Summary Report on Financial Results for Fiscal Year Ended March 2016
(Japan GAAP)May 13th, 2016
Listing: TSE-JASDAQ
Company name: Fukuda Denshi Co., Ltd.
Code No.:

6960 (http://www.fukuda.co.jp)

Representative:

Daijiro Shirai, President & COO

Inquiries:

Haruhiko Honbu, Senior Manager of Accounting & Finance DepartmentTel:+81-3-5684-1558 (main)

Scheduled date for the ordinary general meeting of shareholders:
Scheduled date for commencement of dividend payment:
Scheduled date for filing the securities report:
Supplementary material development:
Financial results meeting:June 29th, 2016
June 30th, 2016
June 29th, 2016
Yes
Yes (for analysts)(Amounts less than one million yen are rounded down)(The number with parenthesis shows negative figure)1. Consolidated financial results for fiscal year ended March 2016 (April 1st, 2015 through March 31st, 2016)(1) Consolidated operating results
Net sales
millionyen%

Year ended
117,222
March 2016
Year ended
108,269
March 2015
(Note)Comprehensive income(% represent increases or decreases from the previous year)
Profit attributable toOperating income
Ordinary income
parent company
shareholders
million%million%million
%
yen
yen
yen

8.3

10,6493.4

10,934

(3.8)

7,368

3.5

0.6

10,303(12.8)

11,371

(5.4)

7,119

(5.8)

Fiscal year ended March 2016: 4,453 million yen / (49.2)%

Earnings per
share

Diluted earnings
per share

Return on equity

Ratio ofordinary income
to total assets

yen

%

%

Ratio ofoperatingincome to net
sales
%

yen
Year ended
March 2016
Year ended
March 2015

Fiscal year ended March 2015: 8,766 million yen / 17.5 %505.49

-

7.8

8.4

9.1

512.10

-

8.3

9.3

9.5

(Reference) Profit or loss on equity method investments:
Fiscal year ended March 2016: - million yen
Fiscal year ended March 2015: - million yen(2) Consolidated financial situation
Total assets
Year ended
March 2016
Year ended
March 2015

Shareholders’equity ratio

Net assets

Net assets
per share

million yen

million yen%

yen

137,164

99,83072.8

6,498.12

124,582

88,99171.4

6,401.07(Reference) Shareholders’ equity:
Fiscal year ended March 2016: 99,830 million yen

Fiscal year ended March 2015: 88,991 million yen-1-(3) Consolidated cash flows statement
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

million yen

million yen

million yen

Cash and cash
equivalents at theend of the year
million yen

11,758(9,425)(2,260)28,962

12,851(6,592)(2,326)24,189Year ended
March 2016
Year ended
March 2015
2. Dividends

Annual Dividend
Endof End of End of
End ofthethethe first second
the
third
quarter quarter quarter
term
yen
Yen
Year ended
March 2015
Year ended
March 2016
Year ending
March 2017
(Forecast)

AnnualTotal
Ratio ofdividends Payout ratio dividends to(for the (consolidated) net assets
year)(consolidated)yenmillion yen

%

%

-

50.00

-

100.00150.00

2,085

29.3

2.4

-

60.00

-

90.00

150.00

2,224

29.7

2.3

-

60.00

-

90.00

150.0030.9(Note)The detail of year-end dividend of Year ended March 2015; ordinary dividend 40.00 yen, extra dividend 60.00 yen
The detail of second quarter dividend of Year ended March 2016; ordinary dividend 40.00 yen, extra dividend 20.00 yen
The detail of year-end dividend of Year ended March 2016; ordinary dividend 40.00 yen, extra dividend 50.00 yen
The detail of second quarter dividend of Year ending March 2017 (Forecast); ordinary dividend 40.00 yen, extra dividend
20.00 yen
The detail of year-end dividend of Year ending March 2017 (Forecast); ordinary dividend 40.00 yen, extra dividend 50.00
yen

3. Forecast of consolidated financial results for fiscal year ending March 2017 (April 1st, 2016 through March
31st, 2017)(% represent increases or decreases from the previous year)
Net sales

Full-year

Operating income

Ordinary income

Profit attributableto parent

company
shareholders

Earnings
per share

millionyen%

millionyen%

millionyen%

million
yen

%

yen

117,500

0.2

11,0003.3

11,000

0.6

7,500

1.8

486.00(Note)
Since the Group's operating results tend to take a peak at the fourth quarter and it is difficult to give a forecast
every six months based on rational calculation, the consolidated forecast at the second quarter is not disclosed.

-2-

※

Notes

(1) Changes in significant subsidiaries during the current fiscal year: No(2) Changes in accounting policies and procedures(i) Changes in accounting policies associated with revision of accounting standards: Yes(ii) Changes other than (i) above: None(iii) Changes in accounting projections: None(iv) Restatement: None
(Note)For details, please refer to “Change in accounting policies” on page 26.
(3) Number of outstanding shares (common stock)(i) Number of outstanding shares at the year-end (including “Treasury stock”)
Fiscal year ended March 2016: 19,588,000 sharesFiscal year ended March 2015: 19,588,000 shares(ii) Number of shares of treasury stock at the year-end:
Fiscal year ended March 2016: 4,225,003 sharesFiscal year ended March 2015: 5,685,418 shares(ⅲ) Average number of shares during the period
Fiscal year ended March 2016: 14,576,594 sharesFiscal year ended March 2015: 13,902,639 shares(Reference) Summary of non-consolidated financial results
Non-consolidated financial results for fiscal year ended March 2016 (April 1st, 2015 through March 31st,
2016)(1) Non-consolidated operating results(% represent increases or decreases from the previous year)
Net sales
Operating income
Ordinary income
Net income
million%million%million%million
%
yen
yen
yen
yen
Year ended
67,4216.5
5,105(15.3)
7,529(14.0)
5,675
2.0
March 2016
Year ended
63,284
(0.9)
6,027
(0.6)
8,751
9.5
5,794
(0.3)
March 2015

yen

Diluted earnings per
share
yen

389.37-416.78-

Earnings per share
Year ended
March 2016
Year ended
March 2015

-3-

(2)

Non-consolidated financial position
Total assets

Net assets

Shareholders’ equity
ratio%

Net assets per share

million yen
million yen
yenYear ended
109,436
74,00867.6
4,817.34
March 2016
Year ended
99,53563,33963.6
4,555.95
March 2015
(Reference) Shareholders’ equity:
Fiscal year ended March 2016: 74,008 million yen
Fiscal year ended March 2015: 63,339 million yen* Status of Auditing Processes
At the time of disclosure of this report, review procedures for the consolidated financial statements pursuant
to the Financial Instruments and Exchange Law had not been completed.
* Explanation about the appropriate use of the forecasts of financial results, and other noteworthy matters
1. The forecasted financial results described above are based on information available at the time ofannouncement. Actual results may differ from the results projected and presented hereby for a variety ofreasons.
2. With respect to the preconditions for the forecast of financial results, please refer to “(1) Analysis ofoperation results” under the “1. Operating results & financial situation" section on page 7.
3. At the meeting of Board of Directors held on May 13 th, 2016, Fukuda Denshi Co., Ltd. (hereinafter referred
to as “Fukuda Denshi” or “the Company”) has resolved to dispose of treasury stock, in order to support thesocial contribution activities of Fukuda Foundation for Medical Technology (hereinafter, the “Foundation”).
For details, please refer to the announcement “Notice of Disposal of Treasury Stock through a Third-Party
Allocation to Support Fukuda Foundation for Medical Technology’s Social Contribution Activities”.
The influence of this dispose of treasury stock is considered to “Earnings per share” above mentioned in “3.
Forecast of consolidated financial results for fiscal year ending March 2017”.

-4-

Contents of the Attached Materials
1. Operating results & financial situation------------------------------------------------------------------

7(1) Analysis of operation results--------------------------------------------------------------------------

7(2) Analysis of financial situation------------------------------------------------------------------------

9(3) Basic policies for profit distribution, and dividends for fiscal year ended March 2016 andfiscal year ending 2016--------------------------------------------------------------------------------

10(4) Business risks10------------------------------------------------------------------------------------------

2. The Fukuda Denshi Group3. Management policy-------------------------------------------------------------------------------

12---------------------------------------------------------------------------------------

14(1) Basic policies for corporate management(2) Targeted management indices-----------------------------------------------------------

14-------------------------------------------------------------------------

14(3) Medium- to long-term management strategies and issues to be addressed(4) Other important managerial matters of the Group---------------------------------------------------------------------

4. Basic policy on the selection of accounting standards

1414------------------------------------------------

14

5. Consolidated financial statements------------------------------------------------------------------------

15(1) Consolidated balance sheets-----------------------------------------------------------------------

15(2) Consolidated income statements (comprehensive) and consolidated statements ofcomprehensive income ---------------------------------------------------------------------------------

18(3) Consolidated statements of changes in net assets----------------------------------------------------

21----------------------------------------------------------------

24(4) Consolidated statements of cash flows(5) Notes to Consolidated Financial Statement----------------------------------------------------------(Notes regarding the assumption for going concern)26---------------------------------------------------

26(Change in accounting policies)---------------------------------------------------------------------------

26(Changes in the presentation)------------------------------------------------------------------------------

26(Basic significant matters regarding the preparation of consolidated financial statements)(Consolidated balance sheets)------

27-----------------------------------------------------------------------------

29(Consolidated statements of income)---------------------------------------------------------------------

30(Consolidated statements of comprehensive income)--------------------------------------------------

31(Consolidated statements of changes in net assets)-----------------------------------------------------

32-----------------------------------------------------------------

34(Segment information, etc.)-----------------------------------------------------------------------------

35(Business combinations, etc.)---------------------------------------------------------------------------

39----------------------------------------------------------------------------------

41(Consolidated statements of cash flows)(Per share information)(Significant subsequent events)------------------------------------------------------------------------

-5-

41

6. Non-consolidated financial statements(1) Balance sheets-------------------------------------------------------------

42----------------------------------------------------------------------------------------

42(2) Statements of income--------------------------------------------------------------------------------

45(3) Statements of changes in net assets ---------------------------------------------------------------------

47(4) Notes to Non-consolidated Financial Statement49----------------------------------------------------(Notes regarding the assumption for going concern)-------------------------------------------------

49-------------------------------------------------------------------

49---------------------------------------------------------------------------------------------------

51(Significant accounting policies)
7. Others(1) Changes of directors---------------------------------------------------------------------------------

-6-

51

1. Operating results & financial situation(1) Analysis of operation results(i) Overview of the business for the current consolidated fiscal year
Year ended
Year ended
Comparison with the previous year
March 2015
March 2016
Rate of change
AmountAmountChange(%)
Net sales
108,269
117,222
8,953
8.3(million yen)
Operating income
10,303
10,649346
3.4(million yen)
Ordinary income
11,371
10,934(437)(3.8)(million yen)
Profit attributable toparent company
7,119
7,368
248
3.5
shareholders(million yen)
Earnings per share
512.10505.49(6.61)(1.3)(yen)
During the fiscal year ended March 2016, the Japanese economy recovered moderately, as it was seen in
improvements in corporate earnings and indicators reflecting the employment conditions.
In the medical device industry, the remuneration for medical treatments in FY2016 has been a negative
revision as a whole. Medical institutions face continuous demands for efficient and high-quality healthcare.
As a result, the Group posted a consolidated “Net sales” of 117,222 million yen (up 8.3% year-on-year basis)for this consolidated fiscal year. “Operating income” of 10,649 million yen (up 3.4% on a year-to-year basis),“Ordinary income” of 10,934 million yen (down 3.8% on a year-to-year basis), and “Profit attributable toparent company shareholders” of 7,368 million yen (up 3.5% on a year-to-year basis).
(ii) Overview of each segment for the current consolidated fiscal year
Business segment

Physiologicaldiagnostic equipment
Patient monitoring
equipment
Medical treatment
equipment
Consumables and otherproducts
Total

Comparison with theprevious year
ChangeRate of(millionchangeyen)(%)

Year ended March 2015

Year ended March 2016

Amount(millionyen)

Ratio (%)

Amount(millionyen)

Ratio (%)

32,661

30.2

36,677

31.3

4,016

12.3

9,526

8.8

9,012

7.7

(513)

(5.4)

42,20139.0

45,978

39.2

3,777

9.0

23,88022.0

25,554

21.8

1,674

7.0

108,269

100.0

117,222

100.0

8,953

8.3

A. Physiological diagnostic equipment segment
Consolidated “Net sales” of electrocardiographs, vascular screening systems, and blood cell countersand others were 36,677 million yen (up 12.3% year-on-year basis).
B. Patient monitoring equipment segment
Consolidated “Net sales” of patient monitoring equipment were 9,012 million yen (down 5.4%
year-on-year basis).
C. Medical treatment equipment segment
The business of renting medical equipment for home treatment and sales of pacemakers increased.

