February 13, 2018
Name of Listed Company: ISEKI & CO., LTD.
Stock Exchange Listings: Tokyo
Company Code:6310 (URL http://www.iseki.co.jp)
Representative: Title President
Name Eiichiro Kinoshita
Enquiries:
Title General Manager of Financial Department
Name Katsuhiro Osuga
Telephone: +81-3-5604-7671
Date of the Ordinary General Meeting of Shareholders:
Scheduled Date to Commence Dividend Payment:
Date of Submission of Securities Report:
Supplementary Information for Financial Results:
Financial Results Briefing:

March 29, 2018
March 30, 2018
March 30, 2018
Yes
Yes (for institutional investors and analysts)

Summary Announcement of Consolidated Financial Results
for the Fiscal Year Ended December 31, 2017 (Japanese GAAP)
I. Consolidated Financial Results for the Fiscal Year Ended December 31, 2017 (January 1, 2017－December
31, 2017)
A. Consolidated Results of Operations(Rounded down to a million yen, % indicates changes from the previous corresponding period)

Fiscal Year Ended
December 31, 2017
158,382
3,953
4,250
2,807

%

Fiscal Year Ended
December 31, 2016
153,097
2,469
1,635
858

%

Net Sales
3.5―
Operating Income
60.1―
Ordinary Income
159.8―
Profit Attributable to Owners of Parent
227.0―
Earnings per Share (yen)Basic124.2938.01
Diluted124.0837.94
Return on Equity (%)
4.2
1.3
Return on Assets (%)
2.1
0.8
Operating Margin (%)
2.5
1.6
Note: Comprehensive income
Fiscal year ended December 31, 2017: ¥4,113 million [—%]
Fiscal year ended December 31, 2016: ¥(602) million [—%]
Reference: Share of profit or loss of entities using equity method
Fiscal year ended December 31, 2017: ¥(219) million
Fiscal year ended December 31, 2016: ¥(1,075) million* The Company has changed its balance sheet date from March 31 to December 31 since the fiscal year ended
December 31, 2015. Percentage changes from the previous corresponding period are not stated for the fiscal year
ended December 31, 2016, as the fiscal year ended December 31, 2015 do not correspond to the fiscal year ended
December 31, 2016.
* The Company has consolidated shares of its common stock (one-for-ten share consolidation), effective July l, 2017.
The amounts stated for basic earnings per share and diluted earnings per share are calculated based on the assumptionthat shares of the common stock were consolidated at the beginning of the previous fiscal year.

B. Consolidated Financial Position(Rounded down to a million yen)

As of December 31, 2017

As of December 31, 2016

Total Assets
201,348
203,356
Net Assets
70,916
67,151
Shareholder’s Equity to Total Assets Ratio (%)
34.4
32.2
Net Assets per Share (yen)3,061.84
2,896.78
Reference: Shareholder’s equity
As of December 31, 2017: ¥69,164 million
As of December 31, 2016: ¥65,430 million* The Company has consolidated shares of its common stock (one-for-ten share consolidation), effective July l, 2017.
The amounts stated for net assets per share are calculated based on the assumption that shares of the common stock
were consolidated at the beginning of the previous fiscal year.
C. Consolidated Cash Flows(Rounded down to a million yen)

Fiscal Year Ended
December 31, 2017
Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash Flows from Financing Activities
Cash and Cash Equivalents at End of Period

Fiscal Year Ended
December 31, 2016

3,308
(5,273)(4,294)
7,795

8,283
(5,736)
2,621
13,909

II. Dividends

Total

AnnualDividends(million yen)

Payout Ratio(%,
consolidated)

Dividend to Net
Assets Ratio(%,
consolidated)

Dividend per Share (yen)1Q-end 2Q-end 3Q-end Year-end
FY Ended December
31, 2016
FY Ended December
31, 2017
FY Ending December
31, 2018 (Forecast)

—

—

—

1.50

1.50

338

39.5

0.5

—

—

—

30.00

30.00

677

24.1

1.0

—

—

—

30.00

30.00

21.2

* The Company has consolidated shares of its common stock (one-for-ten share consolidation), effective July 1, 2017.
The amounts of dividends for the fiscal year ended December 31, 2016 are stated at the actual amounts paid out prior
to the share consolidation.
III. Consolidated Financial Results Forecast for the Fiscal Year Ending December 31, 2018 (January 1, 2018－
December 31, 2018)(Rounded down to a million yen, % indicates changes from the previous period)
Net SalesFirst Half
Full Year

86,000164,500

%

7.3
3.9

Operating
Income

2,000
4,500

%

(29.6)
13.8

Ordinary
Income

1,800
4,300

%

(46.7)
1.2

ProfitAttributableto Ownersof Parent

1,600
3,200

%

Earnings
per Share(yen)(27.1)
14.0

70.83
141.66

* Notes
A. Changes in significant subsidiaries during the fiscal year under review (changes in specified subsidiaries
resulting in changes in the scope of consolidation): No
New: — (), Exclusion: — ()
B. Changes in accounting policies, changes in accounting estimates and restatements
1) Changes in accounting policies due to the revision of accounting standards, etc.:
2) Any changes other than 1) above:3) Changes in accounting estimates:
4) Restatements:

No
No
No
No

C. Total number of shares issued (common stock)1) Total number of shares issued at the end of the fiscal year (including treasury shares):
As of December 31, 2017
22,984,993 shares
As of December 31, 2016
22,984,993 shares2) Total number of treasury shares at the end of the fiscal year:
As of December 31, 2017395,946 shares
As of December 31, 2016
397,612 shares
3) Average number of shares during the fiscal year:
Fiscal year ended December 31, 2017
22,588,520 sharesFiscal year ended December 31, 2016
22,588,076 shares
The Company has consolidated shares of its common stock (one-for-ten share consolidation), effective Julyl, 2017. The amounts stated for the total number of shares issued (common stock) are calculated based on
the assumption that shares of the common stock were consolidated at the beginning of the previous fiscalyear.

(Reference) Summary of Non-consolidated Financial Results
Non-consolidated Financial Results for the Fiscal Year Ended December 31, 2017 (January 1, 2017－December
31, 2017)
A. Non-consolidated Results of Operations(Rounded down to a million yen, % indicates changes from the previous corresponding period)

Fiscal Year Ended
December 31, 2017
92,913
501
2,126
2,013

%

Fiscal Year Ended
December 31, 2016
95,873
921
2,746
2,651

%

Net Sales(3.1)―
Operating Income(45.6)―
Ordinary Income(22.6)―
Profit(24.1)―
Earnings per Share (yen)
Basic
89.13
117.37
Diluted
88.99
117.16* The Company has changed its balance sheet date from March 31 to December 31 since the fiscal year ended
December 31, 2015. Percentage changes from the previous corresponding period are not stated for the fiscal year
ended December 31, 2016, as the fiscal year ended December 31, 2015 do not correspond to the fiscal year ended
December 31, 2016.
* The Company has consolidated shares of its common stock (one-for-ten share consolidation), effective July l, 2017.
The amounts stated for basic earnings per share and diluted earnings per share are calculated based on the assumptionthat shares of the common stock were consolidated at the beginning of the previous fiscal year.
B. Consolidated Financial Position(Rounded down to a million yen)

As of December 31, 2017

As of December 31, 2016

Total Assets
134,826
135,976
Net Assets
58,38756,138
Shareholder’s Equity to Total Assets Ratio (%)
43.2
41.2
Net Assets per Share (yen)2,581.21
2,481.33
Reference: Shareholder’s equity
As of December 31, 2017: ¥58,307 million
As of December 31, 2016: ¥56,046 million* The Company has consolidated shares of its common stock (one-for-ten share consolidation), effective July l, 2017.
The amounts stated for net assets per share are calculated based on the assumption that shares of the common stock
were consolidated at the beginning of the previous fiscal year.

* These financial results are outside the scope of audit.
* Explanation on the proper use of financial results forecasts and other notes
The financial results forecasts and other forward-looking statements contained in this report are based on
information available to the Company on the date of this report’s release and certain preconditions that theCompany deems to be reasonable. Actual results, etc. may differ significantly from the forecasts, however, as aresult of various factors. For details on the preconditions on the financial results forecasts of the Company andnotes on the use of financial results forecasts, please see “Summary of Results of Operations, etc.” on page 2 of
the Appendix.

