Miura Co., Ltd. and
its Consolidated Subsidiaries
Consolidated Financial Statements for theYear Ended March 31, 2014,
and Independent Auditor's ReportMiura Co., Ltd. and its Consolidated Subsidiaries
Consolidated Balance Sheet
March 31, 2014ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 18)¥
Short-term investments (Notes 3 and 18)
Marketable securities (Notes 4 and 18)
Receivables (Note 18):
Trade notes
Trade accounts
Unconsolidated subsidiaries and associated companies (Note 6)
Other
Allowance for doubtful accounts
Inventories (Note 5)
Lease investment assets (Notes 17 and 18)
Deferred tax assets (Note 13)
Prepaid expenses and other

Millions of Yen
2014
2013

Thousands of
U.S. Dollars(Note 1)
2014

16,923
12,689502$ 164,429
123,290
4,878¥

13,257
11,631

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

7,519
13,945
315
191
(78 )
9,651
2,308
2,159
336

69,977
161,4171,759
1,039(554 )
108,949
20,90022,522
5,333

70,391

61,234

683,939

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

11,392
31,057
6,971
6,905
822
57,147(22,020 )11,221
27,578
6,640
6,493
1,847
53,779(21,744 )

110,688
301,759
67,732
67,091
7,987
555,257(213,953 )Net property, plant and equipment

35,12732,035341,304

9,557

9,480

92,859

350
750

3,401
7,287

432
892

1,341
674
456
16
705

11,981

12,672

116,411

Total current assets

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 4 and 18)
Investments in and advances to unconsolidated subsidiaries andassociated companies
Deposits
Prepaid pension costs (Note 9)
Deferred tax assets (Note 13)
Other
Total investments and other assets¥ 117,499¥ 105,941$

291

19,024

218,655

6
2,362
70
3
376

9
147
87
117
527

58
22,950
680
29
3,654

Total long-term liabilities

2,817

887

27,371

Total liabilities

25,321

19,911

246,026

9,544
10,089123
78,553

9,544
10,08853
73,737

92,732
98,0281,195
763,243(7,053 )(7,057 )(68,529 )

860
1,405
(1,362 )92,15919333(682 )
86,01614

8,356
13,652(13,234 )895,443
185

92,17886,030895,628¥ 117,499¥ 105,941$ 1,141,654

TOTAL

-1-

35

22,504

EQUITY (Notes 11, 12 and 22):
Common stock—authorized, 100,000,000 shares;
issued, 41,763,704 shares in 2014 and 2013
Capital surplus
Stock acquisition rights
Retained earnings
Treasury stock—at cost, 4,274,196 shares in 2014 and
4,276,831 shares in 2013
Accumulated other comprehensive gain (loss):
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans
Total
Minority interests

See notes to consolidated financial statements.

¥

5,441
21,619457
32,957
24,971
63,42857,792
6,413
107
68
5,111

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$ 1,141,654

30

381
1,821
48
2,313
1,747
6,131
5,328
512
11
7
690

Total current liabilities

4,197
8,667

¥

560
2,225
47
3,392
2,570
6,528
5,948
660
11
7
526

Total equity
TOTAL

Millions of Yen
2014
2013

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
Asset retirement obligations
Other current liabilities

Thousands of
U.S. Dollars(Note 1)2014

Miura Co., Ltd. and its Consolidated Subsidiaries
Consolidated Statement of Income
Year Ended March 31, 2014
Thousands of
U.S. Dollars(Note 1)
2014

Millions of Yen
2014
2013
NET SALES (Note 15)¥ 85,536¥ 78,157$ 831,092

49,94045,950485,23135,59632,207345,861

26,631

24,765

258,755

8,965

7,442

87,106

298
385
356

2,895
3,741
3,459

(297 )
416

293
385
347
302
(395 )
368(2,886 )
4,043

1,158

1,300

11,252

INCOME BEFORE INCOME TAXES AND MINORITY
INTERESTS

10,123

8,742

98,358

INCOME TAXES (Note 13):
Current
Deferred

4,095(262 )

3,446
107

39,788(2,546 )Total income taxes

3,833

3,553

37,242NET INCOME BEFORE MINORITY INTERESTS

6,290

5,189

61,116MINORITY INTERESTS IN NET LOSS (INCOME)

1

1

10

5,188

$ 61,106

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
Gain on abolishment of retirement benefit plan
Impairment loss of long-lived assets (Note 7)
Other—net (Note 16)
Other income—net

NET INCOME

¥

6,289

¥
Yen

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

¥ 167.75
167.5155.00

See notes to consolidated financial statements.