-7-

As a result, consolidated “Net sales” were 45,978 million yen (up 9.0% year-on-year basis).
D. Consumables and other products segment
In this segment, we mainly handle recording paper, disposable electrodes, and consumables used for
devices handled in the above segments, as well as maintenance and repair services.
As the sales increased toward the end of the term, consolidated “Net sales” for this segment were25,554 million yen (up 7.0% year-on-year basis).
(iii) Outlook for fiscal year ending March 2017
Year ended
Year ending
March 2016
March 2017
AmountNet sales(million yen)
Operating income(million yen)
Ordinary income(million yen)AmountComparison with the previous year
Rate of change(%)

Change117,222

117,500

277

0.2

10,64911,000350

3.3

10,934

11,00065

0.6Profit attributable to
7,368
7,500
131
1.8
owners of parent(million yen)
Earnings per share
505.49486.00(19.49)(3.9)(yen)
Regarding the future of Japan’s economy, it is expected to continue to gradually recover. We at the Fukuda
Denshi Group (herein after “the Group”), inspired by our corporate philosophy, remain dedicated to contributeto medical progress and healthcare in general in accordance with our social mission.
The Group expects a consolidated “Net sales” of 117,500 million yen, consolidated “Operating income” of
11,000 million yen, consolidated “Ordinary income” of 11,000 million yen, and consolidated “Profit
attributable to parent company shareholders” of 7,500 million yen for the fiscal year ending March 2017.
Forecast shown in this material are just an outlook judged or assumed based on the information available atthe moment, changes will be promptly disclosed when necessary.

-8-(2) Analysis of financial situation(i) Assets, liabilities and net assets“Total assets” increased 12,582 million yen from the end of the previous fiscal year to reach 137,164
million yen. The main factors are the increase of 9,042 million yen in “Cash and deposits” and 1,588 million
yen in “Land”, despite a decrease of 2,218 million yen in “Investment securities”.
“Total liabilities” increased 1,742 million yen from the end of the previous fiscal year to reach 37,333
million yen. The main factor is the increase of 1,956 million yen in “Net defined benefit liability”, despite adecrease of 250 million yen in “Notes and accounts payable-trade”.
“Net assets” increased 10,839 million yen from the end of the previous fiscal year to reach 99,830 million
yen. The main factors are the increase of 12,285 million yen in “Capital surplus” and 5,124 million yen in“Retained earnings” at the end of current period, despite the decrease of 1,481 million yen in “Adjustmentsof defined benefit plans”.
(ii) Consolidated cash flows
Year ended March2015
Cash flows from operating
activities (million yen)
Cash flows from investing
activities (million yen)
Cash flows from financing
activities (million yen)
Effect of exchange rate changes(million yen)
Increase (decrease) in cash andcash equivalents (million yen)
Increase in cash and cash
equivalents resulting from shareexchanges
Cash and cash equivalents at theend of the fiscal year (million
yen)Year ended March
2016

Change12,851

11,758(1,092)(6,592)(9,425)(2,833)(2,326)(2,260)

66

(81)

(15)

66

3,850

57

(3,792)

-

4,715

4,715

24,18928,962

4,772(Cash flows from operating activities)
In the consolidated fiscal year, the “Cash flows from operating activities” were 11,758 million yen, down
1,092 million yen from the previous year. Including “Profit before income taxes” of 11,282 million yen,
“Depreciation” of 6,586 million yen.
(Cash flows from investing activities)“The cash flows from investing activities” were minus 9,425 million yen, down 2,833 million yen fromthe previous year. Including purchase of “Property, plant and equipment” amounted to 6,670 million yen and“Purchase of insurance funds” amount of 2,361 million yen.
(Cash flows from financing activities)“The cash flows from financing activities” were minus 2,260 million yen, up 66 million yen from theprevious year, mainly because of the “Cash dividends paid” of 2,095 million yen.
From the share exchange making, Fukuda Denshi as the wholly-owning parent company and Atomic
Sangyo Co., Ltd. (hereinafter referred to as “Atomic Sangyo”) as a wholly-owned subsidiary, “Cash anddeposits” have increased 4,715 million yen.
As a result, “Cash and cash equivalents at the end of the fiscal year” was 28,962 million yen, up 4,772
million yen compared to the end of the previous fiscal year.

-9-(Reference) Trends in cash flow indicators
Year ended
Year ended
March 2012
March 2013
Shareholders’ equity
72.7
71.6
ratio (%)
Market value-based
37.1
45.9
shareholders’ equity
ratio (%)
Years needed to repay
0.3
0.2
debts
Interest coverage ratio

389.3

450.9

Year ended
March 2014

Year ended
March 2015

Year ended
March 2016

67.7

71.4

72.8

52.5

75.5

66.1

0.3

0.1

0.2

403.4

461.7

422.2

Note: Shareholders’ equity ratio = Shareholders’ equity / Total assets
Market value-based shareholders’ equity ratio = Market capitalization /Total assets
Years needed to repay debts = Interest-bearing debts / Operating cash flows
Interest coverage ratio = Operating cash flows / Interest payments*Each indicator is calculated using consolidated financial data.
*Market capitalization is calculated by multiplying stock closing prices at the end of the fiscal year by the
number of outstanding shares (excluding treasury stock) at the end of the fiscal year.
*Interest-bearing debts represent total debts recorded in the consolidated balance sheets on which interest is
paid.
*For interest payments, data on interest expenses in the consolidated cash flow statement are used.
(3) Basic policies for profit distribution, and dividend for fiscal year ended March 2016 and fiscal year ending
2017
The Group regards the returning of profits to shareholders as one of its key managerial measures, and makes
it a basic policy to continuously provide shareholders with stable returns with 30% consolidated payout ratio,by reinvesting profits in order to generate sustainable growth while maintaining an appropriate level of retained
earnings.
Year-end dividend of 90 yen per share will be paid for the fiscal year ended March 2016. As a result, annual
dividend is 150 yen per share, including interim dividend of 60 yen per share.
For the fiscal year ending March 2017, annual dividend per share is expected to be 150 yen per share(interim dividend of 60 yen per share and year-end dividend of 90 yen per share).
(4) Business risks(i) Effect of medical administration
The Japanese Government has been pushing forward with its policies of improving the quality of
medical care and curtailing the medical costs, and the remuneration for medical services, and the official
reimbursement prices for drugs and specific insurance medical materials are revised every two years.
Changes in the governmental health care policies may lead to intensified competition within the market
and lowered sales prices, thus adversely affecting the operating results and financial standing of the Group.
(ii) Legal regulations
The manufacture and sales of medical equipment are subject to regulations prescribed in the
Pharmaceutical Affairs Law, and it may take a certain period of time for a new medical equipment to beinvestigated and finally approved for sale. In addition, some medical equipment requires clinical trials,
thus taking a long period of time before it is launched in the market.
If the current regulations are revised, new ones are introduced, or any other unpredictable regulatorychange is made in the future, it is likely that this will adversely affect the operating results and financial
standing of the Group.

- 10 -

(iii) High dependence on certain business partners with which continuation of transactions is unsure
The Group imports and sells ventilators, pacemakers, defibrillators and other devices and equipment. If
any problem arises that will make it impossible to continue stable transactions with the exporters, theoperating results and financial standing of the Group will be adversely affected. To prevent this, sufficient
care has been taken not to depend too heavily on a few specific companies for the supply of thoseequipment.
(iv) Product quality
The Group manufactures the products under a rigorous quality control system that is strictly in
conformance with the international standards including ISO. If any quality problem arises due tounforeseen failure or defect of a product, suspension of sale and recall of such product may be ordered by
the authorities concerned, adversely affecting the operating results and financial standing of the Group.
(v) Risks accompanying overseas businesses
The Group not only supplies products to distributors overseas, but also has its own overseas sales,development and production bases. Hence, it is possible that unforeseen changes to laws and regulations or
new ones are introduced in foreign countries, as well as terrorist acts, natural disasters, or other incidents
could adversely affect theGroup’s business performance and financial position.
(vi) Fluctuations in foreign exchange rates and others
The Group has subsidiaries in foreign countries and is procuring and importing products and raw
materials from overseas companies. In case, rapid fluctuations in foreign exchange rates could adversely
affect theGroup’s business performance and financial position.
(vii) Impairment accounting
In case that “Impairment losses” is needed to book for the assets of the Group, it is possible that it could
adversely affect theGroup’s business performance and financial position.
(viii) Effects to the group from tremendous disaster
The Group has domestic and oversea bases; if an earthquake, electric-power shortages or any otherincidents occurs, it is possible that it could adversely affect theGroup’s business performance and financial
position.

- 11 -

2. The Fukuda Denshi GroupThe Group consists of the Company, 59 subsidiaries and 1 affiliates; the Group is engaged mainly in
manufacturing, purchasing and sales of medical equipment, and conducts related logistics and services
operations.
The relationship between Group companies and business segments are as follows:- Physiological diagnostic equipment segment
Production, purchase and sales of electrocardiographs; phonocardiographs; polygraphs; ultrasounddiagnostic imaging systems; and other items which convert physical phenomena generated by physiological
functions, such as electric potentials caused by heart action, cardiac sound, pulse waves, blood pressure,respiration, and organic movement, into electric signals which are then measured and recorded.
<Major companies involved>
Production: Fukuda Denshi Co., Ltd.; Fukuda Denshi Fine Tech Sendai Co., Ltd. and Beijing Fukuda
Denshi Medical Instruments Co., Ltd.
Purchase:

Fukuda Denshi Co., Ltd.

Sales:

Fukuda Denshi Co., Ltd.; Fukuda Life Tech Co., Ltd.; Fukuda Denshi Hokkaido and other sales
subsidiaries; Fukuda Denshi USA, Inc.; Beijing Fukuda Denshi Medical Instruments Co., Ltd.
and Fukuda Denshi Switzerland AG- Patient monitoring equipment segment
Production, purchase, and sales of patient monitors that monitor various physiological parameters over along period of time. They are used for serious cases after patients’ have undergone operations and forpatients with acute cardiac disease.
<Major companies involved>
Production: Fukuda Denshi Co., Ltd.; Fukuda Denshi Fine Tech Sendai Co., Ltd.; Beijing Fukuda Denshi
Medical Instruments Co., Ltd.
Purchase:

Fukuda Denshi Co., Ltd.

