Financial Performance (Consolidated)

Operating Results

Cash FlowsNet Sales

At year-end, cash and cash equivalents stood at ¥49,152
million (US$409 million), increase ¥6,854 million from a year
earlier.

Net sales increased ¥5,955 million, or 3.2% year on year, to¥194,674 million (US$1.619 million), owing to increase in the
Industrial Machinery Products Business.

Cash Flow from Operating Activities

Operating Income

Net cash provided by operating activities was ¥11,580
million (US$96 million), compared with ¥11,549 million in theprevious year. Primar y factors included a year-on-year
decrease in income before income taxes. This contrasted
with provision for loss on wind power business, which did
not involve cash outflows.

Operating income declined ¥647 million, or 7.3%, to ¥8,217
million (US$68 million). The operating income margin stoodat 4.2%, a 0.5 percentage-point decline compared with theprevious year.
Net Income

Cash Flow from Investing Activities

As a result, the Group posted a net loss of ¥3,740 million(US$31 million), compared with net income of ¥5,527 million(US$45 million) in the previous fiscal year. This equates to
net loss of ¥10.10 for the period on a per-share basis.

Net cash used in investing activities was ¥2,675 million(US$22 million), compared with ¥5,719 million a year earlier.
The main factor was proceeds from sale of investment
securities.

Sales by Region
The Japanese market accounted for sales of ¥100,417 million(US$835 million), the Chinese market for ¥29,131 million(US$242 million), with all other markets accounting for¥65,125 million (US$541 million).

2013

2011

2012

2013

2014

2015

Millions of yen
40,00045

30,00030

20,00015

10,000

0

0

2011

2012

2013

11,5802012%
60

11,5492011

Net Cash Provided byOperating Activities

23,735

48.4

49.1

52.3

40,0000024

94,256

2015

92,752

8,217

2014

115,472

8,864

10,00080,00016,68020,00049.8

120,000

110,21130,000113,858

160,000

23,911Millions of yen

40,00028,495

Millions of yen

53.5% of total sales

32,507

Overseas Sales

21,774

Operating Income

2014

2015

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

Financial Position
Cash Flow from Financing Activities

Total assets at March 31, 2015, stood at ¥321,083 million(US$2,671 million), increase ¥27,944 million, or 9.5%, fromthe close of the previous year. This was due to an increase incurrent assets stemming mainly from rises in cash and cash
equivalents, notes and accounts receivable, and deferred
tax assets.
Total liabilities were ¥181,261 million (US$1,508 million)
at year-end, increase ¥27,391 million, or 17.8%, from theclose of the previous year. This was due to an increase incurrent liabilities caused mainly by a rise in prepaid
expenses and provision for loss on wind power business.
Interest-bearing debt was ¥41,346 million (US$344 million),increase ¥745 million.
Net assets stood at ¥139,821 million (US$1,163 million),up ¥552 million, or 0.4%, from the previous year. This wasdue mainly to an increase in unrealized holding gain on
securities, which contrasted with a decrease in retained
earnings stemming from the net loss.

Net cash used in financing activities was ¥2,964 million(US$24 million), compared with ¥15,007 million a year earlier.
The main factor was syndicated loan repayments made in
the previous fiscal year.

Interest-Bearing Debt
Millions of yen

41,346

2012

20,00042,092

2011

40,00053,24263,60760,00065,68580,000

2014

2015

0

Equity Ratio
%

10

15

0

2011

2012

2013

2014

2015

4.1

30

0

0

20

6.3

43.0

43.8

39.2

30

(2.7)

40,00045

35.3

139,821

139,268

134,368

128,613120,82080,000%60

160,000

47.1

Millions of yen

120,000

ROE

10.2

Net Assets

14.4

2013

-10

2011

2012

2013

2014

2015

2011

2012

2013

2014

2015

25

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheet
March 31, 2015 and 2014

Assets

2014

Millions of yen

Thousands of
U.S. dollars(Note 4)

2015

2015

Current assets:
Cash on hand and in banks (Notes 14 and 16)
Notes and accounts receivable:
Unconsolidated subsidiaries and affiliates
Trade (Note 16)
OtherLess allowance for doubtful accounts
Inventories (Note 5)
Deferred tax assets (Note 20)
Other current assets¥ 42,329¥ 49,176 $ 409,220

376
48,520540(310)
65,488
5,374
5,155

204
56,482
179(157)
68,856
9,252
7,529

1,698
470,017
1,490(1,306)572,988
76,99162,653

167,476

191,523

1,593,767

Land
Buildings and structures
Machinery and equipment
Leased assets
Construction in progress

10,50996,456
141,603
3,799
559

10,897
98,195
142,705
3,843
1,404

90,680817,134
1,187,526
31,98011,683

Less accumulated depreciation

252,928(167,255)

257,046 2,139,020(174,270) (1,450,196)

Total current assets

Property, plant and equipment, at cost (Notes 6 and 7):

Property, plant and equipment, net

Intangible assets

85,67282,775

688,816

855

718

5,975

1,009
32,444
88
2,427
1,249
2,487
(572)

1,003
38,731
74
3,063
1,065
2,714
(588)

8,347
322,302616
25,4898,862
22,585(4,893)39,13446,065383,332

Investments and other assets:
Investments in unconsolidated subsidiaries and affiliates
Investment securities (Notes 16 and 17)
Long-term loans receivable
Retirement benefit asset (Note 19)
Deferred tax assets (Note 20)
Other assets
Less allowance for doubtful accounts
Total investments and other assets
Total assets

26¥293,139¥321,083 $2,671,906

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

Liabilities and Net Assets

2014

Millions of yen

Thousands of
U.S. dollars(Note 4)

2015

2015

Current liabilities:
Short-term borrowings (Notes 9 and 16)
Current portion of long-term debt (Notes 9 and 16)
Notes and accounts payable:
Unconsolidated subsidiaries and affiliates
Trade (Note 16)
Other
Advances received for products
Accrued income taxes (Note 20)
Provision for loss on wind power generator business (Note 3)
Other current liabilities¥ 12,292
3,454¥ 12,255 $ 101,981
21,768181,14370
42,2681,059
22,0481,802—
15,85280
42,167
2,563
34,697
1,171
13,203
17,439666
350,895
21,328288,733
9,745
109,869
145,119

98,848145,349

1,209,528

Long-term debt (Notes 9 and 16)
Accrued retirement benefits (Note 19)
For directors and corporate auditors
Retirement benefit liability (Note 19)
Deferred tax liabilities (Note 20)
Other long-term liabilities

26,345

7,322

60,930115
10,405
1,391
16,761

109
10,8573,064
14,559907
90,34725,497
121,153

Total long-term liabilities

55,02135,912

298,843

19,694
5,425
110,635(730)

19,694
5,425
104,916(731)

163,884
45,144873,063(6,083)135,026

129,305

1,076,017

4,293
(130)
(96)
(1,042)

9,195
(194)
239
(399)

76,517(1,614)
1,989(3,320)

3,024

8,839

73,554

1,218

1,676

13,947

Total net assets

139,268

139,821

1,163,527

Total liabilities and net assets¥293,139¥321,083 $2,671,906

Total current liabilities
Long-term liabilities:

Net assets:
Shareholders’ equity (Note 13)
Common stock:
Authorized—1,000,000,000 shares
Issued—371,463,036 shares
Capital surplus
Retained earnings
Treasury stock, at cost (1,192,297 shares in 2015 and 1,189,350 shares in 2014)
Total shareholders’ equity
Accumulated other comprehensive income:Unrealized holding gain (loss) on securities
Unrealized gain (loss) from hedging instruments
Translation adjustments
Remeasurement of retirement benefit plans
Total accumulated other comprehensive income
Minority interests

The accompanying notes are an integral part of these statements.

27

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Income
For the years ended March 31, 2015 and 2014

2014

Thousands of
U.S. dollars(Note 4)

2015

2015

Net sales¥188,719¥194,674 $1,619,988

Cost of sales (Note 10)

153,137

158,488

1,318,865

35,581

36,186

301,123

26,717

27,969232,745

8,864

8,217

68,378

756
(424)
—
308

718
(264)
(15,967)
3,277

5,975
(2,197)(132,870)
27,270639(12,235)(101,814)

Income before income taxes and minority interests

9,504(4,017)(33,428)

Income taxes (Note 20):
Current
Deferred

3,530
344

3,534
(4,026)

29,408(33,503)

Income before minority interests
Minority interests in net income of consolidated subsidiaries

5,629
102

(3,525)
215(29,333)
1,789

Gross profit
Selling, general and administrative expenses (Note 10)
Operating income
Other income (expenses):
Interest and dividend income
Interest expense
Provision for loss on wind power generator business
Other, net (Note 11)

Net income (Note 26)
The accompanying notes are an integral part of these statements.

28

Millions of yen¥ 5,527¥ (3,740) $ (31,123)

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Comprehensive Income
For the years ended March 31, 2015 and 2014

Millions of yen

Thousands of
U.S. dollars(Note 4)

2014

2015

2015

Income before minority interests
Other comprehensive income:Unrealized holding gain (loss) on securities
Unrealized gain (loss) from hedging instruments
Translation adjustments
Retirement benefits plans adjustments¥5,629¥(3,525)$(29,333)

2,817
202
390
—

4,902
(64)
358
617

40,792
(533)
2,979
5,134

Total other comprehensive income (Note 11)

3,410

5,814

48,381

Comprehensive income¥9,039¥2,288$ 19,040

Total comprehensive income attributable to:Shareholders of The Japan Steel Works, Ltd.
Minority interests¥8,924¥ 114¥2,074¥ 213$ 17,259$ 1,772

The accompanying notes are an integral part of these statements.

29Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Changes in Net Assets
For the years ended March 31, 2015 and 2014
Millions of yen

Shareholders’ equity

Commonstock

CapitalsurplusRetainedearnings

Accumulated other comprehensive income

Treasurystock(Note 13)

Total
Retirement
accumulated
benefitUnrealized Unrealizedotherliability
holding gain gain (loss)
Total
shareholders’ (loss) on from hedging Translation adjustments comprehensive
securities instruments adjustments (Note 19)
equityincomeTotal net
assets—¥ 668¥1,131 ¥134,368—

668

1,131 134,368¥19,694
Balance at April 1, 2013
Cumulative effect of change inaccounting principle (Note 2)
19,694
Restated balance at April 1 ,2013
Changes during the year
Cash dividends paid
Net income
Purchases of treasury stock
Changes in the scope of consolidation
Net changes in items other thanthose in shareholders’ equity—
Total changes during the year
Balance at March 31, 2014 ¥19,694¥5,425 ¥107,861¥(413) ¥132,568¥1,475¥(332)¥(474)

5,425

107,861(413) 132,568

1,475

(332)

(474)

(2,781)
5,527(2,781)
5,527
(316)
28

—
2,774
¥5,425 ¥110,635

(316)
2,457
¥(730) ¥135,026

2,817
2,817
¥4,293202
202¥(130)

377(1,042)(1,042)377¥ (96) ¥(1,042)

2,355
2,355
¥3,024

86
2,422
86
4,900
¥1,218 ¥139,268¥19,694
Balance at April 1, 2014
Cumulative effect of change inaccounting principle (Note 2)
19,694
Restated balance at April 1 ,2014
Changes during the year
Cash dividends paid
Net loss
Purchases of treasury stock
Disposal of treasury stock
Changes in the scope of consolidation
Net changes in items other thanthose in shareholders’ equity—
Total changes during the year
Balance at March 31, 2015 ¥19,694¥5,425 ¥110,635¥(730) ¥135,026¥4,293¥(130)¥ (96) ¥(1,042)¥3,024¥1,218 ¥139,268(555)
110,080(555)(730) 134,471

4,293

(130)

3,024

(555)
1,218 138,713(1,666)(3,740)(1,666)(3,740)
(1)
0
242

(316)

28

5,425

(0)

(1)
0

242

(1) (5,165)¥(731) ¥129,305(0) (5,164)¥5,425 ¥104,916¥

Minority
interests(2,781)
5,527
(316)
28

(96)

(1,042)(1,666)(3,740)
(1)
0
242
4,902
4,902
¥9,195(64)(64)¥(194)

335
335
¥ 239

642
642
¥ (399)

5,815
5,815
¥8,839

457
6,273
457
1,107
¥1,676 ¥139,821

Thousands of U.S. dollars (Note 4)

Shareholders’ equity

Total
Retirement
accumulated
benefitUnrealized Unrealizedotherliability
holding gain gain (loss)
Total
shareholders’ (loss) on from hedging Translation adjustments comprehensive
securities instruments adjustments (Note 19)
equityincomeCommonstock

CapitalsurplusRetainedearnings

Treasurystock(Note 13)$163,884
Balance at April 1, 2014
Cumulative effect of change inaccounting principle (Note 2)
Restated balance at April 1 ,2014 163,884
Changes during the year
Cash dividends paid
Net loss
Purchases of treasury stock
Disposal of treasury stock
Changes in the scope of consolidation
Net changes in items other thanthose in shareholders’ equity—
Total changes during the year
Balance at March 31, 2015 $163,884$45,144$920,654$(6,075) $1,123,625$35,724$(1,082)$ (799)$(8,671)$25,164$10,136 $1,158,925

45,144(4,618)916,036(4,618)(6,075) 1,119,006

35,724(1,082)(799)(8,671)

25,164(4,618)
10,136 1,154,306(13,864)(31,123)(13,864)(31,123)
(8)
0
2,014

(0)

2,014

(0)
(42,972)$45,144 $873,063

The accompanying notes are an integral part of these statements.

30

Accumulated other comprehensive income(8)0(8) (42,981)$(6,083) $1,076,017

Minority
interests

Total net
assets(13,864)(31,123)
(8)
0
2,014
40,79240,792$76,517

(533)
(533)
$(1,614)

2,788
2,788
$1,9895,342
5,342$(3,320)

48,39048,390$73,554

3,803
52,201
3,803
9,212$13,947 $1,163,527

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Cash Flows
For the years ended March 31, 2015 and 2014

Millions of yen

Thousands of
U.S. dollars(Note 4)

2014

2015

2015

¥ 9,504
12,878
(756)
424
0
(65)
147
(46)
—
—
—
44

¥ (4,017)
10,936
(718)
264
0
(6)
343
(2,214)(218)(709)
13,20355$ (33,428)
91,004(5,975)
2,197
0
(50)
2,854
(18,424)(1,814)(5,900)109,869458

2,827(2,219)(5,772)(1,643)

3,834
(322)
(3,243)(1,860)31,905(2,680)(26,987)(15,478)

15,323

15,325

127,528754(435)(4,093)712(255)(4,201)

5,925(2,122)(34,959)

11,54911,58096,363(4,610)
138
86
(821)
(223)
(17)
14
—
(79)
—
(206)

(5,392)
260
2,835
(11)
(192)
215
13
(200)
(56)
3
(151)

(44,870)
2,164
23,592(92)(1,598)1,789
108(1,664)(466)
25(1,257)

Net cash used in investing activities(5,719)(2,675)(22,260)

Financing activities (Notes 9 and 16)
Net decrease in short-term borrowings
Increase in long-term debt
Decrease in long-term debt
Cash dividends paid
Acquisition of treasury stock
Repayments of finance lease obligations
Other

(411)
200
(10,740)(2,781)
(316)
(955)
(2)

(37)
2,250
(2,712)(1,668)
(1)
(803)
8

(308)
18,723(22,568)(13,880)(8)(6,682)67

Net cash provided by (used in) financing activities(15,007)(2,964)(24,665)

Effect of exchange rate changes on cash and cash equivalents

432

415

3,453

(8,744)50,972

6,356
42,29752,892351,976

Operating activities

Income before income taxes and minority interests
Depreciation and amortization
Interest and dividend income
Interest expense
Equity in (earnings) losses of affiliates(Gain) loss on sales of investment equipment
Loss on disposal of tangible and intangible assets(Gain) loss on sales of property, plant and securities
Gain on bargain purchase
Gain on settlement of long-term guarantee deposited
Increase (decrease) in provision for loss on wind power generator business
Loss on valuation of shares of subsidiaries and associates
Changes in operating assets and liabilities:
Trade assets (Note 16)
Trade liabilities
Inventories (Note 5)
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities

Investing activities
Increase in tangible and intangible assets
Decrease in tangible and intangible assets
Proceeds from sale of investment securities
Purchases of investment securities
Reimbursement of long-term deposits on contracts(Increase) decrease in short-term loans receivableCollection of long-term loans receivable
Payments for transfer of business
Purchase of investments in subsidiaries
Proceeds of investments in subsidiaries
Other(Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Increase in cash and cash equivalents resulting from merger
Cash and cash equivalents at end of the year (Notes 14 and 16)

69

498

4,144

¥42,297¥ 49,152$ 409,021

The accompanying notes are an integral part of these statements.

31

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements

32

1. Basis of Presentation
The Japan Steel Works, Ltd. (the “Company”) and its domestic
subsidiaries maintain their books of account in conformity with thefinancial accounting standards of Japan, and its foreign subsidiaries
maintain their books of account in conformity with those of theirrespective countries of domicile.
The accompanying consolidated financial statements have been
prepared in accordance with accounting principles generally acceptedin Japan, which are different in certain respects as to the applicationand disclosure requirements of IFRS, and have been compiled from theconsolidated financial statements prepared by the Company as
required by the Financial Instruments and Exchange Law of Japan.
As permitted by the Financial Instruments and Exchange Law ofJapan, amounts of less than one million yen have been omitted. As aresult, the totals shown in the accompanying consolidated financial
statements (both in yen and in U.S. dollars) do not necessarily agreewith the sums of the individual amounts.
Certain amounts in the prior year’s consolidated financial
statements have been reclassified to conform to the current year’s
presentation.

(b) Foreign currency translation
The balance sheet accounts of the foreign consolidated subsidiaries aretranslated into yen at the rates of exchange in effect at the balance sheet
date, except for the components of net assets excluding minority
interests which are translated at their historical exchange rates. Revenue
and expense accounts are translated at the average rates of exchange in
effect during the year. Differences arising from the translation arepresented as translation adjustments and minority interests in the
consolidated financial statements.
Revenue and expense items arising from transactions denominatedin foreign currencies are generally translated into yen at the rates of
exchange in effect at the respective transaction dates.
All monetary assets and liabilities denominated in foreign
currencies are translated into yen at the rates of exchange in effect at thebalance sheet date and differences arising from the translation are
included in the consolidated statements of income.