-2-

U.S. Dollars¥ 136.14
136.03
41.00

$

1.63
1.63
0.53

Miura Co., Ltd. and its Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Year Ended March 31, 2014

Millions of Yen
2014
2013
NET INCOME BEFORE MINORITY INTERESTS¥OTHER COMPREHENSIVE INCOME (Note 19):
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Total other comprehensive income

6,290

¥

528
2,091
2,619

COMPREHENSIVE INCOME

5,189

Thousands of
U.S. Dollars(Note 1)
2014
$

566
1,091
1,657

61,116

5,130
20,31725,447

¥

8,909

¥

6,846

$

86,563TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the Company¥
Minority interests

8,904
5

¥

6,842
4

$

86,51449

See notes to consolidated financial statements.

-3-

Miura Co., Ltd. and its Consolidated Subsidiaries
Consolidated Statement of Changes in Equity
Year Ended March 31, 2014
Thousands

BALANCE, APRIL 1, 2012

IssuedNumber of
Shares ofCommonStockTreasury
Stock41,764(3,324 )Net income
Cash dividends, ¥40.00 per share
Purchase of treasury stock
Change in scope of consolidation
Net change in the year
BALANCE, MARCH 31, 2013

BALANCE, MARCH 31, 2013¥

¥ 10,088

9,544

Retained
Earnings

TreasuryStock¥ 70,046¥(5,055 )(953 )¥ (233 )¥ (1,770 )¥ 82,620

1,088

5,188
(1,538 )(2,002 )41
1,707(682 )¥ 86,016

2,087¥ (1,362 )

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

1,405

¥ (1,362 )¥ 92,159(2,002 )41,764(4,277 )¥9,544¥ 10,088

¥

53

¥

53

566
¥ 73,737¥(7,057 )

¥

333

¥

6,289
(1,574 )
(1 )
4

(2 )
6

1
101
70

41,764(4,274 )¥9,544¥ 10,089

¥

123

527
¥ 78,553¥(7,053 )

¥

860

¥

CommonStockCapitalSurplus

Stock
Acquisition
RightsRetained
Earnings

Thousands of U.S. Dollars (Note 1)
Accumulated othercomprehensive gain (loss)
Unrealized
Gain (Loss) on
Foreign
AvailableCurrency
DefinedTreasury
for-saleTranslation
Retirement
Stock
Securities
Adjustments
Benefit Plans$ 92,732$ 98,018$$ 716,449$ (68,568 )

515

$

3,236

$ 835,756

5,120

20,278$ (13,234 )

61,106(15,293 )
(19 )
68
981
12,844

8,356$ 13,652$ (13,234 )$ 895,443

(19 )
58
981
680

$ 92,732$ 98,028$

1,195$ 763,243$ (68,529 )See notes to consolidated financial statements

-4-

$

Total

$ (6,626 )

61,106(15,293 )10

Minority
Interests

Total

41

Net income
Cash dividends, $0.41 per share
Purchase of treasury stock
Exercise of stock options
Change in scope of consolidation
Net change in the year
BALANCE, MARCH 31, 2014

CapitalSurplus

5,188(1,538 )Net income
Cash dividends, ¥42.00 per share
Purchase of treasury stock
Exercise of stock options
Change in scope of consolidation
Net change in the year
BALANCE, MARCH 31, 2014

Stock
Acquisition
RightsCommonStockMillions of Yen
Accumulated other comprehensive
gain (loss)
Unrealized
Gain (Loss) on
Foreign
AvailableCurrency
Definedfor-saleTranslation
Retirement
Securities
Adjustments Benefit Plans

¥

¥

¥

Minority
Interests
$

$

Total
Equity11¥ 82,631

3

5,188(1,538 )(2,002 )
41
1,710

14

¥ 86,030

5

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

19

¥ 92,178

Total
Equity136$ 835,892

49

61,106(15,293 )
(19 )
68
981
12,893185$ 895,628

Miura Co., Ltd. and its Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2014

Millions of Yen
2014
2013
OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes—paidDepreciation and amortization
Impairment loss of long-lived assets
Increase in net liability for retirement benefit
Decrease in prepaid pension costs
Decrease in allowance for doubtful accounts
Increase (decrease) in provision for accrued bonuses
to employees
Stock based compensation expense(Gain) loss on disposal and sale of property,
plant and equipment
Loss on sales and retirement of intangible assets
Gain on abolishment of retirement benefit plan
Foreign exchange gain
Loss on valuation of investment securities(Increase) decrease in receivables
Increase in inventories
Decrease in payables
Other—net
Total adjustments¥ 10,123¥

Thousands of
U.S. Dollars(Note 1)
2014

8,742

$ 98,358(3,264 )
2,192
297
79
456
(43 )

(4,017 )
2,013
395
2
404
(100 )(31,714 )
21,298
2,886
768
4,431
(418 )

710
77(109 )
53

6,899
748

(128 )
324(1,244 )29(302 )(98 )(214 )
3(1,427 )(806 )(47 )
511(1,601 )496(153 )(574 )
415(1,551 )(2,079 )29(13,865 )(7,831 )(457 )
4,964(15,556 )