 Contents of Appendix
1. Summary of Results of Operations, etc. ...............................................................................................2(1) Summary of Results of Operations for the Fiscal Year under Review .............................................2(2) Summary of Financial Position for the Fiscal Year under Review ...................................................2(3) Summary of Cash Flows for the Fiscal Year under Review .............................................................3(4) Future Outlook..................................................................................................................................3(5) Basic Policy on Distribution of Surplus and Dividends for the Current and Next Fiscal Years .......4(6) Risks Which Could Affect Our Business ..........................................................................................4
2. Status of the Corporate Group ................................................................................................................6
3. Management Policies .............................................................................................................................7(1) Basic Management Principles ..........................................................................................................7(2) Long- to Mid-term Management Strategies and Issues to be Addressed .........................................7
4. Basic Policy for Choosing Accounting Standards ..................................................................................8
5. Consolidated Financial Statements and Principal Notes ........................................................................9(1) Consolidated Balance Sheets ............................................................................................................9(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ..... 11(3) Consolidated Statements of Changes in Equity ..............................................................................13(4) Consolidated Statements of Cash Flows .........................................................................................15(5) Notes to Consolidated Financial Statements ...................................................................................17(Notes to Going Concern Assumption) ..........................................................................................17(Important Basic Items for Preparing Consolidated Financial Statements) ...................................17(Consolidated Balance Sheets) .......................................................................................................19(Consolidated Statements of Income).............................................................................................20(Consolidated Statements of Changes in Equity) ...........................................................................21(Consolidated Statements of Cash Flows) ......................................................................................23(Segment Information) ...................................................................................................................23(Per Share Information) ..................................................................................................................23(Significant Subsequent Events) .....................................................................................................23
6.Non-consolidated Financial Statements and Principal Notes ................................................................24(1) Non-consolidated Balance Sheets ..................................................................................................24(2) Non-consolidated Statements of Income ........................................................................................26(3) Non-consolidated Statements of Changes in Equity .......................................................................27(4) Notes to Non-consolidated Financial Statements ...........................................................................29(Notes to Going Concern Assumption) ..........................................................................................29
7. Others ...................................................................................................................................................29(1) Production, Orders and Sales..........................................................................................................29-1-

1. Summary of Results of Operations, etc.
(1) Summary of Results of Operations for the Fiscal Year under Review
During the fiscal year ended December 31, 2017, the Japanese economy was on a moderate recovery track due torecovery in corporate earnings and an improvement in personal consumption. In addition, the economy in the U.S.
continued its steady recovery backed by a positive employment environment and a recovery in corporate earnings,
while the economy in Europe remained on a strong recovery track, with signs of a pick-up in the Chinese economy
buoyed by financial policies, all contributing to an overall picture of modest recovery.
On the other hand, in the domestic agricultural environment, the market for agricultural machinery is bottoming out
and could potentially move into a recovery phase, amid ongoing structural changes in agriculture including farmland
consolidation to principal farmers and rice-crop diversion such as a shift to dry field farming and vegetable production.
Under these circumstances, the ISEKI Group continued its initiatives to strengthen the responsiveness to structuralchanges in agriculture mainly by launching new products and improving customer service in Japan, while working tostrengthen its sales in its mainstay overseas markets of North America, Europe, China, and ASEAN. As a result, theGroup’s consolidated financial results are summarized as follows.
[Consolidated financial results]
Net sales for the fiscal year ended December 31, 2017 were ¥158,382 million, an increase of ¥5,284 million (3.5%)
year on year. Domestic sales in Japan were ¥123,136 million, an increase of ¥2,094 million (1.7%) year on year, as aresult of favorable sales of tractors and increased sales of farming implements, spare parts, repair fees and constructionof facilities, while overall sales of agricultural machinery slightly decreased from the previous fiscal year. Overseas
sales were ¥35,245 million, an increase of ¥3,189 million (10.0%) year on year. This was due to the launch of new
products and the effects of foreign exchange rates of subsidiaries in Europe, and increased shipments of tractors andcombine harvesters in ASEAN for Indonesia and Thailand, despite decreased sales in North America attributable tochanges in business terms with an OEM partner.
Operating income was ¥3,953 million, an increase of ¥1,483 million (60.1%) year on year, as a result of positiveeffects from improvements in the revenue-expenditure structure in domestic direct dealers and improved revenue inthe Indonesian business, despite the recording of provision for loss on construction contracts for construction offacilities.
Ordinary income was ¥4,250 million, an increase of ¥2,614 million (159.8%) year on year, mainly due to an upturnin the share of profit or loss of entities using equity method and a favorable turn in foreign exchange gains or losses.
Profit attributable to owners of parent was ¥2,807 million, an increase of ¥1,948 million (227.0%) year on year,
mainly resulting from the payment of income taxes of ¥993 million, in addition to the posting of extraordinary income(losses) such as subsidy income related to the Kumamoto Earthquake and facility contract penalty.
[Non-consolidated financial results]
Net sales for the fiscal year ended December 31, 2017 were ¥92,913 million (down 3.1% year on year), operating
income was ¥501 million (down 45.6% year on year), ordinary income was ¥2,126 million (down 22.6% year on year),and profit was ¥2,013 million (down 24.1% year on year).
Sales by product are as follows.
[Domestic]
Sales of cultivating and mowing machinery (tractors, high-clearance multipurpose vehicles, among others) were¥28,200 million (an increase of 2.3% year on year). Sales of planting machinery (rice transplanters and vegetabletransplanters) were ¥8,486 million (a decrease of 7.0% year on year). Sales of harvesting and processing machinery(combine harvesters, among others) were ¥20,398 million (a decrease of 2.4% year on year). Sales of farming
implements, spare parts and repair fees were ¥39,766 million (an increase of 3.1% year on year). Sales of otheragriculture-related business (construction of facilities, among others) were ¥26,284 million (an increase of 5.6% year
on year).
[Overseas]
Sales of cultivating and mowing machinery (tractors, among others) were ¥25,202 million (an increase of 2.8% year
on year). Sales of planting machinery (rice transplanters, among others) were ¥4,174 million (an increase of 27.2%
year on year). Sales of harvesting and processing machinery (combine harvesters, among others) were ¥1,703 million(an increase of 336.1% year on year). Sales of farming implements and spare parts were ¥2,621 million (an increaseof 25.6% year on year). Sales of other agriculture-related business were ¥1,543 million (a decrease of 13.4% year onyear).
(2) Summary of Financial Position for the Fiscal Year under Review
Total assets at the end of the fiscal year ended December 31, 2017 decreased by ¥2,008 million from the end of theprevious fiscal year to ¥201,348 million. Current assets decreased by ¥1,182 million, while non-current assets
decreased by ¥825 million. This was mainly due to a decrease of ¥5,954 million in cash and deposits, an increase of¥3,379 million in merchandise and finished goods, an increase of ¥770 million in buildings and structures, a decreaseof ¥1,155 million in leased assets, and an increase of ¥826 million in investment securities.
-2-

Total liabilities decreased by ¥5,773 million from the end of the previous fiscal year to ¥130,432 million. This was
mainly due to a decrease of ¥1,806 million in short-term loans payable and long-term loans payable, a decrease of¥1,747 million in notes and accounts payable-trade, a decrease of ¥1,321 million in lease obligations, and a decreaseof ¥1,178 million in net defined benefit liability.
Net assets increased by ¥3,764 million from the end of the previous fiscal year to ¥70,916 million. This was mainly
due to an increase of ¥2,484 million in retained earnings, an increase of ¥590 million in valuation difference on
available-for-sale securities, an increase of ¥317 million in foreign currency translation adjustment, and an increase of¥374 million in remeasurements of defined benefit plans.
The shareholder’s equity to total assets ratio was 34.4%.
(3) Summary of Cash Flows for the Fiscal Year under Review(Cash flows from operating activities)
Cash flows from operating activities resulted in a net cash inflow of ¥3,308 million (a decrease of cash inflow of¥4,975 million from the previous fiscal year). This was mainly due to income before income taxes of ¥3,838 million,¥7,005 million of depreciation, a decrease of ¥1,195 million in net defined benefit liability, an increase of ¥3,805
million in inventories, and a decrease of ¥1,900 million in notes and accounts payable-trade.
(Cash flows from investing activities)
Cash flows from investing activities resulted in a net cash outflow of ¥5,273 million (a decrease of cash outflow of¥462 million from the previous fiscal year). This was mainly due to ¥5,646 million of capital investment expenditures.
(Cash flows from financing activities)
Cash flows from financing activities resulted in a net cash outflow of ¥4,294 million (an increase in cash outflow of¥6,915 million from the previous fiscal year). This was mainly due to a decrease in interest-bearing liabilities.
(Reference) The trend of cash flow indicators
Indicator

FY ended
March 31,2015

FY ended
December31, 2015

FY ended
December31, 2016

FY ended
December31, 2017

Shareholder’s equity to total assets ratio (%)

34.0

33.0

32.2

34.4

Market-based equity ratio (%)

