O u r H e a r t a n d Te c h n o l o g y f o r t h e F u t u r eTokyo Tatemono Yaesu Building, 1-4-16 Yaesu, Chuo-ku, Tokyo 103-0028, Japan Tel: +81-3-5202-8121

http://www.toyodenki.co.jp/

Toyo Denki Seizo Report2013Contents / Editorial Policy / History / Business Principles

2010

Together with the Trust We Have Built

CONTENTS
Contents / Editorial Policy /History / Business Principles
Consolidated Financial
Highlights
Top Message

1

5

Since then, we have contributed to building social infrastructure and the development ofIntroduction of Products

7

industry, earning the trust of our many customers, and 2018 will mark the 100th anniversary

Business Report

9of our founding.

CSR Report

15

Financial Report31

Reference Data forManagement IndicesCompany Profile

59

Executive Profiles

61

Organization Chart

62

Stock Related Information

63

History

1988

Full-scale global expansion

Toyo Denki Seizo K.K. was founded in 1918 with a mission of domestically manufacturing
3electrical equipment for rail vehicles for which Japan relied on foreign imports at that time.

Enhancement of research anddevelopment system

1958

Contribution to development oftechnologies for high-speed railroads

Completion of the R&D facility“Engineering Center” at Yokohama Plant(2010)

Through our outstanding technologies and products, we will strive to achieve efficientenergy usage and support the infrastructure for “a safe, secure, and comfortable society.”
Electric towing locomotives in Panama
Canal (2000)

60

1945

Contribution to postwar reconstruction
and high economic growth

1918

Test operation of Tokaido Shinkansen(1962)

Establishment of the Company with the mission of domesticallymanufacturing electrical equipment for rail vehicles

Business Principles

Electrical equipment for medium-sizedshape steel rolling equipment (1961)

Yokohama Factory at time ofestablishment (1919)

Pantograph (1922)

The Toyo Denki Group will practice the following business principles to ensure
the growth of its business, earn the confidence and understanding ofshareholders and stakeholders, and foster the development of its employees:

Prioritize ethics and contribute to the prosperity of customers
and society as a whole
Encourage creativity and an enterprising spirit, to meet thechallenges of the future
Build trust by focusing on quality first
Code of Conduct

Editorial Policy
We began publication of this report in 2013 with the goalof allowing a wide range of shareholders to have a better
understanding of the Company. This report combines ourmanagement policy with reports on our businesses, CSR
and finances. We are committed to describing our
initiatives during the year and our future direction in amanner that is easy to understand.
Period Covered by This Report
This report focuses on our activities in fiscal 2012 (fromJune 2012 to May 2013), but also contains some
information from outside this period.

1

Organizations Covered by This Report
This report covers the Toyo Denki Group, including Toyo
Denki Seizo K.K. and its consolidated subsidiaries.
Reference Guidelines· Global Reporting Initiative (GRI) “Sustainability
Reporting Guidelines Version 3.1”
· Ministry of the Environment “Environmental Reporting
Guidelines 2012”

1. Respond to customers in a timely and speedy manner
2. Tackle all challenges with forethought and creativity
3. Continuous efforts toward self-development and skill
improvement
4. Keep a broad perspective and influence each othertoward growth
5. Act with awareness and pride of a good member ofsociety and businessman
Established: June 2001

Toyo Denki Seizo Report 20132

Consolidated Financial Highlights
Highlights of Toyo Denki Seizo K.K. and Consolidated Subsidiaries for the Consolidated Fiscal Year ended May 31 or as of May 31

8,834

7,696

Operating income

1,396

975

1,503

1,701

501

103

512

678

785

722

-

-

272

1,071

3,761

Net Income

FY 2008

1,050

2,073

1,142

1,307

1,296

826

719

917

797

913

2009

Net assets

15,04918,519Total assets

32,78034,38536,89238,08642,364

Number of
employees

1,047

1,073

1,177

1,175

1,170

36,892

14,26834,385

12,58532,78012,464285.86295.89312.12384.14

Net income

2.32

11.63

14.86

16.29

14.98

6

6

6

6

6

FY 20082009

15,049282.4014,268

Net assets

12,585Per Share Information

12,464(Unit: Yen)

Dividend

2010

2011

Return on equity (ROE)

4.8

Major Management Indices

38.0

36.6

38.7

39.5

4.2

4.8

5.3

4.8

4.2

2.8

4.0

4.4

1.6

12.7

20.0

26.5

34.7

23.7

258.6

51.6

40.4

36.8

40.0

722

785
2010

2011

Number of employees

2012

FY 2008(Unit: Persons)2010

FY 2008

2009

2010

2011

(Unit: %)Operating income ratio

Dividend

258.6%

2012

2009

Dividend payout ratio

40.4% 36.8% 40.0%

2012

FY 20082010(Unit: %)Overseas net sales ratio

4.4

4.2

2011

Dividend/Dividend payout ratio (Unit: Yen)

51.6%

2012

4.8

2009

2011

2012

(Unit: %)

34.7

4.0
26.5
23.7

2.8
20.0
1.6

12.7

2012

FY 2008

0.9

FY 2008

3

2009

4.2

43.7

0.9

FY 2008

Total assets

5.3(Unit: %)Shareholders’equity ratio
Return on equity(ROE)
Operating income
ratio
Overseas net
sales ratio
Dividend payout
ratio

2012

Net assets/Total assets (Unit: Million yen)

Fiscal Year-End
Net assets

678

2011

1,701

2010

38,086Comprehensive
incomeCapitalinvestment
Research anddevelopment costs

6

8,663

6

7,403

6

7,814

512

Gross profit(Unit: Million yen)

630,575103

38,5706

37,893

Net income

501

35,4291,170

33,226

1,175

Net sales(Unit: Million yen)

975

Fiscal Year

1,503

(Unit: Million yen)

1,177

Fiscal 2012

1,073

Fiscal 2011

Operating income

1,047

Fiscal 2010

30,575

Fiscal 2009

42,364

Fiscal 2008

(Unit: Million yen)

18,519152

38,570151

37,893150

35,429149

1,396

Net sales

148

33,226

Fiscal term

2009

2010

2011

2012

FY 2008

2009

2010

2011

2009

2010

2011

2012

Toyo Denki Seizo Report 2013

4

Top Message

Contributing to the maintenance and development of asafe, secure, and comfortable society as a global
enterprise that continually creates new technologies
Following the General Meeting of Shareholders held in
August 2013, Hiroshi Tsuchida was appointed as
Chairman and Kenzo Terashima was appointed as
President. Our new Chairman and President hereby
explain our initiatives moving forward.
In the DASH 2015 three-year medium-term
management plan launched in fiscal 2012, our targets
for fiscal 2014 are set as follows: net sales of 52.0
billion yen; overseas net sales ratio of 50% or higher(26.0 billion yen); operating income of 3.6 billion yen(operating income margin of 7%); ordinary income of
3.6 billion yen; net income of 1.8 billion yen; and ROE
of 8% or higher. Under an environment where theeffect of “Abenomics” is expected to drive an
economic recovery, in order to achieve our targets, weplan to further expand our Transportation Systems
and Industrial Systems segments internationally, andin regard to profits, we will in particular strive to makeour Industrial Systems segment profitable.
In fiscal 2013, demand for renewals in the domestic
railway market has recovered. Overseas, we havestarted shipping aforementioned electrical equipment
for the “LRV” in Los Angeles, and we have also won
contracts for high-speed railroads and subway
systems in China thanks to the steady market there.
We can thus expect strong growth in sales in our
Transportation Systems segment. China and North
America will remain the key targets in our overseas
sales activities, and we will also make a strategic
move focusing on the Indian and Southeast Asianmarkets centering on the Delhi Liaison Office we haveopened in India in August 2012.

In the Industrial Systems segment, we expect alarge increase in orders for testing equipment for
automotive development and a recovery in capital
investment thanks to the upturn of the Japanese
economy. During fiscal 2013, we also plan to open
representative offices in Thailand and other countries
in Southeast Asia, in order to strengthen our
expansion in sales of motors and inverters for
production facilities into this region. Meanwhile, wehave begun full-scale entry into the market for motors
and inverters for construction equipment around thesummer of 2012. We believe that these initiatives will
make our Industrial Systems segment profitable in thisfiscal year.
In the Information Equipment Systems segment,
we are actively committed to capturing the demandrising from the revision to the consumption tax onequipment relating to railway station operations byleveraging the growth in our customer base won
through the development of ticket issuing handy
terminals.
Through the above initiatives, we will strive toexpand our business in all three segments, increase
our corporate value as well as continuously contributeto the maintenance and development of a safe,
secure, and comfortable society by continuing atireless challenge to technological innovation and byoffering high-quality products and services.
We ask for the continued understanding of ourbusinesses of our stakeholders.

Long-Term Vision
Integrating the exceptional motor drive technologies since establishment with our breakthrough advanced
technologies to help build environmentally friendly societies through global business development.

The DASH 2015 Medium-Term Management Plan
In June 2012, we began our DASH 2015 three-year medium-term management plan. We will aim to achieve
further growth chiefly by expanding overseas businesses.

Fundamental Policy
The Toyo Denki Group is committed to drastically improving its corporate value and thoroughly strengthening its managementfoundation in order to become a Group well adapted to the new era as it approaches 2018, the 100th anniversary of its founding.

(1) Strengthenbusiness overseas(2) Increase market
share in Japan(3) Develop new
businesses and products(4) Promote alliancestrategy

Promote automotive electric
equipment business

Establish a global businesspromotion system
We will expand into India and Southeast Asia
while further cultivating and expanding ourmarkets in China, the U.S., South Korea, andTaiwan. We will also expand and newly
establish overseas production bases and fortify
alliances.

Develop new products
and new technologies

We will establish the commercial production of
automotive electric equipment. We will also
open up new business fields suited to thetrends of “wide use of electrical operation” and“environmental suitability.”

We will focus on development of new strategic
products while reorganizing and expanding
our research and development departments.
We also intend to acquire certification throughinternational attestation.

Principal
MeasuresPursue cost reduction, highquality, and high reliability

Establish and promote
dynamic corporate culture
We will improve the pleasant environment ofeach workplace. Furthermore, we will procurenext-generation human resources andcapacity-development systems.

(5) Be consistent for
efficient management

We will strengthen our cash-generating
potential by implementing drastic cost
reductions in production and management
departments as a whole and by improving
asset efficiency. In addition, we will strengthen
our quality control systems.

Promote CSR activities
We will establish CSR activities and expand
their sphere.

Progress and Plans in the DASH 2015 Medium-Term Management Plan
Net sales (Unit: Million yen)
33,000(forecast)

36,00052,000Operating income (Unit: Million yen)

3,600

(forecast)(forecast)

1,500

700

30,575

Kenzo Terashima
President

Hiroshi Tsuchida
Chairman

Net income (Unit: Million yen)

2014

1,800

350

2013

Overseas net sales (Unit: Million yen)2014

26,000FY 2012

3,600(forecast)

1,500

750

(forecast)(forecast)

1,150
2013

Overseas net sales ratio (%)

2014

FY 201250.0

Return on equity (ROE) (%)(forecast)2013(forecast)

2014

8.0

(forecast)

750(forecast)722
FY 2012(forecast)

1.6(forecast)(forecast)

5

FY 2012

Ordinary income (Unit: Million yen)

4.2

(forecast)(forecast)

2013

7.0

(forecast)

2.1(forecast)

501
FY 2012

Operating income ratio (%)(forecast)

23.4

7,234
2013

2014

FY 2012

2013

2014

FY 2012

4.3
2013

2014

FY 2012

2013

2014

Toyo Denki Seizo Report 20136

Introduction of Products

Building Solutions That Make
People’s Lives Better
Railway station
operating equipment

Delivering specialized
solutions for industrial
advancement and better living
Toyo Denki Seizo K.K. has been manufacturing
electrical equipment for more than 90 years. Our
areas of business share a high relevancy to society

N700A Shinkansen*

Electricalequipment forrail vehicles

and the public interest, from railway and othert r a n s p o r t a t i o n i n f r a s t r u c t u re s o l u t i o n s t o
manufacturing equipment used in general industry.
These sectors are helping to make people’s lives
better, and Toyo Denki continues to leverage its
sophisticated engineering to facilitate industrial
advancement and better living.

Rail solutions

Industrial motors,
inverters andconverters

Growth driven by four corebusiness segments and new
business fields
Electrical equipment for rail vehicles tosupport the safe, smooth operation of trains
for domestic and foreign railways; industrial
systems for diverse manufacturing settings
and testing equipment for the development of
next-generation automobiles; and railway
station operating equipment that leverages
advanced engineering to improve amenity

Remote monitoring
systems and Toyo Wireless
Measurement Systemand deliver reliable service. In addition, we are
expanding into new business segments suchas electric vehicle (EV) systems and remotemonitoring systems as future core businesssegments that will drive sustainable growth.

Traction systems for
eco-friendly vehicles

Motor drive solutions
Information equipment solutions
New businesses* Photo courtesy : Central Japan Railway Company

7

Toyo Denki Seizo Report 20138

Transportation Systems Segment

Business Report

Supporting safe, secure, and comfortable railtransportation through a variety of products
Business Overview
Percentage of
total net sales

We contribute to the advancements of railway systems worldwide and to safe, secure,and comfortable rail transportation through the development and manufacture ofelectrical equipment for rail vehicles, including propulsion inverter (VVVF inverter),traction motor, driving gear unit and current collectors (pantographs).

56.7%

Results for fiscal 2012

1,913 million yen

2,701

FY 2010

3,055

2012

Profits fell due to the impact of
reduced revenues.

1,913

Segment Income

17,324(Down 27.8% year on year)

Segment Income (Unit: Million yen)

23,991

17,324 million yen

A slowdown in demand for renewals
reduced sales in Japan and there
was a great decline in sales of
products for high-speed railroads
and subway systems in China.

25,657

Net Sales

Net Sales (Unit: Million yen)

20,940(Up 19.6% year on year)

Orders Received (Unit: Million yen)

17,506

20,940 million yen

Although domestic orders only
grew slightly, overseas orders
including electrical equipment for
the LRV in Los Angeles, U.S.
increased.

21,756

Orders Received(Down 29.2% year on year)
FY 2010

2011

2011

2012

FY 2010

2011

2012

Auxiliary power supply (SIV)

A railway power storage solution, E3 Solution System(Delivered to TOBU RAILWAY CO., LTD.)

Pantograph

Door operating equipment

Driving gear unit

10 Transportation Systems segment
11 Industrial Systems segment

Total train communication system(TTCS)

12 Information Equipment Systems segment

Traction motor

13 Expansion of EVs and HEVs
Twin disk coupling

14 Research and Development/Intellectual Property
Propulsion inverter (VVVF inverter)

9

Toyo Denki Seizo Report 201310

Industrial Systems Segment

Information Equipment Systems Segment

Achievement of efficient energy usage with
our advanced power electronics

Developing and manufacturing railway station operating
equipment and remote monitoring systems to contributeto improvement of operational efficiency

Business Overview

Business Overview
Percentage of
total net sales

We leverage our advanced motor drive technology to develop and manufacture
products and systems that achieve efficient energy usage and meet our customers’
needs in a wide range of fields, including testing equipment for automobile
development, systems for production facilities, and various power generation systems.

37.7%

Segment Income

265 million yen(Up 71.1% year on year)(Down 60.2% year on year)
FY 2010

2011

2012

FY 2010

2011

2012

FY 2010

2011

Profits declined greatly due to theimpact of reduced revenues anddevelopment costs for new
products.

2012

FY 2010

Railway station operating equipment

265

Profits increased due toimprovements making plants
more profitable.

1,544

253

(Down 26.2% year on year)

1,133

433

11,542

12,265

1,701 million yen

Segment Income (Unit: Million yen)

666

Sales fell for the same reason asorders received.