8,522

7,191

82,802INVESTING 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
Payment for investment in unconsolidated subsidiaries
Decrease (increase) in short-term investments—net
Other—net(4,482 )486(14,698 )14,100(296 )
517(184 )
101
(41 )
147
(331 )(5,386 )39(18,200 )19,300(1,422 )
1,306
(57 )
50
(1,093 )(532 )(118 )(43,548 )
4,722(142,810 )
137,000(2,876 )
5,023(1,788 )981(398 )
1,428(3,216 )Net cash used in investing activities(4,681 )(6,113 )(45,482 )1,078$ 37,320

Net cash provided by operating activities

FORWARD

¥

3,841

¥

(Continued)-5-

Miura Co., Ltd. and its Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2014

Millions of Yen
2014
2013
FORWARD¥

1,078$ 37,320(6 )(2 )(1,574 )(6 )(2,002 )(1,535 )

(59 )
(19 )
(15,293 )Net cash used in financing activities(1,582 )(3,543 )(15,371 )FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS

361

233

3,508

NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS

2,620(2,232 )25,457

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

13,257

14,317

128,809

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

1,046

1,172

10,163

CASH AND CASH EQUIVALENTS, END OF YEAR

¥ 16,923¥ 13,257$ 164,429

FINANCING ACTIVITIES:
Repayments of lease obligations
Purchase of treasury stock
Cash dividends paid

3,841

¥

Thousands of
U.S. Dollars(Note 1)
2014

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

Miura Co., Ltd. and its Consolidated Subsidiaries
Notes to Consolidated Financial Statements
Year Ended March 31, 2014
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 2013
consolidated financial statements to conform to the classifications used in 2014.
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 ¥102.92
to U.S.$1, the approximate rate of exchange at March 31, 2014. 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, 2014 include theaccounts of the Company and its fifteen (fourteen in 2013) significant subsidiaries (collectively, the“Companies”).
Miura Boiler Co., Ltd. (Taiwan) was included in the scope of consolidation at the beginning of theyear ended March 31, 2014, due to increased materiality.
Under the control or influence concept, those companies in which the Company, directly or indirectly,
is able to exercise control over operations are fully consolidated, and those companies over which theCompanies have the ability to exercise significant influence are accounted for by the equity method.
Investments in four (five in 2013) unconsolidated subsidiaries and three (three in 2013) 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.
Nine 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.

c.

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

-7-

d.

Inventories— Inventories are stated at cost, determined by the following method (balance sheet value
is to be 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.

Employees' Retirement and Pension Plans—The Company and its domestic subsidiaries havenon-contributory funded pension plans covering substantially all of their employees.
Four foreign subsidiaries in Korea, Indonesia and Taiwan have funded or unfunded retirement planscovering substantially all of their employees.
The liability for employees' retirement benefits is 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.

-8-

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 shall be treated asreclassification adjustments (see Note 2.u).
(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. As a result, liability for retirement benefits of ¥2,362 million($22,950 thousand) was recorded as of March 31, 2014, and accumulated other comprehensive
income for the year ended March 31, 2014, decreased by ¥1,362 million ($13,234 thousand).
l.

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.

m.

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.

n.

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.

o.

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

-9-

p.

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.

q.

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.

r.

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.

s.

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.

t.

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.

u.

New Accounting Pronouncements
Accounting Standard for Retirement Benefits—On May 17, 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 time through 2009.
Major changes are as follows:(1) Treatment in the balance sheet
Under the current requirements, actuarial gains and losses and past service costs that are yet to berecognized in profit or loss are not recognized in the balance sheet, and the difference between
retirement benefit obligations and plan assets (hereinafter, “deficit or surplus”), adjusted by suchunrecognized amounts, is recognized as a liability or asset.

- 10 -

Under the revised accounting standard, actuarial gains and losses and past service costs that are
yet to be recognized in profit or loss shall be recognized within equity (accumulated othercomprehensive income), after adjusting for tax effects, and any resulting deficit or surplus shallbe recognized as a liability (liability for retirement benefits) or asset (asset for retirement
benefits).
(2) Treatment in the statement of income and the statement of comprehensive income
The revised accounting standard does not change how to recognize actuarial gains and losses andpast service costs in profit or loss. Those amounts would be recognized in profit or loss over acertain 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 andhave not yet been recognized in profit or loss shall be 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 shall be treatedas reclassification adjustments.
(3)

Amendments relating to the method of attributing expected benefit to periods and relating to thediscount rate and expected future salary increases
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 for (1) above effective March 31, 2014, andexpects to apply (2) and (3) above from April 1, 2014.
In accordance with the revised standard, it is expected that opening retained earnings increased by¥2,538 million ($24,660 thousand), and operating income and income before taxes and minority
interests increase by ¥52 million ($505 thousand).

3.

