Annual Report 2015
April 1, 2014-March 31, 2015

Delivering Increased Cu
through Our Global Exp
Torishima is a leading pump manufacturer, founded in 1919 in Osaka, Japan.
Our primary objective is to contribute to society as a quality provider ofpumping equipment and services. We continue to strive to be the market
leader in our field, and our ongoing investment in research and development
highlights our commitment to provide the best technology for our customers.
Our mission is always to listen to our customers, understand their needs, andmeet their expectations. Torishima is also firmly committed to contributing tosociety in total harmony with environmental demands.

(Billions of yen)

50

Business and Products

40

30

20
Cooling water pump for one of the largest
ammonia plants in the world

Water transmission pumping station

High-Tech Pumps

Projects

Manufacture and supply ofhigh-efficiency,
high-value-added pumps

EPC (engineering, procurement, and construction) for
turnkey pumping stations

OPower generation plants
ODesalination plants
OWaterworks
OPetrochemical plants

OWater transmission
OIrrigation
ODrainage
OBalance of plant

Renewable Energy &Environment

Service Solutions

OWind power generation
OMini- and Micro-hydro generation

Reverse-rotated pump water turbine

Total plant maintenancesolutions for pumps androtating machinery

Overhaul of a multi-stage ring section pump

10
Founding
0

1919

Japan’s
economic
historystomer Satisfaction
ansionSales since 1919
1979 F irst overseas representative office established in

1960s
Began to installpumps in overseas
seawater desalination and thermal
power plants— Growth Trajectory —1994 T orishima (Hong Kong) Ltd.

Singapore2003 T orishima began full-scale entry
into overseas businessestablished1980 L isted shares on the Osaka Securities Exchange
1981 Listed shares on the Tokyo Stock Exchange

1997 T orishima headquarters obtained

1984 P .T. Torishima Guna Indonesia established as a joint

1999 T orishima headquarters obtained

ISO 9001 certification2007 S ales rise quickly to ¥45 billion
2014 9 6th anniversary of Torishima’s
founding, Approach to 100th
anniversary

ISO 14001 certification

venture(Note: Figures for FY2001 and subsequent years are on a consolidated basis.)

1955

1960

1965

1970

1975

1980

1985

1990

Historical peakin Japan’s
stock prices
Rapid growth

Stable growth

Bubbleeconomy

1995

2000

Collapse of
the bubble
economy2005

Reduction in
public works
spending2010

2014 (FY)Collapse of
LehmanBrothers

The so-called “Lost 20 years”
Deflation

Abenomics

Contents 
Financial Highlights..............................................................2
A Message from the Management.......................................3
Driving Sustainable Growth .................................................6
Special Feature: The Strength behind Our Success............8
Research and Development...............................................11
Corporate Governance and Internal Controls....................12

Directors and Executive Officers........................................14
Corporate Social Responsibility (CSR)...............................15
Financial Section................................................................18
Financial Review.............................................................18
Financial Statements......................................................20
Corporate Data...................................................................41

Cautionary Statement with Regard to Forward-Looking Statements
Certain of the statements made in this annual report are forward-looking statements, which involve certain risks and uncertainties that could cause actual results to differ materiallyfrom those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which are valid only as of the date thereof. Torishima undertakes noobligation to republish revised forward-looking statements to reflect events or circumstances after the date thereof or to reflect the occurrence of unanticipated events.
Torishima Pump Mfg. Co., Ltd.

1

Financial Highlights (Years ended March 31)
Thousands of
U.S. dollars
except per shareamounts

Millions of yen
except per share amounts

2015

2014

2013

2012

2011

2015

Orders Received.........................................

¥   42,878¥  52,847¥  40,975¥  39,579¥  32,974$357,317

Net Sales....................................................

46,502

45,98545,97546,45349,880387,517

Orders Backlog..........................................

38,582

42,20535,34240,342

47,216

321,517

Operating Income (Loss).............................

400

(945)

517

2,286

3,127

3,333

Net Income.................................................

405

442

944

1,498

1,892

3,375

Per Share of Common Stock (in yen and U.S. dollars):
Net Income—Basic.................................... ¥   14.61¥   15.74¥   33.64¥   53.38¥   67.45$   0.12

Net Income—Fully Diluted..........................

14.55

15.69

33.54

53.27

67.35

0.12

Net Assets Per Share.................................

1,329.06

1,209.10

1,172.56

1,112.29

1,097.71

11.07

Cash Dividends Applicable to Period..........

18.00

18.00

18.00

18.00

18.00

0.15

Total Assets................................................

¥  71,987¥  68,063¥  68,233¥  60,813¥  61,179$599,892

Net Assets..................................................

36,532

34,52433,602

31,77530,969304,434

Operating Cash Flow..................................

¥  (1,195)¥   (4,086)¥   3,513¥   2,662¥    736$ (9,958)

Investing Cash Flow....................................

(345)(4,498)(3,966)(1,270)(75)(2,875)

4.8%
51.3%

6.1%
50.3%

Cash Flows:%

Ratios:Return on Equity (ROE)...............................
Equity Ratio................................................

1.2%
50.0%

1.3%
49.9%

2.9%
48.2%

Note: U.S. dollar amounts in this annual report are translated from yen, for convenience only, at the rate of ¥120=U.S.$1, the exchange rate prevailing at March 31, 2015.

Orders Received (Billions of yen)

Net Sales (Billions of yen)

60

Operating Income (Loss) (Billions of yen)
3.5

50

3.0

50

40

40

2.5
2.0

30

1.5

30

0.5
0

10

10
0

1.0

20

20

-0.5
2011

2012

2013

2014

2015

0

2011

2012

2013

2014

2015

-1.0

2011

2012

Net Income (Billions of yen)

Net Assets Per Share (Yen)

Equity Ratio (%)

2.0

1,500

60

2013

2014

2015

2013

2014

2015

1,200

1.5

900
50

1.0
600
0.5

0

2

300

2011

2012

Annual Report 2015

2013

2014

2015

0

2011

2012

2013

2014

2015

40

2011

2012

A Message from the Management

Kotaro Harada
President & CEO
Mr. Harada joined Torishima in 1997 andthe Board of Directors in 1999 andbecame president in 2006. Previously,
he worked at Daiwa Bank, Limited (currently, Resona Bank, Ltd.) and obtained
an MBA degree from Bath University
School of Business in the U.K.

Our Priorities as a Proactive Global Company
Torishima formed its Torishima Global Team (TGT) back in 2003. Until then, while we were winningorders mainly within Japan, our TGT began the robust development of overseas sales programs.
Originally, about 10% of our net sales were to overseas customers, but five years later, in 2008, we had
expanded overseas sales to account for some 50% of consolidated net sales. Moreover, since 2003, withthe aim of global expansion, we have been proactively implementing capital investments and expanding
the number of our overseas branches and subsidiaries, as well as our pump manufacturing and service
facilities.
Net Sales(Billions of yen,%=Overseas sales ratio)

50
45
40

Overseas sales
Domestic sales

35
30

57%
11%

12%

(Mar.) 2003

2004

25

30%

30%

2005

2006

58%

54%

2009

2010

63%

44%

63%

61%

56%

59%

2012

2013

2014

2015

20
15
10
5
0

2007

2008

2011

Torishima Pump Mfg. Co., Ltd.

3

In order to increase our share of the global market, we determined it was necessary to objectively
review and strengthen our operational processes. Over a period of two years, we worked intensively toestablish an efficient and consistent business flow for receiving orders, design, procurement, production,
installation, and after-sales services. We named this system our Torishima Innovation System (TIS), sparing no effort in standardizing the design of our pumps and improving operational processes. As this standardization process nears completion, we shifted our emphasis in the fiscal year ended March 31, 2015 torobust sales and marketing initiatives. With our new operational systems firmly in place, we have beenable to accelerate our processes and further increase the reliability of our manufacturing operations. We
are now fully prepared to respond effectively to the needs of customers the world over.

Torishima’s Role in Energy Conservation
Global warming caused by rising levels of CO2 emissions; the rapid increase in demand for electric powerfrom emerging economies; the accidents at the Fukushima Daiichi Nuclear Power Station and their implications for Japan’s energy policies: It is clear from the above that energy conservation must remain at the
top of our agenda.
Pumps are undeniably essential for providing electricity and water, but the amount of energy they require
to operate makes them the biggest consumers of electric power by some margin. Japan’s annual electric
power output is around one trillion kWh; pumps utilize about 30% of this.
In this context, Torishima’s mission is to develop pumps that are highly efficient, but consume less energy,
and furthermore develop best-of-breed energy-efficiency proposals, not only for pumps but also forenergy-recovery devices. This commitment to energy conservation will put Torishima ahead of the packin both energy-efficiency solutions and technological capability.
Our energy-efficiency initiatives, “Go Green with Pumps”, received Japan’s Minister of Economy, Tradeand Industry (METI) Prize, in fiscal 2014*. This METI prize is the highest-level prizein the Energy Conservation Grand Prize, and Torishima is the first company inJapan’s pump industry to receive this honor, which both recognizes and rewards
our “Go Green with Pumps” initiatives. These initiatives have been raising aware-

EnergyConservation
Grand Prizeness of the ways in which energy consumption can be reduced in pumping operations. Especially with standard pumps, little attention has been paid to energy
efficiency. Torishima, as a leading pump manufacturer, has developed higher-efficiency standard pumps—“the Eco-Pumps”, drawing on the technical knowledge
and experience gathered in manufacturing large-sized high-efficiency pumps for awide range of applications including power plants and seawater desalination
plants.
In fiscal 2014, we began to manufacture these Eco-Pumps in Indonesia, and,beginning in fiscal 2015, we will intensify our promotion overseas, focusing on
Southeast Asia. Going forward, we will reaffirm our commitment to offering
products and services of ever higher quality and energy efficiency.
* For further background on Torishima’s “Go Green with Pumps” initiatives that won the METI Energy
Conservation Grand Prize, please refer to TOPIC on page 17 of this report.

Began production of the Eco-Pumps at P.T.
Torishima Guna Indonesia

4

Annual Report 2015

A Message from the Management

Delivered pumps tomore than 100 countries
 ations where Torishima productsN
have been delivered
Torishima overseas offices

Impact of the Market Environment
and Steady Demand
The decline in crude oil prices in fiscal 2014 dealt a serious blow to the Middle East and other oilproducing areas. Although there are concerns about the impact on Torishima in the short term, demand
for the construction of thermal power plants and desalination plants, and for related services, has heldfirm. The long-term prospects are also promising. On the other hand, the decline in oil prices has had
a positive effect on oil-importing countries. In such emerging markets as India, Southeast Asia, andelsewhere, demand for construction of thermal power plants, water supply and sewage disposal
facilities, and other infrastructure is continuing.
In Japan, orders related to thermal power plants and infrastructure renewal remain steady. Following
the Fukushima Daiichi Nuclear Power Station accidents, nuclear power plants have been shut down,
and restarting them is proving difficult. As a result, thermal power plants are operating at full capacity.
Fortunately, the Japanese economy has escaped from its more than 15-year period of deflationary trends,
and there are positive signs on the horizon, including active capital spending. Other good news is thepriority being placed on investment in Japan’s aging infrastructure, the downward adjustment in the value ofthe yen, lower oil prices, the recovery of Japan’s stock market prices to their highest level in more than
15 years, and the decision to hold the Olympic Games in Tokyo in 2020.
Since its founding in 1919, Torishima has delivered pumps to more than 100 countries and territories. By
developing our business activities globally, we are working to minimize the effects of regional and geopolitical risks, and, with our alliance partners, we are taking up the challenge of global market development.
Torishima’s aim going forward is to structure an even stabler and more sustainable business portfolio.
The year 2015 marks the 96th anniversary of the founding of Torishima. With our centenary fast
approaching, Torishima team members are pulling together to enable Torishima at 100 to well and truly
become a global company.
I would like to take this opportunity to thank our shareholders for their continuing trust and support.
I would also like to thank our customers and business partners for their close, committed, and mutually
beneficial association. All of us at Torishima respectfully ask for your continuing cooperation in the years
to come.

Kotaro Harada
President and Chief Executive Officer

Torishima Pump Mfg. Co., Ltd.

5

Driving Sustainable Growth
A decade-long campaign of sustained and determined com-

Management’s Top Priority

mitment to overseas business development was marked in

Manufacturing Process Innovation2013. Revolutionizing our manufacturing processes was thenext step and a chief management goal. Integrated operation
processes from initial orders to design, procurement, production, installation, and after-sales service were established. This

Torishima
Innovation System(TIS)

Product
Standardization

was achieved by undertaking a zero-base review to revitalize
core systems, leading to the introduction of the Torishima
Innovation System (TIS) as well as top-to-bottom standardization of pump design and operations.

Fiscal 2014
Disciplined Order-Taking Strategy

A sudden and sharp rise in orders caused our standardiza-

Underpins Manufacturing Process Innovation

tion project to be delayed, in response to which we instituted astrategic and more-disciplined approach in order acceptance.
In practice, this means analyzing volume, quality, and profitability of each and every order. As a consequence, eventhough orders in fiscal 2014 declined from the previous fiscal
year, we came within sight of our objective of standardizing
our integrated manufacturing processes.
In fiscal 2015, we expect a recovery in both the volume andFiscal 2015 and after
Total Benefits of Manufacturing Process Innovation

Fully Integrating Operational Processes:
From receiving orders, design, procurement,
production, installation, and service

profitability of orders received, thanks to proactive sales andstrategic order taking focusing on profitability, as well as thefavorable impact of the depreciation of the yen.

Targets of the Three-Year Business Plan
(Billions of yen)

(%)

60

6

50

5

40

4

30

3

20

2

10

1

0

(Mar.)

2015

2016

2017

Results

Plans

Plans

Orders received
Net sales
Operating profit ratio

6

Annual Report 20150

Benefits of Standardization
Shorter delivery times
Smoother project management
Higher competitiveness in procurement
Quicker quotations
Avoidance of overruns
Reduction in production problems
Reduction in potential warranty claims

Boosting Manufacturing Efficiency and Profitability

Energy-Efficiency
Initiative by Rotating
Machinery

Growing Our Services
BusinessEnergy-Efficiency Initiative by Rotating Machinery

Boiler feed pumps for power
plant in Argentina

Developing proposals for energy efficiency and energy recovery in rotatingmachinery, such as high-efficiency pumps and turbochargers, leads toexpansion in orders.
Drawing on our capabilities in high-efficiency, high-pressure pumps technology, engineering, and technology development, we can offer our customers world-class products and services. Due to increases in
population, urbanization, and other factors, the demand for water-related and energy-related plants is on
an upward trend worldwide. We at Torishima will play a key role in this market.
In the United States, we are expecting increases in demand for products of partner company Fluid
Equipment Development Company, LLC (FEDCO), which manufactures high-pressure pumps and energy-

FEDCO’s turbocharger forseawater desalination plantin Saudi Arabia

recovery devices. Expansion of Torishima’s service business in the U.S. market is another key goal. To thisend, in fiscal 2014, we doubled the capacity of FEDCO’s plants. In fiscal 2015, we are anticipating further
growth in demand as we work to realize the synergies between our energy-efficiency technology forpumps, in which we take considerable pride, and FEDCO’s energy-recovery technology for turbochargers.
Also in fiscal 2014, production commenced in Indonesia of compact high-technology Eco-Pumps. In
Tianjin, China, we can now also handle tasks ranging from procurement to manufacturing of high-pressure pumps for power-generation plants. We will continue to strengthen Torishima’s competitiveness in

FEDCO’s new plant doubles
its production capacity.

this segment, too.

Growing Our Services Business
Stepping up our marketing drive with a focus on areas around our service
centers for both existing and potential customers.
Torishima Service Solutions
FZCO in Dubai, the U.A.E.