Net Sales (Unit: Million yen)

1,701

Net Sales

Orders Received (Unit: Million yen)

2,303

1,544 million yen

Orders decreased in this fiscal
year as a repercussion to increasein orders of ticket issuing handy
terminal for railway companies inJapan for the previous year.

101

433 million yen

Orders Received

1,105

Segment Income

Segment Income (Unit: Million yen)

164

(Down 5.9% year on year)

11,095

11,542 million yen

As with orders, despite the strong
sales of products such as testing
equipment for automobile
development, sales for production
facilities and overseas sales declined.

11,457

Net Sales

Net Sales (Unit: Million yen)

(Down 43.1% year on year)

12,439(Down 7.9% year on year)

Despite strong orders of infrastructure
related products such as testing
equipment for automobile development
and power generators, there was alarge decrease in orders overseas.

11,98811,457 million yen

5.6%

Results for fiscal 2012
Orders Received (Unit: Million yen)

2,714

Results for fiscal 2012

Orders Received

Percentage of
total net sales

Our Information Equipment Systems segment helps our customers make theiroperations more efficient by developing and manufacturing advanced “railway station
operating equipment” compatible with IC cards and “remote monitoring systems” thatmonitor status and position and facilitate visualization of power consumption.

2011

2012

FY 2010

2011

2012

FY 2010

2011

2012

Remote monitoring systems
Remote monitoring
system “μ-TOP”

Low inertia motor
Programmable controller (PLC)Intelligent inverter

ED motor
Commuter pass issuing machine

Ticket issuing
handy terminal
Toyo Wireless Measurement System

11

Toyo Denki Seizo Report 201312

Expansion of EVs and HEVs

Research and Development/Intellectual Property

Developing and manufacturing hybrid
construction machinery and electric traction
systems for EVs and HEVs

Committed to technological innovation in thefields of railway and industry

Business Overview

507

2011

2012

Net Sales (Unit: Million yen)Segment Income (Unit: Million yen)

504

507

Orders Received (Unit: Million yen)

FY 2010

FY 2010

2011

2012

FY 2010

2011

-161

-281

-127

320

396

407

We develop and manufacture “automotive electrical equipment” suchas motors and inverters which support electric vehicles (EVs), hybrid
electric vehicles (HEVs), and electrification of construction machinery
as a new core business for the Company alongside our Transportation
Systems and Industrial Systems segments.
Currently, the orders received, net sales, and profits and losses ofthese products are included in our results for the Industrial Systems
segment. As stated in the principal measures of the DASH 2015
Medium-Term Management Plan, this business will drive the expansionof our businesses by establishing a mass production structure for
automotive electrical equipment, firmly capturing demand for a shift tohybrid construction machinery and quickly entering the international
market for electric vehicles.

2012

Research and Development
Our research and development system consists of
the research laboratory and the development
divisions in each business unit. With regard to our
R&D activities, we seek to create products thatfully satisfy our customers in Japan and overseas
and challenge the creation and expansion of theseproducts. We actively develop technologies of ourexisting businesses and core technologies that
support this development as well as new products
Results and topics from fiscal 2012

Segment

Reference: Orders received and net sales
Our automotive electrical equipment business starts with the receipt of orders of thedevelopment and design of prototypes from manufacturers of construction machinery,automobiles, industrial machinery, and other products.
After thorough testing, if the manufacturer decides to take the trial product into
mass production, we begin manufacturing at our industrial motor and inverter
factories in accordance with the mass production plan provided by the customer.
Below are our orders received and net sales for the past three years for reference.

that expand our businesses.
Furthermore, we created a project teamincluding people from our sales, development, anddesign divisions in April 2013. This team hasstudied the theme of “new businesses andproducts” in a cross-company manner and iscommitted to commercializing unique products inthe future.

Project
Fully enclosed induction traction motor

Transportation Information control systems for rolling stock
Systems

Industrial
Systems

Description
Commercialized traction motor that contributes to reduction of maintenance labor.
Completed an information control system for next-generation rolling stock which wasdeveloped jointly with FUJI ELECTRIC.

Compact and lightweight control system

Completed power supply for light rail cars.

Inverter with isolated control unit

Developed a unique inverter with separate control and power units.

Programmable controller (PLC) with increased
functionality

Made PLC with higher reliability by using dual-CPU architecture, and added Internet
communication features.

Expanded line of motors for automotive test
equipment

Developed new models to expand lineup, including ultra-fast motors for EVs and
HEVs.

Information Air conditioning instrumentation system (E-SAVE)
Equipment Next-generation all-in-one ticketing machines (railway
Systems station operating equipment)

Developed energy management system for central air-conditioning systems.
Developed a ticketing machine that is more compact, more energy efficient, andissues tickets faster than current models.

Intellectual Property
Inverter

Motor (Image)
Inverter (Image)
Motor

Construction machinery13

O u r i n t e l l e c t u a l p ro p e r t y i s p l a c e d a s a k e y
corporate resource for the present and the future.
Our intellectual property department is responsible
for the management of intellectual property at our
research laboratory and the development divisions
in each business unit actively apply for patents andutility models.
In the overseas markets which we expect tofurther expand our businesses, we will actively
engage in activities concerning our intellectual
property in order to protect our technologies.

Patent applications
Patent applications:
Granted cases:(Applications)

80

2

60

46

40

0
20

31
31

66
8
45
0

2
64

44

45

59
40
51
36

0
FY

2008

2009

2010

1

Japan
Japan

Overseas
Overseas51

4
50 25 3
15
2
22
13
2011

8
8

0

2012

Electric vehicle (EV)Toyo Denki Seizo Report 201314

Management

CSR Report

In an effort to continuously enhance its corporate value, the Company is striving to ensure transparencyof management and compliance, along with the maintenance and operation of an adequate governanceframework while reinforcing its risk management framework.

Corporate GovernanceOur philosophy of corporate governance
The Group’s business activities are based on the businessprinciples that “prioritize ethics and contribute to theprosperity of customers and society as a whole.” We
therefore strive to attain sound corporate management
through strengthening and reinforcing corporate
governance, fully appreciating the significance ofcompliance based on corporate ethics. At the same time,
we review as appropriate our management monitoring
system to ensure its conformity to the changes in thebusiness environment including social environment andrelevant legislation.

Corporate governanceManagement

16 Corporate Governance17 Internal Control/Compliance
18 Risk Management
18 Information Security

Reports by Stakeholder

19 With Our Customers
21 With Our Suppliers
22 With Our Shareholders and Investors
23 With Our Employees

Actions to Deal with the Environment and Local Communities

26 Actions to Protect the Environment
30 Contributions to Local Communities
15

We are a company with a board of statutory auditors,
furnished with corporate bodies established in accordancewith laws and regulations as well as the Articles ofIncorporation, and include the Board of Directors,
Statutory Auditors, the Board of Statutory Auditors,
Accounting Auditors, along with the General Meeting of
Shareholders and Directors. At its regular monthly
meetings as well as extraordinary meetings held whenappropriate, the Board of Directors discusses and decides
on important management matters such as reports on
Directors’ business execution and matters to be decided
solely at the discretion of the Board of Directors, while
supervising Directors’ business execution. In addition, theCompany has meeting bodies including the Management
Strategy Meeting and Executive Officer Liaison Meeting.
Through these bodies, critical management matters
including matters related to their execution of duties and/or those subject to the deliberation of the Board of
Directors are reported to the President by the generalmanagers of business execution departments, and aredeliberated and discussed preliminarily.

Internal audit and statutory auditor’s audit
Action plans and results of internal audits are reported to
the Board of Directors and Statutory Auditors by the Audit
Division under the direct control of the President as afunction independent of all business operations subject toaudit, as part of an effort to reinforce corporate
governance. Statutory Auditors hold preliminary meetings
with Accounting Auditors after the Ordinary General
Meeting of Shareholders to exchange opinions regarding
the audit plan. Statutory Auditors receive the results ofquarterly reviews from Accounting Auditors both verballyand in writing, and confirm their action plans (if required by
the reviews) to be taken at a fiscal year-end audit.
Statutory Auditors also receive the results of the reviewson the fiscal year-end audit from Accounting Auditors in a

s t a t u t o r y d o c u m e n t a l o n g w i t h v e r b a l re v i e w s .
Furthermore, Statutory Auditors are in principle required to
be present at inventory taking or on-site inspection at
subsidiaries by Accounting Auditors.

External Statutory Auditors and Outside Directors
Although the Company has established neither guidelines
nor policies regarding the independence required for a
candidate for its External Statutory Auditor, we usedcriteria for the independence of members of an
independent committee established by stock exchanges
as reference in appointing the two External Statutory
Auditors, who both have excellent insight in their areas ofexpertise with no interest in the Company or in its major
suppliers. One of them is engaged in the auditing activities
for the Company, drawing on his wealth of experience andbroad knowledge developed in his service at a financial
institution. The other is a certified public accountant who
utilizes his professional expertise in the area of corporate
financial accounting for the Company’s auditing work.
Meanwhile, the Company has appointed Mr. Ikeda as amember of the Independent Committee and registered
him as such at stock exchanges.
The Board of Directors consists of Directors who arefamiliar with the Company’s business operations, so thatmaintenance and enhancement of management efficiency
can be ensured. External Statutory Auditors are in place tothoroughly perform auditing functions to ensure
management soundness. As such, the Company has notappointed Outside Directors as of this report’s date ofissue.

Executive remuneration
Amounts of remuneration for Directors and Statutory
Auditors are decided by a resolution at the General
Meeting of Shareholders. Basic remuneration for Directors
is a fixed salary while a bonus is payable as determined byeach Director’s contribution to management as well as
business results of the Company. Basic remuneration forboth Standing and Part-time Statutory Auditors is a fixedsalary without bonus payments.
Category of executives
Directors
Statutory Auditors(excluding External
Statutory Auditors)
Outside Executives(External Statutory
Auditors)

Number of executives Total amount of remuneration
applicable(Unit: Million yen)

9

125

2

27

2

11

Toyo Denki Seizo Report 201316

Management

Internal Control/Compliance

Risk Management

Internal control

Principles of compliance

The Company has developed an internal control system
based on the Rules for the Internal Control OversightCommittee established in June 2006. The system
reasonably ensures the achievement of objectives
including effectiveness and efficiency of operations,reliability of financial reporting, compliance with relevantlaws and regulations and protection of corporate assets.
The Company has also introduced a self-inspection
system to enhance monitoring so that an effectivefunctioning of internal control can be ensured.
Furthermore, the Company has developed andoperates an internal control system appropriately toensure the reliability of its financial reporting, based on the
Financial Instruments and Exchange Act (the so-called
J-SOX Law). Accordingly, we determined that the internal
control with respect to the Group’s financial reporting was
effective as of fiscal 2012, and we submitted an internal
control report to the relevant authorities in August 2013.
The report has been endorsed as adequate by an audit
report submitted by the Accounting Auditor.

Basic policy

The Company has set “1. adherence to rules,” “2.
observance of confidentiality,” “3. distinction between
private and public matters,” “4. strictness with money,”“5. prohibition of side jobs,” and “6. prohibition of
discriminatory and sexually suggestive statements or
behavior” as principles of compliance.

The Company is engaged in developing rules and aframework for risk management according to the Basic
Rules for Risk Management established in August 2006.

Promotion framework

Compliance promotion framework
To focus on business principles and fulfill its social
responsibility, the Company has provided all officers andemployees with a copy of the Compliance Manual (ToyoDenki Seizo Ethical Standards) that stipulates its code of
conduct. The move is part of an effort to have the codeand the basic rules of work fully known.
The Company has also introduced a whistle-blowing
system that allows employees to provide information
directly to the management. The system is aimed atensuring that any illegal or inappropriate conduct within
the Company is detected at the earliest possible stage
and that adequate measures are taken promptly and asneeded so that such conduct is rectified.

The Company has established the Internal Control
Oversight Committee, an advisory body chaired by the
President and has some of its authority delegated from theBoard of Directors. It analyzes and assesses all the risks
that exist in the Group and develops an effective risk
management framework capable of dealing precisely withthe risks of the types and degrees that the Group is
exposed to. The committee specifically reviews the way
such a risk management framework ought to be, and it
reports periodically to the Board of Directors on therecommendations resulting from its deliberations.
Furthermore, the committee is committed to enhancing
t h e G ro u p - w i d e r i s k m a n a g e m e n t f r a m e w o r k i n
accordance with the Basic Rules for Risk Management.

Compliance education
The Company is organizing scheduled and systematictraining sessions based on a compliance training masterplan to enhance knowledge on compliance while
promoting a conscious respect for corporate ethics.

General Meeting of Shareholders
Appointments/dismissals

Accounting Auditors

Reporting

ReportingAppointments/dismissals

Board of Statutory Auditors

Legal audit

ReportingBoard of Directors
Directors

Statutory Auditors
ReportingAppointments/dismissals

Business audit

Accounting audit
Reporting/decisions
Instruction/reporting

Audit DivisionInternal audit

Appointments/dismissals

Internal Control Oversight Committee
Appointments/reporting(Secretariat)
General Affairs Division(Contact for whistle-blowers)(Contact for legal consulting)whistle-blowings

Reporting on business execution

President
Management Strategy Meeting
Executive Officer Liaison Meeting
National and Global Group Company Meetings

Disaster drill by the company’s fire brigade(Yokohama Plant)

The Company holds a vast amount of information assets
including information presented by customers related toits business execution and confidential information
concerning the Group’s proprietary technologies and its
trade. Each Group company is taking various measures inthis respect based on an awareness of shared security
under the Group’s Information Security Guidelines, whichhave been established to adequately manage and use
these information assets.

Information security training
The Company is conducting educational activities todevelop information security awareness among all
employees including various training sessions, someinvolving the use of educational DVDs.

Instruction/reporting

Executive Officers (including those concurrently serving as Directors)
Instruction/reporting

Each business department
Oversight

Appointments/dismissals

In 2008, the Company developed a Business Continuity
Plan (BCP) for its main production site, the Yokohama
Plant. In the event of crises such as natural disasters,
accidents or emerging pandemics, the BCP shall belaunched without delay to ensure the continuity ofminimum essential work while facilitating an early recoveryof business operations.

Information Security
Basic policy

Corporate governance framework

Development of Business Continuity Plan (BCP)

Instruction/reporting

Instruction/reporting

Each Group company
A training session

17

Toyo Denki Seizo Report 201318

Reports by Stakeholder

With Our Customers

Passing on skills

The Company makes it one of our business principles to “build trust by focusing on quality first.” As such, we
strive to enhance customer satisfaction through our commitment to thorough-going quality control as we believedelivering safe and secure products and services to customers is the Company’s most important mission.

Quality Control – Providing Safe and High-Quality Products
Basic policy on quality control
The Company’s electrical equipment for rail vehicles isinstalled in many rail vehicles. These extremely important
products play a direct role in ensuring the safety of humanlife and property during rail transportation. In the Industrial
Systems and Information Equipment Systems segments
as well, the Company’s products and services are used incustomers’ production facilities, development sites and in
the field of social infrastructure, and they form thefoundation supporting the sustainable development of asociety that is safe and comfortable to live in.
In order to ensure the high quality of our products andservices, the Company has established a “Basic Policy on
Quality Control” which is deployed at all production bases
as we strive to maintain and improve our human resources
education, compliance with rules, and our facilities.

Promotion framework
With regard to quality control, each fiscal year theCompany develops policies and the promotion framework
aimed at further maintaining and improving quality in eachbusiness unit, along with specific policies pertaining to the
reduction of flaws and other issues. The Company’s
Corporate Quality Control Division works together with thequality control department or quality assurance
department in each business unit to put together a reporton the status of quality control and results in each unit.
The report is delivered to top management at the monthly
Executive Officer Liaison Meeting where measures aredebated and decided. Furthermore, in the event that aflaw is discovered after a product has been shipped, thenecessary steps are swiftly taken, mainly by the quality
assurance department in each business unit, while at thesame time the causes that led to the flaw and its
mechanism are investigated, and this information is put
into a database so that the information can be shared inhouse in an effort to prevent recurrence.

