MIURA CO., LTD. and
its Consolidated Subsidiaries
Consolidated Financial Statements for theYear Ended March 31, 2016,
and Independent Auditor's ReportMIURA CO., LTD. and its Consolidated Subsidiaries
Consolidated Balance Sheet
March 31,2016

Millions of Yen
2016
2015

ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 17)¥
Short-term investments (Notes 3 and 17)
Marketable securities (Notes 4 and 17)
Receivables (Note 17):
Trade notes
Trade accounts
Unconsolidated subsidiaries and associated companies (Note 6)
Other
Allowance for doubtful accounts
Inventories (Note 5)
Lease investment assets (Notes 16 and 17)
Deferred tax assets (Note 12)
Prepaid expenses and otherTotal current assets

23,87512,011¥

23,7608,423
1Thousands of
U.S. Dollars(Note 1)
2016
$

8,201
17,387
244
138
(98 )
13,781
2,014
2,104
485

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

72,781
154,3042,165
1,226(870 )
122,302
17,874
18,672
4,304

80,14275,481

711,235

CURRENT LIABILITIES:
Short-term borrowings (Note 7)
Payables (Note 17):
Trade notes
Trade accounts
Unconsolidated subsidiaries
Other
Income taxes payable (Note 17)
Advances received from customers
Accrued expenses
Product warranty provision
Provision for environmental measures
Provision for shareholders benefit program
Asset retirement obligations
Other (Note 12)

11,68635,915
8,642
7,496
627
64,366(25,079 )

11,674
34,691
8,195
7,308
860
62,728(23,453 )103,710
318,734
76,69566,5255,564
571,228(222,568 )Net property, plant and equipment

39,28739,275

348,660

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 4 and 17)
Investments in and advances to unconsolidated subsidiaries andassociated companies
Deposits
Asset for retirement benefits (Note 8)
Deferred tax assets (Note 12)
Other
Total investments and other assets

12,27910,577

108,972

1,302
769
1,031
56
995

648
840
1,651
77
976

11,555
6,825
9,150
497
8,830

16,432

14,769145,829¥

135,861¥

129,525

-1-

$

337

23,798233,262

19
386
65
1,778
284

17
445
55
1,629
363

169
3,426
577
15,7792,520

Total long-term liabilities

2,532

2,509

22,471

Total liabilities

28,81626,307

255,733

9,544
10,098
246
91,212

9,544
10,089205
86,30684,70089,6172,183
809,478(7,042)(7,056 )(62,496 )

3,222
1,381
(1,874)
106,787
258

2,561
3,031
(1,483 )103,19721

28,594
12,256(16,631 )947,701
2,290

107,045

103,218

949,991

129,525$ 1,205,724

TOTAL

638
2,848
66
4,530
2,172
8,296
6,380
701

38

26,284

EQUITY (Notes 10, 11 and 21):
Common stock—authorized, 300,000,000 shares;
issued, 125,291,112 shares in 2016 and 2015
Capital surplus
Stock acquisition rights
Retained earnings
Treasury stock—at cost, 12,788,321 shares in 2016 and12,824,842 shares in 2015
Accumulated other comprehensive income
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total
Noncontrolling interests

See notes to consolidated financial statements.

¥

34
6
575

LONG-TERM LIABILITIES:Long-term borrowings (Note 7)
Liability for retirement benefits (Note 8)
Retirement allowances for directors (Note 9)
Deferred tax liabilities (Note 12)
Other$ 1,205,724

38

5,662
25,275586
40,202
19,27673,62456,621
6,221

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 16)
Tools, furniture and fixtures (Note 16)
Construction in progress
Total
Accumulated depreciation

Millions of Yen
2016
2015

LIABILITIES AND EQUITY

211,883
106,594

Thousands of
U.S. Dollars(Note 1)
2016

¥ 135,861

¥

302
53
5,103

MIURA CO., LTD. and its Consolidated Subsidiaries
Consolidated Statement of Income
Year Ended March 31, 2016

Millions of Yen
2016
2015

Thousands of
U.S. Dollars(Note 1)
2016

99,019¥ 90,424$ 878,763

58,82553,380522,054

40,19437,044

356,709

29,97428,032

266,010

10,2209,012

90,699

365
401
(446)
541

304
394
549
301

3,239
3,559
(3,958)
4,801

861

1,548

7,641

INCOME BEFORE INCOME TAXES

11,081

10,56098,340

INCOME TAXES (Note 12):Current
Deferred

3,591
14

3,007
88

31,869124

Total income taxes

3,605

3,095

31,993

7,476

7,465

66,347

NET SALES (Note 14)¥

COST OF SALES (Notes 8 and 14)
Gross profit
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES(Notes 8, 13 and 14)
Operating income
OTHER INCOME (EXPENSES):Interest and dividend income
Rent on real estate (Note 14)
Foreign exchange (loss) gain—net
Other—net (Note 15)
Other income—net

NET INCOME
NET INCOME ATTRIBUTABLE TO NONCONTROLLINGINTERESTS
NET INCOME ATTRIBUTABLE TO OWNER OF THE
PARENT

1
¥

7,476

¥

7,464

Yen
PER SHARE OF COMMON STOCK (Note 20):
Basic net income
Diluted net income
Cash dividends applicable to the year¥

See notes to consolidated financial statements.