Sales:

Fukuda Denshi Co., Ltd.; Fukuda Denshi Hokkaido and other sales subsidiaries; Fukuda
Denshi USA, Inc.; Beijing Fukuda Denshi Medical Instruments Co., Ltd.

- Medical treatment equipment segment
Production, purchase and sales of defibrillators, which are used to resuscitate patients with cardiac arrest
and which treat abnormal heart rhythm by delivering electric impulses to the heart; pacemakers; ventilators
which help patients with respiratory insufficiency breathe easier; catheters which are used for heart andvascular treatment, and other equipment.
<Major companies involved>
Production: Fukuda Denshi Co., Ltd.; Fukuda Denshi Fine Tech Sendai Co., Ltd.
Purchase:

Fukuda Denshi Co., Ltd.

Sales:

Fukuda Denshi Co., Ltd.; Fukuda Life Tech Co., Ltd.; Fukuda Denshi Hokkaido and other sales
subsidiaries- Consumables and other products segment
Production, purchase and sales of recording paper, electrodes, accessories and parts for medical equipment<Major companies involved>
Production: Fukuda Denshi Co., Ltd.; Atomic Sangyo Co., Ltd.; Fukuda Denshi Fine Tech Sendai Co., Ltd.
Purchase:

Fukuda Denshi Co., Ltd.

Sales:

Fukuda Denshi Co., Ltd.; Fukuda Life Tech Co., Ltd.; Fukuda Denshi Hokkaido and other sales
subsidiaries- 12 -

Diagram of the Group’s business structure

Customers
Japan

Overseas
Products andmerchandise

Products andmerchandise

Consolidated subsidiary
Fukuda Denshi USA,Inc.

RentalConsolidated
subsidiary
Fukuda Denshi
Switzerland AG

Domestic warehousemanagement andpacking/shipping

Consolidated subsidiary
Fukuda Denshi
Technology Service

Consolidated subsidiaries
Fukuda Logistics
CenterProducts andmerchandise

Entrustment of
warehousemanagement andpacking/shipping

Parts

Supply of materials

Repairs in Japan

Products and merchandise

Consolidated
subsidiary
Fukuda Life
Tech Co.,
Ltd.

Consolidated subsidiaryBeijing Fukuda
Denshi Medical
Instruments Co., Ltd.

Repairs

Products andmerchandise

Products and merchandise

RentalEntrustment ofresearch anddevelopment
Consolidated
subsidiaryJapan Stent
Technology
Co., Ltd.

Fukuda Denshi
Medical treatment
equipment segment

Outsourcing of processing

Patient monitoring
equipment segment
Supply of materials

Outsourcing of processing

Physiological diagnostic
equipment segment
Supply of materials

Products and merchandise

Consolidated subsidiaries
Fukuda Denshi Hokkaido and other sales subsidiaries

Products

Consumables and otherproducts segment

Supply ofmaterials

Unconsolidated subsidiaries
ME Times
Miyagi Prefecture Medical Information ResearchCenterNiigata Medical Information Development Center
Okusonic
Breath Technology Co., Ltd.
Fukuda Neurotech Co.,Ltd.
Japan Stent Technology Europe GmbH
Affiliated company not accounted of equity method
Fukuda Pulmo- 13 -

Products

Consolidated
subsidiary
Atomic Sangyo
Co., Ltd.

Consolidated subsidiary
Fukuda Denshi Fine Tech Sendai
Co., Ltd.
Publication, sales, and other processing of medical books

Products

Non-life insurance agency operations
Unconsolidated
subsidiaries
Fukushin3. Management policy(1) Basic policies for corporate management
Since established in 1939, the Group has contributed significantly to the advancement of people’s healththrough the production and sale of a wide range of medical equipment, centering on respiratory and circulatory
systems such as electrocardiographs, under our corporate philosophy to “Contribute to medical advances byfulfilling our social mission and developing medical equipment.”
Responding to significant changes in the social environment, medical equipment has increasingly been
expected to play roles not only in the conventional diagnostics and treatment of diseases but also in themaintenance and improvement of health and the enhancement of quality of life (QOL).
Against this backdrop, under the slogan of “safety, reliability and comfort,” the Group will make every effort
to raise the quality of products to offer to customers, develop products that provide differentiation from ourcompetitors, and carry out product strategies that meet varying medical needs, aiming to become a company
that is trusted by customers.
(2) Targeted management indices
The objectives of our business operations are to achieve sustainable growth and increase profits, and theGroup targets consolidated “Net sales” of 121,500 million yen or more and consolidated “Ordinary income of
11,400 million yen or more in the fiscal year ending March 2019. Also, the Group plans to work on increasing
the capital efficiency by continuously using created cash flow for growth investment with the aim of improving
the corporate value, and continue to provide shareholders with stable returns.
(3) Medium- to long-term management strategies and issues to be addressed
The expansion of DPC (Diagnosis Procedure Combination) in Japan, combined with revisions of medical
treatment fees, drug prices, and official reimbursement amounts for specific insurance-covered treatment
materials, mean the outlook for our market remains severe. Nonetheless, we remain devoted to providing
customers with safe, secure products by:・ Maintaining rigorous quality control and safety management regimes;
・ Developing products that provide a clear difference between the Group and our competitors;
・ Investing in the upkeep of our sales framework; and・ Cutting costs in order to maintain a competitive advantage over competitors worldwide.
Over the mid-term, we will institute a business plan to keep abreast of the changes in medical markets as
populations get progressively older, and implement a steadfast foundation for our business so that we may
better pursue our goals more efficiently.
Strategic investment in growth segments and effective research and development will enable us to provide
more comprehensive solutions to medical institutions and bolster our ability to provide community-based
solutions in the home-care segment. Meanwhile, we will seek to reinforce our governance and compliancestructures, and reinvigorate our organization by developing our human resources. Through these combined
efforts, we aim to enhance the Group’s business administration as a whole.
Our mission is to uphold medical care in the community and, to that end, we are committed to providing a
one-stop solutions incorporating “prevention, testing, treatment, observation, rehabilitation, and home-basedcare”. By providing value through those solutions to our customers, we seek to achieve sustainable growth.
(4) Other important managerial matters of the Group
None
4. Basic policy on the selection of accounting standards
The Group decided to adopt the Japanese accounting standards for the time being, because the Group’sbusiness is based chiefly in Japan. We will consider implementing the IFRS (International Financial ReportingStandards) in an appropriate manner in light of the movement toward its adaption both at home and abroad.

- 14 -

5. Consolidated financial statements(1) Consolidated balance sheets(Million yen)Previous fiscal yearst
(as of March 31 , 2015)

Current fiscal yearst
(as of March 31 , 2016)

AssetsCurrent assets
Cash and deposits

25,726

34,768Notes and accounts receivable-trade32,69834,066

192

1,647

8,616

8,917

112

95

Raw materials and supplies

2,128

2,140

Deferred tax assets

1,770

1,739

Other

2,010

1,422

Allowance for doubtful accounts

(24)

(21)

73,232

84,777

11,173

11,063

Accumulated depreciation and impairment loss

(5,732)(5,922)

Buildings and structures, net

5,440

5,141

Machinery, equipment and vehicles

1,112

1,173

Accumulated depreciation and impairment loss

(795)

(820)

Machinery, equipment and vehicles, net

316

352

28,01329,626

Accumulated depreciation and impairment loss

(17,850)(18,891)

Tools, furniture and fixtures, net

10,163

10,734

7,493

9,082

860

927

Accumulated depreciation and impairment loss

(420)

(498)

Leased assets, net

439

429

Construction in progress

242

397

24,096

26,138

Securities
Merchandise and finished goods
Work in process

Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures

Tools, furniture and fixtures

Land
Leased assets

Total property, plant and equipment- 15 -

Previous fiscal yearst
(as of March 31 , 2015)
Intangible assets

Current fiscal yearst
(as of March 31 , 2016)

2,551

2,545

Investment securities

11,362

9,144

Deferred tax assets

910

1,690

Insurance funds

9,474

10,920

Other

2,966

2,008

Allowance for doubtful accounts

(12)

(61)

Total investments and other assets

24,701

23,702

51,34952,386

124,582

137,164

Investments and other assets

Total noncurrent assets
Total assets- 16 -

(Million yen)Previous fiscal yearst
(as of March 31 , 2015)

Current fiscal yearst
(as of March 31 , 2016)

Liabilities
Current liabilities
Notes and accounts payable-trade22,62022,370

Short-term loans payable

1,850

1,850

132

148

Income taxes payable

1,832

1,871

Provision for bonuses

2,034

2,054

Provision for directors' bonuses

173

183

Provision for product warranties

370

490

Other

4,478

4,157

Total current liabilities

33,49333,127Long-term loans payable－

108

Lease obligations

384

357

Provision for directors' retirement benefits

192

222

Net defined benefit liability

548

2,504

Other

971

1,013

2,097

4,206

35,59037,333

Capital stock

4,621

4,621

Capital surplus

10,05522,340Retained earnings

86,36991,493

Treasury stock(14,731)(18,386)

Total shareholders' equity

86,315100,069

Valuation difference on available-for-sale securities

2,164

774

Foreign currency translation adjustment

(152)

(195)

Adjustments of defined benefit plans

664

(817)

2,676

(238)

88,991

99,830124,582

137,164

Lease obligations

Noncurrent liabilities

Total noncurrent liabilities
Total liabilities
Net assets
Shareholders' equity

Accumulated other comprehensive income

Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets- 17 -

(2) Consolidated income statements (comprehensive) and consolidated statements of comprehensive income(Million yen)Previous fiscal yearst

Current fiscal year

stst

(April 1 , 2014 to March 31 , 2015)

st(April 1 , 2015 to March 31 , 2016)

Net sales

108,269

117,222

Cost of sales

59,966

68,615Gross profit

48,302

48,606

Selling, general and administrative expenses

37,99937,956

Operating income

10,303

10,649Interest income

66

69

Dividend income

140

129

Foreign exchange gains

647-

Gain on investments in partnership

19-

Commission for insurance office work

60

58

Other

173

153

1,109

410

Interest expenses

27

27

Foreign exchange losses-

67

Loss on investments in partnership

-

8

Other

13

22

Total non-operating expenses

40

126

11,371

10,934

5

3

Gain on sales of investment securities

301-

Subsidy income

27-

Surrender value of insurance

315

349

Gain on forgiveness of debts

960

-

-

12

1,609

364

Non-operating income

Total non-operating income
Non-operating expenses

Ordinary income
Extraordinary income
Gain on sales of noncurrent assets

Other
Total extraordinary income- 18 -

(Million yen)Previous fiscal yearst

Current fiscal year

stst

(April 1 , 2014 to March 31 , 2015)

st(April 1 , 2015 to March 31 , 2016)

Extraordinary losses
Loss on sales of noncurrent assets-

0

Impairment loss

66

15

Loss on business withdrawal

915

-

2

-

Total extraordinary losses

985

16

Profit before income taxes

11,996

11,282

Income taxes-current

4,062

3,613

Income taxes-deferred

814

301

Total income taxes

4,876

3,914

Profit

7,119

7,368

Profit attributable to parent company

7,119

7,368

Other

shareholders- 19 -

Consolidated statements of comprehensive income(Million yen)Previous fiscal yearst

Current fiscal yearst

(April 1 , 2014 to March 31 , 2015)

Profitstst(April 1 , 2015 to March 31 , 2016)

7,119

7,368

Valuation difference on available-for-salesecurities

1,106(1,389)Other comprehensive income

Foreign currency translation adjustment

(104)

(43)

Adjustments of defined benefit plans,
net of tax

645(1,481)

