Consolidated Financial Statements
Yodogawa Steel Works, Ltd.
and Consolidated Subsidiaries
March 31, 2015
with Independent Auditor’s Report

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Consolidated Financial Statements
March 31, 2015

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

Consolidated Financial Statements
Consolidated Balance Sheet ................................................................................................ 2
Consolidated Statement of Income...................................................................................... 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, 2015

Millions of yen
2014
2015
AssetsCurrent assets:
Cash and deposits (Notes 4, 5 and 12)
Marketable securities (Notes 4, 5 and 6)
Notes and accounts receivable (Note 5):
Unconsolidated subsidiaries and affiliates (Note 23)
TradeLess allowance for doubtful receivables
Inventories (Note 7)
Deferred income taxes (Note 15)
Other current assets (Note 4)
Total current assets

Property, plant and equipment:
Land (Notes 8, 18 and 24)
Buildings and structures (Notes 8 and 24)
Machinery, equipment and vehicles (Note 8)
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 5, 6 and 12)
Investments in unconsolidated subsidiaries andaffiliates (Note 25)
Goodwill (Note 25)
Deferred income taxes (Note 15)
Intangible assets (Note 25)
Other assets (Note 12)
Total investments and other assets

Total assets (Note 25)2¥ 26,877
5,404¥

35,176505

Thousands of
U.S. dollars(Note 3)
2015$

292,719
4,202

14,36426,023(229)
29,901606
6,600
109,546

14,644
26,595(189)
32,706381
5,626
115,444

121,861
221,311(1,573)272,164
3,171
46,817
960,672

19,182
57,720138,9121,441
3,482(161,940)
58,797

18,97958,925
147,823
1,644
537(168,739)
59,169157,935
490,347
1,230,115
13,681
4,469(1,404,169)
492,378

31,36137,011

307,989

4,603
–
650
972
1,847
39,433

4,875
198
699
1,145
1,530
45,45840,568
1,648
5,817
9,528
12,731
378,281¥ 207,776¥ 220,071$ 1,831,331

Millions of yen
2014
2015
Liabilities and net assets
Current liabilities:
Current portion of finance lease obligations
Notes and accounts payable (Note 5):
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(Notes 10 and 20)
Negative goodwill (Note 25)
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: 753,814,067 shares in 2014 and2015
Issued: 184,186,153 shares in 2014 and
179,186,153 shares in 2015
Capital surplus
Retained earnings (Note 26)
Treasury stock, at cost – 26,530,317 shares in 2014
and 24,475,276 shares in 2015
Total shareholders’ equity
Accumulated other comprehensive income:Unrealized holding gain on securities (Note 6)
Unrealized loss from hedging instruments
Land revaluation reserve (Note 18)
Translation adjustments
Retirement benefit liability adjustments (Note 14)
Total accumulated other comprehensive income
Stock acquisition rights (Note 17)
Minority interests
Total net assets
Total liabilities and net assets

¥

146

¥

182

Thousands of
U.S. dollars(Note 3)
2015
$

1,515

539
18,805
3,236
960
3,345
2,294
902
2,307
32,534450
17,450
1,665
7,104
2,382
1,161
829
2,589
33,812

3,745
145,211
13,855
59,116
19,822
9,661
6,899
21,544
281,368

9,615

9,642

80,236

73
3,120

93
3,005

774
25,006

1,150
7
2,471

1,193
–
4,899

9,928
–
40,767917
1,356
18,709853
1,674
21,3597,098
13,931
177,740

23,221
23,46093,84623,221
21,21094,908193,235
176,500
789,781(10,104)
130,423(9,186)130,153(76,442)
1,083,074

8,923
(0)
1,545
933
(1,511)9,890
156
16,064
156,533¥ 207,776

14,150
–
1,615
2,554
(1,260)17,059166
17,522
164,900¥ 220,071

117,750–
13,43921,253(10,485)
141,957
1,382
145,810
1,372,223$ 1,831,331

See accompanying notes to consolidated financial statements.

3

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Consolidated Statement of Income
Year ended March 31, 2015

Millions of yen
2014
2015
Net sales (Notes 23, 24 and 25)
Cost of sales (Notes 7 and 24)
Gross profit¥ 157,552
134,872
22,680¥ 175,890
154,782
21,108$ 1,463,676
1,288,025
175,651

16,557
6,123

17,6803,428

147,125
28,526

762
(112)
93
400
10
142
44

971
(158)
95
1,460
7
377
23

8,080
(1,315)791
12,149
58
3,137
191

283

1,091

9,079

(231)

(256)

(2,130)

(85)

(83)

(691)

(266)

(133)

(1,107)

(7)

(588)

(4,893)

50
914
(948)
77
7,249

47
12
–
133
6,426

391
100
–
1,108
53,474

3,083
256
3,339
3,910
(640)
3,270 ¥

2,599
583
3,182
3,244
(627)
2,617

21,6284,851
26,47926,995(5,218)21,777

Selling, general and administrative expenses(Notes 17, 19 and 24)
Operating income (Note 25)
Other income (expenses):
Interest and dividend income
Interest expense
Dividend income of life insurance
Foreign exchange gain, net
Amortization of negative goodwill (Note 25)
Equity in earnings of an affiliate
Gain on revaluation of derivatives
Gain on sales of investments in securities, net(Note 6)
Expenses related to employees seconded tooverseas unconsolidated subsidiaries
Loss on sales or disposal of property, plant andequipment, net
Loss on impairment of investments in securities(Note 6)
Loss on impairment of fixed assets(Notes 8, 24 and 25)
Gain on recognition of negative goodwill(Note 25)
Gain on insurance claim (Note 9)
Loss on disaster (Note 9)
Other, net (Notes 6, 24 and 25)
Income before income taxes and minority interests
Income taxes (Note 15):
Current
DeferredIncome before minority interests
Minority interests
Net income

Thousands of
U.S. dollars(Note 3)2015¥

See accompanying notes to consolidated financial statements.

$

4

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Year ended March 31, 2015

Millions of yen
2015
2014
Income before minority interests
Other comprehensive income (Note 16):
Unrealized holding gain on securities
Unrealized gain from hedging instruments
Land revaluation reserve
Translation adjustments
Retirement benefit liability adjustments
Share of other comprehensive income of anaffiliate accounted for by the equity method
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:Shareholders of the Company
Minority interests of consolidated subsidiaries

Thousands of
U.S. dollars(Note 3)2015

¥ 3,910¥ 3,244$ 26,995

2,363
1

–

5,207
0
64
2,589
162

43,3300533
21,544
1,348

18
9,101
¥ 13,011

70
8,092¥ 11,336

583
67,338$ 94,333¥ 9,991
3,020¥ 9,802
1,534$ 81,568
12,765–

6,719

See 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, 2015
Millions of yen
Number ofshares issued

Common stock

Capital surplus

Retained earnings

Treasury stock,at costTotal shareholders’equity184,186,153––¥ 23,221––¥ 23,497––¥ 92,135(1,571)
3,270¥ (10,132)––¥ 128,721(1,571)
3,270

–

–

–

–

(1,331)(1,331)

–

–

(37)

–

1,359

1,322

Balance at April 1,
2013
Cash dividends
Net income
Acquisition oftreasury stock
Disposition oftreasury stockReversal of land
revaluation reserve
Other changes
Balance at April 1,
2014
Cash dividends
Net income
Acquisition oftreasury stock
Disposition oftreasury stock
Retirement oftreasury stockReversal of land
revaluation reserve
Other changes

–
–

–
–

–
–

12
–

–
–

12
–

184,186,153¥ 23,221¥ 23,460¥ 93,846¥ (10,104)¥ 130,423

–
–

–
–

–
–

(1,571)
2,617––(1,571)
2,617

–

–

–

–

(1,348)(1,348)

–

–

(5)

–

21

16

(5,000,000)–(2,245)

–

2,245

–

–
–

–
–

–
–

16
–

Balance at March
31, 2015––¥

179,186,153¥ 23,221¥ 21,210¥ 94,90816–¥
130,153(9,186)

Millions of yen

Balance at April 1,
2013
Cash dividends
Net income
Acquisition oftreasury stock
Disposition oftreasury stockReversal of land
revaluation reserve
Other changes
Balance at April 1,
2014
Cash dividends
Net income
Acquisition oftreasury stock
Disposition oftreasury stock
Retirement oftreasury stockReversal of land
revaluation reserve
Other changes
Balance at March
31, 2015

Total
accumulated
othercomprehensive
incomeStockacquisitionrightsMinority
interests

Total net
assets–––¥ 4,693
–
–

¥ 134
–
–

¥ 13,502––¥ 147,050(1,571)
3,270

–

–

–

–

–

(1,331)

–

–

–

–

–

–

1,322

–
1

–
(12)

–
4,364

–
(1,511)

–
5,197

–
22

–
2,562

12
7,781

¥ 8,923¥ (0)¥ 1,545933¥ (1,511)¥ 9,890¥ 156¥ 16,064¥ 156,533

–
–

–
–

–
–

–
–

–
–

–
–

–
–

–
–

(1,571)
2,617

–

–

–

–

–

–

–

–

(1,348)

–

–

–

–

–

–

–

–

16

–

–

–

–

–

–

–

–

–

–
5,227

–
0

–
70

–
1,621

–
251

–
7,169

–
10

–
1,458

16
8,637

¥ 14,150¥ –¥ 1,615¥ 2,554¥ (1,260)¥ 17,059¥ 166¥ 17,522¥ 164,900

Unrealized
holding gain
on securities

Unrealized
loss fromhedging
instruments

Land
revaluation
reserve

Translation
adjustments¥ 6,568
–
–

¥ (1)
–
–

¥ 1,557––¥ (3,431)
–
–

–

–

–

–

–

–
2,355

¥

Retirement
benefitliability
adjustments¥

6

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets (continued)
Year ended March 31, 2015
Thousands of U.S. dollars (Note 3)