2. Summary of Significant Accounting Policies(a) Principles of consolidation and accounting for investments inunconsolidated subsidiaries and affiliates
The accompanying consolidated financial statements include theaccounts of the Company and any significant companies controlled
directly or indirectly by the Company.
Companies over which the Company exercises significant influencein terms of their operating and financial policies have been accounted
for by the equity method. All significant intercompany balances andtransactions have been eliminated in consolidation.
As of March 31, 2015, the numbers of consolidated subsidiaries, andsubsidiaries and affiliates accounted for by the equity method were 31
and 1 (34 and 1 in 2014), respectively. MURORAN ENVIRONMENT PLANTSERVICE, CO., LTD. was included in the scope of consolidation due to its
increased significance. JSW Plastics Machinery Service CO., LTD. wasabsorbed by the Company. Nikko Design Co., Ltd. , Nikko Casting Co.,
Ltd. and JSW Clad Steel Company Co., Ltd. which was consolidated
subsidiary in the previous fiscal year was absorbed by Nikko Kouei Co.,
Ltd. in accordance with the merger. Nikko Kouei Co., Ltd. has changed
corporate name to Nikko MEC Co., Ltd.
Certain foreign subsidiaries are consolidated on the basis of fiscal
periods ended December 31, which differ from that of the Company.
However, the necessary adjustments have been made if the effect of thedifference is material.
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 suchinvestments, the Company has written them down.
Differences between the cost and the underlying net equity at fairvalue of investments in consolidated subsidiaries and in companies
accounted for by the equity method have been amortized by thestraight-line method over five years after acquisition and are included inselling, general and administrative expenses.

(d) Inventories
Real estate held for sale, finished products and work in process arestated at the lower of cost or net realizable value determined principallyby the specific identification method. Raw materials are stated at thelower of cost or replacement cost determined principally by the moving
average method.

(c) Cash equivalents
Short-term investments with a maturity of three months or less whenpurchased which can easily be converted to cash and are subject tolittle risk of change in value are considered to be cash equivalents.

(e) Investment securities
Marketable securities classified as other securities are carried at fair value
with changes in unrealized holding gain or loss, net of the applicable
income taxes, included directly in net assets. Non-marketable securities
classified as other securities are carried at cost. Cost of securities sold isdetermined by the moving average method.
(f) Allowance for doubtful accounts
The allowance for doubtful accounts is provided for possible bad debts
at an amount estimated based on the historical experience with bad
debts on normal receivables plus an additional allowance for specificuncollectible amounts determined by reference to the collectability of
individual doubtful accounts.
(g) Provision for warranties for completed construction
The Company provides a provision for warranties for completed
construction by estimating losses on possible future claims.
(h) Provision for loss on construction contracts
The Company provides a provision for loss on construction contracts,
which has not been delivered by the fiscal year end, by estimating theamount of total losses anticipated in the following fiscal year andthereafter to be incurred, when the amounts can be reasonably
estimated.

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report(i) Provision for loss on wind power generator business
The Company provides a provision for loss on wind power generator
business by estimating the amount of total losses caused by the defectsof certain parts used in wind power generators.
(j) Property, plant and equipment and depreciation
Property, plant and equipment is stated on the basis of cost.
Depreciation of property, plant and equipment is determined by the
declining-balance method over the estimated useful lives of therespective assets, except for buildings to which the straight-line method
is applied.
Significant renewals and additions are capitalized at cost.
Maintenance and repairs are charged to income as incurred(k) Leases and depreciation
Finance lease transactions which do not stipulate the transfer ofownership of the leased assets to the lessee are accounted for aspurchase and sales transactions.
With regard to the depreciation method of leased assets, thestraight-line method is applied using the lease period as the estimateduseful life and a residual value of zero.
(l) Retirement benefit
The retirement benefit obligation for employees is attributed to eachperiod by the benefit formula method.
Prior service cost is being amortized as incurred by the straight-line
method over ten years, which is shorter than the average remaining
years of service of the eligible employees.
Actuarial gain or loss is amortized in the year following the year inwhich the gain or loss is recognized by the straight-line method over ten
years, which is shorter than the average remaining years of service ofthe employees participating in the plans.
Certain subsidiaries use a simplified method in the calculation of
their retirement benefit obligation.
(m) Income taxes
Deferred tax assets and liabilities have been recognized in the
consolidated balance sheets with respect to the differences between
financial reporting and the tax bases of the assets and liabilities, and aremeasured using the enacted tax rates and laws which will be in effectwhen the differences are expected to reverse.
(n) Research and development expenses
Research and development expenses are charged to income whenincurred.
(o) Revenue and cost recognition
Revenues on sales of products are generally recognized at the time of
shipment.
Revenues and costs, of which the percentage of completion can bereliably estimated, are recognized by the percentage-of-completion
method. The percentage of completion is calculated at the cost
incurred as a percentage of the estimated total cost. The
completed-contract method is applied to contracts for which thepercentage of completion cannot be reliably estimated.

(p) Derivative financial instruments
Derivative financial instruments are carried at fair value. Gain or loss onderivatives designated as hedging instruments is deferred as acomponent of net assets until the loss or gain on the underlying hedged
items is recognized. Foreign currency receivables and payables aretranslated at the applicable forward foreign exchange rates whencertain conditions are met. In addition, the related interest differential
paid or received under interest-rate swaps utilized as hedging
instruments is recognized over the terms of the swap agreements as an
adjustment to the interest expense of the underlying hedged items
when certain conditions are met.
(q) Consumption tax
Accounting treatment of consumption tax is the tax exclusion method.
(r) Provision for directors’ bonuses
Provision for directors’ bonuses is provided based on estimatedamounts to be paid in the subsequent period that are applicable to thecurrent period.
(s) Provision for directors’ retirement benefits
Provision for directors’ retirement benefits is provided based on estimatedamounts determined by internal rules.
(t) Accounting changes
The Company and its domestic subsidiaries adopted Section 35 of“Accounting Standard for Retirement Benefits” (ASBJ Statement No.26
of May 17, 2012) and the main clause of Section 67 of “Guidance on
Accounting Standard for Retirement Benefits” (ASBJ Guidance No.25 ofMarch 26, 2015) effective from April 1, 2014. As a result, the method for
calculating the retirement benefit obligation and service cost have beenrevised in the following respects: the method for attributing projected
benefits to each period has been changed from the straight-line method
to the benefit formula method, and the method for determining thediscount rate has been changed to use a single weighted-average
discount rate reflecting the expected timing and amount of benefit
payments.
The cumulative effect of changing the method for calculating theretirement benefit obligation and service cost was recognized byadjusting retained earnings at April 1, 2014, in accordance with thetransitional treatment provided in Paragraph 37 of Accounting Standard
for Retirement Benefits.
As a result, retirement benefit liability increased by ¥712 million($5,925 thousand), retirement benefit asset decreased by ¥128 million($1,065 thousand) and retained earnings decreased by ¥555 million($4,618 thousand) at April 1, 2014. The effect of these changes on
consolidated operating income, loss before income taxes and minority
interests for the year ended March 31, 2015 was immaterial.
In addition, net assets per share decreased by ¥1.50 ($0.01), while
the effect of change on net loss per share was immaterial.

33

(u) Standards issued but not yet effective
Accounting standards for business combinations
On September 13, 2013, the ASBJ issued “Revised Accounting Standard
for Business Combinations” (ASBJ Statement No.21), “Revised
Accounting Standard for Consolidated Financial Statements” (ASBJ
Statement No.22), “Revised Accounting Standard for Earnings Per
share” (ASBJ Statement No.2) , “Revised Guidance on AccountingStandard for Business Combinations and Accounting Standard forBusiness Divestitures” (ASBJ Guidance No.10), and “Revised Guidanceon Accounting Standard for Earnings Per Share” (ASBJ Guidance No.4).
(1) Overview
Under there revised accounting standards, the accounting
treatment for any changes in a parent’s ownership interest in a
subsidiary when the parent retains control over the subsidiaryand the corresponding accounting for acquisition-related costs
were revised. In addition, the presentation method of net
income was amended, the reference to “minority interests” waschanged to “non-controlling interests,” and transitional
provisions for these accounting standards were also defined.
(2) Scheduled date of adoption
The Company expects to adopt these revised accounting
standards and guidance from the beginning of the fiscal year
ending March 31, 2016.
(3) Impact of adopting revised accounting standards and guidance
The Company is currently evaluating the effect of adopting
these revised standards on its consolidated financial
statements.
3. Additional Information
The Company has recorded Provision for loss on wind power generator
business, amounting to ¥15,967 million ($132,870 thousand), by
estimating the amount of total losses caused by the defects of certain
parts used in wind power generators. As a result, loss on wind power
generator business, amounting to ¥15,967 million ($132,870 thousand),has been recognized in Other income (expenses).
4. U.S. Dollar Amounts
The translation of yen amounts into U.S. dollars is included solely forconvenience, as a matter of arithmetic computation only, at ¥120.17 =U.S.$1.00, the approximate rate of exchange prevailing on March 31,
2015. This translation should not be construed as a representation that
all amounts shown could be converted into U.S. dollars at such rate.