Total other comprehensive income

1,647(2,914)

8,766

4,453

8,766

4,453

Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparent- 20 -

(3) Consolidated statements of changes in net assets
Previous fiscal year (April 1st, 2014 to March 31st, 2015)(Million yen)
Shareholders' equity

Capital stock
Balance at beginning of current
periodCumulative effects of changes
in accounting policies
Restated balance
Changes of items during period

4,621

CapitalsurplusRetainedearnings

10,05580,760(14,729)

591
4,621

10,055

Dividends of surplus
Employees’ bonuses andwelfare funds
Profit attributable to parent

company shareholders

80,707591

81,351(14,729)

81,298(2,092)(2,092)

(8)

(8)

7,119

7,119

Purchase of treasury stock
Disposal of treasury stock
Adjustment of the reserve due
to change in tax rate
Net changes of items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current period

Totalshareholders'equityTreasury
stock

(2)

(2)

0

0
-

-

-

5,017

(1)

5,016

4,621

10,05586,369(14,731)

86,315

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning of current
periodCumulative effects of changes
in accounting policies
Restated balance
Changes of items during period

Foreigncurrencytranslation
adjustment

1,057

(47)

1,057

(47)

Adjustmentsof defined
benefit plans

19

19

Total
accumulated
othercomprehensive
income1,029

81,736

-

591

1,029

82,328(2,092)

Dividends of surplus
Employees’ bonuses andwelfare funds
Profit attributable to parent

(8)
7,119

company shareholders
Purchase of treasury stock
Disposal of treasury stock
Adjustment of the reserve due
to change in tax rate
Net changes of items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current period

Total net
assets

(2)
0
1,106

(104)

645

1,647

1,647

1,106

(104)

645

1,647

6,663

2,164

(152)

664

2,676

88,991- 21 -

Current fiscal year (April 1st, 2015 to March 31st, 2016)(Million yen)
Shareholders' equity

Capital stock
Balance at beginning of current
periodCumulative effects of changes
in accounting policies
Restated balance

4,621

Capitalsurplus10,055Retainedearnings

Total
shareholders'equityTreasurystock

86,369(14,731)

86,315-

4,621

10,05586,369(14,731)

86,315

Changes of items during period
Dividends of surplus
Employees’ bonuses andwelfare funds
Profit attributable to parent

company shareholders(2,232)(2,232)

(11)

(11)

7,368

7,368

Purchase of treasury stock
Disposal of treasury stock
Adjustment of the reserve due
to change in tax rate
Net changes of items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current period

12,285(13,265)(13,265)

9,610

21,895

(0)

(0)

-

12,285

5,124(3,655)

13,755

4,621

22,34091,493(18,386)

100,069

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning of current
periodCumulative effects of changes
in accounting policies
Restated balance

2,164

2,164

Foreigncurrencytranslation
adjustment
(152)

(152)

Adjustmentsof defined
benefit plans

664

664

Total
accumulated
othercomprehensive
incomeTotal net
assets

2,676

88,991

-

-

2,676

88,991

Changes of items during theperiod(2,232)

Dividends of surplus
Employees’ bonuses andwelfare funds
Profit attributable to parent

(11)
7,368

company shareholders
Purchase of treasury stock(13,265)

Disposal of treasury stock

21,895Adjustment of the reserve due
to change in tax rate
Net changes of items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current period(0)(1,389)(43)(1,481)(2,914)(2,914)(1,389)(43)(1,481)(2,914)

10,840

774

(195)

(817)

(238)

99,830- 22 -

Note for statements of changes in shareholders’ equity:“Employees’ bonuses and welfare funds” were provided by a subsidiary in China in accordance with local
laws and regulations.

- 23 -

(4) Consolidated statements of cash flows(Million yen)
Current fiscal year

Previous fiscal year
stst

(April 1 , 2014 to March 31 , 2015)

st

st(April 1 , 2015 to March 31 , 2016)

Cash flows from operating activities
Profit before income taxes

11,996

11,282

Depreciation

6,161

6,586

Impairment loss

66

15

(190)

46

(454)

13

(26)

9

15

120

(293)

56

25

15

(207)

(197)

Interest expenses

27

27

Loss (gain) on sales of noncurrent assets

(5)

(2)

Loss (gain) on sales of investment
securities
Loss (gain) on cancellation of insurance
contract

(301)

-

(315)

(349)

Subsidy income

(27)

-

Gain on forgiveness of debt

(960)

-

915

-

Decrease (increase) in notes and accounts
receivable-trade

1,321(1,282)

Decrease (increase) in inventories

(913)

(279)

796

(157)

838

(655)

Other, net

(356)

305

Subtotal

18,112

15,554

Interest and dividend income received

206

198

Interest expenses paid

(27)

(27)

Income taxes paid

(5,440)(3,967)

Net cash provided by (used in) operating
activities

12,851

11,758

Increase (decrease) in allowance for
doubtful accounts
Increase (decrease) in provision forbonuses
Increase (decrease) in provision for
directors' bonuses
Increase (decrease) in provision for productwarranties
Increase (decrease) in net defined benefit
liability
Increase (decrease) in provision for
directors' retirement benefits
Interest and dividend income

Loss on withdrawal from business

Increase (decrease) in notes and accounts
payable-trade
Increase (decrease) in accrued consumption
taxes- 24 -

(Million yen)
Current fiscal year

Previous fiscal year
st

st

st

(April 1 , 2014 to March 31 , 2015)

st(April 1 , 2015 to March 31 , 2016)

Cash flows from investing activities
532

200

Purchase of property, plant and equipment(6,718)(6,670)Purchase of intangible assets

(274)

(725)

Purchase of short-term and long-term
investment securities
Proceeds from sales of short-term andlong-term investment securities

(767)

(867)

838

300

(1,952)(2,361)

Proceeds from maturity of insurance funds

2,132

1,284

Purchase of investments of subsidiaries

(20)

-

Payments of loans receivable

(90)

-

Proceeds from compensation

27

-

(300)

(585)

(6,592)(9,425)

Proceeds from long-term loans payable

2-

Repayments of long-term loans payable

(141)

(22)

(1)

(3)

(2,090)(2,095)

(96)

(139)

Net cash provided by (used in) financing
activities
Effect of exchange rate change on cash andcash equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
periodIncrease in cash and cash equivalents
resulting from share exchanges(2,326)(2,260)

(81)

(15)

3,850

57

20,33924,189-4,715

Cash and cash equivalents at end of period

24,18928,962

Decrease (increase) in time deposits

Purchase of insurance funds

Other, net
Net cash provided by (used in) investing
activities
Cash flows from financing activities

Purchase of treasury stock
Cash dividends paid
Repayments of lease obligations- 25 -

(5) Notes to Consolidated Financial Statement(Notes regarding the assumption for going concern)
Not applicable(Change in accounting policies)(Application of Accounting Standard for Business Combinations, etc.)
The Group has applied the Accounting Standard for Business Combinations (ASBJ Statement No.21 issued
on September 13th, 2013, hereinafter, the “Business Combinations Accounting Standard”), the AccountingStandard for Consolidated Financial Statements (ASBJ Statement No.22 issued on September 13th, 2013,
hereinafter, the “Consolidated Accounting Standard”) and the Accounting Standard for Business Divestitures(ASBJ Statement No.7 issued on September 13th, 2013, hereinafter, the “Business Divestitures AccountingStandard”), etc. from the start of the current consolidated fiscal year. The Group hereby posts the difference
caused by changes in the Company’s equity in a subsidiary, when the Company continues to control thesubsidiary, as “”Capital surplus” and posts the acquisition-related expenses as the expenses in the
consolidated fiscal year in which they were incurred. Furthermore, for business integrations implemented
from the beginning of the current consolidated fiscal year onwards theGroup has reflected the revision of theallocated amount of the acquisition cost caused by the finalization of the provisional accounting treatment in
the consolidated financial statements for the consolidated fiscal year in which the business combination
occurs. In addition, the Group has changed the presentation of net income, etc. and has changed the term
“Minority interests” to “Non-controlling interests”. The Group has adjusted the consolidated financial
statements of the previous consolidated fiscal year in order to reflect these changes to be comparable in thepresentation.
Regarding the application of the Business Combinations Accounting Standard, etc., the Group complies
with the transitional measures prescribed under the Business Combinations Accounting Standard, Clause58-2 (4), the Consolidated Accounting Standard, Clause 44-5 (4) and the Business Divestitures AccountingStandard, Clause 57-4 (4), and will apply the new accounting standards from the beginning of the current
consolidated fiscal year into the future.
The impact on profit and loss is minor.
In addition, the impact on “Capital surplus” of the end current consolidated fiscal year is minor.
On the consolidated cash flows statement for the current consolidated fiscal year, cash flows fromacquisitions or sales of shares of subsidiaries not accompanied by changes in the scope of consolidation arerecorded under “The cash flows from financing activities,” and cash flows from costs related to acquisition ofshares of subsidiaries accompanied by changes in the scope of consolidation or costs arising in relation toacquisitions or sales of shares of subsidiaries not accompanied by changes in the scope of consolidation arerecorded under “The cash flows from operating activities.”
The impact on “Capital surplus” of the consolidated statements of changes in net assets at the end of thecurrent consolidated fiscal year is minor.
In addition, the impact on the net assets per share and net income per share for the current fiscal year is also
minor.
(Changes in the presentation)“Insurance administrative fees” , which had been included in “Other” under “Non-operating income,”
exceeded 10% of total non-operating income in the previous consolidated fiscal year, so beginning from thisyear it is being posted separately. In order to reflect this change in reporting method, the Group has
implemented the reclassification in the consolidated financial statements from the previous consolidated
fiscal year.
As a result, 234 million yen in “Other” in “Non-operating income” recorded in the previous consolidated
fiscal years under “Consolidated income statements (comprehensive)” is adjusted to “Commission for
insurance office work” of 60 million yen and “Other” of 173 million yen.

- 26 -

(Basic significant matters regarding the preparation of consolidated financial statements)
1. Scope of consolidation(1) Number of consolidated subsidiaries: 51
Major consolidated subsidiaries are as follows:
Fukuda Life Tech Co., Ltd.
Fukuda Denshi Hokkaido Co., Ltd.
The Atomic Sangyo Co., Ltd., which becomes a wholly-owned subsidiary by the share exchange, is
included within the scope of consolidated accounts from the current fiscal year.
(2) Names and other details of major unconsolidated subsidiaries(8)Of the subsidiaries, ME Times Co., Ltd., Fukushin Co., Ltd. and six (6) other companies were notincluded in the scope of consolidation, because their business sizes are small, and their “Total assets”,“Net sales”, ”Profit and loss” (amount corresponding to the owned interest), “Retained earnings” (amountcorresponding to the owned interest) had no material effect on the consolidated financial statements.
2. Application of equity method(1) Names and other details of unconsolidated subsidiaries and affiliates that are not accounted for by equity
methodThe eight (8) unconsolidated subsidiaries and the affiliate company Fukuda Pulmo Co., Ltd. had nomaterial effect on consolidated income and loss(amount corresponding to the owned equity) and“Retained earnings”(amount corresponding to the owned equity), and they were not important as a wholein terms of material influence on the consolidated interim financial statements. Accordingly, we did not
apply equity method accounting to them.
3. Accounting period, etc. of consolidated subsidiaries
The accounts of consolidated subsidiaries Fukuda Denshi USA, Inc.; and Fukuda Denshi Switzerland AG
close on December 31st of each year. In the preparation of consolidated financial statements, consolidated
subsidiaries’ financial statements as of the said date were used, and with respect to significant transactions that
occurred between the said date and the consolidated book-closing, adjustments necessary for consolidation are
made.
4. Accounting standards(1) Valuation standards and methods for principle assets(i) Securities
Held-to-maturity securities;- Amortized cost method (straight-line method)
Other securities
Marketable securities;- Stated at fair value based on the market price as of the end of current fiscal year.
(Unrealized holding gains or losses are reported in a component of net assets, while the cost of
securities sold is calculated by the moving average method.)
Non-marketable securities;- Stated at cost based on the moving average method.
For investments in the investment enterprise limited Liability association and similar associations(deemed to be securities pursuant to Article 2, Paragraph 2 of the Financial Instruments andExchange Law), the net amount corresponding to the ownership percentage is used, based on themost recent financial statements available as of the reporting date and other material stipulated in
the partnership contract.
(ii) Inventories
The cost method (the amounts stated in the balance sheets are calculated by writing down the bookvalues based on lower profitability) is used as a valuation standard.
Merchandise and finished goods-Mainly stated at cost determined by the first-in, first-out method.
Work in process-Mainly stated at cost based on the specific cost method.