Thanks to our progress toward the globalization and localization of our business functions, our orders formaintenance services are expanding steadily. Today, Torishima has service centers around the world, andis able to provide maintenance services from locations close to its customers.
In the Middle East, where we have delivered several thousand pumps for seawater desalination andthermal power plants, we successfully operate an after-sales service center in Dubai, the United ArabEmirates. This service location is driving the growth of Torishima’s regional services division, and ourTorishima’s Original, HighValue-Added Services: By
improving performance andlengthening the useful livesof pumps, Torishima canincrease the efficiency ofboth individual pumps andplants as a whole.
An example of REDU:
Upgrade of Impeller

strategy at this important center continues to be expanding orders for new pumps and maintenanceservices in the Middle East.
In addition, in India, we have supplied more than 300 Torishima boiler circulation pumps for thermal
power plants, and about 1,000 of our boiler feed and other types of pumps are in operation. We completed a service location in India in October 2013, which went into operation in 2014. We are confident ofgrowth in orders at this service location.
Torishima’s services exceed simple maintenance; by making pumps more efficient, regardless of manufacturer, we can help customers cut electric-power consumption and save energy. We are also, where circumstances allow, expanding our services for rotating machinery other than pumps, including turbines,
and other equipment. Looking ahead, we will draw on capabilities in pump engineering to strengthen our

BeforeAfterservices business around the world.

Torishima Pump Mfg. Co., Ltd.

7

Special Feature: The Strength behind Our Success

What makes a successful manufacturing business? This is a question all business people ask.
Good management definitely is critical to any business being a success; however, the other key
components are the quality and strength of the products. There is no doubt the products within
the Torishima Pump range provide a solid base on which to build our business. Torishima has
supplied its reliable, high-efficiency pumping equipment into a variety of domestic and overseas markets for a wide range of applications. We have a proven track record in the desalination,water, and power industries. Our diverse product ranges are suitable for both high flow rates
and high pressure.

Diverse High-Quality Product Range
Torishima continues to develop and improve its product range to ensure that it offers the best pumping
solutions to EPC contractors and end users. As mentioned above, we can supply a wide range of equipment to meet varying technologies and industry demands. For example, within the desalination industry, no matter what process a plant is using, be it multi-stage flash (MSF) or multi-effect distillation(MED) or even reverse osmosis (RO), Torishima can design and supply suitable pumping equipment.
This equipment can be as diverse as 5MW brine recirculation pumps pumping 20,000 m3/hr., large seawater intake pumps, and high-pressure RO pumps. Torishima can also supply energy-recovery equipment ­(manufactured by our partner FEDCO). Similarly, in the case of electric power plants, Torishima
offers pumps which can be installed in thermal, combined cycle, and geothermal plants.
In this Special Feature of this year’s annual report, we present a simplified explanation of various
applications of our high-efficiency pumps.

Highly Competitive Pumps for Seawater Desalination Plants
The two principal methods of removing salt from seawater to make fresh water are the evaporation
method and the reverse osmosis (RO) membrane process. Torishima has a long record of supplying
pumps for both these types of seawater desalination plants. The RO process has become the mainstream method in recent years. As an example, let us look at the roles of pumps in the RO process.

RO System with Turbocharger
Dual Media
Filter

Cartridge
FilterFiltered
Water Tank

Sea

8

Seawater Intake Pump

Filtered Water Pump

High-Pressure Seawater Feed Pump

This pump draws water from thesea. Typically, large vertical pumps
are used to perform this function.
Torishima manufactures pumps
with a maximum capacity to supply
80,000 tons of seawater per hour.

The seawater is first treated withcleaning chemicals. After this, afiltered water pump sprays theseawater onto a filter to remove
larger particles.

The seawater is forced through the special RO
membranes by this high-pressure pump toremove the salt. These membranes have a vast
number of microscopic openings too small to
be seen with the naked eye. As a result, water
will only pass through the membrane under highpressure.

Annual Report 2015

Highly Competitive Pumps for Power Plants
There are a number of widely used methods of power ­generation worldwide. The choice of method
will depend on location, availability of fuel, and environmental controls. These can range from thelarge thermal fossil fuel plants which provide the largest number of megawatts globally to gas-fired
combined cycle plants to geothermal plants and hydroplants which are located in suitable sites. In
recent years, we have also seen shale gas used as fuel. One of the key issues to the sustainability ofsome of these power sources in the long term will be whether CO2 emissions can be reduced, which
could well have an impact on the design and construction of future plants.

Steam Power Generation System
Boiler Circulation Pump
This pump is essential to keep water circulating through the boiler and prevent the overheating of the boiler chamber. Manufacturing
these pumps requires an extremely high level of specialized technology, and only a handful of companies manufacture such products.

Steam
Steam
TurbineGenerator

BoilerSea
Condenser
Circulating Water Pump

Feed Water
Tank

Boiler Feed Pump
This is a high-pressure horizontal multi-stage
pump that is the heart of the power plant producing high-pressure boiler feed water into
the main boiler, which, in turn, creates highpressure steam to feed into the main power
plant turbines creating power.

Condensate Pump
In order to convert the exhausted
steam into condensate, a condenser
is required. This condenser operates
in a vacuum and therefore requires a
specialized pump to extract thiscondensate and start the feed-water
cycle all over again. Torishima supplies such a specialized ‘canister’type pump.

1st Pass
Membrane

High-Pressure
Brine
Low-Pressure Brine

Turbocharger
A turbocharger recovers the excess energy thatis generated in the RO desalination process andmakes it available for reuse. This device isextremely useful in reducing the cost of the process over the life cycle of the equipment.

2nd Pass
Membrane

Large volumes of water are necessary to provide cooling water tothe condensers. The sources ofsuch water can be from the sea
or a river depending on plant
location.

PotableWater Tank

Second Pass Feed Pump
After the salt has been removed by
the membranes, the water is forced
through another filter to improve its
quality even further.

Potable Water Pump
The water produced by the desalination process then must be delivered
to people’s homes. The potable water pumps distribute the fresh water
to the local area and through intermediate pumping stations to locations
100 kilometers or more from the desalination plant.
Torishima Pump Mfg. Co., Ltd.

9

Newly Developed Technology for Flood Control
Torishima’s products and systems are not limited to those for thermal power plants and seawater desalination plants. Torishima is also active in other fields and, never being complacent with the status quo,
is working to continue to develop better products suited to changing times and needs.
In this section, we would like to introduce our new technology for protecting pump equipment fromthe increasingly f­ requent occurrence of localized torrential downpours and floods caused by unusual
weather conditions accompanying climate change. When designing a new technology, Torishima hastaken an innovative approach and looked beyond conventional thinking.

Pump with Vortex-Prevention Technology
In recent years, many facilities have expanded their
pumping capacity by switching to high-volume pumps
to cope with the large volumes of rainwater that may
flow into water drainage areas in short periods oftime.
However, if pumping volume is increased withoutchanges in the shape and dimensions of existing
pump sumps, the water flow within the sump will
increase causing harmful vortices. This may havean adverse impact on pump operations, such asincreased noise and vibration as well as a reductionin the volume of water discharged by the pumps. One
countermeasure is the installation of anti-vortex
baffles in the pump sump. However, installing suchbaffles is expensive and time consuming.
To solve these problems, Torishima has developed
a pump with a double-suction bellmouth and vortexpreventing ring. This new technology removes theneed to install anti-vortex baffles in the pump sump,
reducing civil engineering costs and shortening theconstruction time schedule.

Conventional measure to prevent vortices

Controlling vortices at the pump stage
Vortex-preventing ring

(Prevents surface vortices)

Installing anti-vortex baffles requires increased construction time and expenditure.

10

Annual Report 2015

Double-suction bellmouth(Prevents submerged vortices)

Restraining vortices at the pump stage makes anti-vortex baffles unnecessary.
It lowers construction costs and the time needed for construction.

Research and Development
Torishima is conducting research on and developing high-efficiency, high-speed pumps
that conserve energy and resources under the slogan “Strive to be the world’s best.”
The world’s population is growing rapidly, and the demand forof contributing to the Earth’s environment by developing theenergy and water resources is expected to continue to expand

best high-efficiency, high-speed pumps in the world.

in the years ahead. Moreover, we are faced with global warm-

In fiscal 2014, under the product concept of achieving ever-ing. Meanwhile, operations at all 50 of Japan’s nuclear power

higher speed, more-compact design, and greater efficiency as

plants have been suspended. Policies to deal with power short-well as reliability, Torishima has been developing ever-moreages call for the construction of a substantial number of ther-efficient products, including boiler feed pumps for frequent

mal power plants in the next few years, but, at present, power

load changes in combined cycle power plants, new 11kV-size

supply capacity is not keeping up with growth in demand. For

motors for more-compact and lighter boiler circulation pumps,

Torishima, which provides a large number of pumps for use in

and advanced double-suction centrifugal pumps. In addition,

thermal power plants, this represents a major business oppor-

to increase the efficiency of existing medium-pressure, multi-

tunity, but we also realize that thermal power plants emit large

stage pumps—a product that Torishima has already supplied

volumes of CO2 that causes deterioration in the Earth’s envi-

to more than 12,000 installations—it is putting hydraulicronment. Therefore, we cannot be wholeheartedly pleased

analysis to good use in the development of hydrocomponents.

with these developments. On the other hand, there are highIn fiscal 2015, Torishima is proceeding with the development

expectations about the beneficial impact of energy conserva-of advanced boiler water feed pumps for the thermal powertion, and the need for energy-saving and energy-efficient

market, which is expected to show growth. Torishima is also­technologies is increasing rapidly.

working on the development of advanced double-suction cen-

To respond to these needs of society, Torishima has

trifugal pumps, which are in strong demand for water transmis-­designated its social mission as increasing the efficiency andsion in the seawater desalination market. We are committed toreducing the energy consumption of pumps used in power

continuing R&D activities to develop products that will satisfy

plants, seawater desalination plants, and other applications

our customers’ needs for energy conservation and highthat account for a large percentage of energy consumption.

­reliability.

Therefore, in its R&D activities, Torishima has set an objective

Upgrade Pump Efficiency and Reliability

Demonstration of advanced boiler feed pump to customers

Torishima Pump Mfg. Co., Ltd.

11

Corporate Governance and Internal Controls
In response to the social demands for corporations to be responsible, Torishima emphasizes abalance between the three values of society, economy, and the environment. We are continuing to make progress toward strengthening our corporate governance and risk management
systems as well as our internal control systems as required under the Japanese version of the
Sarbanes Oxley Act (J-SOX).

Corporate Governance Structure
Under Japan’s Amended Companies Act, which became effec-

Committee, and the Internal Audit Department exchange

tive on May 1, 2015, Torishima made the transition from a corpo-

opinions and provide information to conduct auditing activi-

rate governance structure with an Audit & Supervisory Board toties efficiently and effectively. The Internal Audit Department,a Company with an Audit and Supervisory Committee. Under

which is independent from the conduct of business operations,this structure, directors (including outside directors) who arefrom its fair perspective, conducts internal auditing activities

members of the Audit Committee are given voting rights in thewith an eye to the efficiency, effectiveness, and legality of busi-

Board of Directors. This strengthens the supervisory functions

ness operations. In response to the globalization of Torishima’sof the Board of Directors and enhances Torishima’s corporate

activities, these auditing activities are also conducted ingovernance structure. The Accounting Auditor, the Audit

Torishima Group companies overseas.

Corporate Governance Structure
General Shareholders’ Meeting

Company Units

Appointment/Dismissal

Appointment/Dismissal

Opinion Statements

Board of Directors
Supervision

Directors

Auditing

Selection/Supervision

Appointment/Dismissal(On nomination of directors
and compensation)

Directors who are members of
the Audit and Supervisory Committee

Audit and Supervisory
Committee

ReportingAccounting Auditor

Collaborating
Accounting

Agenda Items/Reports

Collaborating

Organization in Charge of Conducting BusinessPresident
Prior discussions

Instruction

Instruction

Executive Officers Committee

Instruction

Reports

Compliance Committee

Executive Officers

Risk Management Committee

Business Divisions

Guidance/Advice

Safety and Health Committee

Reports/Consultation

Administrative Divisions

Quality Committee
Environment Committee

Group Companies

Annual Report 2015

Internal Audit Department
Auditing/Instruction

Auditing/Instruction

12

Reports

Reports/Consultation

Auditing/InstructionCompliance Structure
In accordance with its business creed, which is expressed as follows “The Torishima Group has consistently accorded highest
priority to winning and maintaining the customer’s solid trust,”
Torishima believes that customer trust is something that is built

Duties of the Compliance Committee
1) Develop legal and ethical compliance systems
in Torishima and its subsidiaries that together
make up the Torishima Groupup over time, and once a customer’s trust is lost, it takes years to
restore. Our commitment to maintaining the customer’s utmost
trust is reflected in our commitment to compliance. Therefore,
Torishima’s basic principles are to observe legal regulations,behave fairly and impartially, forbid behavior that violates social
ethics, maintain discipline and order, forbid discrimination, andtake remedial action when violations occur. Torishima provides
employee training and education to make sure all personnel
understand these principles. It also provides advisory functions
to offer information on corporate ethics and has formed a2) P rovide guidance and advice to operating
departments regarding the results of internal
audits of corporate ethics3) P rovide guidance and advice regarding
educational planning and activities related tocorporate ethics4) Provide guidance and advice to the internal
consulting service regarding the “whistle
blower” function

Compliance Committee.

A Message from Outside Director
At Torishima, the outside directors interview the executive

ing corporate value. Outside directors must be aware of­officers individually, and, in addition to holding question-

Torishima’s business creed, which is “The Torishima Group

and-answer sessions regarding the conduct of business activ-

has consistently accorded highest priority to winning andities, we exchange opinions proactively. President Harada

maintaining the customer’s solid trust.” With this awareness,has a strong concern for corporate governance, and my view

our role should be to help Torishima pursue management

is that Torishima’s governance is functioning effectively, but,within an effective governance structure.

to strengthen governance even more, Torishima made the

Akira Tsuda

transition to a Company with an Audit and Supervisory
Committee.
I am putting my 20 years of experience gained from beinga director of a securities company, where I took care of morethan 2,000 listed companies and contributed to arranging
corporate acquisitions, to best use as an outside director.
Through its core business of manufacturing high-efficiency
pumps, Torishima contributes to the foundations of society,and, thereby, has won the trust of its customers and society.

Mr. Tsuda was appointed an outside
auditor of Torishima in June 2009
and then became director in June
2015. His other management positions include serving as outside
director of Takara Printing Co., Ltd.,
Hitachi Capital Corporation, as wellas adviser to Gexeed Co., Ltd., andHikari Tsushin, Inc.

This trust helps to motivate employees and results in increas-

Torishima Pump Mfg. Co., Ltd.

13

Directors and Executive Officers (As of July 1, 2015)
Directors

Executive Officers

Kotaro HaradaCEO

President and Representative Director

Kotaro Harada

Hiromichi Fujikawa

President

Vice President and Representative Director

Tetsuya Kujima
Director

Nobuyuki Yoshikawa
Director

Kinichi Yoshida
Director

Members of Audit and Supervisory
Committee
Yutaka Fukuda

Executive Officers

Haruhisa Sumi
General Manager of Tokyo Branch

Senior Managing Executive Officers

Tetsuya Kujima

Satoshi Tomizawa

General Manager of Corporate Planning Office
General Manager of Procurement Division
Responsible for Administration Division

Deputy General Manager of Overseas Marketing& Sales Division (TGT)TGT Regional Director
General Manager of TGT Sales Department

Gerald Ashe

Mike Choi

General Manager of Overseas Marketing &Sales Division (TGT)*

Regional Director of TGT Hong Kong & Vietnam
Managing Director of Torishima Hong Kong Ltd.

Managing Executive Officers

Takashi Kondo

General Manager of Manufacturing Division

General Manager of Middle East Project Branch
General Manager of TGT Project Department

Yutaka Tsuaki

Masahisa Ikuta

Nobuyuki Yoshikawa

Director

Responsible for Global Service

General Manager of Al Ain Project Office

Akira Tsuda

Yoshiaki Inuyama

Masahiko Ishida

Outside Director

Shiro Hakukawa
Outside Director

General Manager of Plant Engineering Division
General Manager of Public-Sector Sales
Department

General Manager of Service Division
General Manager of Service Department

Koichiro Hamu

General Manager of Accounting Department

General Manager of Engineering Division

Akihiro Suezawa

Koichi Otao

General Manager of Personnel Department

Masahiro Yamazaki
Chairman of Torishima Pumps India Pvt. Ltd.

