Miura Co., Ltd. and
its Consolidated Subsidiaries
Consolidated Financial Statements for theYear Ended March 31, 2015,
and Independent Auditor's ReportMiura Co., Ltd. and its Consolidated Subsidiaries
Consolidated Balance Sheet
March 31, 2015

ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 18)¥
Short-term investments (Notes 4 and 18)
Marketable securities (Notes 5 and 18)
Receivables (Note 18):
Trade notes
Trade accounts
Unconsolidated subsidiaries and associated companies (Note 7)
Other
Allowance for doubtful accounts
Inventories (Note 6)
Lease investment assets (Notes 17 and 18)
Deferred tax assets (Note 13)
Prepaid expenses and otherTotal current assets

Millions of Yen
2015
2014

Thousands of
U.S. Dollars(Note 1)
2015

23,7608,423
116,923
12,689502$ 197,720
70,092
8

8,296
16,669
326
192
(73 )
13,014
2,066
2,121
686

7,202
16,613
181
107
(57 )
11,213
2,151
2,318
549

69,036
138,7102,713
1,598(607 )
108,297
17,192
17,6505,709

75,481

70,391

628,118¥

11,674
34,691
8,195
7,308
860
62,728(23,453 )

11,392
31,057
6,971
6,905
822
57,147(22,020 )97,146288,682
68,19560,814
7,157
521,994(195,165 )Net property, plant and equipment

39,27535,127

326,829

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 5 and 18)
Investments in and advances to unconsolidated subsidiaries andassociated companies
Deposits
Asset for retirement benefits (Note 9)
Deferred tax assets (Note 13)
Other
Total investments and other assets

10,577

9,557

88,017

648
840
1,651
77
976

350
750
432
892

5,392
6,990
13,739641
8,122

14,76911,981

122,901¥ 129,525¥ 117,499

-1-

$

317

23,79822,504

198,036

17
445
55
1,629
363

6
2,362
70
3
376

141
3,703
458
13,556
3,021

Total long-term liabilities

2,509

2,817

20,879Total liabilities

26,30725,321

218,915

9,544
10,089205
86,306

9,544
10,089123
78,55379,421
83,956
1,706
718,199(7,056 )(7,053 )(58,717 )

2,561
3,031
(1,483 )103,197
21

860
1,405
(1,362 )92,15919

21,311
25,223(12,341 )
858,758
175

103,218

92,178858,933¥ 129,525¥ 117,499$ 1,077,848

TOTAL

See notes to consolidated financial statements.

30

7
526

EQUITY (Notes 11, 12 and 22):
Common stock*—authorized, 300,000,000 shares;
issued, 125,291,112 shares in 2015 and 2014
Capital surplus
Stock acquisition rights
Retained earnings
Treasury stock*—at cost, 12,824,842 shares in 2015 and12,822,588 shares in 2014
Accumulated other comprehensive income
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total
Minority interests* Shares have been restated, as appropriate, to reflect a three-for-one stock split effected October 1, 2014.

¥

5,717
20,895449
34,651
9,778
65,45750,004
5,284
75
316
108
4,985

LONG-TERM LIABILITIES:Long-term borrowings (Note 8)
Liability for retirement benefits (Note 9)
Retirement allowances for directors (Note 10)
Deferred tax liabilities (Note 13)
Other$ 1,077,848

38

560
2,225
47
3,392
2,570
6,528
5,948
660
11

Total equity
TOTAL

¥

687
2,511
54
4,164
1,175
7,866
6,009
635
9
38
13
599

Total current liabilities
PROPERTY, PLANT AND EQUIPMENT:Land
Buildings and structures
Machinery and equipment (Note 17)
Tools, furniture and fixtures (Note 17)
Construction in progress
Total
Accumulated depreciation

Millions of Yen
2015
2014

LIABILITIES AND EQUITYCURRENT LIABILITIES:
Short-term borrowings (Note 8)
Payables (Note 18):
Trade notes
Trade accounts
Unconsolidated subsidiaries and associated companies
Other
Income taxes payable (Note 18)
Advances received from customers
Accrued expenses
Product warranty provision
Provision for environmental measures
Provision for shareholders benefit program
Asset retirement obligations
Other current liabilities

Thousands of
U.S. Dollars(Note 1)2015

Miura Co., Ltd. and its Consolidated Subsidiaries
Consolidated Statement of Income
Year Ended March 31, 2015
Thousands of
U.S. Dollars(Note 1)
2015

Millions of Yen
2015
2014
NET SALES (Note 15)¥ 90,424¥ 85,536$ 752,467

53,38049,940444,204

37,04435,596308,263

28,032

26,631

233,270

9,012

8,965

74,993

304
394
549
(88 )
(15 )

298
385
356

2,530
3,279
4,568
(732 )(125 )COST OF SALES (Notes 9 and 15)
Gross profit
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES(Notes 9, 14 and 15)
Operating income
OTHER INCOME (EXPENSES):Interest and dividend income
Rent on real estate (Note 15)
Foreign exchange gain—net
Loss on valuation of shares of subsidiary
Loss on sales of shares of subsidiary
Impairment loss of long-lived assets
Other—net (Note 16)404(297 )
416

3,362

1,548

1,158

12,882

INCOME BEFORE INCOME TAXES AND MINORITY
INTERESTS

10,56010,12387,875

INCOME TAXES (Note 13):
Current
Deferred

3,007
88

4,095
(262 )

25,023732

Total income taxes

3,095

3,833

25,755

7,465

6,290

62,120

1

1

8

6,289

$ 62,112

Other income—net

NET INCOME BEFORE MINORITY INTERESTSMINORITY INTERESTS IN NET LOSSNET INCOME

¥

7,464

¥
Yen

PER SHARE OF COMMON STOCK* (Note 21):
Basic net income
Diluted net income
Cash dividends applicable to the year

¥

66.37
66.23
19.67

U.S. Dollars
¥

55.92
55.84
18.33

$

0.55
0.55
0.16

* Per share figures have been restated, as appropriate, to reflect a three-for-one stock split effected October 1,
2014.
See notes to consolidated financial statements.

-2-

Miura Co., Ltd. and its Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Year Ended March 31, 2015

Millions of Yen
2015
2014
NET INCOME BEFORE MINORITY INTERESTS¥OTHER COMPREHENSIVE INCOME (Note 19):
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total other comprehensive income

7,465

¥

1,700
1,627
(121 )
3,206

COMPREHENSIVE INCOME

6,290

Thousands of
U.S. Dollars(Note 1)
2015
$

528
2,091

62,12014,147
13,539(1,007 )
26,6792,619¥ 10,671

¥

8,909

$

88,799TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the Company¥ 10,668
Minority interests
3

¥

8,904
5

$

88,77425

See notes to consolidated financial statements.