- 27 -

Raw materials-Mainly stated at cost based on the gross average method.
Supplies-Stated at cost based on the last purchase price method.
(2) Depreciation method for significant depreciable assets(i) Property, plant and equipment (excluding lease assets)
Depreciated primarily by the declining balance method. However, buildings (except for building
attachments) acquired on or after April 1 st, 1998 were depreciated using the straight-line method.
In addition, the expected lifetime are as follows:
Buildings and structures:
3 to 60 years
Machinery, equipment and vehicles:
2 to 17 years
Tools, furniture and fixtures:
2 to 20 years
Assets with an acquisition cost of 100,000 yen or more but less than 200,000 yen were evenly amortizedover a three-year period.
Of the tools, furniture and fixtures, the oxygen concentrator devices (assets for rental) were depreciatedusing the straight-line method with the estimated rental period (four years) used as the number ofdepreciation years.
(ii) Intangible assets (excluding lease assets)
Depreciated by the straight-line method.
Software for internal use is amortized by the straight-line method over its useful life of five years.
As for software for sale in the market, the Group records the larger of an amortization based on
projected sales volume for the effective sales period (no longer than three years) or a uniform
amortization over the effective remaining sales period.
(iii) Lease assets
Lease assets in finance lease transactions
We adopted the same depreciation method applied to self-owned “Noncurrent assets”.
Lease assets in finance lease transactions that do not transfer ownership
The straight-line method is used, based on the assumption that the useful life is the lease term and theresidual value is zero.
(3) Basis for provision of allowances(i) Allowance for doubtful accounts
To prepare for losses incurred by bad debts, the amount of potential loss is calculated by using thehistorical loss ratio in the case of general loans or receivables. Potential loss for specific loans or
receivables, for which we have concerns regarding their collectability, is calculated by assessing thepossibility of collection for each individual account.
(ii) Provision for bonuses
To prepare for the payment of bonuses to employees, an amount corresponding to current fiscal year’s
portion of estimated bonus payments was reserved.
(iii) Provision for directors' bonuses
To prepare for the payment of bonuses to directors and corporate auditors, an amount corresponding tocurrent fiscal year’s portion of estimated bonus payments was reserved.
(iv) Provision for directors' retirement benefits
To prepare for the payment of retirement benefits to directors and corporate auditors, some consolidated
subsidiaries reserve the estimated amount to be paid at the end of the fiscal year, in accordance with theinternal regulations.
(v) Provision for product warranties
To prepare for the expenses incurred by the free repair to be implemented after the delivery of the
products, estimated amount of the repair expenses was reserved on the basis of the estimated proportionof such expenses to net sales and the estimated amount of such expenses for individual products.

- 28 -

(4) Accounting for retirement benefits(i) Accounting for retirement benefits
In the calculation of retirement benefits, accrued benefits are assigned to the period up to the current
consolidated fiscal year in accordance with the fixed-amount standards.
(ii) Accounting for actuarial differences and prior service costs
Prior service costs are amortized, using the straight-line method over a certain number of years (10years), which are less than the average remaining years of service of the employees when they incurred.
Actuarial differences are amortized, using the straight-line basis over a certain number of years (10years), which are less than the average remaining years of service of the employees when they incurred,from the fiscal year after the one in which they arise.
(5) Standards for translation of important foreign currency-based assets or liabilities into Japanese yen
Monetary credits and debts denominated in foreign currencies are translated into yen based on thecurrent exchange rates at the end of each fiscal year. Differences arising from such translation are statedas profits or losses. Assets, liabilities, revenue and expenses of overseas subsidiaries, and other financial
items are translated into yen based on the current exchange rates at the end of each fiscal year. The
resulting differences are recorded as “Foreign currency translation adjustment” account and “Minority
interests”, under “Net assets”.
(6) Method and period of goodwill amortization
Goodwill is evenly amortized over the effective period of the goodwill.
(7) Cash in consolidated cash flow statements
Cash (cash and cash equivalents) in the consolidated statements of cash flows consists of cash on hand,readily-available deposits, and short-term investments with a maturity not exceeding three months at thetime of purchase that are readily convertible to cash and not exposed to significant risk in value
fluctuations.
(8) Other important matters for preparation of consolidated financial statements
Accounting treatment of consumption tax and other taxes
Consumption tax and other taxes are excluded from profits and losses.
(Consolidated balance sheets)*1. Unconsolidated subsidiaries and affiliated companies:(Million yen)
Current fiscal year

Previous fiscal yearstst

(as of March 31 , 2015)

Investment securities(Stocks)(as of March 31 , 2016)

161

161

2. Discount on bills:(Million yen)
Current fiscal year

Previous fiscal yearstst

(as of March 31 , 2015)

Discount on notes receivable - trade
Discount on export bills- 29 -(as of March 31 , 2016)

480

-

102

33

(Consolidated statements of income)*1. The year-end inventory balance is the amount after the devaluation of the book value arising from thedecline in profitability, and the next loss on valuation of inventories is included in cost of sales.
(Million yen)Previous fiscal yearst

Current fiscal year

stst

(April 1 , 2014 to March 31 , 2015)

st(April 1 , 2015 to March 31 , 2016)

(182)

33

*2. Major items and amounts of Selling, general and administrative expenses are as follows:(Million yen)
Current fiscal year

Previous fiscal year
st

st

st

(April 1 , 2014 to March 31 , 2015)

Salaries, allowance, and other monies for
directors and employees
Bonuses and provision of allowance forbonuses
Provision of allowance for retirement
benefits to directors
Retirement benefit expenses
Depreciation
Provision of allowance for bonuses todirectorsst(April 1 , 2015 to March 31 , 2016)

13,206

13,628

3,042

3,248

39

44

1,329

1,122

1,410

1,431

173

182

*3. Research and development expenses included in the general and administrative expenses andManufacturing expenses:(Million yen)Previous fiscal yearst

Current fiscal year

stst

(April 1 , 2014 to March 31 , 2015)

st(April 1 , 2015 to March 31 , 2016)

4,148

3,672

*4. Breakdown of gains on sale of noncurrent assets:(Million yen)
Current fiscal year

Previous fiscal year
st

st

st

(April 1 , 2014 to March 31 , 2015)

Machinery, equipment and vehicles
Tools, furniture and fixtures
Total

1

0

st

(April 1 , 2015 to March 31 , 2016)

5

3

0

0

5

3

*5. Breakdown of losses on sale of noncurrent assets:(Million yen)
Current fiscal year

Previous fiscal year
st

st

st

(April 1 , 2014 to March 31 , 2015)

Buildings
Machinery, equipment and vehicles
Total- 30 -st(April 1 , 2015 to March 31 , 2016)

-

0

-

0

-

0

*6. Impairment losses:
Previous fiscal year (April 1st, 2014 to March 31st, 2015)
The Group booked the following assets as “Impairment loss”.
Location of assets
Use of assets
Type of assets
Bunkyo-ku, Tokyo
Operational assets
Tools, furniture and fixtures
Sakai, Osaka
Operational assets
Tools, furniture and fixtures
Buildings and structures
Okayama, Okayama Prefecture
Operational assets
Goodwill
Okayama, Okayama Prefecture
Other
Nasu, Tochigi Prefecture
Idle assets
Land
The Group mainly groups its operations by business segment, and consolidated subsidiaries form theirgrouping with each company or office as one unit. “Impairment losses” on “Leased real estate” and “Idleassets” are recognized separately.
Because of a decrease in cash flows caused by a declined “Operating income” and a fall of the market
price, we have written down the book values of the above assets to recoverable values. These write-offs
have resulted in “Impairment losses” (of 66 million yen), which were booked as “Extraordinary losses”.
These “Impairment losses” consist of the losses on “Tools, furniture and fixtures” of 16 million yen and on“Land” of 50 million yen.
And “Impairment losses” (of 739 million yen) according to the withdrawal of Stent Development Businessis booked as “Loss on business withdrawal”. These consist of the losses on “Goodwill” of 665 million yen
and on “Buildings and structures” of 83 million yen.
The recoverable value was assessed according to the net sale value, and the market prices were evaluatedaccording to roadside land prices or the assessed value of “Noncurrent asset tax”, with reasonableadjustments.
Current fiscal year (April 1st, 2015 to March 31st, 2016)
The Group booked the following assets as impairment loss.
Location of assets
Use of assets
Type of assets
Bunkyo-ku, Tokyo
Operational assets
Tools, furniture and fixtures
Sakai, Osaka
Operational assets
Tools, furniture and fixtures
Nasu, Tochigi Prefecture
Idle assets
Land
The Group mainly groups its operations by business segment, and consolidated subsidiaries form theirgrouping with each company or office as one unit. “Impairment losses” on “Leased real estate” and “Idleassets” are recognized separately.
Because of a decrease in cash flows caused by a declined “Operating income” and a fall of the market
price, we have written down the book values of the above assets to recoverable values. These write-offs
have resulted in “Impairment losses” (of 15 million yen), which were booked as “Extraordinary losses”.
These “Impairment losses” consist of the losses on “Tools, furniture and fixtures” of 4 million yen, on“Vehicles” of 0 million yen, on “Lease assets” of 1 million yen, and on “Land” of 9 million yen.
The recoverable value was assessed according to the net sale value, and the market prices were evaluatedaccording to roadside land prices or the assessed value of “Noncurrent asset tax”, with reasonable adjustments.
(Consolidated statements of comprehensive income)*1. Amount of Reclassification adjustments and Tax effects for other comprehensive income(Million yen)
Current fiscal year

Previous fiscal year
stst

(April 1 , 2014 to March 31 , 2015)

Valuation difference on available-for-salesecurities:
Amount incurred in current fiscal year
Amount of Reclassification adjustments
Before adjusting tax benefit
Amount of tax benefit
Valuation difference on
available-for-sale securities

1,810- 31 -

stst(April 1 , 2015 to March 31 , 2016)(1,770)

(295)

-

1,515

(1,770)

(408)

380

1,106

(1,389)(Million yen)
Current fiscal year

Previous fiscal year
stst

(April 1 , 2014 to March 31 , 2015)

Foreign currency translation adjustment：
Amount incurred in current fiscal year
Adjustments of defined benefit plans：
Amount incurred in current fiscal year
Amount of Reclassification adjustments
Before adjusting tax benefit
Amount of tax benefit
Adjustments of defined benefit plans
Other comprehensive incomestst(April 1 , 2015 to March 31 , 2016)

(104)

(43)

922

(1,895)

(5)

(194)

916

(2,090)

(271)