Balance at April 1,
2014
Cash dividends
Net income
Acquisition oftreasury stock
Disposition oftreasury stock
Retirement oftreasury stockReversal of land
revaluation reserve
Other changes
Balance at March 31,
2015

Balance at April 1,
2014
Cash dividends
Net income
Acquisition oftreasury stock
Disposition oftreasury stock
Retirement oftreasury stockReversal of land
revaluation reserve
Other changes
Balance at March 31,
2015

Common stock

Capital surplus

Retained earnings

Treasury stock, at cost

Total shareholders’equity$ 193,235––$ 195,223––$ 780,944(13,073)
21,777$ (84,081)––$ 1,085,321(13,073)
21,777–––(11,217)(11,217)

–

(41)

–

174

133

–

(18,682)–

18,682

–

–
–

–
–

133
–

–
–

133
–

$ 193,235$ 176,500$ 789,781$ (76,442)$ 1,083,074

Thousands of U.S. dollars (Note 3)
Total
Retirement
accumulated
benefitotherTranslation
liability
comprehensive
adjustments
adjustments
incomeUnrealized
holding gain on
securities

Unrealized
loss fromhedging
instruments

Land
revaluation
reserve$ 74,253
–
–

$ (0)
–
–

$ 12,857––$ 7,764––$ (12,574)
–
–

–

–

–

–

–

–

–

–

–

–
43,497$117,750

StockacquisitionrightsMinority
interests

Total net
assets$ 82,300––$ 1,298––$ 133,677––$ 1,302,596(13,073)
21,777––––(11,217)

–

–

–

–

–

133

–

–

–

–

–

–

–

–
0

–
582

–
13,489–2,089–
59,657–84–
12,133133
71,874$ –$ 13,439$ 21,253$ (10,485)$ 141,957$ 1,382$ 145,810$ 1,372,223

See accompanying notes to consolidated financial statements.

7

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year ended March 31, 2015

Millions of yen
2014
2015
Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments for:
Depreciation and amortization
Amortization of negative goodwill
Equity in earnings of an affiliate(Decrease) increase in provision for retirement
benefits for directors and audit & supervisoryboard members(Decrease) increase in liability for retirement
benefits
Increase (decrease) in provision for bonuses to
employees
Increase (decrease) in allowance for doubtfulreceivables
Interest and dividend income
Interest expense
Insurance income
Gain on recognition of negative goodwill
Gain on revaluation of derivatives
Gain 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
Increase in notes and accounts receivable
Increase in inventories
Increase (decrease) in notes and accounts payable
Other, 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 3)2015

¥ 7,249¥ 6,426$ 53,474

4,352
(10)
(142)

5,155
(7)
(377)

42,898(58)(3,137)

(12)

20

166

(189)

182

1,515

78

(73)

(607)

2
(762)
112
(1,007)
(50)
(44)
(283)
266

(59)
(971)
158
(107)
(47)
(23)
(1,091)
133(491)(8,080)
1,315
(891)
(391)
(191)
(9,079)1,10785
7(4,951)(4,753)
3,532(1,239)
2,241
1,007
820
(114)
(2,102)¥ 1,852

83
588
(576)
(1,814)(1,652)
(325)
5,623
107
1,025
(153)
(3,774)¥ 2,828

691
4,893(4,793)(15,095)(13,747)(2,707)
46,792891
8,529(1,273)(31,406)$ 23,533

8

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Consolidated Statement of Cash Flows (continued)
Year ended March 31, 2015

Millions of yen
2015
2014
Cash flows from investing activities:
Investments in time deposits
Proceeds from time deposits
Proceeds from sales of marketable securities
Purchases of property, plant and equipment
Proceeds from sales of property, plant andequipment
Purchases of intangible fixed assets
Purchases of investments in securities
Proceeds from sales of investments in securities
Payment for loans receivableCollection of loans receivable
Proceeds from subsidy income
Other
Net cash used in investing activities
Cash flows from financing activities:
Short-term bank loans, net
Proceeds from sales of treasury stock
Purchases of treasury stock
Cash dividends paid to the Company’s
shareholders
Proceeds from stock issuances to minority
shareholders of consolidated subsidiaries
Cash dividends paid to minority shareholders ofconsolidated subsidiaries
Proceeds from sale and leaseback transactions
Repayment of lease obligations
Net cash provided by financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net (decrease) increase 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 4)

Thousands of
U.S. dollars(Note 3)2015

¥ (5,999)
4,469
10(7,320)¥ (1,847)
3,881–(5,458)$ (15,370)
32,296–(45,419)80(80)(1,531)
1,096
(661)
465
425
(7)
(9,053)

3
(112)
(27)
2,235
(175)
241
–
(97)
(1,356)

25
(932)
(225)
18,599(1,456)
2,005
–
(807)
(11,284)

946
1,317(1,328)5,353
0(1,200)44,5450(9,986)(1,583)(1,582)(13,165)

–

401

3,337

(191)
1,466
(248)
379

(615)
–
(163)
2,194

(5,118)–(1,356)
18,257

1,764

252

2,098

(5,058)3,918

32,60436,33831,280260,298¥ 31,280¥ 35,198$ 292,902

See accompanying notes to consolidated financial statements.

9

Yodogawa Steel Works, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2015
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 ofaccounting principles generally accepted in Japan, which are different in certain respects
as to the application and disclosure requirements of International Financial ReportingStandards, and have been compiled from the consolidated financial statements preparedby 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 morefamiliar to readers outside Japan.
Certain reclassifications of previously reported amounts have been made to conform theaccompanying consolidated financial statements for the year ended March 31, 2014 to
the 2015 presentation. Such reclassifications had no effect on consolidated net income
or net assets.
(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.
All assets and liabilities of the consolidated subsidiaries are revalued on acquisition, if
applicable. The difference between the cost of investments in subsidiaries and theequity in their net assets at their respective dates of acquisition is amortized over a
period of 5 years on a straight-line basis. Negative goodwill arising from transactions
that occurred on or after April 1, 2010 is credited to income when incurred.
10

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

1.

Summary of Significant Accounting Policies (continued)(b) Basis of consolidation (continued)
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 fromtheir fiscal year end to the Company’s balance sheet date.
(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 income.
The balance sheet accounts of the overseas consolidated subsidiaries (except for net
assets excluding minority interests) are translated into yen at the rate of exchange in
effect at the balance sheet date. The components of net assets excluding minority
interests 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.
Translation adjustments have been presented as a component of net assets and minority
interests in the accompanying consolidated financial statements.
(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 toan insignificant risk of any changes in their value and which were purchased with an
original maturity of three months or less.

11

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

1.

Summary of Significant Accounting Policies (continued)(e) Securities
The accounting standard for financial instruments requires that securities other thanthose of subsidiaries and affiliates be classified into three categories: trading securities,
held-to-maturity debt securities or other securities. Under this standard, trading
securities are carried at fair value and gain or loss, both realized and unrealized, iscredited or charged to income. Held-to-maturity debt securities are carried atamortized cost. Marketable securities classified as other securities are carried at fairvalue with any changes in unrealized holding gain or loss, net of the applicable income
taxes, reported as a separate component of net assets. Non-marketable securities
classified as other securities are carried at cost. Cost of securities sold is determinedprincipally by the moving average method.
(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 ofcost or 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 is calculated by the declining-balancemethod over the estimated useful lives of the respective assets, except that thestraight-line method is applied to buildings (other than structures attached to thebuildings) acquired on or after April 1, 1998.
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

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

1.

Summary of Significant Accounting Policies (continued)(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 charged toincome as incurred, unless these contribute to the generation of future income or costsavings. Such expenditures are capitalized as assets and amortized by the straight-line
method over their estimated useful life of 5 years.
(j) Research and development costs
Research and development costs are charged to income as incurred.
(k) 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. Among the finance lease transactions
which do not transfer ownership of the leased assets to the lessees, those that started onor before March 31, 2008 are accounted for in the same manner as operating leases.
(l) Allowance for doubtful receivables
The Group provides an allowance for doubtful receivables at an amount calculated
based on their historical experience of bad debts on ordinary receivables plus anadditional estimate of probable specific bad debts from customers experiencing financial
difficulties.
(m) Provision for bonuses to employees
The Company and its domestic consolidated subsidiaries provide for payments ofbonuses to employees based on the estimated amount to be paid to employees after thebalance sheet date, which is attributable to the current fiscal year. There are nobonuses to employees at overseas consolidated subsidiaries to be provided.

13

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

1.

Summary of Significant Accounting Policies (continued)(n) 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
the unfunded retirement benefit plans. Provision for retirement benefits for these
directors and audit & supervisory board members has been provided at an estimatedamount based on each consolidated subsidiary’s internal rules.
(o) Retirement benefits
The retirement benefit obligation is attributed to each period by the straight-line method
over the estimated years of service of the eligible employees.
Prior service cost is being amortized as incurred by the straight-line method over a
period of principally 10 years, which is within the estimated average remaining years ofservice of the eligible employees.
Actuarial gain or loss is amortized in the year following the year in which the gain orloss is recognized by the straight-line method over a period of principally 10 years,
which is within the estimated average remaining years of service of the eligible
employees.
Certain consolidated subsidiaries calculate liability for retirement benefits andretirement benefit expenses for the defined benefit corporate pension plans and theretirement lump-sum plans based on the amount which would be payable at the year end
if all eligible employees terminated their services voluntarily (“simplified method”).
(p) 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.
(q) 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 charged to income when incurred.

