P010-E654

Shimadzu Integrated Report 2018
Financial Section

Shimadzu Corporation and Consolidated Subsidiaries

Consolidated Balance Sheet
March 31, 2018

Millions of Yen
2018
2017

ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 13)............................................................... ¥ 75,090
Time deposits (Note 13)..................................................................................
1,837
Trade receivables:
Notes and accounts (Note 13)..................................................................... 119,118(1,409)Allowance for doubtful receivables.............................................................
Net trade receivables.......................................................................... 117,709
Securities........................................................................................................
20
Inventories (Note 5).........................................................................................
80,636
Deferred tax assets (Note 11)...........................................................................
9,662
8,932
Prepaid expenses and other current assets......................................................
Total current assets............................................................................. 293,886
PROPERTY, PLANT AND EQUIPMENT (Note 2.f):
Land...............................................................................................................
Buildings and structures..................................................................................
Machinery, equipment and vehicles.................................................................
Tools, furniture and fixtures............................................................................
Lease assets....................................................................................................
Construction in progress.................................................................................
Total property, plant and equipment...................................................

18,822
39,985
6,714
12,6552,735
3,225
84,136INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 4 and 13).............................................................
15,779Investments in and advances to unconsolidated subsidiaries andassociated companies (Note 13)..................................................................
685
6,303
Software.........................................................................................................
Asset for retirement benefits (Note 8).............................................................
8,010
3,089
Deferred tax assets (Note 11)...........................................................................
7,877
Other assets....................................................................................................
Total investments and other assets......................................................
41,743TOTAL............................................................................................................. ¥419,765
See notes to consolidated financial statements.

1

Shimadzu Integrated Report 2018

Thousands of
U.S. Dollars(Note 3)2018

¥ 52,763
3,935$  708,396
17,330112,878(1,143)
111,735
76,701
9,603
8,344
263,081

1,123,755(13,292)
1,110,463
189
760,717
91,151
84,2632,772,509

18,88039,976
5,904
10,8532,510
628
78,751

177,566
377,217
63,340
119,387
25,80230,425
793,737

13,495

148,858

284
6,822
3,706
4,161
5,054
33,522¥375,354

6,462
59,46275,56629,142
74,312393,802$3,960,048

Millions of Yen
2018
2017

LIABILITIES AND EQUITYCURRENT LIABILITIES:
Short-term borrowings (Notes 7 and 13)......................................................... ¥  2,435
Current portion of long-term debt (Note 7).....................................................
1,761
Trade notes and accounts payable (Note 13)....................................................
66,589Other payables................................................................................................
16,244
Advances from customers...............................................................................
7,967
Income taxes payable......................................................................................
7,460
Provision for loss on defense equipment..........................................................
95
19,416
Accrued expenses and other current liabilities (Note 11)...................................
Total current liabilities......................................................................... 121,967
LONG-TERM LIABILITIES:Long-term debt (Notes 7 and 13)....................................................................
Liability for retirement benefits (Note 8)..........................................................
Long-term deposit..........................................................................................
Other long-term liabilities (Note 11).................................................................
Total long-term liabilities.....................................................................

17,488
9,733
99
2,417
29,737

Thousands of
U.S. Dollars(Note 3)2018¥  2,473
1,501
57,263
11,364
8,227
4,871
484
17,965
104,148$   22,972
16,613
628,198
153,245
75,16070,377896
183,170
1,150,631

17,407
10,708
121
1,342
29,578

164,981
91,821934
22,802
280,538

26,64935,188174,391

251,406
331,962
1,868,283(886)(13,311)5,850(1,429)1,568)
241,331297
241,628¥375,354

70,189(18,849)
35,7452,525,425
3,454
2,528,879$3,960,048

COMMITMENTS AND CONTINGENT LIABILITIES (Notes 12 and 14)
EQUITY (Notes 9 and 17):
Common stock, authorized, 800,000,000 shares; issued,
26,649296,070,227 shares....................................................................................
Capital surplus................................................................................................
35,188Retained earnings........................................................................................... 198,038
Treasury stock – at cost, 1,500,941 shares in 2018 and 1,245,641
shares in 2017.............................................................................................
(1,411)
Accumulated other comprehensive income (loss):
Unrealized gain on available-for-sale securities............................................
7,440
Foreign currency translation adjustments....................................................
(1,998)
3,789
Defined retirement benefit plans.................................................................
Total................................................................................................... 267,695
366
Noncontrolling interests..................................................................................
Total equity........................................................................................ 268,061
TOTAL............................................................................................................. ¥419,765

Shimadzu Integrated Report 20182

Shimadzu Corporation and Consolidated Subsidiaries

Consolidated Statement of Income
Year Ended March 31, 2018

Millions of Yen
2018
2017

NET SALES (Notes 12 and 18)......................................................................... ¥376,531¥342,480$3,552,179

COST OF SALES (Notes 8 and 12).................................................................... 226,697
Gross profit........................................................................................ 149,834
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Notes 8, 10 and 12).... 107,012

206,070
136,410
99,3202,138,651
1,413,528
1,009,547

42,82237,090403,981587(138)(1,271)
(312)
158

5,538
(1,302)(11,991)(2,943)
1,491

Operating income (Note 18)................................................................
OTHER INCOME (EXPENSES):Interest and dividend income..........................................................................
Interest expense..............................................................................................
Foreign exchange loss, net..............................................................................
Compensation expenses (Note 2.w)................................................................
Gain on sales of non-current assets.................................................................
Impairment loss (Note 6).................................................................................
Loss on valuation of investment securities.......................................................
Other, net.......................................................................................................
Other income (expenses), net..............................................................

(66)
(4)
(1,046)

436
(138)
(72)
(100)
32
(781)
(1)
(353)
(977)

INCOME BEFORE INCOME TAXES................................................................

41,776

36,113394,113

INCOME TAXES (Note 11):
Current...........................................................................................................
Deferred.........................................................................................................
Total income taxes..............................................................................

11,513343
11,856

8,763
820
9,583

108,6133,236
111,849

NET INCOME.................................................................................................

29,92026,530282,264

NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS.............

82

57

774

NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT..................... ¥ 29,838¥ 26,473$  281,490

Yen

PER SHARE OF COMMON STOCK (Notes 2.v and 16):
Basic net income......................................................................................... ¥101.26
Cash dividends applicable to the year..........................................................
24.00
See notes to consolidated financial statements.

3

Thousands of
U.S. Dollars(Note 3)
2018

Shimadzu Integrated Report 2018

(623)
(38)
(9,868)

U.S. Dollars¥89.79
20.00

$0.96
0.23

Shimadzu Corporation and Consolidated Subsidiaries

Consolidated Statement of Comprehensive Income
Year Ended March 31, 2018

Millions of Yen
2018
2017

NET INCOME................................................................................................. ¥29,920

Thousands of
U.S. Dollars(Note 3)
2018

¥26,530$282,264

OTHER COMPREHENSIVE INCOME (LOSS) (Note 15):
Unrealized gain on available-for-sale securities............................................
Foreign currency translation adjustments....................................................
Defined retirement benefit plans.................................................................
Total other comprehensive income......................................................

1,591
(566)
2,219
3,244

813
(2,450)
2,939
1,302

15,010(5,340)20,93430,604COMPREHENSIVE INCOME..........................................................................

¥33,164¥27,832$312,868

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent................................................................................. ¥33,079
Noncontrolling interests..............................................................................
85¥27,78745$312,066802

See notes to consolidated financial statements.

Shimadzu Integrated Report 20184

Shimadzu Corporation and Consolidated Subsidiaries

Consolidated Statement of Changes in Equity
Year Ended March 31, 2018

Millions of Yen

Number of
Shares ofCommon Stock
Outstanding

BALANCE, APRIL 1, 2016................................. 294,839,522
Net income attributable to owners of
the parent......................................................
Cash dividends...................................................
Change of scope of consolidation......................
Purchase of treasury stock..................................
Net change in the year.......................................
(14,936)BALANCE, MARCH 31, 2017............................ 294,824,586
Net income attributable to owners of
the parent......................................................
Cash dividends...................................................
Change of scope of consolidation......................
Purchase of treasury stock..................................
Net change in the year.......................................
(255,300)
BALANCE, MARCH 31, 2018............................ 294,569,286

CommonStockCapitalSurplusRetained
Earnings

TreasuryStock¥26,649¥35,188¥153,758¥  (861)

26,473(5,601)(239)(25)
26,64935,188174,391(886)

29,838(6,191)(525)¥26,649¥35,188¥198,038¥(1,411)

Thousands of U.S. Dollars (Note 3)

BALANCE, MARCH 31, 2017............................
Net income attributable to owners of
the parent......................................................
Cash dividends...................................................
Change of scope of consolidation......................
Purchase of treasury stock..................................
Net change in the year.......................................
BALANCE, MARCH 31, 2018............................
See notes to consolidated financial statements.