608

645

(1,481)

1,647(2,914)(Consolidated statements of changes in net assets)
Previous fiscal year (from April 1st, 2014 to March 31st, 2015)
1. Type and total number of issued shares and type and number of shares of treasury stock
Number of shares at
Increase in number
Decrease in number Number of shares atthe beginning ofof shares for current of shares for current
the end of thecurrent fiscal year
fiscal year underfiscal year
current fiscal year
(1,000 shares)(1,000 shares)(1,000 shares)(1,000 shares)
Number ofissued shares
Common stock
19,58819,588
Total
19,58819,588Treasury stock
Common stock
5,685
0
0
5,685
(Note)
Total
5,685
0
0
5,685
Note: (i) The shares of Trust & Custody Services Bank, Ltd. owns are included in the number of our“Treasury stock”(49 thousand shares at the start of the fiscal year and 49 thousand shares at the endof the fiscal year).
(ii) The increase of 0 thousand shares in “Treasury stock” of common stock reflects the increase of 0
thousand shares owing to the acquisition of “Treasury stock”.
(iii) The decrease of 0 thousand shares in “Treasury stock” of common stock reflects the decrease of
0 thousand shares of disposal of “Treasury stock” by Trust & Custody Services Bank, Ltd. toemployees’ stock ownership associations.
2. Stock acquisition rights and treasury stock acquisition rights
Not applicable.
3. Dividends(1) Dividend payment amount(Resolution)
Board of Directors’
meeting held on May
15th, 2014
Board of Directors’
meeting held on
October 31st, 2014
(Note):

Type of shares

Total dividend
amount(million yen)

Common stock*1

Common stock

*2

1,395

697

- 32 -

Dividends
per share(in yen)Record date

Effective date

100

March 31st,2014

June 30th,
2014

50

September 30th,
2014

December 8th,2014

*1: The total dividend amount resolved a at the board of directors' meeting held on May 15th, 2014,
includes the dividend 4 million yen for the share Trust & Custody Services Bank, Ltd. owns.
*2: The total dividend amount resolved at the board of directors' meeting held on October 31st, 2014,
includes the dividend 2 million yen for the share Trust & Custody Services Bank, Ltd. owns.
(2) Of the dividends whose record date belongs to the current fiscal year, and those whose effective date of thedividends will be in the next fiscal year
Total
Dividends
Type of
Source for
Effective
dividend(Resolution)
pershare (inRecord dateamountsharesdividends
dateyen)(million yen)
Board of Directors’CommonRetained
March 31st,June 29th,
meeting held on
1,395
100
stock
earnings
2015
2015
May 15th, 2015th(Note): The total dividend amount resolved at the board of directors' meeting held on May 15 , 2015, includes
the dividend 4 million yen for the share Trust & Custody Services Bank, Ltd. owns.
Current fiscal year (from April 1st, 2015 to March 31st, 2016)
1. Type and total number of issued shares and type and number of shares of treasury stock
Number of shares at
Increase in number
Decrease in number Number of shares atthe beginning ofof shares for current of shares for current
the end of thecurrent fiscal year
fiscal year underfiscal year
current fiscal year
(1,000 shares)(1,000 shares)(1,000 shares)(1,000 shares)
Number ofissued shares
Common stock
19,58819,588
Total
19,58819,588Treasury stock
Common stock
5,685
2,244
3,704
4,225
(Note)
Total
5,685
2,244
3,704
4,225
Note: (i) On October 1st, 2015, Fukuda Denshi conducted a share exchange with Fukuda Denshi as thewholly-owning parent company and Atomic Sangyo as a wholly-owned subsidiary and Fukuda
Denshi allotted treasury stock for the share exchange. With this share exchange, “Capital surplus”
increased 12,285 million yen and “Treasury stock” decreased 9,610 million yen.
Also Atomic Sangyo, which has owned common shares of Fukuda Denshi, became awholly-owned subsidiary of Fukuda Denshi from this share exchange, “Treasury stock” haveincreased.
(ii) The shares of Trust & Custody Services Bank, Ltd. owns are included in the number of our“Treasury stock”(49 thousand shares at the start of the fiscal year and 49 thousand shares at theend of the fiscal year).
(iii) The increase of 2,244 thousand shares in “Treasury stock” of common stock reflects the increaseof making Atomic Sangyo a consolidated subsidiaries, and 0 thousand shares owing to theacquisition of “Treasury stock”.
(iv) The decrease of 3,704 thousand shares in “Treasury stock” of common stock reflects the decreaseof 3,704 thousand shares disposal of “Treasury stock” for the share exchange, and 0 thousand
shares of disposal of “Treasury stock” by Trust & Custody Services Bank, Ltd. to employees’
stock ownership associations.
2. Stock acquisition rights and treasury stock acquisition rights
Not applicable.
3. Dividends- 33 -

(1) Dividend payment amount(Resolution)

Type of shares

Total dividend
amount(million yen)

Dividends per
share(in yen)Record date

Effective date

Board of Directors’
March 31st,June 29th,*1
meeting held on
Common stock
1,395
100
2015
2015
May 15th, 2015
Board of Directors’
September
December 7th,*2
meeting held on
Common stock
837
60
th
30 , 2015
2015
October 30th, 2015
(Note):*1: The total dividend amount resolved at the board of directors' meeting held on May 15th, 2015, includes
the dividend 4 million yen for the share Trust & Custody Services Bank, Ltd. owns.
*2: The total dividend amount resolved at the board of directors' meeting held on October 30th, 2015,
includes the dividend 2 million yen for the share Trust & Custody Services Bank, Ltd. owns.
(2) Of the dividends whose record date belongs to the current fiscal year, and those whose effective date of thedividends will be in the next fiscal year
Total
Dividends
Type of
Source for
Effective
dividend(Resolution)
pershare (inRecord dateamountsharesdividends
dateyen)(million yen)
Board of Directors’CommonRetained
March 31st,June 30th,
meeting held on
1,387
90
stock
earnings
2016
2016
May 13th, 2016
(Note): The total dividend amount, resolved at the board of directors' meeting held on May 13th, 2016, includes
the dividend 4 million yen for the share Trust & Custody Services Bank, Ltd. owns.
(Consolidated statements of cash flows)*1. Relationship between the balance of cash and cash equivalents at the end of the fiscal year and amounts
stated in the consolidated balance sheets:(Million yen)
Current fiscal year

Previous fiscal year
stst

(April 1 , 2014 to March 31 , 2015)

Cash and deposits
Time deposits with a deposit period ofover three months
Cash and cash equivalentsstst(April 1 , 2015 to March 31 , 2016)

25,726

34,768(1,536)(5,806)24,18928,962

2. Details of important non-fund transactions:
The amounts of assets and liabilities in finance lease transactions(Million yen)
Current fiscal year

Previous fiscal year
stst

(April 1 , 2014 to March 31 , 2015)

The amounts of assets and liabilities infinance lease transactions

299- 34 -

stst(April 1 , 2015 to March 31 , 2016)

119

(Segment information, etc.)
a. Segment information
1. Reportable Segments
The reportable segments of the Group are the constituent units of the Group for which separate financial
information can be obtained, and they are the subject of regular examinations by the Board of Directors
aimed at helping the board to decide the allocation of management resources and evaluate theperformance of the Group.
The Group has set up divisions for each product and service in the corporate headquarters, and each of
the divisions formulates comprehensive strategies for the product or service it handles, and develops its
own business activities.
We have 4 reportable segments based on our headquarter divisions which are “Physiological diagnostic
equipment segment”, “Patient monitoring equipment segment”, “Medical treatment equipment segment”,
and “Consumables and other products segment”.
In the “Physiological diagnostic equipment segment”, we mainly handle electrocardiographs, ultrasounddiagnostic imaging systems and blood cell counters. In the “Patient monitoring equipment segment”, wehandle patient monitors. In the ”Medical treatment equipment segment”, we mainly handle defibrillators,
ventilators, pacemakers, catheters, and business of renting medical equipment for home treatment. In the“Consumables and other products segment”, we mainly handle consumables used for devices handled by
the above segments, as well as maintenance and repair services.
2. Methods to calculate the sales, gains (or losses), assets, liabilities and other numbers of the reportablesegments
The accounting policies for the reportable segments are basically the same as those described in “Basicsignificant matters regarding the preparation of consolidated financial statements”.
Reported segment profit is based on the amount of “Operating income”.
(Application of Accounting Standard for Business Combinations, etc.)
As mentioned in “Change in accounting policies” on page 26, Fukuda Denshi has applied theApplication of Accounting Standard for Business Combinations, etc. from the start of the current
consolidated fiscal year. And the Company hereby posts the difference caused by changes in the
Company’s equity in a subsidiary, when the Company continues to control the subsidiary, as ”Capitalsurplus” and posts the acquisition-related expenses as the expenses in the consolidated fiscal year inwhich they were incurred.
The impact on profit and loss is minor.

- 35 -

3. Information regarding sales, gains (or losses), assets, liabilities and other amounts by reportablesegments(i) Previous fiscal yearstst（Million yen)(from April 1 , 2014 to March 31 , 2015)
Reporting Segments
Total

Adjustments*1

Consolidated
financialstatements*2

23,880108,269-

108,269

-

-

-

-

-

Physiologicaldiagnostic
equipment

Patient
monitoring
equipment

Medicaltreatment
equipment

Consumables
and otherproducts

32,661

9,526

42,201--

32,661

Net sales
Sales toexternalcustomers
Internal sales
or transfers

Total

9,526

42,201

23,880108,269-

108,269

Segment profit
Segment
assetsOther items

2,474

830

4,736

2,261

10,303-

10,303

18,4206,452

32,316

13,93971,12853,453

124,582

Depreciation

560

163

5,027

409

6,161

-

6,161

Amortizationof goodwill

-

-

175

-

175

-

175

-

-

960

-

960

-

960

-

-

915

-

915

-

915

428

124

5,912

313

6,778

-

6,778

Gain onforgiveness ofdebt
Loss onwithdrawal
from business
Increase in
Property, plantand equipment
and intangible
assets*1.

Adjustment of segment assets of 53,453 million yen include extra investment funds (cash etc.), long-term investments(“Investment securities” etc.), and etc. which does not allocated to each reportable segments*2. Segment profit equals to “Operating income” of consolidated financial statements.

- 36 -

(ii) Current fiscal year

(from April 1st, 2015 to March 31st, 2016)
Reporting Segments

Physiologicaldiagnostic
equipment

Patient
monitoring
equipment

Medicaltreatment
equipment

Consumables
and otherproducts

36,677

9,012

45,978--36,677（Million yen)
Consolidated
financialstatements
*2

Total

Adjustments*1

25,554

117,222-

117,222

-

-

-

-

-

9,012

45,97825,554

117,222-

117,222Net sales
Sales toexternalcustomers
Internal sales
or transfers
Total

Segment profit
Segment
assetsOther items

2,254

682

5,394

2,318

10,649-10,64919,785

6,277

34,53014,29474,88762,276

137,164

Depreciation

612

150

5,395

426

6,586

-

6,586

Amortizationof goodwill

-

-

-

-

-

-

-

Gain onforgiveness of
debt

-

-

-

-

-

-

-

Loss onwithdrawal
from business

-

-

-

-

-

-

-

648

159

5,925

451

7,184

-

7,184

Increase in
Property, plantand equipment
and intangible
assets*1.