25.5

21.2

25.0

31.9

─

5.2

7.4

18.0

─

16.0

13.7

5.6

Cash flow/Interest-bearing liabilities ratio(times)Interest coverage ratio (times)• Shareholder’s equity to total assets ratio: Shareholders’ equity/Total assets• Market-based equity ratio: Total market price of shares/Total assets• Cash flow/Interest-bearing liabilities ratio: Interest-bearing liabilities/Cash flow
• Interest coverage ratio: Cash flow/Interest payments
Notes: 1. All figures have been calculated using financial figures on a consolidated basis.
2. The total market price of shares have been calculated by multiplying the per-share closing price at the endof the fiscal year by the total number of shares outstanding (less treasury shares) at the end of the fiscal year.
3. The cash flow uses the figures of the cash flows from operating activities in the Consolidated Statements ofCash Flows. Interest-bearing liabilities include all bonds payable and loans payable as recorded in theConsolidated Balance Sheets. The Interest payments use the figures of the interest expenses paid as recordedin the Consolidated Statements of Cash Flows.
4. A cash flow/Interest-bearing liabilities ratio and an interest coverage ratio for the fiscal year ended March
31, 2015 are not presented because the net cash flow from operating activities for the fiscal year was
negative.
(4) Future Outlook
The environment surrounding the Group during the fiscal year ending December 31, 2018 is expected to be on amoderate recovery in Japan as improvements continue in the employment environment and personal consumption. A
steady recovery is projected to continue in the U.S. economy, as fiscal policies provide strong backing for corporate
earnings and capital investment. Although the European economy is projected to remain strong, the recovery is
expected to be moderate due to uncertainty surrounding the U.K. exit from the EU.
In domestic agriculture, demand for agricultural machinery is likely to remain bearish and flat in line with changes
in needs resulting from structural changes in agriculture. Under these circumstances, the Company forecasts higher
revenue centered on products and farming implements via initiatives such as responding to scaling by principal farmers,-3-

responding to efficiency needs against a backdrop of personnel shortages, and providing a product lineup for rice-crop
diversion such as the shift to dry field farming and vegetable production.
Overseas, in the North American market, the effects of changes in business terms will be settled, with a turn torecovery. Higher revenues are projected as the Company continues to introduce new products in the European market
and raises shipments to the ASEAN market, where strong demand persists.
Profits are expected to increase due to higher gross profit on the back of higher revenue, in addition to factors suchas improvements in the revenue and cost structure at domestic sales companies and improved profitability in theIndonesian business, despite an increase in selling and administrative expenses.
(5) Basic Policy on Distribution of Surplus and Dividends for the Current and Next Fiscal Years
We recognize that decision on dividends to be paid to shareholders is one of the most important policies to be made.
Our basic policy is to continue to make and increase our dividend distribution, taking into consideration, not justconsolidated financial results, but our Group’s financial position and future business developments as well as changes
in our managerial environment. It is our basic policy to distribute retained earnings to shareholders once a year as yearend dividends. The authority deciding payment of dividends is General Meeting of Shareholders.
With respect to dividends for the fiscal year ended December 31, 2017, we will pay a year-end dividend of 30.0 yen
per share in line with the above policy.
For the fiscal year ending December 31, 2018, we plan to pay a year-end dividend of 30.0 yen per share.
(6) Risks Which Could Affect Our Business
Latent risks and uncertainties which could affect our future financial performance are exemplified as below. We
recognize the possibility of the occurrence of such risks and uncertainties, and will strive to avoid their occurrence andtake proper measures should they occur:
1) Economic conditions and changes in the environment of agriculture
Sluggishness of domestic and/or overseas economic conditions and any change in the agricultural policy may
harm our financial performance through reduced demand for agricultural machinery.
2) Exchange rate fluctuation
There is a possibility that fluctuation of foreign exchange may adversely impact our financial performance.
3) Price hike of raw materials, difficulty in procurement, and confusion in the supply chain
As we procure raw materials and parts from numerous suppliers, their prices suddenly increasing more rapidly
than expected and a prolonged tightening of supplies may harm our business performance.
In addition, a fall in production activities due to disruptions in the supply chain may adversely impact the ISEKI
Group’s business performance and financial position.
4) Dependency on specific customers or suppliers
Any change of business policy, business depression or bankruptcy of our specific customers or suppliers may
harm our financial performance.
5) Competition with other companies
We are involved in fierce competition with other companies in the market, and unless overall productcompetitiveness, including relevant services, is maintained, there is the possibility of a decline in our performance.
6) Serious defects in products and services
The occurrence of serious defects in our products or services may harm our financial performance.
7) Stock market fluctuation
As we hold securities, stock price declines may adversely impact our business performance and financial position.
8) Government regulation on environmental issues, etc., and occurrence of related difficulties
Substantial costs may be incurred related to our products or business activities due to necessitated responses topublic regulation of environmental issues, etc., corrective measures undertaken upon the occurrence of troubles,
lawsuits and other situations which could lead to a deterioration of our financial performance.
9) Risks derived from international businessAs we promote overseas business development, unexpected changes in tax and legal systems or political unrestof any particular country may harm our financial performance when we engage in international business activities.
In addition, as we focus on expanding business to the Asian region, mainly a difficulty in ensuring humanresources, immature technological levels and unstable labor-management relationships in the region may hinder
the ISEKI Group’s business development.
10) Risk of legal violation
We are making group-wide efforts to accomplish complete legal compliance and drive home the code of ethicalbehavior by establishing the “ISEKI Group Code of Ethical Behavior” and preparing an internal control system.
In spite of such efforts, if any of our directors and/or employees should conduct themselves in any way that
violates laws and regulations, the business activities of the Group may be restrained and the business performance
may be deteriorated.
11) Risk of natural disasters and accidents
Natural disasters such as earthquakes, typhoons, flood or unexpected accidents may occur, which may harm ourfinancial performance.
-4-12) Business alliances, joint ventures and strategic investment with other companies
We will form business alliances and joint ventures and carry out strategic investment with other companies asnecessary. We believe that these measures are an effective means for the effective utilization of the management
resources of both parties and for the timely development, production and sales of products.
However, should a conflict of interests occur between the parties concerned in business alliances or joint
ventures due to financial position or other reasons, we would not be able to maintain the alliances. With regard
to strategic investment, including acquisitions, the expected results and/or effects may not be obtained in the
integration of business, technologies, products and human resources, or more time and expenses than expected
may be required. Accordingly, the success or failure of these measures may materially impact the ISEKI Group’sbusiness and may adversely impact our business performance and financial position.
13) Debt
We have concluded syndicated loan or commitment line contracts with financial institutions. Should any of thefinancial conditions of these contracts be triggered, we could face obligations to pay back some or all of theseloans, which could adversely impact the financial position of the ISEKI Group. There is a possibility that a hikein interest rate may harm our financial performance.
The forecasts for future results and target figures produced by ISEKI & CO., LTD., are based on information
available as the day of this announcement, and assumptions made as of the same day regarding a number oflatent risks and uncertainties that could affect future financial performance. Actual results could differ
considerably depending on economic conditions, market trends, and future conditions for business operations
hereafter.

-5-

2. Status of the Corporate GroupThe main business of the ISEKI Group is the development, manufacture and sale of agricultural machinery for riceand vegetable farming, among other related areas.
The position of the business in the ISEKI Group is stated below.
(Agriculture-related Business)
ISEKI & CO., LTD. primarily handles the development and design of agricultural machinery. Iseki-Matsuyama Mfg.
Co., Ltd., Iseki-Kumamoto Mfg. Co., Ltd. and seven other companies handle our agricultural machinery
manufacturing and processing of related components, and 13 domestic sales companies market and sell the machinery
across the country. Overseas marketing operations are handled by ISEKI France S.A.S (France), Dongfeng Iseki
Agricultural Machinery Co., Ltd. (China) and local distributors and affiliates.

Domestic Users and Customers

Overseas Users and Customers(Agriculture-related Business)

Sales

Sales

Consolidated Subsidiaries

Consolidated Subsidiaries:

ISEKI France S.A.S

Iseki-Hokkaido Co., Ltd.

(France) and 2 other

Iseki-Tohoku Co., Ltd.

companies

and 11 other companies

Equity Method Affiliate
ISEKI SALES (THAILAND)

SalesCO., LTD. (Thailand)

Transport andServiceNon-consolidated Subsidiary
N.V. ISEKI EUROPE S.A.

Products
and Parts(Belgium)

Products
and Parts

Consolidated
Subsidiaries:
Iseki-Butsuryu
Co., Ltd.
and 1 other company
Transport andService

ISEKI & CO., LTD.
Products andParts

Products andParts

Consolidated Subsidiaries:

Equity Method Affiliate:Dongfeng Iseki Agricultural
Machinery Co., Ltd. (China)

Iseki-Matsuyama Mfg. Co., Ltd.
Iseki-Kumamoto Mfg. Co., Ltd.