5

Shimadzu Integrated Report 2018

CommonStockCapitalSurplusRetained
Earnings

TreasuryStock$251,406$331,962$1,645,198$ (8,358)

281,490(58,405)(4,953)$251,406$331,962$1,868,283$(13,311)

Millions of Yen
Accumulated Other Comprehensive
Income (Loss)
Unrealized
Foreign
Gain onCurrency
DefinedAvailable-for- Translation Retirement
Sale Securities Adjustments Benefit Plans
Total

BALANCE, APRIL 1, 2016........................
Net income attributable to owners of
the parent.............................................
Cash dividends..........................................
Change of scope of consolidation.............
Purchase of treasury stock.........................
Net change in the year..............................
BALANCE, MARCH 31, 2017...................
Net income attributable to owners of
the parent.............................................
Cash dividends..........................................
Change of scope of consolidation.............
Purchase of treasury stock.........................
Net change in the year..............................
BALANCE, MARCH 31, 2018...................

¥5,037

813
5,850

1,590
¥7,440¥ 1,294(2,723)(1,429)(569)¥(1,998)¥(1,371)¥219,694

2,939
1,568

26,473(5,601)
(239)
(25)
1,029
241,3312,221¥ 3,789

Noncontrolling
Interests

Total
Equity¥278¥219,972

19
297

26,473(5,601)
(239)
(25)
1,048
241,628

29,838(6,191)

29,838(6,191)

(525)
3,242
¥267,695

69
¥366

(525)
3,311
¥268,061

Total

Noncontrolling
Interests

Total
Equity$2,276,708$2,803$2,279,511

Thousands of U.S. Dollars (Note 3)
Accumulated Other Comprehensive
Income (Loss)
Unrealized
Foreign
Gain onCurrency
DefinedAvailable-for- Translation Retirement
Sale Securities Adjustments Benefit Plans

BALANCE, MARCH 31, 2017................... $55,189
Net income attributable to owners of
the parent.............................................
Cash dividends..........................................
Change of scope of consolidation.............
Purchase of treasury stock.........................
Net change in the year..............................
15,000
BALANCE, MARCH 31, 2018................... $70,189$(13,481)$14,792

281,490(58,405)(5,368)$(18,849)

20,953$35,745(4,953)30,585$2,525,425

281,490(58,405)651$3,454(4,953)
31,236$2,528,879

See notes to consolidated financial statements.

Shimadzu Integrated Report 20186

Shimadzu Corporation and Consolidated Subsidiaries

Consolidated Statement of Cash Flows
Year Ended March 31, 2018

Millions of Yen
2018
2017

OPERATING ACTIVITIES:
Income before income taxes........................................................................... ¥41,776
Adjustments for:
Income taxes paid.......................................................................................
(8,814)
Depreciation and amortization....................................................................
10,591
Impairment loss (Note 6).............................................................................
Foreign exchange loss (gain), net.................................................................
22
Loss on sale and retirement of property, plant and equipment....................
30
Changes in assets and liabilities:(6,910)
Increase in trade receivables....................................................................
Increase in allowance for doubtful receivables.........................................
134
Increase in inventories.............................................................................
(5,513)
Increase in trade payables.......................................................................
10,045554
Increase in accrued bonuses....................................................................
Increase in liability for retirement benefits...............................................
1,896(2,596)
Other, net...................................................................................................
Total adjustments...............................................................................
(561)
41,215
Net cash provided by operating activities............................................
INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment......................................
490
Purchases of property, plant and equipment................................................... (11,972)
Purchase of investments in capital of subsidiaries............................................
(1,557)Purchases of investment securities...................................................................
(483)
(157)
Payments of long-term loans receivable..........................................................
Collections of long-term loans receivables.......................................................
45
Increase in treasury shares (Note 2.w)..............................................................
(525)
3,086
Other, net.......................................................................................................
Net cash used in investing activities.................................................... (11,073)
FINANCING ACTIVITIES:(53)
Net decrease in short-term borrowings...........................................................
Borrowings of long-term debt.........................................................................
650
Repayments of long-term debt........................................................................
(1,755)(6,199)Cash dividends paid........................................................................................
(546)
Other, net.......................................................................................................
Net cash used in financing activities....................................................
(7,903)
FORWARD...................................................................................................... ¥22,239

7

Shimadzu Integrated Report 2018

Thousands of
U.S. Dollars(Note 3)
2018

¥36,113$394,113(9,183)
9,547
781
(3)
144

(83,151)
99,915(7,912)145(3,816)
5,183
103
1,190
(2,684)(6,505)29,608(65,189)
1,264(52,009)
94,764
5,226
17,887(24,490)(5,292)
388,821212(11,014)
(886)
(6)
(41)
37
(25)
(581)
(12,304)

4,623(112,943)(14,689)(4,557)(1,481)425(4,953)29,113(104,462)(55)
51(1,633)(5,611)(46)(7,294)¥10,010

(500)
6,132
(16,557)(58,481)(5,151)(74,557)$209,802

208
283

Shimadzu Corporation and Consolidated Subsidiaries

Consolidated Statement of Cash Flows
Year Ended March 31, 2018

Thousands of
U.S. Dollars(Note 3)2018

Millions of Yen
2018
2017

FORWARD...................................................................................................... ¥22,239¥10,010$209,802

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS.......................................................

88(1,222)830

NET INCREASE IN CASH AND CASH EQUIVALENTS...................................

22,327

8,788

210,632

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR............................

52,76343,509497,764

INCREASE IN CASH AND CASH EQUIVALENTS FROMNEWLY CONSOLIDATED SUBSIDIARY.....................................................
CASH AND CASH EQUIVALENTS, END OF YEAR........................................

466¥75,090¥52,763$708,396

See notes to consolidated financial statements.

Shimadzu Integrated Report 20188

Shimadzu Corporation and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
Year Ended March 31, 2018

1. B
 ASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL
STATEMENTS
The accompanying consolidated financial statements of
Shimadzu Corporation (the “Company”) and its significant
subsidiaries (together, the “Group”) have been prepared inaccordance with the provisions set forth in the Japanese
Financial Instruments and Exchange Act and its related
accounting regulations and in accordance with accounting
principles generally accepted in Japan (“Japanese GAAP”),
which are different in certain respects as to the application anddisclosure requirements of International Financial ReportingStandards (“IFRS”).
In preparing these consolidated financial statements, certain
reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order topresent them in a form which is more familiar to readers outside
Japan. In addition, certain reclassifications have been made in
the 2017 consolidated financial statements to conform to theclassifications used in 2018.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation - The consolidated financial statements as ofMarch 31, 2018, include the accounts of the Company andits 23 (24 in 2017) domestic subsidiaries and 51 (50 in 2017)
foreign subsidiaries. Consolidation of the remaining
subsidiaries would not have a material effect on theaccompanying consolidated financial statements.
Under the control concept, those companies in which
the Company, directly or indirectly, is able to exercise control
over operations are fully consolidated.
Investments in 4 (1 in 2017) unconsolidated subsidiaries
and 5 (4 in 2017) associated companies are stated at cost.
The effect on the consolidated financial statements of not
applying the equity method is immaterial.
All significant intercompany balances and transactions
have been eliminated in consolidation. All material
unrealized profit included in assets resulting fromtransactions within the Group is also eliminated.
Shimadzu (Hong Kong) Limited and 11 other subsidiaries
have a closing date falling on December 31; however, thesecompanies carry out provisional settlements of accounts on
March 31 and use these amounts in consolidated accounts.
During the year ended March 31, 2018, Shimadzu
Vacuum Equipment (Shanghai) Co., Ltd. was newly includedin the scope of consolidation due to its new establishment.
b. Unification of Accounting Policies Applied to Foreign
Subsidiaries for the Consolidated Financial Statements- Under Accounting Standards Board of Japan (“ASBJ”)
Practical Issues Task Force (“PITF”) No. 18, “Practical
Solution on Unification of Accounting Policies Applied toForeign Subsidiaries for the Consolidated Financial
Statements,” the accounting policies and procedures applied
to a parent company and its subsidiaries for similartransactions and events under similar circumstances should
in principle be unified for the preparation of theconsolidated financial statements. However, financial
statements prepared by foreign subsidiaries in accordance
9