Alister Flett
Managing Director of Torishima Service Solutions
FZCO
General Manager of Middle East Branch* Torishima Global Team (TGT)

Corporate Organization(As of July 1, 2015)

Corporate Planning Office
Torishima Innovation System Project OfficeInformation System Department
Internal Audit Department
Quality Management Department
President

Domestic Marketing & Sales Division
Overseas Marketing & Sales Division (TGT)Engineering Division
Plant Engineering Division
Manufacturing Division
Procurement Division
Service Division
Administration Division

14

Annual Report 2015

Corporate Social Responsibility (CSR)
Torishima is working to fulfill its social responsibilities in three areas:

Technology that
Conserves theEnvironment

Environmental
Management

 ontributing toCSociety

Torishima takes account of the

At Torishima, we are implementing

The issues of preserving the Earth’s

effects that its business activities

initiatives that make contributions

environment and reducing energy

have on the natural environment.

not only to the development of theconsumption are becoming increas-

At every stage, from product devel-

Company but also to society as a

ingly serious. As a responsible glob-

opment to final disposal, we arewhole. These include thoroughgoing

al corporation, Torishima provides

working to reduce the impact of ouremphasis on compliance; maintain-

products and services that contrib-

business activities, including reduc-ing close communication with ourute to reducing the burden on thetion of CO2 emissions and the reuse

stakeholders; contributing to safety,

natural environment.

of resources.

disaster prevention, and global environmental preservation; respecting
human rights; and improving ourworkplace environments.

Environmental Policy• Philosophy
At Torishima, we believe that protecting the Earth’s natural environment is a vital task that must be addressed by all mankind. In a3) Provision of technologies targeting reuse of waste materials, asa way of contributing to enhanced recycling of natural resources
4) Proactive promotion of reductions in environmental loads andquest to create a global environment of natural beauty conducive toprevention of environmental contamination based on environ-pleasurable living, for the sake of the planet and all its inhabitants,

mental assessment results, coupled with ongoing enhancement

through the provision of pumps and other environmentally friendlyof environmental protection activities

products, we supply environmentally sustainable systems engineered to enrich living environments everywhere. Meanwhile,through production activities in harmony with environmental
demands and the provision of products having minimal environmental loads, we strive to contribute to the formation of a developmentally sustainable society on a global scale, to ensure thecontinuation of a healthy global environment well into the future.

5) Compliance with environmental laws, regulations, and otherappropriate demands, and formulation of and compliance within-house rules6) In the performance of production activities, pursuit of energy
and natural resource savings, recycling, waste reduction, andproper management of chemical substances, as a way oflightening environmental burdens• Activities
To carry out the foregoing philosophy into practice, we undertakethe following activities:1) Development and supply of highly efficient, environmentallyfriendly pumps, as a way of contributing to energy savings2) Development and supply of wind power and hydropower
generation systems that use natural energy sources, as a

October 24, 2011
Kotaro Harada, President & CEO,Torishima Pump Mfg. Co., Ltd.

way of contributing to reduction of CO2 emissions

Torishima Pump Mfg. Co., Ltd.

15

Initiatives to Lower the Environmental Loads
Torishima implemented the following initiatives in fiscal 2014 to reduce its environmental loads.
Conserving Energy

Torishima is taking steps to use electricity more efficiently by shortening the running time of pumps and optimizing the use of compressors. In addition, we are reducing the amount of electric power used in our factories by
gradually replacing conventional lights with LED lamps.

Reducing and Reusing
Industrial Waste

Torishima has achieved a ratio of resource reusage of 97.9% through such activities as recycling and reusing
molding sand and unused models. We have also separated and recycled metal pump parts from pumps underrepair.

Reducing Chemical
Usage

Torishima has reduced the use of solvent-based cleaners by using the dry ice blast*1 and wet blast*2 cleaning
methods. We raise the awareness of cleaner use by providing monthly feedback on usage in the assembly
processes.

*1 D ry ice blast: A cleaning process that involves spraying tiny particles of dry ice under pressure at high speed*2 Wet blast: A cleaning method for removing rust and certain other substances using a polisher (zirconium) and water

Torishima promotes production activities that have high regard for the environment and safety as well as quality, and has obtained thefollowing certifications.
ISO14001 (Environment Management System)
and ISO9001 (Quality Management System)

These certifications have been obtained by the Head Office as a matter of course,
and the number of offices, branches, subsidiaries, etc., obtaining certification isincreasing. Additionally, these certifications were received by Torishima Pump (Tianjin)
Co., Ltd. in July 2013.

Occupational Safety andHygiene Management System (OSHMS)

This certification is mainly related to risk assessment in manufacturing departments
and involves assessing the frequency, possibility, and seriousness of dangerous andharmful risks, and then establishing measures for risk reduction.

Promoting Diversity
Torishima is actively hiring non-Japanese personnel in its operations in Japan and is working to develop their global instincts.
In addition, Torishima provides support to these employees tohelp them become accustomed to the diet and living customs
in Japan. Also, for female employees with children, Torishima
makes arrangements for day care and other services. The percentage of female employees returning to work after childbirthis 100%. Since 2010, Torishima has hired handicapped workers

cations and doctorates. Additionally, for younger employees,
Torishima conducts on-site training, and trainees in this program went to India in 2014. This program enables employees
to identify customer needs and the “seeds” of new business
opportunities, while, at the same time, motivating them morestrongly by being able to see Torishima products at work inenvironments outside Japan.

from support centers for the handicapped, and 14 of these indi-

Acting as a Member of Society

viduals are currently active in the Company. As these com-

Torishima implements measures to strengthen not only its inter-ments suggest, a diversity of employees are working as a teamnal systems but also its relationships with stakeholders. Forwithin Torishima. In addition,

example, we have provided financial support for scholarship

Torishima is training its humanfunds as well as research in hydraulics since 1981. We also pro-resources and working to draw

vide a career awareness program for primary school children,

fully on their capabilities withtaught by young Torishima employees. This program is not only

the goal of improving organiza-

intended to help children but also give employees good oppor-

tional performance.

tunities for personal growth bySpecial diet for Muslims

Employee Education
Torishima provides for many kinds of education. Educational
programs in progress include training for improving skill levels, on-the-job training for new employees, correspondence
16

courses, and support for obtaining national technical qualifi-

Annual Report 2015teaching children and thereby
gaining a better understandingof Torishima’s mission in society and their own personalsense of mission.

A career awareness program

Corporate Social Responsibility (CSR)

TOPIC

Torishima Wins
Energy Conservation
Grand Prize in Japan
In January 2015, Torishima was awarded Japan’s Minister of Economy, Trade and Industry(METI) Prize under the Business Model Category in the Energy Conservation Grand Prize.
This prize was received in recognition of Torishima’s “Go Green with Pumps” energyefficiency initiatives.
Under these initiatives, Torishima applied its long experience and knowledge of hightechnology developed for large high-efficiency pumps to smaller standard pumps. These
units are marketed under the name “The Eco-Pump.” The development of more-efficient
standard pumps has much potential for reducing energy consumption of pumps as well as
CO2 emissions in a wide range of applications, such as industrial plants, office buildings,
commercial facilities, hospitals, hotels, and elsewhere. In fact, according to a report provid-

Electricity consumption in
Japan by pumps is estimated at 28%. We can reduce
the power consumption by
improving pump efficiency,
which will lead to a substantial reduction in CO2 emissions. This means we cancontribute to CO2 reduction
by promoting “Go Green
with Pumps” to save theplanet!

ed by Japan’s Institute of Applied Energy, an estimated 28% of electricity consumed inJapan is accounted for by pumps. Thus, Torishima’s “Go Green with Pumps” initiatives havePower Consumption in Japanconsiderable potential for “greening” the natural environment.

(1 trillion kW)

Along with providing the Eco-Pumps, we also promote the efficient use of energy by con-

28

% of
electricity
consumedby pumps!

sulting with our customers regarding the most-suitable pumps for their facilities. We also
show the power consumption and CO2 emissions before and after installing the Eco-Pumps.
In our experience, the average reduction in annual power consumption in an industrial
plant is 15.1%, but we have achieved 30% to 40% reductions in some cases. In addition, we

Otherspublish the Eco-Pump News and hold “Go Green with Pumps” seminars in which we demonstrate how to reduce energy with pumps. We call these activities the “Go Green with
Pumps” initiatives.

Little attention is given toenergy efficiency instandard pumps.

Reference: A report provided by theInstitute of Applied Energy, Japan

Spreading the message that pumps canachieve greater energy efficiency

Eco-Pump News

Pumps are simple
pieces of equipment, and, if they
can lift water andwork properly,
everything is fine.

The end result of Torishima’s“Go Green with Pumps”­initiatives is….

“Go Green with Pumps”
seminarIn our Eco-Proposals, wesuggest the pumps that are
most suitable for each installation and give specific dataon the estimated reductionin power consumption andCO2 emissions.

Outstanding Energy-Saving
Results

See more about our energy-efficiency initiatives “Go Green with Pumps” at www.torishima.co.jp/en/award.html

Torishima Pump Mfg. Co., Ltd.

17

Financial Section
Financial Review
Consolidated Operating Results
Analysis of Consolidated Operating Results
Results of Operations
During the fiscal year ended March 31, 2015 (Fiscal 2014),
trends in the world economy were as follows. In the UnitedStates, although there were concerns regarding the effects ofthe possible ending of the monetary easing policy and tightening of credit, personal consumption, production, and private
capital investment remained firm. Also, in Europe, while concerns continued regarding the debt problems of certain countries and geopolitical risks, movements toward moderate
economic recovery emerged. In China and the emerging countries, although economic growth slowed temporarily compared with previous levels, moderate growth continued. For
the world economy as a whole, economic recovery was moderate amid the decline in crude oil prices, the Ukraine issue, andthe uncertainty about future trends.
In the Japanese economy, the Nikkei Stock Price average
recovered the 19,000 level for the first time in 15 years, and,
although growth in income in nominal terms was positive, inreal terms, income declined because of the increase in prices
following the rise in the consumption tax. As a result of thisand other factors, consumer spending decreased. This was
accompanied by a weakening of export growth, owing to theslower rates of expansion in the emerging countries, and theemergence of a substantial deficit in Japan’s trade accountbecause of the rise in raw material import prices that accompanied the weakening of the yen. Because of these and other factors, the Japanese economy did not show a full-scale recovery.
In the pump industry, overseas demand for infrastructure
improvements, especially for water-related and energy-related
projects, remained firm. In Japan, trends continued to be firm
for activities related to the renewal of the aging infrastructure.
However, the weakening of economic expansion overseas,
mainly in the emerging countries, the delay in recovery of consumer spending in Japan, and other factors led to restraints on
capital investment and more-intense competition for orders.
Amid these operating conditions, the Torishima Groupfocused on the development, production, and sales of high-­
efficiency pumps; promoted sales of the Eco-Pumps, which arestandard pumps incorporating Torishima’s know-how in highefficiency large-scale pumps; and took other measures to continue to develop its business activities in Japan and overseas.
As a result, Torishima reported orders of ¥42,878 million for the
fiscal year, which was 81% of the ¥52,847 million in orders­during the previous fiscal year.
Broken down by type of customer, public-sector orders were¥12,001 million (75% of the ¥15,923 million in the previous fiscal
year); domestic private-sector orders amounted to ¥6,943 million (97% of the ¥7,144 million in the prior year); and orders
from overseas totaled ¥23,933 million (80% of the ¥29,779 million in the previous year).

18

Annual Report 2015

Net sales for the fiscal year under review were ¥46,501 million (101% of the ¥45,985 million reported for the previous fiscal
year). The balance of orders outstanding at the end of the fiscal year and carried over to the next year amounted to ¥38,582
million (91% of the ¥42,205 million in the prior year). The
decline in the balance of orders outstanding was due to a shift
in priorities toward the renewal of our core systems, which had
become a priority for the Company, and adjustments in the volume of orders for certain pump products. At present, however,
we have returned to normal operating status.
Operating income for the fiscal year was ¥400 million­(compared with an operating loss of ¥945 million in the previous fiscal year). This recovery in operating income was due toa decrease in low margin activities, a decline in expenses related to the renewal of core systems, and other factors. Ordinary
income amounted to ¥793 million (compared with an ordinary
loss of ¥632 million in the previous year). Although Torishimareported a loss of ¥212 million on investments in companies
accounted for under the equity method, this was offset by foreign exchange gains of ¥391 million. Regarding net income,
Torishima reported an extraordinary loss, due in part to an
impairment loss of ¥158 million on the disposal of an employee
welfare facility, and, as a result of this and other factors, net
income for the fiscal year amounted to ¥405 million (92% of the¥442 million reported in the previous fiscal year).

Forecast for Fiscal 2015
and the Medium-Term Business Plan
The world’s population has exceeded seven billion. Securing
supplies of water and energy and using them efficiently continue to be major issues of global proportions. The overseas markets for water-related equipment and systems are expanding
along with increases in population and urbanization, particularly in Asia and Africa. The business environment is expected
to improve as new thermal power plants are constructed inJapan to deal with the electric power shortages following theGreat East Japan Earthquake. In addition, public investments
are being made to build a strong national infrastructure, andservice industries are expanding accompanying the renewalof aging infrastructure.
Amid this operating environment, the Torishima Group aims
to be a company that offers solutions to energy issues and­contributes to the world’s growth by developing and providing
high-efficiency pumps. In fiscal 2009, to show that “pumps canbe energy-saving,” we brought together and combined theexperience and technology that we have developed as a manufacturer of pumps over many years and began full-scale efforts
to implement our “Go Green with Pumps” initiatives. In fiscal
2014, Torishima received Japan’s Minister of Economy, Tradeand Industry (METI) Prize in the Energy Conservation Grand
Prize. This is sponsored by the Energy Conservation Center, ageneral corporation, and, with the support of METI, awards arepresented to businesses that are promoting energy conservation and businesses that develop superior, energy-saving products. Among these awards, the METI Minister’s Award is themost prestigious. Torishima, with its slogan of “saving the planet with pumps,” is a manufacturer that takes a keen interest inenergy efficiency and is conducting research and development
on a round-the-clock basis.

The status of consolidated cash flows at fiscal year-end andfactors influencing cash were as follows.

*Meaning “pumps that are eco-friendly and eco-efficient”

O Operating cash flows
Net cash provided by operating activities amounted to ¥1,194
million (compared to a decrease of ¥4,086 million used in theprevious fiscal year-end). Although notes and accounts receivable decreased ¥726 million (compared to an increase of ¥2,811
million in the previous fiscal year), inventories increased¥1,122 million (compared to an increase of ¥1,194 million in theprevious fiscal year), and notes and accounts payable
decreased ¥1,918 million (compared to a decrease of ¥150 million in the previous fiscal year), thus bringing a decrease in net
cash from operating activities.

The status of our three-year medium-term plan that webegan to implement in fiscal 2014 is as follows. Under this plan,we will further develop our Torishima Global Team (TGT)
activities that we have conducted over the past 10 years andproceed with further expansion with a focus on opportunities
in the water and energy markets. At the same time, we will
implement a thorough review of our business processes withthe aim of strengthening our operating and financial positions.
In addition, as a result of our consideration of progress toward
our goals in fiscal 2014, we have revised our plans in fiscal 2015
and net sales in fiscal 2016.

Targets of the Three-Year Business Plan
(Millions of yen)Orders
Net sales
OperatingincomeOrdinary
incomeNet income
attributable
to theCompany
andshareholdersof the parent

FY2014
Plan
49,50046,00042,87846,501FY2015Initial Plan
55,00050,000

RevisedPlan
50,00043,000

500

400

1,500

1,000

2,500

No change

700

793

1,700

1,400

2,700

No change

500

405

1,200

1,000

1,900

No change

Actual

FY2016
RevisedInitial Plan
Plan
60,000 No change
50,00055,000Note: T hese figures do not take account of the International Financial ReportingStandards (IFRS).

Financial Position
Consolidated Assets, Liabilities, and Net Assets
Assets on a consolidated basis as of the end of the fiscal year
under review amounted to ¥71,987 million, an increase of¥3,924 million over the previous fiscal year-end. This was primarily due to an increase in marketable securities of ¥1,817 million, owing to the recovery in stock prices, and an increase inwork in process of ¥1,020 million.
Liabilities on a consolidated basis at fiscal year-end amounted to ¥35,454 million, an increase of ¥1,915 million over the endof the previous fiscal year. This was mainly due to an increasein short-term borrowings of ¥1,421 million and an increase inlong-term debt of ¥2,053 million, which offset a decrease inpayables-trade of ¥1,771 million.
Net assets on a consolidated basis at fiscal year-end were¥36,532 million, an increase of ¥2,008 million over the previous
fiscal year-end. This was due to an increase in accumulatedcomprehensive income of ¥1,783 million over the previous­fiscal year-end.
Consolidated Cash Flows
Consolidated cash and cash equivalents (hereinafter, cash) at
the end of the fiscal year amounted to ¥4,307 million, representing an increase of ¥709 million over the previous fiscal year-end.
Note that cash in the consolidated financial statements includes¥132 million in deposits with maturities over three months.

