Consolidated Financial Statements
Yodogawa Steel Works, Ltd.
and Consolidated Subsidiaries
March 31, 2017with Independent Auditor’s Report

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Consolidated Financial Statements
March 31, 2017

Contents
Independent Auditor’s Report ............................................................................................. 1

Consolidated Financial Statements
Consolidated Balance Sheet ................................................................................................ 2
Consolidated Statement of Operations ................................................................................ 4
Consolidated Statement of Comprehensive Income ........................................................... 5
Consolidated Statement of Changes in Net Assets ............................................................. 6
Consolidated Statement of Cash Flows ............................................................................... 8
Notes to Consolidated Financial Statements ..................................................................... 10

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Consolidated Balance Sheet
March 31, 2017

Millions of yen
2016
2017
AssetsCurrent assets:
Cash and deposits (Notes 5, 6 and 12)
Marketable securities (Notes 6 and 7)
Notes and accounts receivable (Note 6):
Unconsolidated subsidiaries and affiliates(Note 23)
Trade
Less allowance for doubtful receivables
Inventories (Note 8)
Deferred income taxes (Note 15)
Other current assets (Note 5)
Total current assets

Property, plant and equipment:
Land (Notes 9, 18 and 24)
Buildings and structures (Notes 9 and 24)
Machinery, equipment and vehicles (Note 9)
Leased assets (Note 20)
Construction in progress
Less accumulated depreciation
Property, plant and equipment, net (Note 25)

Investments and other assets:
Investments in securities (Notes 6, 7 and 12)
Investments in unconsolidated subsidiaries andaffiliates (Note 25)
Goodwill (Notes 9 and 25)
Deferred income taxes (Note 15)
Intangible assets
Other assets (Note 12)
Total investments and other assets

Total assets (Note 25)

2

Thousands of
U.S. dollars(Note 4)2017

¥ 46,503
100¥ 40,762–$ 363,330–

14,191
23,489(112)
25,189546
7,647
117,553

14,71926,384(114)
25,508529
6,400
114,188

131,197
235,173(1,016)
227,364
4,715
57,046
1,017,809

18,38558,637
141,798
1,500
659(170,341)
50,63818,68659,869142,692
1,409
766(172,534)
50,888

166,557
533,639
1,271,878
12,5596,828(1,537,873)
453,588

29,91837,558334,771

4,879
14
782
1,274
802
37,669

5,017
11
403
1,417
496
44,902

44,71998
3,592
12,6304,421
400,231¥ 205,860¥ 209,978$ 1,871,628

Millions of yen
2016
2017
Liabilities and net assets
Current liabilities:
Current portion of finance lease obligations(Note 10)Notes and accounts payable (Note 6):
Unconsolidated subsidiaries and affiliates
Trade
Construction
Short-term loans (Note 10)
Accrued expenses
Income tax payable (Note 15)
Provision for bonuses to employees
Other current liabilities (Note 12)
Total current liabilities
Long-term liabilities:
Liability for retirement benefits (Note 14)
Provision for retirement benefits for directors andaudit & supervisory board members
Guarantee deposits (Note 10)
Finance lease obligations, less current portion(Note 10)Deferred income taxes (Note 15)
Deferred income taxes on land revaluation reserve(Note 15)
Other long-term liabilities
Total long-term liabilities
Contingent liabilities (Note 13)
Net assets:
Shareholders’ equity (Note 17):
Common stock:
Authorized: 143,000,000 shares in 2016 and 2017
Issued: 35,837,230 shares in 2016 and 2017
Capital surplus
Retained earnings(Note 26)
Treasury stock, at cost – 5,363,079 shares in 2016
and 6,028,845 shares in 2017
Total shareholders’ equity
Accumulated other comprehensive income:Unrealized holding gain on securities (Note 7)
Land revaluation reserve (Note 18)
Translation adjustments
Retirement benefit liability adjustments (Note 14)
Total accumulated other comprehensive income
Stock acquisition rights (Note 17)
Non-controlling interests
Total net assets
Total liabilities and net assets

¥

173

¥

177

Thousands of
U.S. dollars(Note 4)
2017

$

1,578

302
16,072
1,654
7,153
2,236
1,758
939
2,809
33,096499
17,301
2,695
670
2,405
2,626
1,052
3,023
30,4484,448
154,21224,022
5,972
21,437
23,407
9,377
26,944
271,397

10,638

8,279

73,794

112
3,068

94
3,053

838
27,213

931
2,673

743
3,943

6,623
35,146856
1,087
19,365856
1,187
18,155

7,630
10,579161,823

23,221
21,43290,59023,221
20,38895,665206,979
181,728
852,705(10,399)
124,844(12,199)
127,075(108,735)
1,132,677

10,756
1,627
1,860(1,938)12,305
178
16,072
153,399¥ 205,860

14,477
1,626
1,581(1,517)
16,167205
17,928161,375¥ 209,978

129,040
14,49314,092(13,521)
144,104
1,827
159,800
1,438,408$ 1,871,628

See accompanying notes to consolidated financial statements.
3

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Consolidated Statement of Operations
Year ended March 31, 2017

Net sales (Notes 23, 24 and 25)
Cost of sales (Notes 8 and 24)
Gross profit
Selling, general and administrative expenses(Notes 17, 19 and 24)
Operating income (Note 25)
Other income (expenses):
Interest and dividend income
Interest expense
Insurance income
Foreign exchange loss, net
Equity in earnings of an affiliate
Gain (loss) on revaluation of derivatives
Gain (loss) on sales of investments in securities,
net (Note 7)
Expenses related to employees seconded tooverseas unconsolidated subsidiaries
Expenses for disposal of PCB waste
Loss on sales or disposal of property, plant andequipment, net
Loss on impairment of investments in securities(Note 7)
Loss on impairment of fixed assets(Notes 9 and 25)
Gain on insurance claim
Other, net (Note 7)(Loss) profit before income taxes
Income taxes (Note 15):
Current
Deferred(Loss) profit(Loss) profit attributable to:Non-controlling interests
Owners of parent

Millions of yen
2016
2017
¥ 159,214¥ 154,221
134,978
123,884
24,23630,337

Thousands of
U.S. dollars(Note 4)2017
$ 1,374,641
1,104,234
270,407

16,934
7,302

17,168
13,169153,026
117,381

1,031
(215)
93
(612)
337
32

923
(158)
105
(200)
300
(2)

8,227
(1,408)936(1,783)
2,674
(18)

497

(6)

(53)

(255)
–

(261)
(231)

(2,326)(2,059)

(77)

(90)

(802)

(1,828)(135)(1,203)(6,603)
1
193
(104)

(737)
–
124
12,801(6,569)–1,104
114,101

2,941
(333)
2,608
(2,712)

4,126
74
4,200
8,601

36,777659
37,436
76,66559¥ (2,771)

1,866
6,735

16,63360,032¥$

See accompanying notes to consolidated financial statements.
4

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Year ended March 31, 2017

(Loss) profit
Other comprehensive (loss) income (Note 16):
Unrealized holding (loss) gain on securities
Land revaluation reserve
Translation adjustments
Retirement benefit liability adjustments
Share of other comprehensive (loss) income ofan affiliate accounted for by the equity
methodTotal other comprehensive (loss) income
Comprehensive (loss) income
Total comprehensive (loss) income attributable to:
Owners of parent
Non-controlling interests

Millions of yen
2016
2017
¥ (2,712)¥ 8,601

Thousands of
U.S. dollars(Note 4)2017
$ 76,665(3,422)(4)(1,120)
(752)

3,725
–
(735)
310

33,203–(6,552)2,763(10)(5,308)¥ (8,020)

22
3,322¥11,923

196
29,610$106,275¥ (7,530)(490)¥10,597
1,326$ 94,456
11,819See accompanying notes to consolidated financial statements.
5

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets
Year ended March 31, 2017
Millions of yen

Balance at April 1, 2015
Cash dividends
Loss attributable to owners of parent
for the year
Acquisition of treasury stock
Disposition of treasury stock
Increase due to change in ownershipinterest resulting from capitalincrease of a consolidated subsidiary
Increase due to change in ownershipinterest resulting from acquisition of
investments in a consolidated
subsidiary
Reversal of land revaluation reserve
Other change
Balance at April 1, 2016
Cash dividends
Profit attributable to owners of parent
for the year
Acquisition of treasury stock
Disposition of treasury stock
Decrease due to change in ownershipinterest resulting from capitalincrease of a consolidated subsidiary
Increase due to change in ownershipinterest resulting from acquisition of
investments in a consolidated
subsidiary
Reversal of land revaluation reserve
Other changes
Balance at March 31, 2017

Balance at April 1, 2015
Cash dividends
Loss attributable to owners of parent
for the year
Acquisition of treasury stock
Disposition of treasury stock
Increase due to change in ownershipinterest resulting from capitalincrease of a consolidated subsidiary
Increase due to change in ownershipinterest resulting from acquisition of
investments in a consolidated
subsidiary
Reversal of land revaluation reserve
Other changes
Balance at April 1, 2016
Cash dividends
Profit attributable to owners of parent
for the year
Acquisition of treasury stock
Disposition of treasury stock
Decrease due to change in ownershipinterest resulting from capitalincrease of a consolidated subsidiary
Increase due to change in ownershipinterest resulting from acquisition of
investments in a consolidated
subsidiary
Reversal of land revaluation reserve
Other changes
Balance at March 31, 2017

Number ofshares issued
179,186,153–

Common stock¥ 23,221–

Capital surplus¥ 21,210–

Retained earnings¥ 94,908(1,542)

Treasury stock,at cost¥ (9,186)–

Total shareholders’equity¥ 130,153(1,542)

–
–
–

–
–
–

–
–
(8)

(2,771)–––(1,238)25(2,771)(1,238)
17

–

–

198

–

–

198

–
–
(143,348,923)
35,837,230––––¥ 23,221–32––¥ 21,432––(5)–¥ 90,590(1,661)–––¥ (10,399)
–

32
(5)
–
¥ 124,844(1,661)

–
–
–

–
–
–

–
–
(2)

6,735
–
–

–
(1,810)10

6,735(1,810)8––(1,048)––(1,048)–––35,837,230–––¥ 23,2216––¥ 20,388–1–¥ 95,665–––¥ (12,199)

6
1–¥ 127,075

Unrealized
holding gain
on securities¥ 14,150–

Land
revaluation
reserve¥ 1,615–

Translation
adjustments¥ 2,554–

Millions of yen
Total
Retirement
accumulated
benefitotherliability
comprehensive
adjustments
income¥ (1,260)¥ 17,059––

Stockacquisitionrights¥ 166–

Noncontrollinginterests¥ 17,522–

Total net
assets¥ 164,900(1,542)

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

(2,771)(1,238)
17

–

–

–

–

–

–

–

198

–
–
(3,394)¥ 10,756–––12¥ 1,627
–

–
–
(694)
¥ 1,860
–

–
–
(678)
¥ (1,938)–––(4,754)¥ 12,305
–

–
–
12
¥ 178
–

–
–
(1,450)¥ 16,072–

32(5)(6,192)¥ 153,399(1,661)

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

6,735
(1,810)
8

–

–

–

–

–

–

–

(1,048)––3,721¥ 14,477––(1)¥ 1,626––(279)¥ 1,581––421¥ (1,517)

–
–
3,862
¥ 16,167

–
–
27
¥ 205

–
–
1,856
¥ 17,928

6
15,745¥ 161,375

6

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets (continued)
Year ended March 31, 2017
Thousands of U.S. dollars (Note 4)

Balance at April 1, 2016
Cash dividends
Profit attributable to owners of parent
for the year
Acquisition of treasury stock
Disposition of treasury stock
Decrease due to change in ownershipinterest resulting from capitalincrease of a consolidated subsidiary
Increase due to change in ownershipinterest resulting from acquisition of
investments in a consolidated
subsidiary
Reversal of land revaluation reserve
Other changes
Balance at March 31, 2017