Shimadzu Integrated Report 2018with either International Financial Reporting Standards orgenerally accepted accounting principles in the United Statesof America (Financial Accounting Standards Board
Accounting Standards Codification) tentatively may be used
for the consolidation process, except for the following items
that should be adjusted in the consolidation process so thatnet income is accounted for in accordance with Japanese
GAAP, unless they are not material: (a) amortization of
goodwill; (b) scheduled amortization of actuarial gain or lossof pensions that has been recorded in equity through othercomprehensive income; (c) expensing capitalized
development costs of R&D; and (d) cancellation of the fairvalue model of accounting for property, plant andequipment and investment properties and incorporation of
the cost model of accounting.
c. Cash Equivalents - Cash equivalents are short-term
investments that are readily convertible into cash exposed toinsignificant risk of changes in value.
Cash equivalents include time deposits that mature or
become due within three months of the date of acquisition.
d. Marketable and Investment Securities - Marketable andinvestment securities are classified and accounted for,depending on management’s intent, as follows: (1) trading
securities, which are held for the purpose of earning capitalgains in the near term, are reported at fair value, and therelated unrealized gains and losses are included in earnings;(2) held-to-maturity debt securities, for which there is apositive intent and ability to hold to maturity, are reported
at amortized cost; and (3) available-for-sale securities, which
are not classified as either of the aforementioned securities,
are reported at fair value, with unrealized gains and losses,
net of applicable taxes, reported in a separate component ofequity.
Non-marketable available-for-sale securities are stated atcost, determined by the moving-average method. For otherthan-temporary declines in fair value, investment securities
are reduced to net realizable value by a charge to income.
e. Inventories - Inventories are principally stated at the lowerof cost, using the periodic average method, or net selling
value.
f. Property, Plant and Equipment - Property, plant andequipment are stated at cost. Depreciation of property,
plant and equipment is computed by the straight-line
method based on the estimated useful lives of the assets.
The range of useful lives is principally from 3 to 75 years forbuildings and structures; from 4 to 17 years for machinery,equipment, and vehicles; and from 2 to 15 years for tools,
furniture, and fixtures. The useful lives for lease assets are
the terms of the respective leases.
Accumulated depreciation at March 31, 2018 and 2017,was ¥89,663 million ($845,877 thousand) and ¥85,640
million, respectively.
g. Long-Lived Assets - The Group reviews its long-lived assets

for impairment whenever events or changes incircumstances indicate that the carrying amount of an asset
or asset group may not be recoverable. An impairment loss
is recognized if the carrying amount of an asset or asset
group exceeds the sum of the undiscounted future cash
flows expected to result from the continued use andeventual disposition of the asset or asset group. The
impairment loss would be measured as the amount bywhich the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted
cash flows from the continued use and eventual dispositionof the asset or the net selling price at disposition.
h. Goodwill - Goodwill is amortized using the straight-line
method over 20 years, while immaterial amounts ofgoodwill are charged to income as incurred. Goodwill is
included in the other assets among the investments andother assets section of the consolidated balance sheet.
i.

Software - Software costs for internal use are capitalized
and amortized by the straight-line method over estimateduseful lives of 5 years.

j.

Retirement and Pension Plans - The Company and certain
domestic subsidiaries have three types of retirement andpension plans covering most of their employees, a cash
balance type defined benefit pension plan, a lump-sum
severance payment plan, and a defined contribution plan or
an advance payment system. Under the defined
contribution plan or advance payment system, employees
can adopt whichever they consider more preferable. Other
domestic subsidiaries have defined benefit pension plans
and lump-sum severance payment plans. Certain foreignsubsidiaries have non-contributory funded pension plans.
Certain consolidated subsidiaries have adopted asimplified method of calculation with liability for retirement
benefits and retirement benefits expense. Under thissimplified method, the retirement benefit obligation for
employees is stated at the amount which would be required
to be paid if all eligible employees voluntarily retired at thebalance sheet date.
The Company has an employee retirement benefit trust
for payments of retirement benefits. The securities thatwere contributed to and held in this trust qualify as plan
assets.
A subsidiary participates in a multi-employer plan forwhich the Company cannot reasonably calculate the amountof plan assets corresponding to the contributions made by
the Company. Therefore, it is accounted for using the same
method as a defined contribution plan.
The domestic subsidiaries also have a retirement plan for
directors and Audit & Supervisory Board members. The
Group provides a liability for the amount that would be
required if all directors and Audit & Supervisory Board
members retired at the end of each financial period. The
accrued provisions are not funded and any amounts payable
upon retirement are included in other long-term liabilities asof March 31, 2018 and 2017.

k. Asset Retirement Obligations - An asset retirement
obligation is recorded for a legal obligation imposed either
by law or contract that results from the acquisition,
construction, development, and normal operation of atangible fixed asset and is associated with the retirement ofsuch tangible fixed asset. The asset retirement obligation isrecognized as the sum of the discounted cash flows required
for the future asset retirement and is recorded in the period
in which the obligation is incurred if a reasonable estimate
can be made. If a reasonable estimate of the asset
retirement obligation cannot be made in the period theasset retirement obligation is incurred, the liability should berecognized when a reasonable estimate of the asset
retirement obligation can be made. Upon initial recognitionof a liability for an asset retirement obligation, an asset
retirement cost is capitalized by increasing the carrying
amount of the related fixed asset by the amount of theliability. The asset retirement cost is subsequently allocatedto expense through depreciation over the remaining usefullife of the asset. Over time, the liability is accreted to its
present value each period. Any subsequent revisions to thetiming or the amount of the original estimate ofundiscounted cash flows are reflected as an adjustment tothe carrying amount of the liability and the capitalized
amount of the related asset retirement cost.
l.

Research and Development Costs - Research anddevelopment costs are charged to income as incurred.

m. Allowance for Doubtful Receivables - The allowance for
doubtful receivables is stated in amounts considered to beappropriate based on the Group’s past credit loss experienceand an evaluation of potential losses in the receivables
outstanding.
n. Leases - Finance lease transactions are capitalized torecognize lease assets and lease obligations in the balance
sheet.
o. Transactions Related to the Board Incentive Plan Trust- Based on the resolution at the general meeting ofshareholders held on June 28, 2017, the Company
introduced the “Board Incentive Plan Trust” (the “Plan”) as aperformance-based stock remuneration plan for directors
and titled corporate officers of the Company (excluding
corporate officers who are non-residents of Japan).
Accounting treatments related to the trust are in accordancewith “Practical Solution on Transactions of Delivering theCompany’s Own Stock to Employees etc. through Trusts”(Practical Issue Task Force No. 30, March 26, 2015).
The Plan is a stock remuneration plan, wherein a trust
established by the Company (Board Incentive Plan Trust)acquires Company shares using the cash contributed by theCompany, and through this trust the Company shares andmoney equivalent to the amount obtained by converting theCompany shares into cash, corresponding to the points
granted based on the degree of achievement of businessperformance each fiscal year and according to the individual
Shimadzu Integrated Report 201810

position of the recipient, are delivered and paid to directors.
The shares of the Company remaining in the trust arerecorded as treasury stock under equity based on the bookvalue (excluding incidental costs) in the trust. The bookvalue of the treasury stock and the number of shares at theend of the current fiscal year were ¥519 million ($4,896
thousand) and 253,200 shares.
In addition, the estimated amount of theaforementioned directors’ remuneration allotted at the endof the current fiscal year was recorded as provision for stock
payment.
p. Bonuses to Directors and Titled Corporate Officers- Bonuses to directors and titled corporate officers are
accrued at the year-end to which such bonuses are
attributable.
q. Income Taxes - The provision for income taxes is computed
based on the pretax income included in the consolidated
statement of income. The asset and liability approach isused to recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of assets
and liabilities. Deferred taxes are measured by applying
currently enacted income tax rates to the temporary
differences.
The Group files a tax return under the consolidated
corporate tax system, which allows companies to base tax
payments on the combined profits or losses of the parent
company and its wholly owned domestic subsidiaries.
The Company applied ASBJ Guidance No. 26, “Guidanceon Recoverability of Deferred Tax Assets,” effective April 1,
2016. There was no impact from the adoption of thisguidance for the year ended March 31, 2017.
r. Appropriations of Retained Earnings - Appropriations ofretained earnings are reflected in the consolidated financial
statements for the following year upon shareholders’approval.
s. Foreign Currency Transactions - All short-term andlong-term monetary receivables and payables denominatedin foreign currencies are translated into Japanese yen at theexchange rates at the consolidated balance sheet date. The
foreign exchange gains and losses from translation arerecognized in the consolidated statement of income in the
period in which they occur.
t. Foreign Currency Financial Statements - The balance
sheet accounts of the consolidated foreign subsidiaries aretranslated into Japanese yen at the current exchange rate asof the balance sheet date, except for equity, which istranslated at the historical exchange rate. Differences
arising from such translation are shown as “Foreign currencytranslation adjustments” in accumulated othercomprehensive income in a separate component of equity.
Revenue and expense accounts of the consolidated foreignsubsidiaries are translated into Japanese yen at the average
11