Quality management system
The Company has created and operates a quality
management system at its production bases, theYokohama Plant and the Shiga Factory, and has obtained
ISO 9001 certification.
Year ISO 9001 certification obtained

Yokohama Plant

1994

Shiga Factory

2000

Extendedcompanywide

2007

Improvement activities
The Company promotes improvement activities focusedon our production bases for the purpose of improving
operational efficiency across the board, from the designand development stage through to manufacturing andquality assurance. These involve activities by groups orcircles in which all employees participate, with targets set
for each employee to carry out improvements and submit
case reports. The Circle of Excellence is an activity we are
implementing to raise employee motivation.
Commendations are awarded twice a year, and apresentation and awards ceremony is held at the
Yokohama Plant where individual improvement casestudies are evaluated and cash bonuses are given.

Responding to the Global Market
Proper export control
The Corporate Quality Control Division is responsible forexport management as an export management control
department. We have created a system for the proper
management of exports in order to ensure compliancewith the laws and regulations concer ning export
management in the countries and regions where we
engage in business activities as well as to avoid
involvement in transactions that could hinder the
maintenance of international peace and security.
The Corporate Quality Control Division handles cargo
and technology parameters used in determining whether
or not export permits are required, as well as investigationof transactions. In addition, the Division carries out
employee education and instruction and support forGroup companies.

Towards Greater Customer Satisfaction
Technical Training Center

Customer satisfaction survey
Through its sales department, the Company regularly
conducts surveys on topics such as customer requests
and customer satisfaction. The results are reported to the
top management at Executive Officer Liaison Meetings,
and the information is shared within the Company. We
strive to maintain good relations with our customers byidentifying problems that need to be solved and swiftly
addressing them in order to raise customer satisfaction.

Hands-on technical training workshop

T O P I C S

Measures to prevent the recurrence of shipments of products containing asbestos
4, 2013, the Company released an “Apology
O nandMarch
Notice Concerning Shipment of Products

Improvement Activities Presentation Ceremony(Yokohama Plant)

19

In order to maintain high quality, the Company actively
promotes the transmission of outstanding skills. To thisend, employees with exceptional manufacturing skills or
expertise are recognized as “My Star” internally, and are
given responsibility to instruct and train younger workers.
The Company’s tradition of technical education has
continued unbroken since the establishment of the Toyo
Denki School for Young People in 1937. In April 2013, theTechnical Training Center was newly established within the
Yokohama Plant, where training is carried out for technicalstaff through lectures and various hands-on workshops.

Containing Asbestos.” Due to the inadequacy in some ofour policies on asbestos, it was discovered that insulating
sheets with asbestos backing had been used in someequipment for rail vehicles, namely “conductor’s switches,”that were manufactured and shipped by the Company.
In addition to offering an apology to our customers in
the railway business that received the products in question,
after consulting with the railway operators and based on
the law and regulations, we implemented measures toreplace the relevant products with products in whichasbestos was not used. Furthermore, we have repeatedly
conducted thorough investigations into the situation withregard to use of asbestos-containing products within theGroup, and as a result have confirmed that asbestos is not
used in any of our products.
We offer our deepest apologies for the problems wecaused for the railway operators and all others involved inthis matter, while at the same time taking this accident as alesson to take thorough steps to prevent a recurrence inthe future.

Toyo Denki Seizo Report 201320

Reports by Stakeholder

With Our SuppliersWith our Shareholders and Investors

The Company responds to the needs of our customers through the strong network we have built with
suppliers in line with our unique characteristics as a business based on an individual build-to-order/multi-

Through the timely and proper disclosure of information and various modes of communication, we strive to
receive an appropriate evaluation of the Company from our shareholders and investors.

product small lot manufacturing model.

Towards Just and Fair Procurement
Communication with suppliers
The Company’s products possess various distinctive
characteristics such as being individually built-to-order,
manufactured in multi-product small lots, and demanding
high reliability. Therefore, the Company can be affected by
the performance of our suppliers as a result of issues suchas delays in supply due to fluctuations in production
quantity or delays in processing due to the quality of
products received.
In order to reduce these risks as much as possible, theCompany carries out instruction and support related toquality, technology, and skills for our suppliers, as well as
guidance for improvement of manufacturing sites, in orderto ensure stable procurement of even better quality
products. In addition, we actively promote information
sharing through the “Toyo Denki Cooperation Association”
to which our leading suppliers belong.

Thorough incoming inspection
Many of the Company’s products are related to railways orsocial infrastructure and a high degree of reliability isrequired of these products.
When procuring materials, we have in place a system
in which procured items undergo a thorough incoming
inspection, and only those that pass the strict inspection
are accepted. The incoming inspection records are kept toprovide a trail that can be used in quality checks later on.
When a variation occurs in a procured item, the natureof the variation is verified from the perspective of fourmanagement points, “the 4Ms”: Man, Machine, Material,and Method. This mechanism allows us to confirm with

Towards Enhancement of Corporate Value
regard to the variation whether or not a problem arises
during processing before making a change.

Incoming inspection

Basic philosophy
Through timely and appropriate disclosure of information
to our shareholders and investors, the Company
accurately conveys our management policy and businessconditions while making use of IR tools such as our
website to promote a full range of IR activities that
contribute to the improvement of our corporate value.

The Company endeavors to maintain proper execution ofoperations by implementing a variety of training programsfor material procurement officers to deepen theirknowledge of the Act against Delay in Payment of
Subcontract Proceeds, Etc. to Subcontractors and related
laws and regulations and to cultivate awareness of legal
compliance.

External whistle-blower system (for suppliers)
The Company has established an external whistle-blower
system to receive consultations or reports on compliancefrom our suppliers. The legal compliance department
handles complaints and consultations about transactions,and the Company’s retained lawyer resolves issues whennecessary.

The Toyo Denki management team holds a financial
results briefing each quarterly period and gives areport including the state of progress of the mediumterm management plan, an overview and forecast foreach segment, major orders, and other topics.
In addition, we strive to deepen understanding of
the Company through individual visits to institutional
investors or holding factory tours, participating in small
meetings organized by securities companies, and soon.

IR activities for individual shareholders and individual
investors
The Company website includes a “For Individual
Investors” page which offers a clear introduction to ourbusiness activities and our results, as well as making
available a variety of IR materials.
URL “For Individual Investors”

http://www.toyodenki.co.jp/html/ir_individual.html

Efforts with regard to local procurement of materials overseaspress ahead with local procurement of materials while
striking a balance between reducing costs and ensuring
quality. In particular, in the Transportation Systems
segment, when submitting a tender for electrical equipment
for rail vehicles used overseas, one of the conditions
sometimes required is to meet a certain ratio of local
procurement, and as such the Company is stepping up
cultivation of local procurement sources and reinforcing the

Dividend per share
(Yen)

8
6

6

6

6

6

6

2008

2009

2010

2011

2012

4
2
0
FY

Record of 152nd Ordinary General Meeting of Shareholders
Date held: Tuesday, August 27, 2013
Attendance: 112 people

T O P I C S

IR activities for individual investors
received valuable comments fromT heourCompany
shareholders through the Questionnaire to
Shareholders inserted in the Interim Business Reportfor fiscal 2012 issued in early February 2013. Basedon the valuable answers and opinions that were
submitted, we will enhance our IR activities forindividual investors as follows.

T O P I C S
the Company’s business development expands
A soverseas,
it has become more and more important to

Maintenance of stable dividends forms the basis of theCompany’s distribution of profit, and the dividend for the
fiscal year ended May 31, 2013 was 6 yen per share(interim dividend of 0 yen, fiscal year-end dividend of 6yen). The Company also intends to maintain dividends at
6 yen or more per share from the fiscal year ending May
31, 2014 onward.

Development of IR activities
IR activities for institutional investors and securities
analysts

Training for material procurement officers

Dividends

quality check system for materials.
Furthermore, by moving ahead with measures such as
central purchasing that also includes Group companies
and joint purchasing with FUJI ELECTRIC and Hitachi withwhom we have business alliances in the field of electricalequipment for rail vehicles for railways overseas, we arealso advancing local procurement of materials in India andSoutheast Asia where the Company will be expanding in
the future.

IR activities launched in response to
the results of the questionnaire
Establishment of a web page for individual investors (June 2013)
Company presentation for individual investors (From September 2013)
Hold factory tours for shareholders(Scheduled to be held in spring of 2014)
Financial results briefing for the fiscal year ended May 31, 2013
by former President Hiroshi Tsuchida (held in July 2013)21

Toyo Denki Seizo Report 2013

22

Reports by Stakeholder

With Our Employees
The Company seeks to cultivate a dynamic corporate culture and to create a pleasant and safe workplace
where each and every employee can unleash his or her diverse capabilities.

Towards the Development of Human Resources with Competitive Strengths
Human resources development policy

Establishing and promoting a dynamic corporate culture

Executives

Other/Personal development

Executive training
Executive manager development training
Training for newly appointed division heads

Non-managerial employees

Follow-up training (1st year)
Training for new employees On-the-job
sales training
I Introductory training
II Hands-on learning
IT education
III Basic knowledge course
IV Practical training
Training inV Individual training business manners

Follow-up Training(within 1 year)
On-the-job
factory training(sales staff)
Introductory
IT education
training

Training for unofficial new hires (graduates)
In-house exchange event “Area Night”

23

Mental health training

Follow-up training (3rd year)

Life-planning seminar

Pre-promotion training for senior general staff

Various distance learning courses

Comprehensive training for newly appointed senior general staff

Compliance training

Pre-promotion training for managers and professionals Coaching training

TOEIC challenge system

Evaluator training
Training for newly appointed managers and professionals

System for fostering specialists

Training for middle-management executives

Follow-up training (2nd year)

Safety and hygiene initiatives
The Company holds monthly meetings of the Safety andHygiene Committee jointly with labor and management,
where ongoing discussions are held in order to build asafer working environment and to reduce workplace
injuries to zero, and to find solutions to mental healthissues at each of our bases. In particular, sub-committees
are set up to address important topics related to safety
and hygiene at production bases in an effort to create aneven better workplace.

Support system for Language education(TOEIC)acquiring public(Chinese)certification

due to life events that occur in the course of their career(childbirth, childcare, family care, spouse’s transfer, etc.),
so that they can be rehired when they reach the stage
when it is possible to return to work.
As for employees who wish to be rehired after theyreach the mandatory retirement age (60), in principle, we
continue to employ them until the age of 65.

Initiatives for employment of the disabled
Initiatives to support a balance between work and family
The Company has put in place a full range of systems inorder to allow each and every employee to realize abalance between work and family. Details about thecontents of these systems are published in a PR pamphlet
for employees called the “Guidebook on Childcare andFamily Care Leave,” and are posted on the company
intranet where employees can consult them at any time.

Initiatives for diverse work-styles

Incentive system for acquiring certification

The Company engages in a range of communication
activities to realize the “establishment and promotion of a
dynamic corporate culture” set as a fundamental policy
under the Dash 2015 medium-term management plan.
These are implemented in-house through the Dynamism
Committee and include initiatives such as exchanges
between employees and between different business types
as well as opportunities for personal development.
The Dynamism Committee, made up of members fromthe Company’s administrative professionals and generalemployees, draws up policies related to these activities
and develops them independently.

Training system

Division heads(1) To develop human resources who understand andpractice our business principles and code of conduct
and who are of value both as company employees andas members of society.
(2) To develop human resources who are professionals,
each possessing a high degree of specialized
expertise, by enhancing the knowledge, techniques,
and skills they need to carry out their duties.
(3) To provide a variety of educational opportunities inorder to promote personal development, with emphasis
on a self-directed approach to study and growth.

Department heads

Fundamental policy

Training programs at the Company are divided into several
categories according to the employee’s year of service,type of work and role, and training is carried out after
clarifying what part each employee is expected to play.
Furthermore, in response to globalization of theCompany’s operations, we offer English and Chinese
language programs. The Company covers the full cost fora variety of courses tailored to the level of the participating
employees, including distance learning, enrollment inschools, and classes provided by teachers in-house.

Supervisors

The Company has set the following policy on humanresources development and carries out education andtraining.

Education and training system

Creating a Pleasant Workplace

The Company has implemented a flexible work-styleincluding a flextime system for sales staff and those
involved in development. Furthermore, in order toencourage retention and utilization of employees withknowledge and skills, we have put in place the “System
for Rehiring Employees” for employees who have resigned

Work and family
life balance

The Company makes improvements to the workplaceenvironment and carries out workplace training with theaim of creating a workplace where the disabled and thosein normal health can work together energetically. We also
promote collaboration with local governing agencies andspecial-needs schools regarding employment of thedisabled.

Mental health measures
As measures to address mental health, the Company
conducts “Line care training” for administrative
professionals and “Self care training” for employees. In
addition, we have partnered with an external medical
institution to set up a telephone and e-mail consultation
service to provide support for prevention, treatment, andreturn to work.

Leading a busy but fulfilling life, encouraged by the smiling faces of my child and family
Asami Isaka (Financial Affairs Division), Tsutomu Isaka (Industry Business Unit)

I work in the Financial Affairs Division, and my husband is in
the Sales Division of the same company. When our firstchild was born, I took maternity and childcare leave. My
initial plan was to return to work when our child turned one,but I extended the childcare leave until our child was one
and a half years old because we could not find a place in
daycare, and then I went back to work.
After returning to work, my husband and I both took
advantage of the system of shorter work hours forchildcare, so my husband can drop the baby off at daycare
in the mornings, and I handle the pickup in the evening.
The three of us are making the effort to maintain a balance
between childcare and work.
It can be tough to strike that balance when time islimited, for example, when I found out I was pregnant with
our second baby after I returned to work, or when I get asudden call from the daycare because our child is ill or not

feeling well. It is
thanks to the people
at my workplace who
understand mysituation, my husband
who helps out withhousework and childrearing, and myparents who lend a
hand when the baby
is sick that I am able
to work, and I am
grateful for that. It is
pretty hectic when I get home, as I have to get dinner readyand prepare the bath, but I am leading a busy but fulfilling
life, encouraged by the smiling faces of my child and family.

Regular new hires (general staff group) Mid-career hires
Toyo Denki Seizo Report 201324

Reports by Stakeholder

Initiatives to Deal with the Environment and Local Communities

Data Concerning Personnel and Labor
Data concerning personnel and labor (at Toyo Denki Seizo K.K.)
Item

Unit

Fiscal 2008

Men

Men

700 *1748 *2744 *2791 *3

649

697

693

735

44

51

51

51

56

%

6.5

7.3

6.8

6.9

7.1

163

170

171

155

152

162

169

170

153

151

1

1

1

2

1

0.6

0.6

0.6

1.3

0.7

39.7

39.7

40.8

41.1

41.0
41.1

Persons

Women
Ration of female administrative professionals%
Overall

Average age

Men

Fiscal 2012673 *1

Total
Number of administrative professionals

Fiscal 2011

629

Women
Ratio of female employees

Fiscal 2010

Persons

Total
Number of employees

Fiscal 2009

40.0

40.0

41.1

41.4

Women

35.7

35.7

36.5

38.2

38.9

Overall

15.8

16.2

16.4

16.5

16.1

Years

16.0

16.4

16.6

16.7

16.3

13.0

13.3

13.5

14.6

14.5

Average annual salaryYen

5,899,196

5,831,972

5,953,210

6,039,332

5,885,559

Overturn rate (within 3 years of joining the Company)

%

0.0

5.9

5.9

13.5

3.8

Average years of employment

Men

Age

Women

Number taking childcare leave

Persons

1

0

1

2

3

Number taking family care leave

Persons

0

0

0

0

0

Number of temporary staff (including part-timers)

Persons

180

222

155

149

167

*1 Number of regular employees excluding Executive Officers*2 ‌Number of regular employees including Executive Officers and number of special employees, temporary
employees and temporary and part-time employees*3 ‌Number of regular employees including Executive Officers, and number of special employees, temporary
employees, contract employees and staff on loan from other companies, etc.