Balance at April 1, 2016
Cash dividends
Profit attributable to owners of parent
for the year
Acquisition of treasury stock
Disposition of treasury stock
Decrease due to change in ownershipinterest resulting from capitalincrease of a consolidated subsidiary
Increase due to change in ownershipinterest resulting from acquisition of
investments in a consolidated
subsidiary
Reversal of land revaluation reserve
Other changes
Balance at March 31, 2017

Common stock$ 206,979–

Capital surplus$ 191,033–

Treasury stock,at cost$ (92,691)–

Retained earnings$ 807,469(14,805)

Total shareholders’equity$ 1,112,790(14,805)

–
–
–

–
–
(17)

60,032–––(16,133)
89

60,032(16,133)
72–(9,341)––(9,341)–––$ 206,979

53––$ 181,728–
9–$ 852,705–––$ (108,735)

53
9–$ 1,132,677

Thousands of U.S. dollars (Note 4)
Total
Retirement
accumulated
benefitother
StockTranslation
liability
comprehensive acquisition
adjustments
adjustment
incomerights$ 16,579$ (17,274)$ 109,680$ 1,587––––

Unrealized
holding gain
on securities$ 95,873–

Land
revaluation
reserve$ 14,502–

Noncontrollinginterests$ 143,257–

Total net
assets$ 1,367,314(14,805)

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

60,032(16,133)
72

–

–

–

–

–

–

–

(9,341)––
33,167$ 129,040––(9)$ 14,493––(2,487)$ 14,092––
3,753$ (13,521)––
34,424$ 144,104––240$ 1,827––
16,543$ 159,800

53
951,207$ 1,438,408

See accompanying notes to consolidated financial statements.
7

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year ended March 31, 2017

Millions of yen
2016
2017
Cash flows from operating activities:(Loss) profit before income taxes
Adjustments for:
Depreciation and amortization
Amortization of goodwill
Equity in earnings of an affiliate
Increase (decrease) in liability for retirement
benefits
Increase (decrease) in provision for retirement
benefits for directors and audit & supervisoryboard members
Increase in provision for bonuses to employees(Decrease) increase in allowance for doubtfulreceivables
Interest and dividend income
Interest expense
Insurance income(Gain) loss on revaluation of derivatives(Gain) loss on sales of investments in securities,
net
Loss on impairment of investments in securities
Loss on sales or disposal of property, plant andequipment, net
Loss on impairment of fixed assets
Decrease (increase) in notes and accounts
receivable
Decrease (increase) in inventories(Decrease) increase in notes and accounts
payableOther, net
Subtotal
Insurance dividends and claims received
Interest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities¥

Thousands of
U.S. dollars(Note 4)
2017

(104)

¥ 12,801$ 114,101

4,312
22
(337)

4,169
3
(300)

37,16027(2,674)83(1,630)(14,529)

19
109

(18)
114

(160)
1,016

(77)
(1,031)
215
(94)
(32)

2
(923)
158
(105)
2

18
(8,227)
1,408
(936)
18

(497)
1,828

6
135

53
1,203

77
6,603

90
737

802
6,569

3,472
6,783

(3,398)(484)(30,288)(4,314)(1,417)933
20,867
94
1,079
(213)
(2,422)¥ 19,405

1,460
(159)
12,660
105
957
(162)
(3,342)¥ 10,218

13,014(1,417)
112,844936
8,530(1,444)(29,788)$ 91,078

8

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Consolidated Statement of Cash Flows (continued)
Year ended March 31, 2017
Thousands of
U.S. dollars(Note 4)2017

Millions of yen
2016
2017
Cash flows from investing activities:
Investments in time deposits
Proceeds from time deposits
Proceeds from sales or redemption of marketablesecurities
Purchases of property, plant and equipment
Proceeds from sales of property, plant andequipment
Purchases of intangible assets
Purchases of investments in securities
Proceeds from sales of investments in securities
Payment for loans receivableCollection of loans receivable
Other
Net cash used in investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term bank loans
Proceeds from sales of treasury stock
Purchases of treasury stock
Cash dividends paid to owners of parent
Cash dividends paid to non-controlling interests
Repayment of lease obligations
Purchases of investments in a subsidiary not
resulting in change in scope of consolidation
Net cash used in financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at the beginning of theyear
Cash and cash equivalents at the end of the year
(Note 5)

¥ (11,041)
2,721¥ (1,261)
6,816$ (11,240)
60,754300(2,810)100(4,769)891(42,508)11(194)(1,526)
2,188
(112)
184
0
(10,279)11(299)(3,308)
1,359
(424)
215

98
(2,665)(29,485)
12,113(3,779)
1,916

–

–

(1,560)(13,905)431
1(1,235)(1,556)
(721)
(177)

(5,737)0(1,807)(1,676)
(512)
(164)

(51,136)0(16,107)(14,939)(4,564)(1,462)(8)(3,265)(1)(9,897)(9)(88,217)

(269)

(504)

(4,493)

5,592(1,743)(15,537)

35,19840,790363,580¥ 40,790¥ 39,047$ 348,043

See accompanying notes to consolidated financial statements.
9

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2017
1.

Summary of Significant Accounting Policies(a) Basis of preparation
Yodogawa Steel Works, Ltd. (the “Company”) and its domestic subsidiaries maintaintheir books of account and records in accordance with accounting principles generally
accepted in Japan, and its overseas subsidiaries maintain their books of account inconformity with those of their respective countries of domicile.
The accompanying consolidated financial statements of the Company and its consolidated
subsidiaries (collectively, the “Group”) are prepared on the basis of accounting principles
generally accepted in Japan, which are different in certain respects as to the applicationand disclosure requirements of International Financial Reporting Standards, and havebeen compiled from the consolidated financial statements prepared by the Company as
required by the Financial Instruments and Exchange Act of Japan.
In preparing the accompanying consolidated financial statements, certain reclassifications
and rearrangements have been made to the consolidated financial statements issued
domestically in order to present them in a format which is more familiar to readers outside
Japan.
(b) Basis of consolidation
The accompanying consolidated financial statements include the accounts of theCompany and all subsidiaries over which substantial control is exerted through either
majority ownership of voting stock and/or by other means. All significant intercompany
balances and transactions have been eliminated in consolidation.
An investment in one affiliate (a company over which the Company has the ability to
exercise significant influence) is stated at cost plus equity in its undistributed earnings orundisposed loss. Consolidated net income or loss includes the Company’s equity in thecurrent net income or loss of this company after the elimination of unrealizedintercompany profits.
The financial statements of certain consolidated subsidiaries whose fiscal year end is
December 31 have been included in consolidation on the basis of a full fiscal year after
making the necessary adjustments for significant transactions during the period from theirfiscal year end to the Company’s balance sheet date.

10

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

1.

Summary of Significant Accounting Policies (continued)(c) Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are translated into yen
at the rates of exchange in effect at the balance sheet date. Other assets and liabilities
denominated in foreign currencies are translated at their historical rates. All revenues
and expenses associated with foreign currencies are translated at the rates of exchange
prevailing when such transactions were made. The resulting exchange gain or loss iscredited or charged to profit or loss.
The balance sheet accounts of the overseas consolidated subsidiaries (except for net assets
excluding non-controlling interests) are translated into yen at the rate of exchange in effectat the balance sheet date. The components of net assets excluding non-controllinginterests are translated at their respective historical rates of exchange. Revenue andexpense accounts are translated into yen at the average rate of exchange in effect during
the year.
Differences arising from translation are reflected in “Translation adjustments” and “Noncontrolling interests” in the accompanying consolidated balance sheet and statement ofchanges in net assets.
(d) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits with banks withdrawable on
demand, and short-term investments which are readily convertible into cash subject to an
insignificant risk of any changes in their value and which were purchased with an original
maturity of three months or less.
(e) Securities
The accounting standard for financial instruments requires that securities other than thoseof subsidiaries and affiliates be classified into three categories: trading securities, held-tomaturity debt securities or other securities. Under this standard, trading securities arecarried at fair value and gain or loss, both realized and unrealized, is credited or charged
to income. Held-to-maturity debt securities are carried at amortized cost. Marketablesecurities classified as other securities are carried at fair value with any 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 is determined principally by the moving average method.

11

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

1.

Summary of Significant Accounting Policies (continued)(f) Derivatives
Derivatives are measured at fair value.
(g) Inventories
Inventories of the Company and its domestic consolidated subsidiaries are principallystated at the lower of cost or net selling value, cost being determined by the averagemethod. Inventories of overseas consolidated subsidiaries are stated at the lower of costor net selling value, cost being determined by the moving average method.
(h) Property, plant and equipment and depreciation (except for leased assets)
Depreciation of property, plant and equipment at the Company and its domestic
consolidated subsidiaries is calculated by the declining-balance method over the estimateduseful lives of the respective assets, except that the straight-line method is applied tobuildings (other than facilities attached to the buildings) acquired on or after April 1, 1998,
and facilities attached to the buildings and other structures acquired on or after April 1,
2016.
Depreciation of property, plant and equipment at overseas consolidated subsidiaries iscalculated by the straight-line method.
The useful lives adopted for calculating depreciation are principally as follows:
Buildings and structures
Machinery, equipment and vehicles

3 to 60 years
3 to 36 years(i) Intangible assets (except for leased assets)
Amortization of intangible assets is calculated by the straight-line method over theestimated useful lives of the respective assets.
Expenditures related to computer software development for internal use are expensed as
incurred, unless these contribute to the generation of future income or cost savings. Suchexpenditures are capitalized as assets and amortized by the straight-line method over theirestimated useful life of 5 years.
(j) Goodwill
All assets and liabilities of the consolidated subsidiaries are revalued on acquisition, if applicable.
The difference between the cost of investments in subsidiaries and the equity in their net assets attheir respective dates of acquisition is amortized over a period of 5 years on a straight-line basis.

12

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

1.

Summary of Significant Accounting Policies (continued)(k) Research and development costs
Research and development costs are expensed as incurred.
(l) Leases
Leased assets under finance lease transactions that transfer ownership to the lessee aredepreciated by the same method used for owned fixed assets.
Leased assets under finance lease transactions which do not transfer ownership of theleased assets to the lessee are depreciated to a residual value of zero by the straight-line
method using the contract term as the useful life.
(m) Allowance for doubtful receivables
The Group provides an allowance for doubtful receivables at an amount calculated basedon their historical experience of bad debts on ordinary receivables plus an additional
estimate of probable specific bad debts from customers experiencing financial difficulties.
(n) Provision for bonuses to employees
The Company and its domestic consolidated subsidiaries provide for payments of bonuses
to employees based on the estimated amount to be paid to employees after the balance
sheet date, which is attributable to the current fiscal year. There are no bonuses to
employees at overseas consolidated subsidiaries to be provided.
(o) Provision for retirement benefits for directors and audit & supervisory board
members
The directors and audit & supervisory board members of the Company’s domestic
consolidated subsidiaries have customarily been entitled to lump-sum payments under theunfunded retirement benefit plans. Provision for retirement benefits for these directors
and audit & supervisory board members have been provided at an estimated amount basedon each consolidated subsidiary’s internal rules.

13

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

1.