14

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

1.

Summary of Significant Accounting Policies (continued)(r) 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 theestimated total cost. The completed-contract method continues to be adopted forcontracts for which the percentage of completion cannot be reliably estimated.
(s) Hedge accounting
Gain or loss on derivatives designated as hedging instruments is deferred until the loss
or gain on the underlying hedged items is recognized. Receivables or payables hedged
by forward foreign exchange contracts which meet certain conditions are translated at
the corresponding foreign exchange contract rates (“Allocation method”). The
evaluation of effectiveness of such forward foreign exchange contracts is omitted
because significant terms of the hedging instruments and underlying hedged items are
the same and the Company and certain consolidated subsidiaries assume thatmovements of cash flows are completely offset.
(t) Accounting standards issued but not yet effective
Accounting standards for business combinations
On September 13, 2013, the Accounting Standard Board of Japan (“ASBJ”) issued“Revised Accounting Standard for Business Combinations” (ASBJ Statement No.21),“Revised Accounting Standard for Consolidated Financial Statements” (ASBJ Statement
No.22), “Revised Accounting Standard for Business Divestitures” (ASBJ Statement
No.7), “Revised Accounting Standard for Earnings Per Share” (ASBJ Statement No.2),“Revised Guidance on Accounting Standard for Business Combinations and AccountingStandard for Business Divestitures” (ASBJ Guidance No.10), and “Revised Guidance on
Accounting Standard for Earnings Per Share” (ASBJ Guidance No.4).
Under these revised accounting standards, the accounting treatment for any changes in aparent’s ownership interest in a subsidiary when the parent retains control over thesubsidiary and the corresponding accounting for acquisition-related costs were revised.
In addition, the presentation method of net income was amended, the reference to“minority interests” was changed to “non-controlling interests,” and accounting
treatment for adjustments to provisional amounts was also changed.
The Company expects to adopt these revised accounting standards and guidance fromthe beginning of the fiscal year ending March 31, 2016.
The Company is currently evaluating the effect of adopting these revised standards on
its consolidated financial statements.
15

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

2.

Accounting Change

The Company and its domestic consolidated subsidiaries adopted the main clause of Section
35 of “Accounting Standard for Retirement Benefits” (ASBJ Statement No.26 of May 17,2012) and the main clause of Section 67 of “Guidance on Accounting Standard for
Retirement Benefits” (ASBJ Guidance No. 25 of March 26, 2015) effective from April 1,
2014. As a result, the method for calculating the discount rate has been changed to using asingle weighted-average discount rate reflecting the expected timing and amount of benefit
payments.
The adoption of these standards had no effect on liability for retirement benefits and retained
earnings at April 1, 2014 or on income before income taxes and minority interests for theyear ended March 31, 2015.

3.

U.S. Dollar Amounts

The translation of yen amounts into U.S. dollar amounts is included solely for theconvenience of readers outside Japan and has been made at the rate of ¥120.17 = U.S.$1.00,
the approximate exchange rate prevailing on March 31, 2015. The translation should not be
construed as a representation 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.

4.

Cash and Cash Equivalents

A reconciliation of cash and deposits shown in the accompanying consolidated balance sheet
as of March 31, 2014 and 2015 to cash and cash equivalents shown in the accompanying
consolidated statement of cash flows for the years ended March 31, 2014 and 2015 ispresented as follows:
Thousands of
U.S. dollars
2015

Millions of yen
2014
2015
Cash and deposits
Investment trust beneficiary securities
included in “Marketable securities”
Trust beneficiary right included in “Other
current assets”
Time deposits with a maturity of more than
three months
Cash and cash equivalents¥ 26,877¥ 35,176$ 292,719

5,404

204

1,698

1,000

–

–

(2,001)¥ 31,280(182)¥ 35,198(1,515)$ 292,902

16

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

5.

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 bankborrowings or bond issuances. The Group manages temporary cash surpluses throughlow-risk financial assets. The Group uses derivatives for the purpose of reducing risk
and does not enter into derivatives for speculative purposes.
(b) Types of financial instruments and related risk
Trade receivables, notes and accounts receivables, are exposed to credit risk ofcustomers. In addition, the Group is exposed to foreign currency exchange risk arisingfrom trade receivables denominated in foreign currencies.
Investments in securities and marketable securities are exposed to market risk. The
former is composed mainly of the shares of common stock of certain companies withwhich the Group has business relationships, held-to-maturity debt securities and hybrid
financial instruments containing embedded derivatives. The latter is composed mainlyof 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
and loans receivable denominated in foreign currencies for the purpose of efficient risk
management.
Information regarding the method of hedge accounting is provided in Note 1 (s).

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

5.

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 issuedby companies 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 fromfluctuations 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 andestablishes 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 flowplans on a timely basis and maintains sufficient solvency to manage liquidity risk. In
order to provide for unexpected cash requirements, the Company has entered intoline-of-credit agreements with certain financial institutions and its overseas consolidated
subsidiaries are able to obtain short-term borrowings from certain financial institutions.

18

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

5.

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 fairvalue, different assumptions and factors could result in different fair value.
Estimated Fair Value of Financial Instruments
Carrying value of financial instruments on the consolidated balance sheet, estimated fairvalue and unrealized loss as of March 31, 2014 and 2015 are shown in the following table.
The following table does not include financial instruments for which it is extremely difficult
to determine the fair value.

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

Carrying value

Millions of yen
2014
Estimated
fair value¥ 26,877¥ 26,877

14,36426,02314,36426,023––35,500¥ 102,764

35,434¥ 102,698(66)¥ (66)¥¥

Difference¥–

Liabilities:
Notes and accounts payable
Unconsolidated subsidiaries and affiliates
Trade
Total liabilities539
18,805¥ 19,344

539
18,805¥ 19,344

¥
¥

–
–
–

Derivative transactions(*)

¥

¥

¥

–

(210)

(210)

19

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

5.

Financial Instruments (continued)

Estimated Fair Value of Financial Instruments (continued)

Assets:Cash and deposits
Notes and accounts receivable
Unconsolidated subsidiaries and affiliates
Trade
Marketable securities and investments insecurities
Total assets
Liabilities:
Notes and accounts payable
Unconsolidated subsidiaries and affiliates
Trade
Total liabilities
Derivatives(*)

Carrying value

Millions of yen
2015
Estimated
fair value

Difference¥ 35,176¥ 35,176¥ –14,644
26,595

14,644
26,595––36,271¥ 112,686

36,348¥ 112,763

77
¥ 77

¥

¥

¥ –
–
¥ –
¥ –

450
17,450¥ 17,900
¥
(539)

450
17,450¥ 17,900¥(539)

Thousands of U.S. dollars
2015
Estimated
Difference
Carrying value
fair value
Assets:Cash and deposits
Notes and accounts receivable
Unconsolidated subsidiaries and affiliates
Trade
Marketable securities and investments insecurities
Total assets
Liabilities:
Notes and accounts payable
Unconsolidated subsidiaries and affiliates
Trade
Total liabilities
Derivatives(*)$ 292,719$ 292,719

121,861
221,311

121,861
221,311––

301,831$ 937,722

302,471$ 938,362

640
$ 640

$

$

$

3,745
145,211$ 148,956$ (4,485)

3,745
145,211$ 148,956$ (4,485)

$

$
$

–

–
–
–
–

(*) 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)

5.

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 toNote 6.
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, 2014 and 2015 is presented as follows:

Unlisted stocks
Investments in limited liability
partnership
Preferred stocks
Total

Millions of yen
2014
2015
¥ 432
¥ 470
186
647
¥ 1,265114
661¥ 1,245

Thousands of
U.S. dollars
2015$ 3,911949
5,500$ 10,360

Because no quoted market price is available, it is extremely difficult to determine the fairvalue. 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)

5.

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, 2014 and 2015 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
Other
Total

¥ 26,811

40,387

–
–

10
–

500

–
1,800

–

300
–
¥ 310

200
–
¥ 740

–
–
¥ 1,800

4,700¥ 71,898

¥

¥

–
–

Due after
ten years––

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
2014
Due after one Due after five
year throughyears throughfive years
ten years¥

40

Millions of yen
2015
Due after one Due after five
year throughyears throughfive years
ten years
¥

–
–

–
–

Due after
ten years¥ 35,129
41,239

¥ –
–

¥

–
–

–
–

10
–

58
500

–
1,500

300
¥ 76,668

–
¥ 10

200
¥ 758

–
¥ 1,500

22

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

5.

Financial Instruments (continued)

Estimated Fair Value of Financial Instruments (continued)

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

6.

Due in one
year or less
$ 292,328
343,172

Thousands of U.S. dollars
2015
Due after one Due after five
year throughyears throughfive years
ten years
$ –
$
–
–
–

Due after
ten years
$
–
–

–
–

83
–

483
4,161

–
12,4822,496$ 637,996

–
$ 83

1,664
$ 6,308–$ 12,482

Securities

Marketable securities classified as held-to-maturity debt securities as of March 31, 2014 and2015 are summarized as follows:

Carrying
value
Securities whose estimated fair value
exceeds their carrying value:
Government bonds
Corporate bonds
Securities whose estimated fair value
does not exceed their carrying value:
Corporate bonds
Total

¥

50
443
493

1,724
¥ 2,217

Millions of yen
2014
Estimated
fair value

¥

51
500
551

1,601
¥ 2,152

Unrealized
gain (loss)

¥

1
57
58

(123)
¥ (65)

23

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

6.