O Investing cash flows
Net cash used in investing activities amounted to ¥345 million(compared to net cash used of ¥4,498 million in the previous
fiscal year). This decrease was due to purchases of property,
plant and equipment of ¥832 million (compared to purchasesof ¥1,621 million in the previous fiscal year).
O Financing cash flows
Net cash provided by financing activities amounted to ¥2,120
million (compared to net cash used in financing activities of¥112 million in the previous fiscal year). Although there were
cash outflows that included repayments of long-term debt
amounting to ¥2,148 million (compared to net cash used for
repayments of long-term debt of ¥1,577 million in the previous
fiscal year), on the other hand, short-term borrowings increased¥1,462 million (compared to an increase of ¥1,089 million in theprevious fiscal year), and proceeds from long-term debt
amounted to ¥4,095 million (compared with proceeds fromlong-term debt of ¥1,078 million in the previous fiscal year),resulting in a net cash inflow from financing activities.

Basic Policy for Allocation of Income and Dividends
for Fiscal 2014 and Fiscal 2015
The basic policy of the Torishima Group is to pay stable­dividends to shareholders. Taking account of its future needs
to make investments for future growth, the Group aims to­maintain a dividend payout ratio of between 20% and 30%.
Regarding retained earnings, the Torishima Group aims toinvest these funds effectively for financing new growth, including the development of technologies and products for responding to future advances in the sophistication of pumping as well
as related equipment and software. The Group also uses
retained earnings for the maintenance of existing pump installation and plants, for the development of more-efficient production facilities, and for expanding the scope of its businessportfolio to environmental businesses that will help to preserve
the global environment.
For fiscal 2014, the Torishima Group paid a regular interim dividend of ¥9 per share. In paying its fiscal year-end dividend, theGroup emphasized providing a return to shareholders and also
paid a year-end dividend of ¥9 per share. Thus, the dividend forthe full fiscal year, including interim and fiscal year-end dividends, was ¥18 per share. For fiscal 2015, the Torishima Group isplanning to also pay a dividend for the full year of ¥18 per share.

Torishima Pump Mfg. Co., Ltd.

19

Financial Statements
Consolidated Balance Sheet
Torishima Pump Mfg. Co., Ltd. and Consolidated Subsidiaries
March 31, 2015
Thousands of
U.S. Dollars(Note 1)Millions of Yen

ASSETS

2015

2014

2015

¥ 4,307¥ 3,598$ 35,892

CURRENT ASSETS:
Cash and cash equivalents (Note 13).....................................................................................
Marketable securities (Note 3)................................................................................................

700
132

527

1,100

   Trade (Note 13)..................................................................................................................

26,61626,927

221,800   Unconsolidated subsidiaries and associated companies....................................................

243

123

2,025

  Other..................................................................................................................................

622

689

5,183

   Allowance for doubtful accounts.........................................................................................

(85)

(244)

(708)

Inventories (Note 4)................................................................................................................

8,838

7,637

73,650

Advance payments................................................................................................................

813

423

6,775

Deferred tax assets (Note 10).................................................................................................

905

1,029

7,541

Other current assets..............................................................................................................

513

481

4,275

   Total current assets........................................................................................................

42,904

41,890357,533

Land (Note 6).........................................................................................................................

2,561

2,534

21,342

Buildings and structures (Notes 5 and 6)................................................................................

9,613

9,614

80,108

Machinery and equipment (Note 6)........................................................................................

13,342

12,737111,183

Short-term investments (Note 3)............................................................................................
Receivables:

PROPERTY, PLANT AND EQUIPMENT:

Construction in progress........................................................................................................

93

61

775

Lease assets (Note 12)..........................................................................................................

707

687

5,892

   Total...............................................................................................................................

26,31625,633219,300

Accumulated depreciation.....................................................................................................

(15,704)(15,121)(130,867)    Net property, plant and equipment.................................................................................

10,612

10,51288,433

Investment securities (Notes 3 and 13)...................................................................................

8,625

7,399

71,875Investments in and advances to unconsolidated subsidiaries and associated companies.......

6,057

5,181

50,475

Software................................................................................................................................

2,098

2,102

17,484

Asset for retirement benefits (Note 7).....................................................................................

1,103

Deferred tax assets (Note 10).................................................................................................

48

130

400

Other assets (Note 9).............................................................................................................

540

849

4,500

    Total investments and other assets.................................................................................

18,471

15,661

153,926

TOTAL......................................................................................................................................

¥71,987¥68,063$599,892

INVESTMENTS AND OTHER ASSETS:

9,192

See notes to consolidated financial statements.
U.S. dollar amounts in this annual report are translated from yen, for convenience only, at the rate of ¥120.00=U.S.$1, the exchange rate prevailing at March 31, 2015.
20

Annual Report 2015

Financial Section

Thousands of
U.S. Dollars(Note 1)Millions of Yen

LIABILITIES AND EQUITY

2015

2014

2015

Short-term borrowings (Notes 6 and 13)................................................................................

¥ 6,537¥ 5,365$ 54,475

Current portion of long-term debt (Notes 6 and 13)................................................................

1,960

1,691

16,333CURRENT LIABILITIES:

Payables:   Trade (Note 13)..................................................................................................................

10,081

11,83284,008   Unconsolidated subsidiaries and associated companies....................................................

30

50

250

  Other..................................................................................................................................

1,039

1,011

8,659

Advances received from customers.......................................................................................

1,812

1,971

15,100

Income taxes payable (Note 13).............................................................................................

111

180

925

Allowance for product warranties...........................................................................................

636

721

5,300

Allowance for losses on construction contracts......................................................................

436

351

3,633

Accrued expenses.................................................................................................................

1,267

1,147

10,558Other current liabilities............................................................................................................

1,231

485

10,259   Total current liabilities......................................................................................................

25,14024,804

209,500

8,976

6,957

74,800

LONG-TERM LIABILITIES:Long-term debt (Notes 6 and 13)...........................................................................................
Liability for retirement benefits (Note 7)...................................................................................

261

1,462

2,175

Other long-term liabilities (Note 10)........................................................................................

1,077

316

8,975

   Total long-term liabilities..................................................................................................

10,314

8,735

85,950 Common stock,authorized, 60,000 thousand shares; issued 29,889 thousand shares in 2015 and 2014.....

1,593

1,593

13,275

Capital surplus.......................................................................................................................

7,829

7,823

65,242

COMMITMENTS AND CONTINGENT LIABILITIES (Notes 12 and 14)
EQUITY (Notes 8, 9 and 17):

Stock acquisition rights..........................................................................................................

110

101

917

Retained earnings..................................................................................................................

24,651

23,889205,425 Treasury stock—at cost
2,402 thousand shares in 2015 and 1,815 thousand shares in 2014...................................

(1,499)(962)(12,492)

Accumulated other comprehensive income:   Unrealized gain on available-for-sale securities...................................................................

1,615

1,073

13,458   Deferred loss on derivatives under hedge accounting.........................................................

(457)

(249)

(3,808)   Foreign currency translation adjustments............................................................................

1,503

632

12,525   Defined retirement benefit plans.........................................................................................

725

146

6,042

   Total...............................................................................................................................

36,07034,046

300,584

Minority interests....................................................................................................................

463

478

3,858

   Total equity.....................................................................................................................

36,53334,524

304,442TOTAL......................................................................................................................................

¥71,987¥68,063$599,892

Torishima Pump Mfg. Co., Ltd.

21

Consolidated Statement of Income
Torishima Pump Mfg. Co., Ltd. and Consolidated Subsidiaries
Year Ended March 31, 2015
Thousands of
U.S. Dollars(Note 1)Millions of Yen

NET SALES..............................................................................................................................
COST OF SALES (Notes 11 and 12) .......................................................................................
   Gross profit.....................................................................................................................
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Notes 11 and 12)......................
   Operating income (loss)..................................................................................................
OTHER INCOME (EXPENSES):Interest and dividend income.................................................................................................
Interest expense....................................................................................................................
Gain on sales of land..............................................................................................................
Gain on sales of consolidated subsidiaries.............................................................................
Loss on restructuring of a subsidiary......................................................................................
Gain on foreign exchange—net..............................................................................................
Rent income..........................................................................................................................
Equity in (losses) earnings of associated companies...............................................................
Settlement package...............................................................................................................
Impairment loss (Note 5)........................................................................................................
Other—net.............................................................................................................................
   Other income—net.........................................................................................................
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS......................................
INCOME TAXES (Note 10):
Current..................................................................................................................................
Deferred.................................................................................................................................
   Total income taxes..........................................................................................................
NET INCOME BEFORE MINORITY INTERESTS...................................................................
MINORITY INTERESTS IN NET INCOME..............................................................................
NET INCOME...........................................................................................................................

2015¥46,50237,340
9,162
8,762
400

2014

¥45,985
37,664
8,321
9,266
(945)

241
(149)

210
(129)
766
1,076
(98)
112
99
66
(226)

391
126
(213)

2,008
(1,242)

3,259
1,050
(1,775)

(158)
38
276
676

(18)
1,858
913

(1,317)
317
2,300
5,633

119
56
175
501
(96)
¥   405

286
37
323
590
(148)
¥   442

992
466
1,458
4,175
(800)
$  3,375Yen

PER SHARE OF COMMON STOCK (Notes 2. v and 17):
Basic net income...................................................................................................................
Diluted net income.................................................................................................................
Cash dividends applicable to the year....................................................................................

2015$387,517
311,167
76,35073,017
3,333

U.S. Dollars

2015

2014

2015

¥ 14.61
14.55
18.00

¥ 15.74
15.69
18.00

$   0.12
0.12
0.15

See notes to consolidated financial statements.

Consolidated Statement of Comprehensive Income
Torishima Pump Mfg. Co., Ltd. and Consolidated Subsidiaries
Year Ended March 31, 2015

Thousands of
U.S. Dollars(Note 1)Millions of Yen

NET INCOME BEFORE MINORITY INTERESTS...................................................................
OTHER COMPREHENSIVE INCOME (Note 15):
Unrealized gain on available-for-sale securities.......................................................................
Deferred (loss) gain on derivatives under hedge accounting...................................................
Foreign currency translation adjustments...............................................................................
Defined retirement benefit plans.............................................................................................
Share of other comprehensive income in associates..............................................................
Total other comprehensive income........................................................................................
COMPREHENSIVE INCOME..................................................................................................
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent.............................................................................................................
Minority interests....................................................................................................................
See notes to consolidated financial statements.
22

Annual Report 20152015¥  501

2014¥  5902015$ 4,175

541
(208)
699
579
213
1,824
¥2,325108
945¥1,535

4,508(1,733)
5,825
4,825
1,775
15,200$19,375¥2,189136¥1,385150$18,242
1,133

170
36
631

Financial Section

Consolidated Statement of Changes in Equity
Torishima Pump Mfg. Co., Ltd. and Consolidated Subsidiaries
Year Ended March 31, 2015
Thousands

Millions of Yen
Accumulated Other Comprehensive Income

IssuedNumber of Number of
Shares of Shares ofCommon Treasury
Stock
Stock

BALANCE, APRIL 1, 2013

29,889(1,828)

CommonStock

Stock
Capital Acquisition Retained
Surplus
Rights
Earnings¥1,593¥7,814¥ 91

Deferred
Unrealized Loss on
Foreign
Gain on Derivatives Currency DefinedunderTranslation Retirement
AvailableTreasury for-Sale
Hedge
AdjustBenefit
Stock Securities Accounting
ments
Plans

¥23,952 ¥   (969)¥  903¥(285)¥ (105)

Total

Minority
Interests

Total
Equity¥32,994¥608¥33,602

Net income....................

442

442

442

 Cash dividends,¥18.00 per share..........

(505)

(505)

(505)

(0)

(0)

(0)

7

16

16

 Purchase oftreasury stock..............

(1) Disposal of treasury
stock............................

149 Net change
in the year....................

10

BALANCE, MARCH 31, 2014
(APRIL 1, 2014 as previously reported)
29,889(1,815)

1,593

7,823

101

 Cumulative effect ofaccounting change.......
BALANCE, APRIL 1, 2014(as restated)

23,889

(962)

170

36

737

¥146

1,099

(130)

969

1,073

(249)

632

146

34,046478

34,524857
29,889(1,815)

1,593

7,823

101

24,746

857
(962)

1,073

(249)

632

146

34,903857
478

35,381

Net income....................

405

405

405

 Cash dividends,¥18.00 per share..........

(500)

(500)

(500)

(544)

(544)

(544)

7

13

13

 Purchase oftreasury stock..............

(601) Disposal of treasury
stock............................

14

6(2,402)¥1,593 ¥7,829 Net change
in the year....................
BALANCE, MARCH 31, 2015 29,889

9

¥110

542

¥24,651 ¥(1,499)¥1,615(208)871¥(457) ¥1,503

1,793

(15)

1,778

¥725 ¥36,070¥463¥36,533

Minority
Interests

Total
Equity579

Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income

CommonStock

Stock
Capital Acquisition
Surplus
RightsBALANCE, MARCH 31, 2014 (APRIL 1,
2014 as previously reported)................ $13,275 $65,192$842$199,075 $ (8,017) $ 8,942

65,192

842

206,217

Net income...........................................

3,375

Cash dividends, $0.15 per share...........

(4,167)$(2,075)$ 5,266

50

Net change in the year..........................
BALANCE, MARCH 31, 2015................. $13,275 $65,242

Total$1,217 $283,717 $3,983 $287,700

7,142(8,017)

8,942(2,075)5,266

1,217 290,859

7,142
3,983

3,375
(4,533)Purchase of treasury stock....................
Disposal of treasury stock.....................

Treasury
Stock

Deferred
Loss onForeign
Derivatives Currency DefinedunderTranslation Retirement
Benefit
Hedge
AdjustAccounting
ments
Plans

7,142

Cumulative effect of accounting change
BALANCE, APRIL 1, 2014 (as restated) 13,275

Retained
Earnings

Unrealized
Gain onAvailablefor-Sale
Securities

58

3,375

(4,167)(4,167)(4,533)(4,533)

108

75

4,516

(1,733)

7,259

$917

$205,425 $(12,492) $13,458$(3,808)$12,525

4,825

294,842

14,942108(125)

14,817$6,042 $300,584 $3,858 $304,442

See notes to consolidated financial statements.

Torishima Pump Mfg. Co., Ltd.

23

Consolidated Statement of Cash Flows
Torishima Pump Mfg. Co., Ltd. and Consolidated Subsidiaries
Year Ended March 31, 2015
Thousands of
U.S. Dollars(Note 1)Millions of Yen

OPERATING ACTIVITIES:
Income before income taxes and minority interests................................................................
Adjustments for:  Income taxes—paid...........................................................................................................
  Income taxes—refunded....................................................................................................
   Depreciation and amortization............................................................................................
   Loss on sales of consolidated subsidiaries.........................................................................
   Gain on sales of land..........................................................................................................
  Impairment loss..................................................................................................................
   Changes in assets and liabilities:   Change in accounts receivables.....................................................................................
   Change in inventories.....................................................................................................
   Change in advance payments.........................................................................................
   Change in accounts payables.........................................................................................
   Change in advances received from customers................................................................
   Change in allowance for doubtful accounts.....................................................................
   Change in allowance for product warranties...................................................................
   Change in allowance for losses on construction contracts..............................................
   Change in liability for retirement benefits.........................................................................
  Other—net.........................................................................................................................
  Total adjustments...............................................................................................................
   Net cash used in operating activities...................................................................................
INVESTING ACTIVITIES:
Increase in saving of time deposits.........................................................................................
Proceeds from withdrawal of time deposits............................................................................
Purchases of property, plant and equipment..........................................................................
Proceeds from sales of property, plant and equipment..........................................................
Purchases of intangibles........................................................................................................
Purchases of associated companies......................................................................................
Proceeds from sales of investments in consolidated subsidiaries...........................................
Proceeds from sales of investment securities.........................................................................
Payments of loans receivable.................................................................................................
Collection of loans receivable.................................................................................................
Other.....................................................................................................................................