-3-

Miura Co., Ltd. and its Consolidated Subsidiaries
Consolidated Statement of Changes in Equity
Year Ended March 31, 2015
Thousands

BALANCE, APRIL 1, 2013

IssuedNumber of
Shares ofCommonStock*

Treasury
Stock*

CommonStockCapitalSurplus

Stock
Acquisition
RightsRetained
Earnings

TreasuryStock125,291(12,831 )¥¥ 10,088¥¥ 73,737¥

Net income
Cash dividends, ¥14.00 per share
Purchase of treasury stock
Exercise of stock options
Change in scope of consolidation
Net change in the year
BALANCE, MARCH 31, 2014 (APRIL 1, 2014,as previously reported)
Cumulative effects of changes in accounting
policies
BALANCE, APRIL 1, 2014 (as restated)

(3 )
11

(7,057 )

¥

333

¥

(682 )¥ 86,016

2,087¥ (1,362 )

6,289(1,574 )
(2 )
7
101
1,322

1,405

¥

(1,362 )¥ 92,159(1,362 )2,538
94,697

1,626(121 )

7,464(2,249 )
(3 )
3,288

3,031

¥ (1,483 )¥ 103,197

(2 )
6

1
101
70

125,291(12,823 )

125,291(12,823 )

¥

9,544

¥ 10,089

9,544

10,089

¥

527

123

¥ 78,553

123

2,538
81,091¥(7,053 )(7,053 )

¥

860

¥

860

1,405

7,464
(2,249 )
(2 )

(3 )
82

125,291

CommonStock
BALANCE, MARCH 31, 2014 (APRIL 1, 2014,as previously reported)$ 79,421
Cumulative effects of changes in accounting
policies
BALANCE, APRIL 1, 2014 (as restated)
79,421(12,825 )

¥

9,544

¥ 10,089

¥

1,701

205

¥ 86,306¥(7,056 )¥ 2,561¥

CapitalSurplus

Stock
Acquisition
RightsRetained
Earnings

Thousands of U.S. Dollars (Note 1)
Accumulated othercomprehensive income
Unrealized
Gain onForeign
AvailableCurrency
Treasury
for-saleTranslation
Stock
Securities
Adjustments$ 83,956$

1,024$ 653,682$ (58,692 )1,024

21,120674,802(58,692 )

83,956

Net income
Cash dividends, $0.2 per share
Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2015

53$

Remeasurementsof defined
benefit plans

Total

7,156

$ 11,692$ (11,334 )$ 766,905

7,156

11,692(11,334 )

21,120788,025

62,112(18,715 )
14,155

13,531(1,007 )62,112(18,715 )(25 )27,361$ 21,311$ 25,223$ (12,341 )$ 858,758

(25 )
682
$ 79,421$ 83,956$

1,706$ 718,199$ (58,717 )* Shares and per share figures have been restated, as appropriate, to reflect a three-for-one stock split effected October 1, 2014.
See notes to consolidated financial statements.

-4-

Minority
Interests

Total

6,289
(1,574 )Net income
Cash dividends, ¥20.00 per share
Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2015

9,544

Millions of Yen
Accumulated other comprehensive
incomeUnrealized
Gain onForeign
AvailableCurrency
Remeasurements
for-saleTranslationof defined
Securities
Adjustments
benefit plans

¥

¥

¥

Minority
Interests

$

$

Total
Equity14¥ 86,030

5

6,289(1,574 )
(2 )
7
101
1,327

19

¥ 92,178

19

2,538
94,7162

7,464(2,249 )
(3 )
3,290

21

¥ 103,218

Total
Equity158$ 767,063

158

21,120788,18317

62,112(18,715 )(25 )27,378175$ 858,933

Miura Co., Ltd. and its Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2015

Millions of Yen
2015
2014
OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes—paidDepreciation and amortization
Retirement benefit expenses
Increase in asset for retirement benefits
Impairment loss of long-lived assets(Decrease) increase in net liability for retirement benefits
Decrease in prepaid pension costs
Increase (decrease) in allowance for doubtful accounts(Decrease) increase in provision for accrued bonuses
to employees
Stock based compensation expense
Loss on valuation of shares of subsidiary
Loss on sales of shares of subsidiary
Loss (gain) on disposal and sale of property,
plant and equipment
Foreign exchange gain
Loss on valuation of investment securities
Increase in receivables
Increase in inventories
Increase (decrease) in payables
Increase in advances received
Other—net
Total adjustments¥ 10,560¥ 10,123$ 87,875(4,412 )2,546
750(556 )(3,264 )2,192(36,715 )21,187
6,241(4,627 )

297
79
456
(43 )

(10 )
7

Net cash provided by operating activities
INVESTING ACTIVITIES:
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of marketable securities
Proceeds from sales and redemption of marketable securities
Purchase of investment securities
Proceeds from sales and redemption of investment securities
Payment for loans
Proceeds from collection of loans
Payments for sales of shares of subsidiaries resulting inchange in scope of consolidation
Purchase of shares of unconsolidated subsidiaries
Payment for investment in associated companies
Increase in short-term investments—net
Other—net

¥

(83 )
58

(543 )
82
88
15

710
77

(4,519 )
682
732
125

131
(469 )
5(741 )(1,407 )
206
1,159
1,552
(1,597 )(128 )(214 )
3(1,427 )(806 )
(47 )
196
318
(1,601 )

1,090(3,903 )42(6,166 )(11,708 )
1,714
9,645
12,915(13,290 )

8,963

8,522

74,585(6,598 )257(6,873 )11,373(2 )1,412(219 )
21(4,482 )486(14,698 )14,100(296 )
517(184 )
101(54,906 )2,139(57,194 )
94,641(17 )
11,750(1,822 )175(8 )(317 )Net cash used in investing activities
FORWARD

Thousands of
U.S. Dollars(Note 1)
2015

(67 )
(2,638 )557(265 )(41 )
147(331 )

4,635(2,205 )(662 )(4,681 )(5,509 )3,841$ 69,076

8,301¥(Continued)-5-

Miura Co., Ltd. and its Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2015

Millions of Yen
2015
2014
FORWARD¥

3,841$ 69,076

10
(7 )
(3 )
(2,246 )(6 )(2 )(1,574 )

83
(59 )
(25 )
(18,689 )Net cash used in financing activities(2,246 )(1,582 )(18,690 )FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS

782

361

6,507

NET INCREASE IN CASH AND CASH
EQUIVALENTS

6,837

2,620

56,893

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

16,923

13,257140,827

FINANCING ACTIVITIES:
Increase in short-term borrowings―net
Repayments of lease obligations
Purchase of treasury stock
Cash dividends paid

8,301

INCREASE IN CASH AND CASH EQUIVALENTSRESULTING FROM CHANGE IN SCOPE OF
CONSOLIDATION¥

Thousands of
U.S. Dollars(Note 1)
2015

1,046

CASH AND CASH EQUIVALENTS, END OF YEAR

¥ 23,760¥ 16,923$ 197,720

See notes to consolidated financial statements.
(Concluded)-6-

Miura Co., Ltd. and its Consolidated Subsidiaries
Notes to Consolidated Financial Statements
Year Ended March 31, 2015
1.

BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements of Miura Co., Ltd. (the “Company”) and its
consolidated subsidiaries have been prepared in accordance with the provisions set forth in the Japanese
Financial Instruments and Exchange Act and its related accounting regulations, and in accordance withaccounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain
respects as to application and disclosure requirements of International Financial Reporting Standards.
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 a form which
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 theCompany is incorporated and operates. 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 ¥120.17
to U.S.$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.

Principles of Consolidation—The consolidated financial statements as of March 31, 2015 include theaccounts of the Company and its fifteen (fifteen in 2014) significant subsidiaries (collectively, the“Companies”).
Miura International Inc. (USA) was established in February 2015, and was included in the scope of
consolidation. Miura Manufacturing Korea Co., Ltd. (Korea) was excluded from the scope of
consolidation beginning in the third quarter due to the transfer of shares in July 2014.
Under the control and influence concepts, those companies in which 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 seven (four in 2014) unconsolidated subsidiaries and three (three in 2014) associatedcompanies are stated at cost. If the equity method had been applied to account for investments in thesecompanies, the effect on the accompanying consolidated financial statements would not be material.
All significant intercompany balances and transactions have been eliminated in consolidation. All
material unrealized profit included in assets resulting from transactions among the Companies iseliminated.
Eight consolidated subsidiaries use a fiscal year ending on December 31, which is different from theCompany's fiscal year. The consolidated financial statements include the financial statements of thesesubsidiaries for their fiscal year after making appropriate adjustments for significant intercompany
transactions during the period from their fiscal year end to the date of the consolidated financial
statements.

b.

Cash Equivalents—Cash equivalents are short-term investments that are readily convertible into cash
and that are exposed to insignificant risk of changes in value.
Cash equivalents include time deposits and certificates of deposit, all of which mature or become due
within three months of the date of acquisition.

-7-

c.

Short-term Investments—Short-term investments consist of time deposits which mature in more than
three months from the date of acquisition, negotiable certificates of deposit and trust funds.

d.

Inventories— Inventories are stated at cost, determined by the following method (consolidatedbalance sheet value is calculated using the devaluating book value method based on decreases in
profitability).
・Merchandise and raw materials ― principally by the average method・Finished products, semi-finished products and work-in-process― principally by the specific identification method
・Supplies ― principally by the last purchase cost methode.

Marketable and Investment Securities—Marketable and investment securities are classified andaccounted for, depending on management's intent, as follows:(1) Held-to-maturity debt securities, which are expected to be held to maturity with the positive
intent and ability to hold to maturity, are reported at amortized cost.
(2) Available-for-sale securities are reported at fair value, with unrealized gains and losses, net of
applicable taxes, reported in a separate component of equity.
Non-marketable available-for-sale securities are stated at cost determined by the moving-averagemethod. For other-than-temporary declines in fair value, investment securities are reduced to net
realizable value by a charge to income.

f.

Property, Plant and Equipment—Property, plant and equipment are stated at cost. Depreciation iscomputed by the declining-balance method over the estimated useful lives of the assets, while thestraight-line method is applied to buildings, excluding structures (e.g., facilities for water supply anddrainage, air conditioning units and electricity), which were acquired after April 1, 1998. Machineryand equipment held for lease are depreciated by the straight-line method over the respective lease
periods.
The estimated useful lives are principally as follows:
Buildings and structures
15 to 65 years
Machinery and equipment (excluding leases)
6 to 12 yearsg.

Long-lived Assets —The Companies review their long-lived assets for impairment whenever events orchanges in circumstance indicate the carrying amount of an asset or asset group may not berecoverable. An impairment loss would be recognized if the carrying amount of an asset or asset groupexceeds the sum of the undiscounted future cash flows expected to result from the continued use andeventual disposition of the asset or asset group. The impairment loss would be measured as theamount by which the carrying amount of the asset exceeds its recoverable amount, which is the higherof the discounted cash flows from the continued use and eventual disposition of the asset or the net
selling price at disposition.

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 ofpotential losses in the receivables outstanding.

i.

Provision for environmental measures—To provide for the future expenditures on environmental
protection (disposal cost of polychlorinated biphenyls waste), the estimated amount is recorded at theend of the fiscal year.

j.

Product warranty provision—Product warranty provision is provided to cover the cost of all services
anticipated to be incurred during the entire warranty period and based on past experience.

k.

Provision for shareholders benefit program—Provision for shareholders benefit program comprises
the estimated expenses for shareholders benefit program for the following fiscal year.

-8-

l.

Employees' Retirement and Pension Plans—The Company and its domestic subsidiaries havenon-contributory funded pension plans covering substantially all of their employees.
Three foreign subsidiaries in Korea, Indonesia and Taiwan have funded or unfunded retirement planscovering substantially all of their employees.
The asset and liability for employees' retirement benefits are based on the projected benefit obligations
and plan assets at the consolidated balance sheet date. The net periodic benefit costs, based on an
actuarial computation of current and future employee benefits, are charged to income.
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 BusinessAccounting Council in 1998 with an effective date of April 1, 2000, and the other related practicalguidance, and were followed by partial amendments from time to time through 2009.
(1) 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 othercomprehensive income), after adjusting for tax effects, and any resulting deficit or surplus isrecognized as a liability (liability for retirement benefits) or asset (asset for retirement benefits).
(2) The revised accounting standard does not change how to recognize actuarial gains and losses andpast service costs in profit or loss. Those amounts are recognized in profit or loss over a certain
period no longer than the expected average remaining service period of the employees. However,actuarial gains and losses and past 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 priorperiods and then recognized in profit or loss in the current period, are treated as reclassification
adjustments (see Note 19).
(3) The revised accounting standard also made certain amendments relating to the method of
attributing expected benefit to periods and relating to the discount rate and expected future salary
increases.
This accounting standard and the guidance for (1) above are effective for the end of annual periods
beginning on or after April 1, 2013, and for (2) and (3) 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 orafter April 1, 2015, subject to certain disclosure in March 2015, both with earlier application being
permitted from the beginning of annual periods beginning on or after April 1, 2013. However, noretrospective application of this accounting standard to consolidated financial statements in priorperiods is required.
The Company applied the revised accounting standard and guidance for retirement benefits for (1)above, effective March 31, 2014, and for (2) and (3) above, effective April 1, 2014.
With respect to (3) above, the Company changed the method of attributing the expected benefit toperiods from a straight-line basis to a benefit formula basis and the method of determining thediscount rate from using the period which approximates the expected average remaining service
period to using a single weighted average discount rate reflecting the estimated timing and amount ofbenefit payment, and recorded the effect of (3) above as of April 1, 2014, in retained earnings. As aresult, liability for retirement benefits as of April 1, 2014, decreased by ¥2,131 million ($17,733
thousand) asset for retirement benefits as of April 1, 2014, increased by ¥1,798 million ($14,962
thousand), and retained earnings as of April 1, 2014, increased by ¥2,538 million ($21,120 thousand).
Further, operating income and income taxes and minority interests for the year ended March 31, 2015,
increased by ¥52 million ($433 thousand). In addition, basic net income per share and diluted net
income per share for the year ended March 31, 2015, increased by ¥0.47 ($0.004) and ¥0.47 ($0.004),
respectively.