Adjustment of segment assets of 62,276 million yen include extra investment funds (cash etc.), long-term investments(“Investment securities” etc.), and etc. which does not allocated to each reportable segments*2. Segment profit equals to “Operating income” of consolidated financial statements.

b. Related Information(i) Previous fiscal year (from April 1st, 2014 to March 31st, 2015)
1. Information about each products and services
Information about each products and services is omitted, as categories of products and services are
identical to segment information.
2. Information by geographical area
(1) Sales
Information about “Sales” is omitted because our domestic “Sales” accounted for more than 90% ofconsolidated “Sales”.

- 37 -

(2) Property, plant and equipment
Information about “Property, plant and equipment” is omitted because domestic “Property, plant andequipment” accounted for more than 90 % of “Property, plant and equipment” of consolidated “Property,
plant and equipment ".
3. Information by each major customer
Information about each major customer is omitted because “Sales” for each major customer accounted
for less than 10 % of consolidated “Sales”.
(ii) Current fiscal year (from April 1st, 2015 to March 31st, 2016)
1. Information about each products and services
Information about each products and services is omitted, as categories of products and services are
identical to segment information.
2. Information by geographical area
(1) Sales
Information about “Sales” is omitted because our domestic “Sales” accounted for more than 90% ofconsolidated “Sales”.
(2) Property, plant and equipment
Information about “Property, plant and equipment” is omitted because domestic “Property, plant andequipment” accounted for more than 90 % of “Property, plant and equipment” of consolidated “Property,
plant and equipment”.
3. Information by each major customer
Information about each major customer is omitted because “Sales” for each major customer accounted
for less than 10 % of consolidated “Sales”.
c. Information about impairment loss for noncurrent assets by reportable segments(i) Previous fiscal year (from April 1st, 2014 to March 31st, 2015)（Million yen)Physiologicaldiagnostic
equipment
Impairment
loss

Patient
monitoring
equipment

4

Medicaltreatment
equipment
1

Consumables
and otherproducts

745

3

Elimination/ Corporate

Total

50

805

(Note): “Impairment losses” (of 739 million yen) in “Medical treatment equipment” is booked as “Loss on
business withdrawal” in “Extraordinary losses”.
(ii) Current fiscal year (from April 1st, 2015 to March 31st, 2016)（Million yen)Physiologicaldiagnostic
equipment
Impairment
loss

1

Patient
monitoring
equipment

Medicaltreatment
equipment
0Consumables
and otherproducts
2- 38 -

1

Elimination/ Corporate

Total
9

15

d. Information about amortization and depreciation expense on goodwill of each reportable segment(i) Previous fiscal year (from April 1st, 2014 to March 31st, 2015)
PhysiologicalPatient
Medicaldiagnostic
monitoring
treatment
equipment
equipment
equipment
Depreciation ofcurrent period
Balance at theend of current
periodConsumables
and otherproducts

Elimination/ Corporate

Total

-

-

175

-

-

175

-

-

-

-

-

-

(ii) Current fiscal year (from April 1st, 2015 to March 31st, 2016)
Not applicablee. Information about gain on negative goodwill of each reportable segment(i) Previous fiscal year (from April 1st, 2014 to March 31st, 2015)
Not applicable(ii) Current fiscal year (from April 1st, 2015 to March 31st, 2016)
In the “Consumables and other products”, the share exchange making, Fukuda Denshi as thewholly-owning parent company and Atomic Sangyo as a wholly-owned subsidiary, caused a negative
goodwill of 11 million yen in “Extraordinary income” for current fiscal year to be recorded.
(Business combinations, etc.)
Business combinations by acquisition
1. Overview of the business combinations(1) Acquired company’s name and description of businessCompany name: Atomic Sangyo Co., Ltd.
Description of business: Manufacturing of recording papers for medical electronic devices,
real estate leasing business(2) Main reason of the business combinations
Recording paper and other products manufactured by Atomic Sangyo are essential to our business andthus cannot easily be replaced with other companies’ products. Therefore, we came to the conclusion thatrather than terminate the transactions or switching to products of other companies, we can stabilize thesupply chain as a Group from manufacturing to sales, and improve management efficiency including
further cost reduction and enhance customer service by making Atomic Sangyo wholly-owned subsidiaryby the share exchange, and terminating these related party transactions.
On May 15th, 2015, Fukuda Denshi and Atomic Sangyo concluded the Share Exchange Agreement inorder to enhance the transparency of corporate management by terminating these related party
transactions, and stabilize and improve the efficiency of corporate management, as well as improvecustomer services.
(3) Date of business combination
October 1st, 2015(4) Legal form of the business combination
Fukuda Denshi as the wholly-owning parent company and Atomic Sangyo as a wholly-owned
subsidiary.
(5) Company name after the business combination
There is no change of Company name after the business combination.
(6) Percentage of voting rights acquired
Percentage of voting rights owned before the share exchange: 0.0%
Percentage of voting rights acquired on the date of business combination: 100%

- 39 -

Percentage of voting rights after the acquisition: 100%
(7) The main reason of deciding the acquiring company
Fukuda Denshi owns all of the voting rights and made Atomic Sangyo as a wholly-owned subsidiary.
2. Period of business results of the acquired company included in the consolidated income statement for the
consolidated fiscal year.
From October 1st, 2015 to March 31st, 2016.
3. Detail of acquisition cost and the value of the acquired company
Market value of the Fukuda Denshi's common shares issued on the date of the business combination
21,895 million yen.
Acquisition cost 21,895 million yen.
4. Ratio of allotment of shares and calculation method and the number of shares issued(1) Ratio of allotment of shares
Fukuda Denshi 419 common shares to one share of Atomic Sangyo.
In the share exchange ratio calculation sheet that we used to calculate the share exchange ratio, thecomparable company method and the DCF method is based on financial figures assuming theabsorption-type company split and the asset transfer.
(2) Calculation method of the share exchange ratio
As improving discussions and exchanges of views about the share exchange, Fukuda Denshi appointed
MID Structures, Co., Ltd. (hereinafter referred to as “MID Structures”), a third-party valuation
institution independent from Fukuda Denshi and Atomic Sangyo, as well as Yanagida & Partners as
legal adviser and has conducted a full-scale review in order to ensure fairness and reasonableness of theshare exchange ratio to be used for the share exchange (hereinafter referred to as the “Share Exchange
Ratio”).
Fukuda Denshi has repeated careful discussions and reviews, taking into account the financial
conditions and trends in earnings of both companies, based on the share exchange ratio calculation sheet
submitted by MID Structures and advice from our legal adviser.
As a result, we have come to the conclusion that the Share Exchange Ratio is reasonable. It was
decided at the meetings of the Board of Directors of both companies held on May 15th, 2015, to conduct
the share exchange, and both companies signed the share exchange agreement.
The Share Exchange Ratio is calculated based on more than one financial advisor's share exchange
ratio report and consulted between the companies.
(3) The number of shares issued for the share exchange
3,704,798 shares
5. The amount of gain on negative goodwill and the reason(1) The amount of gain on negative goodwill
11 million yen(2) The reason of gain on negative goodwill
Because the market value of net assets exceeded the acquisition price at the time of the businesscombination, the Group reported the difference in “other” under “extraordinary income.”- 40 -

(Per share information)
Previous fiscal year

Current fiscal year

(April 1st, 2014 to March 31st, 2015)(April 1st, 2015 to March 31st, 2016)

Net assets per share

6,401.07 yen

6,498.12 yen

Earnings per share

512.10 yen

505.49 yen

Not stated, as there is no potential
dilution.

Not stated, as there is no potential
dilution.

Fully diluted earnings per
share

Note: (i) The shares of Trust & Custody Services Bank, Ltd. owns are included in the number of our“Treasury stock”(49 thousand shares at the start of the fiscal year and 49 thousand shares at the end of the
fiscal year), which is excluded from the “Number of shares at the end of the current fiscal year”, which isused to calculate the “Net assets per share”.
It is also included in the number of our “Treasury stock”(49 thousand shares at the start of the fiscal year
and 49 thousand shares at the end of the fiscal year), which is excluded from the calculation of “Average
number of shares during the period”, which is used to calculate the “Net income per share”.
(ii) The basis for calculation of earnings per share:
Item

Previous fiscal year

Current fiscal year

(April 1st, 2014 to March 31st, 2015)(April 1st, 2015 to March 31st, 2016)

7,119

7,368

-

-

7,119

7,368

13,902

14,576

Profit attributable to parent
company shareholders(million yen)Amount not belonging toordinary shareholders (million
yen)Profit attributable to parent
company shareholders in
relation to common stock(million yen)
Average number of shares
during the fiscal year (1,000
shares)(Significant subsequent events)
1. Introduction of a Board Benefit TrustAt the meeting of Board of Directors held on May 13th, 2016, Fukuda Denshi has resolved to introduce a
new stock-based compensation system (BBT, Board Benefit Trust hereinafter referred to as the “System”),
for directors (excluding outside directors), and will submit a proposal for the System to the 69 th Ordinary
General Meeting of Shareholders to be held on June 29 th, 2016.
Please refer to the “Notice Concerning the Introduction of a Board Benefit Trust” for details.
2. Disposal of treasury stock through a third-party allocation to support Fukuda Foundation for Medical
Technology
At the meeting of Board of Directors held on May 13 th, 2016, Fukuda Denshi has resolved to dispose oftreasury stock, in order to support the social contribution activities of Foundation. This disposal of treasury
stock is subject to approval at the Fukuda Denshi’s 69th General Meeting of Shareholders to be held on June
29th, 2016.
Please refer to the “Notice of Disposal of Treasury Stock through a Third-Party Allocation to Support
Fukuda Foundation for Medical Technology’s Social Contribution Activities” for details.

- 41 -

6. Non-consolidated financial statements(1) Balance sheets(Million yen)Previous fiscal yearst
(as of March 31 , 2015)

Current fiscal yearst
(as of March 31 , 2016)

AssetsCurrent assets
10,225

10,79839

24

26,53627,211

192

1,647

3,792

3,878

7

29

Raw materials and supplies

1,712

1,689

Advance payments-trade

164

416

Deferred tax assets

462

458

Short-term loans receivable

1,490

1,284

Other

1,118

961

Allowance for doubtful accounts(1,243)(322)

Total current assets

44,49948,079Buildings

4,211

4,037

Structures

178

160

Machinery and equipment

75

77

Vehicles26

26

Tools, furniture and fixtures

9,774

10,262

Land

6,303

7,234

Leased assets

224

216

Construction in progress

242

393

21,03822,409

2,363

1,979

Software in progress

41

402

Other

25

24

2,430

2,406

Cash and deposits
Notes receivable-trade
Accounts receivable-trade
Securities
Merchandise and finished goods
Work in process

Noncurrent assets
Property, plant and equipment

Total property, plant and equipment
Intangible assets
SoftwareTotal intangible assets- 42 -

(Million yen)Previous fiscal yearst
(as of March 31 , 2015)

Current fiscal yearst
(as of March 31 , 2016)

Investments and other assets
Investment securities

11,198

8,981

Stocks of subsidiaries and associates

3,247

11,922

1

1

423

423

Long-term loans receivable

5,488

5,312

Deferred tax assets

1,665

1,807

Long-term time deposits

2,000

1,000

Insurance funds

9,255

10,700272

319

Allowance for doubtful accounts(1,986)(3,928)

Total investments and other assets

31,56636,54055,03561,356

99,535

109,436

Accounts payable-trade

13,80913,296

Short-term loans payable

1,850

1,850

53

63

Accounts payable-other

1,812

1,953

Income taxes payable

964

833

14,39014,530

Provision for bonuses

684

660

Provision for directors' bonuses

53

50

Provision for product warranties

308

476

Other

653

233

34,57833,946

Investments in capital
Investments in capital of subsidiaries
and associates

Other

Total noncurrent assets
Total assets
Liabilities
Current liabilities

Lease obligations

Deposits received

Total current liabilities- 43 -

(Million yen)Previous fiscal yearst
(as of March 31 , 2015)