Shimadzu Integrated Report 2018exchange rate.
u. Derivatives - The Group uses derivative financial
instruments to manage their exposures to fluctuations inforeign currency exchange rates. Foreign exchange forward
contracts are utilized by the Group to reduce foreign
currency exchange rate risk. The Group does not enter into
derivatives for trading or speculative purposes.
Foreign currency forward contracts are measured at fairvalue and the unrealized gains/losses are recognized inincome.
v. Per-Share Information - Basic net income per share iscomputed by dividing net income attributable to commonshareholders by the weighted-average number of commonshares outstanding for the period.
Diluted net income per share is not presented as there
are not any dilutive securities outstanding.
Cash dividends per share presented in the accompanying
consolidated statement of income are dividends applicableto the respective fiscal years, including dividends to be paid
after the end of the year.
w. Changes in Presentation
Compensation Expenses - Prior to April 1, 2017,
compensation expenses were included in other expenses ofincome. Since during this fiscal year ended March 31, 2018,the amount increased significantly, such amount wasdisclosed separately in other expenses of income as ofMarch 31, 2018. The amount included in the otherexpenses as of March 31, 2017, was ¥100 million.
Increase in Treasury Shares - Prior to April 1, 2017,
increase in treasury shares was included in other of cash
flows. Since during this fiscal year ended March 31, 2018,the amount increased significantly, such amount wasdisclosed separately in other of cash flows as of March 31,
2018. The amount included in the other as of March 31,
2017, was ¥(24) million.
x. New Accounting Pronouncements
Implementation guidance on accounting standards oftax effect - On February 16, 2018, ASBJ issued ASBJ
Guidance No. 28, “Implementation Guidance on Tax EffectAccounting,” and ASBJ Guidance No. 26, “Implementation
Guidance on Recoverability of Deferred Tax Assets.”(1) Overview
When authority for providing practical guidelines on theaccounting and auditing treatment of recoverability ofdeferred tax assets (limited to the portion related toaccounting treatment) was transferred from JapaneseInstitute of Certified Public Accountants (“JICPA”) to
ASBJ, “ASBJ fundamentally followed the framework of
the contents.” Necessary revisions to theimplementation guidance were made, as below.
(Main revisions to accounting treatment)( i ) accounting treatments for deductible temporary
differences of stocks of subsidiaries for individual

financial statements, and(ii) accounting treatments for recoverability of deferred
tax assets for entities in Category 1.
(2) Date of adoption
The Company will adopt the revised implementation
guidance from the beginning of the fiscal year ending
March 31, 2019.
(3) Impact of the adoption of the implementation guidance
The Company is in the process of measuring the effects
of applying the revised implementation guidance infuture applicable periods.
Implementation guidance on accounting standards ofrevenue recognition - On March 31, 2018, ASBJ issued
ASBJ Statement No. 29, “Accounting Standard for Revenue
Recognition,” and ASBJ Guidance No. 30, “Implementation
Guidance on Accounting Standard for Revenue
Recognition.”(1) Overview
The International Accounting Standards Board (“IASB”)
and the Financial Accounting Standards Board (“FASB”)
have jointly developed and issued a new comprehensive
revenue standard, “Revenue from Contracts with
Customers” (IFRS 15 issued by IASB and Topic 606
issued by FASB), in May 2014.
As a basic policy, the ASBJ has developed comprehensive
accounting standards for revenue recognition following
the implementation of the requirement for entities toapply IFRS 15 for annual periods beginning on or afterJanuary 1, 2018, and Topic 606 for annual periods
beginning after December 15, 2017.
ASBJ has established a new accounting standard forrevenue recognition based on the basic principles of IFRS
15, focusing on ensuring financial statementcomparability. Also, the accounting convention forrevenue recognition can take priority over the new
accounting standard developed by ASBJ, as reasonable
to ensure financial statement comparability.
(2) Date of adoption
The Company will adopt the revised implementation
guidance from the beginning of the fiscal year ending
March 31, 2022.
(3) Impact of the adoption of the implementation guidance
The Company is in the process of measuring the effects
of applying the revised implementation guidance infuture applicable periods.
3. U.S. DOLLAR AMOUNTS
The consolidated financial statements are stated in Japaneseyen, the currency of the country in which the Company isincorporated and operates. The translations of Japanese yenamounts into U.S. dollar amounts are included solely for theconvenience of readers outside Japan and have been made at
the rate of ¥106 to $1, the approximate rate of exchange at
March 31, 2018. Such translations should not be construed as
representations that the Japanese yen amounts could be
converted into U.S. dollars at that or any other rate.

4. INVESTMENT SECURITIESInvestment securities as of March 31, 2018 and 2017, consistedof the following:Thousands of
U.S. Dollars
2018

Millions of Yen
2018
2017

Non-current:
Marketable equity securities.... ¥15,405 ¥13,110
Non-marketable equity
securities..............................
374
365
20
Debt securities.........................
Total.................................... ¥15,779 ¥13,495$145,330
3,528$148,858

The cost and aggregate fair values of investment securities at
March 31, 2018 and 2017, were as follows:
Cost

Millions of Yen
Unrealized Unrealized
Gains
LossesMarch 31, 2018
Securities classified as:
Available-for-sale equity
securities..................... ¥4,758 ¥10,820
March 31, 2017
Securities classified as:
Available-for-sale equity
securities..................... ¥4,751 ¥8,443

Cost

Fair
Value

¥172 ¥15,406¥84 ¥13,110

Thousands of U.S. Dollars
Unrealized Unrealized
Fair
Gains
LossesValue

March 31, 2018
Securities classified as:
Available-for-sale equity
securities..................... $44,887 $102,076 $1,623 $145,340
5. INVENTORIESInventories at March 31, 2018 and 2017, consisted of thefollowing:
Millions of Yen
2018
2017

Merchandise and finished goods ¥40,068 ¥40,588
Work in process.......................... 19,936 16,899
Raw materials and supplies......... 20,632 19,214
Total........................................... ¥80,636 ¥76,701

Thousands of
U.S. Dollars
2018$378,000
188,075
194,642$760,717

6. LONG-LIVED ASSETS
No impairment loss was recognized for the year ended March
31, 2018.
The Group recognized impairment losses for the year ended
March 31, 2017, as follows:
March 31, 2017
Location

Usage

Description

Brazil, São Paulo State Business assets Goodwill and other assets
Shizuoka Prefecture Idle assets
Land
Ishikawa Prefecture Idle assets
Land

Millionsof Yen

¥451
201
129

Long-lived assets are generally grouped by businesssegments for management accounting. The Group has
Shimadzu Integrated Report 201812

recognized impairment losses on business assets, due to thefact that originally expected revenue and profitability in thebusiness plan created when the Group acquired the business is
no longer expected, and on idle assets due to a significant
decline in their market value, by recording these impairment
losses as other expenses.
The full amount of the unamortized balance of goodwill andother assets is impaired and recognized as an impairment loss.
The net realizable value for idle assets is based on their net
selling price. The selling price is estimated by using theirdisposal price.
7. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings primarily consisted of bank overdrafts
and financing agreements with banks, which are renewable on
an annual basis and bear interest at annual rates ranging from
0.36% to 4.12% and from 0.33% to 4.30%, at March 31, 2018and 2017, respectively.
Long-term debt at March 31, 2018 and 2017, consisted of
the following:
Millions of Yen
2018
2017

Thousands of
U.S. Dollars
20180.30% unsecured bonds,
due June 2019......................... ¥15,000 ¥15,000 $141,509
Borrowings, principally frombanks, due serially to 2021
with interest rates ranging
from 0.35% to 3.60% (from0.49% to 3.60%, due seriallyto 2021 at March 31, 2017)..... 1,202
1,141
11,340Obligations under finance leases... 3,047
2,767
28,745
Total.................................... 19,249 18,908
181,594
Less current portion.................... (1,761) (1,501)(16,613)Long-term debt, less current
portion.................................... ¥17,488 ¥17,407 $164,981
Annual maturities of long-term debt outstanding at March 31,2018 were as follows:Year Ending March 31

2019.................................................
2020.................................................
2021.................................................
2022.................................................
2023.................................................
2024 and thereafter..........................
Total.................................................