Securities (continued)

Carrying
value
Securities whose estimated fair value
exceeds their carrying value:
Government bonds
Corporate bonds
Securities whose estimated fair value
does not exceed their carrying value:
Corporate bonds
Total

¥

68
448
516

1,446
¥ 1,962

Millions of yen
2015
Estimated
fair value¥

Unrealized
gain (loss)

70
525
595

¥ 2
77
79

1,444
¥ 2,039(2)¥ 77

Thousands of U.S. dollars

Securities whose estimated fair value
exceeds their carrying value:
Government bonds
Corporate bonds
Securities whose estimated fair value
does not exceed their carrying value:
Corporate bonds
Total

Carrying
value

2015
Estimated
fair value

$

$

566
3,728
4,294

12,033$ 16,327

Unrealized
gain (loss)

583
4,368
4,951

$ 17
640
657

12,017$ 16,968

(16)
$ 641

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 consolidated statement of income.

24

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

6.

Securities (continued)

Other securities with determinable market value as of March 31, 2014 and 2015 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
Other
Total

Carrying
value

Millions of yen
2014
Acquisition
costs

Unrealized
gain (loss)¥ 23,356
1,012
110
24,478¥ 9,681
1,001
97
10,779¥ 13,675
11
13
13,699

3,401
5,404
8,805
¥ 33,283

3,867
5,404
9,271
¥ 20,050

(466)
(466)
¥ 13,233

Carrying
value

Millions of yen
2015
Acquisition
costs

Unrealized
gain (loss)¥ 31,662
1,006
119
32,787¥ 11,319
1,001
97
12,417¥ 20,343
5
22
20,370

1,318
204
1,522
¥ 34,309

1,474
204
1,678
¥ 14,095

(156)
–
(156)
¥ 20,214–25

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

6.

Securities (continued)
Thousands of U.S. dollars
2015
Carrying
Acquisition
Unrealized
costs
gain (loss)
value

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

$ 263,477
8,371
990
272,838$ 94,192
8,330
807
103,329$ 169,285
41
183
169,509

10,968
1,698
12,666$ 285,504

12,265
1,698
13,963$ 117,292(1,297)–(1,297)$ 168,212

Because no quoted market price is available and it is extremely difficult to estimate thecorresponding future cash flow, unlisted stocks of ¥1,265 million and ¥1,245 million($10,360 thousand) as of March 31, 2014 and 2015, respectively, are not included in theabove table.
Sales of securities classified as other securities for the years ended March 31, 2014 and 2015
are summarized as follows:

Sales
Aggregate gain

Millions of yen
2015
2014

Thousands of
U.S. dollars
2015

¥ 354
289

$ 15,611
9,204¥ 1,876
1,106

The Group recorded loss on impairment of investments in securities with determinable
market value of ¥45 million for the year ended March 31, 2014. Loss on impairment isrecorded at 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 thedecline 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)

7.

Inventories

The following is a summary of inventories as of March 31, 2014 and 2015:

Millions of yen
2015
2014
¥ 14,396¥ 14,278
3,976
4,278
14,15011,529¥ 29,901¥ 32,706

Merchandise and finished goods
Work in process
Raw materials and supplies

Thousands of
U.S. dollars
2015$ 118,814
35,600117,750$ 272,164

Gain on reversal of devaluation of inventories is included in cost of sales of ¥434 million forthe year ended March 31, 2014 and loss on devaluation of inventories is included in cost of
sales of ¥93 million ($774 thousand) for the year ended March 31, 2015.

8.

Loss on Impairment of Fixed Assets

The Company and its consolidated subsidiaries recognized loss on impairment of fixed
assets for the years ended March 31, 2014 and 2015 as follows:

Location
Nishiwaki City,
Hyogo Prefecture

Use
Golf course

Miyazaki City,
Miyazaki Prefecture
Village of Hakuba
Nagano Prefecture
Suzaka City,
Nagano Prefecture
Thailand
Chon Buri
Total

Idle assets

Classification
Land, buildings
and structuresand machinery,equipment andvehiclesLand

Idle assets

Land

Idle assets

Land

Manufacturing Machinery andfacilities
equipment

Millions of yen
2014
2015

Thousands of
U.S. dollars
2015

¥ –

¥ 511

$ 4,252

7

7

58

–

0

0

0

–

–

–

70
¥ 588

583
$ 4,893¥ 7

27

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

8.

Loss on Impairment of Fixed Assets (continued)

The Company and its consolidated subsidiaries group fixed assets by management segment,each of which continuously records cash receipts and payments.
Consequently, the Company and its consolidated subsidiaries have written down the carrying
values of the golf course and its asset group whose operating income has been continuously
negative to their respective net recoverable values, and have recorded a related loss on
impairment of fixed assets of ¥511 million ($4,252 thousand) for the year ended March 31,
2015, which consisted of land of ¥379 million ($3,153 thousand), building and structures of¥100 million ($832 thousand), machinery, equipment and vehicles of ¥21 million ($175
thousand) and others of ¥11 million ($92 thousand).
In addition, the Company and its consolidated subsidiaries have written down the carrying
values of the idle assets of land owned by the Company and its consolidated subsidiaries forthe years ended March 31, 2014 and 2015, which are not expected to be utilized in the future,to their respective net recoverable values, and have recorded a related loss on impairment of
fixed assets of ¥7million and ¥7 million ($58 thousand) for the years ended March 31, 2014
and 2015.
The recoverable amounts of these assets are measured at estimated net selling value based on
appraisals conducted by real estate appraisers and the values assessed for property tax
purposes.
The impairment loss on machinery resulting from the decision to dispose of a portion of a
production line was measured at estimated net selling value in the amount of ¥70 million($583 thousand) for the year ended March 31, 2015.
9.

Gain on insurance claim and Loss on DisasterIn connection with a fire at the Ichikawa Plant in July 2013, the Company recorded a loss on
disaster of ¥948 million including fixed production costs incurred during the suspension ofoperations and repair expenses, mainly for machinery and equipment for the year ended
March 31, 2014. The Company recognized the corresponding gain on insurance claim of¥914 million and ¥12 million ($100 thousand) for the years ended March 31, 2014 and 2015,
respectively.

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 rate on short-term bank loans were 2.63% and 1.34% as ofMarch 31, 2014 and 2015.
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 0.80% and 0.79% as of March 31, 2014 and2015, respectively.
Interest-free deposits and interest-bearing deposits as of March 31, 2014 and 2015 are as
follows:

Interest-free deposits
Interest-bearing deposits

Millions of yen
2014
2015
¥ 2,352¥ 2,177768
828¥ 3,120¥ 3,005

Thousands of
U.S. dollars
2015$ 18,116
6,890$ 25,006

The average annual interest rate on finance lease obligations was 4.48% as of March 31,
2014 and 2015.
The aggregate annual maturities of finance lease obligations subsequent to March 31, 2015
are summarized as follows:

Years ending March 31,
2016
2017
2018
2019
2020

Millions of yen
2015
¥ 182
185
192
814
2
¥ 1,375

Thousands of
U.S. dollars
2015$ 1,515
1,539
1,598
6,774
17
$ 11,443

29

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-of-credit agreements with certain financial institutions. The status of these lines ofcredit as of March 31, 2014 and 2015 is as follows:

Lines of credit
Credit utilized
Available credit

Millions of yen
2014
2015
¥ 19,450¥ 19,450––¥ 19,450¥ 19,450

Thousands of
U.S. dollars
2015$ 161,854–$ 161,854

12. Pledged Assets
Assets pledged as collateral for indebtedness as of March 31, 2015 are summarized asfollows:

Cash and deposits
Investments in securities
Other assets

Millions of yen
2015
¥ 60
17
228
¥ 305

Thousands of
U.S. dollars
2015
$ 499
142
1,897
$ 2,538

Indebtedness secured by these assets as collateral was ¥50 million ($416 thousand), a
component of other current liabilities as of March 31, 2015.

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 ¥74 million($616 thousand) as of March 31, 2015.
In addition, the Company is repairing machinery supplied to a customer located in Africa
due to a product defect, damages during the shipment and other reasons. The Company
was contingently liable for additional repair costs in the amount of approximately ¥300
million ($2,496 thousand) as of March 31, 2015. The total amount to be paid by theCompany 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 two types of defined benefit
retirement plans: a defined benefit pension plan and a lump sum payment plan. Moreover,
two 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 the “simplified method”
for calculating liability for retirement benefits and retirement benefit expenses.
The changes in the retirement benefit obligation for the years ended March 31, 2014 and2015 are as follows:

2014

2015

Thousands of
U.S. dollars
2015¥ 14,156
641
176
(209)
(914)
565

¥ 14,415
625
189
210
(987)
311

$ 119,955
5,201
1,573
1,747
(8,213)
2,588¥ 14,415¥ 14,763$ 122,851

Millions of yen
Retirement benefit obligation at
the beginning of the year
Service cost(*)
Interest cost
Actuarial differences
Retirement benefit paid
Prior service cost
Retirement benefit obligation at
the end of the 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, 2014 and 2015 are as
follows:

2014

2015

Thousands of
U.S. dollars
2015¥ 4,208
75
246
598
(387)
60

¥ 4,800
88
355
368
(539)
49

$ 39,943
732
2,954
3,062
(4,485)409¥ 4,800¥ 5,121$ 42,615

Millions of yen
Plan assets at fair value at the
beginning of the year
Expected return on plan assets
Actuarial differences
Contributions by the employers
Retirement benefit paid
Other(*)
Plan assets at fair value at theend of the year(*) “Other” mainly consists of the effect of foreign currency exchange translation
adjustments on pension plan assets at fair value attributable to an overseas subsidiaryand the difference of actual and expected returns on plan assets at fair value from theretirement benefit plans of consolidated subsidiary 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, 2014 and 2015 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
2014
2015
¥ 14,402¥ 14,743(4,800)(5,121)
9,602
9,622