Notes

Initiatives to Protect the Environment
With a view to realizing an environment-friendly society, the Company will further strive to provide more
efficient and energy-saving products that generate lower noise, while promoting the reduction ofenvironmental burden.

Environmental Philosophy
The Toyo Denki Group sets initiatives to protect the global environment as its priority task
and contributes to the development of a sustainable society.

Action Guidelines
We will continue to provide products and services that are considerate of the burden on the global environment bydrawing on our “future-oriented technologies friendly to the Earth and mankind.”
1.
2.
3.
4.

We will comply with all environmental requirements including those under the relevant laws and regulations.
We will strive to minimize environmental burden through a reduction of energy consumption and other measuresat all stages of product lifecycle, namely planning, development, design, production, sales, use and disposal.
We will establish and execute a system to continuously promote activities to protect the global environment.
We will raise environmental awareness among individuals through enlightenment activities within the Group

Aiming for realization of a Sustainable Society

Reference data I: Number of Officers (at Toyo Denki Seizo K.K.)
Item

Unit
Total

Number of Officers

Men

Persons

Women

Fiscal 2008

Fiscal 2009

Fiscal 2010

Fiscal 2011

Fiscal 2012

10

10

12

10

10

10

10

12

10

10

0

0

0

0

0

For each fiscal year as of May 31 (Executives include Directors, Internal Statutory Auditors, and External
Statutory Auditors)

Notes

Reference data II: Number of employees at the Group Companies in Japan and overseas (at the 6 consolidated subsidiaries of Toyo Denki Seizo K.K.)
Item

Fiscal 2008

Fiscal 2009

Fiscal 2010

Fiscal 2011

Fiscal 2012

Number of employees at Group companies in Japan and overseas Persons

Unit

374

373

429

431

379

Number of temporary staff (including part-timers)

154

131

107

86

89

Notes

Persons

As of May 31 for each fiscal year

Reference data III: System for support of work-family balance (at Toyo Denki Seizo K.K.)
Prenatal leave

Can be taken from 8 weeks prior to due date (14 weeks prior in the case of multiple births.)(6 weeks is required by law)

Maternity leave

Can be taken for up to 8 weeks after birth.

Childcare leave
Maternity andchildcare related

Repeat childcare leave(Mom and Dad Childcare
Leave Plus)
Shorter working hours forchildcare
Nursing leave
Family care leave

Family care related

Other

25

Family care work hours
System for Rehiring
Employees

In principle, childcare leave can be taken for a period as needed from the day after 8 weeks have elapsed
since birth (completion of maternity leave), until the day before the child turns 1 year old. In cases where
it is difficult to find a place in daycare, etc., it is possible to apply for an extension of childcare leave until
the child is 1 year and 6 months, or until the last day of the month of March after the child has reached
the age of 1 year, whichever is longer.
If an employee has taken childcare leave within the 8-week period after his spouse has given birth, he
may take repeat childcare leave until the child reaches one year of age. Further, if the employee andspouse both take childcare leave, the childcare leave period can be extended until the child reaches 1
year and 2 months.
Working hours may be set at 5 hours 45 minutes or 6 hours 45 minutes per day for a period as neededfrom the end of childcare leave until the child graduates from elementary school.
Up to 5 special days off may be taken per family member for nursing care for pre-elementary school age
children.
A total of up to 3 years of family care leave may be taken per person needing care.
Employees not taking family care leave may limit working hours to 5 hours and 45 minutes or 6 hours
and 45 minutes per day.
Employees who have resigned due to marriage, infertility treatment, childbirth, childcare, family care, or
spouse’s transfer, etc., may be rehired when they are able to return to work depending on the employee’s
request and workplace needs.

A sustainable society as envisaged by the Company is the
combination of a “low-carbon society,” a “recycling-basedsociety” and a “nature-symbiotic society.”
The Company has produced numerous products thatfacilitate the efficient use of energy, including highefficiency motors and inverters that capitalize on theamalgamation of our outstanding motor drive technology
and other state-of-the-art technologies. In the meantime,
the Company has been striving to reduce the size andweight of its products as part of its efforts to conserve
resources, while lowering the level of noise involved in theiru s e t o m a k e t h e m f r i e n d l i e r t o t h e s u r ro u n d i n genvironment. As a member of society, the Company will
make further contribution to make society moresustainable, fully utilizing on its environmental technologies
on a global scale, while following through various
environmental actions at each of its bases.

Environment technologies of theCompany
Energy conservation at each baseUse of sustainable energy

Low-carbon society
Implementation of measures against
global warming

Recycling-based society

Waste reduction and recyclingat each basePromotion of waste reduction
and recycling

Nature-symbiotic society

Initiatives for control overchemical substances

Conservation of biodiversity

Environmental Management System
In order to tackle environmental issues on an independentand continuous basis, the Company has developed andoperates an environmental management system andthereby obtained ISO 14001 certification. This certification
has been acquired for all offices and the production bases
Yokohama Plant and Shiga Factory.

Years of ISO 14001 certification

Shiga Factory

2001

Yokohama Plant

2004

Extended to all
offices

2010

Toyo Denki Seizo Report 201326

Initiatives to Deal with the Environment and Local Communities

Initiatives to Prevent Global Warming

Initiatives for Reducing Disposed Waste as Well as Recycling

Initiatives to reduce greenhouse gas (CO2) emissions
The Company is promoting energy conservation at eachof its production bases and offices to reduce its CO2
emissions.
At the production bases in particular, the progress ofenergy-saving efforts at workplaces is checked on amonthly basis to encourage an energy-saving awarenessamong employees, along with general power-saving andstreamlining at production facilities.

Main actions

Total energy input at Yokohama Plant (electricity and gas)
(Unit: 10,000 kWh)

800

653.6

600

400

720.7
317.2

637.0

227.8

400

Gas (Unit: 1,000 Nm3)

Electricity

631.8

590.9
252.0

244.6

232.0

100

0

0
2008

At the Company’s main production base, the Yokohama
Plant, the targeted 1% year-on-year reduction of CO2
emissions per unit of production output has not beenachieved this year, which is primarily attributable to adecrease in the production volume at the plant as well as
an increase in the actual CO2 emission factor at the Tokyo
Electric Power Company.

The Company successfully reduced its landfill waste rate
to 0.9% in fiscal 2012, as a result of thoroughly
implementing waste processing rules, sorting of metal
waste and recycling of paper resources.

200

200

Targeted reduction of CO2 emissions and progress status

300

2009

Promotion of green procurement

2010

2011

2012

(year)*

Volume of landfill waste

Output of general and valuable waste

(t)

25

(t)

800

24.2

693.4

20

Total water input/output at Yokohama Plant

15(Unit: 1,000 m3)

25

Water input

23.2

20

22.8
18.0

22.5
17.9

15

21.1
15.8

Water output

19.9
15.8

The Company is promoting green procurement withrespect to office equipment and supplies, stationery andworker’s clothes used at the Yokohama Plant. A 70%
green procurement ratio was achieved in fiscal 2012
based on purchase value.

13.0

12.4

703.5

637.4

5.6

5.0

2011

2012

200

0
2008

2009

587.9

400

10
5

13.9

710.0

600

2010

0

(year)*

2008

10

2009

2010

2011

2012

(year)*

502008

Use of sustainable energy
The Company in July 2012 installed a 500 kW solar
power system on the roof of the Yokohama Plant forthe purpose of cutting power use at peak times.
Electricity generated by this system is used entirely
within the plant. A more than 5% reduction in the useof externally supplied electricity was achieved in the
one-year period following its installation.
Thanks to the in-house electricity generation by thesolar power system, the plant is capable of securing asufficient supply of power on its own during daytime tooperate its communication infrastructure and maintaina minimum level of business execution, even in theevent of major disasters such as earthquakes.

2009

2010

2011

2012

(year)*

Initiatives for Control over Chemical Substances

Total CO2 emissions at Yokohama Plant
(t)

4,000

3,262.3

3,000

3,479.2
2,905.0

2,896.7

3,307.3

2,000
1,000
0
2008

2009

2010

2011

2012

(year)*

Based on 12 kW generator

500,000

Notification volume for Pollutant Release and Transfer Register (PRTR) substances
Total amount of air emissions(kg)

10,000
8,000

8,800
7,160

7,900
6,060

6,000

Total amount of shift

9,600
7,700
5,320

4,000

4,600

7,300
4,810

2,000
0
2008

2009

2010

2011

2012

(year)**Period from April to following March.

Total solar power generation at Yokohama Plant(kWh)

Volatile organic compounds (VOCs) emitted as a result ofour business activities are adequately controlled and theamount of emission in monitored under the Pollutant
Release and Transfer Register (PRTR).
PCB waste is also subject to adequate control, storage
and disposal in accordance with Japan’s Act on Special
Measures concerning Promotion of Proper Treatment of
PCB Wastes.
We will further engage in the reduction of waste
through such measures including using non-VOC materials
and implementing recovery and reuse of solvents.

Based on 500 kW generator

433,862.6

400,000
30,00020,00016,219.7

15,388.5

16,275.6

2010

2011

2012

10,00003,217.1
2009(year)*

Solar power system at Yokohama Plant

27

Toyo Denki Seizo Report 201328

Initiatives to Deal with the Environment and Local Communities
Environment-Related Data
Indices

Input

Electric power (10,000 kWh)Urban gas (1,000 Nm3)
Water input (1,000 m3)CO2 emissions (t)Yokohama
Solar power generation (kWh)
Plant
Water output (1,000 m3)
Total amount of air emissions (kg)
Total amount of shift (kg)Amount of air
emissions
Bisphenol A (kg)
Total amountof shiftAmount of air
emissions
Ethylbenzene (kg)Domestic

Total amountof shift
PRTR*1

Amount of air
emissions
Xylene (kg)OutputTotal amountof shift

Tetrahydromethylphthalicanhydride (kg)Amount of air
emissions
Total amountof shiftAmount of air
emissionsToluene (kg)
Total amountof shiftIndustrial waste (tons)
General waste (tons)
Valuable metal waste (tons)
WastesWaste output ( + + ) (tons)
Recycled amount (tons)
Volume of landfill waste (tons)
Percentage of landfill waste (%)
Yearly comparison

Applicable premises
Production bases total
Yokohama Plant
Shiga FactoryNon-production bases total
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga FactoryNon-production bases total
Total power generation
Based on 500 kW generator
Based on 12 kW generator
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory
Production bases total
Yokohama Plant
Shiga Factory

Fiscal 2008
653
653
227
227
23
23
0
3,262
3,262
18
18
0
8,800
7,160
0
0
0
1,600
1,600
0
2,100
2,100
0
150
150
0
3,700
3,700
0
120
120
0
0
0
0
4,700
4,700
0
3,000
3,000
0
590
590
0
198
198
115
115
379
379
693
693
560
560
13
13
1.9
1.9
-

Fiscal 2009
662
637
25
232
232
22
22
0
2,985
2,896
89
3,217
3,217
17
17
0
7,900
6,060
0
0
0
940
940
0
1,700
1,700
0
230
230
0
2,900
2,900
0
190
190
0
0
0
0
3,700
3,700
0
3,300
3,300
0
1,000
1,000
0
242
242
113
113
354
354
710
710
556
556
12
12
1.7
1.7
-

Fiscal 2010
756
720
36
18
317
317
22
22
0
3,585
3,479
106
212
16,21916,219
15
15
0
9,600
5,320
0
0
2,300
2,300
0
450
450
0
4,000
4,000
0
370
370
0
0
0
0
2,800
2,800
0
3,300
3,300
0
1,700
1,700
0
319
292
27
130
130
280
280
730
703
27
524
524
51
24
27
7.0
3.4
100.0

Fiscal 2011
667
631
35
16
244
244
21
21
0
3,014
2,905
109
231
15,38815,388
15
15
0
7,700
4,600
0
0
1,800
1,800
0
550
550
0
3,300
3,300
0
450
450
0
0
0
0
1,600
1,600
0
2,600
2,600
0
2,000
2,000
0
316
282
34
114
114
240
240
671
637
34
436
436
39
5
34
5.9
0.9
100.0

Fiscal 2012
624
590
33
20
252
252
19
19
0
3,456
3,307
149
169
450,138
433,862
16,275
13
13
0
7,300
4,810
0
0
1,800
1,800
0
330
330
0
2,900
2,900
0
280
280
0
0
0
0
3,000
3,000
0
2,600
2,600
0
1,200
1,200
0
266
230
35
101
101
255
255
623
587
35
432
432
40
5
35
6.5
0.9
100.0

Remarks

*3

*4

29

We are committed to various social contribution activities, to facilitate our own co-existence with
communities and to foster young people who will represent the next generation.

To Convey the Mission and the Appeal of Electrical Industry as Well as of Toyo Denki

*5
*6

*7
*8

*9

*10
*10
*10
*10
*10
*10

As an electrical manufacturer that contributes to thedevelopment of railways and industries in general, theCompany is committed to providing young people, whowill represent the next generation, with various educational
opportunities. The goal is to have them appreciate the role
manufacturers must play in achieving a sustainable
society, and thus to nurture an environmental awarenessamong them.

Receiving interns
We are committed toactivities that raiseawareness andappreciation of ourmanufacturing expertise by
accepting interns fromlocal technical high schools
and providing them withhands-on experience at
An intern at work
manufacturing sites. This
internship system serves
as an effective means of recruiting outstanding technicalstaff on a consistent basis as some students in theschools apply for positions at the Company.

Environmental workshops at schools
The Company engages inenlightenment activities by
dispatching its employees
to hold lectures on theenvironment at educational
institutions such as
elementary schools. The
idea is to inform the publicof the fact that railways,
An environmental workshop at anparticularly those using
elementary school
electric trains, is a modeof transport that produces less CO2 emission than othermodes, and of the Company’s profound historicalcommitment to the development of environmental
technologies used by railways.

On-demand lectures on career workshops
The Company also dispatches its employees, primarily
engineers, for a career workshop at educational
institutions. The employees provide useful information topromote autonomous career choice among the students
at junior high schools and high schools. We offer
audience-friendly presentations that provide practicalinformation on the design and development work at
manufacturers.

*11

Aiming to be a Factory Trusted by All Members of Local Communities
Factory tours
*11

*11

*11

*Non-production bases: Toyo Denki Seizo Head Office, Osaka Branch, Nagoya Branch, Hokkaido Branch, Kyushu Branch, Hiroshima Branch*1 PRTR: Pollutant Release and Transfer Register*2	Data collection started at Shiga Factory in fiscal 2009 due to a revision of Japan’s Act on
the Rational Use of Energy, prior to which no data existed.
*3 ISO14001 certification was acquired for non-production bases in June 2010.
*4 Production activities at Shiga Factory recorded close to zero water input.
*5	Data collection started at Shiga Factory in fiscal 2009 due to a revision of Japan’s Act on
the Rational Use of Energy, prior to which no data existed.

Contributions to Local Communities*2*6 Data collection started in fiscal 2010.
*7 500 kW solar panel became operational in July 2012.
*8 12 kW solar panel became operational in January 2010.
*9 Production activities at Shiga Factory recorded nearly nil water output.
*10 Bisphenol A has been inapplicable thus outside the scope of registration since fiscal 2010.
*11 Data collection started at Shiga Factory in fiscal 2010, prior to which no data existed.

