuously strengthening the function ofdecision-making and operational oversight at the Board of Directors, he is a candidate for a Director of theCompany.
December 2004
Joined the Company
February 2005
General Manager of Production Technology Dept.
March 2005
General Manager of Research & Development Dept.
October 2005
Head of Research & Development Dept. and Quality
Assurance Dept.
April
2006
Executive Officer and Head of Research &Yasuharu Odachi
2,100 shares
Development H.Q. and Quality Assurance Dept.
(July 31, 1958)
April 2008
Executive Officer and Head of Research &Development H.Q.
June 2008
Director and Head of Research & Development H.Q.
June 2011
Managing Director and Head of Research &Development H.Q.
To the present
Reasons for appointment:
Yasuharu Odachi has been primarily involved in management and operation of research and development, thus
having broad experience in the business. Because of the expectation to strengthen the function of decision-making
and supervision by the Board of Directors, he is a candidate for a Director of the Company.

– 30 –

No.

Name(Date of birth)

Yasushi Kitagawa(August 12, 1958)
4

Career summary, position, areas of responsibility, and representation ofother organizations
September 2007
November 2007
April 2008

Joined the Company
Deputy Head of Manufacturing Dept.
Deputy Head of Manufacturing Dept. and Head of
Quality Assurance Dept.

April 2009

Executive Officer, Deputy Head of Manufacturing
Dept. and Head of Quality Assurance Dept.

August 2009

Executive Officer, Head of Manufacturing Dept. andHead of Quality Assurance Dept.
Director and Head of Manufacturing Dept. and Headof Quality Assurance Dept.
Managing Director and Head of Manufacturing Dept.
and Head of Quality Assurance Dept.

June 2010
June 2013

5

6

Note: 1
2
3

Number ofshares held

1,200 shares

To the present
Reasons for appointment:
Yasushi Kitagawa has been primarily engaged in management and operation of production and has extensive
experience. Because of the expectation of continuously strengthening the decision-making and supervising
functions of the Board of Directors, he is a candidate for a Director of the Company.
March 1975
Joined Kyoto Ceramic Co., Ltd.(currently Kyocera
Corporation)
June 1987
Director
June 1992
Senior Managing Director and Representative
Director
June 1997
Executive Vice president and Representative Director
June 1999
President and Representative Director
June 2003
President and Representative Director and President
and Executive Officer
June 2005
Chairman of the Board and Representative Director,
and Chief Executive Officer
Yasuo Nishiguchi
1,700 Shares
April
2006
Advisor and Director(October 9, 1943)
June 2009Retired from the office of Director
June 2012
Outside Director of NAGASE & CO., LTD.
To the present
June 2013
Outside Director of Zensho Holdings Co., Ltd.
To the present
June 2014
Outside Director of the Company
To the present
March 2015
Chairman and CEO of Socionext Inc.
To the present
Reasons for nomination as an Outside Director:
Yasuo Nishiguchi has held such positions as the President and Representative Director, and the Chairman and
Representative Director at Kyocera Corporation. Based on his knowledge and experience in general management
cultivated through prominent corporate positions, we asked him to give the Company advice and supervision ofoperations as an Independent Director. Thus, because we can expect to strengthen the function of the Company’s
Board of Directors, he is a candidate for an Outside Director of the Company.
June 1976
Research Assistant of school of precision engineeringin Faculty of Engineering at Kyoto University
October 1987
Assistant professor
April 1994
Professor( transferred to graduate school of department ofHiroshi Matsuhisa- Shares
Mechanical Engineering and Science by a
(August 5, 1947)
reorganization in 1995 )April 2012
June 2014