Thousands of
U.S. dollars
2015$ 122,685(42,615)80,070

13

20

166

9,615

9,642

80,236

9,615

9,642

80,236¥ 9,615¥ 9,642$ 80,236

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, 2014 and2015 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
2015
2014
¥ 641
¥ 625
176
189
(75)
(88)
223
311
(2)
(2)
¥ 963
¥ 1,035

Thousands of
U.S. dollars
2015$ 5,201
1,573
(732)
2,588
(17)
$ 8,613

The components of retirement benefit liability adjustments recognized in othercomprehensive income (before tax effect) for the years ended March 31, 2014 and 2015 are
as follows:

Prior service cost
Actuarial differences
Total

Millions of yen
2014
2015
¥–
¥
2
–
(402)
¥ –
¥ (400)Thousands of
U.S. dollars
2015
$
17
(3,346)$ (3,329)

Unrecognized prior service cost and unrecognized actuarial differences included inaccumulated other comprehensive income (before tax effect) as of March 31, 2014 and 2015
are as follows:

Unrecognized prior service cost
Unrecognized actuarial differences
Total

Millions of yen
2014
2015
¥ (11)
¥
(9)
2,523
2,121
¥ 2,512¥ 2,112

Thousands of
U.S. dollars
2015
$
(75)
17,650$ 17,725

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 ofMarch 31, 2014 and 2015 is as follows:

Bonds
StocksGeneral account at insurance companies
Other
Total

2014
28%
42
17
13
100%

2015
27%
45
15
13
100%

Note: 15% and 16% 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, 2014 and 2015,
respectively.
The expected long-term rate of return on plan assets is determined as a result ofconsideration of both the portfolio allocation of plan assets at present and in the future andlong-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, 2014 and 2015 are as follows:

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

2014

2015

1.3%

1.3%

1.9%

2.0%

0.5%

0.6%

The contributions paid by consolidated subsidiaries to the defined contribution pension plansamounted to ¥34 million and ¥41 million ($341 thousand) for the years ended March 31,
2014 and 2015, 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 37.9% and 35.5% for the years ended March 31, 2014 and 2015,
respectively.
Reconciliations of the statutory tax rates and the effective tax rate for the years ended March
31, 2014 and 2015 as a percentage of income before income taxes and minority interests are
as follows:

Statutory tax rates
Permanently non-deductible expenses
Per capita portion of inhabitants’ taxes
Differences in tax rates applicable to the overseas
consolidated subsidiaries
Cash dividends received from the overseas
consolidated subsidiary
Adjustments of accounting standards applied by
the overseas consolidated subsidiary
Foreign tax credit
Tax loss carryforwards of consolidated
subsidiaries
Increase in valuation allowance
Permanently non-taxable income
Tax credit for research and development costs
Equity in earnings of an affiliate
Decrease in deferred tax assets resulting fromchange in the statutory tax rate applicable to thefiscal years beginning on or after April 1, 2014
Other
Effective tax rates

2014
37.9 %
0.6
0.7

2015
35.5 %
0.6
0.9

(3.4)

(9.1)

1.4

0.2

1.5
0.5

0.1
2.0

5.2
2.5
(1.2)
(0.3)
(0.8)

24.0
(2.1)
(1.6)
(0.4)
(1.9)

0.7
0.8
46.1 %

0.2
1.1
49.5 %

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 ofMarch 31, 2014 and 2015 are summarized as follows:

Millions of yen
2014
2015
Deferred tax assets:
Liability for retirement benefits
Allowance for doubtful receivables
Accrued enterprise taxes
Provision for bonuses to employees
Loss on devaluation of inventories
Tax loss carryforwards
Loss on impairment of investments insecurities and golf-club memberships
Loss on impairment of fixed assets
Unrealized loss from hedging
instruments
Other
Gross deferred tax assets
Less valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Dividends from an overseas
consolidated subsidiary
Unrealized holding gain on securities
Land revaluation reserve
Deferred gain on property for tax
purposes
Reserve for special depreciation
Other
Total deferred tax liabilities
Net deferred tax liabilities

Thousands of
U.S. dollars
2015¥ 2,993
83
136
318
247
520

¥ 2,657
59
70
272
230
626

$ 22,110
491
583
2,263
1,914
5,209

770
216

687
368

5,717
3,062

0
1,031
6,314
(2,176)
4,138

–
914
5,883
(2,453)
3,430

–
7,607
48,956(20,413)28,543(142)(4,279)
(917)

(160)
(6,107)(853)(1,332)(50,820)(7,098)

(643)
(119)
(170)
(6,270)¥ (2,132)

(559)
(423)
–
(8,102)¥ (4,672)(4,652)(3,520)–(67,422)$ (38,879)

36

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

15. Income Taxes (continued)
Note: Net deferred tax liabilities as of March 31, 2014 and 2015 are reflected in thefollowing accounts in the consolidated balance sheet:

Millions of yen
2014
2015
Current assets
Investments and other assets
Long-term liabilities:
Deferred income taxes
Deferred income taxes on land
revaluation reserve

¥

606
650

¥

Thousands of
U.S. dollars
2015

381
699

$ 3,171
5,817(2,471)(4,899)(40,767)

(917)

(853)

(7,098)The “Act for Partial Amendment of the Income Tax Act, etc.” (Act No.9 of 2015) and the“Act for Partial Amendment of the Local Tax Act, etc.” (Act No.2 of 2015) were
promulgated on March 31, 2015. As a result, the effective statutory tax rate used tomeasure the Company’s deferred tax assets and liabilities was changed from 35.5% to 32.9%
and 32.1% for the temporary differences expected to be realized or settled in the year
beginning April 1, 2015 and for the temporary differences expected to be realized or settled
from April 1, 2016, respectively.
The effects of the announced reduction of the effective statutory tax rate were to decreasedeferred tax liabilities, after offsetting deferred tax assets, by ¥576 million ($4,793 thousand),retirement benefit liability adjustments by ¥47 million ($391 thousand), increase deferredincome tax expense by ¥170 million ($1,415 thousand), unrealized holding gain on securitiesby ¥729 million ($6,066 thousand) and land revaluation reserve by ¥64 million ($533
thousand) as of and for the year ended March 31, 2015.

37

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 income for the years
ended March 31, 2014 and 2015 are summarized as follows:

Millions of yen
2014
2015
Unrealized holding gain on securities:
Amount arising during the year
Reclassification adjustments
Before tax effectTax effectUnrealized holding gain on securities
Unrealized gain from hedging instruments:
Amount arising during the year
Reclassification adjustments
Before tax effectTax effectUnrealized gain from hedging instruments
Land revaluation reserve
Tax effectLand revaluation reserve
Translation adjustments:
Amount arising during the year
Reclassification adjustments
Translation adjustments
Retirement benefits liability adjustments
Amount arising during the year
Reclassification adjustments
Before tax effectTax effect
Retirement benefits liability adjustments
Share of other comprehensive income of anaffiliate accounted for by the equity
method:Amount arising during the year
Reclassification adjustments
Share of other comprehensive income ofan affiliate accounted for by the equity
methodTotal other comprehensive income

Thousands of
U.S. dollars
2015¥ 3,652(17)
3,635(1,272)
2,363¥ 8,126(1,091)
7,035(1,828)5,207$ 67,621(9,079)58,542(15,212)43,330

1
–
1
(0)
1

0
–
0
(0)
0

0
–
0
(0)
0

–
–

64
64

533
533

6,719
–
6,719

2,589
–
2,589

21,544–
21,544

–
–
–
–
–

145
255
400
(238)
162

1,207
2,122
3,329
(1,981)
1,348

18
–

70
–

583
–

18
¥ 9,10170¥ 8,092583$ 67,338

38

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 theamount to be disbursed as distributions of capital surplus (other than the capital reserve) andretained earnings (other than the legal reserve) be transferred to the capital reserve and thelegal reserve, respectively, until the sum of the capital reserve and the legal reserve equals
25% of the capital stock account. Such distributions can be made at any time by resolutionof the shareholders, or by the Board of Directors if certain conditions are met.
The legal reserve of the Company was nil as of March 31, 2014 and 2015.
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 meetingsof the shareholders for the 2004 and the 2005 plans in accordance with the former
Commercial Code of Japan and meetings of the Board of Directors for the 2006 plan throughto the 2014 plan in accordance with the Act.
Stock option expenses, included in selling, general and administrative expenses, charged toincome for the years ended March 31, 2014 and 2015 amounted to ¥27 million and ¥26
million ($216 thousand), respectively.

