Summary Report on Financial Results for Fiscal Year Ended March 2014
(Japan GAAP)May 15th, 2014
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 27th, 2014
June 30th, 2014
June 27th, 2014
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 2014 (April 1st, 2013 through March 31st, 2014)(1) Consolidated operating results
Net sales
million%yen
Year ended
107,574
11.8
March 2014
Year ended
96,2394.0
March 2013
(Note)Comprehensive income(% represent increases or decreases from the previous year)
Operating income
Ordinary income
Net income
million%million%million
%
yen
yen
yen
11,78315.1

11,995

14.9

7,540

16.7

10,24011.4

10,435

10.7

6,462

22.7

Fiscal year ended March 2014: 7,441 million yen / 6.6%

Year ended
March 2014
Year ended
March 2013

Net income per
share

Fully diluted net
income per
share

yen

yen

Fiscal year ended March 2013: 6,982 million yen / 14.6 %Ratio of net
income toshareholders’equity%%Ratio ofoperatingincome to net
sales%

Ratio ofordinary income
to total assets

515.60

-

9.2

10.2

11.0

415.47

-

8.1

9.4

10.6

(Reference) Profit or loss on equity method investments:
Fiscal year ended March 2014: (448) million yen
Fiscal year ended March 2013: (321) million yen(2) Consolidated financial situation
Total assets
Year ended
March 2014
Year ended
March 2013

Shareholders’equity ratio

Net assets

Net assets
per share

million yen

million yen%

yen

120,743

81,721

67.7

5,878.16

114,646

82,082

71.6

5,306.30(Reference) Shareholders’ equity:
Fiscal year ended March 2014: 81,721 million yen

Fiscal year ended March 2013: 82,082 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

11,115(4,350)(7,845)

20,33912,199(10,929)(2,396)

21,461

Year ended
March 2014
Year ended
March 2013
2. Dividends
End ofthefirstquarteryenYear ended
March 2013
Year ended
March 2014
Year ending
March 2015
(Forecast)

Annual Dividend
End of End of End of
the
the
the
secondthird
term
quarter quarter
Yen

Ratio of
Total
Payout ratio dividends todividends (for (consolidated)
net assets
Annualthe year)(consolidated)yenmillion yen

%

%

-

40.00

-

85.00

125.00

1,930

30.1

2.5

-

45.00

-

100.00145.00

2,015

28.1

2.6

-

45.00

-

105.00150.0027.4(Note)The detail of year-end dividend of Year ended March 2013; ordinary dividend 40.00 yen, extra dividend 45.00 yen
The detail of second quarter dividend of Year ended March 2014; ordinary dividend 40.00 yen, extra dividend 5.00 yen
The detail of year-end dividend of Year ended March 2014; ordinary dividend 40.00 yen, extra dividend 60.00 yen
The detail of second quarter dividend of Year ending March 2015 (Forecast); ordinary dividend 40.00 yen, commemorative
dividend 5.00 yen
The detail of year-end dividend of Year ending March 2015 (Forecast); ordinary dividend 40.00 yen, extra dividend 65.00
yen

3. Forecast of consolidated financial results for fiscal year ending March 2015 (April 1st, 2014 through March
31st, 2015)(% represent increases or decreases from the previous year)

millionyen%

millionyen%

millionyen%

millionyen%Netincomeper shareyen

108,000

0.4

12,0001.8

12,000

0.0

7,600

0.8

546.66

Net sales

Full-year

Operating income

Ordinary income

Net income(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-

4. Others(1) Changes in significant subsidiaries during the current fiscal year: Yes
New: 1 (Japan Stent Technology Co., Ltd)
Exclusion: None
(Note)For details, please refer to “1. Scope of consolidation” under the section “(Basic significant matters regarding
the preparation of consolidated financial statements)” on page 26.
(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 “Changes in accounting policies” on page 29.
(3) Number of outstanding shares (common stock)(i) Number of outstanding shares at the year-end (including “Treasury stock”)
Fiscal year ended March 2014: 19,588,000 sharesFiscal year ended March 2013: 19,588,000 shares(ii) Number of shares of treasury stock at the year-end:
Fiscal year ended March 2014: 5,685,382 sharesFiscal year ended March 2013: 4,119,095 shares(ⅲ) Average number of shares during the period
Fiscal year ended March 2014: 14,625,522 sharesFiscal year ended March 2013: 15,553,736 shares(Reference) Summary of non-consolidated financial results
Non-consolidated financial results for fiscal year ended March 2014 (April 1st, 2013 through March 31st,
2014)(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
63,849
7.1
6,053
20.3
7,981
15.8
5,806
20.8
March 2014
Year ended
59,638
6.3
5,031
46.0
6,893
38.2
4,805
41.3
March 2013

yen

Fully diluted net
income per shareyen

397.01-308.99-Net income per share
Year ended
March 2014
Year ended
March 2013

-3-

(2)

Non-consolidated financial position
Total assets

Net assets

Shareholders’ equity
ratio%

Net assets per share

million yen
million yen
yenYear ended
96,25558,35560.6
4,197.43
March 2014
Year ended
95,34960,45063.4
3,907.89
March 2013
(Reference) Shareholders’ equity:
Fiscal year ended March 2014: 58,355 million yen
Fiscal year ended March 2013: 60,450 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.