Summary of Significant Accounting Policies (continued)(p) Retirement benefits
In calculating the retirement benefit obligation, the benefit formula basis is applied for theattribution of expected retirement benefits to each period up to the end of the current year.
Prior service cost is being amortized as incurred by the straight-line method over a periodof principally 10 years, which is within the estimated average remaining years of serviceof the eligible employees.
Actuarial gain or loss is amortized in the year following the year in which the gain or loss
is recognized by the straight-line method over a period of principally 10 years, which iswithin the estimated average remaining years of service of the eligible employees.
Certain consolidated subsidiaries calculate liability for retirement benefits and retirement
benefit expenses for the defined benefit corporate pension plans and the retirement lumpsum plans based on the amount which would be payable at the year end if all eligible
employees terminated their services voluntarily (“simplified method”).
(q) Income taxes
Deferred income taxes are provided for temporary differences between the balances ofassets and liabilities for financial reporting purposes and the corresponding balances for
tax reporting purposes.
(r) Consumption taxes
Transactions subject to consumption taxes are recorded at amounts exclusive ofconsumption taxes. Consumption taxes and local consumption taxes paid not offset byconsumption taxes and local consumption taxes received in accordance with Consumption
Tax Act of Japan are expensed when incurred.
(s) Recognition of revenues and costs of construction contracts
Revenues and costs of construction contracts of which the percentage of completion canbe reliably estimated, are recognized by the percentage-of-completion method. The
percentage of completion is calculated at the cost incurred as a percentage of the estimatedtotal cost. The completed-contract method continues to be adopted for contracts forwhich the percentage of completion cannot be reliably estimated.

14

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

1.

Summary of Significant Accounting Policies (continued)(t) Hedge accounting
Gain or loss on derivatives designated as hedging instruments is deferred until the loss orgain on the underlying hedged items is recognized. Receivables or payable hedged byforward foreign exchange contracts which meet certain conditions are translated at thecorresponding foreign exchange contract rates (“Allocation method”). The evaluationof effectiveness of such forward foreign exchange contracts is omitted because significant
terms of the hedging instruments and underlying hedged items are the same and theCompany and certain consolidated subsidiaries assumes that movements of cash flows arecompletely offset.

2.

Change in Accounting Policy

Application of Practical Solution on a Change in Depreciation Method Due to Tax
Reform 2016
Effective April 1, 2016, Company and its domestic consolidated subsidiaries adopted“Practical Solution on a Change in Depreciation Method Due to Tax Reform 2016”(Accounting Standards Board of Japan (“ASBJ”) Practical Issues Task Force (“PITF”) No.32
issued on June 17, 2016) in accordance with the revision of the Corporation Tax Act of Japan.
Accordingly, Company and its domestic consolidated subsidiaries changed the depreciation
method for both facilities attached to buildings and other structures acquired on or after April
1, 2016 from the declining-balance method to the straight-line method.
The effect of this change on operating income and profit before income taxes for the year
ended March 31, 2017 was immaterial.

3.

Additional Information

Implementation Guidance on Recoverability of Deferred Tax Assets
Effective April 1, 2016, the Company and its domestic consolidated subsidiaries adopted“Revised Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ
Guidance No. 26 of March 28, 2016).

15

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

4.

U.S. Dollar Amounts

The translation of yen amounts into U.S. dollar amounts is included solely for the convenienceof readers outside Japan and has been made at the rate of ¥112.19 = U.S.$1.00, the approximate
exchange rate prevailing on March 31, 2017. The translation should not be construed as arepresentation that yen have been, could have been, or could in the future be, converted into
U.S. dollars at the above or any other rate.

5.

Cash and Cash Equivalents

A reconciliation of cash and deposits shown in the accompanying consolidated balance sheet
as of March 31, 2016 and 2017 to cash and cash equivalents shown in the accompanying
consolidated statement of cash flows for the years ended March 31, 2016 and 2017 is presented
as follows:

Cash and deposits
Trust beneficiary rights included in “Other
current assets”
Time deposits with a maturity of more than
three months
Cash and cash equivalents

6.

Millions of yen
2016
2017
¥ 46,503¥ 40,762

Thousands of
U.S. dollars
2017$ 363,330

500

–

–

(6,213)¥ 40,790(1,715)¥ 39,047(15,287)$ 348,043

Financial Instruments

Overview(a) Policy for financial instruments
In consideration of plans for capital investment, the Group primarily utilizes its own funds.
In case its own funds are insufficient, the Group raises funds by bank or bond issuances.
The Group manages temporary cash surpluses through low-risk financial assets. The
Group uses derivatives for the purpose of reducing risk and does not enter into derivatives
for speculative purposes.

16Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

6.

Financial Instruments (continued)

Overview (continued)(b) Types of financial instruments and related risk
Trade receivables, notes and accounts receivables, are exposed to credit risk of customers.
In addition, the Group is exposed to foreign currency exchange risk arising from tradereceivables denominated in foreign currencies.
Investments in securities and marketable securities are exposed to volatility risk of market
price. The former is composed mainly of the shares of common stock of the companies
with which the Group has business relationships, held-to-maturity debt securities andhybrid financial instruments containing embedded derivatives. The latter is composed
mainly of commercial paper and negotiable certificates of deposits.
Trade payables, notes and accounts payable, have payment due dates within six months.
The Group is exposed to foreign currency exchange risk arising from trade payables
denominated in foreign currencies.
Regarding derivatives, the Group enters into forward foreign exchange contracts to reduce
the foreign currency exchange risk arising from trade receivables, trade payables andloans receivables denominated in foreign currencies for the purpose of efficient risk
management.
Information regarding the hedging instruments and hedged items, the hedging policy andthe method of the evaluation of the effectiveness of hedging is addressed in Note 1(t).

17Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

6.

Financial Instruments (continued)

Overview (continued)(c) Risk management for financial instruments
For trade receivables, each related division monitors the credit worthiness of their main
customers periodically, and monitors due dates and outstanding balances by customer.
In addition, the Company and its domestic consolidated subsidiaries are making efforts to
identify at an early point and mitigate risks of bad debts from customers who havefinancial difficulties. The overseas consolidated subsidiaries request customers to issue
non-cancelable letters of credit to hedge credit risk.
The Group only acquires held-to-maturity debt securities and commercial paper issued bycompanies with high credit ratings or sound credit profiles. Accordingly, the Group
believes that the credit risk deriving from such securities is insignificant. The Groupalso believes that the credit risk of derivatives is insignificant as the Group enters into
derivative transactions only with financial institutions with high credit ratings.
For trade receivables and trade payables denominated in foreign currencies, the Group
enters into forward foreign exchange contracts to hedge the risks arising from fluctuations
in foreign exchanges rates.
For marketable securities and investments in securities, the Group periodically reviews
the fair value of such financial instruments and the financial position of the issuers. In
addition, the Group continuously evaluates whether or not securities other than thoseclassified as held-to-maturity debt securities should be maintained taking into accounttheir fair value and relationships with the issuers.
The Group enters into derivative transactions based on internal regulations and establishes
the reporting and approval system which set forth the purpose, contents, counterparties,
holding risk, maximum upper limit of loss amount and risk amounts.
Based on a report from each division, the Group prepares and updates its cash flow plans
on a timely basis and maintains sufficient solvency to manage liquidity risk. In order toprovide for unexpected cash requirements, the Company has entered into the line-of-credit
agreements with certain financial institutions and its overseas consolidated subsidiaries
are able to obtain credit limit of short-term borrowings from certain financial institutions.

18

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

6.

Financial Instruments (continued)

Overview (continued)(d) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market prices, if available.
When there are no quoted market prices available, fair value is reasonably estimated.
Since various assumptions and factors are reflected in estimating the fair value, different
assumptions and factors could result in different fair value.
(e) Concentration of credit risk
There is no concentration of credit risk for the year ended March 31, 2017.
Estimated Fair Value of Financial Instruments
Carrying value of financial instruments on the consolidated balance sheet, estimated fair value
and unrealized gain as of March 31, 2016 and 2017 are shown in the following table. The
following table does not include financial instruments for which it is extremely difficult todetermine the fair value.

Carrying value

Millions of yen
2016
Estimated
fair value¥ 46,503¥ 46,503

14,191
23,48914,191
23,489––29,667¥ 113,850

29,774¥ 113,957

107
¥ 107

Liabilities:
Notes and accounts payable:
Unconsolidated subsidiaries andaffiliates
Trade
Total liabilities¥

302
16,072¥ 16,374¥

302
16,072¥ 16,374

¥
¥

–
–
–

Derivatives*

¥

–

¥

–

¥

–

Assets:Cash and deposits
Notes and accounts receivable:
Unconsolidated subsidiaries andaffiliates
Trade
Marketable securities and investments insecurities
Total assets

Difference
¥

–

19

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

6.

Financial Instruments (continued)

Estimated Fair Value of Financial Instruments (continued)

Assets:Cash and deposits
Notes and accounts receivable:
Unconsolidated subsidiaries andaffiliates
Trade
Marketable securities and investments insecurities
Total assets
Liabilities:
Notes and accounts payable:
Unconsolidated subsidiaries andaffiliates
Trade
Total liabilities

Carrying value

Millions of yen
2017
Estimated
fair value¥ 40,762¥ 40,762

14,71926,384

14,71926,384––37,294¥ 119,159

37,414¥ 119,279

120
¥ 120

¥

¥

¥

499
17,301¥ 17,800

499
17,301¥ 17,800–

Derivatives (*)

Difference
¥

¥

–

–

–
–
–
–

Thousands of U.S. dollars
2017
Estimated
Carrying value
fair value
Difference
Assets:Cash and deposits
Notes and accounts receivable
Unconsolidated subsidiaries andaffiliates
Trade
Marketable securities and investments insecurities
Total assets
Liabilities:
Notes and accounts payable
Unconsolidated subsidiaries andaffiliates
Trade
Total liabilities
Derivatives (*)$ 363,330

131,197
235,173

131,197
235,173––

332,418$ 1,062,118

333,488$ 1,063,188

1,070$ 1,070

$

$

$

4,448
154,212$ 158,660–

4,448
154,212$ 158,660–$–$ 363,330

$

–
–
–
–

(*) The value of assets and liabilities arising from derivative transactions is shown at net value,
and with the amount in parentheses representing net liability position.
20

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

6.

Financial Instruments (continued)

Estimated Fair Value of Financial Instruments (continued)
Calculation method of estimated fair value of financial instruments is as follows:
Cash and deposits, notes and accounts receivable
Since these items are settled in a short period of time, their carrying value approximates thefair value.
Marketable securities and investments in securities
The fair value of equity securities is based on quoted market prices. The fair value of debt
securities is based on either quoted market prices or the prices provided by the financial
institutions. For information on securities classified by holding purpose, please refer to Note7.
Notes and accounts payable
Since this item is settled in a short period of time, its carrying value approximates the fairvalue.
Derivative transactions
Please refer to Note 21.
The carrying value of financial instruments without determinable market value as of March
31, 2016 and 2017 is presented as follows:

Unlisted stocks
Investment in limited liability
partnership
Preferred stocks
Total

Millions of yen
2016
2017
¥ 244
¥ 244
59
48
¥ 351

Thousands of
U.S. dollars
2017$ 2,175

20

178

–

–

¥ 264

$ 2,353

Because no quoted market price is available, it is extremely difficult to determine the fair value.
Therefore, the above financial instruments are not included as part of the amounts presented
in the preceding fair value of financial instruments table.

21

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

6.

Financial Instruments (continued)

Estimated Fair Value of Financial Instruments (continued)
The redemption schedule for monetary assets and investments by maturity dates as of March
31, 2016 and 2017 is as follows:

Due in one
year or less
Deposits
Notes and accounts receivable
Marketable securities andinvestments in securities
Held-to-maturity debt securities
National and local government
bonds
Corporate bonds
Other securities with maturities
Bonds
Total

¥ 46,440
37,680

¥ –
–

100
–
–
¥ 84,220

Due in one
year or less
Deposits
Notes and accounts receivable
Marketable securities andinvestments in securities
Held-to-maturity debt securities
National and local government
bonds
Corporate bonds
Other securities with maturities
Bonds
Total

Millions of yen
2016
Due after one Due after five
year throughyears throughfive years
ten years¥ 40,706
41,103

–
–

¥–
–

10
–

1,040
1,500

–
–

–
¥ 10

–
¥ 2,540–¥–¥

Millions of yen
2017
Due after one Due after five
year throughyears throughfive years
ten years¥

Due after ten
years

–
–

¥

Due after ten
years

–
–

¥–
–

10
–

20
1,900

38
2,400

–
–

–
¥ 81,819–¥ 1,920–¥ 2,438–¥–

22

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

6.