39

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, 2015 are summarized as follows:

Date of approval
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

June 29, 2004
5 Directors
10 Executive officers(other than directors
who concurrently
serve as executive
officers
Common stock 81,000
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

June 29, 2005
6 Directors
9 Executive officers(other than directors
who concurrently
serve as executive
officers
Common stock 62,000
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

July 14, 2006
5 Directors
8 Executive officers(other than directors
who concurrently
serve as executive
officers
Common stock 53,000
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

40

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

17. Shareholders’ Equity (continued)

Date of approval
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

July 17, 2007
4 Directors
8 Executive officers(other than directors
who concurrently
serve as executive
officers)
Common stock 43,000
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

July 15, 2008
4 Directors
7 Executive officers(other than directors
who concurrently
serve as executive
officers)
Common stock 60,000
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

July 15, 2009
5 Directors
7 Executive officers(other than directors
who concurrently
serve as executive
officers)
Common stock 69,000
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

41

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

17. Shareholders’ Equity (continued)

Date of approval
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

July 14, 2010
5 Directors
7 Executive officers(other than directors
who concurrently
serve as executive
officers)
Common stock
102,000 shares
July 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

July 15, 2011
5 Directors
6 Executive officers(other than directors
who concurrently
serve as executive
officers)
Common stock 98,000
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

July 17, 2012
5 Directors
9 Executive officers(other than directors
who concurrently
serve as executive
officers)
Common stock 77,000
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

42

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

17. Shareholders’ Equity (continued)

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

Vesting period for services
received

Exercisable period

The 2013 plan

The 2014 plan

January 16, 2014
5 Directors
9 Executive officers(other than directors
who concurrently
serve as executive
officers)
Common stock 72,000
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 the annual
general meeting of
the shareholders forthe fiscal year ended
March 31, 2014

July 16, 2014
5 Directors
8 Executive officers(other than directors
who concurrently
serve as executive
officers)
Common stock 70,000
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 August1, 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

From February 1, 2014
to June 29, 2033

43

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

17. Shareholders’ Equity (continued)
Stock option activity plans are summarized as follows:
The 2004 The 2005 The 2006 The 2007 The 2008 The 2009 The 2010 The 2011 The 2012 The 2013 The 2014
plan
plan
plan
plan
plan
plan
plan
plan
plan
plan
plan
Number of stock
options which are
not yet vested:
Outstanding at
April 1, 2014
GrantedForfeited
VestedOutstanding at
March 31, 2015
Number of stock
options whichhave alreadybeen vested:
Outstanding at
April 1, 2014
VestedExercised
Forfeited
Outstanding at
March 31, 2015

15,000–––12,000–––19,000–––21,000––2,000

31,000––3,000

48,000––6,000

61,000––10,00059,000––8,000

77,000––6,000

72,000––5,000–
70,000––15,00012,00019,00019,00028,00042,00051,00051,00071,00067,00070,000

3,000
–
3,000
–

2,000
–
2,000
–

6,000
–
4,000
–

8,000
2,000
6,000
–

12,000
3,000
9,000
–

21,0006,000
11,000–23,00010,0007,000–

19,000
8,000
6,000
–

–
6,000
–
–

–
5,000
–
–

–
–
–
–

–

–

2,000

4,000

6,000

16,00026,00021,000

6,000

5,000

–

The unit price of the stock option for the stock potion plan of the Company during the year
ended March 31, 2015 is summarized as follows:

Exercise price
Weighted averagefair value per stockat the exercise date
Fair value of stock
options as of the
grant date

Exercise price
Weighted averagefair value per stockat the exercise date
Fair value of stock
options as of the
grant date

Yen
The 2004 The 2005 The 2006 The 2007 The 2008 The 2009 The 2010 The 2011 The 2012 The 2013 The 2014
plan
plan
plan
plan
plan
plan
plan
plan
plan
plan
plan
¥ 1
¥ 1
¥ 1
¥ 1
¥ 1
¥ 1
¥ 1
¥ 1
¥ 1
¥ 1
¥ 1

440

440

442

443

443

442

438

438

–

–

–

–

–

478

546

416

365

280

240

204

375

373

U.S. dollars
The 2004 The 2005 The 2006 The 2007 The 2008 The 2009 The 2010 The 2011 The 2012 The 2013 The 2014
plan
plan
plan
plan
plan
plan
plan
plan
plan
plan
plan
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0

4

4

4

4

4

4

4

4

–

–

–

–

–

4

5

3

3

2

2

2

3

3

44

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

17. Shareholders’ Equity (continued)
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 2014 plan
25.752%10 years¥10 per share
0.532%(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 2004 to June 2014.
(b) The expected dividend was calculated at the actual amounts paid for the year ended
March 31, 2014.
(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 expire, theestimation reflects only the actual number of expired stock options.
Common stock and treasury stock
Movements in common stock and treasury stock during the years ended March 31, 2014 and2015 are summarized as follows:

Common stock
Treasury stock (*1)

Common stock (*2)
Treasury stock (*3)

April 1, 2013
184,186,153
26,402,891

Number of shares
2014
Increase
Decrease––
3,145,426
3,018,000

March 31, 2014
184,186,153
26,530,317

April 1, 2014
184,186,153
26,530,317

Number of shares
2015
Increase
Decrease–
5,000,000
2,992,959
5,048,000

March 31, 2015
179,186,153
24,475,276

45

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

17. Shareholders’ Equity (continued)(*1) The increase in the number of shares of treasury stock consists of 3,118,000 shares dueto the purchase of shares based on the resolution of the Board of Directors meeting,
20,303 shares due to the purchase of fractional shares of less than one voting unit and7,123 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 3,000,000 shares due
to a third-party allotment based on the resolution of the Board of Directors meeting and
18,000 shares due to the exercise of stock options.
(*2) The decrease in the number of shares of common stock consists of 5,000,000 shares dueto the retirement of treasury stock.
(*3) The increase in the number of shares of treasury stock consists of 2,661,000 shares due
to purchase of shares based on the resolution of the Board of Directors meeting, 13,981
shares due to the purchase of fractional shares of less than one voting unit, 223,406
shares attributable to the Company acquired by its affiliate under the equity method, and94,572 shares due to the repurchase of shares held by untraceable shareholders.
The decrease in the number of shares of treasury stock consists of 5,000,000 shares dueto the retirement of treasury stock and 48,000 shares due to the exercise of stock
options.

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, 2014 and 2015:

Land revalued as of March 31, 2000
Land revalued as of March 31, 2002

Millions of yen
2014
2015
¥ (312)¥ (328)(662)(653)¥ (981)¥ (974)

Thousands of
U.S. dollars
2015$ (2,729)(5,434)$ (8,163)

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, 2014 in the amounts of ¥13 millionand ¥271 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, 2015 in the amounts of ¥12 million($100 thousand) and ¥280 million ($2,330 thousand), respectively.

19. Research and Development Costs
Research and development costs included in selling, general and administrative expenses
totaled ¥538 million and ¥568 million ($4,727 thousand) for the years ended March 31, 2014
and 2015, respectively.

20. Leases(a) Finance leases
The Company and its consolidated subsidiaries lease mainly machinery, vehicles andothers (machinery and equipment) as leased assets under finance lease transactions
which transfer ownership to the Group and mainly, information processing systems(machinery and equipment) as leased assets under finance lease transactions which do
not transfer ownership to the Group.
The depreciation method for leased assets is provided in Note 1. Summary of Significant
Accounting Policies (k) Leases.
The following pro forma amounts represent the acquisition costs, accumulated
depreciation and net book value of the leased assets as of March 31, 2014, which would
have been reflected in the accompanying consolidated balance sheet if finance leases,
other than those which transfer the ownership of the leased assets to the Group, thatstarted on or before March 31, 2008 (which are currently accounted for as operatingleases) had been capitalized:

Machinery and equipment

Acquisition costs¥6

Millions of yen
2014
Accumulated
depreciation¥6

Net book value¥047

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

20. Leases (continued)(a) Finance leases (continued)
The related lease payments and depreciation for the year ended March 31, 2014 were as
follows:

Lease payments
Depreciation

Millions of yen
2014
¥1
1

Depreciation is calculated by the straight-line method over the respective lease terms
assuming a nil residual value.
There are no finance lease transactions which do not transfer ownership to the Groupstarting on or before March 31, 2008 (which are currently accounted for as operatingleases) for the year ended March 31, 2015.
(b) Operating leases
Future minimum lease receipts subsequent to March 31, 2015 under non-cancelable
operating leases are as follows:

Years ending March 31,
20162017 and thereafter

Millions of yen
¥ 17
119
¥ 136

Thousands of
U.S. dollars
$ 142
990
$ 1,132

48

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

21. Derivatives
The outstanding currency-related derivatives positions not designated as hedging instruments
as of March 31, 2014 and 2015 are as follows:
Thousands of
New Taiwan dollars

Millions of yen
2014Type of transaction
Over-the-counter transactions
Forward foreign exchange
contracts:
Selling USD

Contract value(notional
principal
amount)TWD 141,711

Contract value
over one year

TWD

Estimated
fair value

Unrealized
loss

¥ (2)

¥ (2)

–
Millions of yen
2014Type of transaction
Over-the-counter transactions
Forward foreign exchange
contracts:
Selling Chinese Yuan

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

Estimated
fair value

Unrealized
loss¥ 1,733¥ 1,733¥ (208)¥ (208)Millions of yen
2015

Type of transaction
Over-the-counter transactions
Forward foreign exchange
contracts:
Selling Chinese Yuan

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

Estimated
fair value

Unrealized
loss¥ 2,674¥ 1,733¥ (539)¥ (539)Thousands of U.S. dollars
2015Type of transaction
Over-the-counter transactions
Forward foreign exchange
contracts:
Selling Chinese Yuan

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

Estimated
fair value

Unrealized
loss$ 22,252$ 14,421$ (4,485)$ (4,485)

Fair value is based on the prices obtained from financial institutions.
49

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

21. Derivatives (continued)
The outstanding currency-related derivatives positions designated as hedging instruments asof March 31, 2014 and 2015 are as follows:
Millions of yen
2014

Method ofhedge accounting
Deferral hedge accounting
Allocation method forforward foreignexchange contracts

Hedge transactions
and major hedged items
Forecasted transactions in foreign currencies:
Selling USD, Accounts receivable
Forward foreign exchange contracts: Selling
USD, Accounts receivable
Forward foreign exchange contracts: Buying
USD, Accounts payable

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

Estimated
fair value

¥ 22

¥ –

¥ 0

¥ 217

¥–

(*)

¥ 205

¥–

(*)

Millions of yen
2015

Method ofhedge accounting
Allocation method forforward foreignexchange contracts

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

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

Estimated
fair value

¥ 154

¥ –

(*)

¥ 135

¥ –

(*)

Thousands of U.S. dollars
2015

Method ofhedge accounting
Allocation method forforward foreignexchange contracts

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

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

Estimated
fair value$ 1,282$–(*)$ 1,123$–(*)(*) The fair value of forward foreign exchange contracts that qualify for allocation method
is included in the carrying value of hedged accounts receivable and payable.