-9-

m.

Retirement Allowances for Directors in Some Consolidated Subsidiaries—Directors are entitled toreceive lump-sum payments based on their compensation at the time of retirement and years of service
when they leave the Companies, subject to the approval by the shareholders.
The annual provision for severance payments is calculated to state the severance liability at theamount that would be payable if all directors were to retire at each consolidated balance sheet date.
Accrued provisions are not funded.

n.

Advances Received from Customers—The Companies provide various repair and maintenanceservices to their customers under three-year contracts. The Companies receive advances from
customers for the full contract cost and recognize revenues on a straight-line basis over the contract
period.

o.

Stock Options—The accounting standard for stock options 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 the vesting 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 ofeither the stock option or the goods or services received. In the balance sheet, the stock option ispresented 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 theirintrinsic value if they cannot reliably estimate fair value.

p.

Research and Development Costs ― Research and development costs are charged to income as
incurred.

q.

Leases―The Company leases certain assets produced as a lessor and the Companies lease certain
equipment as lessees.
Lessor:All finance leases that are not deemed to transfer ownership of the leased property to the lessee arerecognized as lease investment assets. Sales and cost of sales are recorded upon receipt of lease
revenue.
Lessee:All finance lease transactions are capitalized to recognize lease assets and lease obligations in thebalance sheet. Lease assets are included in “Machinery and equipment” and “Tool, furniture andfixtures”, and lease obligations are included in “Short-term borrowings” and “Long-term borrowings”,
as such amounts are considered immaterial.

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 and liabilities. Deferred taxes are measured byapplying currently enacted tax laws 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 theconsolidated balance sheet date. The foreign exchange gains and losses from translation arerecognized 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 of the consolidated foreignsubsidiaries are translated into Japanese yen at the current exchange rate as of the balance sheet date
except for equity, which is translated at the historical rate.
Differences arising from such translation are shown as “Foreign currency translation adjustments” in a
separate component of equity. Revenue and expense accounts of consolidated foreign subsidiaries aretranslated into yen at the average exchange rate.

- 10 -

u.

Derivatives and Hedging Activities — The Companies use derivative financial instruments to manage
their exposures to fluctuations in foreign exchange. Foreign exchange forward contracts are utilized
by the Companies to reduce foreign currency exchange risks. The Companies do not enter into
derivatives for trading or speculative purposes.
Derivative financial instruments are classified and accounted for as follows: all derivatives arerecognized as either assets or liabilities and measured at fair value, and gains or losses on derivativetransactions are recognized in the consolidated statement of income.
Foreign currency forward contracts employed to hedge foreign exchange exposures for export sales
are measured at fair value and the unrealized gains/losses are recognized in income.

v.

Per Share Information—Basic net income per share is computed by dividing net income available tocommon shareholders by the weighted-average number of common shares outstanding for the period,
retroactively adjusted for stock splits.
Diluted net income per share reflects the potential dilution that could occur if stock options were
exercised. Diluted net income per share of common stock assumes full conversion of the outstanding
stock options at the beginning of the year.
Cash dividends per share shown in the accompanying consolidated statement of income represent cash
dividends, including semi-annual cash dividends, applicable to the income of the respective years.
On October 1, 2014, the Company effected a three-for-one stock split by way of a free share
distribution based on the resolution of the Board of Directors meeting held on September 1, 2014. All
prior year share and per share figures have been restated to reflect the impact of the stock split, and toprovide data on a basis comparable to the year ended March 31, 2015. Such restatements include
calculations regarding the Company's weighted-average number of common shares, basic net income
per share, diluted net income per share, stock option data of the Company's common stock, and cash
dividends per share.

3.

CHANGE IN PRESENTATION
Prior to April 1, 2014, the increase/decrease in advances received was included in “other―net” of theoperating activities section in the consolidated statement of cash flows. Since the amount increased
significantly during the fiscal year ended March 31, 2015, the increase/decrease is presented separately inthe operating activities section in the consolidated statement of cash flows for the years ended of March 31,
2015 and 2014. The amount included in “other―net” for the year ended March 31, 2014, was ¥196 million
increase.

4.

SHORT-TERM INVESTMENTS
Short-term investments at March 31, 2015 and 2014, consisted of the following:

Millions of Yen
2015
2014
Time deposits
Negotiable certificates of deposit
Total

¥
¥

- 11 -

5,723
2,700
8,423

¥

5,989
6,700
¥ 12,689

Thousands of
U.S. Dollars
2015$ 47,624
22,468$ 70,092

5.

MARKETABLE AND INVESTMENT SECURITIESMarketable and investment securities at March 31, 2015 and 2014, consisted of the following:

Millions of Yen
2015
2014
Current:
Government and corporate bonds and other
Total

¥
¥

Non-current:
Equity securities
Government and corporate bonds and other
Trust fund investments and other
Total

1
1

¥
¥

502
502

9,484
1,000
93
¥ 10,577

¥

7,056
2,417
84
9,557

¥

¥

Thousands of
U.S. Dollars
2015

$
$

8
8

$ 78,921
8,322
774$ 88,017

The carrying amounts and aggregate fair value of investment securities at March 31, 2015 and 2014, wereas follows:

March 31, 2015
Securities classified as:
Available-for-sale:
Equity securities
Trust fund investments and otherHeld-to-maturity¥

March 31, 2014
Securities classified as:
Available-for-sale:
Equity securities
Trust fund investments and otherHeld-to-maturity¥

March 31, 2015
Securities classified as:
Available-for-sale:
Equity securities
Trust fund investments and otherHeld-to-maturity

$

Cost

Millions of Yen
Unrealized
Unrealized
Gains
Losses

5,545
63
1,000

¥ 3,761
26
15

Cost

Millions of Yen
Unrealized
Unrealized
Gains
Losses

5,545
63
2,919

¥ 1,384
16
17

¥

¥

15

71
10

Cost

Thousands of U.S. Dollars
Unrealized
Unrealized
Gains
Losses46,143524
8,322$ 31,297
217
124- 12 -

$

125

Fair
Value

¥

9,291
89
1,015

Fair
Value

¥

6,858
79
2,926

Fair
Value

$ 77,315
741
8,446

6.

INVENTORIESInventories at March 31, 2015 and 2014, consisted of the following:Thousands of
U.S. Dollars
2015

Millions of Yen
2015
2014
Finished products and merchandiseWork-in-process
Raw materials and supplies
Total

7.

¥

4,902
2,491
5,621
¥ 13,014

¥

4,286
2,135
4,792
¥ 11,213$ 40,792
20,72946,776$ 108,297

RECEIVABLES FROM UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATED COMPANIES
Receivables from unconsolidated subsidiaries and associated companies at March 31, 2015 and 2014, wereas follows:
Thousands of
U.S. Dollars
2015

Millions of Yen
2015
2014
Accounts receivable
Short-term loans receivable
Total

8.