-2-

66.46
66.30
21.00

$

66,347

U.S. Dollars
¥

66.37
66.23
19.67

$

0.59
0.59
0.19

MIURA CO., LTD. and its Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Year Ended March 31, 2016

Millions of Yen
2016
2015
NET INCOME¥

OTHER COMPREHENSIVE INCOME (Note 18):
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total other comprehensive income

7,476

¥

7,465

Thousands of
U.S. Dollars(Note 1)
2016$

66,347661(1,532 )(356 )(1,227 )

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

¥

6,249

¥ 10,671$

55,458TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent¥
Noncontrolling interests

6,252
(3 )

¥ 10,668
3$

55,485(27 )COMPREHENSIVE INCOME

See notes to consolidated financial statements.

-3-

5,866
(13,596 )(3,159 )(10,889 )MIURA CO., LTD. and its Consolidated Subsidiaries
Consolidated Statement of Changes in Equity
Year Ended March 31, 2016
Thousands
IssuedNumber of
Shares ofCommonStock*

Treasury
Stock*

CommonStockCapitalSurplus

Stock
Acquisition
RightsRetained
Earnings

TreasuryStock125,291(12,823 )

¥

9,544

¥ 10,089¥

123¥ 78,553¥

125,291(12,823 )

9,544

10,089123

2,538
81,091BALANCE, APRIL 1, 2014 (as previously
reported)
Cumulative effects of changes in accounting
policies
BALANCE, APRIL 1, 2014 (as restated)
Net income
Cash dividends, ¥20.00 per share
Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2015

BALANCE, APRIL 1, 2015

(2 )(7,053 )

860

¥

860

1,405

¥ (1,362 )¥ 92,159

1,405(1,362 )2,538
94,697125,291(12,825 )9,544

10,089205

86,306(7,056 )

1,701

1,626

(121 )

2,561

3,031

(1,483 )103,1977,476(2,362 )
37

(1 )
21

10

(6 )
41

125,291(12,788 )

¥

9,544

¥ 10,098

¥

661

246

¥ 91,212¥ (7,042 )

¥

3,222

¥

1,381

¥ (1,874 )¥ 106,787

Stock
Acquisition
RightsRetained
Earnings$ 84,700$ 89,537$$ 765,939$ (62,620 )1,819$ 22,728$ 26,899$ (13,161 )

Total
$

66,347(20,962 )
(9 )
186

89
(1,846 )
(9 )

(53 )
364

$ 84,700$ 89,617$

2,183$ 809,478$ (62,496 )* 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-

5,866

(14,643 )(3,470 )$ 28,594$ 12,256$ (16,631 )

$

2,538
94,7162

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

21

103,218(208 )(7 )(1,339 )CapitalSurplus19(208 )(391 )

CommonStock¥ 92,178

7,476(2,362 )(1 )31(1,650 )Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income
Unrealized
Gain onForeign
AvailableCurrency
Remeasurements
Treasury
for-saleTranslationof Defined
Stock
Securities
Adjustments
Benefit Plans

19

7,476
(2,362 )(1 )31(208 )
(1 )

¥

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

(3 )
82

Net income
Cash dividends, $0.19 per share
Purchase of treasury stock
Exercise of stock options
Effect on change of the fiscal year-end of
consolidated subsidiaries
Change in the parent’s ownership interest due totransactions with noncontrolling interests
Net change in the year
BALANCE, MARCH 31, 2016

¥

Total
EquityNoncontrolling
Interests

Total

7,464
(2,249 )Net income
Cash dividends, ¥21.00 per share
Purchase of treasury stock
Disposal of treasury stock
Effect on change of the fiscal year-end of
consolidated subsidiaries
Change in the parent’s ownership interest due totransactions with noncontrolling interests
Net change in the year
BALANCE, MARCH 31, 2016

(7,053 )Millions of Yen
Accumulated Other Comprehensive Income
Unrealized
Gain onForeign
AvailableCurrency
Remeasurements
for-saleTranslationof Defined
Securities
Adjustments Benefit Plans

915,841

¥

237

(7 )
(1,102 )258¥ 107,045

Total
EquityNoncontrolling
Interests

$

187

$

916,028

66,347(20,962 )(9 )275

66,347(20,962 )(9 )275(1,846 )(1,846 )(62 )(11,883 )2,103

947,701$ 2,290(62 )(9,780 )$949,991

MIURA CO., LTD. and its Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2016

Millions of Yen
2016
2015
OPERATING ACTIVITIES:
Income before income taxes
Adjustments for:
Income taxes—paidDepreciation and amortization
Retirement benefit expenses
Increase in asset for retirement benefits
Decrease in liability for retirement benefits
Increase in allowance for doubtful accounts
Increase (decrease) 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 on disposals and sales of property,
plant and equipment
Foreign exchange loss (gain)
Loss on valuation of investment securities
Increase in receivables
Increase in inventories
Increase in payables
Increase in advances received
Other—net
Total adjustments¥ 11,081¥ 10,560$ 98,340(2,542 )2,856
901(637 )(131 )
40(4,412 )2,546
750(556 )(10 )7(22,559 )
25,346
7,996(5,653 )(1,163 )
355