2015

2014

2015

¥   676¥   913$   5,633

(277)
1,636

158

(2,308)
13,633

1,317

726(1,122)(353)(2,174)
(198)
(161)
(85)
85
(126)
20

(2,812)(1,195)
226
187
(684)
157
308
134
(343)
(665)

6,050
(9,350)(2,941)(18,116)(1,650)(1,342)(708)
708(1,050)166(1,871)(4,999)(15,591)(1,195)(4,086)(9,958)

(177)
572
(833)
49
(389)
(14)

(527)

(1,475)
4,767(6,942)408(3,242)
(117)

232
(41)
113
143

(1,621)773(518)(3,953)
1,125
224
(108)
165
(58)

1,933
(342)
942
1,193

   Net cash used in investing activities....................................................................................

(345)(4,498)(2,875)FINANCING ACTIVITIES:
Change in short-term borrowings—net..................................................................................
Proceeds from long-term debt...............................................................................................

1,463
4,096

1,090
1,079

12,192
34,133

Repayments of long-term debt..............................................................................................

(2,270)(1,741)(18,917)

Purchase of treasury stock.....................................................................................................
Dividends paid.......................................................................................................................
Other.....................................................................................................................................

(544)
(501)
(124)

(506)
(34)

(4,533)(4,175)(1,033)   Net cash provided by (used in) financing activities..............................................................

2,120

(112)

17,667

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

129

155

1,075

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..................................

709(8,541)

5,909

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

3,598

11,96329,983

CASH AND CASH EQUIVALENTS, END OF YEAR...............................................................

¥   4,307¥  3,598$ 35,892

CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATED SUBSIDIARIES, BEGINNING OF YEAR...

See notes to consolidated financial statements.

24

(191)
60
1,646
(1,061)(766)

Annual Report 2015176

Financial Section

Notes to Consolidated Financial Statements
Torishima Pump Mfg. Co., Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2015

1. BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL
STATEMENTS
The accompanying consolidated financial statements of Torishima
Pump Mfg. Co., Ltd. (the “Company”) and consolidated subsidiaries(together, the “Companies”) have been prepared in accordance withthe provisions set forth in the Japanese Financial Instruments andExchange Act and its related accounting regulations and in accordance with accounting principles generally accepted in Japan(“Japanese GAAP”), which are different in certain respects as to theapplication and disclosure requirements of International Financial
Reporting Standards (“IFRS”).
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated
financial statements issued domestically in order to present them in aform that is more familiar to readers outside Japan. In addition, certain
reclassifications have been made in the 2014 consolidated financial
statements to conform to the classifications used in 2015.
The consolidated financial statements are stated in Japanese yen,
the currency of the country in which the Company is incorporated andoperates. The translations of Japanese yen amounts into U.S. dollar
amounts are included solely for the convenience of readers outside
Japan and have been made at the rate of ¥120 to $1, the approximate rate of exchange at March 31, 2015. Such translations should
not be construed as representations that the Japanese yen amounts
could be converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation
The consolidated financial statements as of March 31, 2015 include
the accounts of the Company and its 18 (18 in 2014) significant subsidiaries.
Under the control and influence concepts, those companies inwhich the Company, directly or indirectly, is able to exercise control
over operations are fully consolidated, and those companies overwhich the Companies have the ability to exercise significant influence
are accounted for by the equity method.
Investments in zero (zero in 2014) unconsolidated subsidiaries and6 (5 in 2014) associated companies are accounted for by the equity
method.
Investments in the remaining unconsolidated subsidiaries and associated companies are stated at cost. If the equity method of accounting had been applied to the investments in these companies, theeffect on the accompanying consolidated financial statements would
not be material.
The excess of the cost of an acquisition over the fair value of the net
assets of an acquired subsidiary at the date of acquisition is being
amortized over a period of less than 20 years.
All significant intercompany balances and transactions have been
eliminated in consolidation. All material unrealized profit included in
assets resulting from transactions within the Companies is eliminated.
b. Unification of Accounting Policies Applied to Foreign
Subsidiaries for the Consolidated Financial Statements
In May 2006, the Accounting Standards Board of Japan (the “ASBJ”)
issued ASBJ Practical Issues Task Force (PITF) No. 18, “Practical
Solution on Unification of Accounting Policies Applied to Foreign
Subsidiaries for the Consolidated Financial Statements.” PITF No. 18
prescribes that the accounting policies and procedures applied to aparent company and its subsidiaries for similar transactions andevents under similar circumstances should in principle be unified forthe preparation of the consolidated financial statements. However,financial statements prepared by foreign subsidiaries in accordancewith either IFRS or generally accepted accounting principles in the
United States of America tentatively may be used for the consolidation
process, except for the following items that should be adjusted in
the consolidation process so that net income is accounted for inaccordance with Japanese GAAP, unless they are not material: (a)amortization of goodwill; (b) scheduled amortization of actuarial gain orloss of pensions that has been directly recorded in equity; (c) expensing capitalized development costs of R&D; (d) cancellation of the fairvalue model of accounting for property, plant and equipment andinvestment properties and incorporation of the cost model of accounting; and (e) exclusion of minority interests from net income, if­contained in net income.
c. Unification of Accounting Policies Applied to Foreign
Associated Companies for the Equity Method
In March 2008, the ASBJ issued ASBJ Statement No. 16,“Accounting Standard for Equity Method of Accounting forInvestments.” The new standard requires adjustments to be made toconform the associate’s accounting policies for similar transactions
and events under similar circumstances to those of the parent company when the associate’s financial statements are used in applying theequity method unless it is impracticable to determine such adjustments. In addition, financial statements prepared by foreign associated companies in accordance with either IFRS or generally accepted
accounting principles in the United States of America tentatively may
be used in applying the equity method if the following items are adjusted so that net income is accounted for in accordance with Japanese
GAAP, unless they are not material: (a) amortization of goodwill; (b)scheduled amortization of actuarial gain or loss of pensions that has
been directly recorded in equity; (c) expensing capitalized development costs of R&D; (d) cancellation of the fair value model of accounting for property, plant and equipment and investment properties andincorporation of the cost model of accounting; and (e) exclusion ofminority interests from net income, if contained in net income.
d. Business Combinations
In October 2003, the Business Accounting Council issued aStatement of Opinion, “Accounting for Business Combinations,”
and in December 2005, the ASBJ issued ASBJ Statement No. 7,“Accounting Standard for Business Divestitures” and ASBJ GuidanceNo. 10, “Guidance for Accounting Standard for Business
Combinations and Business Divestitures.” The accounting standard
for business combinations allowed companies to apply the pooling-ofinterests method of accounting only when certain specific criteria are
met such that the business combination is essentially regarded as auniting-of-interests. For business combinations that do not meet theuniting-of-interests criteria, the business combination is considered to
be an acquisition and the purchase method of accounting is required.
This standard also prescribes the accounting for combinations of­entities under common control and for joint ventures.
In December 2008, the ASBJ issued a revised accounting standard
for business combinations, ASBJ Statement No. 21, “AccountingStandard for Business Combinations.” Major accounting changes
under the revised accounting standard are as follows: (1) The revised
standard requires accounting for business combinations only by thepurchase method. As a result, the pooling-of-interests method of
accounting is no longer allowed. (2) The previous accounting standard required research and development costs to be charged toincome as incurred. Under the revised standard, in-process researchand development costs (IPR&D) acquired in the business combination
are capitalized as an intangible asset. (3) The previous accounting
standard provided for a bargain purchase gain (negative goodwill) tobe systematically amortized over a period not exceeding 20 years.
Under the revised standard, the acquirer recognizes the bargain purchase gain in profit or loss immediately on the acquisition date after
reassessing and confirming that all of the assets acquired and all of
the liabilities assumed have been identified after a review of the procedures used in the purchase price allocation. The revised standard wasapplicable to business combinations undertaken on or after April 1,
2010.
Torishima Pump Mfg. Co., Ltd.

25

The Company acquired companies in ­previous years and accounted for the acquisitions by the purchase method of accounting. The
related goodwill is systematically ­amortized over a period not exceeding 20 years.
e. Cash Equivalents
Cash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes invalue. Cash equivalents include time deposits that mature within threemonths of the date of acquisition.
f. Inventories
Inventories are stated at the lower of cost, determined by the specificidentification method for work in process, and by the moving-averagemethod for other inventories, or net selling value.
g. M arketable and Investment Securities
Marketable and investment securities are classified and accounted for,depending on management’s intent, as follows:
Available-for-sale securities, which are not classified as trading
securities, are reported at fair value, with unrealized gains and losses,
net of applicable taxes, reported in a separate component of equity.
Nonmarketable available-for-sale securities are stated at cost­determined by the moving-average method.
For other-than-temporary declines in fair value investment securities
are reduced to net realizable value by a charge to income.
h. Allowance for Doubtful Accounts
The allowance for doubtful accounts is stated in amounts considered
to be appropriate based on the Companies’ past credit loss experience and an evaluation of potential losses in receivables outstanding.
i. Property, Plant and Equipment
Property, plant and equipment are stated at cost.
Buildings and lease assets are depreciated by the straight-line
method and structures, machinery and other equipment are depreciated by the declining-balance method based on the estimated useful
lives of the assets.
The estimated useful lives of the assets are primarily as follows:   Buildings and structures..........10 - 50 years   Machinery and equipment....... 2 - 20 years  Software.................................. 5 - 7 years  Lease assets...........................Terms of the respective lease
j. Long-Lived Assets
The Companies review their long-lived assets for impairment when­ever events or changes in circumstances indicate that the carrying
amount of an asset or asset group may not be recoverable. An­impairment loss is recognized if the carrying amount of an asset or
asset group exceeds the sum of the undiscounted future cash flows
expected to result from the continued use and eventual disposition of
the asset or asset group. The impairment loss would be measured as
the amount by which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted cash flows
from the continued use and eventual disposition of the asset or the
net selling price at disposition.
k. Retirement and Pension Plans
The Company has contributory funded defined benefit pension plans.
Other consolidated subsidiaries have unfunded retirement benefit
plans.
Under the accounting standard for employees’ retirement benefits,
the liability for employees’ retirement benefits is determined based on
projected benefit obligations and plan assets at the balance sheet
date.
In May 2012, the ASBJ issued ASBJ Statement No. 26,“Accounting Standard for Retirement Benefits” and ASBJ Guidance
No. 25, “Guidance on Accounting Standard for Retirement Benefits,”
which replaced the accounting standard for retirement benefits that
had been issued by the Business Accounting Council in 1998 with aneffective date of April 1, 2000, and the other related practical guidance, and were followed by partial amendments from time to timethrough 2009.
26

Annual Report 2015(a) Under the revised accounting standard, actuarial gains and losses
and past service costs that are yet to be recognized in profit or loss
are recognized within equity (accumulated other comprehensive
income), after adjusting for tax effects, and any resulting deficit or
surplus is recognized as a liability (liability for retirement benefits) or
asset (asset for retirement benefits).
(b) The revised accounting standard does not change how to recognize actuarial gains and losses and past service costs in profit orloss. Those amounts are recognized in profit or loss over a certain
period no longer than the expected average remaining service­period of the employees. However, actuarial gains and losses andpast service costs that arose in the current period and have not yet
been recognized in profit or loss are included in other comprehensive income, and actuarial gains and losses and past service costs
that were recognized in other comprehensive income in prior periods and then recognized in profit or loss in the current period, aretreated as reclassification adjustments (See Note 15).
(c) The revised accounting standard also made certain amendments
relating to the method of attributing expected benefit to periods,
the discount rate, and expected future salary increases.
This accounting standard and the guidance for (a) and (b) above are
effective for the end of annual periods beginning on or after April 1,
2013, and for (c) above are effective for the beginning of annual periods beginning on or after April 1, 2014, or for the beginning of annual
periods beginning on or after April 1, 2015, subject to certain disclosure in March 2015, all with earlier application being permitted fromthe beginning of annual periods beginning on or after April 1, 2013.
However, no retrospective application of this accounting standard toconsolidated financial statements in prior periods is required.
The Company applied the revised accounting standard and guidance for retirement benefits for (a) and (b) above, effective March 31,
2014, for (c) above effective April 1, 2014.
With respect to (c) above, the Company changed the method of
attributing the expected benefit to periods from a straight-line basis toa benefit formula basis, the method of determining the discount ratefrom using the period which approximates the expected averageremaining service period to using a single weighted average discountrate reflecting the estimated timing and amount of benefit payment
and recorded the effect of (c) above as of April 1, 2014, in retained
earnings. As a result, liability for retirement benefits as of April 1,
2014, decreased by ¥1,330 million ($11,083 thousand), and retained
earnings as of April 1, 2014, increased by ¥857 million ($7,142 thousand). The effects of (c) above on operating income, income
before income taxes and minority interests, basic net income pershare and diluted net income per share for the year ended March 31,
2015 were not material.
Retirement benefits for subsidiaries’ directors and Audit &Supervisory Board members are recorded as a liability at the amountwhich would be required if all directors and Audit & Supervisory Board
members retired at each balance sheet date.
l. Allowance for Product Warranties
The Companies provide an allowance for foreseeable losses arisingfrom product warranties.
m. Allowance for Losses on Construction Contracts
The Companies provide an allowance for foreseeable losses arisingfrom certain construction contracts.
n. Asset Retirement Obligations
In March 2008, the ASBJ issued ASBJ Statement No. 18, “AccountingStandard for Asset Retirement Obligations” and ASBJ Guidance No.
21, “Guidance on Accounting Standard for Asset Retirement
Obligations.” Under this accounting standard, an asset retirement­obligation is defined as a legal obligation imposed either by law or contract that results from the acquisition, construction, development andnormal operation of a tangible fixed asset and is associated with theretirement of such tangible fixed asset. The asset retirement obligationis recognized as the sum of the discounted cash flows required for the
future asset retirement and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If a reasonable estimate of the asset retirement obligation cannot be made in theFinancial Section

period the asset retirement obligation is incurred, the liability should berecognized when a reasonable estimate of the asset retirement obligation can be made. Upon initial recognition of a liability for an asset
retirement obligation, an asset retirement cost is capitalized by increasing the carrying amount of the related fixed asset by the amount of theliability. The asset retirement cost is subsequently allocated to
expense through depreciation over the remaining useful life of theasset. Over time, the liability is accreted to its present value each period. Any subsequent revisions to the timing or the amount of the original estimate of undiscounted cash flows are reflected as an adjustment
to the carrying amount of the liability and the capitalized amount of therelated asset retirement cost.
o. Stock Options
In December 2005, the ASBJ issued ASBJ Statement No. 8,“Accounting Standard for Stock Options” and related guidance. The
new standard and guidance are applicable to stock options newly
granted on and after May 1, 2006. This standard requires companies
to measure the cost of employee stock options based on the fair value
at the date of grant and recognize compensation expense over thevesting period as consideration for receiving goods or services. The
standard also requires companies to account for stock options granted to non-employees based on the fair value of either the stock option
or the goods or services received. In the balance sheet, the stock
option is presented as a stock acquisition right as a separate component of equity until exercised. The standard covers equity-settled,share-based payment transactions, but does not cover cash-settled,share-based payment transactions. In addition, the standard allows
unlisted companies to measure options at their intrinsic value if theycannot reliably estimate fair value.
p. Research and Development Costs
Research and development costs are charged to income as incurred.
q. Construction Contracts
In December 2007, the ASBJ issued ASBJ Statement No. 15,“Accounting Standard for Construction Contracts” and ASBJ GuidanceNo. 18, “Guidance on Accounting Standard for Construction
Contracts.” Under this accounting standard, the construction revenue
and construction costs should be recognized by the percentage-ofcompletion method, if the outcome of a construction contract can be
estimated reliably. When total construction revenue, total construction
costs and the stage of completion of the contract at the balance sheet
date can be reliably measured, the outcome of a construction contract
is deemed to be estimated reliably. If the outcome of a construction
contract cannot be reliably estimated, the completed-contract methodshould be applied.
r. Income Taxes
The provision for income taxes is computed based on the pretax
income included in the consolidated statement of income. The asset
and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets andliabilities. Deferred taxes are measured by applying currently enacted
income tax rates to the temporary differences.
s. Foreign Currency Transactions
All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at
the exchange rates at the balance sheet date. The foreign exchange
gains and losses from translation are recognized in the consolidated
statement of income to the extent that they are not hedged by forward
exchange contracts.
t. Foreign Currency Financial Statements
The balance sheet accounts and revenue and expense accounts ofthe consolidated foreign subsidiaries are translated into Japanese yenat the current exchange rate as of the balance sheet date except for
equity, which is translated at the historical rate. Differences arisingfrom such translation are shown as “Foreign currency translation
adjustments” under accumulated other comprehensive income in a
separate component of equity.