¥
¥

143
183
326

¥

181

$

¥

181

$

1,190
1,523
2,713

SHORT-TERM AND LONG-TERM BORROWINGS
Short-term borrowings at March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars
2015

Millions of Yen
2015
2014
Short-term borrowings from an unconsolidated
subsidiary with average interest rate of 0.025%(2015 and 2014)
Lease obligations
Total

¥
¥

30
8
38

¥
¥

20
10
30

$
$

250
67
317

Long-term borrowings at March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars
2015

Millions of Yen
2015
2014
Lease obligations
Total

¥
¥

- 13 -

17
17

¥
¥

6
6

$
$

141
141

9.

RETIREMENT BENEFITS FOR EMPLOYEESThe Company and its domestic subsidiaries have severance payment plans for employees, which consist of
defined benefit plans and defined contribution plans. Regarding defined benefit plans, under mostcircumstances, employees terminating their employment are entitled to retirement benefits determinedbased on the rate of pay at the time of termination, years of service, and certain other factors. Suchretirement benefits are made in the form of lump-sum severance payments from the Company or thedomestic subsidiaries and in the form of annuity payments from a trustee. Employees are entitled to larger
payments if the termination is involuntary, by retirement at the mandatory retirement age, by death, or byvoluntary retirement at certain specific ages prior to the mandatory retirement age.
The subsidiaries in Korea, Indonesia and Taiwan have defined benefit plans, and the subsidiaries in Korea,
Canada and Taiwan have defined contribution plans.
a.

The changes in defined benefit obligation for the years ended March 31, 2015 and 2014, were as
follows:
Millions of Yen
2015
2014

Balance at beginning of year
(as previously reported)
Cumulative effects of changes in accounting
policies
Balance at beginning of year (as restated)
Current service cost
Interest cost
Actuarial losses
Benefits paid
Effect of foreign exchange rate fluctuation
Balance at end of yearb.

Thousands of
U.S. Dollars
2015¥ 19,170¥ 18,175$ 159,524(3,929 )15,241
1,038
181
853
(484 )
66¥ 16,895

18,1751,074
181
50(417 )
107¥ 19,170(32,695 )
126,829
8,638
1,506
7,098
(4,028 )550$ 140,593

The changes in plan assets for the years ended March 31, 2015 and 2014, were as follows:
Millions of Yen
2015
2014

Balance at beginning of year
Expected return on plan assets
Actuarial losses
Contributions from the employer
Benefits paid
Effect of foreign exchange rate fluctuation
Balance at end of year

¥ 16,808
185
(45 )
1,616
(509 )
46¥ 18,101- 14 -¥ 16,005
158
(27 )
999
(396 )
69¥ 16,808

Thousands of
U.S. Dollars
2015$ 139,869
1,539(374 )
13,448(4,236 )383$ 150,629

c.

Reconciliation between the liability recorded in the consolidated balance sheet and the balances ofdefined benefit obligation and plan assets
Millions of Yen
2015
2014
Funded defined benefit obligation
Plan assets
Total
Unfunded defined benefit obligation
Net liability (asset) arising from defined benefit
obligation¥ 16,865(18,101 )(1,236 )30¥ 19,152(16,808 )2,344
18$ 140,343(150,629 )(10,286 )
250

¥

¥

$ (10,036 )(1,206 )2,362

Millions of Yen
2015
2014
Liability for retirement benefits
Asset for retirement benefits
Net liability (asset) arising from defined benefit
obligationd.

445(1,651 )

¥

2,362

$

3,703
(13,739 )¥(1,206 )¥2,362$ (10,036 )The components of net periodic benefit costs for the years ended March 31, 2015 and 2014, were as
follows:

Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Recognized actuarial losses
Other
Net periodic benefit costs

¥

¥

1,034
181
(185 )
8
742
4
1,784

¥

¥

939
181
(157 )
8
404
134
1,509

Thousands of
U.S. Dollars
2015
$

$

8,604
1,506
(1,539 )
67
6,175
33
14,846

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, are as follows:
Millions of Yen
2015
2014
Prior service cost
Actuarial losses
Total

f.

Thousands of
U.S. Dollars
2015¥

Millions of Yen
2015
2014

e.

Thousands of
U.S. Dollars
2015

¥
¥

8
(156 )(148 )

Thousands of
U.S. Dollars
2015
$
$

66
(1,298 )(1,232 )Amounts recognized in accumulated other comprehensive income (before income tax effect) in
respect of defined retirement benefit plans as of March 31, 2015 and 2014, are as follows:
Millions of Yen
2015
2014
Unrecognized prior service cost
Unrecognized actuarial losses
Total

¥
¥

- 15 -(54 )(2,203 )(2,257 )

¥
¥

(62 )
(2,047 )(2,109 )Thousands of
U.S. Dollars
2015$(449 )(18,333 )$ (18,782 )

g.
(1)

Plan assets
Components of plan assets
Plan assets as of March 31, 2015 and 2014, consisted of the following:

General accounts of life insurance companies
Domestic bonds
Other
Total
(2)

2015

2014

54%
42
4
100%

55%
41
4
100%

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
which are expected currently and in the future from the various components of the plan assets.

h.

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
Rate of salary increase

2015

2014

0.738%
1.0%
4.9%

1.046%
1.0%
4.9%

10. RETIREMENT ALLOWANCES FOR DIRECTORSThe provisions for retirement benefits to directors charged to income were ¥10 million ($83 thousand) and¥11 million for the years ended March 31, 2015 and 2014, respectively.

11. EQUITY
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant
provisions in the Companies Act that affect financial and accounting matters are summarized below:a.

Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition
to the year-end dividend upon resolution at the shareholders meeting. For companies that meet certain
criteria such as: (1) having a Board of Directors, (2) having independent auditors, (3) having an Audit
and Supervisory Board, and (4) the term of service of the directors is prescribed as one year rather
than two years of normal term by its articles of incorporation, the Board of Directors may declare
dividends (except for dividends-in-kind) at any time during the fiscal year if the company hasprescribed so in its articles of incorporation. However, the Company cannot do so because it does notmeet all the above criteria.
Semi-annual interim dividends may also be paid once a year upon resolution by the Board of Directors
if the articles of incorporation of the company so stipulate. The Companies Act provides certain
limitations on the amounts available for dividends or the purchase of treasury stock. The limitation isdefined as the amount available for distribution to the shareholders, but the amount of net assets after
dividends must be maintained at no less than ¥3 million.

- 16 -

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 capitalsurplus) depending on the equity account that was charged upon the payment of such dividends, until
the total aggregate amount of legal reserve and additional paid-in capital equals 25% of the amount ofcommon stock. Under the Companies Act, the total amount of additional paid-in capital and legal
reserve may be reversed without limitation. The Companies Act also provides that common stock,legal reserve, additional paid-in capital, other capital surplus and retained earnings can be transferredamong the accounts under certain conditions upon resolution of the shareholders.

c.