34

5. Inventories
Inventories at March 31, 2015 and 2014 consisted of the following:
Millions of yen

Thousands of
U.S. dollars

2015

2015

2014
Real estate held for sale
Finished products
Work in process
Raw materials and supplies

¥
6
1,795
59,477
4,208

¥

6 $
50
2,096
17,442
61,517 511,916
5,234
43,555

Total¥65,488¥68,856 $572,988

Work in process related to construction contracts of which a loss isanticipated to be incurred was offset with a provision for loss on
construction contracts of ¥791 million ($6,582 thousand) at March 31,
2015 and ¥1,291 million at March 31, 2014.
6. Depreciation
Depreciation expense on property, plant and equipment for the years
ended March 31, 2015 and 2014 were as follows:

Depreciation expense

Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

¥12,950¥11,008$91,604

7. Advanced Depreciation
Accumulated advanced depreciation related to government grants
received has been deducted directly from the acquisition costs ofcertain tangible fixed assets (plant, machinery and equipment). Suchaccumulated depreciation at March 31, 2015 and 2014 are summarized
as follows:
Thousands of

Accumulated advanced
depreciation expense

Millions of yen

U.S. dollars

2014

2015

2015

¥1,286¥1,286$10,702

8. Contingent Liabilities
Contingent liabilities at March 31, 2015 and 2014 consisted of thefollowing:
Millions of yen

Thousands of
U.S. dollars

2015

2015

2014
As endorsers of trade notes
receivable:
Endorsed to otherAs guarantors of loans:
Muroran Environmental Plant
Service Co., Ltd.
Gotsu Wind Power Co., Ltd.
Employees and other

¥

98

526
1,385
153

¥

68

473
1,236
95

$

566
3,936
10,285791

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

9. Short-Term Borrowings and Long-Term Debt
All short-term borrowings, with interest at annual rates ranging from
0.4218% to 1.5293% at March 31, 2015 and 0.5118% to 1.975% at March
31, 2014, were unsecured.
Long-term debt at March 31, 2015 and 2014 were as follows:

2014
Loans from banks and insurancecompanies with interest aannual rates ranging
from 0.0300% to 1.8863%
Less those maturing within
one yearLease obligations
Less those maturing within
one year
0.48% straight bonds,
due 2015
Less those maturing within
one yearLong-term indebtedness
reflected in the consolidatedbalance sheets

Millions of yen

Thousands of
U.S. dollars

2015

2015

¥17,795¥17,332 $144,229(2,700)2,004(11,105)
1,758(92,411)
14,629

(754)

(663)

(5,517)

10,00010,00083,215—(10,000)(83,215)¥26,345¥ 7,322 $ 60,930

The aggregate annual maturities of long-term debt and leaseobligations subsequent to March 31, 2015 are summarized as follows:
Millions of yen

Year ending March 31,

2016
2017
2018
2019
2020
2021 and thereafterYear ending March 31,

2016
2017
2018
2019
2020
2021 and thereafterThousands of
U.S. dollars

Bonds

Millions of yen

Thousands of
U.S. dollars

Long-term loans¥ 10,000—————$83,215—————

Millions of yen

Thousands of
U.S. dollars¥11,105
240
4,095
52
40
1,800

$92,411
1,997
34,077433
333
14,979

10. Research and Development Expenses
Research and development expenses included in manufacturing costs,
and selling, general and administrative expenses for the years ended
March 31, 2015 and 2014 were as follows:

Research and development
expensesMillions of yen

Thousands of
U.S. dollars

2014

2015

2015

¥3,836¥4,104$34,152

11. Other Income (Expenses)—Other, Net
The details of “Other, net” in “Other income (expenses)” for the years
ended March 31, 2015 and 2014 were as follows:

Foreign exchange gain
Gain on settlement of long-term
guarantee deposited
Amortization of negative goodwill
Commission fee
Non-deductible consumption tax
Equity in losses of affiliates
Gain on sales of property, plantand equipment
Gain on sales of investment
securities
Gain on bargain purchase
Loss on sales or disposal ofproperty, plant and equipment
Loss on valuation of subsidiaries
and associates
Loss on business of subsidiaries
and associates
Other, net
Total

¥

Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

376

¥357

$2,971

—
71
—
(20)
(0)

709
71
(310)
(135)
(0)

5,900
591
(2,580)(1,123)
(0)

107

6

50

46
—

2,214
218

18,424
1,814

(147)

(343)

(2,854)

(44)

(55)

(458)

—
(81)

(6)
551

(50)
4,585

¥308

¥3,277$27,270

Lease obligations

¥663
495
342
180
71
5

$5,517
4,119
2,846
1,498
591
42

35

12. Other Comprehensive Income
The following table presents reclassification adjustments and tax
effects allocated to each component of other comprehensive income
for the years ended March 31, 2015 and 2014:

2014
Unrealized holding gain (loss) on securities:
Amount arising during the year
Reclassification adjustments for gains
and losses realized in net income

Millions of yen

Thousands of
U.S. dollars

2015

2015

¥4,401¥7,399$61,571

(46)

(502)

(4,177)

The amount of unrealized holding gain
(loss) on securities before tax effectTax effect

4,355(1,537)

6,897(1,994)57,394(16,593)

Unrealized holding gain (loss) on securities

2,817

4,902

40,792

Unrealized gain (loss) from hedging instruments:
Amount arising during the year
Tax effect

332
(130)

(86)
21

(716)
175

Unrealized gain (loss) from hedging instruments

202

(64)

(533)

Translation adjustments:
Amount arising during the year

390

358

2,979

Translation adjustments

390

358

2,979

—

458

3,811

—

545

4,535

—
—

1,004
(386)

8,355
(3,212)Retirement benefits plans adjustments:
Amount arising during the year
Reclassification adjustments for gains
and losses realized in net income
The amount of unrealized holding gain
(loss) on securities before tax effectTax effect
Retirement benefits plans adjustments
Total other comprehensive income

—

617

5,134

¥3,410¥5,814$48,381

13. Supplementary Information for Consolidated Statement of
Changes in Net Assets
Year
ended March 31, 2015―――――――――――――――(a) Information regarding the number and type of shares issued andtreasury stock:
Number of sharesYear ended
March 31,
2014

Increaseduringthe year

Shares issued:
Common stock 371,463,036
Treasury stock:
Common stock(Note 1 and 2)
1,189,350—
3,350

Decreaseduringthe yearYear ended
March 31,2015

— 371,463,036
403

1,192,297

Notes: 1. The increase in treasury stock – common stock of 3,350 was due to theacquisition of fractional shares of less than one unit.
2. The decrease in treasury stock – common stock of 403 was due to salesof fractional shares of less than one unit.

(b) Dividends( i ) Dividends paid to shareholders① Resolution:
Type of shares:
Total amount ofdividends:
Dividends per share:
Cut-off date:
Effective date:② Resolution:
Type of shares:
Total amount ofdividends:
Dividends per share:
Cut-off date:
Effective date:

Annual general meeting ofshareholders held on June 25, 2014
Common stock¥925 million ($7,697 thousand)¥2.5 ($0.021)
March 31, 2014
June 26, 2014
Meeting of Board of Directors
held on November 4, 2014
Common stock¥740 million ($6,158 thousand)¥2 ($0.017)
September 30, 2014
December 5, 2014(ii) Dividends of which the cut-off date was in the year ended March 31,
2015, but the effective date is in the following fiscal year
Resolution:
Type of shares:
Total amount ofdividends:
Dividends per share:
Cut-off date:
Effective date:
Source of dividends:

36

Annual general meeting of shareholders
held on June 24, 2015
Common stock¥740 million ($6,158 thousand)¥2 ($0.017)
March 31, 2015
June 25, 2015
Retained earnings

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s ReportYear
ended March 31, 2014―――――――――――――――(a) Information regarding the number and type of shares issued andtreasury stock:
Number of sharesYear ended
March 31,2013

Increaseduringthe year

Decreaseduringthe yearYear ended
March 31,
2014

—

—

371,463,036

14. Cash Flow Information(a) Cash and cash equivalents
The reconciliation between cash and cash equivalents in theaccompanying consolidated statements of cash flows and cash on
hand and in banks in the accompanying consolidated balance sheetsat March 31, 2015 and 2014 are summarized as follows:
Millions of yen

Thousands of
U.S. dollars

2015

2015

2014

Shares issued:
Common stock 371,463,036
Treasury stock:
Common stock(Note 1 and 2)
632,211557,139—

1,189,350

Cash on hand and in banks in the
consolidated balance sheet
Time deposits with maturities ofmore than three months¥42,329¥49,176 $409,220
(24)

(32)

(200)

Notes: The increase in treasury stock – common stock of 511,000 was due to theacquisition from the dissenting shareholders under the provisions of 797,
Paragraph 1 of the Companies Act and common stock of 6,139 was due tothe acquisition of fractional shares of less than one unit.

Cash and cash equivalents in the
consolidated statement ofcash flows(b) Dividends( i ) Dividends paid to shareholders(b) Significant transactions without cash flows
Assets and liabilities corresponding to finance lease transactions thathave been recorded by the Company and its domestic consolidated
subsidiaries at March 31, 2015 and 2014 were as follows:① Resolution:
Type of shares:
Total amount ofdividends:
Dividends per share:
Cut-off date:
Effective date:② Resolution:
Type of shares:
Total amount ofdividends:
Dividends per share:
Cut-off date:
Effective date:

Annual general meeting ofshareholders held on June 25, 2013
Common stock¥1,854 million¥5
March 31, 2013
June 26, 2013
Meeting of Board of Directors
held on November 5, 2013
Common stock¥927 million¥2.5
September 30, 2013
December 4, 2013(ii) Dividends of which the cut-off date was in the year ended March 31,
2014, but the effective date is in the following fiscal year
Resolution:
Type of shares:
Total amount ofdividends:
Dividends per share:
Cut-off date:
Effective date:
Source of dividends:

Lease assets
Lease obligations¥42,297¥49,152 $409,021

Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

¥745
772

¥485
522

$4,036
4,344

15. Leases
Year
ended March 31, 2015―――――――――――――――
Future minimum lease payments subsequent to March 31, 2015 under
non-cancelable operating leases are summarized as follows:Year ending March 31,