PT. ISEKI INDONESIA
and 5 other companies-6-3. Management Policies(1) Basic Management Principles
Since the establishment of the Company in 1926, with the principle of our founder, “free farmers from exhaustinglabor” as the cornerstone, the ISEKI Group has been striving to contribute to the modernization of Japan’s agriculturalindustry as a full-time manufacturer specialized in agricultural machinery. Over this time, we have consistently
pursued efficient and labor-saving advances in agriculture, and have served the market by pioneering the developmentof a great deal of agricultural machinery and facilities. When we consider the increase of global population, food issues,
food self-sufficiency, land conservation, and global environmental issues, the role agriculture plays is significant and,
consequently, the social mission of agricultural machinery manufacturer becomes more and more important.
To contribute to agriculture both in Japan and throughout the world, the ISEKI Group will continue to operate underthe basic business philosophy to “provide products that satisfy customers,” and endeavor to further increase ourcorporate value.

[Company Motto]
Our management philosophy is to provide
1. Products that satisfy customers,
2. A stable workplace to the employees,
3. Appropriate dividend to the shareholders,
and thereby we will fulfill our social mission.
(2) Long- to Mid-term Management Strategies and Issues to be Addressed
In 2025, ISEKI & CO., LTD., will celebrate its 100th anniversary.
To establish our firm position as a manufacturer specialized in agricultural machinery in the global market by our100th anniversary, we will make concerted efforts throughout the Group in strengthening our responsiveness to
structural changes in agriculture in Japan, expanding our overseas business, reinforcing our organization andgovernance by exercising our strength as a manufacturer specialized in agricultural machinery, and utilizing our ability
to develop and propose products that are competitive in the global market.
1) To strengthen the responsiveness to drastic changes in the agriculture in Japan
In domestic agriculture, structural changes are accelerating due to factors such as an aging population of agriculturaloperators, scaling due to a shortage of personnel, and rice-crop diversion from staple rice crops to dry field farming
and vegetable production.
While ISEKI & CO., LTD. has already been making efforts to respond to changes in agriculture in Japan as a priority
issue, we will further accelerate our efforts and strengthen the responsiveness to drastic changes in Japanese agriculture
both in our products and services.
In response to a declining number of farmers and the market shifting to large-scale farming, we will promote
efficiency by transitioning to a wide-area structure with large-scale maintenance centers at the core, enabled via sales
office placement and reassignment of personnel. In addition, in view of changes in regional markets, we will work
toward strengthening promotion in the operator, dry field farming, and vegetable production markets while advancing
improvements in the revenue and cost structure through expanding sales and reducing operating expenses, working tocreate foundations for revenue and profit structures that are not impacted by swings in the market.
In terms of products, we will strengthen measures that leverage our high technological abilities to develop products
in response to market needs, such as simple, low-price machinery, advanced technologies, and vegetable harvesters.
In terms of services, we will work to strengthen its services, proposals, and support abilities by developing personnel
that can respond to market needs primarily at facilities such as the Dream Agricultural Research Institute, which
conducts development and case studies of advanced agricultural techniques and support for their proliferation among
operators, and the ISEKI Global Training Center, which was established in 2017.
We will strengthen the responsiveness to a rapidly changing domestic agricultural market by supporting the “full of
dreams farming industry” in Japan with our products and services.
2) Expanding overseas businesses
We will position North America, Europe, China, and the ASEAN markets as our four strategic regions, and aim toachieve an overseas sales ratio of more than 40%, including entities accounted for using equity method, by the fiscal
year ending December 31, 2020.
In the North American market, we will further strengthen cooperation with our OEM partners and aim to further
expand sales by launching “new strategic products” that satisfy customer needs.
In the European market, we will position ISEKI France S.A.S as the core of business development to establish the
ISEKI brand in Europe, and focus on expanding sales and market share by enhancing our product lineup andstrengthening our service and support system.
-7-

For the Chinese and ASEAN businesses, which we position as a growth engine, we will further strengthen
cooperation with joint venture partners to expand business.
In the Chinese market, a new plant at Dongfeng Iseki Agricultural Machinery Co., Ltd. will strengthen productivity,
and we will enhance its product lineup and expand its business by supplying products not only within China but also
to the ASEAN market.
In the Thai market, we have been endeavoring to establish the ISEKI brand through sales by ISEKI SALES(THAILAND) CO., LTD., which was founded in 2013. We also established ISEKI (THAILAND) CO., LTD., in 2016
to further strengthen sales and services for our products not only in Thailand but also throughout the entire ASEAN
region. Going forward, we will aim to establish our business in Thailand and expand sales channels to surrounding
countries by further strengthening cooperation with joint venture partners.
We will focus on expanding our overseas business by enhancing our product development, production, sales andservice structures by leveraging regional characteristics, and reinforcing the development of personnel that support
such structures.
3) Strengthening profitability through optimizing development and production
The Group has been pushing forward with cost structure reforms mainly in the development and production
departments in order to launch products that are competitive in the intensifying sales competition both in Japan andoverseas. While strengthening measures toward improving productivity via thoroughly increasing efficiency withinitiatives such as speeding up development through standardizing and unifying designs, reducing costs of goods,
streamlining processes in manufacturing, and improving indirect operations, we will aim to strengthen responses tovariability in production burdens. Additionally, at PT. ISEKI INDONESIA, a manufacturing base which serves as thecore of the ASEAN market now under full-scale operation, measures to strengthen profitability improvement such as
adjustment of procurement partners and working to improve site operations while increasing production capacity willserve as efforts to achieve further business expansion. The Global Strategic Products Project Management Department,
established in 2017, will comprehensively supervise measures toward increasing profitability for overseas products,
and we intend to continue our Groupwide cost structure reforms to implement revenue structure reforms.
4) Active capital investment for growth
In the domestic market, we will advance maintenance of sales bases, including increasing the size and enriching
functions of maintenance centers. Moving forward, further strengthening will be necessary to respond to a rapidlychanging market.
In the expanding overseas market as well, we will aim to make capital investment to increase and strengthen capacity
at PT．ISEKI INDONESIA, a strategic production base for North America, Europe, and ASEAN.
Additionally, at domestic production bases as well, we will engage in measures for active capital investment towardboth internal and external growth via initiatives such as facilities to improve product competitiveness and increasing
capacity and strength of production facilities that aim to increase efficiency with technological innovation.
5) Increasing corporate value through strengthening personnel and governance
At issue are securing and developing personnel to support business activities in development, production, and sales
departments in the face of strengthening response to a rapidly changing domestic agriculture market and expanding
overseas business.
To work toward strengthening personnel development, the Company maintains the ISEKI Basic Engineering Design
Training Center, which fosters the development of young designers, the ISEKI Technical Training Center, whichdevelops personnel that can be active in both domestic and overseas production, and the ISEKI Global Training Center,
which develops both domestic and overseas personnel in sales and services.
Additionally, as an element of corporate social responsibility, we are working to strengthen internal controls andcompliance. We will not only comply with related laws, regulations, and statutes, but aim for responsible action by all
executives and employees with high ethics and social awareness while thoroughly implementing public awarenessactivities and internal education.

4. Basic Policy for Choosing Accounting Standards
Considering comparability of periods between consolidated financial statements and comparability between
companies, the ISEKI Group will continue to use the accounting standards generally accepted in Japan for preparing
consolidated financial statements for the time being.
Regarding the international accounting standards, we will adopt them in proper timing and manner, considering
relevant circumstances in and outside Japan.

-8-5. Consolidated Financial Statements and Principal Notes(1) Consolidated Balance Sheets(Millions of yen)
As of December 31, 2016 As of December 31, 2017
AssetsCurrent assets
Cash and deposits

13,936

7,981

Notes and accounts receivable - trade

24,911

25,113Merchandise and finished goods

42,03145,410Work in process

6,073

6,728

Raw materials and supplies

1,211

1,267

Deferred tax assets

1,402

1,233

Other

3,393

4,076

(26)

(60)

92,93491,751

Buildings and structures, net

23,572

24,343

Machinery, equipment and vehicles, net

10,278

9,898

Tools, furniture and fixtures, net

3,122

2,634

Land

50,61950,773

Leased assets, net

7,554

6,398

Construction in progress

1,293

1,514

25

30

96,466

95,592

1,062

1,025

6,319

7,146

49

42

1,125

557

674

773

Other

4,984

4,616

Allowance for doubtful accounts

(259)

(158)

Total investments and other assets

12,893

12,978110,422

109,596203,356

201,348

Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment

Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Net defined benefit asset

Total non-current assets
Total assets-9-

(Millions of yen)
As of December 31, 2016 As of December 31, 2017
Liabilities
Current liabilities
Notes and accounts payable - trade30,286