Professor emeritus at Kyoto University
Outside Director of the Company
To the present
Reasons for nomination as an Outside Director:
Based on the specialized knowledge by the person with academic standing in engineering of Kyoto University, theCompany will ask for advice and oversight from an independent position. Because this will strengthen the functionof the Company’s Board of Directors, Hiroshi Matsuhisa is a candidate for an Outside Director. Although theperson has no experience in direct corporate management, our belief is that he will be able to properly fulfill
assigned duties as an Outside Director of the Company for the reasons cited above.
The candidates for Directors have no special interests in the Company.
Yasuo Nishiguchi and Hiroshi Matsuhisa are candidates of an Outside Director.
Yasuo Nishiguchi and Hiroshi Matsuhisa are the present Outside Directors of the Company and their term of office as
Director of the Company is respectively two (2) years at the closing of this General Meeting of Shareholders. The
Company has registered Yasuo Nishiguchi and Hiroshi Matsuhisa as an Independent Director provided in the rules of
the Tokyo Stock Exchange and submitted notices to this effect to the Exchange.

– 31 –

Proposal 2: Election of One (1) Corporate Auditor
The terms of a Corporate Auditor, Hiroho Kamakura will expire at the conclusion of this meeting.
Accordingly, we propose to elect one (1) Corporate Auditor.
The Board of Corporate Auditors has consented to this proposition.
The candidate for the position of a Corporate Auditor is as follows:
Name(Date of birth)

Career summary, position, areas of responsibility, and representation of
Number ofother organizations
shares held
November 1971 Joined Tohmatsu Aoki & Co. (currently “Deloitte
Touche Tohmatsu LLC”)
May 1973
Registered as CPA
July 2012
Outside Corporate Auditor of Trusco Nakayama
Corporation
Hiroho Kamakura
800 Shares
To the present(January 27, 1947)
July 2012
Outside Corporate Auditor of the Company
To the present
March 2013
Outside Corporate Auditor of FUJIO FOOD
SYSTEM CO., LTD.
To the present
The reason for the nomination as an Outside Corporate Auditor
The specialized knowledge as a Certified Public Accountant in finance and accounting is expected to be put to effective use
for the Company. Our belief is that this must help strengthen the Company’s audit competence. Thus, Hiroho Kamakura is acandidate for an Outside Corporate Auditor. Hiroho Kamakura has no experience for business administration directly, but
the Company judges that he has the ability to execute business properly as an Outside Corporate Auditor of the Company asmentioned above.
Note: 1 Hiroho Kamakura was involved in accounting audits of the Company as a CPA of Deloitte Touche Tohmatsu LLC
from April 1992 to March 2001 and from April 2003 to March 2005. Currently, he retired from the operation and has
no special interests in the Company.
2. Hiroho Kamakura is a candidate of Outside Corporate Auditor.
3. Hiroho Kamakura is the present Outside Corporate Auditor of the Company, and his term of office as Corporate
Auditor of the Company is four (4) years at the closing of this General Meeting of Shareholders.

Proposal 3: Revision of the Remuneration for Directors and Corporate Auditors
The remuneration for Directors and Corporate Auditors of the Company is as approved at the 35th
Ordinary General Meeting of Shareholders held on June 27, 2008, which is up to present date within
300,000 thousand yen for Directors and within 50,000 thousand yen for Corporate Auditors, however,for the purpose of the payment of bonuses to Directors and Corporate Auditors responding to futurebusiness performances and financial positions. The Company asks that shareholders consider thechanges and approve the proposal to revise remuneration conditions to make remuneration for Directors
to be within 500,000 thousand yen (of which, within 100,000 thousand yen for Outside Directors) andremuneration for Corporate Auditors to be within 100,000 thousand yen. Note that the amount of
remuneration for Directors does not include the amount of remuneration that a Director receives forservices concurrently carried out as an employee, should such remuneration exist.
The number of Directors is currently six (6) (of which, two (2) Outside Directors) and the numberof Corporate Auditors is four (4). Even assuming Proposal 1 “Election of Six (6) Directors” andProposal 2 “Election of One (1) Corporate Auditor” are approved as proposed, there will be no change inthe total number of Directors and Corporate Auditors.

End of Reference Documents– 32 –