SHORT-TERM INVESTMENTS
Short-term investments at March 31, 2014 and 2013, consisted of the following:

Millions of Yen
2014
2013
Time deposit
Negotiable certificate of deposit
Other
Total

¥

5,989
6,700

¥ 12,689- 11 -

¥

5,528
6,102
1
¥ 11,631

Thousands of
U.S. Dollars
2014$ 58,191
65,099$ 123,290

4.

MARKETABLE AND INVESTMENT SECURITIESMarketable and investment securities at March 31, 2014 and 2013, consisted of the following:

Millions of Yen
2014
2013
Current:
Government and corporate bonds and other
Total
Non-current:
Equity securities
Government and corporate bonds and other
Trust fund investments and other
Total

¥
¥

502
502

¥

7,056
2,417
84
9,557

¥

Thousands of
U.S. Dollars
2014

$
$

¥

¥

5,960
3,444
76
9,480

4,878
4,878

$ 68,558
23,484817$ 92,859

The carrying amounts and aggregate fair value of investment securities at March 31, 2014 and 2013, wereas follows:

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

March 31, 2013
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

$

Cost

Millions of Yen
Unrealized
Unrealized
Gains
Losses

5,545
63
2,919

¥ 1,384
16
17

Cost

Millions of Yen
Unrealized
Unrealized
Gains
Losses

5,265
62
3,444

¥

747
15
19

¥

71

¥

10

¥

250
3
15

Cost

Thousands of U.S. Dollars
Unrealized
Unrealized
Gains
Losses

53,877612
28,362$ 13,447
156
165- 12 -

Fair
Value

$

690
97

6,858
79
2,926

Fair
Value

¥

5,762
74
3,448

Fair
Value

$ 66,634
768
28,430

5.

INVENTORIESInventories at March 31, 2014 and 2013, consisted of the following:

Millions of Yen
2014
2013
Finished products and merchandiseWork-in-process
Raw materials and supplies
Total

6.

¥

4,286
2,135
4,792
¥ 11,213

¥

¥

3,357
1,753
4,541
9,651

Thousands of
U.S. Dollars
2014$ 41,644
20,74446,561$ 108,949

RECEIVABLES FROM UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATED COMPANIES
Receivables from unconsolidated subsidiaries at March 31, 2014 and 2013, were as follows:

Millions of Yen
2014
2013
Accounts receivable
Short-term loans receivable
Total

7.

¥

181

¥

¥

181

¥

258
57
315

Thousands of
U.S. Dollars
2014
$

1,759

$

1,759

LONG-LIVED ASSETSThe Companies reviewed their long-lived assets for impairment as of March 31, 2014 and 2013.
For the year ended March 31, 2014
The Company recognized an impairment loss of ¥253 million ($2,458 thousand) for land in Matsuyama
because the government and Ehime prefecture plan to expropriate the land for road maintenance and an
improvement project and the expected net disposal value was less than the carrying amount. The
impairment loss was calculated as a difference between the carrying amount and expected net disposal
value based on a real estate appraisal.
Additionally, the Company recognized an impairment loss of ¥44 million ($428) for their patent license
because they decided not to use it in future. The impairment loss was calculated by writing down the
carrying amount to zero.
For the year ended March 31, 2013
The Companies recognized an impairment loss of ¥395 million as other expense for a certain asset groupfor manufacturing boilers in the United States due to a continuous operating loss. The carrying amountsof the relevant assets were written down to the recoverable amounts for the year ended March 31, 2013.
The recoverable amounts of the machinery and equipment were measured at their value in use, and thoseof the buildings and land were measured at their net selling price based on a real estate appraisal. The
discount rate used for computation of the present value of future cash flows was 4.5%.

- 13 -

8.

SHORT-TERM AND LONG-TERM BORROWINGS
Short-term borrowings at March 31, 2014 and 2013, were as follows:
Thousands of
U.S. Dollars
2014

Millions of Yen
2014
2013
Short-term borrowings from an unconsolidated
subsidiary with average interest rate of 0.025%(2014 and 2013)
Lease obligations
Total

¥
¥

20
10
30

¥
¥

20
15
35

$
$

194
97
291

Long-term borrowings at March 31, 2014 and 2013, were as follows:
Thousands of
U.S. Dollars
2014

Millions of Yen
2014
2013
Lease obligations
Total

9.

¥
¥

6
6

¥
¥

9
9

$
$

58
58

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 a 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 foreign subsidiaries in
Canada and Taiwan have defined contribution plans.

For the year ended March 31, 2014a.

The changes in defined benefit obligation for the year ended March 31, 2014, were as follows:

Balance at beginning of year
Current service cost
Interest cost
Actuarial losses
Benefits paid
Effect of foreign exchange rate fluctuation
Balance at end of year

Millions ofYen

Thousands of
U.S. Dollars¥ 18,175
1,074
181
50
(417 )
107¥ 19,170$ 176,593
10,435
1,759
486(4,052 )1,040$ 186,261“Balance at beginning of year” above includes the amount of Miura Boiler Co., Ltd. (Taiwan), which wasadded to the scope of consolidation at the beginning of the year ended March 31, 2014.