Financial Instruments (continued)

Estimated Fair Value of Financial Instruments (continued)

Due in one
year or less
Deposits
Notes and accounts receivable
Marketable securities andinvestments in securities
Held-to-maturity debt securities
National and local
government bonds
Corporate bonds
Other securities with maturities
Bonds
Total

7.

$ 362,831
366,370

Thousands of U.S. dollars
2017
Due after one Due after five
year through years throughfive years
ten years
$

–
–

$

Due after ten
years

–
–

$–
–

89
–

178
16,936339
21,392–––$ 729,290–$ 17,114–$ 21,731–$–

Securities

Marketable securities classified as held-to-maturity debt securities as of March 31, 2016 and2017 are summarized as follows:

Carrying
value
Securities whose estimated fair value exceeds
their carrying value:
National and local government bonds
Corporate bonds
Securities whose estimated fair value does notexceed their carrying value:
National and local government bonds
Corporate bonds
Total

Millions of yen
2016
Estimated
fair value
Difference¥ 1,058452
1,510¥ 1,068
559
1,627

¥ 10
107
117

110
488
598
¥ 2,108

100
488
588
¥ 2,215

(10)
–
(10)
¥ 107

23

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

7.

Securities (continued)

Carrying
value
Securities whose estimated fair value
exceeds their carrying value:
National and local government bonds
Corporate bonds
Securities whose estimated fair value
does not exceed their carrying value:
National and local government bonds
Corporate bonds
Total

¥

68
1458
1,526

–
685
685
¥ 2,211

Millions of yen
2017
Estimated
fair value

¥

71
1,575
1,646

–
685
685
¥ 2,331

Difference

¥

3
117
120

–
0
0
¥ 120

Thousands of U.S. dollars
2017
Carrying
Estimatedvalue
fair value
Difference
Securities whose estimated fair value
exceeds their carrying value:
National and local government bonds
Corporate bonds
Securities whose estimated fair value
does not exceed their carrying value:
National and local government bonds
Corporate bonds
Total

$

606
12,996
13,602$633
14,03914,672

–
6,105
6,105
$ 19,707

–
6,105
6,105
$ 20,777

$

27
1,043
1,070

–
0
0
$ 1,070

Hybrid financial instruments containing an embedded derivative that cannot be separated arestated at fair value in corporate bonds whose estimated fair value does not exceed theircarrying value in the above table and the resulting gains or losses are included in other, net as
a part of other income (expense) in the consolidated statement of operations.

24

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

7.

Securities (continued)

Other securities with determinable market value as of March 31, 2016 and 2017 aresummarized as follows:

Securities whose carrying value exceeds
their acquisition costs:
Equity securities
Corporate bonds
Other
Securities whose carrying value does notexceed their acquisition costs:
Equity securities
Corporate bonds
Total

Securities whose carrying value exceeds
their acquisition costs:
Equity securities
Corporate bonds
Other
Securities whose carrying value does notexceed their acquisition costs:
Equity securities
Corporate bonds
Total

Carrying
value

Millions of yen
2016
Acquisition
costs

Difference¥ 23,610
402
120
24,132¥ 8,525
400
97
9,022

¥ 15,0852
23
15,110

3,328
99
3,427
¥ 27,559

3,465
101
3,566
¥ 12,588

(137)
(2)
(139)
¥ 14,971

Carrying
value

Millions of yen
2017
Acquisition
costs

Difference¥ 31,672
617
421
32,710¥ 11,630
600
397
12,627¥ 20,042
17
24
20,083

892
1,481
2,373
¥ 35,083

910
1,501
2,411
¥ 15,038

(18)
(20)
(38)
¥ 20,045

25

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

7.

Securities (continued)
Thousands of U.S. dollars
2017
Acquisition
Carrying value
costs
Difference

Securities whose carrying value exceeds
their acquisition costs:
Equity securities
Corporate bonds
Other
Securities whose carrying value does notexceed their acquisition costs:
Equity securities
Corporate bonds
Total$ 282,306
5,500
3,753
291,559$ 103,663
5,348
3,539
112,550$ 178,643
152
214
179,009

7,951
13,201
21,152$ 312,711

8,111
13,37921,490$ 134,040

(160)
(178)
(338)
$ 178,671

Because no quoted market price is available and it is extremely difficult to estimate thecorresponding future cash flow, unlisted stocks of ¥351 million and ¥264 million ($2,353
thousand) as of March 31, 2016 and 2017, respectively, are not included in the above table.
Sales of corporate bonds classified as held-to-maturity debt securities for the years ended
March 31, 2016 and 2017 are summarized as follows:

Sales
Cost of securities soldNet gain

Millions of yen
2016
2017
¥ 1,505
¥ 500
1,496
500
9

–

Thousands of
U.S. dollars
2017$ 4,457
4,457–

The reason for the sales was due to the exercise of the early redemption option by the issuer.
Sales of securities classified as other securities for the years ended March 31, 2016 and 2017
are summarized as follows:

Sales
Aggregate gain

Millions of yen
2016
2017
¥ 636
¥ 10
484
5

Thousands of
U.S. dollars
2017
$ 89
45

The Group recorded loss on impairment of investments in securities with determinable market
value of ¥1,181 million for the year ended, March 31, 2016. Loss on impairment is recordedat the amount deemed necessary on securities whose fair value has declined by 50% on more,or whose fair value has declined by 30% on more, but less than 50%, if the decline is deemed
to be irrecoverable considering the movements of individual stock prices and recoverability.
26

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

8.

Inventories

The following is a summary of inventories as of March 31, 2016 and 2017:

Millions of yen
2016
2017
¥ 12,175¥ 11,403
3,296
3,458
9,718
10,647¥ 25,189¥ 25,508

Merchandises and finished goods
Work in process
Raw materials and supplies

Thousands of
U.S. dollars
2017$ 101,639
30,823
94,902$ 227,364

Gain on reversal of devaluation of inventories is included in cost of sales of ¥135 million and¥340 million ($3,031 thousand) for the years ended March 31, 2016 and 2017, respectively.

9.

Loss on Impairment of Fixed Assets

The Group recognized loss on impairment of fixed assets for the years ended March 31, 2016
and 2017 as follows:

Location
Nishiwaki City,
Hyogo Prefecture

Use
Golf course

Miyazaki City,
Idle assets
Miyazaki Prefecture
Suzaka City,
Idle assets
Nagano Prefecture
China Anhui
China Anhui
Ikoma City,
Nara Prefecture
Total

Manufacturing
facilities–
Idle assets

Classification
Land, buildings,
structures,
machinery,equipment andvehiclesLand
Land
Buildings,
machinery andequipment
Goodwill
Land

Millions of yen
2016
2017

¥

600

¥

–

Thousands of
U.S. dollars
2017

$

–

18

23

205

0

0

0

5,809

714

6,364

162

–

–

14
¥ 6,603

0

0

¥ 737

$ 6,569

27

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

9.

Loss on Impairment of Fixed Assets (continued)

The Group mainly groups fixed assets by managerial accounting segment, each of which
continuously records cash receipts and payments.
Consequently, the Group has written down the carrying values of manufacturing facilities of
YSS and the golf course and its asset group of Yodokokohatsu Co., Ltd. whose operating
incomes have been continuously negative to their respective net recoverable values, and hasrecorded a related loss on impairment of fixed assets of ¥6,409 million for the year ended
March 31, 2016, which consisted of machinery and equipment of ¥5,809 million for the
manufacturing facilities of YSS and land of ¥442 million, building and structures of ¥123
million, machinery, equipment and vehicles of ¥22 million and others of ¥13 million. Also,
the Group recorded loss on impairment of goodwill for YSS of ¥162 million for the year ended
March 31, 2016.
In addition, the Group has written down the carrying values of manufacturing facilities of YSS
whose operating incomes have been continuously negative to their respective net recoverable
values, and has recorded a related loss on impairment of fixed assets of ¥714 million ($6,364
thousand) for the year ended March 31, 2017, which consisted of machinery of ¥679 million($6,052 thousand) and building of ¥35 million ($312 thousand).
The Group has written down the carrying values of the idle assets of land owned by the Group,
which are not expected to be utilized in the future, to their respective net recoverable values,and has recorded a related loss on impairment of ¥32 million and ¥23 million ($205 thousand)for the years ended March 31, 2016 and 2017, respectively.
The recoverable amounts of machinery and equipment and goodwill in China Anhui for theyear ended March 31, 2016 were measured at the value in use based on estimated future cash
flows discounted at the rate of 11%, and the recoverable amounts of machinery and equipment
in China Anhui for the year ended March 31, 2017 were measured at estimated net selling
value based on residual value.
The recoverable amounts of assets other than machinery, equipment and goodwill were
measured at estimated net selling value based on appraisals conducted by real estate appraisers
and the values assessed for property tax purposes.

28

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

10. Short-Term Bank Loans, Guarantee Deposits and Finance Lease Obligations
The average annual interest rates on short-term loans were 1.55% and 3.26% as of March 31,
2016 and 2017.
Guarantee deposits consisted of interest-free deposits, most of which were golf-clubmembership deposits, and interest-bearing deposits, which were principally deposits from
customers at average annual interest rates of 0.79% and 0.81% at March 31, 2016 and 2017,
respectively.
Interest-free deposits and interest-bearing deposits as of March 31, 2016 and 2017 are as
follows:

Interest-free deposits
Interest-bearing deposits

Millions of yen
2016
2017
¥ 2,196¥ 2,186872
867¥ 3,068¥ 3,053

Thousands of
U.S. dollars
2017$ 19,485
7,728$ 27,213

The average annual interest rate on financial lease obligations was 4.48% as of March 31,
2016 and 2017.
The aggregate annual maturities of finance lease obligations subsequent to March 31, 2017
are summarized as follows:Year ending March 31,
2018
2019
2020
2021
2022
2023
2024

Thousands ofMillions of yen
U.S. dollars
2017
¥ 177
$ 1,578
727
6,480
14
125
2
18
0
0
0
0
0
0
¥ 920
$ 8,20129

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

11. Line-of-credit Agreements
In order to achieve more efficient and flexible financing, the Company has concluded line-ofcredit agreements with certain financial institutions. The status of these lines of credit as ofMarch 31, 2016 and 2017 is as follows:

Millions of yen
2016
2017
Lines of credit
Credit utilized
Available credit¥ 18,950–¥ 18,950¥ 17,950–¥ 17,950

Thousands of
U.S. dollars
2017$ 159,996–$ 159,996

12. Pledged Assets
Assets pledged as collateral for indebtedness as of March 31, 2017 are summarized as follows:

Cash and deposits
Investments in securities
Other assets

Millions of yen
2017
¥ 60
17
83
¥ 160

Thousands of
U.S. dollars
$

535
152
739
$ 1,426

Indebtedness secured by these assets as collateral was ¥52 million ($463 thousand), a
component of other current liabilities at March 31, 2017.

13. Contingent Liabilities
The Company was contingently liable for guarantees of borrowings from financial institutions
and others of unconsolidated subsidiaries in the aggregate amount of ¥131 million ($1,168
thousand) as of March 31, 2017.
In addition, the Company repaired machinery supplied to a customer located in Africa due toa product defect, damages during the shipment and other reasons. The Company wascontingently liable for additional repair costs in the amount of approximately ¥300 million($2,674 thousand), as of March 31, 2017. The total amount to be paid by the Company will
depend on future negotiations with the manufacturer of the machinery.