26,532

Electronically recorded obligations - operating
Short-term loans payable

12,135
24,69514,14027,216

Current portion of long-term loans payable

8,897

8,004

Lease obligations

2,552

2,194

Accrued consumption taxes

550

989

Income taxes payable

703

894

Deferred tax liabilities
Accrued expenses

7
4,520

1
4,611

Provision for bonuses

407

446

Provision for loss on construction contracts

―
20

391

Provision for loss on disaster
Other

4,668

―
4,220

Total current liabilities

89,44789,644Non-current liabilities
Long-term loans payable

27,78824,354

5,529

4,566

Lease obligations
Deferred tax liabilities

779

476

Deferred tax liabilities for land revaluation

5,790

5,780

Provision for directors’ retirement benefits
Net defined benefit liability

107
4,491

122
3,312

Asset retirement obligations

314

315

Other

1,956

1,859

Total non-current liabilities

46,75740,787

136,205

130,432

Capital stock

23,344

23,344

Capital surplus

13,454

13,453Retained earnings

14,034

16,519Total liabilities
Net assets
Shareholders’ equity

Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

(990)

(986)

49,842

52,330

1,227

1,818

6

(16)

12,686

12,670Foreign currency translation adjustment

798

1,115

Remeasurements of defined benefit plans

870

1,244

15,588

16,833

Non-controlling interests

91
1,629

80
1,671

Total net assets

67,151

70,916203,356

201,348

Revaluation reserve for land

Total accumulated other comprehensive income
Subscription rights to shares

Total liabilities and net assets- 10 -

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income(Millions of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Subsidy income
Subsidies received
Rent income
Technical support fee
Gain on sales of scraps
Other
Total non-operating income
Non-operating expenses
Interest expenses
Sales discounts
Foreign exchange losses
Share of loss of entities accounted for using equity method
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Subsidy income
Total extraordinary income
Extraordinary losses
Loss on sales and retirement of non-current assets
Impairment loss
Loss on valuation of investment securities
Penalty
Loss on disaster
Surcharges
Total extraordinary losses
Income before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent- 11 -

Fiscal year ended
December 31, 2016

Fiscal year ended
December 31, 2017

153,097108,244
44,85242,383
2,469

158,382
112,175
46,20642,252
3,953

134
204
―
27
103
173
285
39
688
1,658

139
164
132
356
83
170
―
90
479
1,617

599
91
172
1,075
552
2,492
1,635

593
93
―
219
414
1,320
4,250

43
1,113
―
1,156

36
0
457
493

200
106
―
―
1,068
315
1,690
1,101
1,049
(810)
238
862
4
858

189
258
30
427
―
―
905
3,838
1,194
(200)
993
2,844
37
2,807

Consolidated Statements of Comprehensive Income(Millions of yen)
Fiscal year ended
December 31, 2016

Fiscal year ended
December 31, 2017

862

2,844

(1,278)

601

5

(22)

Revaluation reserve for land284―

Foreign currency translation adjustment

(265)

209

Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted
for using equity method

152

374

(364)

106

(1,465)

1,269

(602)

4,113

(608)

4,068

5

45

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

Total other comprehensive income
Comprehensive income(Comprehensive income attributable to)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests- 12 -

(3) Consolidated Statements of Changes in Equity
Fiscal year ended December 31, 2016 (January 1, 2016－December 31, 2016)(Millions of yen)
Shareholders’ equity
Capital stock
Balance at beginning of period

23,344

CapitalsurplusRetainedearnings

13,454

13,514

Treasuryshares

(988)

Total
shareholders’equity49,325

Changes of items during period
Dividends of surplus

(338)

(338)

Profit attributable toowners of parent

858

858
(2)

Purchase of treasury shares(2)―

Disposal of treasury shares
Reversal of revaluation
reserve for land
Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of period

―
―
―

―

519

(2)

516

23,344

13,454

14,034(990)

49,842

Accumulated other comprehensive income
Valuationdifference on Deferred gains Revaluation
available
or losses on reserve forfor-salehedgeslandsecurities
Balance at beginning of period

2,509

1

12,401

Foreigncurrencytranslation
adjustment

1,425

Total
Subscription
Remeasureaccumulated
rights toments ofothersharesdefinedcomprehenbenefit plans
sive income

717

17,05591

Noncontrollinginterests

Total net
assets

1,626

68,099Changes of items during period
Dividends of surplus

―

(338)

Profit attributable toowners of parent―

858

Purchase of treasury shares―(2)

Disposal of treasury shares

―

―

―

―

Reversal of revaluation
reserve for land
Net changes of items otherthan shareholders’ equity
Total changes of items during
period(1,282)

5

284

(627)

152

(1,466)―2(1,464)(1,282)

5

284

(627)

152

(1,466)

―

2

(947)

Balance at end of period

1,227

6

12,686798

870

15,588

91

1,629

67,151- 13 -

Fiscal year ended December 31, 2017 (January 1, 2017－December 31, 2017)(Millions of yen)
Shareholders’ equity
Capital stock
Balance at beginning of period

23,344

CapitalsurplusRetainedearnings

13,454

14,034

Total
shareholders’equityTreasuryshares(990)

49,842

Changes of items during period
Dividends of surplus

(338)

(338)

Profit attributable toowners of parent

2,807

2,807

Purchase of treasury shares(0)

Disposal of treasury shares
Reversal of revaluation
reserve for land
Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of period

(7)

(7)

11

11

15

15
―

―

(0)

2,484

4

2,488

23,344

13,453

16,519(986)

52,330

Accumulated other comprehensive income
Valuationdifference on Deferred gains Revaluation
or losses on reserve foravailable
for-salehedgeslandsecurities
Balance at beginning of period

1,227

6

Foreigncurrencytranslation
adjustment

12,686

798

Total
Subscription
Remeasureaccumulated
rights toments ofothersharesdefinedcomprehenbenefit plans
sive income

870

15,58891

Noncontrollinginterests

Total net
assets

1,629

67,151

Changes of items during period
Dividends of surplus

―

(338)

Profit attributable toowners of parent

―

2,807

Purchase of treasury shares―(7)

Disposal of treasury shares

―

11

―

15

Reversal of revaluation
reserve for land
Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of period

590

(22)

(15)

317

374

1,244

(10)

42

1,276

590

(22)

(15)

317

374

1,244

(10)

42

3,764

1,818

(16)

12,670

1,115

1,244

16,83380

1,671

70,916- 14 -

(4) Consolidated Statements of Cash Flows(Millions of yen)
Fiscal year ended
December 31, 2016

Fiscal year ended
December 31, 2017

Income before income taxes

1,101

3,838

Depreciation

7,189

7,005

Impairment loss

106

258

Loss on disaster

1,068

―

Subsidy income

(27)

(813)

Increase (decrease) in net defined benefit liability(300)(1,195)(1,113)(0)Interest and dividend income

(339)

(303)

Interest expenses

599

593

Foreign exchange losses (gains)
Loss (gain) on sales of property, plant and equipment andintangible assets
Surcharges

(298)

95

156

152

315

―

―

427

(153)

(142)

Decrease (increase) in inventories(1,810)(3,805)

Increase (decrease) in notes and accounts payable - trade

2,625(1,900)

Other, net

784

860

Subtotal

9,905

5,071

Interest and dividend income received

342

312

Interest expenses paid

(603)

(593)

Proceeds from subsidy income

27

440

Payments for loss on disaster

(519)

(545)

Surcharges paid

(270)

(315)

Income taxes paid

(598)

(1,061)

Net cash provided by (used in) operating activities

8,283

3,308

(8,561)(5,646)

373

390

(53)

(0)

1,467

0

Decrease (increase) in loans receivable

913

11

Decrease (increase) in time deposits

(0)

(158)

Other, net

123

130

(5,736)(5,273)

Cash flows from operating activities

Loss (gain) on sales of investment securities

Penalty
Decrease (increase) in notes and accounts receivable - trade

Cash flows from investing activities
Purchase of property, plant and equipment and intangible
assetsProceeds from sales of property, plant and equipment andintangible assets
Purchase of investment securities
Proceeds from sales of investment securities

Net cash provided by (used in) investing activities- 15 -

(Millions of yen)
Fiscal year ended
December 31, 2016

Fiscal year ended
December 31, 2017

374

2,582

Proceeds from long-term loans payable

14,780

5,058

Repayments of long-term loans payable(10,438)(9,384)

Proceeds from sales and leasebacks

1,024

420

Repayments of lease obligations(2,766)(2,618)

(2)

(7)

(336)

(341)

Dividends paid to non-controlling interests

(3)

(3)

Other, net

(9)

0

2,621

(4,294)(20)

146

Net increase (decrease) in cash and cash equivalents

5,147(6,113)

Cash and cash equivalents at beginning of period

8,761

13,909Cash and cash equivalents at end of period

13,9097,795

Cash flows from financing activities
Net increase (decrease) in short-term loans payable