Millions of Yen

Thousands of
U.S. Dollars¥ 1,761
16,113
828
344
175
28
¥19,249$ 16,613
152,009
7,811
3,246
1,651
264
$181,594

8. RETIREMENT AND PENSION PLANS
The Company and certain consolidated subsidiaries haveseverance payment plans for employees. In addition,
consolidated domestic subsidiaries have severance payment
plans for directors and Audit & Supervisory Board members.
Under most circumstances, employees terminating theiremployment are entitled to retirement benefits determinedbased on the basic rate of pay at the time of termination, yearsof service, and certain other factors. Such retirement benefits
are made in the form of a lump-sum severance payment fromthe Company or from certain consolidated domestic subsidiaries
13

Shimadzu Integrated Report 2018

and annuity payments from a trustee. Employees are entitled tolarger payments if the termination is involuntary, by retirement
at the mandatory retirement age or certain other conditions.
The liability for retirement benefits at March 31, 2018 and2017, for directors and Audit & Supervisory Board members is¥169 million ($1,594 thousand) and ¥185 million, respectively.
The retirement benefits for directors and Audit & Supervisory
Board members are paid subject to the approval of theshareholders of each subsidiary.
(1) The changes in defined benefit obligation for the years
ended March 31, 2018 and 2017, were as follows:
Millions of Yen
2018
2017

Thousands of
U.S. Dollars
2018

Balance at beginning of year....... ¥52,486 ¥51,640 $495,151
Current service cost................. 2,183
2,101
20,594
Interest cost............................
655
630
6,179
Actuarial (gains) losses.............
(351) 1,419(3,311)
Benefits paid........................... (2,479) (2,438)(23,387)
Past service cost......................
(278)(2,623)(866)
12,539Others..................................... 1,329
Balance at end of year................ ¥53,545 ¥52,486 $505,142(2) The changes in plan assets for the years ended March 31,2018 and 2017, were as follows:
Millions of Yen
2018
2017

Thousands of
U.S. Dollars
2018

Balance at beginning of year....... ¥48,177 ¥40,395 $454,500
Expected return on plan
assets...................................
826
930
7,792
Actuarial gains........................ 2,868
4,732
27,057
Contributions from theemployer............................. 4,260
4,347
40,189Benefits paid........................... (1,703) (1,691)(16,066)
247
(536)
2,330
Others.....................................
Balance at end of year................ ¥54,675 ¥48,177 $515,802(3) The changes in net defined benefit liability for the plans towhich the simplified method was applied for the years
ended March 31, 2018 and 2017, were as follows:
Millions of Yen
2018
2017

Balance at beginning of year....... ¥2,694 ¥2,439
Net periodic benefit costs........
577
625
Benefits paid...........................
(240)
(167)
Contributions from theemployer.............................
(179)
(203)
Balance at end of year................ ¥2,852 ¥2,694

Thousands of
U.S. Dollars
2018$25,415
5,443(2,264)(1,688)$26,906(4) A reconciliation between the liability recorded in the
consolidated balance sheet and the balances of defined
benefit obligation and plan assets as of March 31, 2018 and2017, were as follows:Thousands of
U.S. Dollars
2018

Millions of Yen
2018
2017

Funded defined benefit obligation... ¥57,714 ¥56,466
Plan assets.................................. (57,435) (50,804)
279
5,662
Unfunded defined benefit
obligation................................ 1,444
1,340
Net liability arising from defined
benefit obligation.................... ¥ 1,723 ¥ 7,002
Liability for retirement benefits... ¥ 9,733 ¥10,708
3,706
Asset for retirement benefits...... 8,010
Net liability arising from defined
benefit obligation.................... ¥ 1,723 ¥ 7,002$544,472(541,840)
2,632
13,623$ 16,255$ 91,821
75,566$ 16,255(5) The components of net periodic benefit costs for the years
ended March 31, 2018 and 2017, were as follows:
Thousands of
U.S. Dollars
2018

Millions of Yen
2018
2017

Service cost................................ ¥2,183 ¥2,101
Interest cost................................
655
630
Expected return on plan assets...
(826)
(930)
Amortization of prior service cost...
(262)
(243)
Recognized actuarial (gains) losses..
(27)
739
625
Others........................................ 1,514
Net periodic benefit costs........... ¥3,237 ¥2,922$20,594
6,179(7,792)(2,472)(254)
14,283$30,538(6) Amounts recognized in other comprehensive income (before
income tax effect) in respect of defined retirement benefit
plans for the years ended March 31, 2018 and 2017:
Thousands of
U.S. Dollars
2018

Millions of Yen
2018
2017

Prior service cost......................... ¥   16Actuarial gains............................ 3,077
Total........................................... ¥3,093$  151
29,028$29,179¥ (243)
4,304¥4,061(7) Amounts recognized in accumulated other comprehensive
income (before income tax effect) in respect of defined
retirement benefit plans as of March 31, 2018 and 2017:
Thousands of
U.S. Dollars
2018

Millions of Yen
2018
2017

Unrecognized prior service cost.. ¥1,145
Unrecognized actuarial gains...... 4,384
Total........................................... ¥5,529¥1,1291,307¥2,436$10,80241,358$52,160(8) Plan assets
a. Components of plan assets
Plan assets as of March 31, 2018 and 2017, consisted of
the following:
2018

2017

Debt investments........................ 22%
Equity investments...................... 62
General account asset................. 13
3
Others........................................
Total........................................... 100%

20%
67
12
1
100%

b. Method of determining the expected rate of return onplan assets
The expected rate of return on plan assets is determinedconsidering the long-term rates of return which are
expected currently and in the future from the various
components of the plan assets.
(9) Assumptions used for the years ended March 31, 2018 and2017, were set forth as follows:
Discount rate..............................
Expected rate of return on plan
assets......................................

2018

2017

1.0%

1.0%

1.5%

2.5%

The expected compensation increase rate for the years
ended March 31, 2018 and 2017, is based on the agespecific compensation increase index as of March 31, 2015.
9. EQUITY
Japanese companies are subject to the Companies Act of Japan(the “Companies Act”). The significant provisions in the
Companies Act that affect financial and accounting matters are
summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends at
any time during the fiscal year in addition to the year-end
dividend upon resolution at the shareholders’ meeting.
Additionally, for companies that meet certain criteria
including (1) having a Board of Directors, (2) having
independent auditors, (3) having an Audit & Supervisory
Board, and (4) the term of service of the directors beingprescribed as one year rather than the normal two-year termby its articles of incorporation, the Board of Directors may
declare dividends (except for dividends-in-kind) at any time
during the fiscal year if the company has prescribed so in its
articles of incorporation. However, the Company does notmeet all the above criteria.
The Companies Act permits companies to distributedividends-in-kind (non-cash assets) to shareholders subject
to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a
year upon resolution by the Board of Directors if the articles
of incorporation of the company so stipulate. The
Companies Act provides certain limitations on the amounts
available for dividends or the purchase of treasury stock.
The limitation is defined as the amount available for
distribution to the shareholders.
b. Increases/Decreases and Transfer of Common Stock,
Reserve, and Surplus
The Companies Act requires that an amount equal to 10%
of dividends must be appropriated as a legal reserve (acomponent of retained earnings) or as additional paid-in
capital (a component of capital surplus), depending on theequity account charged upon the payment of such
dividends, until the aggregate amount of legal reserve andadditional paid-in capital equals 25% of the common stock.
Shimadzu Integrated Report 201814