-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 2014 andfiscal year ending 2015--------------------------------------------------------------------------------

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(4) Issues to be addressed-----------------------------------------------------

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

15(5) Other important managerial matters of the Company-----------------------------------------------

15

4. Consolidated financial statements------------------------------------------------------------------------

16(1) Consolidated balance sheets-----------------------------------------------------------------------

16(2) Consolidated income statements (comprehensive) and consolidated statements ofcomprehensive income ------------------------------------------------------------------------------------

19(3) Consolidated statements of changes in net assets----------------------------------------------------

22----------------------------------------------------------------

24(4) Consolidated statements of cash flows(5) Notes to Consolidated Financial Statement-----------------------------------------------------------(Notes regarding the assumption for going concern)---------------------------------------------------(Basic significant matters regarding the preparation of consolidated financial statements)

26------

26-------------------------------------------------------------------------

29-----------------------------------------------------------------------------

29(Changes in accounting policies)(Consolidated balance sheets)

26(Consolidated statements of income)---------------------------------------------------------------------

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

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

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

34(Lease transactions)-----------------------------------------------------------------------------------------

34(Financial Products)----------------------------------------------------------------------------------------

34------------------------------------------------------------------------------------ ---------------

34(Consolidated statements of cash flows)(Securities)(Derivative transactions)(Retirement benefits)-----------------------------------------------------------------------------------

34---------------------------------------------------------------------------------------

35

-5-

(Stock options, etc.)-----------------------------------------------------------------------------------------(Tax effect accounting)----------------------------------------------------------------------------------

35
35(Real estates including rentals)-------------------------------------------------------------------------

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

35(Transactions with related parties)---------------------------------------------------------------------

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

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

39(Business combinations, etc.)(Per share information)(Significant subsequent events)------------------------------------------------------------------------

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

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

40-----------------------------------------------------------------------------------------

40(2) Statements of income---------------------------------------------------------------------------------

44(3) Statements of changes in net assets ----------------------------------------------------------------------

47(4) Notes to Non-consolidated Financial Statement-----------------------------------------------------

49(Notes regarding the assumption for going concern)---------------------------------------------------

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

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

51----------------------------------------------------------------------------------------------------

51(Significant accounting policies)(Changes in the presentation)
6. 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 2013
March 2014
Rate of change
AmountAmountChange(%)
Net sales
96,239107,574
11,33411.8(million yen)
Operating income
10,24011,783
1,543
15.1(million yen)
Ordinary income
10,435
11,995
1,559
14.9(million yen)
Net income
6,462
7,540
1,078
16.7
(million yen)
Net income per share
415.47515.60100.1324.1(yen)During the fiscal year ended March, 2014, an increase in stock prices and weakening of the yen continued
due to the effect of government economic and financial policies, and also positive signs were observed incompanies’ earnings and consumer spending by a rush in demand before the raising of the consumption tax
rate, expectations for economic recovery have been building up.
The remuneration for medical treatment in FY2014 seeks to establish a framework to provide healthcare
services that meet the needs of Japan’s aging society by focusing on challenges such as the differentiation andstrengthening of medical institutions’ functions, encouraging teamwork throughout Japan’s medical network,and expanding home treatment. Medical institutions face ever greater demands for efficient, high-quality
healthcare.
As a result, the Group posted consolidated “Net sales” of 107,574 million yen (up 11.8% year-on-year basis)for this consolidated fiscal year. With regard to incomes, consolidated “Operating income” totaled 11,783
million yen (up 15.1% year-on-year basis) , consolidated “Ordinary income” totaled 11,995 million yen (up14.9% year-on-year basis) and the consolidated “Net income” totaled 7,540 million yen (up 16.7% on a
year-on-year basis).
Consolidated “Net sales”, “Operating income”, “Ordinary income” and “Net income” all marked a record
high for the two consecutive terms.

(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 2013

Year ended March 2014

Amount(millionyen)

Ratio (%)

Amount(millionyen)

Ratio (%)

27,602

28.7

34,711

32.3

7,109

25.8

9,264

9.6

9,461

8.8

197

2.1

38,51940.0

39,909

37.1

1,390

3.6

20,851

21.7

23,491

21.8

2,640

12.7

96,239100.0

107,574

100.0

11,335

11.8-7-

A. Physiological diagnostic equipment segment
Sales of electrocardiographs and vascular screening systems continued to increase. Also, the number oflarge-scale business deals have substantially increased in the fourth quarter of the term.
As a result, consolidated “Net sales” were 34,711 million yen (up 25.8% year-on-year basis).
B. Patient monitoring equipment segment
Sales of patient monitoring equipment increased.
As a result, consolidated “Net sales” were 9,461 million yen (up 2.1% year-on-year basis).
C. Medical treatment equipment segment
The business of renting medical equipment for home treatment and sales of AEDs increased, but thesales of pacemakers decreased.
As a result, consolidated “Net sales” were 39,909 million yen (up 3.6% 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 were
23,491 million yen (up 12.7% year-on-year basis).
(iii) Outlook for fiscal year ending March 2015
Year ended
Year ending
March 2014
March 2015
AmountNet sales(million yen)
Operating income(million yen)
Ordinary income(million yen)AmountComparison with the previous year
Rate of change(%)

Change107,574

108,000

425

0.4

11,783

12,000216

1.8

11,99512,0004

0.0

Net income
7,540
7,600
59
0.8
(million yen)
Net income per share
515.60546.66
31.06
6.0
(yen)
While the effects of economic and financial policies in Japan provide hope for ongoing gradual economic
recovery, reduced consumption in the wake of the raising of the consumption tax rate and increasing resource
prices could yet affect purchasing power. Meanwhile, the US and European economies show signs of recovery
but there are concerns about sluggish growth in China and emerging markets.
The Japanese government raised the consumption tax rate from 5% to 8% starting in April 2014 as part of its
comprehensive reforms of tax and social security, which is aimed at enhancing and stabilizing Japan’s social
security and fiscal consolidation. A further increase to 10% in October 2015 is also being considered.
Moreover, Japan is fast becoming an ultra-aged society, with 22 million baby boomers expected to turn 75 orolder in 2025, at which time one in four Japanese will be aged 75 or older.
Amid this fast-changing climate, we at the Fukuda Denshi Group, inspired by our corporate philosophy,
remain dedicated to contribute to medical progress and healthcare in general in accordance with our social
mission.
The Group expects consolidated “Net sales” of 108,000 million yen, consolidated “Operating income” of
12,000 million yen, consolidated “Ordinary income” of 12,000 million yen, and consolidated “Net income” of
7,600 million yen for the fiscal year ending March 2015.
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 6,096 million yen from the end of the previous fiscal year to reach 120,743 million
yen. The main factors are the increase of 6,960 million yen in “Notes and accounts receivable-trade” and1,471 million yen in “Insurance funds”, despite a decrease of 2,597 million yen in “Investment securities”.
“Total liabilities” increased 6,457 million yen from the end of the previous fiscal year to reach 39,021
million yen. The main factors are the increase of 5,652 million yen in “Notes and accounts payable-trade”
and 2,581 million yen in “Net defined benefit liability”, despite a decrease of 2,858 million yen in “Provision
for retirement benefits”.
“Net assets” decreased 360 million yen from the end of the previous fiscal year to reach 81,721 million yen.
The main factors are the increase of 5,873 million yen in “Treasury stock” at the end of current period,
despite the increase of 5,592 million yen in “Retained earnings”.
(ii) Consolidated cash flows
Year ended March
2013
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)
Cash and cash equivalents at theend of the fiscal year (million
yen)Year ended March2014