Millions of yen

Thousands of
U.S. dollars

20162017 and thereafter¥2,348
2,328$19,539
19,373

Total¥4,676$38,912Annual general meeting of shareholders
held on June 25, 2014
Common stockYear
ended March 31, 2014―――――――――――――――
Future minimum lease payments subsequent to March 31, 2014 under
non-cancelable operating leases are summarized as follows:¥925 million¥2.5
March 31, 2014
June 26, 2014
Retained earnings

Year ending March 31,

Millions of yen

2015
2016 and thereafter¥3,129
4,305

Total

¥7,43437

16. Financial Instruments
Overview(a) Policy for financial instruments
In consideration of plans for operations and capital investment, theCompany and its consolidated subsidiaries (collectively, the “Group”)
utilize funds provided by operating cash flows first. The Group uses
bond issuances and bank borrowings in order to raise additional funds,
if needed. The Company manages temporary cash surpluses throughlow-risk financial assets. The Company uses derivatives for the purposeof reducing risks and does not enter into derivative contracts for
speculative or trading purposes.
(b) Types of financial instruments and related risk
Trade receivables – trade notes and accounts receivable – are exposedto credit risk in relation to customers. In addition, the Company is
exposed to foreign currency exchange risk arising from receivables
denominated in foreign currencies. The foreign currency exchange risks
deriving from the trade receivables denominated in foreign currencies
are hedged by forward foreign exchange contracts, if needed.
Investment securities are exposed to market risk. These securities
are mainly composed of the shares of common stock of companies
with which the Company has business relationships.
Trade payables – trade notes and accounts payable – havepayment due dates within one year. Since the Company is exposed toforeign currency exchange risk arising from those payables
denominated in foreign currencies, forward foreign exchange contracts
are arranged to reduce the risk, if needed.
Loans payable and bonds are used to raise funds mainly inconnection with capital investments. The repayment dates of thelong-term debts extend up to seven years from the balance sheet date.
Long-term debt with variable interest rates is exposed to interest rate
fluctuation risk. However, to reduce such risk and fix the interest
payments for long-term debt with variable rates, the Company utilizes
interest rate swap transactions as hedging instruments.
Regarding derivatives, the Company enters into forward foreignexchange contracts to reduce the foreign currency exchange risk arisingfrom the receivables and payables denominated in foreign currencies.
The Company also enters into interest rate swap transactions to reduce
the fluctuation risk of interest payments for long-term debt withvariable rates.
Information regarding the method of hedge accounting, hedging
instruments and hedged items, hedging policy, and the assessment of
the effectiveness of hedging activities is found in Note 2 (p).
(c) Risk management for financial instruments( i ) Monitoring of credit risk (the risk that customers or
counterparties may default)
In accordance with the internal policies of the Company for
managing credit risk arising from receivables, each related
division monitors credit worthiness of their main customers
periodically, and monitors due dates and outstanding balances38

by individual customer. In addition, the Company is making
efforts to identify and mitigate risks of bad debts from
customers who are having financial difficulties. The
consolidated subsidiaries also manage credit risk using theCompany’s internal policies and methods.
The Company also believes that the credit risk of derivatives
is insignificant as it enters into derivative transactions only withfinancial institutions which have a high credit-rating.
(ii) Monitoring of market risk (the risk arising from fluctuations inforeign exchange rates, interest rates and others)
For trade receivables and payables denominated in foreign
currencies, the Company identifies the foreign currency
exchange risk for each currency on a monthly basis and enters
into forward foreign exchange contracts to hedge such risk. In
order to mitigate the interest rate risk for loans payable bearing
interest at variable rates, the Company may also enter into
interest rate swap transactions.
For investment securities, the Company periodically reviews
the fair values of such financial instruments and the financial
position of the issuers. In addition, the Company continuously
evaluates whether securities should be maintained taking into
account their fair values and relationships with the issuers.
In conducting derivative transactions, the division in chargeof each derivative transaction follows the internal policies,
which set forth delegation of authority. Monthly reports
including actual transaction data are submitted to top
management for their review. The consolidated subsidiaries
also conduct derivative transactions using the Company’s
internal policies.
(iii) Monitoring of liquidity risk (the risk that the Company may not
be able to meet its obligations on scheduled due dates)
Based on the report from each division, the Company preparesand updates its cash flow plans on a timely basis to manage
liquidity risk. The consolidated subsidiaries manage theliquidity risk using cash flow plans and report to the Company
periodically.
(d) Supplementary explanation of the estimated fair value offinancial instruments
The fair value of financial instruments is based on their quoted market
price, if available. When there is no available quoted market price, fairvalue is reasonably estimated. Since various assumptions and factors
are reflected in estimating the fair value, different assumptions andfactors could result in different fair value. In addition, the notionalamounts of derivatives in Note 18 Derivative Transactions are notnecessarily indicative of the actual market risk involved in derivativetransactions.

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

Estimated Fair Value of Financial Instruments
Carrying value of financial instruments on the consolidated balance
sheet as of March 31, 2015 and estimated fair value are shown in thefollowing table. The following table does not include financial
instruments for which it is extremely difficult to determine the fair value(Please refer to Note (ii) below).
Year
ended March 31, 2015―――――――――――――――

AssetsCash on hand and in banks
Trade notes and accounts
receivable
Securities:
Other securities
Total assets

Millions of yen

Carrying
amountEstimated
fair value

Difference¥ 49,176¥ 49,176¥ —56,67856,675(2)

37,40837,408—¥143,263¥143,261¥ (2)Liabilities
Trade notes and accounts payable ¥ 42,248
12,255
Short-term borrowings
11,105Current portion of long-term debt
10,000Current portion of bonds
6,227
Long-term debt

¥ 42,248
12,255
11,11810,014
6,301

¥ —
—
13
14
74

Total liabilities¥ 81,835¥ 81,937¥101

Derivatives (*)¥(288) ¥—

(288)

Thousands of U.S. dollars

Carrying
amountAssetsCash on hand and in banks
Trade notes and accounts
receivable
Securities:
Other securities
Total assets

Estimated
fair value$ 409,220 $ 409,220

Difference

$

(17)

471,624471,648—

311,292

311,292—$1,192,169$1,192,153$ (17)

Liabilities
Trade notes and accounts payable $ 351,569 $ 351,569
101,981
101,981
Short-term borrowings
92,51992,411
Current portion of long-term debt
83,332
83,215Current portion of bonds
52,43451,818Long-term debt
Total liabilities$ 680,994

Derivatives (*)$$ 681,842(2,397) $(2,397)

$

—
—
108
117
616
$840
—

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

Year
ended March 31, 2014―――――――――――――――

AssetsCash on hand and in banks
Trade notes and accounts
receivable
Securities:
Other securities

Millions of yen

Carrying
amountEstimated
fair value

Difference¥ 42,329¥ 42,329¥ —48,86948,866(2)

30,86630,866—¥122,066¥122,063¥ (2)Liabilities
Trade notes and accounts payable ¥ 42,339
12,292
Short-term borrowings
2,700
Current portion of long-term debt
10,000Bonds
15,095Long-term debt

¥ 42,339
12,292
2,732
10,031
15,151

¥ —
—
32
31
56

Total liabilities¥ 82,426¥ 82,548¥121

Derivatives (*)¥

Total assets(201) ¥

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

( i) Method to determine the estimated fair value of financial
instruments and other matters related to securities and derivativetransactions
AssetsCash on hand and in banks
The carrying amount is used for bank deposits without maturities,
because the fair value approximates the carrying value. The fairvalue of time deposits in banks with maturities is calculated basedon the present value of the total principal and interest discounted at
a rate supposing a newly made deposit.
Trade notes and accounts receivables
The fair value is calculated by categories of the remaining periods ofthe receivables based on the present value using discount rates
determined by the period to maturity and credit risk.
Securities
The carrying amount is used for other securities with maturities,
because the fair value approximates the carrying amount.
Quoted market price is used for other securities.
Liabilities
Trade notes and accounts payable and short-term borrowings
The carrying amount is used for these items because the fair value
approximates the carrying amount.
Current portion of long-term debt, bonds and long-term debt
The fair values are calculated by applying a discount rate, based on
the assumed interest rate if a similar new debt is issued, to the totalof the principal and interest. The current portion of long-term debt
and long-term debt with variable interest rates are subject to thespecial treatment of interest rate swaps and is calculated byapplying a discount rate, based on the assumed interest rate if asimilar new debt is issued, to the total of the principal and interest
including that of the interest rate swap.
Derivative Transactions
Please refer to Note 18, Derivative Transactions, of the notes to theconsolidated financial statements.
39

Thousands of U.S. dollars(ii) Financial instruments for which it is extremely difficult to determine
the fair value
Thousands ofUnlisted stocks

Millions of yen

U.S. dollars

2014

2015

2015

¥1,949¥1,722$14,330

Because the fair values of these financial instruments are extremely
difficult to determine, given that they do not have quoted market prices
and future cash flows cannot be estimated, they are not included in“Securities” in the preceding table.
(iii) Redemption schedule for receivables and securities with maturities
at March 31, 2015 and 2014.
Year
ended March 31, 2015―――――――――――――――
Millions of yen

Due in one
year or lessDue after
one yearthroughfive years

Due after
five years

Cash on hand and in banks¥ 49,176
56,050Trade notes and accounts receivable

¥ —
628

—
—

¥628

—

Total

¥105,226

Thousands of U.S. dollars

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

Lease
obligations$83,215—————$92,411
1,997
34,077433
333
14,979$5,517
4,119
2,846
1,498
591
42