Under the Companies Act, the total amount of additional
paid-in capital and legal reserve may be reversed without
limitation. The Companies Act also provides that common
stock, legal reserve, additional paid-in capital, other capitalsurplus, and retained earnings can be transferred among theaccounts within equity under certain conditions upon
resolution of the shareholders.
c. Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchasetreasury stock and dispose of such treasury stock byresolution of the Board of Directors. The amount oftreasury stock purchased cannot exceed the amountavailable for distribution to the shareholders, which isdetermined by a specific formula. Under the Companies
Act, stock acquisition rights are presented as a separate
component of equity. The Companies Act also provides thatcompanies can purchase both treasury stock acquisitionrights and treasury stock. Such treasury stock acquisitionrights are presented as a separate component of equity or
deducted directly from stock acquisition rights.
10. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were
¥9,676 million ($91,283 thousand) and ¥9,297 million for theyears ended March 31, 2018 and 2017, respectively.
11. INCOME TAXESThe Company and its domestic subsidiaries are subject toJapanese national and local income taxes which, in theaggregate, resulted in a normal effective statutory tax rate of
approximately 31% for the years ended March 31, 2018 and2017.
The tax effects of significant temporary differences and tax
loss carryforwards which resulted in deferred tax assets andliabilities at March 31, 2018 and 2017, were as follows:
Millions of Yen
2018
2017

Current:
Deferred tax assets:
Accrued bonuses................. ¥2,594
Unrealized profit eliminatedfrom inventories............... 2,819
Loss on devaluation of
inventories........................ 1,104
Enterprise taxes....................
442
Allowance for doubtfulreceivables........................
274
Other................................... 2,588
Total
9,821
(1)
Less valuation allowance......
¥9,820Total deferred tax assets
Deferred tax liability................ ¥  159Net deferred tax assets............ ¥9,662
Net deferred tax liabilities(included in other current
liabilities).............................. ¥    1
15Shimadzu Integrated Report 2018

Thousands of
U.S. Dollars
2018¥2,471$24,472

2,794

26,594

1,189
336

10,415
4,170

242
2,679
9,711
(12)
¥9,699¥   97¥9,603

2,585
24,41592,651(9)$92,642$ 1,500$91,151¥    1$     9Millions of Yen
2018
2017

Noncurrent:
Deferred tax assets:
Liability for retirement
benefits............................ ¥ 6,326 ¥ 8,209
Depreciation........................ 2,509
2,245
Tax loss carryforwards..........
23
50
Loss on impairment of
301
301
long-lived assets...............
812
Other................................... 1,077
Total............................. 10,236 11,617
(783)
(767)
Less valuation allowance......
Total deferred tax assets...... ¥ 9,453 ¥10,850
Deferred tax liabilities:
Gain on securities
contributed to employee
retirement benefit trust.... ¥ 4,014 ¥ 4,014
Unrealized gain on
available-for-salesecurities.......................... 3,207
2,508
398
494
Other...................................
Total deferred tax liabilities.. ¥ 7,619 ¥ 7,016
Net deferred tax assets............ ¥ 3,089 ¥ 4,161
Net deferred tax liabilities(included in other long-term
liabilities).............................. ¥ 1,255 ¥   327

Thousands of
U.S. Dollars
2018$59,679
23,670217
2,840
10,16096,566(7,387)$89,179$37,868
30,255
3,754$71,877$29,142$11,840

The above net deferred tax assets and liabilities represent
the aggregate amounts of each individual taxpayer’s net
deferred tax assets or liabilities.
A reconciliation between the normal effective statutory tax
rates and the actual effective tax rates reflected in theaccompanying consolidated statement of income for the year
ended March 31, 2018, with the corresponding figures for theyear ended March 31, 2017, is as follows:
2018

Normal effective statutory tax rate................ 30.8%
Expenses not permanently deductible forincome tax purposes................................. 0.8
Valuation allowance...................................... 0.8
Per capita inhabitant tax............................... 0.3
Difference in subsidiaries' tax rates............... (1.4)
Tax credit for research and development
costs......................................................... (4.0)
Other, net..................................................... 1.1
Actual effective tax rate................................ 28.4%

2017

30.8%
0.6
0.1
0.3
(2.0)
(3.9)
0.6
26.5%

12. LEASESLESSEEThe Group leases certain office space, computer equipment andother assets.
Total rental expenses for the years ended March 31, 2018and 2017, were ¥7,080 million ($66,792 thousand) and ¥6,489
million, respectively.
Future minimum payments under noncancelable operatingleases as of March 31, 2018 and 2017, were as follows:Millions of Yen
2018
2017

Due within one year................... ¥  857Due after one year...................... 1,222
Total........................................... ¥2,079¥  843
1,472¥2,315

Thousands of
U.S. Dollars
2018$ 8,085
11,528$19,613LESSOR
Future lease income under noncancelable operating leases as ofMarch 31, 2018 and 2017, was as follows:
Millions of Yen
2018
2017

Due within one year...................
Due after one year......................
Total...........................................

¥100
202
¥302

¥101
303
¥404

Thousands of
U.S. Dollars
2018$  943
1,906$2,84913. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group Policy for Financial Instruments
The Group uses financial instruments such as loans frombanks, bonds, and commercial paper. Cash surpluses, if any,
are invested in low-risk financial assets such as deposits.
Derivatives are used, not for speculative purposes, but tomanage exposure to financial risks as described in (2) below.

hedge foreign currency exposures incorporated within theGroup’s business. Accordingly, market risk in thesederivatives is generally offset by opposite movements in thevalue of hedged assets or liabilities, except for credit-related
market risk.
Because the counterparties to these derivatives arelimited to major international financial institutions, theGroup does not anticipate any losses arising from credit risk.
Derivative transactions entered into by the Group havebeen made in accordance with internal policies under thesupervision of the director in charge of the financedepartment.
The contract or notional amounts of derivatives which
are shown in the table in Note 14 do not represent theamounts exchanged by the parties and do not measure theCompany’s exposure to credit or market risk. Please see
Note 14 for more details about derivatives.
(3) Fair Values of Financial Instruments
Carrying amount, fair value, and unrealized gains (losses) offinancial instruments are as follows. Financial instruments
whose fair value cannot be reliably determined are notincluded in the following table.
(a) Fair value of financial instruments(2) Nature and Extent of Risks Arising from Financial
Instruments and Risk Management for Financial Instruments
Receivables, such as trade notes and trade accounts, are
Receivables, such as trade notes and trade accounts, areexposed to customer credit risk. Such customer credit risk ismanaged by administering the term and balance according
to the Group’s policies and by monitoring indications ofdeterioration of the financial condition of customers.
Although receivables in foreign currencies are exposed tothe market risk of fluctuation in foreign currency exchange
rates, the position is hedged by using forward foreign
currency contracts. Investment securities, mainly equity
instruments of customers and suppliers of the Group, areexposed to the risk of market price fluctuations. The risk ismanaged by monitoring market values and financial
positions of issuers on a regular basis.
Payment terms of payables, such as trade notes andtrade accounts, are generally less than one year. Althoughpayables in foreign currencies are exposed to the market riskof fluctuation in foreign currency exchange rates, those risks
are netted against the balance of receivables denominatedin the same foreign currencies as noted above.
Short-term loans and commercial paper are mainly used
for operating activities, and long-term loans and bonds aremainly used for investment in property, plant andequipment. A part of such loans is exposed to market risks
of interest rate fluctuation. Although payables and loans
are exposed to liquidity risk, such risk is managed by making
monthly cash flow plans.
The Group enters into foreign currency forward
contracts to hedge exchange rate risk associated withcertain assets and liabilities denominated in foreign
currencies. All derivative transactions are entered into toMillions of Yen
Carrying
AmountMarch 31, 2018
Cash and cash equivalents... ¥ 75,090
Time deposits......................
1,837
Trade receivables................. 119,118
15,405Investment securities...........
Total.................................... ¥211,450
Short-term borrowings........ ¥  2,435
Trade notes and accounts
payable............................
66,589Long-term debt: Bonds
payable............................
15,000Total.................................... ¥ 84,024
Derivatives........................... ¥     30Fair Value¥ 75,090
1,837
119,036
15,405¥211,368¥  2,435

Unrealized
Gains(Losses)

¥(82)
¥(82)