Change12,19911,115(1,084)(10,929)(4,350)6,578(2,396)(7,845)(5,449)

(48)

(40)

8

(1,174)(1,121)

52

21,461

20,339(1,121)(Cash flows from operating activities)
In the consolidated fiscal year, the “Cash flows from operating activities” were 11,115 million yen, down
1,084 million yen from the previous year. Including “Income before income taxes” of 12,533 million yen,
“Depreciation” of 5,636 million yen and “Increase in notes and accounts receivable-trade” of 6,836 million
yen.
(Cash flows from investing activities)“The cash flows from investing activities” were minus 4,350 million yen, up 6,578 million yen from theprevious year. Including purchase of “Property, plant and equipment” amounted to 4,345 million yen and“Purchase of insurance funds” amount of 1,977 million yen.
(Cash flows from financing activities)“The cash flows from financing activities” were minus 7,845 million yen, down 5,449 million yen fromthe previous year, mainly because of the payment of “Purchase of treasury stock” of 5,874 million yen andthe “Cash dividends paid” of 1,938 million yen.
As a result, “Cash and cash equivalents at the end of the fiscal year” was 20,339 million yen, down 1,121
million yen compared to the end of the previous fiscal year.

-9-(Reference) Trends in cash flow indicators
Year ended
Year ended
March 2010
March 2011
Shareholders’ equity
73.9
73.4
ratio (%)
Market value-based
38.8
42.8
shareholders’ equity
ratio (%)
Years needed to repay
0.2
0.1
debts
Interest coverage ratio

419.6

589.6

Year ended
March 2012

Year ended
March 2013

Year ended
March 2014

72.7

71.6

67.7

37.1

45.9

52.4

0.3

0.2

0.3

389.3

450.8

403.2

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 2014 and fiscal year ending
2015
The Company regards the returning of profits to shareholders as one of its key managerial measures, andmakes it a basic policy to continuously provide shareholders with stable returns with 30% consolidated payout
ratio, by improving and reinforcing its corporate structure and expanding competitive businesses while
securing the necessary internal reserves.
Year-end dividend of 100 yen per share (ordinary dividend 40 yen, extra dividend 60 yen) will be paid forthe fiscal year ended March 2014.
For the fiscal year ending March 2015, annual dividend per share is expected to be 150 yen per share,including interim dividend of 45 yen per share and commemorative (75th anniversary of the company’s
founding) dividend of 5 yen.
(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.
(iii) High dependence on certain business partners with which continuation of transactions is unsure
The Company imports and sells ventilators, pacemakers, defibrillators, heart catheters and other devices
and equipment. We strive to ensure that we can continue making transactions. If any problem arises that- 10 -

will make it impossible to continue stable transactions with the exporters, the operating results andfinancial 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 those equipments.
(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 the Company’s business performance and financial position.
(vi) 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 the Company’s business performance andfinancial position.
(vii) Important business relationships between the Company and its executives or shareholders withvoting rights
Basic policy on relations with related parties
Relationship with Atomic Sangyo Co., Ltd.
Fukuda Denshi’s shareholder Atomic Sangyo Co., Ltd. holds 16.08% of the Company’s voting rights (asof March 31st, 2014). Kotaro Fukuda, director of the Company, and his close relatives own 100% of theshares in Atomic Sangyo.
Atomic Sangyo produces and sells electrocardiogram recording paper, and also engages in the businessof renting real estate. The Company purchases recording paper and accounting slips and rents offices from
Atomic Sangyo.
Decisions on the prices of recording paper and accounting slips are based on negotiations andconsideration of market prices, and payment terms are the same as those generally adopted in themarketplace.
Office rental contracts are based on actual transactions in nearby locations.

- 11 -

2. The Fukuda Denshi GroupThe Group consists of the company, 56 subsidiaries and 1 affiliates; the Fukuda Denshi Group is engaged
mainly in manufacturing, purchasing and sales of medical equipment, and conducts related logistics andservices 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; 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, accessories and parts for medical 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- 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
IVAC
Okusonic
Breath Technology Co., Ltd.
Japan Stent Technology Europe GmbH
Affiliated company not accounted of equity method
Fukuda Pulmo

Products*
Related party
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* Related party Atomic Sangyo Co., Ltd. manufactures recording paper for medical equipment and supplies it to
Fukuda Denshi’s other products and accessories segment.

- 13 -

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 theCompany targets consolidated “Net sales” of 112,000 million yen or more and consolidated “Ordinary incomeof 12,000 million yen or more in the fiscal year ending March 2017. Also, the Company 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
As its medium-term goal, the Group aims to contribute to the progress of an aging society by establishingbusiness strategy based on the customer-first principle and building a strong management structure with anefficient organizational operation management.
By continuously working on the Group’s issue and promoting innovation strategy based on the needs of themarket, we aim to support the community healthcare and improve the quality and efficiency of medical
services, leading us to further development.
The basic management strategies for the new three-year medium term business plan starting from the fiscal
year ending March 2015 are as follows:(i) Business strategies
Strategic investment to the field with high growth potential
Efficient and effective research and development by strengthening the cooperation between sales
department and development department
Promoting the expansion of businesses by domain; andImproving productivity with company-wide approach aiming for total optimization(ii) Sales strategies
Offering comprehensive support to acute care market and clinics; andStrengthening community-based support for homecare market;(iii) Improvement of the management system
To strengthen the corporate governance and compliance structure;
To revitalize the overall organization through personnel training and education for employees; andTo enhance the group management system.
(iv) Increase of the corporate value
To establish a stable earnings structure and return profits to shareholders; andContribute for the society through the development of electronic medical equipment, and environmental
issues.