We are conducting“factory tours” to provide
opportunities formembers of local
communities to actually
see our manufacturing
A factory tour attended byfacilities and products inelementary school pupils
order to develop deeper
understanding about the business operations of theCompany. During these tours, we inform the participantsof our products as well as our actions for environmental
protection, in an effort to build up relationships built on
trust with local communities.

Contributions to blood donation campaign
As a gesture of support for the
blood donation campaign by theJapanese Red Cross Society, ourYokohama Plant welcomes blood
donation buses onto its premises
on a regular basis. Many employees
offer their blood through cooperative
promotional activities organized by
the Company and the labor union.

A blood donation site

Toyo Denki Seizo Report 201330

Financial Review

Financial Report

Information on “results of operation,” “financial position” and “cash flows” for the consolidated fiscal
year under review (from June 1, 2012 to May 31, 2013) are as follows.

Results of Operation
Orders received
YoY +3.9%

Orders received increased 3.9% compared with the previous fiscal year to 33,949 million yen. Whileorders received in the Information Equipment Systems segment dropped significantly from thesurging levels of the previous year and orders received in the Industrial Systems segment remainedon a declining trend due to environmental factors hindering incoming orders for production
equipment and overseas sales, orders received in the Transportation Systems segment surged
upward, particularly overseas.

Net sales
YoY -20.7%

Net sales decreased 20.7% year on year to 30,575 million yen. Net sales in the Transportation
Systems segment decreased significantly, particularly overseas, and net sales in the Industrial
Systems segment and Information Equipment Systems segment also decreased for the same
reasons as orders received.

Profit/loss
Net Income
YoY -8.1%

Operating income decreased 70.5% compared with the previous fiscal year to 501 million yen, mainly
due to the decrease in net sales. Ordinary income decreased 35.7% year on year to 1,150 million yen,partly due to the posting of foreign exchange gains of 629 million yen derived from the weakening
yen. Net income decreased 8.1% compared with the previous fiscal year to 722 million yen.

Financial Position
AssetsTotal assets
42,364 million yen

Total assets as of May 31, 2013 stood at 42,364 million yen, an increase of 4,278 million yen
compared with the end of the previous fiscal year. Despite a decrease in trade notes and accounts
receivable of 344 million yen, this increase was largely attributable to increases in inventories of
1,133 million yen and investment securities of 4,388 million yen.

Liabilities
Total liabilities
23,844 million yen

Total liabilities as of May 31, 2013 amounted to 23,844 million yen, an increase of 807 million yen
compared with the end of the previous fiscal year. While short-term borrowings contracted 2,080
million yen, this upswing in total liabilities reflected a 2,684 million yen increase in long-term debt.

Net assets
Total net assets
18,519 million yen

Net assets as of May 31, 2013 stood at 18,519 million yen, an increase of 3,470 million yen comparedwith the end of the previous fiscal year. This increase was largely attributable to a 433 million yen
increase in retained earnings and a 2,951 million yen increase in unrealized holding gain on securities.

Cash Flows
Financial Report

32 Financial Review
33 Consolidated Balance Sheets
35 Consolidated Statements of Income and Comprehensive Income
36 Consolidated Statements of Changes in Net Assets
37 Consolidated Statements of Cash Flows
38 Notes to Consolidated Financial Statements
58 Report of Independent Auditors
31

Cash flows fromoperating activities
Net cash provided byoperating activities
1,069 million yen

Net cash provided by operating activities amounted to 1,069 million yen for the fiscal year underreview. Major cash outflows included an increase of 1,122 million yen in inventories, while principal
cash inflows were income before income taxes and minority interests at 1,272 million yen anddepreciation and amortization at 1,144 million yen.

Cash flows frominvesting activities
Net cash used ininvesting activities
1,457 million yen

Net cash used in investing activities totaled 1,457 million yen for the fiscal year under review andmainly comprised funds used for the purchases of property, plant and equipment at 1,425 million
yen.

Cash flows fromfinancing activities
Net cash provided byfinancing activities
155 million yen

Net cash provided by financing activities was 155 million yen for the fiscal year under review. The
principal cash inflow was an increase in long-term debt at 3,800 million yen, while major cash
outflows were a decrease in short-term loans payable at 2,000 million yen and repayment oflong-term debt at 1,196 million yen.

Toyo Denki Seizo Report 201332

TOYO DENKI SEIZO K.K.
Consolidated Balance Sheets

As of

May 31,
2013

May 31,
2012(Millions of yen)

May 31,
2013(Thousands of
U.S. dollars)(Note 2)

AssetsCurrent assets:
Cash on hand and in banks (Notes 17 and 19)¥1,302¥1,489$12,873

Trade notes and accounts receivable (Note 17)

13,384

13,729132,280

Inventories (Note 3)

6,665

5,532

65,869Deferred tax assets (Note 12)

453

517

4,476

Other current assets

179

177

1,772

Allowance for doubtful accounts

(40)

(29)

(399)

21,943

21,415

216,871

Total current assets

Property, plant and equipment (Note 4):
Buildings and structures

2,985

2,374

29,507

Machinery and vehicles

1,109

1,230

10,960

Land

289

289

2,862

Construction in progress

81

495

795

Other

548

473

5,415

5,012

4,861

49,539Total property, plant and equipment

Investments and other assets (Note 5):13,318

8,930

131,630

Deferred tax assets (Note 12)

39

960

386

Intangible assets

322

347

3,178

Other

1,893

1,590

18,709Allowance for doubtful accounts

(163)

(17)

(1,610)Total investments and other assets

15,40911,810152,293

Total assets¥42,364¥38,086$418,703

Investment securities (Notes 5, 17 and 18)

As of

May 31,
2013

May 31,
2012(Millions of yen)

LIABILITIES AND NET ASSETS
Current liabilities:
Trade notes and accounts payable (Note 17)
Short-term borrowings and current portion of long-term debt
(Notes 6 and 17)
Current portion of bonds payable (Note 7)
Income taxes payable (Note 12)
Accrued expenses
Accrued directors’ bonuses
Accrued employees’ bonuses
Reserve for losses on order acknowledgements (Note 3)
Other
Total current liabilities

May 31,
2013(Thousands of
U.S. dollars)(Note 2)

¥4,647¥4,544$45,923

4,296

6,376

42,459

120
319
2,883
17
773
196
1,029
14,280

160
474
2,909
47
891
198
1,121
16,7201,186
3,156
28,494
165
7,639
1,938
10,176
141,136

—
5,413
3,289
615
44
165
38
9,564

120
2,729
3,136
—
44
252
36
6,317

—
53,49932,508
6,077
433
1,628
383
94,528

Net assets (Notes 9 and 16):
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity¥4,998
3,178
7,156
(164)
15,168¥4,998
3,178
6,722
(162)
14,736$49,401
31,40470,722(1,620)149,907

Accumulated other comprehensive income:Unrealized holding gain on securities
Translation adjustments
Total accumulated other comprehensive income
Total net assets

3,367
(15)
3,352
18,520

415
(102)
313
15,04933,277(145)
33,132
183,039

Total liabilities and net assets¥42,364¥38,086$418,703

Long-term liabilities:
Bonds payable (Notes 7 and 17)
Long-term debt (Notes 6, 17 and 20)
Accrued retirement benefits (Note 8)
Deferred tax liabilities (Note 12)
Reserve for ecological countermeasures
Long-term payables
Other
Total long-term liabilities
Commitments and contingencies (Note 15)

See notes to consolidated financial statements.

33

Toyo Denki Seizo Report 201334

TOYO DENKI SEIZO K.K.
Consolidated Statements of Income

For the Years Ended

Net sales (Note 21)
Cost of sales (Note 3)
Gross profit
Selling, general and administrative expenses (Note 10)
Operating income
Non-operating income (expenses):
Interest and dividend income
Interest expense
Equity in (losses) earnings of unconsolidated subsidiaries and affiliates
Dividend income on life insurance
Foreign exchange gain (loss)
Loss on disposal of property, plant and equipment
Other income, net
Ordinary income
Special gains (losses), net (Note 11)
Income before income taxes and minority interests
Income taxes (Note 12):Current
DeferredIncome before minority interests
Minority interests
Net income

TOYO DENKI SEIZO K.K.
Consolidated Statements of Changes in Net Assets
May 31,
2013

May 31,
2012(Millions of yen)

May 31,
2013(Millions of yen)
Shareholders’ equity(Thousands of
U.S. dollars)(Note 2)¥30,575
22,8797,696¥38,571
29,736
8,835$302,185
226,12176,064

7,195
501

7,134
1,701

71,110
4,954

116
(163)
113
48
(23)
(5)
2
88
1,789
(31)
1,758

1,577
(2,130)
(161)
898
6,225
(154)
163
6,418
11,372
1,209
12,581

714
258
972
786
—
¥786

4,904
537
5,441
7,140
—
$7,140¥4,998¥3,178¥6,226¥(160)¥14,242¥124¥(97)¥27¥14,269

—
—
—

—
—
—

(290)
786
—

—
—
(2)

(290)
786
(2)

—
—
—

—
—
—

—
—
—

(290)
786
(2)

—
—
¥4,998——¥3,178—496¥6,722—(2)¥(162)—
494¥14,736

291
291
¥415

(5)
(5)
¥(102)

286
286
¥313

286
780
¥15,049¥4,998———¥3,178———¥6,722(288)
722—¥(162)——(2)¥14,736
(288)
722
(2)

¥415
—
—
—

¥(102)
—
—
—

¥313
—
—
—

¥15,049
(288)
722
(2)

—
—
¥4,998——¥3,178—434¥7,156—(2)¥(164)—
432¥15,168

2,952
2,952
¥3,36787
87¥(15)

3,039
3,039¥3,352

3,039
3,471¥18,520

Cash dividends paid
Net income
Net changes in items other than those inshareholders’ equity
Total changes during the year
Balance as of May 31, 2012
Balance as of June 1, 2012
Cash dividends paid
Net income
Purchase of treasury stock
Net changes in items other than those inshareholders’ equity
Balance as of May 31, 2013

(Thousands of U.S. dollars) (Note 2)
Shareholders’ equity

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders’equity$49,401———$31,404———$66,441(2,859)7,140—$(1,607) $145,639—(2,859)
—
7,140
(13)
(13)

$4,108———$(1,012)———$3,096———$148,735(2,859)
7,140
(13)

—

—

—

—

29,169867

30,03630,036—$49,401—$31,404

4,281$70,722(13)
4,268$(1,620) $149,907

29,169$33,277867$ (145)

30,036$33,132

34,304$183,039

Net income
Purchase of treasury stock
Net changes in items other than those inshareholders’ equity
Total changes during the year
Balance as of May 31, 2013

For the Years Ended(Millions of yen)

May 31,
2013

¥786

$7,140

2,951
27

291
(6)

29,169
262

61
3,039

1
286

605
30,036Comprehensive income¥3,761¥1,072$37,176

Comprehensive income attributable to:
Owners of the parent
Minority interests¥3,761—¥1,072—$37,176—

Other comprehensive income (Note 13):
Unrealized holding gain on securities
Translation adjustments
Share of other comprehensive income of affiliates accounted for by theequity method
Total other comprehensive income—

Total net
assetsSee notes to consolidated financial statements.

(Thousands of
U.S. dollars)(Note 2)

¥722

Income before minority interests

Total
accumulated
otherTranslation comprehensive
adjustments
incomeCommonstock

Cash dividends paid

May 31,
2012

Accumulated other comprehensive income
Unrealized
holding
gain onsecurities

Balance as of June 1, 2012

May 31,2013

Total net
assetsChanges during the year

See notes to consolidated financial statements.

TOYO DENKI SEIZO K.K.
Consolidated Statements of Comprehensive Income

Total
accumulated
otherTranslation comprehensive
adjustments
incomeRetainedearnings

Total changes during the year

496
55
551
722
—
¥722

Unrealized
holding
gain onsecurities

Capitalsurplus

Balance as of June 1, 2011

Treasury
stock

Total
shareholders’equityCommonstock

Purchase of treasury stock

160
(215)
(16)
91
630
(16)
16
650
1,151
122
1,273

Accumulated other comprehensive income

See notes to consolidated financial statements.

35

Toyo Denki Seizo Report 201336

TOYO DENKI SEIZO K.K.
Consolidated Statements of Cash Flows

For the Years Ended

TOYO DENKI SEIZO K.K.
Notes to Consolidated Financial Statements
May 31,
2013

May 31,
2012(Millions of yen)

Operating activities
Income before income taxes and minority interests
Depreciation and amortization
Provision for (reversal of) allowance for doubtful accounts
Reversal of accrued employees’ bonuses
Provision for (reversal of) accrued retirement benefits
Interest and dividends income
Interest expenses
Gain on sales of investment securities
Loss on valuation of investment securities
Changes in operating assets and liabilities:
Trade notes and accounts receivable
Inventories
Trade notes and accounts payable
Reserve for losses on order acknowledgements
Advances received
Accrued expenses
Reserve for ecological countermeasures
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities

37

May 31,
2013(Thousands of
U.S. dollars)(Note 2)

1. Summary of Significant Accounting Policies(a) Basis of presentation
The accompanying consolidated financial statements of TOYO DENKI SEIZO K.K. (the “Company”) and consolidated subsidiaries(collectively the “Group”) are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain
respects as to the application and disclosure requirements of International Financial Reporting Standards, and are compiled from theconsolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange Act of Japan.
Certain amounts in the prior year’s financial statements have been reclassified to conform to the current year’s presentation.

¥1,273
1,144
158
(118)
153
(160)
215
(72)
—

¥1,758
1,146
(12)
(43)
(72)
(116)
163
—
23

$12,581
11,308
1,562(1,169)1,512(1,577)
2,130
(719)
—

231
(1,123)
100
(6)
201
(29)
—
(243)
1,724
172
(211)
(615)
1,070

(3,399)2,649(1,135)
46
(493)
(951)
(89)
(51)
(576)
135
(163)
(724)
(1,328)2,278(11,097)
989
(58)
1,985
(284)
—
(2,407)
17,034
1,698(2,079)(6,080)
10,573(b) Principles of consolidation and accounting for investments in unconsolidated subsidiaries and affiliates
The accompanying consolidated financial statements included the accounts 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 have beenaccounted for by the equity method. The Company applies the “Practical Solution of Unification of Accounting Policies Applied toForeign Subsidiaries for Consolidated Financial Statements” (Accounting Standards Board of Japan (ASBJ) Practical Issues Task
Force (PITF) No. 18) and “Practical Solution on Unification of Accounting Policies Applied to Associates Accounted for using Equity
Method” (PITF No. 24). In accordance with these PITF, the accompanying consolidated financial statements have been preparedby using the accounts of foreign consolidated subsidiaries and affiliates prepared in accordance with either International Financial
Reporting Standards (IFRS) or accounting principles generally accepted in the United States as adjusted for certain items including
goodwill, actuarial differences and capitalized development costs.
As of May 31, 2013, the numbers of consolidated subsidiaries and affiliates accounted for by the equity method were 6 and 3 (6and 3 in 2012). A subsidiary, TOYO DENKI USA, INC., whose fiscal year end is December 31, is consolidated by using their pro forma
financial statements as of March 31 which are prepared solely for consolidation purposes and necessary adjustments are made totheir financial statements to reflect any significant transactions from April 1 to May 31. All significant intercompany balances andtransactions have been eliminated in consolidation.
Investments in subsidiaries and affiliates which are neither consolidated nor accounted for by the equity method are carried at costor less. Where there has been a permanent decline in the value of such investments, the Company has written down the investments.