66,58915,030¥ 84,054¥     30

¥(30)
¥(30)

Millions of Yen
Carrying
AmountMarch 31, 2017
Cash and cash equivalents... ¥ 52,763
Time deposits......................
3,935
Trade receivables................. 112,878
13,110Investment securities...........
Total.................................... ¥182,686
Short-term borrowings........ ¥  2,473
Trade notes and accounts
payable............................
57,263Long-term debt: Bonds
payable............................
15,000Total.................................... ¥ 74,736
Derivatives........................... ¥     51Fair Value¥ 52,763
3,935
112,825
13,110¥182,633¥  2,473

Unrealized
Gains(Losses)

¥(53)
¥(53)

57,263
15,071¥ 74,807¥     51

¥(71)
¥(71)

Shimadzu Integrated Report 201816

Thousands of U.S. Dollars
Unrealized
Carrying
Gains
AmountFair Value(Losses)March 31, 2018
Cash and cash equivalents.. $  708,396 $  708,396
Time deposits...................
17,33017,330Trade receivables.............. 1,123,755 1,122,982
145,330
145,330
Investment securities........
Total................................. $1,994,811 $1,994,038
Short-term borrowings..... $   22,972 $   22,972
Trade notes and accounts
payable.........................
628,198
628,198
Long-term debt: Bonds
payable.........................
141,509141,792
Total................................. $  792,679 $  792,962
Derivatives........................ $      283 $      283

(4) Maturity Analysis for Financial Assets and Securities with
Contractual Maturities$(773)$(773)$(283)$(283)Cash and Cash Equivalents and Time Deposits
The carrying values of cash and cash equivalents and time
deposits approximate fair value because of their shortmaturities.
Trade Receivables
The fair values of trade receivables are measured at the amountto be received at maturity discounted at the Group-assumed
corporate discount rate.
Investment Securities
The fair values of investment securities are measured at thequoted market price of the stock exchange for equity
instruments. Fair value information for investment securities byclassification is included in Note 4.
Trade Notes and Accounts Payable, Short-Term Borrowings
The carrying values of trade notes and accounts payable, shortterm borrowings, and commercial paper approximate fair value
because of their short maturities.
Long-Term Debt: Bonds Payable
The fair values of bonds payable are measured at the market price.
Derivatives
Fair value information for derivatives is included in Note 14.
(b) Carrying amount of financial instruments whose fair value
cannot be reliably determined
Millions of Yen
2018
2017

Investments in equity
instruments that do not havea quoted market price in an
active market.......................... ¥  374Stocks of subsidiaries andassociated companies..............
685
Bonds that do not have aquoted market price in an
active market..........................
Total........................................... ¥1,059

¥365
284
20
¥669

Thousands of
U.S. Dollars
2018$3,528

Shimadzu Integrated Report 2018

March 31, 2018
Cash and cash equivalents..............
Time deposits.................................
Trade receivables............................
Total...............................................

Millions of Yen
Due inDue after
1 Year or Less
1 Year¥ 75,090
1,837
118,967¥195,894

¥151
¥151

Thousands of U.S. Dollars
Due inDue after
1 Year or Less
1 YearMarch 31, 2018
Cash and cash equivalents.............. $  708,396
Time deposits.................................
17,330Trade receivables............................ 1,122,330
Total............................................... $1,848,056$1,425$1,425

Please see Note 7 for annual maturities of long-term debt.
14. DERIVATIVESThe Group enters into foreign currency forward contracts tohedge exchange rate risk associated with certain assets andliabilities denominated in foreign currencies. All derivativetransactions are entered into to hedge foreign currency
exposures incorporated within the Group’s business.
Accordingly, market risk in these derivatives is generally offset
by opposite movements in the value of hedged assets or
liabilities, except for credit-related market risk.
Because the counterparties to these derivatives are limited
to major international financial institutions, the Group does not
anticipate any losses arising from credit risk.
Derivative transactions entered into by the Group have been
made in accordance with internal policies under the supervisionof the director in charge of the finance department.
The contract or notional amounts of derivatives which are
shown in the following table do not represent the amounts
exchanged by the parties and do not measure the Company’s
exposure to credit or market risk.
The Company has the following derivative contracts
outstanding as of March 31, 2018 and 2017:
In Thousands
Contract or
Notional
AmountForward exchange contracts:
Selling USD..........................USD66,000
Selling Euro..........................EUR15,000
Buying USD..........................USD2,050

6,463

In Thousands
Contract or
Notional
Amount$9,991

Forward exchange contracts:
Selling USD..........................USD78,000
Selling Euro..........................EUR15,000
Buying USD..........................USD1,072

It is extremely difficult to calculate their fair values because
17

there are no market prices. Therefore, these items are notincluded in “(a) Investment securities.”

2018
Millions of Yen
Unrealized
Fair
Gains
Value
(Losses)

¥ 8
23
(1)

¥ 8
23
(1)

2017
Millions of Yen
Unrealized
Fair
Gains
Value
(Losses)

¥42
10
(1)

¥42
10
(1)

In Thousands
Contract or
Notional
AmountForward exchange contracts:
Selling USD..........................USD66,000
Selling Euro..........................EUR15,000
Buying USD..........................USD2,050

2018
Thousands of U.S. Dollars
Unrealized
Fair
Gains
Value
(Losses)

$ 75
217
(9)

$ 75
217
(9)

The fair value is estimated based on quotes from financial
institutions.
15. OTHER COMPREHENSIVE INCOME
The components of other comprehensive income for the years
ended March 31, 2018 and 2017, were as follows:
Millions of Yen
2018
2017

Thousands of
U.S. Dollars
2018

Unrealized gain on available-forsale securities:
Gains arising during the year... ¥2,289 ¥1,178
Amount before income tax
effect................................... 2,289
1,178
(698)
(365)
Income tax effect....................
¥813
Total................................. ¥1,591
Foreign currency translation
adjustments:
Adjustments arising during
the year............................... ¥ (566) ¥(2,450)
Total................................. ¥ (566) ¥(2,450)
Defined retirement benefit plans:
Adjustments arising during
the year............................... ¥3,347 ¥3,565
Reclassification adjustments
to profit or loss....................
(254)
496
Amount before income tax
effect................................... 3,093
4,061(874) (1,122)
Income tax effect....................
Total................................. ¥2,219 ¥2,939
Total other comprehensive
income.................................... ¥3,244 ¥1,302$21,594
21,594(6,584)$15,010$(5,340)$(5,340)$31,575(2,396)29,179(8,245)$20,934$30,604

16. NET INCOME PER SHARE
Basic net income per share (“EPS”) for the years ended March
31, 2018 and 2017, was as follows:
Millions of
YenNet
IncomeThousandsof Shares
WeightedAverage
SharesU.S.
Dollars

Yen
EPS

Year Ended March 31, 2018:
Basic EPS
Net income available tocommonshareholders............. ¥29,838 294,668 ¥101.26
Year Ended March 31, 2017:
Basic EPS
Net income available tocommonshareholders............. ¥26,473 294,832

Diluted EPS for the years ended March 31, 2018 and 2017, is notdisclosed because no potentially dilutive securities areoutstanding.
17. SUBSEQUENT EVENTSAppropriation of Retained Earnings
The following appropriation of retained earnings at March 31,
2018, was approved at the Company’s shareholders’ meeting
held on June 27, 2018:
Year-end cash dividends, ¥13.00 ($0.12)
per share................................................