Bonds

Long-term
loans

Lease
obligations¥—
10,000————¥ 2,700
10,980
115
4,000
—
—

¥754
549
372
241
84
1

Acquisition
cost

Carrying
amountUnrealized
gain (loss)¥16,672¥30,882¥14,210

6,800

6,126

(674)

¥23,472¥37,008¥13,536

Year
ended March 31, 2014―――――――――――――――

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

Millions of yen

17. Securities
Other securities:
March
31, 2015―――――――――

Due in one
year or lessDue after
one yearthroughfive years

Due after
five years$409,220
Cash on hand and in banks
Trade notes and accounts receivable 466,423

$ —
5,226

—
—

Carrying amount exceeding the acquisition cost:
StocksCarrying amount not exceeding the acquisition cost:
Stocks$875,643$5,226

—

Total

Total

Bonds

Long-termloansMillions of yen

Thousands of U.S. dollars

Year ended March 31, 2014―――――――――――――――
Due in one
year or lessDue after
one yearthroughfive years

Due after
five years

Cash on hand and in banks
Trade notes and accounts receivable¥42,329
48,244

¥ —
624

—
—

Total

¥90,574¥624—(iv) The redemption schedule for long-term debt
Year
ended March 31, 2015―――――――――――――――

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

40

Acquisition
cost

Millions of yen

Millions of yen

Bonds

Long-term
loans

Lease
obligations¥10,000—————¥11,105
240
4,095
52
40
1,800

¥663
495
342
180
71
5

Carrying
amountUnrealized
gain (loss)

Carrying amount exceeding the acquisition cost:$138,737 $256,986 $118,249
StocksCarrying amount not exceeding the acquisition cost:
Stocks56,58750,978(5,609)
Total$195,323 $307,964 $112,640

March
31, 2014―――――――――

Carrying amount exceeding the acquisition cost:
StocksCarrying amount not exceeding the acquisition cost:
Stocks
Total

Millions of yen

Acquisition
cost

Carrying
amountUnrealized
gain (loss)¥12,704¥20,309¥7,604

11,150

10,185(964)¥23,855¥30,494¥6,639When their fair values have declined by 50% or more, impairment losses
are recorded on those securities. When their fair values have declined
by 30% up to 50%, impairment losses are recorded on those securities
on an individual basis to the values considered to be recoverable.

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

18. Derivative Transactions(a) Derivatives not subject to hedge accountingYear
ended March 31, 2015―――――――――――――――
None applicableYear
ended March 31, 2014―――――――――――――――
None applicable(b) Derivatives subject to hedge accounting
The contract amounts or the amount corresponding to principal as specified by the contract as of the date of theclosing of the consolidated accounts is shown below by type of hedge accounting method.
( i ) Currency-related transactions
Year
ended March 31, 2015―――――――――――――――
Hedge accounting method

Type of derivative

Principal items hedged

Allocation method

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

Notes and accounts receivable

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

Notes and accounts payable

Hedge accounting method

Type of derivative

Principal items hedged

Allocation method

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

Notes and accounts receivable

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

Notes and accounts payable

Millions of yen

Contract amount

Fair value¥16,857
1,419
277

Over one year¥(1,413)¥2,76454
11(8)—¥11,815
1,014
157
13

—
—
—
—

¥ 1,178(96)(2)
0

Thousands of U.S. dollars

Contract amount

Fair value$140,276
11,8082,305Over one year
$23,001 ¥(11,758)
449
92
(67)
—

$ 98,319
8,438
1,306
108

—
—
—
—

¥ 9,803
(799)
(17)
0

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

Year
ended March 31, 2014―――――――――――――――

Millions of yen

Hedge accounting method

Type of derivative

Principal items hedged

Allocation method

Foreign exchange forward contracts
Sell:
U.S. dollars
Euros
Canadian dollars
Hong Kong dollars

Notes and accounts receivable

Foreign exchange forward contracts
Buy:
U.S. dollars
Euros
Sterling pound
Hong Kong dollars

Notes and accounts payable

Contract amount¥16,405
554
—
13
¥

745
1,126
143
—

Fair valueOver one year
¥3,294
13
—
—
—
—
—
—

¥(254)
(3)
—
(0)
¥

6
51
(0)
—

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

41

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

Millions of yen

Hedge accounting method

Type of derivative

Special treatment for interest
rate swaps

Receive/floating and pay/fixed

Principal items hedged

Contract amount

Fair valueOver one year
Long-term borrowings¥4,000Principal items hedged

Contract amount¥4,000(*)

Thousands of U.S. dollars

Hedge accounting method

Type of derivative

Special treatment for interest
rate swaps

Receive/floating and pay/fixed

Fair valueOver one year
Long-term borrowings$33,286$33,286(*)(*) Since interest rate swap contracts accounted for by the special treatment for interest rate swaps are treated together with the long-term borrowings subject to hedging,
the estimated fair value of such interest rate swap contracts is included in the estimated fair value of the corresponding long-term borrowings.
Note: Calculation of fair value is based on the stated price by financial institutions.

Year
ended March 31, 2014―――――――――――――――

Millions of yen

Hedge accounting method

Type of derivative

Special treatment for interest
rate swaps

Receive/floating and pay/fixed

Principal items hedged

Contract amount

Fair valueOver one year
Current portion of long-termborrowings
Long-term borrowings¥4,000¥4,000(*)(*) Since interest rate swap contracts accounted for by the special treatment for interest rate swaps are treated together with the long-term borrowings subject to hedging,
the estimated fair value of such interest rate swap contracts is included in the estimated fair value of the corresponding long-term borrowings.
Note: Calculation of fair value is based on the stated price by financial institutions.

19. Retirement Benefit Plans
The Company and its consolidated subsidiaries have either funded or
unfunded defined benefit plans and/or defined contribution plans.
The Company and its domestic consolidated subsidiaries havedefined benefit plans, i.e. lump-sum payment plans, defined benefit
plans, welfare pension fund and tax-qualified pension plans, covering
substantially all employees who are entitled to lump-sum or annuity
payments, the amounts of which are determined by reference to theirbasic rates of pay, length of service, and the conditions under which
termination occurs.
The changes in the retirement benefit obligation for the years ended
March 31, 2015 and 2014 are as follows:

42

Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

¥20,367¥19,819$164,925

—

840

6,990

Restated balance at the
beginning of the year
Service cost
Interest cost
Actuarial gain and loss
Retirement benefit paid

20,367963
272(82)(1,701)

20,659972
244
528(1,915)

171,915
8,089
2,030
4,394
(15,936)

Balance at the end of the year

¥19,819¥20,489$170,500

Balance at the beginning of the year
Cumulative effect of change inaccounting principle

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

The changes in plan assets for the years ended March 31, 2015 and2014 are as follows:
Thousands of2014

Millions of yen

U.S. dollars

2015

2015

Balance at the beginning of the year
Expected return on plan assets
Actuarial gain and loss
Contributions by the Company
Retirement benefits paid

¥14,968
224
901
459(1,030)¥15,524 $129,184
310
2,580
987
8,213
429
3,570
(1,149)(9,561)

Balance at the end the year

¥15,524¥16,101$133,985

The changes in retirement benefit liability accounted for using thesimplified method for the years ended March 31, 2015 and 2014 are as
follows:
Thousands ofMillions of yen

U.S. dollars

2014

2015

2015

Balance at the beginning of the year
Retirement benefit expenses
Retirement benefit paid
Contributions
Other¥3,804
561
(467)
(197)
28

¥3,729
470
(606)
(193)
36

$31,031
3,911(5,043)(1,606)300

Balance at the end the year

¥3,729¥3,436$28,593

The following table sets forth the funded status of the plans and theamounts recognized in the consolidated balance sheets as of March 31,
2015 and 2014 for the Company’s and the consolidated subsidiaries’
defined benefit plans:
Thousands of2014
Funded retirement benefit
obligation
Plan assets at the value
Unfunded retirement benefit obligation

Millions of yen

U.S. dollars

2015

2015

¥19,093 ¥ 19,668 $ 163,668(16,338) (17,013) (141,574)
2,754
5,223

2,655
5,138

2,209442,756The components of retirement benefits plans adjustments included inother comprehensive income (before tax effect) for the years ended
March 31, 2015 and 2014 are as follows:
Thousands ofMillions of yen

U.S. dollars

2014

2015

2015

Prior service cost
Actuarial gain and loss

¥—
—

¥ 180
823

$1,498
6,849

Total

¥—

¥1,004$8,355The components of retirement benefits plans adjustments included inaccumulated other comprehensive income (before tax effect) as ofMarch 31, 2015 and 2014 are as follows:
Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

Unrecognized prior service cost
Unrecognized actuarial gain and loss

¥ (180)(1,442)

¥ —
(618)

$
—
(5,143)

Total¥(1,622)¥(618)$(5,143)

The fair value of plan assets, by major category, as a percentage of total
plan as of March 31, 2015 and 2014 as follows:
March 31,

2014

2015

Bonds
StocksCash on hand and in banks
General account
Other

29%
38
0
16
16

28%
41
0
16
15

Total

100%

100%

Retirement benefit trust set for the lump-sum and corporate pension
plans accounts for 19% and 19% of the total plan assets, for the years
ended March 31, 2015 and 2014, respectively.

Net liability for retirement
benefits in the balance sheet

7,978

7,793

64,850Retirement benefit liability
Retirement benefit assets

10,405(2,427)

10,857(3,063)90,347(25,489)

The expected return on assets has been estimated based on the
anticipated allocation to each asset class and the expected long-term
returns on assets held in each category.