Investing activities
Purchases of property, plant and equipment
Purchases of investment securities
Proceeds from sales of investment securities
Other payments
Other receipts
Other, net
Net cash used in investing activities(1,426)
(13)
127
(178)
124
(92)
(1,458)

(918)
(917)
—
(73)
31
(271)
(2,148)(14,090)
(129)
1,259
(1,760)1,224(909)(14,405)(c) Foreign currency translation
Receivables and payables denominated in foreign currencies are translated into yen at the rates of exchange in effect at the balance
sheet date, and differences arising from the translation are included in the consolidated statements of income.
The balance sheet accounts of the foreign consolidated subsidiaries are translated into yen at the rates of exchange in effect atthe balance sheet date, except for the components of net assets excluding minority interests which are translated at their historicalexchange rates. Revenue and expense accounts are translated at the average rate of exchange in effect during the year. Differences
arising from the translation are presented as translation adjustments in the consolidated financial statements.

Financing activities(Decrease) increase in short-term loans payable
Increase in long-term debt
Repayment of long-term debt
Redemption of bonds payable
Purchases of treasury stock
Cash dividends paid
Other, net
Net cash provided by financing activities
Effect of exchange rate change on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period (Note 19)(2,000)3,800(1,196)
(160)
(1)
(288)
(0)
155
46
(187)
1,489
¥1,302

1,500
2,300
(750)
(200)
(2)
(284)
—
2,564
(9)
(921)
2,410
¥1,489(19,767)
37,557(11,821)(1,581)(13)(2,840)
(3)
1,532
454
(1,846)
14,719$12,873(d) Cash and Cash equivalents
Cash and cash equivalents consist of cash on hand, cash in banks which can be withdrawn at any time and short-term investmentswith a maturity of three months or less from the date of purchase, which can easily be converted to cash and are subject to little riskof change in value.
(e) Inventories
Inventories are stated principally at the lower of cost or market, cost being determined principally by the specific identification method
for finished products and work in process and by the moving average cost method for raw material and supplies.
(f) Short-term investments and investment securities
Securities other than equity securities issued by subsidiaries and affiliates are classified into three categories: trading, held-tomaturity or other securities (available-for-sale securities). Trading securities are carried at fair value and held-to-maturity securities
are carried at amortized cost. Available-for-sale securities with market quotation are carried at fair value with changes in unrealized
holding gain or loss, net of the applicable income taxes, included directly in net assets. Available-for-sale securities without market
quotation are carried at cost. Cost of securities sold is determined by the moving average method.

Toyo Denki Seizo Report 201338

(g) Property, plant and equipment (except for leased assets) and depreciation
Depreciation of property, plant and equipment of the Company and its consolidated subsidiaries is calculated principally by
the declining-balance method based on the estimated useful lives and the residual value, while buildings except for leasehold
improvements acquired on or after April 1, 1998 are depreciated by the straight-line method. The estimated useful lives of theseassets are as follows:
Buildings and structures:		
8 to 60 years
3 to 12 years
Machinery and vehicles:		
Significant renewals and additions are capitalized at cost. Maintenance and repairs are charged to income.

(o) Reserve for ecological countermeasures
Reserve for ecological countermeasures is provided based on the amounts expected to be incurred in future to cover the costs on
ecological countermeasures such as soil pollution countermeasures.

(Accounting change which is difficult to distinguish from a change in accounting estimates)
Following the corporate income tax reform, the Company and its domestic consolidated subsidiaries changed the depreciation method
for property, plant and equipment acquired on or after June 1, 2012 to the depreciation method based on the amended Corporation
Tax Act. The effect of this change was to increase operating income, ordinary income and income before income taxes and minority
interests by ¥48 million ($479 thousand) for the year ended May 31, 2013.

(q) Construction revenue and costs
Construction revenue and construction costs are recognized by the percentage-of-completion method, if the outcome of aconstruction contract can be estimated reliably. The percentage of completion is measured based on the percentage of the costs
incurred to the estimated total costs. For other construction contracts, the completed-contract method is applied.

(h) Intangible assets (except for leased assets)
Intangible assets are amortized using the straight-line method. Software for internal use is amortized over the internal available period(5 years) using the straight-line method.
(i) Leases
Non-cancellable lease transactions that transfer substantially all risks and rewards associated with the ownership of assets to thelessee are accounted for as finance leases. Leased assets capitalized under the finance lease arrangements are depreciated over thelease period without any residual value using the straight-line method.
All other lease transactions are accounted for as operating leases and related payments are charged to income as incurred.
(j) Allowance for doubtful accounts
Allowance for doubtful accounts is provided based on past experience for normal receivables and on an estimate of the collectabilityof receivables from companies in financial difficulty.
(k) Accrued directors’ bonuses
Accrued directors’ bonuses are provided to cover the current fiscal year’s portion of the estimated amounts to be paid in future forthe performance incentive bonuses.
(l) Accrued employees’ bonuses
Accrued employees’ bonuses are provided to cover the current fiscal year’s portion of the estimated amounts to be paid in future.
(m) Accrued retirement benefits
Accrued retirement benefits for employees have been recorded at the amount calculated based on the retirement benefit obligation asof balance sheet date, as adjusted for unrecognized net retirement benefit obligation at transition, unrecognized actuarial gain or loss,
and unrecognized prior service cost. The retirement benefit obligation is attributed to each period by the straight-line method over theestimated years of service of the eligible employees. The net retirement benefit obligation at transition is being amortized principallyover a period of 15 years by the straight-line method.
Actuarial gain or loss is amortized in the following year in which the gain or loss is recognized primarily by the straight-line
method over periods (10 years) which are shorter than the average remaining years of service of the employees.
Prior service cost is being amortized as incurred by the straight-line method over periods (10 years) which are shorter than the
average remaining years of service of the employees.

(p) Income taxes
Deferred tax assets and liabilities have been recognized in the consolidated financial statements with respect to the differences
between the financial reporting and tax bases of the assets and liabilities, and were measured using the enacted tax rates and laws
which will be in effect when the differences are expected to reverse.

(r) Research and development expenses
Research and development expenses are charged to income when incurred.
(s) Consumption taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
(t) Derivative financial instruments
The Company and certain consolidated subsidiaries enter into various derivative transactions in order to manage certain risks arisingfrom adverse fluctuations in interest rates. Derivative financial instruments are carried at fair value with changes in unrealized gain orloss charged or credited to operations, except for these which meet the criteria for deferred hedge accounting under which unrealized
gain or loss is deferred as a component of net assets.
Deferred hedge accounting is adopted for derivatives which qualify as hedges, under which unrealized gain or loss is deferred.
Hedging instruments are derivative transactions and hedged items are primarily interest on debts. Hedge effectiveness is notassessed if the substantial terms and conditions of the hedging instruments and the hedged items are the same.
(u) Standards issued but not yet adopted
On May 17, 2012, the ASBJ issued “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26) and “Guidance on
Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25), which replaced the Accounting Standard for Retirement
Benefits that had been issued by the Business Accounting Council in 1998 with effective date of April 1, 2000 and the other related
practical guidance, being followed by partial amendments from time to time through 2009.
Under the revised accounting standard, taking into accounts the viewpoints of improvement of financial reporting and international
trends, accounting treatment for actuarial gains or losses and past service costs that are yet to be recognized in profit or loss, thecalculation method for retirement benefit obligations and service costs and expansion of the related disclosure requirements havebeen revised.
The Company is going to apply the new accounting standard and implementation guidance from the end of the fiscal year endingon May 31, 2014, but the revision of the computation method for retirement benefit obligation and prior service cost will be adopted
from the beginning of the fiscal year ending May 31, 2015. The Company is currently evaluating what effect these modifications will
have on its consolidated financial statements.
2. U.S. Dollar Amounts
The accompanying consolidated financial statements are expressed in yen, and solely for the convenience of the reader, havebeen translated into U.S. dollars at the rate of ¥101.18=U.S.$1, the approximate rate of exchange prevailing at May 31, 2013. Thistranslation should not be construed as a representation that all amounts shown could be converted into U.S. dollars at such rate.

(n) Reserve for losses on order acknowledgements
Reserve for losses on order acknowledgements is provided based on the amounts expected to be incurred during the current fiscal
year and which are able to estimate the losses reasonably to cover the future losses on order acknowledgements. Provision of reserve
for losses on order acknowledgements in the amounts of ¥(2) million ($(16) thousand) and ¥ 49 million is included in cost of sales
for the years ended May 31, 2013 and 2012, respectively.

39

Toyo Denki Seizo Report 201340

3. Inventories
Inventories as of May 31, 2013 and 2012 were as follows:

As ofMerchandise and finished products
Work in process
Raw materials and supplies

May 31,
2013

May 31,
2012(Millions of yen)

¥1,465
3,082
2,118¥6,665

May 31,
2013(Thousands of
U.S. dollars)¥1,5982,243
1,691¥5,532$14,477
30,457
20,935$65,869

Inventories are stated at the lower of cost or market and the Company recognized losses on write-down of inventories held for theordinary sales purpose due to a decline in profitability in the amount of ¥55 million ($542 thousand) and ¥166 million for the years
ended May 31, 2013 and 2012, respectively. These amounts were included in “Cost of sales”.

5. Investments and Other Assets
Investments in unconsolidated subsidiaries and affiliates included in “Investment securities” as of May 31, 2013 and 2012 were as
follows:

As ofEquity securities
Investments in capital

As of

May 31,
2013

May 31,
2012(Millions of yen)

¥8
30
¥38

Merchandise and finished products
Work in process

May 31,
2013(Thousands of
U.S. dollars)

¥69
71
¥140

$83
293
$376

4. Property, Plant and Equipment
The following table sets forth the acquisition costs and related accumulated depreciation:

As of
Buildings and structures
Machinery and vehicles
Other
Accumulated depreciation

May 31,
2012(Millions of yen)¥6,973
6,757
3,025
16,755(12,113)¥4,642

May 31,
2013(Thousands of
U.S. dollars)¥6,279
6,405
2,715
15,399(11,322)¥4,077$68,922
66,78229,895
165,599(119,717)$45,882

Depreciation of property, plant and equipment for the years ended May 31, 2013 and 2012 were as follows:

For the Years Ended

May 31,
2013

May 31,
2012(Millions of yen)

¥1,144

May 31,
2013(Thousands of
U.S. dollars)¥1,146$11,308

Accumulated depreciation of property, plant and equipment amounted to ¥12,113 million ($119,717 thousand) and ¥11,322
million as of May 31, 2013 and 2012, respectively.
The following amount of deferred gain was directly deducted from the acquisition costs of the related property, plant and equipment
acquired during the year ended May 31, 2013:¥29 million ($284 thousand)
Buildings and structures:
Other:	   6 million ($64 thousand)

41

Loans, principally from banks
Current portion of long-term debt

(Millions of yen)

¥ 59
856

May 31,
2013(Thousands of
U.S. dollars)

¥124
758

$582
8,464

May 31,
2013

May 31,
2012(Millions of yen)

¥3,180
1,116¥4,296

May 31,
2013(Thousands of
U.S. dollars)¥5,1801,196¥6,376$31,429
11,030$42,459

The annual weighted average interest rates applicable to short-term borrowings and current-portion of long-term debt as of May
31, 2013 were 1.475% and 2.102%, respectively.
As of May 31, 2013 and 2012, long-term debts were as follows:

As of

May 31,
2013

May 31,2012

6. Short-Term Borrowings and Long-Term Debt
As of May 31, 2013 and 2012, short-term borrowings and the current portion of long-term debt consisted of the following:

As of
Inventories related to construction contracts which are estimated to make losses are stated after deducting the corresponding reserve
for losses on order acknowledgements in the following amounts:

May 31,
2013

Long-term debt, excluding current portion, serially due from 2014 through 2018

May 31,
2013

May 31,
2012(Millions of yen)

¥5,413

May 31,
2013(Thousands of
U.S. dollars)¥2,729$53,499

The annual weighted average interest rate applicable to long-term debt as of May 31, 2013 was 1.430%.
The maturities of long-term debt are summarized as follows:

Years ended May 31
2014
2015
2016
2017
2018

(Millions of yen)(Thousands of
U.S. dollars)¥1,116
871
592
150
3,800
¥6,529$11,030
8,608
5,851
1,483
37,557$64,529

The assets pledged as collateral for short-term borrowings of ¥3,751 million ($37,073 thousand) and long-term debt of ¥1,188
million ($11,741 thousand) as of May 31, 2013 were as follows:

As of May 31
Buildings and structures
Machinery and vehicles
Other property, plant and equipment
Land(Millions of yen)(Thousands of
U.S. dollars)¥1,858919
372
159¥3,308$18,358
9,087
3,678
1,566
$32,689

Toyo Denki Seizo Report 2013

42

The following assets included in the above are set by factory foundation fixed collateral security:(Millions of yen)

As of May 31
Buildings and structures
Machinery and vehicles
Other property, plant and equipment

The components of retirement benefit expenses for the years ended May 31, 2013 and 2012 are outlined as follows:(Thousands of
U.S. dollars)¥1,858919
372¥3,149$18,358
9,087
3,678$31,123

7. Bonds Payable
As of May 31, 2013 and 2012, bonds payable consisted of the following:

May 31,2013

As ofIssued by:
The Company
The Company

May 31,
2012(Millions of yen)

4th unsecured bonds issued on Sep. 28, 2007 at 1.33%, due
on Sep. 28, 2012
5th unsecured bonds issued on Mar. 25, 2009 at 1.12%, dueon Mar. 25, 2014

May 31,
2013(Thousands of
U.S. dollars)

¥ —

¥ 40

$—

120
¥120

240
¥280

1,186
$1,186

Annual maturity of bonds payable as of May 31, 2013 was as the following:

Years ended May 31
2014(Millions of yen)(Thousands of
U.S. dollars)

¥120
¥120

$1,186$1,186

The following table sets forth the components of the amounts recognized in the consolidated balance sheets as of May 31, 2013
and 2012 for the Company and its consolidated subsidiaries’ benefit plans:

As ofRetirement benefit obligation
Unrecognized net retirement benefit obligation at transition
Unrecognized actuarial loss
Unrecognized prior service costAccrued retirement benefits

May 31,
2012(Millions of yen)¥(4,052)
539
273
(49)
¥(3,289)

Consolidated subsidiaries adopted a simplified method in the calculation of their retirement benefit obligation.

May 31,
2013(Millions of yen)

¥229
61
270
44
(10)
112
¥706

Service cost
Interest cost
Amortization of net retirement benefit obligation at transition
Amortization of actuarial loss
Amortization of prior service cost
Other
Retirement benefit expenses(Thousands of
U.S. dollars)

¥215
67
270
74
(10)
103
¥719

$2,266
605
2,666
437
(99)
1,102
$6,977

Notes: 1. Retirement benefit expenses for consolidated subsidiaries adopting the simplified method are included in “Service cost.”
2. “Other” represents contributions paid to defined contribution pension plans.

The assumptions used in accounting for the above plans were as follows:

May 31,2013

For the Years Ended
Inter-period allocation method of estimated retirement benefits
Discount rate
Amortization period of actuarial loss
Amortization period of prior service cost
Amortization period of net retirement benefit obligation at transition

May 31,
2012

Straight-line method

1.5%
10 years
10 years
15 years

1.5%(1) Information regarding changes in net assets for the years ended May 31, 2013 and 2012 are as follows:a. Shares issued and outstanding/ Treasury stock
For the year ended May 31, 2013

May 31,
2013(Thousands of
U.S. dollars)¥(4,199)
808
314
(59)
¥(3,136)

May 31,
2012

9. Net Assets

8. Retirement Benefit Plans
The Company and its consolidated subsidiaries have retirement benefit plans combined by defined contribution plans and lump-sum
payment plans.