Current fiscal yearst
(as of March 31 , 2016)

Noncurrent liabilities
Lease obligations

188

170

Provision for retirement benefits

599

474

Long-term accounts payable-other

816

816

Other

13

18

1,617

1,480

36,19535,427

4,621

4,621

Legal capital surplus

8,946

8,946

Other capital surplus

1,109

13,394

Total capital surpluses

10,05522,340

1,171

1,171

Reserve for business expansion

300

300

Reserve for advanced depreciation of
noncurrent assets

53

53

General reserve

37,50037,500Retained earnings brought forward

22,20425,64861,23064,673

Treasury stock(14,731)(18,400)

Total shareholders' equity

61,17673,235

2,163

773

2,163

773

63,33974,00899,535

109,436

Total noncurrent liabilities
Total liabilities
Net assets
Shareholders' equity
Capital stock
Capital surplus

Retained earnings
Legal retained earnings
Other retained earnings

Total retained earnings

Valuation and translation adjustments
Valuation difference on
available-for-sale securities
Total valuation and translation
adjustments
Total net assets
Total liabilities and net assets- 44 -

(2) Statements of income(Million yen)Previous fiscal yearst

Current fiscal year

st

st

st

(April 1 , 2014 to March 31 , 2015)(April 1 , 2015 to March 31 , 2016)

63,28467,421

42,51446,927

20,77020,493

14,743

15,388

6,027

5,105

Interest income

99

97

Dividend income

1,712

2,220

Other

1,006

473

Total non-operating income

2,818

2,791

Interest expenses

89

90

Foreign exchange losses

-

251

Other

3

24

Total non-operating expenses

93

366

8,751

7,529

2

0

Gain on sales of investment securities

301-

Surrender value of insurance

315

349

Subsidy income

27-

Gain on forgiveness of debts

960-

Total extraordinary income

1,606

349

Net sales
Cost of sales
Gross profit
Selling, general and administrative
expenses
Operating income
Non-operating income

Non-operating expenses

Ordinary income
Extraordinary income
Gain on sales of noncurrent assets- 45 -

(Million yen)Previous fiscal yearst

Current fiscal year

st

st

st

(April 1 , 2014 to March 31 , 2015)(April 1 , 2015 to March 31 , 2016)

Loss on sales and retirement of non-current
assets-0

Impairment loss

50

9Loss on business withdrawal

2,521

-

Total extraordinary losses

2,572

9

Profit before income taxes

7,786

7,869

Income taxes-current

2,280

1,951

Income taxes-deferred

(288)

242

Total income taxes

1,991

2,193

Profit

5,794

5,675

Extraordinary losses- 46 -

(3) Statements of changes in net assets(I) Previous fiscal year

stst(from April 1 , 2014 to March 31 , 2015)(Million yen)
Shareholders' equity
Capital surplus

Retained earnings
Other retained earnings

Capital
stock

Legal
capitalsurplus

4,621

8,946

Reserve
Legalretained forearnings businessexpansion

Retainedearnings
brought
forwardTotal
retainedearnings

18,32457,349178

178

18,50357,528Dividends of surplus(2,092)(2,092)

Profit

5,794

5,794

Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

4,621

Other Total
capital capitalsurplus surplus

Reserveforadvanced
Generaldepreciat
reserve
ion ofnoncurrent assets

8,946

1,109

10,055

1,109

10,055

1,171

1,171

300

300

53

53

37,50037,500Changes of items during
periodPurchase of treasury stock
Disposal of treasury stock
Net changes of items otherthan shareholders' equity
Total changes of items
during period
Balance at end of current
period

-

-

-

-

-

-

-

-

3,701

3,701

4,621

8,946

1,109

10,055

1,171

300

53

37,50022,204

61,230

Valuation and translation
adjustments

Shareholders' equity

Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

Treasury
stock

Total
shareholders'equityValuationdifference on
available-for-s
ale securities

Total valuationand translation
adjustments

Total net assets(14,729)57,297

1,056

1,056

58,354

178(14,729)57,476

178
1,056

1,056

58,533

Changes of items during
periodDividends of surplus(2,092)(2,092)

Profit

5,794

5,794

- 47 -

Purchase of treasury stock

(2)

(2)

(2)

Disposal of treasury stock

0

0

0

Net changes of items otherthan shareholders' equity
Total changes of items
during period
Balance at end of current
period(ii) Current fiscal year

1,106

1,106

1,106

(1)

3,699

1,106

1,106

4,806

(14,731)

61,176

2,163

2,163

63,339st

st(from April 1 , 2015 to March 31 , 2016)(Million yen)
Shareholders' equity
Capital surplus

Retained earnings
Other retained earnings
Reserveforadvanced
Generaldepreciat
reserve
ion ofnoncurrent assets

Capital
stock

Legal
capitalsurplus

4,621

8,946

1,109

10,055

1,171

300

53

4,621

8,946

1,109

10,055

1,171

300

53

Retainedearnings
brought
forwardTotal
retainedearnings

37,50022,204

61,23037,50022,204

61,230

Dividends of surplus(2,232)(2,232)

Profit

5,675

5,675

Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

Other Total
capital capitalsurplus surplus

Reserve
Legalretained forearnings businessexpansion

Changes of items during
periodPurchase of treasury stock
Disposal of treasury stock

12,285

12,285

Net changes of items otherthan shareholders' equity
Total changes of items
during period
Balance at end of current
period--12,285

12,285

-

-

-

-

3,443

3,443

4,621

8,946

13,394

22,340

1,171

300

53

37,50025,64864,673- 48 -

Valuation and translation
adjustments

Shareholders' equity

Treasury
stock

Total
shareholders'equityValuationdifference on
available-for-s
ale securities

Total valuationand translation
adjustments

Total net assets

Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies(14,731)

61,176

2,163

2,163

63,339

Restated balance(14,731)

61,176

2,163

2,163

63,339Changes of items during
periodDividends of surplus(2,232)(2,232)

Profit

5,675

5,675

Purchase of treasury stock(13,279)(13,279)(13,279)

Disposal of treasury stock

9,610

21,89521,895

Net changes of items otherthan shareholders' equity
Total changes of items
during period
Balance at end of current
period(1,389)(1,389)(1,389)(3,669)12,059(1,389)(1,389)10,669(18,400)

73,235773

773

74,008(4) Notes to Non-consolidated Financial Statement(Notes regarding the assumption for going concern)
Not applicable(Significant accounting policies)
1. Valuation standards and methods for assets(1) Valuation standards and methods for securities
a. Held-to-maturity securities;- Amortized cost method (straight-line method)b. Shares of subsidiaries and affiliates- Stated at cost based on the moving average method
c. Other securities
Marketable securities;- Stated at fair value based on the market price as of the end of the fiscal year.
(Unrealized holding gains or losses are reported in a component of “Net assets”, with the costof “Securities” sold is calculated by the moving average method.)
Non-marketable securities;- Stated at cost based on the moving average method.
For investments in the investment enterprise limited Liability association and similar
associations (deemed to be “Securities” pursuant to Article 2, Paragraph 2 of the Financial
Instruments and Exchange Law), the net amount corresponding to the ownership percentage isused, based on the most recent financial statements available as of the reporting date and othermaterials stipulated in the partnership contract.
(2) Valuation standards and methods for inventories- 49 -

The cost method (the amounts stated in the balance sheets are calculated by writing down the bookvalues based on lower profitability) is used as a valuation standard.
Merchandise and finished goods- Stated at cost determined by the first-in, first-out method.
Work in process- Stated at cost based on the specific cost method.
Raw materials- Stated at cost determined by the gross average method.
Supplies- Stated based on the last purchase price method.
2. Depreciation method for noncurrent assets(1) Property, plant and equipment (excluding lease assets)
Depreciated by the declining balance method. However, buildings (except for building
attachments) acquired on or after April 1 st, 1998 were depreciated using the straight-line method.
In addition, the expected lifetime are as follows:
Buildings:
3 to 50 years
Structures:
10 to 60 years
Machinery and equipment:
7 to 17 years
Vehicles and delivery equipment: 4 to 6 years
Tools, furniture and fixtures:
2 to 20 years
Assets with an acquisition cost of 100,000 yen or more but less than 200,000 yen were evenly
amortized over a three-year period.
Of the tools, furniture and fixtures, the oxygen concentrator devices (assets for rental) weredepreciated using the straight-line method with the estimated rental period (four years) used as thenumber of depreciation years.
(2) Intangible assets (excluding “Lease assets”)
Depreciated by the straight-line method.
Software for internal use is amortized by the straight-line method over its useful life of five years.
As for software for sale in the market, the Group records the larger of an amortization based on
projected sales volume for the effective sales period (no longer than three years) or a uniform
amortization over the effective remaining sales period.
(3) Lease assets“Lease assets” in finance lease transactions that do not transfer ownership
The straight-line method is used, based on the assumption that the useful life is the lease term andthe residual value is zero.
3. Basis for provision of allowances(1) Allowance for doubtful accounts
To prepare for losses incurred by bad debts, the amount of potential loss is calculated by using thehistorical loss ratio in the case of general loans or receivables.
Potential losses for specificloans or receivables, for which we have concerns regarding their collectability, are calculated byassessing the possibility of collection for each individual account.
(2) Provision for bonuses
To prepare for the payment of bonuses to employees, we reserve an amount corresponding to current
fiscal year’s portion of estimated bonus payments to employees.
(3) Provision for director’s bonuses
To prepare for the payment of bonuses for directors and corporate auditors, we reserve an amountcorresponding to current fiscal year’s portion of estimated bonus payments to directors and corporate
auditors.
(4) Provision for retirement benefits- 50 -

To prepare for the payment of retirement benefits for employees, the amount recognized as accruingat the end of current fiscal year was reserved, based on estimated retirement benefit obligation andpension assets at the end of current fiscal year.
(i) Method of assigning recognized accrued benefits to particular periods
In the calculation of retirement benefits, accrued benefits are assigned to the period up to thecurrent consolidated fiscal year in accordance with the fixed-amount standards.
(ii) Accounting for actuarial differences and prior service costs
Prior service costs are amortized, using the straight-line basis over a certain number of years (10years), which are less than the average remaining years of service of the employees when they
incurred.
Actuarial differences are amortized, using the straight-line basis over a certain number of years (10years), which are less than the average remaining years of service of the employees when they
incurred, from the fiscal year after the one in which they arise.
(5) Provision for product warranties

To prepare for the expenses incurred by free repair to be implemented after the delivery of the
products, an estimated amount of the repair expenses was reserved on the basis of the estimatedproportion of such expenses to net sales and the estimated amount of such expenses forindividual products.
4. Other important matters for preparation of financial statements(1) Accounting for retirement benefits
The method of accounting for unrecognized actuarial differences and unrecognized prior service
costs relating to retirement benefits differs from the method used in the consolidated financial
statements.
(2) Accounting treatment of consumption tax, and other taxes, etc.
The Consumption tax and other taxes, etc. are excluded from profits and losses.
7. Others(1)Changes of directors(i) Representative Director
Not applicable(ii) Other directors
・New Auditor candidates
Statutory Auditor (part-time): Mr. Keiji Goto
*Mr. Keiji Goto is the candidate of outside Auditor
・Directors to retire
Statutory Auditor (part-time): Mr. Akihiko Shiba
・Effective from
June 29th, 2016
* This English translation is for reference purposes only. The original Japanese version will prevail as theofficial authoritative version.

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