240
72

(543 )
82
88
15

2,130
639

(91 )
187

(808 )
1,660(1,045 )(418 )
456
269
261
418

131
(469 )
5(741 )(1,407 )
206
1,159
1,552
(1,597 )(9,274 )(3,710 )
4,047
2,387
2,316
3,709

11,4998,963

102,049(2,616 )378(12,500 )15,200(814 )(23,216 )
3,355(110,934 )
134,895(7,224 )(2 )6(6,598 )257(6,873 )11,373(2 )1,412(219 )
21(653 )(6,177 )(816 )(8 )(317 )
557(265 )(5,795 )(54,819 )(7,242 )(7,994 )(662 )(70,945 )8,301$ 31,104

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(Decrease) increase in short-term investments—net
Other—net
Net cash used in investing activities
FORWARD

Thousands of
U.S. Dollars(Note 1)
2016

¥

3,505

¥

(18 )
53

(Continued)-5-MIURA CO., LTD. and its Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2016

Millions of Yen
2016
2015
FORWARD

¥

3,505

¥

Thousands of
U.S. Dollars(Note 1)
2016

8,301

$ 31,104

10
(7 )
(3 )
(2,246 )(115 )(9 )(20,944 )FINANCING ACTIVITIES:
Increase in short-term borrowings―net
Repayments of lease obligations
Purchase of treasury stock
Cash dividends paid
Payments for changes in ownership interests in subsidiaries that
do not result in change in scope of consolidation

(13 )
(1 )
(2,360 )Net cash used in financing activities(2,396 )(2,246 )(21,263 )FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS(356 )

782(3,158 )NET INCREASE IN CASH AND CASH
EQUIVALENTS

753

6,837

6,683

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

108

958

EFFECT ON CHANGE OF THE FISCAL YEAR-END OFCONSOLIDATED SUBSIDIARIES(746 )(6,621 )CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR

(22 )

(195)

23,76016,923

210,863¥ 23,875¥ 23,760$ 211,883

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

MIURA CO., LTD. and its Consolidated Subsidiaries
Notes to Consolidated Financial Statements
Year Ended March 31, 2016
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 2015
consolidated financial statements to conform to the classifications used in 2016.
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 ¥ 112.68
to U.S.$1, the approximate rate of exchange at March 31, 2016. 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, 2016 include theaccounts of the Company and its thirteen (fifteen in 2015) significant subsidiaries (collectively, the“Companies”).
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 over which theCompanies have the ability to exercise significant influence are accounted for by the equity method.
Investments in one unconsolidated subsidiary AIMU CO., LTD. are accounted for by the equity method
at the beginning of the year ended March 31, 2016 due to the increasing materiality.
Another seven (seven in 2015) unconsolidated subsidiaries and one (three in 2015) associated company
are stated at cost. If the equity method had been applied to account for investments in these companies,
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.
To achieve more appropriate disclosure of consolidated financial information, from the consolidated
fiscal year under review we have changed the closing date for KOREA MIURA CO., LTD. and fiveother companies to March 31. With regard to MIURA INDUSTRIES (SUZHOU) CO., LTD., we
performed a provisional settlement of account on March 31, the consolidated closing date, and haveswitched to the consolidation method.
As a result of this change in settlement period, we have adjusted profit and loss for the period fromJanuary 1, 2015 to March 31, 2015 and recorded reduction of ¥208 million in retained earnings.
Furthermore, as the closing date for NIWA KOUGYO CO., LTD. is December 31, we performed aprovisional settlement of account on March 31, the consolidated closing date, and a consolidation.

-7-

b.