Treasury Stock
The Companies Act also provides for companies to purchase treasury stock and dispose of suchtreasury stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot
exceed the amount available for distribution to the shareholders, which is determined by a specificformula.
On October 1, 2014, the Company made a stock split by way of a free share distribution at the rate ofthree-for-one shares for each outstanding share. 12,822,588 shares were issued to shareholders ofrecord on October 1, 2014.

12. STOCK OPTIONSThe stock options outstanding as of March 31, 2015, are as follows:
Persons
GrantedNumber of
Options Granted

Date of
Grant

Exercise
Price

Exercise Period

271,200 shares2012.7.17
2013.7.16
2014.7.16¥
1$ (0.01 )From July 18, 2012
to July 16, 2044

11 directors

The number of shares in the above table reflects the three-for-one share split executed on October 1, 2014.
The stock option activity is as follows:Year Ended March 31, 2015
Non-vested (Shares)
March 31, 2014—Outstanding
GrantedCanceled
VestedMarch 31, 2015—Outstanding

200,700
70,500271,200

Vested (Shares)
March 31, 2014—Outstanding
VestedExercised
Canceled
March 31, 2015—Outstanding
The number of shares in the above table reflects the three-for-one share split executed on October 1, 2014.

- 17 -

Exercise price

Exercised

Outstandingat March 31,
2015

¥
$

¥
$

1
(0.01 )¥$

834
(6.94 )

1
(0.01 )

Average stock price at exercise
Fair value price at grant date

The exercise price in the above table reflects the three-for-one share split executed on October 1, 2014.
The Assumptions Used to Measure the Fair Value of the 2015 Stock Option
Estimate method:
Volatility of stock price:
Estimated remaining outstanding period:
Estimated dividend:
Risk free interest rate:

Black-Scholes option pricing model
23.173%
3.7 years¥50 per share
0.103%

13. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes which,in the aggregate, resulted in a normal effective statutory tax rate of 35.4% for the years ended March 31,
2015 and 2014.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred
tax assets and liabilities at March 31, 2015 and 2014, are as follows:

Millions of Yen
2015
2014
Deferred tax assets:
Accrued expenses
Retirement allowances for directors
Long-term liability — other
Enterprise tax
Accrued warranty costs
Loss on valuation of unconsolidated
subsidiaries shares
Impairment loss of long-lived assets
Share-based compensation expenses
Liability for retirement benefit
Depreciation
Tax loss carryforwards
Other
Less valuation allowance
Total

¥

¥

Deferred tax liabilities:
Asset for retirement benefit
Unrealized gain on available-for-sale securities
Other
Total
Net deferred tax assets- 18 -

¥

¥

1,308
18
104
92
188
14
81
66
78
144
803
287
(911 )
2,272

461
1,211
33
1,705
567

¥

¥

¥

¥

Thousands of
U.S. Dollars
2015

1,574
29
114
179
217

$ 10,885
150
866
766
1,564

287
44
758
155
493
361
(902 )
3,309

117
674
549
649
1,198
6,682
2,388
(7,581 )$ 18,907

4
472
86
562
2,747

$

3,836
10,077275
14,188$ 4,719

A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in
the accompanying consolidated statement of income for the year ended March 31, 2015, is as follows:
2015
35.4 %
1.1
0.9(2.0 )

Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Minimum inhabitant taxes
Tax credits on research and development costs and others
Downward revision to deferred tax assets as of the end of the period due to thechange in corporate tax rates
Dividend and other permanently non-taxable income
The reduction due to the application of such foreign tax credit
Tax rate difference in consolidated subsidiaries
Change in valuation allowances
Effect of consolidation adjustments
Other — net
Actual effective tax rate

0.5
(0.2 )(0.2 )(1.2 )
0.1(4.9 )(0.2 )
29.3 %For the year ended March 31, 2014, a reconciliation schedule was omitted because the difference between
the normal effective statutory tax rate and the actual effective tax rate was less than 5% of the normal
effective statutory tax rate. This treatment is permitted by Japanese accounting regulations.
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, to approximately 32.8% and for the fiscal year beginning on orafter April 1, 2016, to approximately 32.1%. The effect of these changes was to increase deferred tax assets
in the consolidated balance sheet as of March 31, 2015, by ¥68 million ($566 thousand) and to increase
income taxes—deferred in the consolidated statement of income for the year then ended by ¥56 million($466 thousand).

14. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥2,403 million ($19,997 thousand) and ¥2,055
million for the years ended March 31, 2015 and 2014, respectively.

15. TRANSACTIONS WITH UNCONSOLIDATED SUBSIDIARIES AND
ASSOCIATED COMPANIES
Major transactions with unconsolidated subsidiaries for the years ended March 31, 2015 and 2014, were as
follows:

Year Ended
March 31, 2015
March 31, 2014

Sales
¥

817
952

Millions of Yen
Rent onResearch andReal
Development
Purchases
Estate
Costs
¥
¥

3

7
7

¥

5
3

Year Ended

Sales

Thousands of U.S. Dollars
Rent onResearch andReal
Development
Purchases
EstateCosts

March 31, 2015

$ 6,799$ 58- 19 -$

Fee
Expenses

42

¥ 278
266

Fee
Expenses$

2,313

16. OTHER INCOME (EXPENSES) — NET
Other income (expenses) — net for the years ended March 31, 2015 and 2014, consisted of the following:

Millions of Yen
2015
2014
Gain on sale of property and equipment
Loss on retirement of property and equipment
Loss on sales of property, plant and equipment
Subsidies
Other
Other income (expenses) — net

¥

¥

10
(84 )
(58 )
148
388
404

¥

¥

376
(195 )
(55 )
290
416

Thousands of
U.S. Dollars
2015
$

$

83
(699 )(483 )
1,232
3,229
3,362

17. LEASESAs a lessor, the Company recognized leased assets as lease investment assets. The net lease investment
assets are summarized as follows:

Millions of Yen
2015
2014
Gross lease receivables
Unearned interest income
Lease investment assets, current

¥
¥

4,495
2,429
2,066

¥
¥

4,643
2,492
2,151

Thousands of
U.S. Dollars
2015
$
$

37,405
20,213
17,192

Maturities of lease investment assets for finance leases that are not deemed to transfer ownership of theleased property to the lessee are as follows:
Years Ending
March 31
2016
2017
2018
2019
2020
2021 and thereafter
Total

Millions of Yen
¥

¥

474
464
404
331
249
144
2,066

Thousands of
U.S. Dollars
$

3,945
3,861
3,362
2,754
2,072
1,198
$ 17,192

As a lessee, the Company and some subsidiaries lease certain machinery, equipment, tools, furniture andfixtures.

- 20 -

18. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURESa.

Group policy for financial instruments
The capital expenditures of the Companies are financed by their own funds. Cash surpluses, if any, areinvested in low-risk financial instruments such as negotiable certificates of deposit and marketabledebt securities. The Companies also invest in the stock of their business partners to maintain andenhance business relationships. Derivatives are used, not for speculative purposes, but to manage
exposure to financial risks as described in “b.” below.

b.