30

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

14. Retirement Benefits Plans
The Company and its domestic consolidated subsidiaries have defined benefit retirement
plans: a defined benefit pension plan and a lump sum payment plan. Moreover, certain
overseas consolidated subsidiaries have a defined benefit pension plan and defined
contribution plans. Furthermore, the Company has adopted a retirement benefit trust.
Certain consolidated domestic subsidiaries are accounted for using “simplified method” forcalculating liability for retirement benefits and retirement benefit expenses.
The changes in the retirement benefit obligation for the years ended March 31, 2016 and 2017
are as follows:

2016

2017

Thousands of
U.S. dollars
2017¥ 14,763
728
191
1,099
(983)
(143)

¥15,655
687
87
290
(936)
(46)

$ 139,540
6,124
775
2,585
(8,343)(410)¥ 15,655¥ 15,737$ 140,271

Millions of yen
Retirement benefit obligation at
the beginning of year
Service cost (*)
Interest cost
Actuarial differences
Retirement benefit paid
Prior service cost
Retirement benefit obligation at
the end of year(*) Retirement benefit expenses for certain consolidated subsidiaries, whose benefit
obligation is calculated by the simplified method, have been included in service cost.

31

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

14. Retirement Benefits Plans (continued)
The changes in plan assets at fair value for the years ended March 31, 2016 and 2017 are as
follows:

2016

2017

Thousands of
U.S. dollars
2017¥ 5,121
93
(269)
554
(468)
(14)

¥ 5,017
103
151
2,491
(446)
142

$ 44,719
918
1,346
22,203(3,975)1,266¥ 5,017¥ 7,458$ 66,477

Millions of yen
Plan assets at fair value at the
beginning of year
Expected return on plan assets
Actuarial differences
Contributions by the employers
Retirement benefit paid
Other (*)
Plan assets at fair value at theend of year(*) “Other” mainly consists of the effect of foreign currency exchange translation adjustmentson pension plan assets at fair value attributable to an overseas subsidiary and thedifference of actual and expected returns on plan assets at fair value from the retirement
benefit plans of consolidated subsidiaries to which the simplified method applied.
The following table sets forth the funded status of the plans and the amounts recognized in the
consolidated balance sheet as of March 31, 2016 and 2017 for the Company’s and theconsolidated subsidiaries’ defined benefit plans:

Funded retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit
obligation
Liability for retirement benefits in the
consolidated balance sheet, net
Liability for retirement benefits
Liability for retirement benefits in the
consolidated balance sheet, net

Millions of yen
2016
2017
¥ 15,634¥ 15,706(5,017)(7,458)
10,617
8,248

Thousands of
U.S. dollars
2017$ 139,995(66,477)
73,518

21

31

276

10,638

8,279

73,794

10,638

8,279

73,794¥ 10,638¥ 8,279$ 73,794

Note: The above includes retirement benefit plans calculated under the simplified method.

32

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

14. Retirement Benefits Plans (continued)
The components of retirement benefit expenses for the years ended March 31, 2016 and 2017
are as follows:

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial differences
Amortization of prior service cost
Retirement benefit expenses

Millions of yen
2016
2017
¥ 724
¥ 676
191
87
(93)
(103)
310
644
(1)
(1)
¥ 1,131¥ 1,303

Thousands of
U.S. dollars
2017$ 6,025
775
(918)
5,741
(9)
$ 11,614

The components of retirement benefit liability adjustments recognized in other comprehensive
income (before tax effect) for the years ended March 31, 2016 and 2017 are as follows:

Prior service cost
Actuarial differences
Total

Millions of yen
2016
2017
¥
1
¥
2
1,027
(503)
¥ 1,028¥ (501)Thousands of
U.S. dollars
2017
$
17
(4,483)$ (4,466)

The components of retirement benefit liability adjustments recognized in accumulated othercomprehensive income (before tax effect) as of March 31, 2016 and 2017 are as follows:

Unrecognized prior service cost
Unrecognized actuarial differences
Total

Millions of yen
2016
2017
¥
(8)
¥
(6)
3,148
2,645
¥ 3,140¥ 2,639

Thousands of
U.S. dollars
2017
$
(53)
23,576$ 23,523

33

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

14. Retirement Benefits Plans (continued)
The fair value of plan assets, by major category, as a percentage of total plan assets as of March
31, 2016 and 2017 is as follows:

Bonds
StocksGeneral account at insurance companies
Other
Total

2016
28%
41
16
15
100%

2017
23%
38
10
29
100%

Note: 14% and 11% of the total plan assets are held in a retirement benefit trust for defined
benefit pension plan and a lump sum payment plan as of March 31, 2016 and 2017,
respectively.
The expected long-term rate of return on plan assets is determined as a result of considerationof both the portfolio allocation of plan assets at present and in the future and long-term
expected rate of return from multiple plan assets at present and in the future.
The assumptions used in the actuarial calculation for the above defined benefit pension plans
for the years ended March 31, 2016 and 2017 are as follows:

Discount rate
Expected long-term rates of return on plan assets(weighted average)
Expected rate of future salary increase(weighted average)

2016

2017

0.5%

0.5%

2.0%

2.3%

0.6%

0.6%

The contributions paid by consolidated subsidiaries to the defined contribution pension plansamounted to ¥49 million and ¥46 million ($410 thousand) for the years ended March 31, 2016
and 2017, respectively.

34

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

15. Income Taxes
Income taxes applicable to the Company and its domestic consolidated subsidiaries comprise
corporation, enterprise and inhabitants’ taxes which, in the aggregate, resulted in statutory tax
rates of approximately 32.1% and 30.8% for the years ended March 31, 2016 and 2017,
respectively.
A reconciliation of the statutory tax rate and the effective tax rate for the year ended March 31,
2016 was omitted because the Company recorded loss before income taxes.
A reconciliation of the statutory tax rate and the effective tax rate for the year ended March 31,2017 as a percentage of profit before income taxes is as follows:

Statutory tax rate
Permanently non-deductible expenses
Per capita portion of inhabitants’ taxes
Differences in tax rates applicable to the overseas
consolidated subsidiaries
Foreign tax credit
Tax loss carryforwards of consolidated
subsidiaries
Increase in valuation allowance
Equity in earnings of an affiliate
Other
Effective tax rate

2017
30.8%
0.3
0.4
(3.3)
0.7
3.8
0.5
(0.8)
0.4
32.8%

35

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

15. Income Taxes (continued)
The significant components of the deferred tax assets and liabilities of the Group as of March
31, 2016 and 2017 are summarized as follows:
Millions of yen
2016
2017
Deferred tax assets:
Accrued enterprise taxes
Provision for bonuses to employees
Loss on impairment of investments insecurities and golf-club memberships
Loss on devaluation of inventories
Allowance for doubtful receivables
Liability for retirement benefits
Tax loss carryforwards
Loss on impairment of fixed assets
Other
Gross deferred tax assets
Less valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Dividends from an overseas consolidated
subsidiaryLand revaluation reserve
Unrealized holding gain on securities
Deferred gain on property for tax purpose
Reserve for special depreciation
Other
Total deferred tax liabilities
Net deferred tax liabilities

¥

120
289

¥

Thousands of
U.S. dollars
2017

126
324

$ 1,123
2,888

2,905
185
34
2,877
803
517
945
8,675
(4,882)
3,793

2,996
78
35
2,424
857
1,961
968
9,769
(6,300)3,469

26,705695
312
21,606
7,639
17,4798,628
87,075(56,155)
30,920(126)(856)(4,227)
(443)
(342)
0
(5,994)¥ (2,201)

(175)
(856)
(5,598)
(427)
(280)
0
(7,336)¥ (3,867)(1,560)(7,630)(49,897)(3,806)(2,496)
0(65,389)$ (34,469)

Note: Net deferred tax liabilities as of March 31, 2016 and 2017 are reflected in the following
accounts in the consolidated balance sheet:
Millions of yen
2016
2017
Current assets
Investments and other assets
Long-term liabilities – Deferred income taxes– Deferred income taxes
on land revaluation
reserve¥546
782(2,673)(856)¥

Thousands of
U.S. dollars
2017

529
403
(3,943)$ 4,715
3,592(35,146)(856)(7,630)36

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

16. Other Comprehensive Income
Reclassification adjustments and tax effects of other comprehensive (loss) income for theyears ended March 31, 2016 and 2017 are summarized as follows:
Thousands of
U.S. dollars
2017

Millions of yen
2016
2017
Unrealized holding (loss) gain securities:
Amount arising during the year
Reclassification adjustments
Before tax effectTax effectUnrealized holding (loss) gain on
securities
Land revaluation reserve:
Tax effectLand revaluation reserve
Translation adjustments:
Amount arising during the year
Translation adjustments:
Retirement benefit liability adjustment:
Amount arising during the year
Reclassification adjustments
Before tax effectTax effect
Retirement benefit liability adjustments
Share of other comprehensive (loss) incomeof an affiliate accounted for by the equity
method:Amount arising during the year
Share of other comprehensive (loss)
income of an affiliate accounted for by
the equity method
Total other comprehensive (loss) income¥ (6,363)
1,061(5,302)
1,880¥ 5,090
6
5,096(1,371)$ 45,370
53
45,423(12,220)(3,422)

3,725

33,203

(4)
(4)

–
–

–
–

(1,120)(1,120)

(735)
(735)

(6,552)(6,552)(1,183)155(1,028)
276
(752)

222
279
501
(191)
310

1,979
2,486
4,465
(1,702)
2,763

(10)

22

196

(10)
¥ (5,308)22¥ 3,322196$ 29,610

37

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

17. Shareholders’ Equity
The Companies Act of Japan (the “Act”) provides that an amount equal to 10% of the amountto be disbursed as distributions of capital surplus (other than 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 capitalstock account. Such distributions can be made at any time by resolution of the shareholders,or by the Board of Directors if certain conditions are met.
The capital reserve of the Company amounted to ¥58,050 million ($517,426 thousand) as ofMarch 31, 2016 and 2017.
The legal reserve of the Company was nil as of March 31, 2016 and 2017.
Stock options
The Company has stock option plans. The following stock option plans for certain directors
and executive officers of the Company were approved at annual general meetings of theshareholders for the 2004 and the 2005 plans in accordance with the former Commercial Codeof Japan and meetings of the Board of Directors for the 2006 plan through to the 2016 plan inaccordance with the Act.
Stock option expenses, included in selling, general and administrative expenses, charged to
profit or loss for the years ended March 31, 2016 and 2017 amounted to ¥29 million and ¥35
million ($312 thousand), respectively.