- 14 -

(4) Issues to be addressed
In Japan, various medical system reforms have been carried out, including: the revision of official
reimbursement prices for medical treatment fees, drug prices and specific medical materials covered byinsurance and an increasing adoption of the comprehensive medical fee payment system, called diagnosis
procedure combination (DPC).
Given the above and possible future reforms, we expect our market environment to remain severe. Against
this backdrop, the Company will continue to strive to raise its corporate value, develop products that provide
differentiation from our rivals, strengthen the maintenance service and supplies sales businesses, makeinvestments for enhancing the sales system, and reduce costs to become more price competitive than our rival
manufacturers at home and abroad.
Furthermore, the Company will continuously strengthen and maintain its quality control and safety
management systems so that customers can use our products without anxiety, and improve the internal control
system to ensure managerial soundness and transparency.
(5) Other important managerial matters of the Company
The Board of Directors approved on the acquisition of Fukuda Denshi’s own shares under the Article 156 of
the Companies Act of Japan applied as mutatis mutandis stipulated under the Article 165(3) of the same Law
during its meeting held on July 31st, 2013, and as of August 1st, 2013, 1,566,354 common shares have beenacquired through a fixed price trading at the market of Tokyo Stock Exchange which amounted to 5,873
million yen.
As a result, the value of the “Treasury stock” was 14,721 million yen at the end of fiscal year under review.

- 15 -

4. Consolidated financial statements(1) Consolidated balance sheets(Million yen)Previous fiscal yearst
(as of March 31 , 2013)

Current fiscal yearst
(as of March 31 , 2014)

AssetsCurrent assets
Cash and deposits

24,201*3

Notes and accounts receivable-trade
Securities

26,96322,408*3

33,924

-

273

6,916

7,382

165

149

Raw materials and supplies

1,981

2,294

Deferred tax assets

2,130

2,268

Other

1,955

1,984

Allowance for doubtful accounts

(49)

(172)

64,26570,512

11,117

11,074

Accumulated depreciation and impairment loss

(5,625)(5,344)

Buildings and structures, net

5,491

5,729

Machinery, equipment and vehicles

928

1,053

Accumulated depreciation and impairment loss

(530)

(669)

Machinery, equipment and vehicles, net

397

383

26,17526,999(17,156)(17,911)

9,018

9,088

6,859

7,011

516

611

Accumulated depreciation and impairment loss

(260)

(346)

Lease assets, net

256

265

137

48

22,16022,526

2,408

3,826

Merchandise and finished goods
Work in process

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

Tools, furniture and fixtures
Accumulated depreciation and impairment loss
Tools, furniture and fixtures, net
Land
Lease assets

Construction in progress
Total property, plant and equipment
Intangible assets
Investments and other assets*1

Investment securities
Deferred tax assets

12,103
2,480- 16 -

*1

9,506
2,220

Previous fiscal yearst
(as of March 31 , 2013)

Current fiscal yearst
(as of March 31 , 2014)

Insurance funds

7,863

9,334

Other

3,374

2,866

Allowance for doubtful accounts

(10)

(50)

Total investments and other assets

25,812

23,87750,381

50,230114,646

120,743

Total noncurrent assets
Total assets- 17 -

(Million yen)Previous fiscal yearst
(as of March 31 , 2013)

Current fiscal yearst
(as of March 31 , 2014)

Liabilities
Current liabilities
Notes and accounts payable-trade16,19821,851

Short-term loans payable

1,850

1,850

88

78

Income taxes payable

2,594

3,211

Provision for bonuses

2,254

2,488

Provision for directors' bonuses

134

200

Provision for product warranties

411

354

Other

3,747

3,939

Total current liabilities

27,27933,973

1,038

1,098

223

242

2,858

-

217

167

-

2,581

946

956

5,285

5,047

32,56439,021

Capital stock

4,621

4,621

Capital surplus

10,047

10,047Retained earnings

75,15280,744

Treasury stock(8,847)(14,721)

Total shareholders' equity

80,97380,692

Valuation difference on available-for-sale securities

1,145

1,057

Foreign currency translation adjustment

(36)

(47)

Remeasurements of defined benefit plans

-

19

1,108

1,029

82,082

81,721

114,646

120,743

Lease obligations

Noncurrent liabilities
Long-term loans payable
Lease obligations
Provision for retirement benefits
Provision for directors' retirement benefits
Net defined benefit liability
Other
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- 18 -

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

Current fiscal year

stst

(April 1 , 2012 to March 31 , 2013)

Net salesst(April 1 , 2013 to March 31 , 2014)

96,239*1

Cost of sales
Gross profit

50,912

107,574*1

45,326*2,*3

Selling, general and administrative expenses
Operating income

35,08558,884
48,689*2,*3

36,906

10,24011,783

Interest income

7475

Dividends income

144

125

Foreign exchange gains

162

377

Compensation income

37

-

Other

203

178

Total non-operating income

621

756

Interest expenses

26

27

Equity in losses of affiliates

321

448

Loss on investments in partnership

66

18

Other

10

49

Total non-operating expenses

425

544

10,435

11,995Non-operating income

Non-operating expenses

Ordinary income
Extraordinary income
Gain on sales of noncurrent assets*4Gain on sales of investment securities

398

357

Subsidy income

116

67

Surrender value of insurance

70

55

Gain on step acquisitions

-

186

Other

-

7

587

785

Loss on sales of noncurrent assets

*5

0

*5

Impairment loss

*6

1

Total extraordinary income

2

*4

111

Extraordinary loss

*6

0
14

Loss on valuation of investment securities

-

232

Other

-

0

Total extraordinary losses

1

248

11,021

12,533

Income before income taxes and minority interests- 19 -

(Million yen)Previous fiscal yearst

Current fiscal yearst

(April 1 , 2012 to March 31 , 2013)

st

st(April 1 , 2013 to March 31 , 2014)

Income taxes-current

4,445

5,007

Income taxes-deferred

114

(15)

Total income taxes

4,559

4,992

Income before minority interests

6,462

7,540

Net income

6,462

7,540

- 20 -

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

Current fiscal yearst

(April 1 , 2012 to March 31 , 2013)