Nature and extent of risks arising from financial instruments
Receivables, such as trade notes and trade accounts, and lease investment assets are exposed tocustomer credit risk. Receivables in foreign currencies are exposed to the market risk of fluctuation inforeign currency exchange rates. Marketable and investment securities, mainly negotiable certificatesof deposit, held-to-maturity securities, and equity instruments of customers and suppliers of theCompanies, are exposed to the risk of market price fluctuations.
Payment terms of payables, such as trade notes and trade accounts, are generally less than one month.

c.

Risk management for financial instruments
Credit risk management
Credit risk is the risk of economic loss arising from a counterparty’s failure to repay or service debt
according to the contractual terms. The Company manages its credit risk from receivables and lease
investment assets on the basis of internal guidelines, which include monitoring of payment terms andbalances of major customers by each division to identify the default risk of customers in the earlystages.
Certain consolidated subsidiaries hedge their credit risk by collecting advance payments before
shipment of products.
Market risk management (foreign exchange risk and interest rate risk)
Marketable and investment securities are managed by putting limits on investment amounts inaccordance with internal guidelines, and monitoring market value and financial position of issuers ona regular basis.
Foreign exchange risk is hedged by using forward foreign currency contracts. In conducting andmanaging derivative transactions, the division in charge of derivative transactions follows the internalmanagement policies which define delegation of authority and position limits. Actual transaction data
are regularly reported to the Board of Directors.
The Company considers that credit risk from non-performance of counterparties is minimal because
the counterparties to the derivative transactions are limited to banks with high credit standings.
Liquidity risk management
Liquidity risk comprises the risk that the Company cannot meet its contractual obligations in full on
maturity dates. The Companies manage their liquidity risk by developing cash management plans
based on reports from each division, and holding adequate balances of liquid assets.

- 21 -

d.

Fair value of financial instruments
Fair value of financial instruments is based on quoted price in active markets. If quoted price is notavailable, other rational valuation techniques are used instead.
(1) Fair value of financial instruments
Millions of Yen
March 31, 2015
Cash and cash equivalents
Short-term investments
Receivables
Lease investment assets
Investment securities
Total
PayablesIncome taxes payable
Total

Carrying
Amount¥ 23,760
8,423
25,4102,066
10,380¥ 70,039

Fair Value¥ 23,760
8,423
25,410
4,395
10,394¥ 72,382

¥

¥

¥

7,416
1,175
8,591

¥

Unrealized
Gain/Loss

¥
¥

2,329
14
2,343

7,416
1,175
8,591

Millions of Yen
March 31, 2014
Cash and cash equivalents
Short-term investments
Marketable securities
Receivables
Lease investment assets
Investment securities
Total
PayablesIncome taxes payable
Total

March 31, 2015
Cash and cash equivalents
Short-term investments
Receivables
Lease investment assets
Investment securities
Total
PayablesIncome taxes payable
Total

Carrying
Amount¥ 16,923
12,689502
24,0462,151
9,354¥ 65,665

Fair Value¥ 16,923
12,689503
24,046
4,524
9,360¥ 68,045

¥

¥

6,224
2,570
8,794

Carrying
Amount$ 197,720
70,092
211,450
17,19286,378$ 582,832$$

61,712
9,778
71,490

Unrealized
Gain/Loss

¥

1

¥

2,373
6
2,380

6,224
2,570
8,794

Thousands of U.S. Dollars
Unrealized
Fair Value
Gain/Loss$ 197,720
70,092
211,450
36,574$ 19,382
86,494116$ 602,330$ 19,498$$

61,712
9,778
71,490Cash and cash equivalents, short-term investments, receivables, payables, and income taxes payable
The carrying value of cash and cash equivalents, short-term investments, receivables, payables andincome taxes payable approximates fair value because of their short maturities.
Lease investment assets
The fair value of lease investment assets are determined by discounting the cash flows related to thelease investment assets at the Companies' assumed corporate discount rate, based upon considerationsof risk-free interest rates and credit risk.

- 22 -

Investment securities
The fair value of investment securities is measured at the quoted market price of the stock exchange for
equity instruments, and at the quoted price obtained from the financial institution for certain debt
instruments. Fair value information for investment securities by classification is included in Note 4.
(2) Carrying amount of financial instruments whose fair value cannot be reliably determined
Investments in equity instruments and debt instruments that do not have a quoted market price inan active market
Carrying AmountThousands of
U.S. Dollars
2015

Millions of Yen
2015
2014
Investments in unconsolidated subsidiaries andassociated companies
Other
Total
e.

¥

527
197
724

¥

¥

298
202
500

¥

$
$

4,386
1,639
6,025

Maturity analysis for financial assets and securities with contractual maturities

March 31, 2015
Cash and cash equivalents
Short-term investments
Marketable securities
Receivables
Lease investment assets
Investment securities:
Held-to-maturity securities
Available-for-sale securities with
contractual maturities
Total

March 31, 2014
Cash and cash equivalents
Short-term investments
Marketable securities
Receivables
Lease investment assets
Investment securities:
Held-to-maturity securities
Available-for-sale securities with
contractual maturities
Total

Due in One
Year or Less
¥ 23,711
8,423
1
25,397
473

Millions of Yen
Due after One Due after Five
Year through Years throughFive Years
Ten Years

¥

13
1,449

¥

2

¥

58,005Due in One
Year or Less
¥ 16,877
12,689501
24,030
498

¥

30
1,494

1,001

¥

14
1,487

¥

3

¥

54,595- 23 -

144

1,145

Millions of Yen
Due after One Due after Five
Year through Years throughFive Years
Ten Years

¥

¥

28
1,532

Due after
Ten Years

2
166
2,400

¥

2,568

Due after
Ten Years

March 31, 2015
Cash and cash equivalents
Short-term investments
Marketable securities
Receivables
Lease investment assets
Investment securities:
Held-to-maturity securities
Available-for-sale securities with
contractual maturities
Total

Due in One
Year or Less
$ 197,312
70,092
8
211,342
3,936

Thousands of U.S. Dollars
Due after One Due after Five
Year through Years throughFive Years
Ten Years$

108
12,058$17$ 482,690$

250
12,433Due after
Ten Years

1,198
8,330

$

9,528

19. OTHER COMPREHENSIVE INCOME
The components of other comprehensive income for the years ended March 31, 2015 and 2014, were as
follows:

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 effectTotal
Foreign currency translation adjustments:
Adjustments arising during the year
Remeasurements of defined benefit plans
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Total other comprehensive income- 24 -

Millions of Yen
2015
2014

Thousands of
U.S. Dollars
2015

¥

2,439

$ 20,296¥

2,439(739 )
1,700

¥

821
3
824
(296 )
528

¥

1,627

¥

2,091

$ 13,539¥¥(898 )
750(148 )
27(121 )

¥

3,206

¥

20,296(6,149 )$ 14,147

$

$
¥

2,619

(7,473 )
6,241(1,232 )225(1,007 )$ 26,679

20. SEGMENT INFORMATION
For the years ended March 31, 2015 and 2014a.

Description of reportable segments
The Companies’ reportable segments are those for which separate financial information is available
and regular evaluation by the Company’s management is being performed in order to decide how
resources are allocated among the Companies. Therefore, the Companies consist of the segments of“Domestic manufacturing and sales of products”, “Domestic maintenance”, “Overseas manufacturing
and sales of products”, and “Overseas maintenance”.
Changes in classification of segments
Effective from the fiscal year ended March 31, 2015, the Company changed the segments to“Domestic manufacturing and sales of products”, “Domestic maintenance”, “Overseas manufacturing
and sales of products”, and “Overseas maintenance”.
The Companies are improving their business to provide total solutions for plant infrastructure globally,
according to which various boilers and related equipment are provided to customers systematically,
and the Companies are also accelerating the expansion of their overseas business. As a result, the priorclassification of segments was no longer appropriate for the Companies’ decision making in theperformance management process.
The segment information for the fiscal year ended March 31, 2014 is reclassified according to the newreportable segments.

b.