Net liability for retirement
benefits in the balance sheet¥7,978¥ 7,793 $ 64,850

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

The components of retirement benefit expense for the years ended
March 31, 2015 and 2014 are as follows:
Thousands ofService cost
Interest cost
Expected return on plan assets
Amortization of actuarial gain and loss
Amortization of prior service cost
Simplified method for
retirement benefit expenses
Other
Retirement benefit expense

Millions of yen

U.S. dollars

2014

2015

2015

¥963
272
(224)
139
155

¥ 972
244
(310)
380
180

$ 8,089
2,030(2,580)
3,162
1,498

561
65

470
48

3,911
399

¥1,930¥1,986$16,527

March 31,

Discount rates
Expected rates of return on plan assets

2014

2015

1.50%
1.50

1.09%
2.00

Contributions made to defined contribution plans for the years ended
March 31, 2015 and 2014 were ¥32 million ($266 thousand) and ¥32
million, respectively.

4320. Income Taxes
The significant components of the Company’s deferred tax assets andliabilities at March 31, 2015 and 2014 were as follows:
Millions of yen

Thousands of
U.S. dollars

2015

2015

2014
Deferred tax assets:
Accrued enterprise taxes
Accrued bonuses
Depreciation
Amortization of long-term
prepaid expenses
Loss on revaluation of
inventory items
Loss on revaluation of financial
instruments
Retirement benefit liability
Provision for warranties forcompleted construction
Provision for loss on
construction contracts
Provision for loss on wind
power generator business
Less allowance for doubtful
accounts
Asset retirement obligations
Percentage-of-completion
methodTax loss carry forwards
Unrealized loss on investment
securities
Deferred loss on hedges
Unrealized gain on
intercompany transactions
Other
Gross deferred tax assets$ 1,182
8,288
7,598

115

111

924

1,202

798

6,641

253
4,612

214
4,558

1,781
37,930

924

724

6,025

700

486

4,044

—

4,295

35,741

169
450

195
410

1,623
3,412

617
2,412

948
2,102

7,889
17,492

341
99

215
506

1,789
4,211

690
534
15,276688
617
18,927

5,725
5,134
157,502¥

Valuation allowance(3,706)(3,456)(28,759)

Total deferred tax assets

11,56915,471

128,743

1,702

1,479

12,308

864
696

411
984

3,420
8,188

283

250

2,080

2,698
28
64

4,568
413
110

38,013
3,437
915

Deferred tax liabilities:
Reserve for advanced
depreciation
Reserve for special
depreciation
Net defined benefit asset
Disposal cost with asset
retirement obligations
Unrealized gain on investment
securities
Deferred gain on hedges
Other

44

142
996
913

¥ 180
1,004
966

Total deferred tax liabilities

6,337

8,217

68,378Net deferred tax assets¥ 5,231¥ 7,254$ 60,364

The reconciliation between the effective tax rates reflected in the
consolidated statement of income and the statutory tax rates for theyears ended March 31, 2015 and 2014 were as follows:

2014
Statutory tax rates
Effect of:Permanent differences
Tax credit
Decrease in deferred tax assets
due to tax rate change
Other

37.8%

Effective tax rates

40.8%

3.0
(2.5)
3.0
(0.5)

2015
No reconciliation
items are applicablefor the year as theCompany recorded
net loss before
income taxes

Adjustment of deferred tax liabilities and deferred tax assets due tochange in the corporate tax rate
The “Act for Partial Amendment of the Income Tax Act, etc.” (Act No.9 of2015) and the “Act for Partial Amendment of the Local Tax Act, etc.” (ActNo.2 of 2015) were promulgated on March 31, 2015. As a result, theeffective statutory tax rate used to measure the Company’s deferred tax
assets and liabilities was changed from 35.4% to 32.9% and 32.1% for
the temporary differences expected to be realized or settled in the year
beginning April 1, 2015 and the temporary differences expected to berealized or settled from April 1, 2016, respectively.
The effect of the announced reduction of the effective statutory tax
rate was to decrease deferred tax assets after offsetting deferred tax
liabilities by ¥767 million ($6,383 thousand), deferred tax liabilities after
offsetting deferred tax assets by ¥328 million ($2,729 thousand),
unrealized gain (loss) from hedging instruments by ¥8 million ($67
thousand), retirement benefits plans adjustments by ¥13 million ($108
thousand) and increase deferred income taxes by ¥864 million ($7,190
thousand) and unrealized gain (loss) on securities by ¥447 million($3,720 thousand) as of and for the year ended March 31, 2015.
21. Business Combinations
Business combination through acquisition(a) Outline of business combination① Name and business of acquired company
Name: MES AFTY Co., Ltd.
Business: Businesses of manufacture, sales and after-sales service of
ECR Plasma Deposition Systems, ALD Systems and Aneal
Systems② Main reason for the business combination
Advancing into deposition business③ Date of business combination
April 1, 2014
④ Legal form of business combination
Business transfer by cash payment⑤ Name of company after business combination
JSW AFTY Co., Ltd.

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report(b) Period for which earnings of the acquired company were
included in the consolidated financial statements
The earnings of the acquired company for the period from April 1,2014 through March 31, 2015 are included in the Company’s
consolidated statement of income for the year ended March 31,
2015.
(c) Acquisition cost and breakdown
Acquisition price:¥200 million ($1,664 thousand)Acquisition cost:¥200 million ($1,664 thousand)(d) Amount and reason for gain on negative goodwill① Amount¥218 million ($1,814 thousand)② Reason
The negative goodwill was generated because the fair value of the
net assets acquired on the date of the business combination
exceeded the acquisition cost.
(e) Assets acquired and liabilities assumed at the date of businesscombination
Current assets:¥178 million ($1,481 thousand)Fixed assets:¥409 million ($3,404 thousand)Total assets:¥588 million ($4,893 thousand)Current liabilities:¥115 million ($957 thousand)Long-term liabilities: ¥54 million ($449 thousand)Total liabilities:¥170 million ($1,415 thousand)Transaction under common control(a) Outline of the transaction
Combination between Nikko Kouei Co., Ltd., Nikko Design Co., Ltd.,
Nikko Casting Co., Ltd. and JSW Clad Steel Plate Company Co., Ltd.
① Name and business of companies
Name of surviving company: Nikko Kouei Co., Ltd.
Business: General construction contractor
Name of absorbed company: Nikko Design Co., Ltd.
Business: Designing and drafting of various machineries andequipment
Name of surviving company: Nikko Casting Co., Ltd.
Business: Manufacturing and sales of various steel castings,
and materials for steel castings manufacturing
Name of surviving company: JSW Clad Steel Plate Company
Co., Ltd.
Business: Manufacturing and processing of various steel plates② Date of business combination
October 1, 2014
③ Legal form of business combination
Absorption-type merger with Nikko Kouei Co., Ltd. as thesurviving company④ Name of company after business combination
Nikko MEC Co., Ltd.
⑤ Purpose of transaction
The Company intends to construct an efficient and rational
operating structure. In addition, the Company plans to enhance
productivity and profitability, use human resources effectively andbuild a responsive organization.
(b) Outline of the accounting treatment
The Company treated the transaction as transaction undercommon control based on Accounting Standard for Business
Combinations (Accounting Standards Board of Japan (ASBJ),
Statement No.21 issued on December 26, 2008) and the Guidanceon Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures (ASBJ Guidance
No.10, issued on December 26, 2008).

22. Asset Retirement Obligations
The following table presents the changes in asset retirement
obligations for the years ended March 31, 2015 and 2014:
Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

Balance at beginning of year
Liabilities incurred due to theacquisition of property,
plant and equipment
Accretion expense
Liabilities settled
Other¥1,371¥1,271$10,577

—
20
—
(120)

—
20
(17)
19

—
166
(141)
158

Balance at end of year

¥1,271¥1,295$10,776

23. Investment and Rental Properties
The Company has omitted the disclosure of investment and rental
properties due to immateriality for the years ended March 31, 2015 and
2014.

45

24. Segment Information
The reportable segments of the Group are components for which discrete financial information is available and whose operating results are regularly reviewed
by the Executive Committee to make decisions about resource allocation and to assess performance.
The Steel and Energy Products segment includes steel castings and forgings, steel plates, pressure vessels and steel structures. The Industrial Machinery
Products segment includes injection molding machines, film and sheet machinery, blow molding machines, magnesium injection molding machines, waste
treatment equipment and manufacturing equipment for electronic products. The Real Estate and Other Businesses segment includes regional development.
Millions of yen

Year ended March 31, 2015

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

Reportable segments
Steel andIndustrial
Real Estate
EnergyMachineryand Other
Products
Products
Businesses

Total

AdjustmentsandEliminations

Consolidated¥ 66,215
5,093
71,308¥ (3,200)¥126,363
1,379
127,743¥ 11,370¥ 2,095
3,446
5,542
¥ 962

¥194,674
9,919
204,593¥ 9,132¥—(9,919)(9,919)¥ (915)¥194,674—
194,674¥ 8,217¥112,831
8,043
3,474

¥108,440
2,563
4,414

¥ 13,097291
72¥234,369
10,8987,960¥ 86,713
109
31¥321,083
11,008
7,992

Thousands of U.S. dollars

Sales and operating income:Sales to third parties
Intra-segment sales and transfers
Total sales
Operating income
Assets, depreciation, and capital expenditures:
Total assets
Depreciation and amortization
Capital expenditures$551,011
42,382
593,393$ (26,629)$1,051,535
11,475
1,063,019$ 94,616$ 17,434
28,676
46,118$8,005$1,619,988
82,541
1,702,530$75,992$—(82,541)(82,541)$ (7,614)$1,619,988—
1,619,988$ 68,378$938,928
66,93028,909$ 902,388
21,32836,731$108,987
2,422
599$1,950,312
90,68866,239$721,586
907
258$2,671,906
91,60466,506