50

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

22. Amounts per Share
Amounts per share as of March 31, 2014 and 2015 and for the years then ended are as
follows:
Yen
Net assets
Net income:
Basic
DilutedCash dividends

2014¥ 890.00

2015¥ 951.53

20.76
20.70
10.00

16.73
16.67
10.00

U.S. dollars
2015$ 7.92
0.14
0.14
0.08

Amounts per share of net assets are computed based on the number of shares of common
stock outstanding at the year end.
Basic net income per share is computed based on the net income attributable to shareholdersof common stock and the weighted-average number of shares of common stock outstanding
during the year. Diluted net income per share is computed based on the net income
available for distribution to the shareholders and the weighted-average number of shares ofcommon stock outstanding during each year after giving effect to the dilutive potential ofshares of common stock to be issued upon the exercise of stock acquisition rights.
The average number of shares of common stock used to compute basic net income per sharefor the years ended March 31, 2014 and 2015 were 157,500 thousand and 156,439 thousand,respectively. The dilutive potential of shares of common stock for the years ended March 31,
2014 and 2015 were 462 thousand and 536 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.

51

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, 2014
and 2015 are summarized as follows:
Transactions
Name ofaffiliated company

Type of transaction
Sales

Millions of yen
2014
2015
¥ 34,206¥ 32,900

Thousands of
U.S. dollars
2015$ 273,779

Balances
Sadoshima
Corporation
Account nameNotes and accounts
receivable

Millions of yen
2014
2015

Thousands of
U.S. dollars
2015¥ 13,149$ 105,792¥ 12,713

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
and the 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 theCompany and certain consolidated subsidiaries.
The carrying value in the consolidated balance sheet as of March 31, 2014 and 2015 and thecorresponding fair value of rental properties and idle properties and real estate including
certain portions used as rental property are as follows:2013
Rental properties and idle
properties
Real estate including certain
portions used as rental
property

Millions of yen
Carrying value
Net change
2014

Fair value
2014¥ 4,391¥ 132¥ 4,523¥ 7,835

4,754

(65)

4,689

11,15752

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

24. Investment, Rental and Idle Properties (continued)

2014
Rental properties and idle
properties
Real estate including certain
portions used as rental
property

Fair value
2015¥ 4,523¥ 94¥ 4,617¥ 9,078

4,689

(61)

4,628

11,599Thousands of U.S. dollars
Carrying value
Net change
2015

Fair value
2015

2014
Rental properties and idle
properties
Real estate including certain
portions used as rental
property

Millions of yen
Carrying value
Net change
2015$ 37,638$ 783$ 38,421$ 75,543

39,020(508)

38,512

96,522The 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, 2014 included
increases mainly due to translation adjustments in the amount of ¥235 million and decreases
mainly due to depreciation of buildings in the amount of ¥149 million.
The components of net change in carrying value for the year ended March 31, 2015 included
increases mainly due to translation adjustments in the amount of ¥114 million ($949
thousand) and reclassification from real estate for sales purpose to investment assets in theamount of ¥45 million ($374 million) and decreases mainly due to depreciation of buildingsin the amount of ¥133 million ($1,107 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.

53

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, 2014 and2015 are as follows:
Millions of yen
2014
Rental revenues¥ 823

Rental costs¥ 557

Difference¥ 266

Other gain, net on
sales and others¥3

Millions of yen
2015
Rental revenues¥ 760

Rental costs¥ 529

Difference¥ 231

Other loss, net on
sales and others¥8

Thousands of U.S. dollars
2015
Rental revenues$ 6,324

Rental costs$ 4,402

Difference$ 1,922

Other loss, net on
sales and others$ 67

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 otherincome (expenses), in the consolidated statement of income.

54

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
Board of Directors of the Company in order to make decisions about resource allocationand to assess 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 based on business units: “Steel
Sheet Segment,” “Roll Segment,” “Grating Segment” and “Real Estate 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, other construction materials, building 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 “RealEstate Segment” engages in the sale, purchase and lease of real estate such as buildings,
car parking lots and other.
(b) Calculation methods used for net sales, income or loss, assets and other items ofeach reportable 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 income.

55

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, 2014 and 2015 aresummarized as follows:
Millions of yen
Year ended March 31, 2014

Net sales
Sales to third
partiesInter-segment
sales andtransfers
Total
Segment income(loss)
Segment assets

Steel Sheet
Segment

Reportable Segments
Roll
Grating Real Estate
Segment Segment Segment¥ 146,791¥ 2,508¥ 3,599¥–¥ 146,791–¥ 2,508¥ 6,702¥ 129,388

Other items
Depreciation
andamortization¥
Investment in an
affiliateaccounted forby the equity
methodIncrease inproperty, plantand equipment
and intangible
assets3,677

Adjustments
andeliminations

Consolidated–¥ 157,552

3,340¥ 160,892(3,340)¥ (3,340)–¥ 157,552¥ 343¥ 8,313¥ 7,043¥ 153,305¥ (920) (*2)
¥ 54,471 (*4)

¥ 6,123¥ 207,776

¥

¥

¥

¥

Sub-Total

Other
(*1)

Total

872

¥ 153,770¥ 3,782¥ 157,552¥–¥ 3,599443¥ 1,315443¥ 154,213

2,897¥ 6,679¥ (720) ¥93¥ 3,413 ¥ 3,825¥ 625¥ 8,366¥ 6,700¥ 144,992

¥

¥

¥

275

¥

74

69

4,095

203

4,298

54

4,352

3,304

–

318

2

3,624

–

3,624

–

3,624

7,119

184

17

4

7,324

804

8,128

24 (*5)8,152

56

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)
Millions of yen
Year ended March 31, 2015

Net sales
Sales to third
partiesInter-segment
sales andtransfers
Total
Segment income
Segment assets
Other items
Depreciation
andamortization
Investment in
an affiliate
accounted forby the equity
methodIncrease inproperty, plantand equipment
and intangible
assetsReportable Segments
Steel Sheet
Roll
Grating Real Estate
Segment Segment Segment
Segment¥ 163,174¥ 3,477¥ 3,511¥–¥ 163,174¥ 3,450¥ 140,062–¥ 3,477¥20¥ 3,496

¥

¥

4,397

240

Adjustments
andeliminations

Consolidated¥ 175,890¥–¥ 175,890

2,555¥ 7,377¥495¥ 10,041

2,998¥ 178,888¥ 4,571¥ 165,959(2,998)¥ (2,998)¥ (1,143) (*2)
¥ 54,112 (*4)–¥ 175,890¥ 3,428¥ 220,071

¥

¥

¥

¥

Sub-Total

Other
(*1)

Total

906

¥ 171,068¥ 4,822–¥ 3,511¥87¥ 4,059443¥ 1,349¥ 519¥ 8,301443¥ 171,511¥ 4,076¥ 155,918

¥

¥

¥

73

62

4,772

331

5,103

52

5,155

3,581

–

341

2

3,924

–

3,924

–

3,924

2,561

83

182

97

2,923

1,100

4,023

10 (*5)

4,033

Adjustments
andeliminations

Consolidated

Thousands of U.S. dollars
Year ended March 31, 2015

Net sales
Sales to third
partiesInter-segment
sales andtransfers
Total
Segment income
Segment assets

Steel Sheet
Segment

Reportable Segments
Roll
Grating Real Estate
Segment Segment Segment$ 1,357,860$ 28,934 $ 29,217 $–$ 1,357,860$ 28,709$ 1,165,532

Other items
Depreciation
andamortization$
Investment in an
affiliateaccounted forby the equity
methodIncrease inproperty, plantand equipment
and intangible
assets36,590Sub-Total

Other
(*1)

Total

7,539

$ 1,423,550$ 40,126$ 1,463,676$–$ 1,463,676

–
–
3,686
$ 28,934 $ 29,217 $ 11,225$
167 $724 $ 4,319$ 29,093 $ 33,777 $ 69,077

3,686$ 1,427,236$
33,919$ 1,297,479

21,262$ 61,388$ 4,119$ 83,556

24,948$ 1,488,624$
38,038$ 1,381,035(24,948)$ (24,948)$ (9,512) (*2)
$ 450,296 (*4)–
$ 1,463,676$
28,526$ 1,831,331$ 1,997 $$

39,710$ 2,755

$

$

$

607 $

516

42,465433

42,89829,799

–

2,838

17

32,654–32,654–32,654

21,311

691

1,515

807

24,324

9,154

33,47883 (*5)33,56157

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)(*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 are not allocated to specific segments of ¥1,116 million and ¥1,169
million ($9,728 thousand) and intersegment profit eliminations of ¥196 million and¥26 million ($216 thousand) for the years ended March 31, 2014 and 2015.
(*3) Segment income or loss is reconciled to operating income on the consolidated
statement of income.
(*4) The adjustments and eliminations of segment assets include corporate assets of theCompany of ¥54,806 million and ¥54,409 million ($452,767 thousand) andeliminations of intersegment transaction of ¥335 million and ¥297 million ($2,471
thousand) for the years ended March 31, 2014 and 2015.
(*5) The adjustments and eliminations of increase in property, plant and equipment andintangible assets include the increase in software in corporate assets not allocated to
the reportable segment of ¥24 million and the increase in tools, furniture andfixtures in corporate assets not allocated to the reportable segment of ¥10 million($83 thousand).