Purchase of treasury shares
Cash dividends paid

Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents- 16 -

(5) Notes to the Consolidated Financial Statements(Notes to Going Concern Assumption)
Not applicable(Important Basic Items for Preparing Consolidated Financial Statements)
1. Scope of consolidation
Number of consolidated subsidiaries: 26 (including Iseki-Matsuyama Mfg. Co., Ltd., Iseki-Kumamoto Mfg. Co.,
Ltd., Iseki-Hokkaido Co., Ltd. and Iseki-Tohoku Co., Ltd.)
2. Scope of the equity method companies
Number of affiliates: 2(Dongfeng Iseki Agricultural Machinery Co., Ltd. and ISEKI SALES(THAILAND) CO., LTD.)
3. Consolidated accounting period
Of the consolidated subsidiaries, 23 companies (including Iseki-Matsuyama Mfg. Co., Ltd.) use a balance sheet dateof December 31. ISEKI France S.A.S and one other company use a balance sheet date of September 30.
With regard to the preparation of the consolidated financial statements, for ISEKI France S.A.S and one othercompany adopting September 30 as their annual closing date, necessary adjustments at consolidation are made forany significant transactions that occurred between the consolidated balance sheet date and these dates.
4. Accounting policies(1) Valuation basis and methods of important assets(a) Securities
Held-to-maturity debt securities: recorded at amortized cost
Available-for-sale securities- Securities with fair market value: recorded at market value, based on the fair market price at the closing
date of the consolidated reporting period.
(Any estimate variance is credited or debited to shareholders’ equity)- Securities without fair market value: recorded at cost, based on the moving-average method(b) Inventories: mainly recorded at cost using the gross-average method(Balance sheet amounts for items with reduced profitability have beenadjusted downward accordingly)(c) Derivatives: recorded at the market value(2) Depreciation methods for material depreciable assets(a) Property, plant and equipment (excluding leased assets)
The straight-line method is used.
(b) Intangible assets (excluding leased assets)
The straight-line method is used. However, software for internal use is depreciated using the straight-line
method over an expected useful life within the company of five years.
(c) Leased assets
Leased assets derived from finance leases other than those leases which transfer the ownership of the assets
to the lessee are amortized using the straight-line method with no residual value over the lease period, which
is deemed the useful life.
Among finance leases that do not involve transfer of ownership to lessee, leases that began before April 1,2008 are accounted for as normal operating leases.
(3) Allowances and reserves(a) Allowance for doubtful accounts
A likely unrecoverable amount is calculated by applying the historical bad debt ratio to general receivables.
For specific receivables, such as doubtful debt receivables, allowances are made by individually evaluating
the likelihood of them being collected.
(b) Provision for bonuses
To provide for future bonus payments to employees, a provision for bonuses is booked based on
estimated future payments.
(c) Provision for directors’ retirement benefits
Some of the consolidated subsidiaries record the directors’ retirement benefits to provide for payment of such
retirement benefits in an amount as required by companies’ internal regulations.
(d) Provision for loss on disasterTo provide for expenditures required for the restoration of assets that were affected by the 2016 Kumamoto
Earthquake, an estimated amount as of December 31, 2017, is booked.
(e) Provision for loss on construction contracts
To provide for future losses on construction contracts, an amount of estimated losses is booked for
uncompleted construction as of December 31, 2017 for which the occurrence of loss is projected, and forwhich the amount is able to be reasonably estimated.
- 17 -

(4) Accounting treatment related to retirement benefits(a) Method of attributing the projected benefits to periods of service
In calculating retirement benefits, the method of attributing the projected benefits to periods until the end of
the current fiscal year is based on the benefit formula basis attribution.
(b) Method of amortization of actuarial gains or losses and prior service cost
Actuarial gains or losses are amortized as incurred over the periods, which are the average remaining service
years of employees, by the straight-line method, starting from the following fiscal year. Prior service cost isamortized as incurred over the periods, which are the average remaining service years of employees, by thestraight-line method.
(c) Adoption of the simplified method at small companies
For calculating net defined benefit liability and retirement benefit expenses, some consolidated subsidiaries
apply the simplified method which assumes the company’s benefit obligation to be equal to the benefits
payable assuming the voluntary retirement of all employees takes place at fiscal year-end.
(5) Accounting standards for revenues and expenses(a) Accounting standards for the value and cost of completed construction contracts
The percentage-of-completion method is applied for construction in progress up to the end of the consolidated
accounting period, for which the outcome can be estimated reliably (the proportional cost method is applied
for estimating the percentage of progress of the construction). The completed-contract method is applied forother constructions.
(6) Foreign currency translations
Monetary assets and liabilities in foreign currencies are translated into yen at the spot exchange rate at thebalance sheet date. Gains or losses resulting from the translation are credited or charged to income.
Balance sheet accounts (except for shareholders’ equity) and revenue and expense accounts of the overseas
subsidiary are translated into yen at the spot exchange rate at the balance sheet dates. Differences arising fromthe translation are presented as “Foreign currency translation adjustment” and “Non-controlling interests”
in shareholders’ equity and financial statements.
(7) Hedge accounting(a) Hedge accounting
Recorded in accordance with deferred hedge accounting. Such receivables and payables, which aredenominated in foreign currencies and for which forward exchange contracts have been entered, are recorded
using the forward exchange rates.
(b) Hedging instruments and hedged items(i) Hedging instruments
Forward exchange contracts(ii) Hedged items
Receivables and payables denominated in foreign currencies, forecasted transactions denominated inforeign currencies(c) Hedging policies
The financial risks associated with fluctuations in foreign currencies exchange rates and interest rates arehedged.
Risks associated with fluctuations in foreign currencies exchange rates concerning transactions in foreign
currencies, which occur when import and export operations are performed, are hedged by keeping a balance
between export exchanges and import exchanges. With regard to risks associated with fluctuations in interest
rates on loans payable, risks concerning variable interest rate loans payable are hedged, mainly with a viewto equalizing interest burdens.
(8) Amortization method and amortization period of goodwill
The goodwill account is amortized by the straight-line method over a period of no longer than 20 years.
(9) Cash and cash equivalents in the Consolidated Statements of Cash Flows
Cash and cash equivalents consist of cash on hand, demand deposits, and short-term investments which arereadily convertible to cash subject to an insignificant risk of any change in their value and which were purchasedwith an original maturity of three months or less.
(10) Other notes pertaining to the preparation of the Consolidated Financial Statements(a) Accounting treatment of consumption tax
Consumption tax and local consumption taxes are accounted for using a tax-exclusive method.

- 18 -

(Consolidated Balance Sheets)

1.
2.
3.
4.
5.

6.

Fiscal year ended
December 31, 2016
105,732(Millions of yen)
Fiscal year ended
December 31, 2017
108,117

Fiscal year ended
December 31, 2016
276

(Millions of yen)
Fiscal year ended
December 31, 2017
336

1,710
1,030
91

1,247
1,566
30

162

47

Accumulated depreciation of property, plant andequipment
Guaranteed liabilities
6,636
9,075
Notes receivable less discount-trade1
3
Endorsed notes receivable - trade
94
88
Revaluation of land for business use
The Company has revalued its land for business use pursuant to the Partial Revision to the Act on Land
Revaluation (Act No. 19, announced on March 31, 2001). The equivalent tax related to the change inthe said revaluation has been recorded in the liabilities (non-current liabilities) as “Deferred tax liabilities
for land revaluation” and the deducted amount has been recorded under net assets as “Revaluation
reserve for land.”• Revaluation method:
The revaluation of land has been determined using a reasonableadjustment to the assessed value of the non-current assets forproperty tax as stipulated in Paragraph 3, Article 2 of the
Enforcement Order to the Act on Land Revaluation (Government
Ordinance No. 119, announced on March 31, 1998)
March 31, 2001
• Revaluation date:• Variance between the market
value of the revalued land at the¥(12,493) million, ¥(12,754) million
end of the period and therevalued book value:
Notes to mature on the last day of the fiscal year, etc.
Notes to mature on the last day of the fiscal year, etc. are settled as of the clearing date. Since the last
day of the fiscal year ended December 31, 2017 fell on a holiday of financial institutions, the balance atthe end of period includes the following notes to mature on the last day of the fiscal year, etc.

Notes receivable - trade
Notes payable - trade
Electronically recorded obligations - operating
Other (notes payable - facilities)
Other (electronically recorded obligations - nonoperating)- 19 -

(Consolidated Statements of Income)1.
2.

(Millions of yen)
Fiscal year ended
Fiscal year ended
December 31, 2016 December 31, 2017
2,981
3,363

Research and development expenses
Impairment loss

Fiscal year ended December 31, 2016 (January 1, 2016–December 31, 2016)
The Company recorded impairment losses on the following assets.

Usage

Type
Buildings,
structures,
land

Idle
property

Buildings,
structures
Land

Location(Millions of yen)
Impairment loss

Kanazawa, Ishikawa Pref.

48

Niigata, Niigata Pref.

32

Kumenan-cho, Kume-gun, Okayama Pref.

7

Kawaminami-cho, Koyu-gun, Miyazaki Pref.