Notes: 1. Adjustments and eliminations for segment profit of ¥915 million ($7,614 thousand) include elimination of inter-segment profit on inventories and corporate generaladministration expense which are not allocable to a reportable segment.
2. Adjustments and eliminations for segment assets of ¥86,713 million ($721,586 thousand) include offset of inter-segment debt and credit, and corporate assets
which are not allocable to a reportable segment.
3. Adjustments and eliminations for depreciation and amortization of ¥109 million ($907 thousand) include depreciation and amortization for corporate assets.
Adjustments and eliminations for capital expenditures of ¥31 million ($258 thousand) include capital expenditures for corporate assets.
Millions of yen

Year ended March 31, 2014

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

Reportable segments
Steel andIndustrial
Real Estate
EnergyMachineryand Other
Products
Products
Businesses

Total

AdjustmentsandEliminations

Consolidated¥ 67,602
3,167
70,769¥ (3,606)¥118,385
1,766
120,152¥ 12,185¥ 2,731
3,190
5,921¥ 1,149¥188,719
8,123
196,842¥ 9,728¥—(8,123)(8,123)¥ (864)¥188,719—
188,719¥ 8,864¥111,561
9,897
2,216

¥99,309
2,649
2,793

¥ 12,984
281
114¥223,855
12,8285,125¥ 69,283
122
117¥293,139
12,9505,242

Notes: 1. Adjustments and eliminations for segment profit of ¥864 million include elimination of inter-segment profit on inventories and corporate general administration
expense which are not allocable to a reportable segment.
2. Adjustments and eliminations for segment assets of ¥69,283 million include offset of inter-segment debt and credit, and corporate assets which are not allocable toa reportable segment.
3. Adjustments and eliminations for depreciation and amortization of ¥122 million include depreciation and amortization for corporate assets.
Adjustments and eliminations for capital expenditures of ¥117 million include capital expenditures for corporate assets.

46

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report(a) Product and service information

Millions of yen

Year ended
March 31, 2015

Steel andEnergyProducts

Industrial
Machinery
Products

Real Estate
and OtherBusinesses

Total

Sales to third parties¥66,215¥126,363¥2,095¥194,674(e) Amortization and balance of goodwill
The following table presents the amortization and balance of negative
goodwill arising from business combinations on or prior to March 31,
2010 as of and for the years ended March 31, 2015 and 2014 byreportable segment:
Millions of yen

Thousands of U.S. dollars

Year ended
March 31, 2015

Steel andEnergyProducts

Industrial
Machinery
Products

Sales to third parties$551,011$1,051,535

Real Estate
and OtherBusinesses

Total$17,434 $1,619,988

Year ended
March 31, 2015
Amortization
Balance as ofMarch 31

Steel andEnergyProducts

Industrial Real Estate Adjustments
Machinery and Other
and
Products Businesses Eliminations

Total

—

¥71

—

—

¥71

—

—

—

—

—

Millions of yen
Thousands of U.S. dollars

Year ended
March 31, 2014

Steel andEnergyProducts

Industrial
Machinery
Products

Real Estate
and OtherBusinesses

Total

Sales to third parties¥67,602¥118,385¥2,731¥188,719

Amortization
Balance as ofMarch 31(b) Geographical information( i) Sales
Millions of yen

Thousands of
U.S. dollars

2014

2015

2015

Japan
China
Others¥ 95,966
27,15965,593¥ 100,417
29,131
65,125$ 835,625
242,415541,941

Consolidated¥188,719¥194,674$1,619,988

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

(ii) Tangible assets
The Company has omitted the disclosure of tangible assets bycountry or region as of March 31, 2015 and 2014 because theamount of tangible assets in Japan accounted for more than 90%of the carrying amount in the consolidated balance sheet.
(c) Significant customer information
The Company has omitted the disclosure of significant customer
information for the years ended March 31, 2015 and 2014 because no
individual customer accounted for more than 10% of net sales in the
consolidated statement of income.
(d) Information on loss on impairment of fixed assets
Impairment losses on fixed assets by reportable segment for the years
ended March 31, 2015 and 2014 are summarized as follows:Year
ended March 31, 2015―――――――――――――――
None applicableYear
ended March 31, 2014―――――――――――――――
None applicableYear ended
March 31, 2015

Steel andEnergyProducts

Industrial Real Estate Adjustments
Machinery and Other
and
Products Businesses Eliminations

Total

—

$591

—

—

$591

—

—

—

—

—

Millions of yen

Year ended
March 31, 2014
Amortization
Balance as ofMarch 31

Steel andEnergyProducts

Industrial Real Estate Adjustments
Machinery and Other
and
Products Businesses Eliminations

Total

—

¥71

—

—

¥71

—

71

—

—

71

(f) Information on gain on negative goodwillYear
ended March 31, 2015―――――――――――――――In the Industrial Machinery Products segment, JSW AFTY Co., Ltd., aconsolidated subsidiary take over retail deposition business from MES
AFTY Co., Ltd. This resulted in a gain on negative goodwill of ¥218
million ($1,814 thousand) in the fiscal year ended March 31, 2015.
Year
ended March 31, 2014―――――――――――――――
None applicable
25. Shareholders’ Equity
The Corporation Law of Japan provides that an amount equal to 10% of
the amount to be disbursed as distributions of capital surplus (otherthan the capital reserve) and retained earnings (other than the legal
reserve) be transferred to the capital reserve and the legal reserve,
respectively, until the sum of the capital reserve and the legal reserve
equals 25% of the capital stock account. Such distributions can bemade at any time by resolution of the meeting of shareholders, or by
the Board of Directors if certain conditions are met.

47

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

26. Amounts per Share
Net income per share is calculated based on the net income available
for distribution to shareholders of common stock and theweighted-average number of shares of common stock outstanding
during the year. Net assets per share are calculated based on thenumber of shares of common stock outstanding at year end. Amounts
per share at March 31, 2015 and 2014 and for the years then ended wereas follows:

Net income
Net assets

Yen

U.S. dollars

2014

2015

2015

¥ 14.92372.83¥ (10.10)373.09$(0.08)
3.10

27. Subsequent Events
Transaction under common control(a) Transfer of business
Based on the resolution at the Board of Directors meeting held on
January 26, 2015, the Company took over simultaneous biaxial
stretching machine business from Hitachi Plant Mechanics Co., Ltd.,effective on April 1, 2015.
① Name of counter party and business
Name:
Hitachi Plant Mechanics Co., Ltd.
Business:
Simultaneous biaxial stretchingmachine business② Assets acquired in business transfer
Current assets:¥280 million ($2,330 thousand)Fixed assets:¥101 million ($840 thousand)
Goodwill:¥138 million ($1,148 thousand)Total assets:¥520 million ($4,327 thousand)③ The date of transfer
April 1, 2015(b) Significant borrowings
Based on the resolution at the Board of Directors meeting held on
January 26, 2015, the Company entered into a syndicated loan
agreement of which Sumitomo Mitsui Banking Corporation and
Sumitomo Mitsui Trust Bank, Ltd. are the arrangers on April 7, 2015.
① Usage of funds
Redemption of bond, repayment of borrowings and investment
funds② Lenders
Sumitomo Mitsui Banking Corporation etc.
③ Aggregate amount of borrowings¥ 30,000 million ($249,646 thousand)④ Execution date
April 7, 2015
⑤ Repayment deadline
April 7, 2020:¥5,000 million ($41,608 thousand)April 7, 2022:¥15,000 million ($124,823 thousand)April 7, 2025:¥10,000 million ($83,215 thousand)48⑥ Repayment method
Bullet repayment⑦ Pledged assets
None(C) Business combination
Based on the resolution at the Board of Directors meeting held on April
21, 2015, the Company entered into a stock purchase agreement with astockholder of SM PLATEK Co., LTD. on April 22, 2015. The Company
acquired the shares of SM PLATEK Co., LTD. on May 8, 2015 and SM
PLATEK Co., LTD. has become a subsidiary of the Company.
① The purpose of stock acquisition
Business expansion of Twin Screw Extruder② Name of acquired company
SM PLATEK Co., LTD.
③ Business of acquired company
Production of Twin Screw Extruder④ Date of combination
May 8, 2015
⑤ Total acquisition value of shares acquired
8,000 shares⑥ Acquisition price¥2,635 million ($21,927 thousand)⑦ Costs incurred directly in the acquisition¥114 million ($949 thousand)⑧ Share of voting rights acquired
80%⑨ Procurement method of fund for purchase
Funds on hand(d) Acquisition of treasury stock
Based on the resolution at the Board of Directors meeting held on May
26, 2015, in accordance with Article 156 of the Companies Act appliedby replacing the phrases pursuant to Article 165 Paragraph 3, theCompany has acquired treasury stocks.
① Reason for acquisition
For the implementation of flexible capital policies in response tochanges in the business environment② Type of stock to be acquired
Common stock of the Company③ Total number of shares to be acquired¥5,173,000 shares④ Total acquisition value of shares to be acquired¥2,938 million ($24,449 thousand)⑤ Acquisition date
May 27, 2015
⑥ Acquisition method
Purchase of treasury stock using the off-hours trading system(ToSTNeT-3) of the Tokyo Stock Exchange

Independent Auditor’s Report

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report49