Business Combinations — In September 2013, the ASBJ issued revised ASBJ Statement No. 21,"Accounting Standard for Business Combinations," revised ASBJ Guidance No. 10, "Guidance on
Accounting Standards for Business Combinations and Business Divestitures," and revised ASBJ
Statement No. 22, "Accounting Standard for Consolidated Financial Statements." Major accountingchanges are as follows:(a) Transactions with noncontrolling interest—A parent's ownership interest in a subsidiarymightchange if the parent purchases or sells ownership interests in its subsidiary. The carrying amountof noncontrolling interest is adjusted to reflect the change in the parent's ownership interest in its
subsidiary while the parent retains its controlling interest in its subsidiary. Under the previous
accounting standard, any difference between the fair value of the consideration received or paid and theamount by which the noncontrolling interest is adjusted is accounted for as an adjustment of goodwill
or as profit or loss in the consolidated statement of income. Under the revised accounting standard, suchdifference is accounted for as capital surplus as long as the parent retains control over its subsidiary.
(b) Presentation of the consolidated balance sheet—In the consolidated balance sheet, "minority
interest" under the previous accounting standard is changed to "noncontrolling interest" under therevised accounting standard.
(c) Presentation of the consolidated statement of income—In the consolidated statement of income,"income before minority interest" under the previous accounting standard is changed to "net income"under the revised accounting standard, and "net income" under the previous accounting standard ischanged to "net income attributable to owners of the parent" under the revised accounting standard.
(d) Provisional accounting treatments for a business combination—If the initial accounting for abusiness combination is incomplete by the end of the reporting period in which the business combination
occurs, an acquirer shall report in its financial statements provisional amounts for the items for which
the accounting is incomplete. Under the previous accounting standard guidance, the impact ofadjustments to provisional amounts recorded in a business combination on profit or loss is recognizedas profit or loss in the year in which the measurement is completed. Under the revised accounting
standard guidance, during the measurement period, which shall not exceed one year from theacquisition, the acquirer shall retrospectively adjust the provisional amounts recognized at theacquisition date to reflect new information obtained about facts and circumstances that existed as of theacquisition date and that would have affected the measurement of the amoun ts recognized as of that
date. Such adjustments shall be recognized as if the accounting for the business combination had been
completed at the acquisition date.
(e) Acquisition-related costs—Acquisition-related costs are costs, such as advisory fees or professionalfees, which an acquirer incurs to effect a business combination. Under the previous accounting standard,
the acquirer accounts for acquisition-related costs by including them in the acquisition costs of theinvestment. Under the revised accounting standard, acquisition-related costs shall be accounted for as
expenses in the periods in which the costs are incurred.
The above accounting standards and guidance for (a) transactions with noncontrolling interest, (b)presentation of the consolidated balance sheet, (c) presentation of the consolidated statement of income,and (e) acquisition-related costs are effective for the beginning of annual periods beginning on or after
April 1, 2015.
Either retrospective or prospective application of the revised accounting standards and guidance for (a)transactions with noncontrolling interest and (e) acquisition-related costs is permitted. In retrospective
application of the revised standards and guidance, the accumulated effects of retrospective adjustments
for all (a) transactions with noncontrolling interest and (e) acquisition-related costs which occurred in
the past shall be reflected as adjustments to the beginning balance of capital surplus and retained
earnings for the year of the first-time application. In prospective application, the new standards andguidance shall be applied prospectively from the beginning of the year of the first -time application.
The revised accounting standards and guidance for (b) presentation of the consolidated balance sheet
and (c) presentation of the consolidated statement of income shall be applied to all periods presented infinancial statements containing the first-time application of the revised standards and guidance.
The revised standards and guidance for (d) provisional accounting treatments for a business combination
are effective for a business combination which occurs on or after the beginning of annual periods
beginning on or after April 1, 2015.

-8-

The Company applied the revised accounting standards and guidance for (a) transactions with
noncontrolling interest, (b) presentation of the consolidated balance sheet, (c) presentation of theconsolidated statement of income, and (e) acquisition-related costs above, effective April 1, 2015, and(d) provisional accounting treatments for a business combination above for a business combination
which occurred on or after April 1, 2015. The revised accounting standards and guidance for (a)transactions with noncontrolling interest and (e) acquisition-related costs were applied prospectively.
With respect to (b) presentation of the consolidated balance sheet and (c) presentation of theconsolidated statement of income, the applicable line items in the 2015 consolidated financial
statements have been accordingly reclassified and presented in line with those in 2016.
c.

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.

d. 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.
e.

Inventories— Inventories are stated at cost, determined by the following methods (consolidated balance
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 methodf.

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.

g.

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 yearsh.

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 be recoverable.
An impairment loss would be recognized if the carrying amount of an asset or asset group exceeds thesum of the undiscounted future cash flows expected to result from the continued use and eventual
disposition of the asset or asset group. The impairment loss would be measured as the amount by which
the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted
cash flows from the continued use and eventual disposition of the asset or the net selling price at
disposition.

i

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.

-9-

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.

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 Busines s
Accounting 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 accounting standard, actuarial gains and losses and past service costs that are yet to berecognized in profit or loss are recognized within equity (accumulated other comprehensive
income), after adjusting for tax effects, and any resulting deficit or surplus is recognized as aliability (liability for retirement benefits) or asset (asset for retirement benefits).
(2) The accounting standard does not change how to recognize actuarial gains and losses and past
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 aros e in the current period and have not yet beenrecognized in profit or loss are included in other comprehensive income, and actuarial gains andlosses 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, are treated as reclassification adjustments(see Note 18).
(3) The 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.
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 the discountrate 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 of benefit payment,
and recorded the effect of (3) above as of April 1, 2014, in retained earnings. As a result, retained
earnings as of April 1, 2014, increased by ¥2,538 million.

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 the amountthat 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 maintenance services
to their customers under three-year contracts. The Companies receive advances from customers for thefull contract cost and recognize revenues on a straight-line basis over the contract period.

- 10 -

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 of either thestock option or the goods or services received. In the balance sheet, the stock option is presented as astock acquisition right as a separate component of equity until exercised. The standard covers equitysettled, share-based payment transactions, but does not cover cash-settled, share-based paymenttransactions. In addition, the standard allows unlisted companies to measure options at their intrinsic
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 by applying
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 are recognizedin the consolidated statement of income to the extent that they are not hedged by forwa rd 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.

u.

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.

- 11 -

3.

SHORT-TERM INVESTMENTS
Short-term investments at March 31, 2016 and 2015, consisted of the following:Thousands of
U.S. Dollars
2016

Millions of Yen
2016
2015
Time deposits
Negotiable certificates of deposit
Total

4.