7

Minamiaizu-machi, Minamiaizu-gun, Fukushima Pref.

3

Yonago, Tottori Pref.

2

Taragi-machi, Kuma-gun, Kumamoto Pref.

2

Mimata-cho, Kitamorokata-gun, Miyazaki Pref.

2

Total

106

(Reason to record impairment loss)
The Company recorded an impairment loss on the above assets because idle properties are not being used andhave no prospect for use in the future. In addition, the market price for land is declining.
(Measurement of recoverable amount)
Recoverable amount is measured using net selling price. The price is determined by applying reasonableadjustments to the assessed value of non-current assets for property tax.
Fiscal year ended December 31, 2017 (January 1, 2017–December 31, 2017)
The Company recorded impairment losses on the following assets.
Usage

Idle
property

Lease
assetsType

Buildings,
structures,
land

Land

AssetsBuildings,
scheduled structures,for sale land

Location(Millions of yen)
Impairment loss

Sanmu, Chiba Pref.

47

Kuwana, Mie Pref.

41

Yachimata, Chiba Pref.

29

Miyakonojo, Miyazaki Pref.

21

Ibaraki-machi, Higashiibaraki-gun, Ibaraki Pref.

8

Teshio-cho, Teshio-gun, Hokkaido

6Inabe, Mie Pref.

6

Okoppe-cho, Monbetsu-gun, Hokkaido

5Tsugaru, Aomori Pref.

13

Matsuyama, Ehime Pref.

78

Total
258
(Reason to record impairment loss)
Impairment losses were recognized for idle property because there is no prospect for use in the future and themarket price of the land is declining; for leased assets, because the market price of the land is declining; and for
assets scheduled for sale because the scheduled sale price is low compared to the book values.
(Measurement of recoverable amount)
Recoverable amounts use the net realizable values and are evaluated based on prices and scheduled sale prices
after reasonable adjustments are made to the valuation amounts of property taxes.
- 20 -

(Consolidated Statements of Changes in Equity)
Fiscal year ended December 31, 2016 (January 1, 2016–December 31, 2016)
1. Matters concerning the class and total number of shares issued and class and number of treasury shares
Number of shares(as of January 1, 2016)

Increase in number ofshares during period

Decrease in number ofshares during period

Number of shares (as ofDecember 31, 2016)

229,849,936――

229,849,936

3,964,166

11,957―

3,976,123(Number of sharesissued)Common stock(Treasury shares)
Common stock

The increase in the number of shares (common stock) by 11,957 shares during the period was due to purchase ofshares below stock trading unit.
2. Dividends(1) Cash dividends paid
Resolution

Class of shares

Total amount ofdividend paid
(millions of yen)

Ordinary General
Meeting of
Shareholders on
March 25, 2016

Common stock

338

Dividend per share(yen)

Record date

1.50 December 31, 2015

Effective date

March 28, 2016

(2) Of the dividends for which the record date belongs to the fiscal year ended December 31, 2016, those for which
the effective date of the dividends will be in the fiscal year ending December 31, 2017.
Resolution

Class of shares

Source offunds fordividends

Total amount ofdividend paid
(millions of yen)

Dividend pershare (yen)Record date

Effective dateOrdinary General
Meeting of
Shareholders on
March 30, 2017

Common stock

Retainedearnings

338

1.50

December 31,
2016

March 31, 2017- 21 -

Fiscal year ended December 31, 2017 (January 1, 2017–December 31, 2017)
1. Matters concerning the class and total number of shares issued and class and number of treasury shares
Number of shares
Increase in number of(as of January 1, 2017) shares during period

Decrease in number ofshares during period

229,849,936―

206,864,943

22,984,993

3,976,123

5,878

3,586,055

395,946(Number ofshares issued)
Common stock(Treasury shares)
Common stock

Number of shares (as ofDecember 31, 2017)

Based on a resolution of the 93rd Ordinary General Meeting of Shareholders held on March 30, 2017, the Company
has consolidated shares of its common stock (one-for-ten share consolidation), effective July l, 2017. As a result, thenumber of shares issued decreased by 206,864,943 shares to 22,984,993 shares.
The increase in the number of treasury shares by 5,878 shares was due to purchase of shares below stock trading
unit. The decrease in the number of treasury shares was due to a 48,000 share decrease due to the exercise of stockacquisition rights and a 3,538,055 share decrease due to a one-for-ten share consolidation conducted with an effective
date of July 1, 2017 that was based on a resolution of the 93rd Ordinary General Meeting of Shareholders held on
March 30, 2017.
2. Dividends(1) Cash dividends paid
Resolution

Class of shares

Total amount ofdividend paid
(millions of yen)

Ordinary General
Meeting of
Shareholders on
March 30, 2017

Common stock

338

Dividend per share(yen)

Record date

1.50 December 31, 2016

Effective date

March 31, 2017(2) Of the dividends for which the record date belongs to the fiscal year ended December 31, 2017, those for which
the effective date of the dividends will be in the fiscal year ending December 31, 2018.
Resolution

Class of shares

Source offunds fordividends

Total amount ofdividend paid
(millions of yen)

Dividend pershare (yen)Record date

Effective dateOrdinary General
Meeting of
Shareholders on
March 29, 2018

Common stock

Retainedearnings

677

30.00

December 31,
2017

March 30, 2018- 22 -

(Consolidated Statements of Cash Flows)
Reconciliation between cash and cash equivalents at the end of period and the amount reported in the Consolidated
Balance Sheet.
(Millions of yen)
Fiscal year ended
Fiscal year ended
December 31, 2016
December 31, 2017
Cash and deposits
13,936
7,981
Time deposits with terms of more than 3 months
(27)
(186)
Total cash and cash equivalents
13,909
7,795(Segment Information)
Since the Group had the only “agriculture-related business” segment, the segment information is omitted.
(Per Share Information)(Yen)
Fiscal year ended
December 31, 2016
Net assets per share

Fiscal year ended
December 31, 2017

2,896.78

3,061.84

Basic earnings per share

38.01

124.29Diluted earnings per share

37.94

124.08Notes:
1. The Company has consolidated shares of its common stock (one-for-ten share consolidation), effective July l,2017. The amounts stated for basic earnings per share and diluted earnings per share are calculated based on theassumption that shares of the common stock were consolidated at the beginning of the previous fiscal year.
2. The basis for calculation of basic earnings per share and diluted earnings per share are as follows.
(Millions of yen)
Fiscal year ended
December 31, 2016

Fiscal year ended
December 31, 2017

Basic earnings per share
Profit attributable to owners of parent reported in theConsolidated Statements of Income

858

2,807

Profit not attributable to common shareholders

―

―

858

2,807

22,588,076

22,588,520――

Increase in common shares (shares)

39,91737,417[Portion of subscription rights to shares] (shares)[39,917][37,417]――

Profit attributable to owners of parent attributed tocommon shares
Average number of common shares during period(shares)
Diluted earnings per share
Adjustment of profit attributable to owners of parent
reported in the Consolidated Statements of Income

Dilutive securities that were not included in thecomputation of diluted earnings per share because of
their anti-dilutive effect(Significant Subsequent Events)
Not applicable- 23 -

6. Non-consolidated Financial Statements and Principal Notes(1) Non-consolidated Balance Sheets(Millions of yen)
As of December 31, 2016 As of December 31, 2017
AssetsCurrent assets
Cash and deposits
Notes receivable - trade
Accounts receivable - trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Advance payments - trade
Prepaid expenses
Deferred tax assets
Short-term loans receivable
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings, net
Structures, net
Machinery and equipment, net
Vehicles, net
Tools, furniture and fixtures, net
Land
Leased assets, net
Construction in progress
Total property, plant and equipment
Intangible assets
Leasehold right
SoftwareLeased assets
Other
Total intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Investments in capital
Investments in capital of subsidiaries and associates
Long-term loans receivable
Prepaid pension cost
Long-term prepaid expenses
Other
Allowance for doubtful accounts
Allowance for investment loss
Total investments and other assets
Total non-current assets
Total assets- 24 -

8,992
2,701
27,49013,411
28
335
214
271
594
11,6342,598(4)68,2674,447
2,881
24,97017,675
317
343
190
269
498
11,7533,049(4)66,392