Income before minority interests

stst(April 1 , 2013 to March 31 , 2014)

6,462

7,540

504

(87)

Other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment

15*1

Total other comprehensive income

520

(11)
*1

(99)

Comprehensive income

6,982

7,441

Comprehensive income attributable toComprehensive income attributable to owners of
the parent

6,982

7,441

- 21 -

(3) Consolidated statements of changes in net assets
Previous fiscal year (April 1st, 2012 to March 31st, 2013)(Million yen)
Shareholders' equity

Capital stock
Balance at the beginning ofcurrent period
Changes of items during theperiod4,621

CapitalsurplusRetainedearnings

10,027

Treasury
stock

70,189(7,580)Total
shareholders'equity77,257

Dividends from surplus(1,495)(1,495)

Employees’ bonuses andwelfare funds

(4)

(4)

6,462

6,462

Net income
Purchase of treasury stock
Disposal of treasury stock
Net changes of items other thanshare holders’ equity
Total changes of items during theperiodBalance at the end of current
period19(1,438)(1,438)

171

191

-

19

4,962

(1,266)

3,716

4,621

10,04775,152(8,847)80,973

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at the beginning ofcurrent period
Changes of items during theperiodForeigncurrencytranslation
adjustment

640

(51)

Remeasurementsof defined
benefit plans

-

Total
accumulated
othercomprehensive
income588

Total net
assets

77,846

Dividends from surplus(1,495)

Employees’ bonuses andwelfare funds(4)

Net income

6,462

Purchase of treasury stock(1,438)

Disposal of treasury stock191

Net changes of items other thanshare holders’ equity
Total changes of items during theperiodBalance at the end of current
period

504

15

-

520

520

504

15

-

520

4,236

1,145

(36)

-

1,108

82,082- 22 -

Current fiscal year (April 1st, 2013 to March 31st, 2014)(Million yen)
Shareholders' equity

Capital stock
Balance at the beginning ofcurrent period
Changes of items during theperiodCapitalsurplus

4,621

Retainedearnings

10,047

Total
shareholders'equityTreasurystock

75,152(8,847)80,973

Dividends from surplus(1,940)(1,940)

Employees’ bonuses andwelfare funds

(7)

(7)

7,540

7,540

Net income
Purchase of treasury stock
Disposal of treasury stock
Net changes of items other thanshare holders’ equity
Total changes of items during theperiodBalance at the end of current
period0(5,874)(5,874)

0

0

-

0

5,592

(5,873)

(281)

4,621

10,04780,744(14,721)80,692

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at the beginning ofcurrent period
Changes of items during theperiodForeigncurrencytranslation
adjustment

1,145

(36)

Remeasurementsof defined
benefit plans

-

Total
accumulated
othercomprehensive
income1,108

Total net
assets82,082

Dividends from surplus(1,940)

Employees’ bonuses andwelfare funds(7)

Net income

7,540

Purchase of treasury stock(5,874)

Disposal of treasury stock0

Net changes of items other thanshare holders’ equity
Total changes of items during theperiodBalance at the end of current
period

(87)

(11)

19

(79)

(79)

(87)

(11)

19

(79)

(360)

1,057

(47)

19

1,029

81,721

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
st

st

st

(April 1 , 2012 to March 31 , 2013)

st(April 1 , 2013 to March 31 , 2014)

Net cash provided by (used in) operating activities
Income before income taxes and minority
interests

11,021

12,533

Depreciation and amortization

5,539

5,636

1

14

(18)

-

(2)

158

79

230

(5)

66

(72)

(57)

(59)

(2,858)

-

2,610

32

(50)

(218)

(201)

Interest expenses

26

27

Loss (gain) on sales of noncurrent assets

(1)

(110)

(398)

(357)

-

232

(70)

(55)

(116)

(67)

-

(186)

Equity in (earnings) losses of affiliates

321

448

Decrease (increase) in notes and accounts
receivable-trade(602)(6,836)

Decrease (increase) in inventories

(767)

(535)

910

4,735

(161)

194

Other, net

(223)

(241)

Subtotal

15,216

15,330Interest and dividends income received

201

199

Interest expenses paid

(27)

(27)

(3,190)(4,386)

Impairment loss
Increase (decrease) in allowance forinvestment loss
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 provision for
retirement benefits
Increase (decrease) in net defined benefit
liability
Increase (decrease) in provision for
directors' retirement benefits
Interest and dividends income

Loss (gain) on sales of investment
securities
Loss (gain) on valuation of investment
securities
Loss (gain) on cancellation of insurance
contract
Subsidy income
Loss (gain) on step acquisitions

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

Income taxes paid

- 24 -

(Million yen)
Current fiscal year

Previous fiscal year
st

st

st

(April 1 , 2012 to March 31 , 2013)

Net cash provided by (used in) operating
activities

st(April 1 , 2013 to March 31 , 2014)12,19911,115491

1,171(7,108)(4,345)(934)(1,025)(4,124)

(106)

2,500

1,893

(2,178)(1,977)

Proceeds from maturity of insurance funds

198

568

Purchase of investments in subsidiaries

(79)

-

Purchase of investments in subsidiaries
resulting in change in scope of
consolidation

-

(136)

Payments of loans receivable

(38)

(130)

Proceeds from compensation

116

67

Other, net

228

(330)

(10,929)(4,350)Net increase (decrease) in short-term loans
payable150-

Proceeds from long-term loans payable

295

60

(1,438)(5,874)191

0(1,498)(1,938)

(96)

(94)

(2,396)(7,845)

(48)

(40)

(1,174)(1,121)

22,635

21,461

Net cash provided by (used in) investing activities
Decrease (increase) in time deposits
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of short-term and long term
investment securities
Proceeds from sales of short-term and longterm investment securities
Purchase of insurance funds

Net cash provided by (used in) investing
activities
Net cash provided by (used in) financing activities

Purchase of treasury stock
Proceeds from sales of treasury stock
Cash dividends paid
Repayments of lease obligations
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
period*1