¥ 12,011¥¥ 12,011

¥

5,723
2,700
8,423

$ 106,594$ 106,594

MARKETABLE AND INVESTMENT SECURITIESMarketable and investment securities at March 31, 2016 and 2015, consisted of the following:Thousands of
U.S. Dollars
2016

Millions of Yen
2016
2015
Current:
Government and corporate bonds and other
Total

¥
¥

Non-current:
Equity securities
Government and corporate bonds and other
Trust fund investments and otherTotal¥ 10,362
1,806
111¥ 12,279

1
1

¥

9,484
1,000
93
¥ 10,577$ 91,960
16,028984$ 108,972

The carrying amounts and aggregate fair value of investment securities at March 31, 2016 and 2015, wereas follows:

March 31, 2016
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

Fair
Value

5,551
88
1,806

¥ 4,65420
8¥ 10,167
108
1,814

Cost

Millions of Yen
Unrealized
Unrealized
Gains
Losses

5,545
63
1,000

¥ 3,76126
15- 12 -

¥

¥

38

15

Fair
Value

¥

9,291
89
1,015

March 31, 2016
Securities classified as:
Available-for-sale:
Equity securities
Trust fund investments and otherHeld-to-maturity
5.

$

Cost

Thousands of U.S. Dollars
Unrealized
Unrealized
Gains
LossesFair
Value

49,263781
16,028$ 41,303
177
71$ 90,229
958
16,099$337

INVENTORIESInventories at March 31, 2016 and 2015, consisted of the following:Thousands of
U.S. Dollars
2016

Millions of Yen
2016
2015
Finished products and merchandiseWork-in-process
Raw materials and supplies
Total

6.

¥

4,425
3,117
6,239
¥ 13,781

¥

4,902
2,491
5,621
¥ 13,014$ 39,271
27,66255,369$ 122,302

RECEIVABLES FROM UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATED COMPANIES
Receivables from unconsolidated subsidiaries and associated companies at March 31, 2016 and 2015, wereas follows:
Thousands of
U.S. Dollars
2016

Millions of Yen
2016
2015
Accounts receivable
Short-term loans receivable
Total

7.

¥
¥

87
157
244

¥
¥

143
183
326

$
$

772
1,393
2,165

SHORT-TERM AND LONG-TERM BORROWINGS
Short-term borrowings at March 31, 2016 and 2015, were as follows:
Thousands of
U.S. Dollars
2016

Millions of Yen
2016
2015
Short-term borrowings from an unconsolidated
subsidiary with average interest rate of 0.025%(2016 and 2015)
Lease obligations
Total- 13 -

¥
¥

30
8
38

¥
¥

30
8
38

$
$

266
71
337

Long-term borrowings at March 31, 2016 and 2015, were as follows:
Thousands of
U.S. Dollars
2016

Millions of Yen
2016
2015
Lease obligations
Total

8.

¥
¥

19
19

¥
¥

17
17

$
$

169
169

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 determined basedon the rate of pay at the time of termination, years of service, and certain other factors. Such retirement
benefits are made in the form of lump-sum severance payments from the Company or the domestic
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 by voluntary
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, Taiwan and US have defined contribution plans.
a.

The changes in defined benefit obligation for the years ended March 31, 2016 and 2015, were as
follows:
Millions of Yen
2016
2015

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
Cumulative effect of accounting period change
Effect of foreign exchange rate fluctuation
Balance at end of yearb.

¥ 16,895
16,895
1,136
146
1,386
(499 )
74(108 )¥ 19,030¥ 19,170(3,929 )15,241
1,038
181
853
(484 )
66¥ 16,895

Thousands of
U.S. Dollars
2016$ 149,938
149,938
10,082
1,296
12,300(4,429 )657(959 )$ 168,885

The changes in plan assets for the years ended March 31, 2016 and 2015, were as follows:
Millions of Yen
2016
2015

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

- 14 -¥ 18,102
191
113
1,825
(481 )(11 )(64 )¥ 19,675¥ 16,808
185
(45 )
1,616
(509 )
46¥ 18,101

Thousands of
U.S. Dollars
2016$ 160,650
1,695
1,003
16,196(4,269 )(97 )(568 )$ 174,610

c.

Reconciliation between the liability recorded in the consolidated balance sheet and the balances ofdefined benefit obligation and plan assets
Millions of Yen
2016
2015

Funded defined benefit obligation
Plan assets
Total
Unfunded defined benefit obligation
Net liability (asset) arising from defined benefit
obligation¥ 18,990(19,675 )(685 )
40¥ 16,865(18,101 )(1,236 )30$ 168,530(174,609 )(6,079 )
355

¥

¥

$

(645 )(1,206 )Millions of Yen
2016
2015
Liability for retirement benefits
Asset for retirement benefits
Net liability (asset) arising from defined benefit
obligationd.

Thousands of
U.S. Dollars
2016

386
(1,031 )¥445(1,651 )$

3,426(9,150 )¥(645 )¥(1,206 )$(5,724 )The components of net periodic benefit costs for the years ended March 31, 2016 and 2015, 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

¥

¥

1,133
146
(190 )
8
890
3
1,990

¥

¥

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

Thousands of
U.S. Dollars
2016
$

$

10,055
1,296(1,686 )
71
7,898
27
17,661

Amounts recognized in other comprehensive income (before income tax effect) in respect of defined
retirement benefit plans for the years ended March 31, 2016 and 2015, are as follows:
Millions of Yen
2016
2015

Prior service cost
Actuarial losses
Total
f.