- 14 -

b.

The changes in plan assets for the year ended March 31, 2014, were as follows:

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

Millions ofYen

Thousands of
U.S. Dollars¥ 16,005
158
(27 )
999
(396 )
69¥ 16,808$ 155,509
1,535(262 )
9,707(3,848 )670$ 163,311“Balance at beginning of year” above includes the amount of Miura Boiler Co., Ltd. (Taiwan), which wasadded to the scope of consolidation at the beginning of the year ended March 31, 2014.
c.

Reconciliation between the liability recorded in the consolidated balance sheet and the balances ofdefined benefit obligation and plan assets

Funded defined benefit obligation
Plan assets
Unfunded defined benefit obligation
Net liability (asset) arising from defined benefit
obligation

Liability for retirement benefits
Net liability (asset) arising from defined benefit
obligationd.

Thousands of
U.S. Dollars¥ 19,152(16,808 )2,344
18$ 186,086(163,311 )
22,775175¥$ 22,950

2,362

Millions ofYen

Thousands of
U.S. Dollars

¥

2,362

$ 22,950¥

2,362$ 22,950

The components of net periodic benefit costs for the year ended March 31, 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 costse.

Millions ofYenMillions ofYen

Thousands of
U.S. Dollars

¥

$

¥

939
181
(157 )
8
404
134
1,509

$

9,124
1,759
(1,525 )
78
3,925
1,301
14,662

Accumulated other comprehensive income on defined retirement benefit plans as of March 31,
2014

Unrecognized prior service cost
Unrecognized actuarial losses
Total

Millions ofYen

Thousands of
U.S. Dollars

¥

$

¥

- 15 -(62 )(2,047 )(2,109 )(603 )(19,889 )$ (20,492 )f.

Plan assets(1) Components of plan assets
Plan assets consisted of the following:
General accounts of life insurance companies
Domestic bonds
Other
Total

55%
41
4
100%

(2) 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.
g.

Assumptions used for the year ended March 31, 2014, were set forth as follows:
Discount rate
Expected rate of return on plan assets
Rate of salary increase

1.046%
1.0%
4.9%

For the year ended March 31, 2013
The net liability for employees' retirement benefits at March 31, 2013, consisted of the following:
Millions of Yen
Projected benefit obligation
Fair value of plan assets
Unrecognized prior service cost
Unrecognized actuarial loss
Prepaid pension costs
Net liability¥ 18,124(15,990 )(69 )(2,374 )456¥
147

The components of net periodic benefit costs for the year ended March 31, 2013, were as follows:
Millions of Yen
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Recognized actuarial loss
Payment to a defined contribution plan
Net periodic benefit costs

¥

¥

835
293
(224 )
8
552
234
1,698

Assumptions used for the year ended March 31, 2013, were set forth as follows:
Discount rate
Expected rate of return on plan assets
Recognition period of actuarial gain/loss

1.016%
1.5%
4 years- 16 -

10. RETIREMENT ALLOWANCES FOR DIRECTORSThe provisions for retirement benefits to directors charged to income were ¥11 million ($107 thousand) and¥27 million for the years ended March 31, 2014 and 2013, 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.

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.

- 17 -

12. STOCK OPTIONSThe stock options outstanding as of March 31, 2014, are as follows:
Persons
Granted11 directors

Number of
Options Granted

Date of
Grant

Exercise
Price

Exercise Period

66,900 shares2012.7.17
2013.7.16¥
1$ (0.01 )From July 18, 2012
to July 16, 2043

The stock option activity is as follows:Year Ended March 31, 2014
Non-vested
March 31, 2013—Outstanding
GrantedCanceled
VestedMarch 31, 2014—Outstanding

38,00032,500(3,600 )66,900

VestedMarch 31, 2013—Outstanding
VestedExercised
Canceled
March 31, 2014—Outstanding

3,600(3,600 )Exercised
Exercise price
Average stock price at exercise
Fair value price at grant date

¥
$
¥
$
¥
$

1
(0.01 )
2,470
(24.00 )1,857(18.04 )Outstandingat March 31,
2014
¥
$

1
(0.01 )¥$

2,132
(20.72 )The Assumptions Used to Measure the Fair Value of the 2014 Stock Option
Estimate method:
Volatility of stock price:
Estimated remaining outstanding period:
Estimated dividend:
Risk free interest rate:

Black-Scholes option pricing model
21.401%
4.7 years¥ 41 per share
0.281%- 18 -

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 37.8% for the years ended March 31,
2014 and 2013.
The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities at
March 31, 2014 and 2013, are as follows:

Millions of Yen
2014
2013
Deferred tax assets:
Accrued expenses
Retirement allowances for directors
Long-term liability — other
Enterprise tax
Accrued warranty costs
Loss on revaluation of available-for-salesecurities
Impairment loss of long-lived assets
Share-based compensation expenses
Liability for retirement benefit
Depreciation
Other
Less valuation allowance
Total

¥

1,574
29
114
179
217

¥

1,422
92
177
151
181

Thousands of
U.S. Dollars
2014$ 15,293
282
1,108
1,739
2,108

85

¥

Deferred tax liabilities:
Long-term prepaid pension expenses
Unrealized loss on available-for-sale securities
Other
Total
Net deferred tax assets

287
44
758
155
854
(902 )
3,309

19

¥

¥
¥

¥

472
90
562
2,747

¥

176
1,015
(858 )
2,460

172
176
54
402
2,058

2,789
428
7,365
1,506
8,298
(8,765 )$ 32,151

¥

4,586
875
5,461
$ 26,690

New tax reform laws enacted in 2014 in Japan changed the normal effective statutory tax rate for the fiscal
year beginning on or after April 1, 2014, from approximately 37.8% to 35.4%. The effect of this change
was to decrease deferred tax assets in the consolidated balance sheet as of March 31, 2014, by ¥152 million($1,477 thousand) and to increase income taxes—deferred in the consolidated statement of income for theyear then ended by ¥152 million ($1,477 thousand).
A reconciliation schedule for the year ended March 31, 2014, was omitted because the difference between
the normal effective statutory tax rate and the actual effective tax rate after applying tax effect accounting
was less than 5% of the normal effective statutory tax rate. This treatment is permitted by the Japanese
accounting regulations.

14. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥2,055 million ($19,967 thousand) and ¥1,909
million for the years ended March 31, 2014 and 2013, respectively.

- 19 -

15. TRANSACTIONS WITH UNCONSOLIDATED SUBSIDIARIES AND
ASSOCIATED COMPANIES
Major transactions with unconsolidated subsidiaries for the years ended March 31, 2014 and 2013, were as
follows:

Year Ended
March 31, 2014
March 31, 2013

Millions of Yen
Rent onResearch andrealdevelopment
Purchases
estate
costs

Sales
¥

952
885

Year Ended

Sales

March 31, 2014

$ 9,250

¥

3
87

¥

7
7

¥

Fee
expenses

3
2

¥ 266
271

Thousands of U.S. Dollars
Rent onResearch andrealdevelopment
Purchases
estatecosts

Feeexpenses

$

$

29

$ 68

$

29

2,585

16. OTHER INCOME (EXPENSES) — NET
Other income (expenses) — net for the years ended March 31, 2014 and 2013, consisted of the following:

Millions of Yen
2014
2013
Gain on sale of property and equipment
Loss on retirement of property and equipment
Loss on sales of property, plant and equipment
Other
Other income (expenses) — net

¥

¥

376
(195 )
(55 )
290
416

¥

¥

5
(24 )
387
368

Thousands of
U.S. Dollars
2014
$

$

3,653
(1,894 )(534 )
2,818
4,043

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

Millions of Yen
2014
2013
Gross lease receivables
Unearned interest income
Lease investment assets, current¥¥- 20 -

4,643
2,492
2,151

¥
¥

4,910
2,602
2,308

Thousands of
U.S. Dollars
2014
$
$

45,11324,213
20,900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
2015
2016
2017
2018
2019
2020 and thereafter
Total

Millions of Yen
¥

¥

498
452
431
352
252
166
2,151

Thousands of
U.S. Dollars
$

4,839
4,392
4,188
3,420
2,448
1,613
$ 20,900

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

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.

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.
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, 2014
Cash and cash equivalents
Short-term investments
Marketable securities
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

¥

Unrealized
gain/loss

¥

1

¥

2,373
6
2,380

6,224
2,570
8,794

Millions of yen
March 31, 2013
Cash and cash equivalents
Short-term investments
Receivables
Lease investment assets
Investment securities
Total
PayablesIncome taxes payable
Total

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

Carrying
amount¥ 13,257
11,63021,892
2,308
9,280¥ 58,367

Fair value¥ 13,257
11,63021,892
4,787
9,285¥ 60,851

¥

¥

¥

4,563
1,747
6,310

Carrying
amount$ 164,429
123,290
4,878
233,638
20,90090,886$ 638,021$$

60,474
24,97185,445¥

Unrealized
gain/loss

¥
¥

2,479
5
2,484

4,563
1,747
6,310

Thousands of U.S. Dollars
Unrealized
Fair value
gain/loss$ 164,429
123,290
4,888$
10
233,638
43,95623,05690,94458$ 661,145$ 23,124$$

60,474
24,97185,445

Cash 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 approximate 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 -

Marketable and investment securities
The fair value of marketable and investment securities is measured at the quoted market price of thestock exchange for equity instruments, and at the quoted price obtained from the financial institution forcertain debt instruments. Fair value information for marketable and investment securities byclassification 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
2014

Millions of Yen
2014
2013
Investments in unconsolidated subsidiaries andassociated companies
Other
Total
e.