Methods of measurement for the amounts of sales, profit, assets, liabilities and other items for eachreportable segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2,“Summary of Significant Accounting Policies”.
Profit of reportable segments is calculated as operating income. The Companies account forintersegment sales and transfers on the basis of arm’s length price.

c.

Information about sales, profit, assets, liabilities and other items
Millions of Yen
2015
Reportable segment
Domestic

Overseas

Manufacturing
Manufacturing
and Sales ofand Sales of
Maintenance
Maintenance
Products
Products

Sales:
Sales to externalcustomers
Intersegment
sales or transfers
Total

Reconciliations Consolidated¥ 48,842¥ 25,755¥ 12,604¥

3,223¥ 90,424

1,746¥ 50,588

81¥ 25,836256¥ 12,860

¥

3,223

2,083
¥ 92,507¥¥(2,083 )(2,083 )¥¥¥(146 )
1,417

¥

¥

258
49,857

Segment profit (loss)¥ 2,172
Segment assets
47,444
Other:
Depreciation
1,562
Increase in property,
plant and equipment
and intangible assets
Impairment lossof long-lived assets

Total

4,902

5,912
18,062816
12,745

8,754
79,668¥ 90,424¥ 90,424¥

9,012
129,525

181

364

53

2,160

386

2,546

567

511

66

6,046

470

6,516

- 25 -

Millions of Yen
2014
Reportable segment
Domestic

Overseas

Manufacturing
Manufacturing
and Sales ofand Sales of
Maintenance
Maintenance
Products
Products

Sales:
Sales to externalcustomers
Intersegment
sales or transfers
Total
Segment profit
Segment assets
Other:
Depreciation
Increase in property,
plant and equipment
and intangible assets
Impairment lossof long-lived assets

Total

Reconciliations Consolidated¥ 47,189¥ 25,217¥ 10,302¥

2,828¥ 85,536

1,791¥ 48,980¥ 25,217

163¥ 10,465

¥

2,828

1,954
¥ 87,490¥¥(1,954 )(1,954 )

¥

¥

¥

¥

115
1,179

¥

¥

151
46,562

2,875
41,2395,466
17,313358
11,206

8,814
70,937¥ 85,536¥ 85,536¥

8,965
117,499

1,264

251

261

73

1,849

343

2,192

2,615

464

1,209

186

4,474

626

5,100

(44)

(253 )(297 )(44)

Thousands of U.S. Dollars
2015
Reportable segment
Domestic

Overseas

Manufacturing
Manufacturing
and Sales ofand Sales of
Maintenance
Maintenance
Products
Products

Sales:
Sales to externalcustomers
Intersegment
sales or transfers
Total

Total

Reconciliations Consolidated$ 406,441$ 214,321$ 104,885$ 26,820$ 752,467

14,530$ 420,971

674$ 214,995

2,130$ 107,015$ 26,820

17,334$ 769,801$ (17,334 )$ (17,334 )Segment profit (loss)$ 18,074
Segment assets
394,807
Other:
Depreciation
12,998$ 49,197
150,304$

6,790
106,058$ (1,215 )
11,792$ 72,846
662,961

$

1,507

3,029

441

4,719

4,252

549

Increase in property,
plant and equipment
and intangible assets
Impairment lossof long-lived assets

40,792$ 752,467$ 752,467

2,147
414,887$ 74,993
1,077,848

17,975

3,212

21,18750,312

3,911

54,223

Notes:
1. “Domestic” segments are accounted for as domestic subsidiaries and “Overseas” segments are accounted foras overseas subsidiaries.
2. Reconciliations of segment assets mainly represent the surplus assets of the Company, which include cash
and marketable securities, long-term investment funds, including investment securities, and assets related tothe management department.
3. Segment profit is reconciled to operating profit in the consolidated financial statements.

- 26 -

d.

Related Information
Information about Geographical Areas(1) Sales
Thousands of
U.S. Dollars
2015

Millions of Yen
2015
2014
Japan
Asia
North and South America
Other
Total
(2)

¥

¥

73,841
13,1493,378
56
90,424¥¥72,037
10,0763,343
80
85,536$ 614,471
109,420
28,110466$ 752,467

Property, plant and equipment
Thousands of
U.S. Dollars
2015

Millions of Yen
2015
2014
Japan
Asia
North and South America
Total

¥

32,482
5,483
1,310
39,275¥¥¥

29,115
4,747
1,265
35,127$$

270,301
45,627
10,901
326,829

21. NET INCOME PER SHARE
Reconciliation of the differences between basic and diluted net income per share (“EPS”) for the years
ended March 31, 2015 and 2014, is as follows:
Millionsof YenNet
IncomeYear Ended March 31, 2015
Basic EPS—Net income available tocommon shareholders
Effect of dilutive securities—Stock options
Diluted EPS—Net income for computation

¥

7,464

¥

7,464

Millionsof YenNet
IncomeYear Ended March 31, 2014
Basic EPS—Net income available tocommon shareholders
Effect of dilutive securities—Stock options
Diluted EPS—Net income for computation

¥

6,289

¥

6,289

Thousandsof Shares
WeightedAverage
Shares

112,467
241
112,708

Yen

EPS

¥

66.37

$

0.55

¥

66.23

$

0.55

Thousandsof Shares
WeightedAverage
Shares

112,467
162
112,629

U.S. Dollars

Yen

U.S. Dollars

EPS

¥

55.92

$

0.54

¥

55.84

$

0.54

A three-for-one stock split was implemented on October 1, 2014. Per share figures were retroactively
adjusted to reflect the stock split.

- 27 -

22. SUBSEQUENT EVENT
Appropriations of Retained Earnings
At the general shareholders meeting held on June 26, 2015, the Company's shareholders approved thefollowing appropriations of retained earnings as of March 31, 2015:

Millions of Yen
Appropriations—Cash dividends,
ordinary dividend of ¥11.00 ($0.09)¥******- 28 -

1,237

Thousands of
U.S. Dollars$ 10,294