(5,724 )¥Millions of Yen
2016
2015

e.

Thousands of
U.S. Dollars
2016

¥
¥

8
(379 )(371 )¥¥

8(156 )(148 )

Thousands of
U.S. Dollars
2016
$
$

71
(3,364 )(3,293 )Amounts recognized in accumulated other comprehensive income (before income tax effect) in
respect of defined retirement benefit plans as of March 31, 2016 and 2015, are as follows:
Millions of Yen
2016
2015
Unrecognized prior service cost
Unrecognized actuarial losses
Total

¥
¥

- 15 -(46 )(2,627 )(2,673 )

¥
¥

(54 )
(2,203 )(2,257 )Thousands of
U.S. Dollars
2016$(408 )(23,314 )$ (23,722 )g.

Plan assets(1)

Components of plan assets
Plan assets as of March 31, 2016 and 2015, consisted of the following:

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

2016

2015

53%
42
5
100%

54%
42
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, 2016 and 2015, were set forth as follows:

Discount rate
Expected rate of return on plan assets
Rate of salary increase
9.

2016

2015

0.148%
1.0
4.9

0.738%
1.0
4.9

RETIREMENT ALLOWANCES FOR DIRECTORSThe provisions for retirement benefits to directors charged to income were ¥ 13 million ($115 thousand) and¥10 million for the years ended March 31, 2016 and 2015, respectively.

10. 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 being prescribed as one year rather
than the normal two-year 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 has prescribedso in its articles of incorporation. However, the Company cannot do so because it does not meet all theabove 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 transferred among
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 such treasury
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 specific formula.

11. STOCK OPTIONSThe stock options outstanding as of March 31, 2016, are as follows:
Persons
Granted11 directors

Number of
Options Granted

Date of
Grant

ExercisePrice283,700 shares2012.7.17
2013.7.16
2014.7.16
2015.7.15¥
1 From July 18, 2012
$ (0.01 )to July 15, 2045

Exercise Period

The stock option activity is as follows:Year Ended March 31, 2016
Non-vested (Shares)
March 31, 2015—Outstanding
GrantedCanceled
VestedMarch 31, 2016—Outstanding

271,200
49,70037,200283,700

Vested (Shares)
March 31, 2015—Outstanding
VestedExercised
Canceled
March 31, 2016—Outstanding

37,20037,200Exercised
Exercise price
Average stock price at exercise
Fair value price at grant date

¥
$
¥
$
¥
$

1
(0.01 )
1,423
(12.63 )823(7.30 )

- 17 -

Outstandingat March 31,
2016
¥
$

1
(0.01 )¥$

927
(8.23 )

The Assumptions Used to Measure the Fair Value of the 2016 Stock Option
Estimate method:
Volatility of stock price:
Estimated remaining outstanding period:
Estimated dividend:
Risk free interest rate:

Black-Scholes option pricing model
25.804%
3.0 years¥19.67 per share
0.0275%

12. 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 approximately 32.8% for the year ended
March 31, 2016 and 35.4% for the year ended March 31, 2015.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax
assets and liabilities at March 31, 2016 and 2015, are as follows:

Millions of Yen
2016
2015
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

¥

1,327
23
68
161
200

¥

Thousands of
U.S. Dollars
2016

1,308
18
104
92
188

$ 11,777
204
603
1,429
1,775

12
77
75
56
134
792
267
(955 )
2,237

14
81
66
78
144
803
287
(911 )
2,272

106
683
666
497
1,189
7,029
2,370
(8,475 )19,853

327
1,414
115
1,856
381

461
1,211
33
1,705
567

2,902
12,5491,021
16,472$ 3,381¥

For the year ended March 31, 2016, 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 2016 in Japan changed the normal effective statutory tax rate for the fiscal
year beginning on or after April 1, 2016 and the fiscal year beginning on or after April 1, 2017, toapproximately 30.7% and for the fiscal year beginning on or after April 1, 2018, to approximately 30.5%.
The effect of these changes was to decrease deferred tax assets in the consolidated balance s heet as of March
31, 2016, by ¥4 million ($35 thousand) and to increase income taxes—deferred in the consolidated statementof income for the year then ended by ¥78 million ($692 thousand).