May 31,
2013

May 31,2013

For the Years Ended$(40,049)
5,324
2,704
(487)
$(32,508)

Type of shares

Number ofshares as ofJune 1, 2012

Increase

Decrease

Number ofshares as of
May 31, 2013

(Shares)

Shares issued:
Common stock
Treasury stock:
Common stock
Note:
Detail of the increase is as the following:
Increase due to purchase of shares of less than standard unit

48,675,000——

48,675,000

458,570

4,996—

463,566

Decrease

Number ofshares as of
May 31, 2012

4,996 shares

For the year ended May 31, 2012

Type of shares

Number ofshares as ofJune 1, 2011

Increase(Shares)

Shares issued:
Common stock
Treasury stock:
Common stock
Note:
Detail of the increase is as the following:
Increase due to purchase of shares of less than standard unit

43

48,675,000——

48,675,000

452,701

5,869—

458,5705,869 shares

Toyo Denki Seizo Report 201344

11. Special Gains (Losses), net
The components of “Special Gains (Losses), net” for the years ended May 31, 2013 and 2012 were as follows:b. Dividends
1) Dividends paid

For the Years Ended

For the year ended May 31, 2013
Resolution
Annual general meetingof the shareholders on
August 28, 2012

Type of shares

Total dividends Total dividends
Dividends per(millions of (thousands of Dividends per share (U.S.
yen)
U.S. dollars)
share (yen)dollars)¥289$2,859

¥6.00

$0.06

Total dividends(millions of Dividends per
yen)share (yen)Cut-off date

Effective dateCommon stock

Cut-off date

Effective date

May 31, 2012 August 29, 2012

For the year ended May 31, 2012
Resolution
Annual general meetingof the shareholders on
August 26, 2011

Type of shares
Common stock¥290¥6.00 May 31, 2011 August 29, 20112) Dividends with the cut-off date in the year ended May 31, 2013 and the effective date in the year ending May 31, 2014
Total
dividends Total dividends
Dividends per(millions of (thousands of Source of Dividends per share (U.S.
Type of shares
yen)
U.S. dollars) dividends
share (yen)dollars)Cut-off date Effective date
Resolution
Annual general meetingof the shareholders on
CommonRetained
May 31,
August 28,
August 27, 2013
stock
2013
¥289
$2,859 earnings¥6.00$0.06 2013
10. Selling, General and Administrative Expenses

For the Years Ended
Salaries and allowances
Provision for accrued directors’ bonuses
Provision for accrued employees’ bonuses
Retirement benefit expenses
Provision for allowance for doubtful accounts
Research and development expenses

45

May 31,
2013

May 31,
2012(Millions of yen)

¥1,760
17
320
347
165
917

May 31,
2013(Thousands of
U.S. dollars)¥1,786
47
357
322
(12)
798

$17,391
165
3,158
3,431
1,627
9,062

Special gains:
Gain on sales of investment securities
Refund of temporary exceptional enterprise tax
Special losses:
Office relocation costs
Loss on valuation of investment securities
Loss on natural disasterTotal

May 31,
2013

May 31,
2012(Millions of yen)

May 31,
2013(Thousands of
U.S. dollars)

¥72
65

¥—
—

$719
641

(15)
—
—
¥122

—
(23)
(8)
¥(31)

(151)
—
—
$1,20912. Income Taxes
Income taxes in Japan applicable to the Company and its domestic consolidated subsidiaries consist of corporation tax, inhabitants’taxes and enterprise tax, which, in the aggregate, resulted in a statutory rate of approximately 38.0% and 40.7% for the years
ended May 31, 2013 and 2012, respectively. Income taxes of a foreign consolidated subsidiary are based generally on the tax rates
applicable in the country of incorporation.
The reconciliation between the effective tax rates reflected in the consolidated statements of income and the effective statutory tax
rate for the years ended May 31, 2013 and 2012 were as follows:

For the Years Ended
Effective statutory tax rate
Effect of :Non-deductible expenses for income tax purpose
Non-taxable income such as dividends income, etc.
Per capita inhabitant tax
Valuation allowance
Income (loss) from affiliates accounted for by the equity method
Unrecognized tax benefits from losses of subsidiaries
Tax rate changes
Other
Effective tax rates

May 31,
2013
38.0%

May 31,
2012
40.7%

1.3
(1.7)
2.1
(4.4)
0.5
5.2
—
2.2
43.2%

1.2
(1.0)
1.6
2.8
(2.6)
2.2
10.3
0.1
55.3%

Toyo Denki Seizo Report 2013

46

The significant components of deferred tax assets and liabilities as of May 31, 2013 and 2012 were as follows:

As ofDeferred tax assets:
Write-down of inventories
Accrued retirement benefits
Accrued employees’ bonuses
Reserve for losses on order acknowledgements
Other
Total gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized holding gain on securities
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)

May 31,
2013

May 31,
2012(Millions of yen)

¥177
1,187
295
65
776
2,500
(792)
1,708

(Thousands of
U.S. dollars)

¥160
1,144
341
67
732
2,444
(677)
1,767

(1,828)(3)(1,831)¥(123)

May 31,
2013

(285)
(6)
(291)
¥1,476$1,752
11,736
2,919
640
7,666
24,713(7,828)16,885(18,073)(27)(18,100)$(1,215)

13. Other Comprehensive Income
The following table presents reclassification adjustments and tax effects allocated to each component of other comprehensive income
for the years ended May 31, 2013 and 2012:

For the Years Ended
Unrealized holding gain on securities:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Amount before tax effectTax effectUnrealized holding gain on securities
Translation adjustments
Amount arising during the year
Amount before tax effectTranslation adjustments
Share of other comprehensive income of affiliates accounted forby the equity method
Amount arising during the year
Share of other comprehensive income in affiliates accounted forby the equity method
Total other comprehensive income47

May 31,
2013

May 31,
2012(Millions of yen)

¥4,568(73)
4,495(1,544)
2,951

May 31,
2013(Thousands of
U.S. dollars)

¥437
23
460
(169)
291

$45,150(719)
44,431(15,262)
29,169

27
27
27

(6)
(6)
(6)

262
262
262

61

1

605

61
¥3,039

1
¥286

605
$30,036

14. Lease Transactions
The information about finance leases that do not transfer ownership of the leased property to the lessee is omitted since there is nomateriality in terms of value.
In addition, finance leases that do not transfer ownership of the leased property to the lessee and whose lease inception was onor before March 31, 2008 are permitted to continue to be accounted for as operating lease transactions if certain “as if capitalized”
information is disclosed in the note to the financial statements, but such information is omitted since there is no materiality in termsof value.
15. Contingent Liabilities
As of May 31, 2013 and 2012, the Company was committed to provide guarantees on bank borrowings of the following affiliates:

As of
Tianjin Toyodenki International Trade Co., Ltd.
Hunan Xiangyang Electric Co., Ltd.
Changzhou Ruiyang Transmission Technology Co., Ltd.

May 31,
2013

May 31,
2012(Millions of yen)

May 31,
2013(Thousands of
U.S. dollars)

¥—
198
187

¥6
249
100

$—
1,958
1,851

May 31,
2013

May 31,
2012

May 31,
2013

16. Amounts Per Share

For the Years Ended
Net income:
Basic

(Yen)

(U.S. dollars)¥14.98¥16.29

$0.15

As of

May 31,
2013

May 31,
2012

May 31,2013

Net assets¥384.14¥312.12$3.80

May 31,
2013

May 31,
2012

May 31,
2013

(Yen)

(U.S. dollars)

Diluted net income per share is omitted since there is no dilution of equity.
The bases for calculation are as follows:
Basic net income per share

For the Years Ended
Net income
Net income not attributable to common shareholders
Net income attributable to common stock(Millions of yen)

¥722
—
722

(Thousands of
U.S. dollars)

¥786
—
786

$7,140—7,140(Thousand shares)

Average number of shares of common stock during the year

48,214

48,219Toyo Denki Seizo Report 201348

17. Financial Instruments

Estimated Fair value of Financial Instruments

Overview

Carrying value of financial instruments on the consolidated balance sheets as of May 31, 2013 and 2012 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 2 below):(1) Policy for financial instruments
The Group raises its necessary funds for capital investments to reinforce and renew production facilities and working capital
principally through bank borrowings and issuance of corporate bonds. The Group manages temporary cash surpluses through low
risk financial assets. The Group uses interest rate swaps for the purpose of reducing the interest rate fluctuation risk on long-term
debt and fixing the interest expenses and does not enter into derivatives for speculative or trading purposes.
(2) Types of financial instruments and related risk
Trade receivables—trade notes and accounts receivable—are exposed to credit risk in relation to customers.
Investment securities are composed of mainly the shares of common stock of other companies with which the Group has business
relationships and exposed to market risk.
Certain long-term debt raised for the purpose of making capital investments with variable interest rates is exposed to interest rate
fluctuation risk. However, to reduce such risk and fix interest expense for long-term debt bearing interest at variable rates, the Grouputilizes interest rate swap transactions as a hedging instrument.
Regarding assessment of the effectiveness of hedging activities, it is omitted since these interest rate swaps qualify for hedge
accounting and meet specific requirements.
(3) Risk management for financial instruments(a) Monitoring of credit risk (the risk that customers or counterparties may default)
In accordance with the internal policies of the Group 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 Group is making efforts to identify and mitigate risks of bad debts from customers who are having financial difficulties.
Investment securities are composed of mainly the shares of common stock of highly rated companies with which the Group hasbusiness relationships. Accordingly, the Group believes that the credit risk deriving from such investment securities is insignificant.
The Group also believes that the credit risk of derivatives is insignificant as it enters into derivative transactions only with financial
institutions which have a sound credit profile.
(b) Monitoring of market risks (the risk arising from fluctuations in foreign exchange rates, interest rates and others)
The Group utilizes interest rate swap transactions to reduce interest rate fluctuation risk on long-term debt.
For investment securities, the Group periodically reviews the fair values of such financial instruments and the financial position of
the issuers.
In conducting derivative transactions, the division in charge of each derivative transaction follows the internal policies, which set
forth delegation of authority and maximum upper limit on positions. Monthly reports including actual transactions data are submitted
to the Board of Directors for their review.

As of May 31, 2013

Carrying value

Fair value

Difference(Millions of yen)

Assets1) Cash on hand and in banks2) Trade notes and accounts receivable3) Investment securities
Total assets
Liabilities
4) Trade notes and accounts payable
5) Short-term borrowings
6) Bonds payable
7) Long-term debt
Total liabilities
8) Derivative transactions

As of May 31, 2013

¥1,302
13,384
12,618¥27,304¥1,302
13,384
12,618¥27,304

¥—
—
—
¥—

¥4,647
3,180
120
6,529
¥14,476¥—¥4,647
3,180
121
6,494
¥14,442
¥—

¥—
—
(1)
35
¥34
¥—

Fair value

Difference

Carrying value(Thousands of U.S. dollars)

Assets1) Cash on hand and in banks2) Trade notes and accounts receivable3) Investment securities
Total assets
Liabilities
4) Trade notes and accounts payable
5) Short-term borrowings
6) Bonds payable
7) Long-term debt
Total liabilities
8) Derivative transactions$12,873
132,280
124,705$269,858$12,873
132,280
124,705$269,858

$—
—
—
$—

$45,923
31,4291,186
64,529$143,067$—$45,923
31,4291,193
64,185$142,730
$—

$—
—
(7)
344
$337
$—

(c) Monitoring of liquidation risk (the risk that the Group may not be able to meet its obligations on scheduled due dates)
Based on the report from each division, the Group prepares and updates its cash flow plans on a timely basis to manage liquidationrisk.
(4) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market priceavailable, fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different
assumptions and factors could result in different fair value. In addition, the notional amounts of derivatives in Note 20, Derivative
Transactions are not necessarily indicative of the actual market risk involved in derivative transactions.

49

Toyo Denki Seizo Report 201350

As of May 31, 2012

Carrying value

Fair value

Difference

3. Redemption schedule for receivables and securities with maturities at May 31, 2013 and 2012 are as follows:(Millions of yen)

Assets1) Cash on hand and in banks2) Trade notes and accounts receivable3) Investment securities
Total assets
Liabilities
4) Trade notes and accounts payable
5) Short-term borrowings
6) Bonds payable
7) Long-term debt
Total liabilities
8) Derivative transactions

As of May 31, 2013
¥1,489
13,7298,164¥23,382¥1,489
13,7298,164¥23,382

¥—
—
—
¥—

¥4,544
5,180
280
3,925
¥13,929¥—¥4,544
5,180
283
3,953
¥13,960
¥—

¥—
—
(3)
(28)
¥(31)
¥—

Notes:
1. Methods to determine the estimated fair value of financial instruments and other matters related to securities and derivative transactions
Assets:Cash on hand and in banks and trade notes and accounts receivable
Since these items are settled in a short period of time, their carrying value approximates fair value.
However, if they are settled in a long period of time, the fair value of receivables is based on the present value of the receivables classified by definite periods discounted
using interest rates on the corresponding period until settlement.
Investment securities
The fair value of stocks is based on quoted market prices. Investment securities held by the Group are classified as available-for-sale securities and please see Note 18“Securities”.

Due in One Yearor Less

Due after One
Year throughFive Years¥1,299
12,095¥13,394¥—
1,289¥1,289

¥—
—
¥—

¥—
—
¥—

Due in One Yearor Less

Due after One
Year throughFive Years

Due after Five
Years throughTen Years

Due after
Ten Years

Due after Five
Years throughTen Years

Due after
Ten Years(Millions of yen)

Cash on hand and in banks
Trade notes and accounts receivable

As of May 31, 2013

(Thousands of U.S. dollars)

Cash on hand and in banks
Trade notes and accounts receivable

As of May 31, 2012$12,841
119,538$132,379$—12,742$12,742

$—
—
$—

$—
—
$—

Due in One Yearor Less

Due after One
Year throughFive Years

Due after Five
Years throughTen Years

Due after
Ten Years¥1,486
12,569¥14,055¥—
1,160¥1,160(Millions of yen)

Cash on hand and in banks
Trade notes and accounts receivable

¥—
—
¥—

¥—
—
¥—

4. The redemption schedule for long-term debt is disclosed in Note 6.

Liabilities:
Trade notes and accounts payable and short-term borrowings
Since these items are settled in a short period of time, their carrying value approximates fair value.
Bonds payable
The fair value of bonds payable is based on the present value of the total of principal and interest discounted by the interest rate to be applied if similar new bonds were
issued.
Long-term debt
The fair value of long-term debt is based on the present value of the total of principal and interest discounted by the interest rate to be applied if similar new borrowings
were entered into. The fair value of long-term debt with variable interest rates, which is hedged by the interest rate swaps and to which hedge accounting is applied (referto the following paragraph), is based on the present value of the total of principal and interest discounted by the interest rate to be applied if similar new borrowings wereentered into.
Derivative transactions
The fair value of interest rate swaps accounted for by the hedge accounting is included in the fair value of the related long-term debt, since such interest rate swaps areaccounted for together with long-term debt as hedged items.
2. Financial instruments for which it is extremely difficult to determine the fair value

As ofUnlisted equity securities

May 31,
2013

May 31,
2012(Millions of yen)¥700

May 31,
2013(Thousands of
U.S. dollars)¥766$6,925

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above financial instruments are not included in the above table.

51

Toyo Denki Seizo Report 201352

18. Securities

As of May 31, 2012

As of May 31, 2013

(1) Information regarding securities classified as available-for-sale securities(1) Information regarding securities classified as available-for-sale securities

Available-for-sale securities

Available-for-sale securities

As of May 31, 2012

As of May 31, 2013

Carrying value Acquisition cost

Unrealized
Gain (Loss)(Millions of yen)

Securities whose carrying value exceeds their acquisition cost:
Stock
Subtotal
Securities whose acquisition cost exceeds their carrying value:
Stock
Subtotal
Total

As of May 31, 2013

¥12,083¥12,083¥6,777¥6,777¥5,306¥5,306¥535¥535¥12,618

¥575
¥575
¥7,352¥(40)¥(40)¥5,266

Carrying value Acquisition cost

Unrealized
Gain (Loss)(Thousands of U.S. dollars)

Securities whose carrying value exceeds their acquisition cost:
Stock
Subtotal
Securities whose acquisition cost exceeds their carrying value:
Stock
Subtotal
Total$66,979$66,979$52,437$52,437$5,289$5,289$124,705$5,685$5,685$72,664$(396)$(396)$52,041

Note: Unlisted stocks are not included in the above table because there were no quoted market prices available and they are extremely difficult to determine
the fair value.