Cash and cash equivalents at end of period- 25 -

21,461*1

20,339(5) Notes to Consolidated Financial Statement(Notes regarding the assumption for going concern)
Not applicable(Basic significant matters regarding the preparation of consolidated financial statements)
1. Scope of consolidation(1) Number of consolidated subsidiaries: 49
Major consolidated subsidiaries are as follows:
Fukuda Life Tech Co., Ltd.
Fukuda Denshi Hokkaido Co., Ltd.
The newly-established Fukuda Life Tech Keiji Co., Ltd. is included within the scope of consolidated
accounts starting in the first quarter.
Conversely, former consolidated subsidiaries Fukuda Life Tech Niigata and Fukuda Life Tech Nagano
Co., Ltd. have been removed from the consolidated accounts starting in the first quarter following theirmerger with another consolidated subsidiary, Fukuda Life Tech Hokuriku Co., Ltd. , on April 1, 2013.
The trade name of the surviving entity of that merger, Fukuda Life Tech Hokuriku Co., Ltd. was changed
to Fukuda Life Tech Hokushinetsu Co., Ltd. on the date of the merger.
Japan Stent Technology Co., Ltd., an equity method affiliate, has been included in the scope of
consolidation starting in the third quarter after Fukuda Denshi acquired further shares and increased its
equity in that company.
(2) Names and other details of major unconsolidated subsidiaries
Of the subsidiaries, ME Times Co., Ltd., Fukushin Co., Ltd.and five (5) other companies were notincluded in the scope of consolidation, because their business sizes are small, and their “Total assets”,“Net sales”, ”Net income and loss” (amount corresponding to the owned interest), “Retained earnings”(amount corresponding 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
methodJapan Stent Technology Co., Ltd, an equity method affiliate, has been included in the scope of
consolidation starting in the third quarter after Fukuda Denshi acquired further shares and increased its
equity in that company, and therefore has been removed from the scope of equity-method accounting.
(2) Names and other details of unconsolidated subsidiaries and affiliates that are not accounted for by equity
methodThe seven (7) unconsolidated subsidiaries and the affiliate company Fukuda Pulmo Co., Ltd. had nomaterial effect on consolidated income and loss and “Retained earnings”, and they were not important as awhole in 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 31 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- 26 -

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.
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, 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:
4 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 Company 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.
Finance lease transactions that do not transfer ownership and for which the inception of the leasepredates March 31, 2008 continue to be accounted for in a similar manner with the ordinary rental
transactions.

- 27 -

(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.
(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.

- 28 -

(Changes in accounting policies)(Application of Accounting Standards for Retirement Benefits)
Fukuda Denshi has adopted the Accounting Standards for Retirement Benefits (standard no. 26 issued by the
Accounting Standards Board of Japan on May 17, 2012) and the Guidance on Accounting Standard for
Retirement Benefits (ASBJ application guidance no. 25; May 17, 2012) starting at the end of the current
consolidated fiscal year (excluding the main provision of Clause 35 of such standard and the main provision ofClause 67 of such guidance). As such, the company has changed the method by which it lists retirement
benefits in accounts; retirement benefit liabilities, which are calculated as retirement benefit obligations lessthe amount of pension assets, and unrecognized actuarial differences and unrecognized prior service costs areincluded as retirement benefit liabilities.
The company is complying with the transitional measures prescribed under Clause 37 of the AccountingStandards for Retirement Benefits regarding its application, and has adjusted the amount of accumulated
adjustments for retirement benefits under Accumulated other comprehensive income at the end of the current
fiscal year to reflect the effects of that change.
Consequently, 2,581 million yen in retirement benefit liabilities were listed in accounts as of the end of the
fiscal year. Accordingly, deferred tax assets decreased 8 million yen and accumulated other comprehensive
income increased 19 million yen.
Net assets per share increased 1.39 yen.
(Consolidated balance sheets)*1. Unconsolidated subsidiaries and affiliated companies:(Million yen)
Current fiscal year

Previous fiscal yearstst

(as of March 31 , 2013)

Investment securities(Stocks)(as of March 31 , 2014)

841

144

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

Previous fiscal yearstst

(as of March 31 , 2013)

Discount on export bills(as of March 31 , 2014)

38

49*3. Accounting for matured notes:
Accounting for matured notes is based on the date when the notes have been exchanged. In addition, since
the last day for the consolidated financial accounting fiscal year was a Bank holiday, the next amount of
matured notes are included in this Consolidated Balance Sheets.
(Million yen)
Current fiscal year

Previous fiscal yearstst

(as of March 31 , 2013)

Notes receivable-trade(as of March 31 , 2014)304- 29 --

(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 , 2012 to March 31 , 2013)

st(April 1 , 2013 to March 31 , 2014)

81

(63)

*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 , 2012 to March 31 , 2013)

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 , 2013 to March 31 , 2014)

12,386

12,876

3,278

3,715

39

30

918

823

922

1,055

134

200

*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 , 2012 to March 31 , 2013)

st(April 1 , 2013 to March 31 , 2014)

3,400

3,591

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

Previous fiscal year
st

st

st

(April 1 , 2012 to March 31 , 2013)

Machinery, equipment and vehicles
Tools, furniture and fixtures
Buildings
Land
Total

1

0

st

(April 1 , 2013 to March 31 , 2014)

2

9

0

0

-

89

-

11

2

111

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

Previous fiscal year
st

st

st

(April 1 , 2012 to March 31 , 2013)

Structures
Machinery, equipment and vehicles
Tools, furniture and fixtures
Total- 30 -st(April 1 , 2013 to March 31 , 2014)

0

-

0

0

0

0

0

0

*6. Impairment losses:
Previous fiscal year (April 1st, 2012 to March 31st, 2013)
The Group booked the following assets as “Impairment loss”.
Location of assets
Use of assets
Bunkyo-ku, Tokyo
Operational assets

Type of assets
Tools, furniture and fixtures

The Company 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 1 million yen), which were booked as “Extraordinary losses”.
These “Impairment losses” consist of the losses on “Tools, furniture and fixtures” of 1 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, 2013 to March 31st, 2014)
The Group booked the following assets as impairment loss.
Location of assets
Use of assets
Bunkyo-ku, Tokyo
Operational assets
Nasu, Tochigi Prefecture

Type of assets
Tools, furniture and fixtures

Idle assets

Land

The Company 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 14 million yen), which were booked as “Extraordinary losses”.
These “Impairment losses” consist of the losses on “Tools, furniture and fixtures” of 3 million yen and on“Land” of 11 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.