38

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

17. Shareholders’ Equity (continued)
The stock option plans of the Company as of March 31 2017 are summarized as follows:

Individuals covered by theplanClass and number of
options granted
Grant date
Vesting conditions

Vesting period for services
received

Exercisable period

The 2004 plan

The 2005 plan

The 2006 plan

5 Directors
10 Executive officers(other than directors
who concurrently
serve as executive
officers
Common stock 16,200
sharesJuly 12, 2004
(1) In the event a
grantee resigns
from both
positions of
director andexecutive officer,
the options are
exercisable fromthe day following
their resignation.
(2) Regardless of (1)above, a grantee
can exercise theoptions from June30, 2023 if the
grantee does not
resign from theCompany until
June 29, 2023.
From July 12, 2004 to
the date of the annual
general meeting of
the shareholders forthe fiscal year ended
March 31, 2005
From July 13, 2004 toJune 29, 2024

6 Directors
9 Executive officers(other than directors
who concurrently
serve as executive
officers
Common stock 12,400
sharesJuly 14, 2005
(1) In the event a
grantee resigns
from both
positions of
director andexecutive officer,
the options are
exercisable fromthe day following
their resignation.
(2) Regardless of (1)above, a grantee
can exercise theoptions from June30, 2024 if the
grantee does not
resign from theCompany until
June 29, 2024.
From July 14, 2005 to
the date of the annual
general meeting of
the shareholders forthe fiscal year ended
March 31, 2006
From July 15, 2005 toJune 29, 2025

5 Directors
8 Executive officers(other than directors
who concurrently
serve as executive
officers
Common stock 10,600
sharesJuly 31, 2006
(1) In the event a
grantee resigns
from both
positions of
director andexecutive officer,
the options are
exercisable fromthe day following
their resignation.
(2) Regardless of (1)above, a grantee
can exercise theoptions from June30, 2025 if the
grantee does not
resign from theCompany until
June 29, 2025.
From July 31, 2006 to
the date of the annual
general meeting of
the shareholders forthe fiscal year ended
March 31, 2007
From August 31, 2006
to June 29, 2026

39

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

17. Shareholders’ Equity (continued)

Individuals covered by theplanClass and number of
options granted
Grant date
Vesting conditions

Vesting period for services
received

Exercisable period

The 2007 plan

The 2008 plan

The 2009 plan

4 Directors
8 Executive officers(other than directors
who concurrently
serve as executive
officers)
Common stock 8,600
sharesAugust 1, 2007
(1) In the event a
grantee resigns
from both
positions of
director andexecutive officer,
the options are
exercisable fromthe day following
their resignation.
(2) Regardless of (1)above, a grantee
can exercise theoptions from June30, 2026 if the
grantee does not
resign from theCompany until
June 29, 2026.
From August 1, 2007
to the date of theannual general
meeting of theshareholders for the
fiscal year ended
March 31, 2008
From August 2, 2007
to June 29, 2027

4 Directors
7 Executive officers(other than directors
who concurrently
serve as executive
officers)
Common stock 12,000
sharesJuly 30, 2008
(1) In the event a
grantee resigns
from both
positions of
director andexecutive officer,
the options are
exercisable fromthe day following
their resignation.
(2) Regardless of (1)above, a grantee
can exercise theoptions from June30, 2027 if the
grantee does not
resign from theCompany until
June 29, 2027.
From August 1, 2008
to the date of theannual general
meeting of theshareholders for the
fiscal year ended
March 31, 2009
From July 31, 2008
to June 29, 2028

5 Directors
7 Executive officers(other than directors
who concurrently
serve as executive
officers)
Common stock 13,800
sharesJuly 30, 2009(1) In the event a
grantee resigns
from both
positions of
director andexecutive officer,
the options are
exercisable fromthe day following
their resignation.
(2) Regardless of (1)above, a grantee
can exercise theoptions from June30, 2028 if the
grantee does not
resign from theCompany until
June 29, 2028.
From August 1, 2009
to the date of theannual general
meeting of theshareholders for the
fiscal year ended
March 31, 2010
From July 31, 2009
to June 29, 2029

40

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

17. Shareholders’ Equity (continued)

Individuals covered by theplanClass and number of
options granted
Grant date
Vesting conditions

Vesting period for services
received

Exercisable period

The 2010 plan

The 2011 plan

The 2012 plan

5 Directors
7 Executive officers(other than directors
who concurrently
serve as executive
officers)
Common stock 20,400
sharesJuly 29, 2010(1) In the event a
grantee resigns
from both
positions of
director andexecutive officer,
the options are
exercisable fromthe day following
their resignation.
(2) Regardless of (1)above, a grantee
can exercise theoptions from June30, 2029 if the
grantee does not
resign from theCompany until
June 29, 2029.
From July 29, 2010 tothe date of the annual
general meeting of
the shareholders forthe fiscal year ended
March 31, 2011

5 Directors
6 Executive officers(other than directors
who concurrently
serve as executive
officers)
Common stock 19,600
sharesAugust 1, 2011(1) In the event a
grantee resigns
from both
positions of
director andexecutive officer,
the options are
exercisable fromthe day following
their resignation.
(2) Regardless of (1)above, a grantee
can exercise theoptions from June30, 2030 if the
grantee does not
resign from theCompany until
June 29, 2030.
From August 2, 2011
to the date of theannual general
meeting of theshareholders for the
fiscal year ended
March 31, 2012
From August 2, 2011
to June 29, 2031

5 Directors
9 Executive officers(other than directors
who concurrently
serve as executive
officers)
Common stock 15,400
sharesAugust 1, 2012(1) In the event a
grantee resigns
from both
positions of
director andexecutive officer,
the options are
exercisable fromthe day following
their resignation.
(2) Regardless of (1)above, a grantee
can exercise theoptions from June30, 2031 if the
grantee does not
resign from theCompany until
June 29, 2031.
From August 2, 2012
to the date of theannual general
meeting of theshareholders for the
fiscal year ended
March 31, 2013
From August 2, 2012
to June 29, 2032

From July 30, 2010
to June 29, 2030

41

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

17. Shareholders’ Equity (continued)

Individuals covered by
the plan

Class and number of
options granted
Grant date
Vesting conditions

Vesting period forservices received

Exercisable period

The 2013 plan

The 2014 plan

The 2015 Plan

5 Directors
9 Executive officers(other than directors
who concurrently
serve as executive
officers)
Common stock 14,400
sharesJanuary 31, 2014(1) In the event a
grantee resigns
from both
positions of
director andexecutive officer,
the options are
exercisable fromthe day following
their resignation.
(2) Regardless of (1)above, a grantee
can exercise theoptions from June30, 2032 if the
grantee does not
resign from theCompany until
June 29, 2032.
From July 29, 2013
to the date of theannual general
meeting of theshareholders for the
fiscal year ended
March 31, 2014
From February 1, 2014
to June 29, 2033

5 Directors
8 Executive officers(other than directors
who concurrently
serve as executive
officers)
Common stock 14,400
sharesJuly 31, 2014(1) In the event a
grantee resigns
from both
positions of
director andexecutive officer,
the options are
exercisable fromthe day following
their resignation.
(2) Regardless of (1)above, a grantee
can exercise theoptions from June30, 2033 if the
grantee does not
resign from theCompany until
June 29, 2033.
From August 1, 2014
to the date of theannual general
meeting of theshareholders for the
fiscal year ended
March 31, 2015
From August 1, 2014
to June 29, 2034

4 Directors
7 Executive officers(other than directors
who concurrently
serve as executive
officers)
Common stock 14,200
sharesJuly 30, 2015(1) In the event a
grantee resigns
from both
positions of
director andexecutive officer,
the options are
exercisable fromthe day following
their resignation.
(2) Regardless of (1)above, a grantee
can exercise theoptions from June30, 2034 if the
grantee does not
resign from theCompany until
June 29, 2034.
From July 30, 2015
to the date of theannual general
meeting of theshareholders for the
fiscal year ended
March 31, 2016
From July 31, 2015 toJune 29, 2035

42

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

17. Shareholders’ Equity (continued)
The 2016 Plan
Individuals covered by
the plan

Class and number of
options granted
Grant date(3) Vesting conditions

Vesting period forservices received

Exercisable period

4 Directors
10 Executive officers(other than directors
who concurrently
serve as executive
officers)
Common stock 15,800
sharesJuly 28, 2016(4) In the event a
grantee resigns
from both
positions of
director andexecutive officer,
the options are
exercisable fromthe day following
their resignation.
(5) Regardless of (1)above, a grantee
can exercise theoptions from June30, 2035 if the
grantee does not
resign from theCompany until
June 29, 2035.
From July 28, 2016
to the date of theannual general
meeting of theshareholders for the
fiscal year ended
March 31, 2017
From July 29, 2016 toJune 29, 2036

The number of common stock for stock options in the description outlined above was adjusted
due to the consolidation of five shares into one share on October 1, 2015.

43

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

17. Shareholders’ Equity (continued)
Stock option activity under the stock option plans referred above is summarized as follows:

Number of stock
options which are
not yet vested:
Outstanding at
April 1, 2016
GrantedForfeited
VestedOutstanding at
March 31, 2017
Number of stock
options which havealready been
vested:Outstanding at
April 1, 2016
VestedExercised
Forfeited
Outstanding at
March 31, 2017

The
2004
plan

The
2005
plan

The
2006
plan

The
2007
plan

The
2008
plan

The
2009
plan

The
2010
plan

The
2011
plan

The
2012
plan

The
2013
plan

The
2014
plan

The
2015
plan

The
2016
plan

2,400
–
–
–

2,000
–
–
–

3,400
–
–
–

3,400
–
–
–

5,000
–
–
–

6,600
–
–
–

7,800
–
–
–

8,200
–
–
–

11,600–––

11,200–––11,800–––14,200––––15,800
–
–

2,400

2,000

3,400

3,400

5,000

6,600

7,800

8,200

11,600

11,20011,80014,20015,800

–
–
–
–

–
–
–
–

–
–
–
–

400
–
400
–

1,200
–
1,200
–

3,000
–
1,800
–

4,400
–
–
–

3,600
–
800
–

3,800
–
–
–

3,200
–
–
–

2,200
–
–
–

–
–
–
–

–
–
–
–

–

–

–

–

–

1,200

4,400

2,800

3,800

3,200

2,200

–

–

The unit price of the stock options for the stock option plans of the Company during the year
ended March 31, 2017 is summarized as follows:

Exercise price
Weighted averagefair value perstock at theexercise date
Fair value of stock
options as of the
grant date

Exercise price
Weighted averagefair value perstock at theexercise date
Fair value of stock
options as of the
grant date

The
2004
plan
¥
1

The
2005
plan
¥
1

The
2006
plan
¥
1

The
2007
plan
¥
1

The
2008
plan
¥
1

The
2009
plan
¥
1

Yen
The
2010
plan
¥
1

The
2011
plan
¥
1

The
2012
plan
¥
1

The
2013
plan
¥
1

The
2014
plan
¥
1

–

–

–

3,350

3,357

3,360

–

3,350

–

–

–

–

–

–

–

2,390

2,730

2,080

1,825

1,400

1,200

1,020

1,875

1,865

2,025

2,225

The
2004
plan
$ 0

The
2005
plan
$ 0

The
2006
plan
$ 0

The
2007
plan
$ 0

The
2008
plan
$ 0

The
2009
plan
$ 0

U.S. dollars
The
The
2010
2011
plan
plan
$ 0
$ 0

The
2012
plan
$ 0

The
2013
plan
$ 0

The
2014
plan
$ 0

The
2015
plan
$ 0

The
2016
plan
$ 0

–

–

–

30

30

30

–

30

–

–

–

–

–

–

–

21

24

19

16

12

11

9

17

17

18

20

The
2015
plan
¥

The
2016
plan
1

44

¥

1

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

17. Shareholders’ Equity (continued)
The above tables present the stock options plans that existed during the year ended March 31,
2017. The number of stock options was converted to the number of shares to be issued upon
the exercise of the stock options.
The number of stock and the fair value in the above tables were adjusted due to theconsolidation of five shares into one share on October 1, 2015.
Valuation method for estimating fair value was the Black-Scholes model. The major
assumptions used are as follows:
Major assumptions
Expected volatility
Expected holding period
Expected dividend
Risk-free rate

Note
(a)
(b)
(c)

The 2016 plan
26.716%
10 years¥50 per share(0.285%)(a) Expected volatility was computed by the closing stock price of the Company in the last
trading day of each month during the period from July 2006 to June 2016.
(b) The expected dividend was calculated at the actual amounts paid for the year ended March
31, 2016.
(c) The risk-free rate was determined based on Japanese government bonds whose
redemption period corresponds to the expected holding period described above.
Because it is difficult to reasonably estimate the number of stock options that will be forfeited,the estimation reflects only the actual number of forfeited stock options.
Common stock and treasury stock
Movements in common stock and treasury stock during the years ended March 31, 2016 and2017 are summarized as follows:

Common stock (*1)
Treasury stock (*2)

April 1, 2015
179,186,153
24,475,276

Common stock
Treasury stock (*3)

April 1, 2015
35,837,230
5,363,079

Number of shares
2016
Increase
Decrease–
143,348,923
1,290,550
20,402,747
Number of shares
2017
Increase
Decrease––
670,018
4,252

March 31, 2016
35,837,230
5,363,079

March 31, 201735,837,230
6,028,845
45

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

17. Shareholders’ Equity (continued)(*1) The decrease in the number of common stock of 143,348,923 shares was due to theconsolidation of five shares into one share on October 1, 2015.
(*2) The increase in the number of shares of treasury consists of 1,272,878 shares due topurchase of shares based on the resolution of the Board of Directors meeting, 14,138
shares due to the purchase of fractional shares of less than one voting unit and 3,534 shares
attributable to the Company acquired by its affiliate under the equity method.
The decrease in the number of shares of treasury stock consists of 20,364,401 shares dueto the consolidation of shares, 37,400 shares due to the exercise of stock option rights and946 shares due to the sales of fractional shares less than one voting unit to shareholders attheir request.
(*3) The increase in the number of shares of treasury consists of 667,400 shares due topurchase of shares based on the resolution of the Board of Directors meeting, 1,550 shares
due to the purchase of fractional shares of less than one voting unit and 1,068 shares
attributable to the Company acquired by its affiliate under the equity method.
The decrease in the number of shares of treasury stock consists of 4,200 shares due to theexercise of stock option rights and 52 shares due to the sales of fractional shares less than
one voting unit to shareholders at their request.

18. Land Revaluation
As of March 31, 2000 and 2002, certain consolidated subsidiaries and an affiliate revalued
their land held for business use in accordance with the “Law on Land Revaluation.”
Differences on land revaluation have been accounted for as land revaluation reserve under net
assets and are stated at the Company’s share of the net amount of the relevant tax effect. The
method followed for land revaluation was determined in accordance with the “Enforcement
Act Concerning Land Revaluation.”
The fair value of the land revalued as of March 31, 2000 and 2002 was less than thecorresponding carrying value by the following amounts as of March 31, 2016 and 2017:Land revalued as of March 31, 2000
Land revalued as of March 31, 2002

Millions of yen
2016
2017
¥ (331)¥ (329)(656)(604)¥ (987)¥ (933)Thousands of
U.S. dollars
2017$ (2,932)(5,384)$ (8,316)

46

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

18. Land Revaluation (continued)
A certain portion of land revalued as of March 31, 2000 and 2002 is related to real estate forinvestment, rental and idle properties as of March 31, 2016 in the amounts of ¥13 million and¥289 million, respectively.
A certain portion of land revalued as of March 31, 2000 and 2002 is related to real estate forinvestment, rental and idle properties as of March 31, 2017 in the amounts of ¥12 million($107 thousand) and ¥286 million ($2,549 thousand), respectively.

19. Research and Development Costs
Research and development costs included in selling, general and administrative expenses
totaled ¥560 million and ¥526 million ($4,688 thousand) for the years ended March 31, 2016
and 2017, respectively.

20. Leases(a) Finance leases
The Group leases mainly machinery, vehicles and others (machinery and equipment) as
leased assets under finance lease transactions which transfer ownership to the Group andmainly, information processing systems (equipment) as leased assets under finance leasetransactions which do not transfer ownership to the Group.
The depreciation method for leased assets is provided in Note 1. Summary of Significant
Accounting Policies (l) Leases.
(b) Operating leases
Future minimum lease receipts subsequent to March 31, 2017 under non-cancelable
operating leases are as follows:

Years ending March 31,
20182019 and thereafter

Millions of yen
¥ 17
86
¥ 103

Thousands of
U.S. dollars
$ 152
766
$ 918

47

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

21. Derivatives
The outstanding currency-related derivatives positions designated as hedging instruments asof March 31, 2016 and 2017 are as follows:
Millions of yen
2016

Method ofhedge accounting
Allocation method forforward foreignexchange contracts

Hedge transactions
and major hedged items
Forward foreign exchange contracts:
Selling USD, Accounts receivable

Contract value(notional
principal
amount)Contract value
over one year

Estimated
fair value

¥ 114

¥–

(*)

Millions of yen
2017

Method ofhedge accounting
Allocation method forforward foreignexchange contracts

Hedge transactions
and major hedged items
Forward foreign exchange contracts:
Selling USD, Accounts receivable

Contract
value(notional
principal
amount)Contract value
over one year

Estimated
fair value

¥ 111

¥–

(*)

Thousands of U.S. dollars
2017

Method ofhedge accounting
Allocation method forforward foreignexchange contracts

Hedge transactions
and major hedged items
Forward foreign exchange contracts:
Selling USD, Accounts receivable

Contract
value(notional
principal
amount)Contract value
over one year

Estimated
fair value

$ 989

$–

(*)

(*) The fair value of forward foreign exchange contracts that qualify for allocation method is
included in the carrying value of hedged accounts receivable.

48

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

22. Amounts per Share
Amounts per share as of March 31, 2016 and 2017 and for the years then ended are as follows:Yen
Net assets(Loss) profit attributable toowners of parent:
Basic
DilutedCash dividends

2016¥ 4,500.51

2017¥ 4,805.41(90.14)–30.00

224.27223.38
70.00

U.S. dollars
2017$ 42.83

2.00
1.99
0.62

Amounts per share of net assets are computed based on the number of shares of common stock
outstanding at the year end.
Basic (loss) profit attributable to owners of parent per share is computed based on the (loss)
profit available for distribution to shareholders of common stock of parent and the weightedaverage number of shares of common stock outstanding during the year. Diluted profit
attributable to owners of parent per share is computed based on the profit available for
distribution to the shareholders and the weighted-average number of shares of common stock
outstanding during each year after giving effect to the dilutive potential of shares of common
stock to be issued upon the exercise of stock acquisition rights.
Diluted earnings attributable to owners of parent per share for the year ended March 31, 2016
was not presented since the Company recorded loss.
The average number of shares of common stock used to compute basic (loss) profit attributableto owners of parent per share for the years ended March 31, 2016 and 2017 were 30,746
thousand and 30,031 thousand, respectively. The number of shares of common stock withdilutive potential for the years ended March 31, 2016 and 2017 were 109 thousand and 120
thousand, respectively.
Cash dividends per share represent the cash dividends proposed by the Board of Directors asapplicable to the respective years together with the interim cash dividends paid.

49

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

23. Transactions with Related Parties
Transactions and balances with related parties as of and for the years ended March 31, 2016
and 2017 are summarized as follows:
Transactions
Name ofaffiliated company

Type of transaction
Sales

Millions of yen
2016
2017
¥ 31,989¥ 32,094

Thousands of
U.S. dollars
2017$ 286,068

Balances
Sadoshima
Corporation

Thousands of
U.S. dollars
2017

Millions of yen
2016
2017

Account nameNotes and accounts
receivable¥ 12,727¥ 13,455$ 119,930

The Company owns 50.0% of the voting rights of Sadoshima Corporation, a steel productwholesaler for the Company. Certain board members of Sadoshima Corporation serve
concurrently as board members of the Company. Selling prices of products are determinedbased on price negotiations each fiscal year, after considering market prices, overall costs andthe Company’s proposals regarding desired prices.

24. Investment, Rental and Idle Properties
The Company and certain consolidated subsidiaries own office buildings, land, and parking
lots as rental properties and idle properties mainly in Osaka Prefecture, other domestic areas
and Taiwan. Certain portions of real estate, such as office buildings are used by the Company
and certain consolidated subsidiaries.
The carrying value in the consolidated balance sheet as of March 31, 2016 and 2017 and thecorresponding fair value of rental properties and idle properties and real estate including
certain portions used as rental property are as follows:

2015
Rental properties and idle
properties
Real estate including certain
portions used as rental
property

Millions of yen
Carrying value
Net change
2016

Fair value
2016¥ 4,617¥ (145)¥ 4,472¥ 9,259

4,628

204

4,832

11,80350

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

24. Investment, Rental and Idle Properties (continued)

2016
Rental properties and idle
properties
Real estate including certain
portions used as rental
property

Fair value
2017¥ 4,472¥ (118)¥ 4,354¥ 9,081

4,832

1,004

5,836

12,175

Thousands of U.S. dollars
Carrying value
Net change
2017

Fair value
2017

2016
Rental properties and idle
properties
Real estate including certain
portions used as rental
property

Millions of yen
Carrying value
Net change
2017$ 39,861$(1,052)$ 38,809$ 80,943

43,0708,949

52,019108,521

The carrying value represents the acquisition cost less accumulated depreciation andcumulative impairment loss.
The components of net change in carrying value for the year ended March 31, 2016 included
increases mainly due to purchase of buildings in the amount of ¥274 million and decreases
mainly due to depreciation of buildings in the amount of ¥131 million and translation
adjustments in the amount of ¥47 million.
The components of net change in carrying value for the year ended March 31, 2017 included
increases mainly due to purchase of buildings in the amount of ¥700 million ($6,239 thousand)and land in the amount of ¥385 million ($3,432 thousand) and decreases mainly due todepreciation of buildings in the amount of ¥143 million ($1,275 thousand) and loss on
impairment of land in the amount of ¥23 million ($205 thousand) and sale of land in theamount of ¥7 million ($62 thousand) and translation adjustments in the amount of ¥27 million($241 thousand).
Fair value of domestic rental properties are principally measured based on the real-estateappraisal assessed by the external real-estate appraiser. However, unless the appraisal orindicators that are regarded to reflect the fair value of the properties appropriately change
significantly since the date of acquisition or the date of the latest appraisal, the Company andcertain domestic consolidated subsidiaries measure the fair value of the properties based onsuch appraisal or indicators obtained previously and adjusted as appropriately.

51

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

24. Investment, Rental and Idle Properties (continued)
Fair value of rental properties in Taiwan is measured based on the property prices announced
by the government.
Revenues, costs and expenses relevant to investment, rental, idle properties and real estateincluding certain portions used as result property for the years ended March 31, 2016 and 2017
are as follows:
Millions of yen
2016
Rental revenues¥ 1,019

Rental costs¥ 742

Difference¥ 277

Other loss, net on
sales and others¥ 38

Millions of yen
2017
Rental revenues¥ 924

Rental costs¥ 564

Difference¥ 360

Other loss, net on
sales and others¥ 22

Thousands of U.S. dollars
2017
Rental revenues$ 8,236

Rental costs$ 5,027

Difference$ 3,209

Other loss, net on
sales and others$ 196

The rental revenues and rental costs for certain properties of which only a part are used asrental properties are not included in the above table because the Company and certain
consolidated subsidiaries use a portion of these properties for the purposes of rendering
services and conducting management activities. The rental revenues are recorded under net
sales or other net, as part of other income (expenses) and the rental costs are recorded undercost of sales, selling, general and administrative expenses or other, net, as part of other income(expenses), in the consolidated statement of operations.