(2) Impairment of investment securities
No impairment loss on investment securities was recognized for the year ended May 31, 2013.

For the Year ended May 31, 2013

Sales proceeds

Gain on sales

Loss on sales(Millions of yen)Stock

For the Year ended May 31, 2013

¥127
Sales proceeds

¥72

¥—

Gain on sales

Loss on sales¥5,305¥5,305¥3,966¥3,966¥1,339¥1,339¥2,859¥2,859¥8,164¥3,429¥3,429¥7,395¥(570)¥(570)¥769

Note: Unlisted stocks are not included in the above table because there were no quoted market prices available and they are extremely difficult to determine
the fair value.

(2) Impairment of investment securities

Stock

May 31,
2012(Millions of yen)

¥23(3) Sales of securities classified as available-for-sale securities and the aggregate gain and loss for the year ended May 31, 2012
No securities classified as available-for-sale securities were sold for the year ended May 31, 2012.
19. Supplementary Cash Flow Information
Cash and cash equivalents in the consolidated statements of cash flows for the years ended May 31, 2013 and 2012 are reconciled to
cash on hand and in banks in the consolidated balance sheets as follows:

As of(3) Sales of securities classified as available-for-sale securities and the aggregate gain and loss for the year ended May 31, 2013

Unrealized
Gain (Loss)(Millions of yen)

Securities whose carrying value exceeds their acquisition cost:
Stock
Subtotal
Securities whose acquisition cost exceeds their carrying value:
Stock
Subtotal
Total

For the Year Ended$119,416$119,416

Carrying value Acquisition cost

Cash on hand and in banks
Cash and cash equivalents

May 31,
2013

May 31,
2012(Millions of yen)

¥1,302¥1,302

May 31,
2013(Thousands of
U.S. dollars)¥1,489
¥1,489$12,873$12,873(Thousands of U.S. dollars)

Stock

53

$1,259$719$—

Toyo Denki Seizo Report 201354

20. Derivative Transactions
Hedging policies
The Company utilizes interest rate swaps for the purpose of hedging its exposure to fluctuations in interest rates. However, based oninternal management rules on financial market risk approved by the Company’s Board of Directors, Group companies do not enter
into transactions involving derivatives for speculative or trading purposes.
Types and purpose of derivative transactions

21. 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 Board of Directors to make decisions about resource allocation and to assess performance.
The Group establishes business units by product and each business unit designs domestic and overseas comprehensive strategies
for its products and is developing business activities. Accordingly, the Group consists of the three reportable segments by productbased on the business units, which are Transportation Systems, Industrial Systems and Information Equipment Systems.
The accounting policies of the segments are substantially the same as those described in the significant accounting policies inNote 1. Segment profit is evaluated based on operating income.
Inter-segment sales are recorded at the same prices used in transactions with third parties.

The Company primarily uses interest rate swaps to hedge against the adverse impact of fluctuations in interest rates on interestbearing debt.
There is no derivative transaction to which hedge accounting is not applied.

Transportation

Interest-related derivatives:

Major hedged
item

Notional amount
Maturing within Maturing after
one year
one year

Fair value(Millions of yen)Interest rate swaps:
Receive/floating and pay/fixedLong-term debt

As of May 31, 2013

Major hedged
item¥5,789¥4,988

Notional amount
Maturing within Maturing after
one year
one year

Note

Fair value(Thousands of U.S. dollars)Interest rate swaps:
Receive/floating and pay/fixedLong-term debt

As of May 31, 2012

Major hedged
item$57,215$49,298

Notional amount
Maturing within Maturing after
one year
one year

Sales, profits orlosses and asset byreportable segments
Net sales:
Sales to third parties
Inter-segment sales
and transfers

Other(Note)

Total

Adjustments

Consolidated¥11,543¥1,701¥6¥30,575¥—¥30,575

2
11,545¥434¥8,614

—
1,701
¥265
¥823

545
551
¥41
¥525

584
31,159¥2,654¥26,642(584)—

Segment profit
Segment assets

37
17,362¥1,914¥16,680(584)¥(2,153)¥15,722

30,575¥501¥42,364

Other items:
Depreciation
Capital expenditures

¥691
¥792

¥239
¥159

¥28
¥29

¥0
¥—

¥958
¥980

¥186
¥316

¥1,144¥1,296

Total

Adjustments

Consolidated

Note
For the year ended May 31, 2013
Reportable segments

Fair value

Transportation

Industrial

Information
Equipment

Other(Note)(Thousands of U.S. dollars)Long-term debt

¥2,870¥1,989Note

Note: Interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but the differential paid or received
under the swap agreement is recognized and included in interest expenses. Accordingly, the fair value of interest rate swaps is included in the fair value of long-term
debt. The notional amount of long-term debt includes current portion of long-term debt.

55

Information
Equipment¥17,325(Millions of yen)Interest rate swaps:
Receive/floating and pay/fixedIndustrial(Millions of yen)

Derivative transactions to which hedge accounting is applied:

As of May 31, 2013

For the year ended May 31, 2013
Reportable segments

Sales, profits orlosses and asset byreportable segments
Net sales:
Sales to third parties
Inter-segment sales
and transfers$171,229$114,083$16,813$60$302,185$—$302,185

Segment profit
Segment assets

368
171,597$18,915$164,851

15
114,098$4,287$85,132—
16,813$2,622$8,138

5,390
5,450
$408
$5,1895,773
307,958$26,232$263,310(5,773)(5,773)$(21,278)$155,393—
302,185$4,954$418,703

Other items:
Depreciation
Capital expenditures$6,823$7,828$2,364$1,576

$276
$288

$3
$—

$9,466$9,692$1,842$3,120$11,308$12,812

Toyo Denki Seizo Report 2013

56

Report of Independent Auditors

For the year ended May 31, 2012
Reportable segments
Transportation

Industrial

Information
Equipment

Other(Note)

Total

Adjustments

Consolidated(Millions of yen)

Sales, profits orlosses and asset byreportable segments
Net sales
Sales to third parties
Inter-segment sales
and transfers¥23,992¥12,265¥2,304¥10¥38,571¥—¥38,571

Segment profit
Segment assets

36
24,028¥2,702¥15,338

1
12,266¥253¥8,712

—
2,304
¥666
¥1,119

852
862
¥54
¥567

889
39,460¥3,675¥25,736

(889)
(889)
¥(1,974)¥12,350—
38,571¥1,701¥38,086

Other items:
Depreciation
Capital expenditures

¥691
¥869

¥257
¥193

¥30
¥8

¥2
¥0

¥980
¥1,070

¥166
¥238

¥1,146¥1,308

Note: “Other” represents business units which are not included in reportable segments and consists of backbone system control and worker dispatching service related
activities.

Geographical information
Net sales to third parties by countries or areas grouped according to geographical classification for the years ended May 31, 2013
and 2012 are summarized as follows:

For the Years Ended

May 31,
2013

Japan
China
Other
Consolidated¥23,341
5,495
1,739¥30,575

May 31,
2012(Millions of yen)

¥25,200
10,082
3,289¥38,571

May 31,
2013(Thousands of
U.S. dollars)$230,685
54,315
17,185$302,185

Note: Net sales information above is based on customers’ location.

Major customer information
Major customer information for the year ended May 31, 2013 is omitted since there was no customer to whom sales exceeds 10% of
net sales recorded in the accompanying consolidated statements of income.

For the Years Ended
Major customer/ related reportable segment
Meiji Sangyo K.K./ Transportation Systems

57

May 31,
2012(Millions of yen)

¥4,102

Toyo Denki Seizo Report 201358

Reference Data for Management Indices

Depreciation and amortization (Unit: Million yen)

2009

2010

2011

913

917
719

798

826

1,145

950

1,296

1,307

1,142

958

2,073
1,050
FY 2008

Research and development costs (Unit: Million yen)

1,144

(Unit: Million yen)

1,169

Capital investment

Company Profile

2012

FY 2008

2009

2010

2011

2012

FY 2008

2009

2010

2011

2012

Company Profile
Company NameTOYO DENKI SEIZO K.K.
(TOYO ELECTRIC MFG. CO., LTD.)

Established

June 20, 1918

Capital4,998,390,000 yen

Number of Employees

1,170 (Consolidated) 791 (TOYO DENKI SEIZO K.K.)

Head Office

Tokyo Tatemono Yaesu Building,
1-4-16, Yaesu, Chuo-ku, Tokyo, 103-0028, Japan
TEL +81-3-5202-8121 (General Affairs Division)
http://www.toyodenki.co.jp/

Stock Exchange Listing

The Tokyo Stock Exchange, First Section

Code Number

6505

Number of Shares Authorized

180,000,000 shares

Number of Shares Issued

48,675,000 shares

Number of Shareholders

Cash flows from operating activities (Unit: Million yen)

Cash flows from investing activities (Unit: Million yen)
2009

2010

2011

2012

Taihei Electric Co., Ltd.

OthersOkinawa
Branch-1,457TOYO DENKI USA, INC.
Toyo Denki (Beijing) Co., Ltd.

836
China

Head office building

ELETT CORPORATION

2009

155

FY 2008

Taiping Zhanyun Automatic Door (Changzhou) Co., Ltd.
Hunan Xiangyang Electric Co., Ltd.
Changzhou Ruiyang Transmission Technology Co., Ltd.

2010

2011

Net sales by region
Japan

Kyushu Branch

NagoyaOsaka Branch
BranchToyo Shoji Co., Ltd.

468

2012

Hiroshima
BranchYokohama
Plant

TD Drive Co., Ltd.

448

2011

7,365

Toyo Sangyo Co., Ltd.

-3,345-1,3282010

Yokohama Branch

TOYOKOUKI Co., Ltd.

-2,148-1,643-1,555

1,069

673
2009

Niigata Branch

Subsidiaries and Affiliates

1,771
FY 2008

Sendai Branch

Shiga Factory

Cash flows from financing activities (Unit: Million yen)

2,563

2,495

FY 2008

Hokkaido Branch

2012

Yokohama Plant(Unit: Million yen)Overseas net sales ratio

FY 2008

2009

2010

2011

2012

Japan

29,02328,35827,83525,20023,340China*

3,436

4,873

8,110

10,081

5,495

Others

767

2,198

1,947

3,289

1,738

Total

33,22635,42937,89338,57030,575

Overseas net sales
ratio

12.7%

20.0%

26.5%

34.7%

23.7%

Toyo Denki (Beijing) Co., Ltd.
Hunan Xiangyang Electric Co., Ltd.
TOYO DENKI SEIZO K.K. DELHI LIAISON OFFICETOYO DENKI USA, INC.

Changzhou Ruiyang Transmission Technology Co., Ltd.
Taiping Zhanyun Automatic Door (Changzhou) Co., Ltd.

*Reported classified as Asia from fiscal 2008 to fiscal 2010.

FY 2008

59

2009

2010

2011

2012

Toyo Denki Seizo Report 201360

Executive Profiles

Organization Chart
Management Planning Division

Group Administration Office
General Affairs Division

Human Resources Division
Financial Affairs Division

Yoshio Hosoda

Director

Director

Director

Director

Hiroshi Shimotakahara

Masami Tsuchiya

Yoshihiko Yoshino

Hiroyuki Arai

National and Global
Group Company
Meetings

Executive Officer
Liaison Meeting

Management Strategy
Meeting

President

Transportation Business Unit

Internal Control Oversight Committee

Audit Officer

Managing Director

Business Development Division

Audit Division

Statutory
Auditors

Kenzo Terashima

Board of Directors

Hiroshi Tsuchida

Corporate Quality Control DivisionCorporate Production Planning Division
Purchasing Center

Board of
Statutory
Auditors

President, Representative Director

General Meeting of Shareholders

Chairman, Representative Director

Industry Business Unit

IT Business Unit

Standing Statutory Auditor

Standing Statutory Auditor

Statutory Auditor

Statutory Auditor

Kazuya Otake

Akira Isogai

Rikio Takezawa

Toshio Ikeda

Executive Officers

Hisashi Sone
Kenichi Gotoh
61

Shinya Koizumi
Ryoichi Kaneko

Hitoshi Katayama
Isami Takase

Shuji Horie
Akihiko Ishii

Yoshifumi Otsubo

Research Laboratory
Yokohama Plant
Osaka Branch
Nagoya BranchManagement Planning Department
PR, IR, and CSR Department
Information Systems Department
General Affairs Department
Legal Compliance Department
Intellectual Property Management Department
Human Resources Department
Education and Development Department
Finance and Accounting Department
Group Administrative Control Department

Purchasing Planning Division
Purchasing Division
Business Development Planning Department
EV Systems Department
EV Quality Control Department
Transportation Business Planning Division
Transportation Systems Quality Control Division
JR Group Sales Division
Commuter Rail and Subway Sales Division
Osaka Sales Division
Nagoya Sales Division
Engineering Division
China Sales Division
Global Sales Division
India Promotion Office
Global Engineering Division
Development Division
Transportation Systems Works
Production Management Division
Design Division
Quality Assurance Division
Manufacturing Division
Industrial Systems Planning Division
Global Strategy Division
Domestic Strategy Division
Osaka Sales Division
Nagoya Sales Division
Engineering Division
Industrial Systems Works
Production Management Division
Design, Development & Engineering Division
Quality Assurance Division
Shiga Factory
Manufacturing Division
Information Equipment Systems Planning Division
Information Systems Sales Division
Monitoring and Control Systems Development Division
Information Systems Works
Design Division
Quality Assurance Division
Engineering Management Division
Engineering Research Division
Administration Division

Kyushu Branch
Hokkaido Branch
Toyo Denki Seizo Report 2013

62

Stock Related Information

Number of shares (As of May 31, 2013)
Number of shares authorized

180,000,000

Number of shares issued

48,675,000

Number of shareholders

7,365

Distribution of shares by type of shareholder
Financial instruments
business operators
1.64%

Major shareholders
Shareholders

Number of shares held(Thousands)% of total
shares held

NIPPON LIFE INSURANCE COMPANY

2,533

5.25

East Japan Railway Company

2,400

4.98

TOYOTA INDUSTRIES CORPORATION

2,100

4.36

Hitachi, Ltd.

2,100

4.36

Employees Stock Ownership Plan

1,855

3.85

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

1,351

2.80

The Bank of Yokohama, Ltd.

1,038

2.15

Ohkuraya Juutaku Co., Ltd.

1,030

2.14

Toyo Denki Subcontract factories shareholding Association

896

1.86

TSUKISHIMA KIKAI CO., LTD.

798

1.66

Treasury stock
0.95%

Foreigncorporations, etc.
4.05%
Financial
institutions
19.78%

Other
corporations
26.36%

Individuals
and others
47.22%(Note) ‌The percentages of total shares held are calculated excluding 464,000
treasury stocks held by the Company.

Transition of share price
Share price
(Yen)
(Yen)
600

600
400
400
200
200

Trading volume00(Thousands)(Thousands)
12,00012,000

8,000
8,000
4,000
4,000
0
0

2010.6
2010.62011.1
2011.12012.12012.1

2013.1
2013.1

Disclaimer on the forward-looking statements
Information in this corporate report contains forward-looking statements. Such statements were developed based on theinformation available at the time when this report was prepared. These forward-looking statements may be largely revised in the
future, and the actual outcome could significantly vary from the stated or implied contents of such statements subject tovarious factors. This report is not intended to solicit investment. Investors are kindly asked to make your investment decision atyour own judgment and responsibility. Numbers presented in 100 million yen or million yen are rounded down to the nearest
respective unit.

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