(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 , 2012 to March 31 , 2013)

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
Foreign currency translation adjustment：
Amount incurred in current fiscal year
Other comprehensive income- 31 -

stst(April 1 , 2013 to March 31 , 2014)

312

344

-

(303)

312

40

192

(128)

504

(87)

15

(11)

520

(99)

(Consolidated statements of changes in net assets)
Previous fiscal year (from April 1st, 2012 to March 31st, 2013)
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 forof shares forthe end of theprevious fiscal year
previous fiscal year
previous fiscal year
previous 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
3,591
607
80
4,119
(Note)
Total
3,591
607
80
4,119
Note: (i) As of March 31st, 2013, according to the purpose, the 50 thousand shares Trust & Custody Services
Bank, Ltd. owns, are included in the number of our “Treasury stock”.
(ii) The increase of 607 thousand shares in “Treasury stock” of common stock reflects the increase of
607 thousand shares of tender offer of “Treasury stock”, and 0 thousand shares owing to theacquisition of “Treasury stock”.
(iii) The decrease of 80 thousand shares in “Treasury stock” of common stock reflects the disposal by
third-party allotment.
2. Stock acquisition rights and treasury stock acquisition rights
Not applicable.
3. Dividends(1) Dividend payment amount(Resolution)

Type of shares

Total dividend
amount(million yen)

Dividends
per share(in yen)Record date

Effective dateOrdinary General
Meeting ofCommonMarch 31st,June 29th,
879
55
Shareholders held
stock
2012
2012
on June 28th, 2012
Board ofDirectors’ meeting
CommonSeptember
December 10th,
615
40
th
held on Octoberstock
30 , 20122012
31st, 2012
(Note): With the introduction of “Stock Benefit Trust (J-ESOP)”, the 50 thousand shares Trust & Custody
Services Bank, Ltd. owns are included in the number of our “Treasury stock”. According to theaccounting, 2 million yen are excluded from the total amount of dividend calculation.
(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)
Ordinary General
Meeting ofCommonRetained
March 31st,June 28th,
1,314
85
Shareholders held onstockearnings
2013
2013
June 27th, 2013- 32 -

(Note): With the introduction of “Stock Benefit Trust (J-ESOP)”, the 50 thousand shares which the Trust &Custody Services Bank, Ltd. owns are included in the number of our “Treasury stock”. According to theaccounting, 4 million yen are excluded from the total amount of dividend calculation.
Current fiscal year (from April 1st, 2013 to March 31st, 2014)
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
4,119
1,566
0
5,685
(Note)
Total
4,119
1,566
0
5,685
st
Note: (i) As of March 31 , 2014, according to the purpose, the 49 thousand shares which the Trust &Custody Services Bank, Ltd. owns are included in the number of our “Treasury stock”.
(ii) The increase of 1,566 thousand shares in “Treasury stock” of common stock reflects the increase of
1,566 thousand shares of tender offer of “Treasury stock”, and 0 thousand shares owing to theacquisition 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, and 0 thousand shares owing to the demand of additionalpurchase of “Treasury stock”.
2. Stock acquisition rights and treasury stock acquisition rights
Not applicable.
3. Dividends(1) Dividend payment amount(Resolution)

Type of shares

Total dividend
amount(million yen)

Dividends per
share(in yen)Record date

Effective date*1

Ordinary General
Meeting ofMarch 31st,June 28th,
Common stock
1,314
85
Shareholders held
2013
2013
on June 27th, 2013*2
Board of Directors’
September
December 9th,
meeting held on
Common stock
625
45
th
30 , 2013
2013
October 31st, 2013
(Note):*1: With the introduction of “Stock Benefit Trust (J-ESOP)”, the 50 thousand shares which the Trust &Custody Services Bank, Ltd. owns are included in the number of our “Treasury stock”. According to
the accounting, 4 million yen are excluded from the total amount of dividend calculation.
*2: With the introduction of “Stock Benefit Trust (J-ESOP)”, the 49 thousand shares which the Trust &Custody Services Bank, Ltd. owns are included in the number of our “Treasury stock”. According to theaccounting, 2 million yen are excluded from the total amount of dividend calculation.

- 33 -

(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)
Ordinary General
Meeting ofCommonRetained
March 31st,June 30th,
1,390
100
Shareholders held onstockearnings
2014
2014
June 27th, 2014
(Note): With the introduction of “Stock Benefit Trust (J-ESOP)”, the 49 thousand shares Trust & Custody
Services Bank, Ltd. owns are included in the number of our “Treasury stock”. According to theaccounting, 4 million yen are excluded from the total amount of dividend calculation.
(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 , 2012 to March 31 , 2013)

Cash and deposits
Time deposits with a deposit period ofover three months
Cash and cash equivalentsstst(April 1 , 2013 to March 31 , 2014)

24,201

22,408(2,739)(2,068)21,461

20,3392. 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 , 2012 to March 31 , 2013)

The amounts of assets and liabilities infinance lease transactions

st

st(April 1 , 2013 to March 31 , 2014)

188

103

(Lease transactions)Disclosure of lease transactions is omitted, as there is no significant necessity of such disclosure in thesummary report on financial results.
(Financial Products)
Disclosure of financial products is omitted, as there is no significant necessity of such disclosure in thesummary report on financial results.
(Securities)
Disclosure of securities is omitted, as there is no significant necessity of such disclosure in the summary
report on financial results.
(Derivative transactions)
Previous fiscal year (from April 1st, 2012 to March 31st, 2013) and current fiscal year (from April 1st, 2013 toMarch 31st, 2014):
There are no applicable items, as the Group did not use derivative transactions.

- 34 -

(Retirement benefits)
Disclosure of retirement benefits is omitted, as there is no significant necessity of such disclosure in thesummary report on financial results.
(Stock options, etc.)
Previous fiscal year (from April 1st, 2012 to March 31st, 2013):
Not applicable.
Current fiscal year (from April 1st, 2013 to March 31st, 2014):
Not applicable.
(Tax effect accounting)Disclosure of tax effect accounting is omitted, as there is no significant necessity of such disclosure in thesummary report on financial results.
(Real estates including rentals)
Previous fiscal year (from April 1st, 2012 to March 31st, 2013):
Total amounts of rent and other real estate matters are unimportant for the purposes of this document, andare therefore omitted.
Current fiscal year (from April 1st, 2013 to March 31st, 2014):
Total amounts of rent and other real estate matters are unimportant for the purposes of this document, andare therefore omitted.