Millions ofYen

Thousands of
U.S. Dollars¥3,832$36,151

18. SEGMENT INFORMATION
Under ASBJ Statement No. 17, “Accounting Standard forDisclosures about Segments of an Enterprise and RelatedInformation” and ASBJ Guidance No. 20, “Guidance on
Accounting Standard for Disclosures about Segments of anEnterprise and Related Information,” an entity is required toreport financial and descriptive information about its reportablesegments. Reportable segments are operating segments oraggregations of operating segments that meet specified criteria.
Operating segments are components of an entity about which
separate financial information is available and for which suchinformation is evaluated regularly by the chief operating
decision-maker in deciding how to allocate resources and inassessing performance. Generally, segment information isrequired to be reported on the same basis as is used internallyfor evaluating operating segment performance and deciding
how to allocate resources to operating segments.
(1) Description of Reportable Segments
The Group’s reportable segments are those for which
separate financial information is available and regular
evaluation by the Company’s management is being
performed in order to decide how resources are allocatedamong the Group. As such, the Group’s reportablesegments consist of Analytical and Measuring Instruments,
Medical Systems and Equipment, Aircraft Equipment, andIndustrial Machinery.
(2) Methods of Measurement for the Amounts of Sales,
Profit (Loss), Assets, and Other Items for Each
Reportable Segment
The accounting policies of each reportable segment areconsistent with those disclosed in Note 2, “Summary of
Significant Accounting Policies.”$0.96¥89.79
Shimadzu Integrated Report 201818

(3) Information about Sales, Profit (Loss), Assets and Other Items
Millions of Yen
2018
Reportable Segment
MedicalAnalytical
Systemsandand
AircraftIndustrial
Measuring
Instruments Equipment Equipment Machinery

Sales:
Sales to external customers.. ¥231,561
Intersegment sales ortransfers...........................
40
Total................................. ¥231,601
Segment profit........................ ¥ 37,046
Segment assets........................ 201,465
Other:
Depreciation.........................
6,087
Increase in property, plant andequipment and intangible assets..
8,841

Total

Other

Total

Reconciliations Consolidated¥65,916¥27,639¥44,191 ¥369,307¥7,224 ¥376,531¥376,531

20¥65,936¥ 2,701
57,40988¥27,727¥   479
50,781

120
268¥44,311 ¥369,575¥ 4,084 ¥ 44,310
40,183 349,838

1,642
1,910
¥8,866 ¥378,441¥  892 ¥ 45,202
9,518 359,356¥(1,910)¥(1,910) ¥376,531¥(2,380) ¥ 42,822
60,409 419,765

1,876

944

1,428

10,335255

10,59010,590

2,963

2,667

2,069

16,540648

17,18817,188Millions of Yen
2017
Reportable Segment
MedicalAnalytical
Systemsandand
AircraftIndustrial
Measuring
Instruments Equipment Equipment Machinery

Sales:
Sales to external customers.. ¥209,238
Intersegment sales ortransfers...........................
84
Total................................. ¥209,322
Segment profit........................ ¥ 33,052
Segment assets........................ 187,562
Other:
Depreciation.........................
5,402
Increase in property, plant andequipment and intangible assets..
7,032

Total

Other

Total

Reconciliations Consolidated¥64,376¥26,729¥36,158 ¥336,501¥5,979 ¥342,480¥342,48011¥64,387¥ 1,922
58,292

85¥26,814¥   776
50,57783
263¥36,241 ¥336,764¥ 2,671 ¥ 38,421
35,539 331,970

1,498
1,761
¥7,477 ¥344,241¥  883 ¥39,304
8,408 340,378¥(1,761)¥(1,761) ¥342,480¥(2,214) ¥ 37,090
34,976 375,354

1,721

899

1,286

9,308

239

9,547

9,547

2,115

1,111

2,320

12,578299

12,877

12,877

Thousands of U.S. Dollars
2018
Reportable Segment
MedicalAnalytical
Systemsandand
AircraftIndustrial
Measuring
Instruments Equipment Equipment Machinery

Sales:
Sales to external customers..$2,184,538
Intersegment sales ortransfers...........................
377
Total.................................$2,184,915
Segment profit........................$  349,491
Segment assets........................ 1,900,613
Other:
Depreciation.........................
57,425
Increase in property, plant andequipment and intangible assets..
83,406

Shimadzu Integrated Report 2018

Other

Total

Reconciliations
Consolidated$621,849$260,745$416,896 $3,484,028$68,151 $3,552,179$3,552,179

189$622,038$ 25,481
541,594

830$261,575$  4,519
479,066

1,132
2,528
$418,028 $3,486,556$ 38,528 $  418,019
379,085 3,300,358

15,49118,019$83,642 $3,570,198$ 8,415 $  426,434
89,794 3,390,152$(18,019)$(18,019)$3,552,179$(22,453)$  403,981
569,896 3,960,048

17,698

8,906

13,47297,501

2,405

99,90699,906

27,95325,16019,519156,038

6,113

162,151

162,151“Reconciliations” of segment profit include eliminations ofintersegment transactions of ¥2,380 million ($22,453 thousand)and ¥2,214 million as of March 31, 2018 and 2017, respectively.
“Reconciliations” of segment assets include eliminations ofintersegment receivables of ¥2,920 million ($27,547 thousand)and ¥3,174 million, and unallocated corporate assets of ¥63,329
19

Total

million ($597,443 thousand) and ¥38,150 million as of March
31, 2018 and 2017, respectively, consisting principally of working funds and investing funds held by the Company and assets
attributed to the Company’s administration headquarters.
Segment profit has been adjusted to operating income in the
consolidated statement of income.

(4) The Geographical Segments of the Groupa. SalesMillions of Yen
United Statesof AmericaJapan

2018...........................................

¥187,667¥41,833

EuropeChina¥27,605¥68,440

Other Asia

Other¥34,133

Total¥16,853¥376,531

Millions of Yen
United Statesof AmericaJapan

2017...........................................

¥175,906¥37,033

EuropeChina¥24,895¥56,149

Other Asia

Other

¥32,951

Total¥15,546¥342,480

Thousands of U.S. Dollars
Japan2018........................................... $1,770,443

United Statesof America

EuropeChina

Other Asia

Other

Total

$394,651$260,425$645,660$322,009$158,991$3,552,179

b. Property, plant and equipment
Millions of Yen

Thousands of U.S. Dollars

2018

2017

2018

Japan

Foreign
Countries

Total

Japan

Foreign
Countries

Foreign
Countries¥71,421¥12,715¥84,136¥66,945¥11,807

Total

Japan

Total

¥78,752 $673,786 $119,954 $793,740(5) Amortization and the Balance of Goodwill of the Group
Millions of Yen
AnalyticalandMeasuring
Instruments

MedicalSystems
andEquipment

Aircraft
Equipment¥34

Amortization of goodwill............
Goodwill at March 31, 2018.......

Industrial
Machinery

Other

Elimination/
Corporate

¥ 14
¥216

Total

¥ 48
¥216

Millions of Yen
AnalyticalandMeasuring
Instruments

Amortization of goodwill............
Goodwill at March 31, 2017.......

MedicalSystems
andEquipment

Aircraft
Equipment¥24¥34

Industrial
Machinery

Other

Elimination/
Corporate

¥ 13
¥230

Total

¥ 37
¥264

Thousands of U.S. Dollars
AnalyticalandMeasuring
Instruments

MedicalSystems
andEquipment

Aircraft
Equipment$321

Amortization of goodwill............
Goodwill at March 31, 2018.......

Industrial
Machinery

Other

Elimination/
Corporate$  132$2,038Total$  453$2,038(6) Impairment Losses on Assets of the GroupNo impairment loss was recognized for the year ended March 31, 2018.
Millions of Yen

2017

Impairment losses on assets........

AnalyticalandMeasuring
Instruments

MedicalSystems
andEquipment

Aircraft
Equipment

Industrial
Machinery

¥604

¥83

¥58

¥36

Other

Elimination/
Corporate

Total

¥781

******

Shimadzu Integrated Report 201820

Deloitte Touche Tohmatsu LLC
Shijokarasuma FT Square
20, Naginataboko-cho
Karasuma-higashiiru, Shijo-doriShimogyo-ku, Kyoto 600-8008
Japan
Tel: +81 (75) 222 0181
Fax: +81 (75) 231 2703
www.deloitte.com/jp

INDEPENDENT AUDITOR'S REPORTTo the Board of Directors and Shareholders of Shimadzu Corporation:
We have audited the accompanying consolidated balance sheet of Shimadzu Corporation and its consolidated
subsidiaries as of March 31, 2018, and the related consolidated statements of income, comprehensive income,changes in equity, and cash flows for the year then ended, and a summary of significant accounting policies andother explanatory information, all expressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inaccordance with accounting principles generally accepted in Japan, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparationand fair presentation of the consolidated financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theentity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by management, as well as evaluating the overall presentation of theconsolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Shimadzu Corporation and its consolidated subsidiaries as of March 31, 2018,
and the consolidated results of their operations and their cash flows for the year then ended in accordance withaccounting principles generally accepted in Japan.
Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our
opinion, such translation has been made in accordance with the basis stated in Note 3 to the consolidated financial
statements. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.
June 28, 2018

Member of
Deloitte Touche Tohmatsu Limited
21

Shimadzu Integrated Report 2018

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