58

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 theGroup for the years ended March 31, 2014 and 2015 are summarized as follows:

Taiwan¥ 24,470

Millions of yen
2014USA¥ 9,769

Other¥ 20,518

Total¥ 157,552

Japan¥ 106,698

Taiwan¥ 25,033

Millions of yen
2015
USA¥ 19,208

Other¥ 24,951

Total¥ 175,890

Japan$ 887,892

Thousands of U.S. dollars
2015
TaiwanUSA
Other$ 208,313¥ 159,840$ 207,631

Total$ 1,463,676

Japan¥ 102,795

Property, plant and equipment, net, categorized by geographical area as of March 31, 2014
and 2015 are summarized as follows:

Taiwan¥ 11,189

Millions of yen
2014
China
¥ 10,166

Other¥ 3,387

Total¥ 58,797Japan¥ 33,351

Taiwan¥ 11,495

Millions of yen
2015
China
¥ 10,854

Other¥ 3,469

Total¥ 59,169

Japan$ 277,532

Thousands of U.S. dollars
2015
TaiwanChina
Other$ 95,656$ 90,322$ 28,868

Total$ 492,378

Japan¥ 34,055

59

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, 2014 and 2015 are as follows:

Customer nameSadoshima
Corporation

Millions of yen
2014
2015
¥ 34,206¥ 32,900

Thousands of
U.S. dollars
2015$ 273,779

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,
2014 and 2015 is summarized as follows:

Steel Sheet
Segment
Loss on impairment of
fixed assets¥ –Steel Sheet
Segment
Loss on impairment of
fixed assets¥ 70

Steel Sheet
Segment
Loss on impairment of
fixed assets$ 583

Millions of yen
Year ended March 31, 2014
Reportable Segments
Roll
Grating
Real Estate
Segment Segment
Segment
Other
¥ –

¥ –

¥–

¥0

Millions of yen
Year ended March 31, 2015
Reportable Segments
Roll
Grating
Real Estate
Other
Segment Segment
Segment
¥ –

¥ –

¥ –

¥ 511

Thousands of U.S. dollars
Year ended March 31, 2015
Reportable Segments
Roll
Grating
Real Estate
Segment Segment
Segment
Other
$ –

$ –

$ –

$ 4,252

Adjustments andeliminations

Total

¥7

¥ 7

Adjustments andeliminations

Total

¥7

¥ 588

Adjustments andeliminations

Total

$ 58

$ 4,89360

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

25. Segment Information (continued)
The amortization and balance of negative goodwill by reportable segment as of and for theyears ended March 31, 2014 and 2015 related to business combinations prior to April 1,2010 are summarized as follows:

Amortization
Balance at the year end

Amortization
Balance at the year end

Amortization
Balance at the year end

Steel Sheet
Segment¥7
5

Millions of yen
Year ended March 31, 2014
Reportable Segments
Roll
Grating
Real Estate
Other
Segment Segment
Segment
¥ –
¥ 0
¥ –
¥ 1
–
0
–
1

Adjustments andeliminations
¥2
1

Total
¥ 10
7

Steel Sheet
Segment¥5–

Millions of yen
Year ended March 31, 2015
Reportable Segments
Roll
Grating
Real Estate
Other
Segment Segment
Segment
¥ –
¥ 0
¥ –
¥ 1
–
–
–
–

Adjustments andeliminations
¥1
–

Total
¥ 7
–

Steel Sheet
Segment$ 42–

Thousands of U.S. dollars
Year ended March 31, 2015
Reportable Segments
Roll
Grating
Real Estate
Other
Segment Segment
Segment
$ –
$0
$–
$ 8
–
–
–
–

Adjustments andeliminations
$8
–

Total
$ 58
–

The balance of goodwill by reportable segment as of March 31, 2015 related to capitalincrease of consolidated subsidiary is summarized as follows:

Balance at the year end

Balance at the year end

Steel Sheet
Segment¥ 198

Millions of yen
Year ended March 31, 2015
Reportable Segments
Roll
Grating
Real Estate
Other
Segment Segment
Segment
¥ –
¥ –
¥ –
¥–

Adjustments andeliminations
¥ –

Total
¥ 198

Steel Sheet
Segment$ 1,648

Thousands of U.S. dollars
Year ended March 31, 2015
Reportable Segments
Roll
Grating
Real Estate
Segment Segment
Segment
Other
$ –
$ –
$ –
$ –

Adjustments andeliminations
$ –

Total
$ 1,648

61

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

25. Segment Information (continued)
Negative goodwill credited to income by reportable segment for the years ended March 31,
2014 and 2015 is summarized as follows:
Millions of yen
Year ended March 31, 2014
Reportable Segments
Steel Sheet
Roll
Grating
Real Estate
Segment Segment Segment
Segment
Other
Negative goodwill
credited to income

¥ 36

¥–

¥1

¥–

¥4

Millions of yen
Year ended March 31, 2015
Reportable Segments
Roll
Grating
Real Estate
Steel Sheet
Segment
Segment Segment Segment
Other
Negative goodwill
credited to income

¥ 32

¥–

¥1

¥–

¥6

Thousands of U.S. dollars
Year ended March 31, 2015
Reportable Segments
Roll
Grating
Real Estate
Steel Sheet
Other
Segment
Segment Segment Segment
Negative goodwill
credited to income

$ 266

$ –

$8

$–

$ 50

Adjustments andeliminations

Total

¥ 9

¥ 50

Adjustments andeliminations

Total

¥ 8

¥ 47

Adjustments andeliminations

Total

$ 67

$ 391

62

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, 2015, was approved at a meeting of the Board of Directors held on May 12,2015.

Cash dividends of ¥5 ($0.05) per share

Millions of yen¥ 781

Thousands of
U.S. dollars$ 6,499(b) Purchase of treasury stock

At the meeting of the Board of Directors of the Company held on May 12, 2015, in
accordance with the Article 459 (1) of the Act and Article 35 of the Company’s articles
of incorporation, the Company approved the purchase of up to 1,000,000 shares oftreasury stock for an aggregate acquisition cost not exceeding ¥600 million ($4,993
thousand) during the period from May 13, 2015 through June 23, 2015, to support theexecution of a flexible capital management policy in response to changes in the businessenvironments.
As a result, the Company purchased 1,000,000 shares of treasury stock for a total
amount of ¥566 million ($4,710 thousand) at Tokyo Stock Exchange.
(c) Share consolidation, change in number of shares constituting our unit and change in a
portion of the Company’s articles of incorporation

The Company decided at a meeting of its Board of Directors held on May 24, 2015 thata proposal for share consolidation and a change in the number of shares constituting one
unit would be submitted to the 116th annual general meeting of shareholders to be heldon June 24, 2015, and which was subsequently approved as proposed at the annual
general meeting of shareholders.
i)

Purpose of share consolidation
All the domestic stock exchanges in Japan jointly announced the “Action Plan for
Consolidating Trading Units” with the final goal to change the minimum trading
unit for ordinary shares of all domestic companies listed on securities markets inJapan to 100 shares. As a company listed on the Tokyo Stock Exchange, theCompany respects the purpose of the action plan and will change its trading unit to
100 shares from 1,000 shares. In addition, the Company will consolidate its shares(one for every five shares) in order to make the trading unit of the Company’s
shares at a level considered appropriate from ¥50,000 ($416) or more and less than
¥500,000 ($4,161) and optimize the total number of shares issued by the Company.
63

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

26. Subsequent Events (continued)(c) Share consolidation and change in number of shares constituting our unit (continued)ii) Specific details of the share consolidation
The class of shares to be consolidated: Common stock
Method and share consolidation ratio
As of October 1, 2015, shares owned by shareholders who are registered orrecorded in the final register of shareholders as of September 30, 2015 will beconsolidated on the basis of one for every five shares.
Decrease in number of shares due to share consolidation
Total number of outstanding shares before the shareconsolidation (as of March 31, 2015)
Decrease in number of shares due to the shareconsolidation
Total number of outstanding share after the shareconsolidation
Note:

179,186,153 shares
143,348,923 shares
35,837,230 shares

The decrease in the number of shares due to the share consolidation is atheoretical number calculated on the basis of the total number ofoutstanding shares before the share consolidation and the shareconsolidation ratio ratio.

iii) Treatment of any fractional units less than one share
If there are any fractional units less than one share resulted from the shareconsolidation, such shares will be collectively sold or purchased by the Company to
be held as treasury stock and the proceeds from such sale will be delivered to theshareholders in proportion to the fraction at amounts attributable to them, in
accordance with the provisions of the Act.
iv) Schedule of share consolidation and change in number of shares constituting one
unit
Date of the resolution by the Board of Directors
Date of the approval by the annual general meetingof shareholders
Effective date of share consolidation
Effective date of change in number of sharesconstituting one unit

May 12, 2015
June 24, 2015
October 1, 2015 (Planned)
October 1, 2015 (Planned)64

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

26. Subsequent Events (continued)(c) Share consolidation and change in number of shares constituting our unit (continued)v) Per share information
Per share information for the years ended December 31, 2014 and 2015 under theassumption that the share consolidation had been implemented on April 1, 2014 is
as follows:

Net assets per share
Net income per share
Diluted net income per share

Millions of yen
2014
2015
¥ 4,449.99¥ 4,757.67
103.82
83.65
103.52
83.36

Thousands of
U.S. dollars
2015$ 39.590.70
0.69

65