u. Derivatives and Hedging Activities
Derivatives under contract
The Companies use derivative financial instruments to manage their
exposures to fluctuations in foreign exchange and interest rates.
Foreign exchange forward contracts and interest rate swaps are utilized by the Companies to reduce foreign currency exchange andinterest rate risks. The Companies do not enter into derivatives for
trading or speculative purposes.
Derivative financial instruments and foreign currency transactions
are classified and accounted for as follows:a) all derivatives are recognized as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions arerecognized in the consolidated statement of income andb) for derivatives used for hedging purposes, if such derivatives qualify
for hedge accounting because of high correlation and effectivenessbetween the hedging instruments and the hedged items, gains orlosses on derivatives are deferred until maturity of the hedged transactions.
Foreign exchange forward contracts employed to hedge foreignexchange exposures for export sales are measured at the fair value
and the unrealized gains/losses are recognized in income.
Foreign exchange forward contracts applied for forecasted or committed transactions are also measured at the fair value but the unrealized gains/losses are deferred until the underlying transactions arecompleted.
Certain foreign exchange contracts are subject to appropriation if
they satisfy the requirements of appropriation treatment.
Interest rate swaps that qualify for hedge accounting and meet specific matching criteria are not remeasured at market value but the differential paid or received under the swap agreements are recognized
and included in interest expense.
Hedging instruments and hedged items
a. Hedging instruments - Foreign exchange forward contracts
Hedged items - Receivables, payables and their forecasted
transactions denominated in foreign currencies
b. Hedging instruments - Interest rate swaps
Hedged items - Long-term debt
Derivative use policy
The Companies manage their derivative financial instruments basedon internal rules that define the dealing authority and the dealing limit.
The Companies use derivatives only for the purpose of hedging
market risks associated with assets and liabilities. The Companies do
not hold or issue derivatives for trading purposes.
Assessing the effectiveness of hedging
The effectiveness of hedging is assessed by comparing the accumulated cash flows between the hedging instruments and hedged items.
However, with regard to interest rate swaps that meet specific matching criteria, the assessments are omitted.
Risk associated with derivatives
All derivative transactions are entered into hedge interest rate risk andforeign currency risk exposures incorporated within the business.
Accordingly, market risk in these derivatives is basically offset by
opposite movements in the value of hedged assets or liabilities.
v. Per Share Information
Basic net income per share is computed by dividing net income available to common shareholders by the weighted-average number ofcommon shares outstanding for the period.
Diluted net income per share reflects the potential dilution that could
occur if securities were exercised or converted into common stock.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to the respective
fiscal years, including dividends to be paid after the end of the year.
w. Accounting Changes and Error Corrections
In December 2009, the ASBJ issued ASBJ Statement No. 24,“Accounting Standard for Accounting Changes and Error Corrections”
and ASBJ Guidance No. 24, “Guidance on Accounting Standard for
Accounting Changes and Error Corrections.” Accounting treatments
under this standard and guidance are as follows: (1) Changes in
Accounting Policies - When a new accounting policy is applied following revision of an accounting standard the new policy is applied retrospectively unless the revised accounting standard includes specific
Torishima Pump Mfg. Co., Ltd.

27

transitional provisions, in which case the entity shall comply with thespecific transitional provision. (2) Changes in Presentation - When thepresentation of financial statements is changed, prior-period financial
statements are reclassified in accordance with the new presentation.
(3) Changes in Accounting Estimates - A change in an accounting
estimate is accounted for in the period of the change if the change
affects that period only, and is accounted for prospectively if thechange affects both the period of the change and future periods. (4)Corrections of Prior-Period Errors - When an error in prior-period financial statements is discovered, those statements are restated.
x. Reclassifications
Prior to April 1, 2014, the purchase of treasury stock was included inother financing activities in the consolidated statement of cash flows.
During the fiscal year ended March 31, 2015, the amount is ­disclosed
separately in financing activities in the consolidated statement of cash
flows as of March 31, 2015, due to an increase in the quantitative
materiality of that item. The amount included in the ­financing activities
as of March 31, 2014, was ¥0 million.
y. New Accounting Pronouncements
Accounting Standards for Business Combinations andConsolidated Financial Statements
In September 2013, the ASBJ issued revised ASBJ Statement No. 21,“Accounting Standard for Business Combinations,” revised ASBJ
Guidance No. 10, “Guidance on Accounting Standards for Business
Combinations and Business Divestitures,” and revised ASBJ
Statement No. 22, “Accounting Standard for Consolidated Financial
Statements.” Major accounting changes are as follows:(a) Transactions with noncontrolling interest
A parent’s ownership interest in a subsidiary might change if the parent purchases or sells ownership interests in its subsidiary. The carrying amount of minority interest is adjusted to reflect the change in theparent’s ownership interest in its subsidiary while the parent retains its
controlling interest in its subsidiary. Under the current accounting standard, any difference between the fair value of the consideration
received or paid and the amount by which the minority interest is
adjusted is accounted for as an adjustment of goodwill or as profit orloss in the consolidated statement of income. Under the revised
accounting standard, such difference shall be accounted for as capitalsurplus as long as the parent retains control over its subsidiary.
(b) Presentation of the consolidated balance sheet
In the consolidated balance sheet, “minority interest” under the current
accounting standard will be changed to “noncontrolling interest” under
the revised accounting standard.
(c) Presentation of the consolidated statement of income
In the consolidated statement of income, “income before minority
interest” under the current accounting standard will be changed to“net income” under the revised accounting standard, and “netincome” under the current accounting standard will be changed to“net income attributable to owners of the parent” under the revised
accounting standard.
(d) Provisional accounting treatments for a business combination
If the initial accounting for a business combination is incomplete by theend of the reporting period in which the business combination occurs,
an acquirer shall report in its financial statements provisional amounts
for the items for which the accounting is incomplete. Under the current accounting standard guidance, the impact of adjustments to provisional amounts recorded in a business combination on profit or loss
is recognized as profit or loss in the year in which the measurement iscompleted. Under the revised accounting standard guidance, during
the measurement period, which shall not exceed one year from theacquisition, the acquirer shall retrospectively adjust the provisionalamounts recognized at the acquisition date to reflect new information
obtained about facts and circumstances that existed as of the acquisition date and that would have affected the measurement of theamounts recognized as of that date. Such adjustments shall be recognized as if the accounting for the business combination had been
completed at the acquisition date.
28

Annual Report 2015(e) Acquisition-related costs
Acquisition-related costs are costs, such as advisory fees or professional fees, which an acquirer incurs to effect a business combination.
Under the current accounting standard, the acquirer accounts foracquisition-related costs by including them in the acquisition costs of
the investment. Under the revised accounting standard, acquisitionrelated costs shall be accounted for as expenses in the periods inwhich the costs are incurred.
The above accounting standards and guidance for (a) transactions
with noncontrolling interest, (b) presentation of the consolidated balance sheet, (c) presentation of the consolidated statement of income,and (e) acquisition-related costs are effective for the beginning ofannual periods beginning on or after April 1, 2015. Earlier applicationis permitted from the beginning of annual periods beginning on or after
April 1, 2014, except for (b) presentation of the consolidated balance
sheet and (c) presentation of the consolidated statement of income.
In the case of earlier application, all accounting standards and guidance above, except for (b) presentation of the consolidated balance
sheet and (c) presentation of the consolidated statement of income,should be applied simultaneously.
Either retrospective or prospective application of the revised
accounting standards and guidance for (a) transactions with noncontrolling interest and (e) acquisition-related costs is permitted. In retrospective application of the revised standards and guidance, theaccumulated effects of retrospective adjustments for all (a) transactions with noncontrolling interest and (e) acquisition-related costs
which occurred in the past shall be reflected as adjustments to thebeginning balance of capital surplus and retained earnings for the yearof the first-time application. In prospective application, the new standards and guidance shall be applied prospectively from the beginningof the year of the first-time application.
The revised accounting standards and guidance for (b) presentationof the consolidated balance sheet and (c) presentation of the consolidated statement of income shall be applied to all periods presented infinancial statements containing the first-time application of the revised
standards and guidance.
The revised standards and guidance for (d) provisional accounting
treatments for a business combination are effective for a businesscombination which occurs on or after the beginning of annual periods
beginning on or after April 1, 2015. Earlier application is permitted fora business combination which occurs on or after the beginning ofannual periods beginning on or after April 1, 2014.
The Company expects to apply the revised accounting standards
and guidance for (a), (b), (c) and (e) above from April 1, 2015, and for(d) above for a business combination which will occur on or after April
1, 2015, and is in the process of measuring the effects of applying therevised accounting standards and guidance in future applicable periods.

Financial Section

3. MARKETABLE ANDINVESTMENT
SECURITIES AND
SHORT-TERM
INVESTMENTS

Marketable and investment securities and short-term investments as of March 31, 2015 and 2014, consisted of
the following:Thousands of
U.S. Dollars
2015

Millions of Yen
2015
2014

Current:
Corporate bonds...........................................................................................
 Time deposits that mature over three months from the dateof acquisition................................................................................................
  Total...........................................................................................................

¥  700¥132¥132$1,100$1,100527¥1,227

Thousands of
U.S. Dollars
2015

Millions of Yen
2015
2014

Non-current:
Marketable equity securities...........................................................................
Non-marketable equity securities...................................................................
Corporate bonds...........................................................................................
Trust funds....................................................................................................
  Total...........................................................................................................

¥7,521333
700
71¥8,625$62,675
2,775
5,833
592
$71,875¥6,977338
84¥7,399The costs and aggregate fair values of marketable and investment securities at March 31, 2015 and 2014
were as follows:
Millions of Yen

March 31, 2015
Securities classified as:
Available-for-sale:
Equity securities............................................................
Corporate bonds..........................................................

Cost

Unrealized Gains

Unrealized Losses

Fair Value¥5,116700¥2,553¥148¥7,521700

March 31, 2014
Securities classified as:
Available-for-sale:
Equity securities............................................................
Corporate bonds..........................................................

¥5,300700¥1,864¥187¥6,977
700

Cost

Unrealized Gains

Unrealized Losses

Fair Value$42,633
5,833$21,275$1,233$62,675
5,833

Thousands of U.S. Dollars

March 31, 2015
Securities classified as:
Available-for-sale:
Equity securities............................................................
Corporate bonds..........................................................

The information for available-for-sale securities that were sold during the years ended March 31, 2015 and2014, was as follows:
Millions of Yen

March 31, 2015
Available-for-sale:
Equity securities...................................................................................
March 31, 2014
Available-for-sale:
Equity securities...................................................................................

Proceeds

Realized Gains

¥232

¥46

¥224

¥75

Realized Losses¥ (4)Thousands of U.S. Dollars

March 31, 2015
Available-for-sale:
Equity securities...................................................................................

Proceeds

Realized Gains$1,933$383

Realized Losses

The impairment losses on available-for-sale equity securities for the years ended March 31, 2015 and 2014
were ¥5 million ($42 thousand) and ¥21 million, respectively.
At March 31, 2015, investment securities with a total carrying value of ¥19 million ($158 thousand) were
pledged as collateral for bank loans of other companies in the ordinary course of business.

4. INVENTORIESInventories at March 31, 2015 and 2014, consisted of the following:
Millions of Yen

Merchandise and finished goods.......................................................................
Work in process................................................................................................
Raw materials and supplies...............................................................................
  Total...........................................................................................................

Thousands of
U.S. Dollars

2015

2014

2015

¥  248
6,656
1,934¥8,838¥  4595,635
1,543¥7,637$ 2,067
55,466
16,117$73,650

Torishima Pump Mfg. Co., Ltd.

29

5. LONG-LIVED ASSETS

6. SHORT-TERM
BORROWINGS AND
LONG-TERM DEBTThe Companies reviewed their long-lived assets for impairment as of March 31, 2015 and 2014. As a result, thecarrying amount of welfare facilities that is scheduled to be scraped in the future was reduced to the recoverable
amount that was determined to have no value. The amount of this reduction was recorded under other expensesof ¥158 million ($1,317 thousand) for the year ended March 31, 2015. No impairment loss was recognized forthe year-end of March 31, 2014.
Use

Classification

Location

Welfare facilities

Buildings and structures

Takatsuki Osaka, Japan

Short-term borrowings generally included overdrafts, which bore interest at the weighted-average interest rates
of 1.02% and 1.32% at March 31, 2015 and 2014, respectively.
Long-term debt at March 31, 2015 and 2014, consisted of the following:
Millions of Yen

Unsecured loans from banks and other financial institutions, due through 2019,
interest 0.40% - 11.97% (2015) and 0.35% - 11.96% (2014)............................
Secured loans from banks, due through 2019, interest 0.63% - 4.48% (2015)
and 0.79% - 4.48% (2014)................................................................................
Obligations under finance leases.......................................................................
  Total...........................................................................................................
Less current portion..........................................................................................
Long-term debt, less current portion.................................................................

Thousands of
U.S. Dollars

2015

2014

2015

¥ 8,598¥ 6,670$ 71,650

2,003
335
10,936(1,960)¥ 8,976

1,629
349
8,648
(1,691)¥ 6,957

16,692
2,791
91,133(16,333)$ 74,800

At March 31, 2015, property, plant and equipment with a total carrying value of ¥3,238 million ($26,983 thousand) were pledged as collateral for short-term borrowings of ¥768 million ($6,400 thousand) and long-term debtof ¥1,932 million ($16,100 thousand).
At March 31, 2015, machinery and equipment with a total carrying value of ¥202 million ($1,683 thousand)were pledged as collateral for the current portion of long-term debt of ¥48 million ($400 thousand) and long-term
debt of ¥71 million ($592 thousand).
Annual maturities of long-term debt, excluding finance leases, at March 31, 2015, were as follows:Year Ending March 31

2016........................................................................................................................................
2017........................................................................................................................................
2018........................................................................................................................................
2019........................................................................................................................................

Millions of Yen

Thousands of
U.S. Dollars¥1,819
1,033
5,841
1,908

$15,158
8,608
48,676
15,900Millions of Yen

Thousands of
U.S. Dollars

¥141
97
61
30
6

$1,175
808
508
250
50

Annual maturities of lease obligations at March 31, 2015 were as follows:Year Ending March 31

2016........................................................................................................................................
2017........................................................................................................................................
2018........................................................................................................................................
2019........................................................................................................................................
2020........................................................................................................................................

Long-term loans from banks include syndicated loan agreements amounting to ¥4,000 million ($33,333 thousand) at March 31, 2015. In the event that any of the following covenants are violated, the Company may lose
the benefit of the term for all the liabilities under these agreements.
These agreements include the following financial restriction provisions:(1) The amount of equity in the consolidated balance sheet at the end of the fiscal year should be more than
75% of the amount as of the previous year or as of just before the end of the year that the syndicated loan
agreements were entered into.
(2) Ordinary income in the consolidated statement of income should not be negative for two consecutive years.
Ordinary income means income before income taxes less extraordinary items. The amount of ordinary income inthe consolidated statement of income for the year ended March 31, 2015 is ¥793 million ($6,608 thousand).
Long-term loans at March 31, 2015 include loan agreements amounting to ¥432 million ($3,600 thousand)that the Company had with lenders on a negotiation basis. In the event that any of the following covenants are
violated, the Company may lose the benefit of the term for all the liabilities under these agreements.
These agreements include the following financial restriction provisions:(1) The amount of equity in the consolidated balance sheet at the end of the fiscal year should be more than
75% of the amount as of the previous year.
(2) Ordinary income in the consolidated statement of income should not be negative for two consecutive years.
Ordinary income means income before income taxes less extraordinary items. The amount of ordinary income inthe consolidated statement of income for the year ended March 31, 2015 is ¥793 million ($6,608 thousand).