¥

298
202
500

¥

¥

1,341
201
1,542

¥

$

2,896
1,963
4,859

$

Maturity analysis for financial assets and securities with contractual maturities

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

March 31, 2013
Cash and cash equivalents
Short-term investments
Receivables
Lease investment assets
Investment securities:
Held-to-maturity securities
Available-for-sale securities with
contractual maturities
Total

Due in one
year or less
¥ 16,877
12,689501
24,030498

Millions of Yen
Due after one Due after five
year throughyears throughfive years
ten years

¥

14
1,487

¥

3

¥

54,595Due in one
year or less
¥ 13,209
11,631
21,873
550

¥

28
1,532

2,400

¥

14
1,560

¥

502

¥

47,263- 23 -

2
166

2,568

Millions of Yen
Due after one Due after five
year throughyears throughfive years
ten years

¥

¥

2,076

Due after
ten years

5
197

Due after
ten years

¥

1

¥

1

2,900

¥

27
3,129

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
$ 163,982
123,290
4,868
233,482
4,839

Thousands of U.S. Dollars
Due after one Due after five
year throughyears throughfive years
ten years$

136
14,448$29$ 530,461$

272
14,885Due after
ten years

20
1,613
23,319$24,952

19. COMPREHENSIVE INCOME (LOSS)
The components of other comprehensive income for the years ended March 31, 2014 and 2013, were as
follows:

Millions of Yen
2014
2013
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

¥

870

$

¥

821
3
824
(296 )
528¥

870(304 )
566$

Foreign currency translation adjustments:
Adjustments arising during the year

¥

2,091

¥

1,091

$ 20,317

Total other comprehensive income

¥

2,619

¥

1,657

$ 25,447- 24 -¥

Thousands of
U.S. Dollars
2014

7,977
29
8,006
(2,876 )5,130

20. SEGMENT INFORMATION
For the years ended March 31, 2014 and 2013a.

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
Manufacturing & sales of boilers, Manufacturing & sales of water tube boilers and cooling equipment,
and Maintenance.
The Companies operate in the following segments:
Small once-through boilers, Simple once-through boilers, Hot water
boilers, Hot water heaters, Steam driven air-compressors, Filtration
Manufacturing & sales
equipment, Pure water generators, Water softeners, Oxygen removers,of boilers
Central Management System, Chemicals for boilers, Lease of Miura
products
Thermal oil heaters, Marine auxiliary boilers, Composite boilers, Waste
Manufacturing & sales heat boilers, Sterilizers, Vacuum boiling washers, Water coolers,of water tube boilers Vacuum coolers, Vacuum thawing equipment, Transfer pumps, Waterand cooling equipment
desalination units, Steam cookers, Waste oil incinerators, Measurement
analysis of dioxins, Ballast water treatment system
Maintenance contracts, Paid maintenance, Technical guidance,
Maintenance
Maintenance leasesb.

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
2014
Reportable segment

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

Manufacturing& sales ofwater tube
Manufacturingboilers and& salescoolingof boilers
equipment

Maintenance

Total¥ 43,492¥ 13,999¥ 28,045¥ 85,536

2,374¥ 45,866¥ 3,762
40,741728¥ 14,727¥ 1,761
11,616¥ 28,045¥ 7,725
18,5803,102¥ 88,638¥ 13,248
70,937

1,128

396

324

2,931

893

650

(44 )

- 25 -

Reconciliations Consolidated¥ 85,536¥¥¥(3,102 )(3,102 )(4,283 )46,562¥ 85,536¥ 8,965
117,499

1,848

344

2,192

4,474

626

5,100

(44 )

(253 )(297 )

Millions of Yen
2013
Reportable segment

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

Manufacturing& sales ofwater tube
Manufacturingboilers and& salescoolingof boilers
equipment

Maintenance

Total¥ 37,748¥ 13,972¥ 26,437¥ 78,157

2,142¥ 39,890¥ 2,449
35,178559¥ 14,531¥ 1,245
11,970¥ 26,437¥ 7,444
17,6892,701¥ 80,858¥ 11,138
64,837

1,032

343

262

2,915

1,022

681

(395 )

Reconciliations Consolidated¥ 78,157¥¥¥(2,701 )(2,701 )(3,696 )41,104¥ 78,157¥ 7,442
105,941

1,637

376

2,013

4,618

963

5,581

(395 )(395 )

Thousands of U.S. Dollars
2014
Reportable segment

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

Manufacturing& sales ofwater tube
Manufacturingboilers and& salescoolingof boilers
equipment