- 18 -

13. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥2,600 million ($23,074 thousand) and ¥2,403
million for the years ended March 31, 2016 and 2015, respectively.
14. TRANSACTIONS WITH UNCONSOLIDATED SUBSIDIARIES AND
ASSOCIATED COMPANIES
Major transactions with unconsolidated subsidiaries for the years ended March 31, 2016 and 2015, were as
follows:

Year Ended

Sales

March 31, 2016
March 31, 2015

¥ 1,196
817

Millions of Yen
Rent onResearch andReal
Development
Purchases
Estate
Costs
¥

18

¥

8
7

¥

3
5

Year Ended

Sales

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

March 31, 2016

$ 10,614

$

160

$ 71

$

Fee
Expenses

27

¥ 231
278

Fee
Expenses$

2,050

15. OTHER INCOME (EXPENSES) — NET
Other income (expenses) — net for the years ended March 31, 2016 and 2015, consisted of the following:
Millions of Yen
2016
2015
Gain on sale of property and equipment
Loss on retirement of property and equipment
Loss on sales of property, plant and equipment
Subsidies
Loss on valuation of shares of subsidiary
Loss on sales of shares of subsidiary
Gain on bargain purchase
Other
Other income (expenses) — net

¥

¥

138
(45 )
(3 )
131
103
217
541

¥

¥

10
(84 )
(58 )
148
(88 )
(15 )
388
301

Thousands of
U.S. Dollars
2016
$

$

1,225
(399 )
(27 )
1,163
914
1,925
4,801

16. LEASESAs a lessor, the Company recognized leased assets as lease investment assets. The net lease investment assets
are summarized as follows:
Millions of Yen
2016
2015
Gross lease receivables
Unearned interest income
Lease investment assets, current¥¥- 19 -

4,391
2,377
2,014

¥
¥

4,495
2,429
2,066

Thousands of
U.S. Dollars
2016
$
$

38,96921,095
17,874

Maturities of lease investment assets for finance leases that are not deemed to transfer ownership of the leased
property to the lessee are as follows:
Years Ending
March 31
2017
2018
2019
2020
2021
2022 and thereafter
Total

Millions of Yen
¥

¥

488
439
385
330
237
135
2,014

Thousands of
U.S. Dollars
$

4,331
3,896
3,417
2,929
2,103
1,198
$ 17,874

As a lessee, the Company and some subsidiaries lease certain machinery, equipment, tools, furniture andfixtures.
17. 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 marketable debt
securities. The Companies also invest in the stock of their business partners to maintain and enhancebusiness relationships. Derivatives are used, not for speculative purposes, but to manage exposure tofinancial 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 to customer
credit risk. Receivables in foreign currencies are exposed to the market risk of fluctuation in foreign
currency exchange rates. Marketable and investment securities, mainly negotiable certificates of deposit,
held-to-maturity securities, and equity instruments of customers and suppliers of the Companies, areexposed 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 early stages.
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 on aregular 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.

- 20 -

The Company considers that credit risk from non-performance of counterparties is minimal because thecounterparties 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 basedon reports from each division, and holding adequate balances of liquid assets.
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, 2016
Cash and cash equivalents
Short-term investments
Receivables
Lease investment assets
Investment securities
Total
PayablesIncome taxes payable
Total

Carrying
Amount¥ 23,875
12,01125,872
2,014
12,081¥ 75,853

Fair Value¥ 23,875
12,01125,872
4,310
12,089¥ 78,157

¥

¥

¥

8,082
2,172
10,254¥

Unrealized
Gain/Loss

¥
¥

2,296
8
2,304

8,082
2,172
10,254

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

March 31, 2016
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

Carrying
Amount$ 211,883
106,594
229,606
17,874
107,215$ 673,172$$- 21 -

71,725
19,27691,001¥

Unrealized
Gain/Loss

¥
¥

2,329
14
2,343

7,416
1,175
8,591

Thousands of U.S. Dollars
Unrealized
Fair Value
Gain/Loss$ 211,883
106,594
229,606
38,250$ 20,376
107,28671$ 693,619$ 20,447$$

71,725
19,27691,001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 approximates fair value because of their short maturities.
Lease investment assets
The fair value of lease investment assets is determined by discounting the cash flows related to the lease
investment assets at the Companies' assumed corporate discount rate, based upon considerations of riskfree interest rates and credit risk.
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 3.
(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
2016

Millions of Yen
2016
2015
Investments in unconsolidated subsidiaries andassociated companies
Other
Total
e.

¥
¥

1,189
198
1,387

¥

527
197
724

¥

$ 10,552
1,757$ 12,309

Maturity analysis for financial assets and securities with contractual maturities

March 31, 2016
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

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
¥ 23,826
12,011
25,863488

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

9
1,391

¥

303
¥

5
62,193

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

¥

38
1,741

1,506
¥

13
1,449

¥

2
¥

58,005- 22 -

135

1,641

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

¥

¥

30
1,494

Due after
Ten Years

144
1,001

¥

1,145

Due after
Ten Years

March 31, 2016
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
$ 211,448
106,594
229,526
4,331

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

80
12,345$2,689
44$ 551,943$

337
15,451

Due after
Ten Years

1,198
13,365$

14,563

18. OTHER COMPREHENSIVE INCOME
The components of other comprehensive income for the years ended March 31, 2016 and 2015, were as
follows:
Millions of Yen
2016
2015
Unrealized gain on available-for-sale securities:
Gains arising during the year
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

¥

¥

¥

865
865
(204 )
661¥¥

Thousands of
U.S. Dollars
2016
$

¥

2,439
2,439
(739 )
1,700(1,532 )¥

1,627$ (13,596 )¥¥(1,272 )
901
(371)
15
(356 )¥(898 )
750(148 )
27(121 )$ (11,289 )
7,996(3,293 )134$ (3,159 )¥(1,227 )¥3,206$ (10,889 )

$

7,677
7,677
(1,811 )5,866

19. SEGMENT INFORMATION
For the years ended March 31, 2016 and 2015a.

Description of reportable segments
The Companies’ reportable segments are those for which separate financial information is available andregular 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”.