30

Annual Report 2015

Financial Section

7. RETIREMENT ANDPENSION PLANS

The Company and certain consolidated subsidiaries have severance payment plans for employees. Under mostcircumstances, employees terminating their employment are entitled to retirement and pension benefits determined by reference to basic rates of pay at the time of termination, length of service and conditions under which
the termination occurs. If the termination is involuntary, caused by retirement at the mandatory retirement age or
caused by death, the employee is entitled to greater payments than in the case of voluntary termination.
The Company has contributory funded defined benefit pension plans. Certain consolidated subsidiaries have
unfunded retirement benefit plans.
The liability for retirement benefits for subsidiaries’ directors and Audit & Supervisory Board members is¥12 million ($100 thousand) and ¥14 million at March 31, 2015 and 2014, respectively.
The liability for employees’ retirement benefits at March 31, 2015 and 2014, consisted of the following:(1) The changes in defined benefit obligation for the years ended March 31, 2015 and 2014, were as follows:
Millions of Yen

Balance at beginning of year (as previously reported)...........................................
Cumulative effect of accounting change...........................................................
Balance at beginning of year................................................................................
Current service cost.........................................................................................
Interest cost.....................................................................................................
Actuarial losses................................................................................................
Benefits paid....................................................................................................
Balance at end of year.........................................................................................

Thousands of
U.S. Dollars

2015

2014

2015

¥ 5,394(1,330)
4,064
332
38
3
(330)
¥ 4,107¥5,307$ 44,950(11,083)
33,8672,767
316
25(2,750)$ 34,225

5,307
332
52
332
(629)
¥5,394(2) The changes in plan assets for the years ended March 31, 2015 and 2014, were as follows:
Millions of Yen

Balance at beginning of year................................................................................
Expected return on plan assets........................................................................
Actuarial gains.................................................................................................
Contributions from the employer......................................................................
Benefits paid....................................................................................................
Balance at end of year.........................................................................................

Thousands of
U.S. Dollars

2015

2014

2015

¥3,946
42
853
363
(243)
¥4,961¥3,176
38
878
328
(474)
¥3,946$32,883
350
7,109
3,025
(2,025)$41,342(3) Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined
benefit obligation and plan assets as of March 31, 2015 and 2014, were as follows:
Millions of Yen

Funded defined benefit obligation........................................................................
Plan assets..........................................................................................................
Total....................................................................................................................
Unfunded defined benefit obligation.....................................................................
Net (asset) liability for defined benefit obligation...................................................

2015

2014

2015

¥3,858(4,961)(1,103)249¥ (854)¥ 5,191(3,946)
1,245
203¥ 1,448$ 32,150(41,342)(9,192)
2,075$ (7,117)

Millions of Yen

Liability for retirement benefits.............................................................................
Asset for retirement benefits................................................................................
Net (asset) liability for defined benefit obligation...................................................

Thousands of
U.S. Dollars

Thousands of
U.S. Dollars

2015

2014

2015

¥   249(1,103)¥   (854)¥1,448$ 2,075(9,192)$(7,117)¥1,448(4) The components of net periodic benefit costs for the years ended March 31, 2015 and 2014, were as follows:
Millions of Yen

Service cost.........................................................................................................
Interest cost........................................................................................................
Expected return on plan assets...........................................................................
Recognized actuarial gains..................................................................................
Net periodic benefit costs....................................................................................

Thousands of
U.S. Dollars

2015

2014

2015

¥332
38
(42)
(5)
¥323

¥332
52
(38)
16
¥362

$2,767
316
(350)
(41)
$2,692(5) Amounts recognized in other comprehensive income (before income tax effect) in respect of defined retirement benefit plans for the years ended March 31, 2015 and 2014, were as follows:
Millions of Yen

Unrecognized actuarial gains...............................................................................
Total....................................................................................................................

Thousands of
U.S. Dollars

2015

2014

2015

¥1,071¥1,071¥227¥227$8,925$8,925Torishima Pump Mfg. Co., Ltd.

31

(6) Plan assets
a. Components of plan assets
Plan assets as of March 31, 2015 and 2014, consisted of the following:
Millions of Yen

Debt investments - domestic..........................................................................................................
Debt investments - international......................................................................................................
Equity investments - domestic........................................................................................................
Equity investments - international...................................................................................................
Call loans........................................................................................................................................
Others............................................................................................................................................
Total...............................................................................................................................................

2015

2014

23.1%
5.3
41.4
20.2
7.3
2.7
100.0%

21.4%
3.4
45.5
13.6
13.9
2.2
100.0%

b. Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term rates of return that are
expected currently and in the future from the various components of the plan assets.
(7) Assumptions used for the years ended March 31, 2015 and 2014, were set forth as follows:
Discount rate..................................................................................................................................
Expected rate of return on plan assets...........................................................................................
Recognition period of actuarial gain / loss.......................................................................................

2015

2014

1.0%
2.0%
10 years

1.0%
2.0%
10 years

For the expected rate of increase in salary, the rate of increase in salary index by age as of September 30,
2014 was used.
The funded entrustment that is included in 27.2% of plan assets is not estimated at the expected rate of returnon plan assets.

8. EQUITY

Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant provisions in the Companies Act that affect financial and accounting matters are summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to theyear-end dividend upon resolution at the shareholders’ meeting. For Companies that meet certain criteria, theBoard of Directors may declare dividends (except for dividends-in-kind) at any time during the fiscal year if thecompany has prescribed so in its articles of incorporation. The Company meets all the above criteria.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if thearticles of incorporation of the company so stipulate. The Companies Act provides certain limitations on theamounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at noless than ¥3 million.
b. Increases/decreases and transfer of common stock, reserve and surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve(a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on
the equity account charged upon the payment of such dividends until the aggregate amount of the legal reserve
and additional paid-in capital equals 25% of common stock. Under the Companies Act, the total amount ofadditional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides
that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can betransferred among the accounts under certain conditions upon resolution of the shareholders.
c. Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stockby resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amountavailable for distribution to the shareholders that is determined by a specific formula. Under the Companies Act,
stock acquisition rights are presented as a separate component of equity. The Companies Act also provides thatcompanies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.

32

Annual Report 2015

Financial Section

9. STOCK OPTIONSThe stock options outstanding as of March 31, 2015 are as follows:
Stock Option

Persons Granted

2008
Stock Option

5 directors
4 Audit & Supervisory
Board Members

Number of Options Granted

11,700 shares

2009
Stock Option

5 directors
5 Audit & Supervisory
Board Members

2010
Stock Option

Date of Grant

Exercise Price

Exercise Period

2008.9.19¥1

From September 20, 2008
to September 19, 2038

19,400 shares2009.7.17¥1

From July 18, 2009
to July 17, 2039

6 directors
5 Audit & Supervisory
Board Members

20,700 shares2010.7.20¥1

From July 21, 2010
to July 20, 2040

2011
Stock Option

6 directors
5 Audit & Supervisory
Board Members

24,700 shares2011.7.19¥1

From July 20, 2011
to July 19, 2041

2012
Stock Option

6 directors
4 Audit & Supervisory
Board Members

34,700 shares2012.7.19¥1

From July 20, 2012
to July 19, 2042

2013
Stock Option

5 directors
4 Audit & Supervisory
Board Members

31,900 shares2013.7.18¥1

From July 19, 2013
to July 18, 2043

2014
Stock Option

4 directors
5 Audit & Supervisory
Board Members

21,300 shares2014.7.18¥1

From July 19, 2014
to July 18, 2044

The stock option activity is as follows:
For the year ended March 31,
2014
Non-vested
March 31, 2013 - Outstanding  Granted  Vested
March 31, 2014 - Outstanding
VestedMarch 31, 2013 - Outstanding  Vested  Exercised
March 31, 2014 - Outstanding
For the year ended March 31,
2015
Non-vested
March 31, 2014 - Outstanding  Granted  Vested
March 31, 2015 - Outstanding
VestedMarch 31, 2014 - Outstanding  Vested  Exercised
March 31, 2015 - Outstanding
Exercise price Average stock price at exercise
Fair value price at grant date

2008
2009
2010
2011
2012
2013
2014
Stock Option Stock Option Stock Option Stock Option Stock Option Stock Option Stock Option

31,900(31,900)

5,000

12,80016,50019,60034,700(1,500)3,500(2,500)10,300(2,500)14,000(2,900)16,700(4,500)30,20031,90031,90021,300(21,300)

3,500

10,30014,00016,70030,20031,9003,500¥    1

10,300¥     1

(2,000)12,000¥     1

(2,600)14,100¥     1

(4,400)25,800¥     1

(4,700)27,200¥     1

21,300¥     1¥2,013¥ 1,257¥   882¥ 1,308¥   882¥ 1,213¥   882¥   728¥   882¥   872¥   901

21,300The Assumptions Used to Measure the Fair Value of 2015 Stock Option
Estimate method......................................................................Black-Scholes option pricing model
Volatility of stock price..........................................................................................................52.1%
Estimated remaining outstanding period.......................................................................... 1.5 years
Estimated dividend................................................................................................... ¥18 per share
Risk free interest rate............................................................................................................0.06%

Estimation of the number of stock options vested
Because it is difficult to reasonably estimate the number of options that will expire in the future, the number of
options that have actually forfeited is reflected.

Torishima Pump Mfg. Co., Ltd.

33

10. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, inthe aggregate, resulted in a normal effective statutory tax rate of approximately 35.6% and 38.0% for the years
ended March 31, 2015 and 2014, respectively.
The tax effects of significant temporary differences and tax loss carryforwards that resulted in deferred tax
assets and liabilities at March 31, 2015 and 2014, are as follows:
Millions of Yen
2015

Deferred tax assets:
Unrealized loss on available-for-sale securities...............................................
Loss on revaluation of available-for-sale securities.........................................
Tax loss carryforwards...................................................................................
Allowance for doubtful accounts....................................................................
Accrued bonuses...........................................................................................
Allowance for product warranties...................................................................
Allowance for losses on construction contracts..............................................
Asset for employees’ retirement benefit.........................................................
Liability for employees’ retirement benefits.....................................................
Deferred loss on derivatives under hedge accounting....................................
Other.............................................................................................................
Less valuation allowance................................................................................
  Total...........................................................................................................

¥   193
498
80
224
211
144
6
36
226
282
(613)
¥ 1,287

Deferred tax liabilities:
Unrealized gain on available-for-sale securities...............................................
Other.............................................................................................................
  Total...........................................................................................................
Net deferred tax assets.....................................................................................

¥  (791)(264)¥(1,055)¥   2322014¥   57
216
620
119
233
258
125

Thousands of
U.S. Dollars
2015

637
137
339
(717)
¥2,024$ 1,608
4,150
667
1,867
1,758
1,200
50
300
1,883
2,350
(5,108)$10,725¥ (659)(236)¥ (895)¥1,129$ (6,592)(2,200)$ (8,792)$ 1,933

A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in theaccompanying consolidated statements of income for the year ended March 31, 2015, with the corresponding
figures for 2014, is as follows:
Normal effective statutory tax rate............................................................................................
Expenses not deductible for income tax purposes....................................................................
Dividend income not taxable for income tax purposes..............................................................
Tax credit mainly for research and development costs..............................................................
Inhabitant taxes........................................................................................................................
Equity method..........................................................................................................................
Less valuation allowance..........................................................................................................
Effect of tax rate reduction on deferred tax assets....................................................................
Reconciliation of consolidation process....................................................................................
Other—net...............................................................................................................................
Actual effective tax rate.............................................................................................................

2015

2014

35.6%
5.0
(3.1)
(0.7)
3.8
11.2
(5.6)
14.4
(35.8)
1.1
25.9%

38.0%
3.5
(5.2)
(1.2)
2.7
(2.8)
7.8
7.3
(13.9)(0.8)
35.4%

New tax reform laws enacted in 2015 in Japan changed the normal effective statutory tax rate for the fiscal
year beginning on or after April 1, 2015, from approximately 35.6% to 33.1%, and for the fiscal year beginningon or after April, 2016, from approximately 35.6% to 32.3%, respectively. The effect of this change was toincrease deferred tax assets by ¥1 million ($8 thousand), to increase unrealized gain on available-for-sale securities by ¥80 million ($667 thousand), to decrease deferred loss on derivatives under hedge accounting by¥17 million ($142 thousand), to increase defined retirement benefit plans by ¥34 million ($283 thousand) in the
consolidated balance sheet as of March 31, 2015, and to increase income taxes—deferred in the consolidated­statement of income for the year then ended by ¥97 million ($808 thousand).

11. R
 ESEARCH AND
DEVELOPMENT
COSTS

Research and development costs charged to income were ¥658 million ($5,483 thousand) and ¥679 million forthe years ended March 31, 2015 and 2014, respectively.

12. LEASESThe Companies lease certain machinery, computer equipment and other assets.
Total rental expenses for the years ended March 31, 2015 and 2014, were ¥755 ­million ($6,292 thousand) and¥674 million, respectively.

13. FINANCIAL
INSTRUMENTS
AND RELATEDDISCLOSURES(1) Company Policy for Financial Instruments
The Companies use financial instruments, mainly long-term debt including bank loans, based on its capitalfinancing plan. Cash surpluses, if any, are invested in low risk financial assets. Short-term bank loans are used tofund its ongoing operations. Derivatives are used, not for speculative purposes, but to manage exposure tofinancial risks as described in (2) below.
(2) Nature and Extent of Risks Arising from Financial Instruments
Receivables such as trade notes and trade accounts are exposed to customer credit risk. Although receivables
in foreign currencies are exposed to the market risk of fluctuation in foreign currency exchange rates, the posi-

34

Annual Report 2015

Financial Sectiontion, net of payables in foreign currencies, is hedged by using forward foreign currency contracts.
Investment securities, mainly equity instruments of customers and suppliers of the Companies, are exposed to
the risk of market price fluctuations.
Payment terms of payables, such as trade notes and trade accounts, are almost all less than five months.
Although payables in foreign currencies are exposed to the market risk of fluctuations in foreign currency
exchange rates, those risks are netted against the balance of receivables denominated in the same foreign­currency as noted above.
Almost all maturities of bank loans are less than four years after the balance sheet date. Although a partof such bank loans are exposed to the market risks from changes in variable interest rates, those risks are­mitigated by using derivatives of interest-rate swaps.
Derivatives mainly include foreign currency forward contracts and interest-rate swaps that are used to manage
exposure to market risks from changes in foreign currency exchange rates of receivables and payables, and fromchanges in interest rates of bank loans. Please see Note 14 for more details about derivatives.
(3) Risk Management for Financial Instruments
Credit risk management
Credit risk is the risk of economic loss arising from a counterparty’s failure to repay according to the contractual
terms. The Companies manage their credit risk from receivables on the basis of internal ­guidelines, which include
monitoring of payment term and balances of major customers by each business administration department to
identify the default risk of customers at an early stage.
Market risk management (foreign exchange risk and interest rate risk)
Foreign currency trade receivables and payables are exposed to market risk resulting from fluctuations in foreign
currency exchange rates. Such foreign exchange risk is hedged principally by forward foreign currency contracts.
Interest-rate swaps are used to manage exposure to market risks from changes in interest rates of loan
­payables.
Investment securities are managed by monitoring the market values and financial position of issuers on a­regular basis.
The basic principles of derivative transactions are approved by management at meetings held on a regularbasis based on internal guidelines that prescribe the authority and the limits for each transaction by the corporate treasury department. Reconciliations of the transactions and balances with customers are performed andthe transaction data is reported to the chief financial officer and the management, on a regular basis.
Liquidity risk management
The Company manages its liquidity risk by holding adequate volumes of liquid assets along with adequate­financial planning by the corporate accounting department.
(4) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If the quoted price is not available, another rational valuation technique is used instead. Please see Note 14 for more details on the fair valueof derivatives.
(a) Fair value of financial instruments
Millions of Yen

March 31, 2015
Cash and cash equivalents...................................................
Receivables-trade.................................................................
Investment securities............................................................
  Total..............................................................................

Carrying Amount

Fair Value¥ 4,307
26,616
8,221¥39,144¥ 4,30726,606
8,221¥39,134¥(10)

Short-term borrowings.........................................................
Payables-trade.....................................................................
Long-term debt....................................................................
  Total..............................................................................