MaintenanceTotal$ 422,581$ 136,018$ 272,493$ 831,092

23,066$ 445,647$ 36,554
395,851

7,074$ 143,092$ 17,110
112,864$ 272,493$ 75,058
180,529

30,140$ 861,232$ 128,722
689,244$ (30,140 )$ (30,140 )$ (41,616 )
452,410$ 831,092$ 87,106
1,141,654

10,960

3,848

3,148

17,956

3,342

21,29828,478

8,677

6,316

43,471

6,082

49,553(428 )(2,458 )(2,886 )(428 )

Reconciliations Consolidated$ 831,092

Notes:
1. Reconciliations of segment profit mainly represent corporate expenses, including administrative expenses,
which are not attributable to specific reportable segments.
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 also respectively
related to assets of management department.
2. Segment profit is reconciled to operating profit of the consolidated financial statements.

- 26 -

d.

Related Information
Information about Geographical Areas(1) Sales
Thousands of
U.S. Dollars
2014

Millions of Yen
2014
2013
Japan
Asia
North and South America
Other
Total
(2)

¥

¥

72,037
10,0763,343
80
85,536¥¥

68,119
7,615
2,369
54
78,157$ 699,932
97,901
32,482777$ 831,092

Property, plant and equipment
Thousands of
U.S. Dollars
2014

Millions of Yen
2014
2013
Japan
Asia
North and South America
Total

¥

29,115
4,747
1,265
35,127¥¥¥

27,8283,095
1,112
32,035$$282,890
46,123
12,291
341,304

21. NET INCOME PER SHARE
Reconciliation of the differences between basic and diluted net income per share (“EPS”) for the years
ended March 31, 2014 and 2013, is as follows:
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

Millionsof YenNet
IncomeYear Ended March 31, 2013
Basic EPS—Net income available tocommon shareholders
Effect of dilutive securities—Stock options
Diluted EPS—Net income for computation- 27 -

¥

5,188

¥

5,188

Thousandsof Shares
Weightedaverage
Shares37,48954
37,543Thousandsof Shares
Weightedaverage
Shares38,10629
38,135

Yen

U.S. Dollars

EPS¥ 167.75$

1.63¥ 167.51

$

1.63

Yen

EPS

¥ 136.14¥ 136.03

22. SUBSEQUENT EVENTSa.

Appropriations of Retained Earnings
At the general shareholders meeting held on June 27, 2014, the Company's shareholders approved thefollowing appropriations of retained earnings as of March 31, 2014:
Thousands of
U.S. Dollars

Millions of Yen
Appropriations—Cash dividends,
ordinary dividend of ¥34.00 ($0.33)

b.

¥

1,275

$ 12,388

Changes in classification of segments
Effective from the year ending March 31, 2015, the Company decided to reclassify the reportablesegments to “Domestic manufacturing & sales of products”, “Domestic maintenance”, “Overseas
manufacturing & sales of products”, “Overseas maintenance”.
The Companies are improving their business to provide the total solutions for plant infrastructure
globally, according to which various boilers and related equipments are provided to their customers
systematically, and are also accelerating the expansion of overseas business. As a result, the existing
segmentation is not appropriate for the Companies’ decision making in the performance management
process.
Pro-forma information about sales and segment income by reportable segment for the year ended
March 31, 2014, if the new segmentation was applied, would be as follows:
Millions of Yen
2014
Reportable segment
Domestic

Overseas

Manufacturing
Manufacturing& sales of& sales of
Maintenance
Maintenanceproducts
products

Sales:
Sales to externalcustomers¥ 47,189
Intersegment
sales or transfers
1,791
Total
¥ 48,980
Segment profit

¥

2,875

Total

Reconciliations Consolidated¥ 85,536¥ 25,217¥ 10,302¥

2,828¥ 85,536¥ 25,217

163¥ 10,465

¥

2,828

1,954
¥ 87,490¥¥(1,954 )(1,954 )

¥

¥

¥

115

¥

¥

151

5,466

358

- 28 -

8,814¥ 85,536¥

8,965

Thousands of U.S. Dollars
2014
Reportable segment
Domestic

Overseas

Manufacturing
Manufacturing& sales of& sales of
Maintenance
Maintenanceproducts
products

Sales:
Sales to externalcustomers$ 458,502
Intersegment
sales or transfers
17,402
Total$ 475,904
Segment profit$ 27,934

Total

Reconciliations Consolidated$ 831,092$ 245,016$ 100,097$ 27,477$ 831,092$ 245,016

1,584$ 101,681$ 27,477

18,986$ 850,078$ (18,986 )$ (18,986 )$ 831,092$ 53,109$$$ 85,639$$ 87,106

3,479

1,117

1,467

Notes:
1. “Domestic” segments are accounted for as domestic subsidiaries business and “Overseas”
segments are accounted for as overseas subsidiaries.
2. Reconciliation includes the amounts of inter-segment transactions to be eliminated.

******- 29 -