- 23 -

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
2016
Reportable segment
Domestic
Manufacturing
and Sales of
P roducts

Sales:
Sales to externalcustomers¥ 51,956
Intersegment
sales or transfers
1,994
Total
¥ 53,950
Segment profit (loss)¥ 2,549
Segment assets
49,066
Other:
Depreciation
1,667
Increase in property,
plant and equipment
and intangible assets
Impairment lossof long-lived assets

Overseas

Manufacturing
and Sales of
Maintenance P roducts

Maintenance

Total

Reconciliations Consolidated¥ 99,019¥ 27,050¥ 16,027¥ 3,986¥ 99,019

95¥ 27,145

168¥ 16,195

32¥ 4,018

2,289¥101,308¥¥(2,289 )(2,289 )¥ 99,019¥ 6,363
18,143¥ 1,253
11,639¥(371 )
1,573¥ 9,794
80,421¥426
55,440¥ 10,220
135,861

273

448

58

2,446

410

2,856

397

210

29

2,791

822

3,613

2,155

Millions of Yen
2015
Reportable segment
Domestic
Manufacturing
and Sales of
P roducts

Sales:
Sales to externalcustomers¥ 48,842
Intersegment
sales or transfers
1,746
Total
¥ 50,588
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

4,902

Overseas

Manufacturing
and Sales of
Maintenance P roducts

Maintenance

Total

Reconciliations Consolidated¥ 90,424¥ 25,755¥ 12,604¥ 3,223¥ 90,42481¥ 25,836256¥ 12,860¥ 3,223

2,083¥ 92,507¥¥(2,083 )(2,083 )¥ 5,91218,062¥¥(146 )
1,417¥ 8,754
79,668¥258
49,857816
12,745¥ 90,424¥

9,012
129,525

181

364

53

2,160

386

2,546

567

511

66

6,046

470

6,516

- 24 -

Thousands of U.S. Dollars
2016
Reportable segment
Domestic
Manufacturing
and Sales of
P roducts

Sales:
Sales to externalcustomers$461,093
Intersegment
sales or transfers
17,696
Total$478,789
Segment profit (loss)$ 22,622
Segment assets
435,446
Other:
Depreciation
14,794
Increase in property,
plant and equipment
and intangible assets
Impairment lossof long-lived assets

19,125

Overseas

Manufacturing
and Sales of
Maintenance P roducts

Maintenance

Total

Reconciliations Consolidated$240,060$142,235$ 35,375$878,763$ 878,763

843$240,903

1,491$143,726

284$ 35,659

20,314$899,077$ (20,314 )$ (20,314 )$ 56,470
161,012$ 11,120
103,293$ (3,293 )
13,960$ 86,919
713,711

$

2,422

3,976

515

3,523

1,864

257

$ 878,763

3,780
492,013$ 90,699
1,205,724

21,707

3,639

25,346

24,7697,295

32,064

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 andmarketable securities, long-term investment funds, including investment securities, and assets related to the
management department.
3. Segment profit is reconciled to operating profit in the consolidated financial statements.

d. Related Information
Information about Geographical Areas(1) Sales
Millions of Yen
2016
2015
Japan
Asia
North and South America
Other
Total
(2)

¥

¥

77,75016,737
4,297
235
99,019¥¥73,841
13,1493,378
56
90,424

Thousands of
U.S. Dollars
2016$ 690,007
148,536
38,1352,085$ 878,763

Property, plant and equipment
Millions of Yen
2016
2015
Japan
Asia
North and South America
Total

¥
¥

- 25 -

33,2124,950
1,125
39,287¥¥32,482
5,483
1,310
39,275

Thousands of
U.S. Dollars
2016
$
$

294,746
43,9309,984
348,660

20. NET INCOME PER SHARE
Reconciliation of the differences between basic and diluted net income per share (“EPS”) for the years ended
March 31, 2016 and 2015, is as follows:
Millionsof YenNet
IncomeYear Ended March 31, 2016
Basic EPS—Net income available tocommon shareholders
Effect of dilutive securities—Stock options
Diluted EPS—Net income for computation

¥

7,476

¥

7,476

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

Thousandsof Shares
WeightedAverage
Shares
112,494272
112,766

Yen

EPS
¥

66.46

$

0.59

¥

66.30

$

0.59

Thousandsof Shares
WeightedAverage
Shares
112,467
241
112,708

U.S. Dollars

Yen
EPS
¥

66.37

¥

66.23

A three-for-one stock split was implemented on October 1, 2014. Per share figures were retroactively adjusted
to reflect the stock split.
21. SUBSEQUENT EVENT
Appropriations of Retained Earnings
At the general shareholders meeting held on June 29, 2016, the Company's shareholders approved thefollowing appropriations of retained earnings as of March 31, 2016:
Millions of Yen
Appropriations—Cash dividends,
ordinary dividend of ¥11.00 ($0.1)¥- 26 -

1,238

Thousands of
U.S. Dollars$ 10,987