¥ 6,537
10,081
10,936¥27,554¥ 6,537
10,081
10,996¥27,614¥ 60¥ 60

Derivatives............................................................................

¥ 1,766¥ 1,766

March 31, 2014
Cash and cash equivalents...................................................
Receivables-trade.................................................................
Investment securities............................................................
  Total..............................................................................

Carrying Amount

Fair Value¥ 3,598
26,927
6,976¥37,501¥ 3,598
26,794
6,976¥37,368

Short-term borrowings.........................................................
Payables-trade.....................................................................
Long-term debt....................................................................
  Total..............................................................................

¥ 5,365
11,832
8,648¥25,845¥ 5,365
11,832
8,657¥25,854

Derivatives............................................................................

¥ 1,154¥ 1,154

Unrealized Gain/Loss¥(10)

Millions of Yen
Unrealized Gain/Loss¥(133)¥(133)

¥   9
¥   9

  Current portion of long-term debt is included in long-term debt.

Torishima Pump Mfg. Co., Ltd.

35

Thousands of U.S. Dollars

March 31, 2015
Cash and cash equivalents...................................................
Receivables-trade.................................................................
Investment securities............................................................
  Total..............................................................................

Carrying Amount

Fair Value$ 35,892
221,800
68,508$326,200$ 35,892
221,71768,508$326,117

Short-term borrowings.........................................................
Payables-trade.....................................................................
Long-term debt....................................................................
  Total..............................................................................

$ 54,475
84,00891,133$229,616$ 54,475
84,00891,633$230,116

Derivatives............................................................................

$ 14,717$ 14,717

Unrealized Loss

$ (83)$ (83)$500$500

Cash and Cash Equivalents
The carrying values of cash and cash equivalents approximate fair value because of their short maturities.
Receivables
The fair values of receivables are measured at the amount to be received at maturity discounted at theCompanies’ assumed corporate discount rate and an evaluation of potential losses.
Investment Securities
The fair values of investment securities are measured at the quoted market price of the stock exchange for
equity instruments.
Fair value information for investment securities by classification is included in Note 3.
Payables and Short-Term Borrowing
The fair values of payables and short-term borrowings approximate fair value because of their short maturities.
Long-Term Debt
The fair values of long-term debt are determined by discounting the cash flows related to the debt at theCompanies’ assumed corporate borrowing rate.
The interest rate swaps that qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but the differential paid or received under the swap agreements is recognized andincluded in interest expense.
As a result, the fair values of such interest rate swaps are included in those of hedged items in Note 14.
Derivatives
Fair value information for derivatives is included in Note 14.
(b) Carrying amount of financial instruments whose fair value cannot be reliably determined
Millions of Yen

Investments in equity instruments that do not have a quoted market
price in an active market..............................................................................
Trust funds....................................................................................................

Thousands of
U.S. Dollars

2015

2014

2015

¥6,03371¥5,46684$50,250592(5) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
March 31, 2015
Cash and cash equivalents.......................................................
Receivables..............................................................................
Investment securities................................................................
  Total..................................................................................

March 31, 2015

Due in 1 Yearor Less¥ 4,307
25,611¥29,918

Due in 1 Yearor Less

Cash and cash equivalents.......................................................
Receivables..............................................................................
Investment securities................................................................
  Total..................................................................................

Please see Note 6 for annual maturities of long-term debt.

36

Annual Report 2015

$ 35,892
213,425$249,317

Millions of Yen
Due after 1 Yearthrough 5 Years

Due after 5 Years
through 10 Years¥1,005700¥1,705
Thousands of U.S. Dollars
Due after 1 YearDue after 5 Years
through 5 Years
through 10 Years$ 8,375
5,833$14,208

Financial Section

14. DERIVATIVESThe Companies enter into foreign currency forward contracts to hedge foreign exchange risk associated withcertain assets and liabilities denominated in foreign currencies. The Companies also enter into interest rate swap
contracts to manage their interest rate exposures on certain liabilities.
All derivative transactions are entered into hedge interest and foreign currency exposures incorporated within
the Companies’ business. Accordingly, market risk in these derivatives is basically offset by opposite movementsin the value of hedged assets or liabilities.
Because the counterparties to these derivatives are limited to major international financial institutions, theCompanies do not anticipate any losses arising from credit risk.
Derivative transactions entered into by the Companies have been made in accordance with internal policies
that regulate the authorization and credit limit amount.
Derivative Transactions to Which Hedge Accounting is not Applied
At March 31, 2015
Foreign currency forward contracts:
Selling U.S.$.......................................

Contract AmountMillions of Yen
Contract Amount Dueafter One Year
Fair Value¥2,517At March 31, 2014
Foreign currency forward contracts:
Buying U.S.$.......................................
NDF:
Buying Korean won.............................

Contract AmountAt March 31, 2015
Foreign currency forward contracts:
Selling U.S.$.......................................

Contract Amount¥3,002190¥(485)

Millions of Yen
Contract Amount Dueafter One Year
Fair Value¥398

Unrealized Gain

¥410

¥12

192

2

Thousands of U.S. Dollars
Contract Amount Dueafter One Year
Fair Value$20,975

Unrealized Loss

$25,017

Unrealized Loss$(4,042)

Derivative Transactions to Which Hedge Accounting is Applied
At March 31, 2015
Hedged Item
Foreign currency forward contracts:
Selling U.S.$....................................... Receivables
Selling Euros....................................... Receivables
Interest rate swaps:(fixed rate payment,
floating rate receipt).............................. Long-term debt

At March 31, 2014

Hedged Item

Millions of Yen
Contract Amount Due
Contract Amountafter One Year

¥8,501
1,401

3,218

¥8,0662,542

Interest rate swaps:(fixed rate payment,
floating rate receipt).............................. Long-term debt

2,246

At March 31, 2015
Hedged Item
Foreign currency forward contracts:
Selling U.S.$....................................... Receivables
Selling Euros....................................... Receivables
Interest rate swaps:(fixed rate payment,
floating rate receipt).............................. Long-term debt

¥9,847
1,329¥3,170Millions of Yen
Contract Amount Due
Contract Amountafter One Year

Foreign currency forward contracts:
Selling U.S.$....................................... Receivables
Selling Euros....................................... Receivables

Fair Value¥8,432
2,727¥2,191Thousands of U.S. Dollars
Contract Amount Due
Contract Amountafter One Year

$70,842
11,675

26,817

Fair Value

Fair Value$82,058
11,075$26,417

The interest rate swaps that qualify for hedge accounting and meet specific matching criteria are not remeasured at market value but the differentials paid or received under the swap agreements are recognized andincluded in interest expense.

Torishima Pump Mfg. Co., Ltd.

37

15. OTHERCOMPREHENSIVEINCOMEThe components of other comprehensive income for the years ended March 31, 2015 and 2014, are as follows:

2015

Unrealized gain on available-for-sale securities:
Gains arising during the year..........................................................................
Reclassification adjustments to profit or loss..................................................
Amount before income tax effect...................................................................
Income tax effect...........................................................................................
Total..............................................................................................................
Deferred (loss) gain on derivatives under hedge accounting:
Gains arising during the year..........................................................................
Amount before income tax effect...................................................................
Income tax effect...........................................................................................
Total..............................................................................................................
Foreign currency translation adjustments:
Adjustments arising during the year...............................................................
Reclassification adjustments to profit or loss..................................................
Amount before income tax effect...................................................................
Total..............................................................................................................
Defined retirement benefit plans:
Gains arising during the year..........................................................................
Amount before income tax effect...................................................................
Income tax effect...........................................................................................
Total..............................................................................................................
Share of other comprehensive income in associates - Gains arising during theyear...................................................................................................................
Total..............................................................................................................
Total other comprehensive income....................................................................

16. CASH FLOWS

Thousands of
U.S. Dollars

Millions of Yen

2015

2014

¥  729$ 6,075

729(188)¥  541

¥429
(49)
380
(210)
¥170

¥ (296)(296)
88¥ (208)

¥ 73
73
(37)
¥ 36

$ (2,466)(2,466)733$ (1,733)¥  699

¥729
(98)
631
¥631

$ 5,825699¥  699¥  844844(265)¥  5796,075(1,567)$ 4,508

5,825$ 5,825$ 7,033
7,033(2,208)$ 4,825¥  213¥  213¥1,824

¥108
¥108
¥945

$ 1,775$ 1,775$15,200

Year Ended March 31, 2014
Main components of assets and liabilities in relation to the sale of all the shares of a consolidated subsidiary withcash consideration
Decreases of assets and liabilities in relation to the sale of all shares of a consolidated subsidiary and proceedsfrom the sale are as follows:
Millions of Yen

Current assets...................................................................................................

17. N
 ET INCOMEPER SHARE

589

Current liabilities................................................................................................

(649)

Noncurrent liabilities...........................................................................................

(57)

Minority interests...............................................................................................

(300)

Goodwill............................................................................................................

(63)

Gain on sales of consolidated subsidiaries.........................................................

1,076

Proceeds from sales of consolidated subsidiary.................................................

1,701

Account receivable............................................................................................

(552)

Cash and cash equivalents of consolidated subsidiary.......................................

(24)

Gain on sales of consolidated subsidiaries-net...................................................

¥1,125Reconciliation of the differences between basic and diluted net income per share (“EPS”) for the years ended
March 31, 2015 and 2014, is as follows:
Millions of Yen

For the year ended March 31, 2015:
Basic EPS
 Net income available to commonshareholders.....................................
Effect of dilutive securities
Stock acquisition rights.........................
Diluted EPS
Net income for computation................
For the year ended March 31, 2014:
Basic EPS
 Net income available to commonshareholders.....................................
Effect of dilutive securities
Stock acquisition rights.........................
Diluted EPS
Net income for computation................

38

Annual Report 2015

¥1,105

Noncurrent assets.............................................................................................

Yen

Net Income

Thousands of Shares
Weighted-Average
Shares

Dollars¥405

27,738¥14.61

$0.12

$0.12

EPS

111
¥405

27,849¥14.55¥442

28,071¥15.74101¥442

28,172¥15.69Financial Section

18. SUBSEQUENTEVENTS

Appropriation of Retained Earnings
The following appropriation of retained earnings at March 31, 2015 was approved at the board of directors’
meeting held on May 15, 2015:
Millions of Yen

Thousands of
U.S. Dollars¥247$2,058Year-end cash dividends, ¥9.0 ($0.08) per share......................................................................

19. SEGMENT
INFORMATION

Under ASBJ Statement No. 17, “Accounting Standard for Segment Information Disclosures” and ASBJ Guidance
No. 20, “Guidance on Accounting Standard for Segment Information Disclosures”, an entity is required to reportfinancial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components
of an entity about which separate financial information is available and such information is evaluated regularly by
the chief operating decision maker in deciding how to allocate resources and in assessing performance.
Generally, segment information is required to be reported on the same basis as is used internally for evaluating
operating segment performance and deciding how to allocate resources to operating segments.
1. Information about products and services
For the fiscal years ended March 31, 2015 and 2014, the total sales, operating income and total assets of the
Pump reporting segment exceeded 90% of the totals of the Companies, thus the Companies have omitted thedisclosure of information about products and services.
2. Information about geographical areas(1) Sales
Millions of Yen
2015
Middle East
Japan

Asia

Saudi Arabia

Other

Other

Total

¥19,105¥11,125¥4,808¥6,308¥5,156¥46,502

Millions of Yen
2014
Middle East
Japan

Asia

Saudi Arabia

Other

Other

Total

¥20,097¥9,042¥4,795¥4,959¥7,092¥45,985

Thousands of U.S. Dollars
2015
Middle East
Japan

Asia

Saudi Arabia

Other

Other

Total

$159,208$92,708$40,067$52,567$42,967$387,517

Note: Sales are classified by country or region based on the location of customers.

(2) Property, plant and equipment
Millions of Yen
2015
Japan

Asia

Middle East

Other

Total

¥7,627¥1,889¥682¥414¥10,612

Millions of Yen
2014
Japan

Asia

Middle East

EuropeTotal¥7,832¥1,760¥524¥396¥10,512

Thousands of U.S. Dollars
2015
Japan

Asia

Middle East

Other

Total

$63,558$15,742$5,683$3,450$88,433

3. Information about goodwill

Amortization of goodwill.....................................................................................
Goodwill............................................................................................................

Millions of Yen
2015
2014

Thousands of
U.S. Dollars
2015

Pumps

Pumps

¥22
76

¥31
21

$183
633

Torishima Pump Mfg. Co., Ltd.

39

Financial Section

Independent Auditor’s Report

Deloitte Touche Tohmatsu LLC
Elgala
1-4-2, Tenjin, Chuo-ku
Fukuoka-shi, Fukuoka 810-0001
Japan
Tel: +81 (92) 751 0931
Fax: +81 (92) 751 1035
www.deloitte.com/jp

To the Board of Directors of Torishima Pump Mfg. Co., Ltd.:We have audited the accompanying consolidated balance sheet of Torishima Pump Mfg. Co., Ltd. and its consolidated
subsidiaries as of March 31, 2015, and the related consolidated statements of income, comprehensive income, changes
in equity, and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory
information, all expressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines
is necessary to enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from­material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks ofmaterial misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purposeof expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Torishima Pump Mfg. Co., Ltd. and its consolidated subsidiaries as of March 31, 2015, and theconsolidated results of their operations and their cash flows for the year then ended in accordance with accounting­principles generally accepted in Japan.
Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made in accordance with the basis stated in Note 1 to the consolidated financial statements. Such
U.S. dollar amounts are presented solely for the convenience of readers outside Japan.

June 26, 2015
Member of
Deloitte Touche Tohmatsu Limited

40

Annual Report 2015

Corporate Data

(As of end of March 2015)

Company nameTORISHIMA PUMP MFG. CO., LTD.

Foundation

August 1, 1919

Outstanding shares

29,889,079

Paid-in capital¥1,592,775,030

Shareholders

9,883

Employees

1,516

URL

www.torishima.co.jp/en

Share Breakdown by Type of
Shareholder
Financial institutions
7,633,748
25.54%

Treasury stock
2,401,805
8.04%
Individuals
and others
8,686,513
29.06%

Places of business
Head office

1-1-8, Miyata-cho, Takatsuki-city, Osaka 569-8660, Japan

Branch offices

Tokyo, Osaka, Kyushu, Nagoya, Sapporo, Sendai, Hiroshima,
Takamatsu, Singapore, Middle East (U.A.E.),
North America (U.S.A.), Saudi Arabia

Sales offices
Manufacturing plants

Okinawa, Saga, Yokohama, Wakayama
Head Office Works (Takatsuki-city, Osaka Pref.)Kyushu Works (Takeo-city, Saga Pref.)Non-Japanesecompanies, etc.
3,823,504
12.79%
Other companies
6,811,724
22.79%

Financial instruments
business operators
531,785
1.78%

Indonesia Works (Jakarta)
China Works (Tianjin)

Global Network(As of end of June 2015)

Service Center

Manufacturing
Torishima Beijing Office
Torishima Europe Ltd.
Torishima Europe Projects Ltd.
Torishima Service Solutions Europe Ltd.

Torishima Pump (Tianjin) Co., Ltd.
Torishima North America East Office
FEDCO Head Office
Torishima Europe Ltd.
Mexico Office
Torishima Taiwan Office

Torishima Europe Ltd.
Poland Office

Torishima Korea Liaison Office

Torishima Europe Ltd.
Madrid Office

Torishima Japan Head Office
Kyushu Torishima Co., Ltd.

Torishima Saudi Arabia Office
Torishima Qatar Project Office
Torishima Middle East Office(Abu Dhabi/U.A.E.)
Torishima Service Solutions FZCO
(Dubai/U.A.E.)
Torishima Pumps (India) Pvt. Ltd.
Sales Office (Gurgaon)
Services Division (Bangalore)

Torishima (Hong Kong) Ltd.
Torishima (Hong Kong) Ltd.
Vietnam Office
P.T. Geteka Founindo
P.T. Torishima Guna Indonesia
P.T. Torishima Guna Engineering
Torishima Australia Pty. Ltd.
Torishima Singapore Office
Torishima Service Solutions Asia Pte. Ltd.

Torishima Pump Mfg. Co., Ltd.

41

1-1-8, Miyata-cho, Takatsuki-city, Osaka 569-8660, Japan
www.torishima.co.jp/en

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