52

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

25. Segment Information(a) Outline of 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 Boardof Directors of the Company in order to make decisions about resource allocation and toassess business performance.
The Group’s business units are divided by the similarity of the products or services soldby each business unit. Each business unit develops its own strategies and operates its
businesses independently. Therefore, the Group consists four reportable segments basedon business units: “Steel Sheet Segment,” “Roll Segment,” “Grating Segment” and “RealEstate Segment.”
The “Steel Sheet Segment” engages in the manufacture and sale of cold rolled steel,polished hoop steel, hot dip galvanizing steel sheets, painted hot dip galvanizing steel
sheets, various steel sheets, other construction materials, and exterior products and others
and in designing and engineering of construction work. The “Roll Segment” engages in
the manufacture and sale of rolls for iron, steel and non-ferrous products and others. The“Grating Segment” engages in the manufacture and sales of gratings. The “Real Estate
Segment” engages in the sale, purchase and lease of real estate such as buildings, carparking lots.
(b) Calculation methods used for net sales, income or loss, assets and other items of eachreportable segment
The accounting policies of the segments are the same as those described in the summaryof significant accounting policies in Note 1. In addition, segment income is adjusted tobe consistent with operating income in the consolidated statement of operations.

53

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

25. Segment Information (continued)(c) Information on net sales, income or loss, assets and other items of each reportablesegment
Information by reportable segment for the years ended March 31, 2016 and 2017 aresummarized as follows:
Millions of yen
Year ended March 31, 2016

Net sales:
Sales to third parties
Inter-segment sales
and transfers
Total
Segment income
Segment assets
Other items:
Depreciation andamortization
Investment in an
affiliate accounted
for by the equity
methodIncrease in property,
plant andequipment andintangible assets

Steel Sheet
Segment

Reportable Segments
Roll
Grating Real Estate
Segment Segment Segment Sub-Total

Other (*1)

Total

¥ 147,758¥ 3,475¥ 3,550¥ 1,128¥ 155,911¥ 3,303¥ 159,214¥¥–¥ 147,758¥ 7,181¥ 124,778¥–¥ 3,475¥ 266¥ 3,094¥–¥ 3,550¥ 76¥ 3,622¥ 443¥ 1,571¥ 721¥ 8,369¥443¥ 156,354¥ 8,244¥ 139,863¥ 2,498¥ 5,801¥ 232¥ 8,934

¥

3,586

¥ 175

¥

¥

¥

¥

3,836

–

363

3

4,202

–

4,202

–

4,202

2,163

76

33

338

2,610

218

2,828

8 (*5)

2,836

90

69

3,920

346

Adjustments
andeliminations

Consolidated–¥ 159,214¥ 2,941¥ 162,155¥ 8,476¥ 148,797¥ (2,941)¥ (2,941)¥ (1,174) (*2)
¥ 57,063 (*4)¥–¥ 159,214¥ 7,302¥ 205,860

¥

¥

¥

4,266

46

4,312

Millions of yen
Year ended March 31, 2017

Net sales:
Sales to third parties
Inter-segment sales
and transfers
Total
Segment income
Segment assets
Other items:
Depreciation andamortization
Investment in an
affiliate accounted
for by the equity
methodIncrease in property,
plant andequipment andintangible assets

Steel Sheet
Segment

Reportable Segments
Roll
Grating Real Estate
Segment Segment Segment

Sub-Total

Other (*1)

Total

¥ 142,811¥ 3,385¥ 3,673¥ 996¥ 150,865¥ 3,356¥ 154,221¥¥–¥ 142,811¥ 12,969¥ 127,862¥–¥ 3,385¥ 265¥ 3,161¥–¥ 3,673¥ 162¥ 3,507¥ 443¥ 1,439¥ 759¥ 9,381¥443¥ 151,308¥ 14,155¥ 143,911¥ 2,662¥ 6,018¥ 316¥ 9,969

¥

¥

¥

¥

¥

¥

3,475

158

73

91

3,797

326

Adjustments
andeliminations

Consolidated–¥ 154,221¥ 3,105¥ 157,326¥ 14,471¥ 153,880¥ (3,105)¥ (3,105)¥ (1,302) (*2)
¥ 56,098 (*4)¥–¥ 154,221¥ 13,169¥ 209,978

¥

¥

¥

4,123

46

4,169

4,089

–

385

3

4,477

–

4,477

–

4,477

4,476

63

19

1,074

5,632

171

5,803

25 (*5)

5,828

54

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

25.

Segment Information (continued)c) Information on net sales, income or loss, assets and other items of each reportablesegment (continued)
Thousands of U.S. dollars
Year ended March 31, 2017

Net sales:
Sales to third parties
Inter-segment sales
and transfers
Total
Segment income
Segment assets
Other items:
Depreciation andamortization
Investment in an
affiliate accounted
for by the equity
methodIncrease in property,
plant andequipment andintangible assets

Steel Sheet
Segment

Reportable Segments
Roll
Grating Real Estate
Segment Segment Segment

Sub-Total$1,272,939$30,172$32,739$ 8,877$ 1,344,727 $ 29,914$ 1,374,641 $$–$1,272,939$ 115,599$1,139,693$–$30,172$ 2,362$28,175$–$32,739$ 1,444$31,259$ 3,949$ 12,826$ 6,765$ 83,617$
3,949$ 1,348,676$ 126,170$ 1,282,744$ 23,727$ 53,641$ 2,817$ 88,858$ 27,676$ 1,402,317$ 128,987$ 1,371,602

$

$

$

33,844$ 2,906$$

30,974 $ 1,408

651

811

Other (*1)

Total

Adjustments
andeliminations

Consolidated–$ 1,374,641$ (27,676)$ (27,676)$ (11,606) (*2)
$ 500,026 (*4)$–
$ 1,374,641$ 117,381$ 1,871,628

36,750 $410$

37,16036,447

–

3,432

27

39,906–39,906–39,90639,897

562

169

9,573

50,201

1,524

51,725223 (*5)

51,948(*1) The “Other” segment consists of business segments not classified into theaforementioned reportable segments, including transportation and warehousebusiness, golf courses, plant machines, supply of electric power (solar power
generation) and other.
(*2) The adjustments and eliminations of segment income or loss include corporate
expenses, which cannot be allocated to specific segments of ¥1,177 million and¥1,310 million ($11,677 thousand) and intersegment profit eliminations of ¥5
million and ¥8 million ($71 thousand) for the years ended March 31, 2016 and 2017,
respectively.
(*3) Segment income or loss is reconciled to operating income on the consolidated
statement of operations.
(*4) The adjustments and eliminations of segment assets include corporate assets of theCompany of ¥57,381 million and ¥56,402 million ($502,736 thousand) andeliminations of intersegment transaction of ¥318 million and ¥304 million ($2,710
thousand) for the years ended March 31, 2016 and 2017, respectively.
(*5) The adjustments and eliminations of increase in property, plant and equipment andintangible assets are due to the increase in tools, furniture and fixtures in corporate
assets not allocated to the reportable segment of ¥8 million and ¥25 million ($223
thousand) for the years ended March 31, 2016 and 2017 respectively.
55

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

25. Segment Information (continued)
Net sales categorized by country and region based on locations of customers within the Groupfor the years ended March 31, 2016 and 2017 are summarized as follows:

Taiwan¥ 23,202

Millions of yen
2016
USA¥ 13,567

Other¥ 22,231

Total¥ 159,214Japan¥ 99,976

Taiwan¥ 27,654

Millions of yen
2017USA¥ 6,713

Other¥ 19,878

Total¥ 154,221

Japan$ 891,131

Thousands of U.S. dollars
2017
TaiwanUSA
Other$ 246,493$ 59,836$ 177,181

Total$ 1,374,641

Japan¥ 100,214

Property, plant and equipment, net, categorized by geographical area as of March 31, 2016
and 2017 are summarized as follows:

Taiwan¥ 11,198

Millions of yen
2016
China
¥ 4,428

Other¥ 2,874

Total¥ 50,638Japan¥ 34,319

Taiwan¥ 10,869

Millions of yen
2017
China
¥ 3,138

Other¥ 2,562

Total¥ 50,888

Japan$ 305,901

Thousands of U.S. dollars
2017
TaiwanChina
Other$ 96,880$ 27,970$ 22,837

Total$ 453,588

Japan¥ 32,138

56

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

25. Segment Information (continued)
Net sales to major customers for the years ended March 31, 2016 and 2017 are as follows:

Customer nameMillions of yen
2016
2017

Thousands of
U.S. dollars
2017

Sadoshima
Corporation¥ 31,989¥ 32,094$ 286,068

Related Segments“Steel Sheet Segment,”“Grating Segment,”“Real Estate Segment”
and “Other”

Loss on impairment of fixed assets by reportable segment for the years ended March 31, 2016
and 2017 is summarized as follows:
Millions of yen
Year ended March 31, 2016
Reportable Segments
Steel Sheet
Roll
Grating Real Estate
Adjustments andSegment Segment Segment
Segment
Othereliminations
Loss on impairmentof fixed assets¥ 5,971

¥–

¥–

¥–

¥ 600

¥ 32

Total
¥ 6,603

Millions of yen
Year ended March 31, 2017
Reportable Segments
Steel Sheet
Roll
Grating Real Estate
Adjustments andSegment Segment Segment
Segment
Othereliminations
Loss on impairmentof fixed assets

¥ 714

¥–

¥–

¥–

¥0

Total

¥ 23

¥ 737

Thousands of U.S. dollars
Year ended March 31, 2017
Reportable Segments
Steel Sheet
Roll
Grating Real Estate
Adjustments andSegment Segment Segment
Segment
Othereliminations
Loss on impairmentof fixed assets$ 6,364

$–

$–

$–

$0

$ 205

Total
$ 6,569

57

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

25. Segment Information (continued)
The amortization and balance of goodwill by reportable segment as of and for the years ended
March 31, 2016 and 2017 is summarized as follows:
Millions of yen
Year ended March 31, 2016
Reportable Segments
Steel Sheet
Roll
Grating Real Estate
Segment Segment Segment
Segment
Other
Amortization
¥ 22
¥–
¥–
¥–
¥–
Balance at the year end
¥ 14
¥–
¥–
¥–
¥–

Adjustments andeliminations
¥–
¥–

Total
¥ 22
¥ 14

Millions of yen
Year ended March 31, 2017
Reportable Segments
Steel Sheet
Roll
Grating Real Estate
Segment Segment Segment
Segment
Other
Amortization
¥ 3
¥–
¥–
¥–
¥–
Balance at the year end
¥ 11
¥–
¥–
¥–
¥–

Adjustments andeliminations
¥–
¥–

Total
¥ 3
¥ 11

Thousands of U.S. dollars
Year ended March 31, 2017
Reportable Segments
Steel Sheet
Roll
Grating Real Estate
Segment Segment Segment
Segment
Other
Amortization
$ 27
$–
$–
$–
$–
Balance at the year end
$ 98
$–
$–
$–
$–

Adjustments andeliminations
$–
$–

Total
$ 27
$ 98

Goodwill was recognized as a result of capital increase of consolidated subsidiary in
November 2014 and March 2015.
Loss on impairment of goodwill of ¥162 million has been recorded in the consolidated
statement of operations for the year ended March 31, 2016.

58

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

26. Subsequent Events(a) Cash dividends
The following distribution of retained earnings of the Company, which has not beenreflected in the accompanying consolidated financial statements for the year ended March
31, 2017, was approved at a meeting of the Board of Directors held on May 10, 2017.

Cash dividends of ¥40 ($0.36) per share

Millions of yen¥ 1,204

Thousands of
U.S. dollars$ 10,732(b) Purchase of treasury stock

At the meeting of the Board of Directors of the Company held on May 10, 2017, in
accordance with Article 459 (1) of the Act and Article 35 of the Company’s articles ofincorporation, the Company approved the purchase of up to 160,000 shares of treasury
stock for an aggregate acquisition cost not exceeding ¥500 million ($4,457 thousand)during the period from May 11, 2017 through June 23, 2017, to support the execution ofa flexible capital management policy in response to changes in the business environment.
As a result, the Company purchased 160,000 shares of treasury stock for a total amountof ¥487 million ($4,341 thousand) on the Tokyo Stock Exchange.

59