6,699
643
1,989
1
1,150
25,399327
886
37,098

7,891
623
1,774
4
831
25,503268
87
36,985

85
220
167
42
515

85
226
140
51
503

6,013
19,037
92
1,941
2,941
―
534
381
(22)
(825)
30,09567,708135,976

6,811
19,037
97
1,941
2,698
420
421
365
(22)
(825)
30,94468,433
134,826

(Millions of yen)
As of December 31, 2016 As of December 31, 2017
Liabilities
Current liabilities
Notes payable - trade
Electronically recorded obligations - operating
Accounts payable - trade
Short-term loans payable
Current portion of long-term loans payable
Lease obligations
Account payable - otherAccrued expenses
Income taxes payable
Advances received
Deposits received
Provision for bonuses
Provision for loss on construction contracts
Provision for loss on disaster
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Provision for retirement benefits
Asset retirement obligations
Long-term deposits received
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Total capital surplus
Retained earnings
Other retained earnings
Retained earnings brought forward
Total retained earnings
Treasury shares
Total shareholders’ equity
Valuations and translation adjustments
Valuation difference on available-for-sale securities
Revaluation reserve for land
Total valuation and translation adjustments
Subscription rights to shares
Total net assets
Total liabilities and net assets- 25 -

7,488
5,784
20,232
6,000
4,862
178
656
2,277
206
150
227
82
―
15
551
48,713

4,964
9,910
18,234
7,400
4,094
180
434
2,484
187
240
236
88
391
―
326
49,174

21,257
353
524
5,790
2,341
112
596
147
31,124
79,837

17,613
261
330
5,780
2,504
112
576
85
27,26476,43823,344

23,344

11,5542,450
14,004

11,5542,449
14,004

5,789
5,789
(990)
42,147

7,479
7,479
(986)
43,842

1,212
12,686
13,89891
56,138135,976

1,794
12,67014,46480
58,387
134,826

(2) Non-consolidated Statements of Income(Millions of yen)
Fiscal year ended
December 31, 2016

Fiscal year ended
December 31, 2017

Net sales

95,873

92,913

Cost of sales

83,04080,795Gross profit

12,833

12,117

Selling, general and administrative expenses

11,911

11,616921

501

Interest income

312

314

Dividend income

1,116

748

Rent income

1,301

1,235

Subsidy income

27

356

Other

758

474

3,515

3,130

Interest expenses

227

197

Sales discounts

44

45

Rent expenses

1,064

1,036

354

226

1,690

1,505

2,746

2,126

Gain on sales of non-current assets

24

25

Gain on sales of investment securities

1,113

―

―

254

1,137

279

Loss on sales and retirement of non-current assets

57

70

Impairment loss―

78

Loss on valuation of investment securities―

30

Penalty―

427

Loss on disaster

659―

Surcharges

315―

Total extraordinary losses

1,032

607

Income before income taxes

2,851

1,799

Income taxes - current

223

145

Income taxes - deferred

(23)

(359)

Total income taxes

200

(214)

2,651

2,013

Operating income
Non-operating income

Total non-operating income
Non-operating expenses

Other
Total non-operating expenses
Ordinary income
Extraordinary income

Subsidy income
Total extraordinary income
Extraordinary losses

Profit- 26 -

(3) Non-consolidated Statements of Changes in Equity
Fiscal year ended December 31, 2016 (January 1, 2016－December 31, 2016)(Millions of yen)
Shareholders’ equity
Capital surplus

Balance at beginning of
periodChanges of items during
periodCapital stock

Legal capitalsurplus

Other capitalsurplus23,344

11,5542,450

Retained earnings
Other retained
Total
earnings
Total capital
Total retained Treasury shares shareholders’
Retained
equitysurplusearnings
earnings
brought forward

14,004

3,476

3,476

Dividends of surplus

―

(338)

(338)

(338)

Profit

―

2,651

2,651

2,651

Purchase of treasury
shares
Disposal of treasury
shares
Reversal of revaluation
reserve for land
Net changes of items
other than shareholders’equityTotal changes of items
during period
Balance at end of period

―

―

―

―

―

―

―

―

―

―

(2)

―

―

―

2,312

2,312

(2)

2,309

23,344

11,5542,450

14,004

5,789

5,789

(990)

42,1472,497

12,401

14,89991

54,829Dividends of surplus

―

(338)

Profit

―

2,651

―

(2)

―

―

―

―

Balance at end of period(2)―

Valuation
Total valuation Subscription Total net assets
difference on
Revaluationand translation rights to sharesavailable-for- reserve for land
adjustments
sale securities

Purchase of treasury
shares
Disposal of treasury
shares
Reversal of revaluation
reserve for land
Net changes of items
other than shareholders’equityTotal changes of items
during period

39,838―Valuation and translation adjustments

Balance at beginning of
periodChanges of items during
period(988)(1,284)284(1,000)―(1,000)(1,284)284(1,000)

―

1,309

1,212

12,686

13,89891

56,138- 27 -

Fiscal year ended December 31, 2017 (January 1, 2017－December 31, 2017)(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained
Total
earnings
Total retained Treasury shares shareholders’
Retained
equityearnings
earnings
brought forward

Capital stock

Legal capitalsurplus

Other capitalsurplus

Total capitalsurplus23,344

11,5542,450

14,004

5,789

5,789

Dividends of surplus

―

(338)

(338)

(338)

Profit

―

2,013

2,013

2,013

Balance at beginning of
periodChanges of items during
periodPurchase of treasury
shares
Disposal of treasury
shares
Reversal of revaluation
reserve for land
Net changes of items
other than shareholders’equityTotal changes of items
during period
Balance at end of period

(0)

―

(7)

(7)

(0)

―

11

11

―

15

―

15

―

―

―

(0)

(0)

1,690

1,690

4

1,694

23,344

11,5542,449

14,004

7,479

7,479

(986)

43,842

1,212

12,686

13,89891

56,138Dividends of surplus

―

(338)

Profit

―

2,013

―

(7)

―

11

―

15

Balance at end of period

15―

Valuation and translation adjustments

Purchase of treasury
shares
Disposal of treasury
shares
Reversal of revaluation
reserve for land
Net changes of items
other than shareholders’equityTotal changes of items
during period

42,147―

Valuation
Total valuation Subscription Total net assets
difference on
Revaluationand translation rights to sharesavailable-for- reserve for land
adjustments
sale securities

Balance at beginning of
periodChanges of items during
period

(990)

581

(15)

565

(10)

554

581

(15)

565

(10)

2,249

1,794

12,67014,46480

58,387- 28 -

(4) Notes to Non-consolidated Financial Statements(Notes to Going Concern Assumption)
Not applicable.

7. Others(1) Production, Orders and Sales

1) Production results per product-type(Millions of yen)
Breakdown

Fiscal year ended
Fiscal year ended
December 31, 2016 December 31, 2017

ChangeCultivating & mowing
machinery

59,35657,313(2,042)

Planting machinery

12,034

15,066

3,032

22,16424,065

1,901

1,992

2,327

334

5,460

6,930

1,469

101,009105,704

4,695

Harvesting and processing
machinery
Spare parts and farming
implements
Other agriculture related
business
Total
Note: Figures are shown in terms of sales values.

2) Orders
We operate a system whereby production is based mostly on projected demand. We hardly ever produce
on order.
3) Sales results per product-type(a) Total(Millions of yen)

Breakdown

Fiscal year ended
December 31, 2016

Fiscal year ended
December 31, 2017

AmountAmount

Ratio

Ratio

ChangeAmount%Cultivating & mowing
machinery

52,092%34.0

53,403

%
33.7

1,310

%
2.5

Planting machinery

12,406

8.1

12,660

8.0

254

2.1

21,282

13.9

22,101

13.9

819

3.9

40,645

26.6

42,387

26.8

1,741

4.3

26,67017.4

27,828

17.6

1,157

4.3

153,097100

158,382

100

5,284

3.5

Harvesting and processing
machinery
Spare parts, farming
implements, and repair fees
Other agriculture related
business
Total- 29 -

(b) Domestic(Millions of yen)

Breakdown

Fiscal year ended
December 31, 2016

Fiscal year ended
December 31, 2017

AmountAmountRatio

ChangeRatio

Amount%Cultivating & mowing
machinery

27,580%22.8

28,200

%
22.9

620

%
2.3

Planting machinery

9,124

7.5

8,486

6.9

(638)

(7.0)

20,891

17.3

20,398

16.6

(493)

(2.4)

38,55831.8

39,766

32.3

1,207

3.1

24,887

20.6

26,284

21.3

1,397

5.6

121,041100

123,136

100

2,094

1.7

Harvesting and processing
machinery
Spare parts, farming
implements, and repair fees
Other agriculture related
business
Total(c) Overseas(Millions of yen)

Breakdown

Fiscal year ended
December 31, 2016

Fiscal year ended
December 31, 2017

AmountAmountRatio

ChangeRatio

Amount%Cultivating & mowing
machinery

24,512%76.5

25,202

%
71.5

690

%
2.8

Planting machinery

3,281

10.2

4,174

11.9

892

27.2

Harvesting and processing
machinery
Spare parts and farming
implements
Other agriculture related
business

390

1.2

1,703

4.8

1,312

336.1

2,087

6.5

2,621

7.4

533

25.6

1,783

5.6

1,543

4.4

(239)

(13.4)

Total

32,055

3,189

10.0

100

- 30 -

35,245100