(Segment information, etc)
a. Segment information
1. Reportable Segments
The reportable segments of the Fukuda Denshi Group are the constituent units of the Company forwhich 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 andevaluate the performance of the Group.
The Company has set up divisions for each product and service in the corporate headquarters, and eachof 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”.
3. Information regarding sales, gains (or losses), assets, liabilities and other amounts by reportablesegments- 35 -

(i) Previous fiscal yearstst（Million yen)(from April 1 , 2012 to March 31 , 2013)
Reporting Segments
Total

Adjustments*1

Consolidated
financialstatements*2

20,851

96,239-96,239

-

-

-

-

-

9,264

38,51920,851

96,239-96,239Physiologicaldiagnostic
equipment

Patient
monitoring
equipment

Medicaltreatment
equipment

Consumables
and otherproducts

27,602

9,264

38,519--27,602

Net sales
Sales toexternalcustomers
Internal sales
or transfers

Total
Segment profit
Segment
assetsOther items

2,658

771

4,941

1,868

10,240-

10,24015,2695,961

28,29911,95761,48853,158

114,646

Depreciation

409

137

4,683

309

5,539

-

5,539

Amortizationof goodwill

-

-

-

-

-

-

-

-

-

(321)

-

(321)

-

(321)

Amount ofinvestment toaffiliatedcompany
accounted ofequity method

-

-

681

-

681

-

681

Increase in
Property, plantand equipment
and intangible
assets

1,406

472

6,492

1,062

9,434

-

9,434

Equity inlosses ofaffiliates*1.

Adjustment of segment assets of 53,158 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, 2013 to March 31st, 2014)
Reporting Segments

Physiologicaldiagnostic
equipment

Patient
monitoring
equipment

Medicaltreatment
equipment

Consumables
and otherproducts

34,711

9,461

39,909--34,711（Million yen)
Consolidated
financialstatements
*2

Total

Adjustments*1

23,491

107,574-

107,574

-

-

-

-

-

9,461

39,90923,491

107,574-

107,574

Net sales
Sales toexternalcustomers
Internal sales
or transfers
Total

Segment profit
Segment
assetsOther items

3,218

934

5,333

2,297

11,783-

11,783

19,423

6,172

31,081

14,25270,93049,813

120,743

Depreciation

476

129

4,708

322

5,636

-

5,636

Amortizationof goodwill

-

-

45

-

45

-

45

-

-

(448)

-

(448)

-

(448)

-

-

-

-

-

-

-

504

137

4,932

341

5,915

-

5,915

Equity inlosses ofaffiliates
Amount ofinvestment toaffiliatedcompany
accounted ofequity method
Increase in
Property, plantand equipment
and intangible
assets*1.

Adjustment of segment assets of 49,813 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, 2012 to March 31st, 2013)
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.

- 37 -

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”.
(ii) Current fiscal year (from April 1st, 2013 to March 31st, 2014)
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, 2012 to March 31st, 2013)（Million yen)Physiologicaldiagnostic
equipment
Impairment
loss

Patient
monitoring
equipment

0

Medicaltreatment
equipment
0Consumables
and otherproducts
0

Elimination/ Corporate

0

Total
-

1

(ii) Current fiscal year (from April 1st, 2013 to March 31st, 2014)（Million yen)Physiologicaldiagnostic
equipment
Impairment
loss

1

Patient
monitoring
equipment

Medicaltreatment
equipment
0Consumables
and otherproducts
1

Elimination/ Corporate0d. Information about amortization and depreciation expense on goodwill of each reportable segment(i) Previous fiscal year (from April 1st, 2012 to March 31st, 2013)
Not applicable- 38 -

11

Total
14

(ii) Current fiscal year (from April 1st, 2013 to March 31st, 2014)（Million yen)Physiologicaldiagnostic
equipment
Depreciation ofcurrent period
Balance at theend of current
periodPatient
monitoring
equipment

Medicaltreatment
equipment

Consumables
and otherproducts

Elimination/ Corporate

Total

-

-

45

-

-

45

-

-

831

-

-

831

e. Information about gain on negative goodwill of each reportable segment(i) Previous fiscal year (from April 1st, 2012 to March 31st, 2013)
Not applicable(ii) Current fiscal year (from April 1st, 2013 to March 31st, 2014)
Not applicable(Transactions with related parties)
Disclosure of transactions with related parties is omitted, as there is no significant necessity of suchdisclosure in the summary report on financial results.
(Business combinations, etc)
Not applicable(Per share information)
Previous fiscal year

Current fiscal year

(April 1st, 2012 to March 31st, 2013)(April 1st, 2013 to March 31st, 2014)

Net assets per share

5,306.30 yen

5,878.16 yen

Net income per share

415.47 yen

515.60 yen

Not stated, as there is no potential
dilution.

Not stated, as there is no potential
dilution.

Fully diluted net income per
share

Note: The basis for calculation of net income per share:
Item

Previous fiscal year

Current fiscal year

(April 1st, 2012 to March 31st, 2013)(April 1st, 2013 to March 31st, 2014)

6,462

7,540

-

-

6,462

7,540

15,553

14,625

Net income (million yen)Amount not belonging toordinary shareholders (million
yen)
Net income in relation tocommon stock (million yen)
Average number of shares
during the fiscal year (1,000
shares)(Significant subsequent events)
Not applicable.

- 39 -

5. Non-consolidated financial statements(1) Balance sheets(Million yen)Previous fiscal yearst
(as of March 31 , 2013)

Current fiscal yearst
(as of March 31 , 2014)

AssetsCurrent assets
11,593

8,419

22

18

24,072

26,621

-

273

2,973

3,225

32

21

Raw materials and supplies

1,479

1,849

Advance payments-trade

214

385

Prepaid expenses

436

458

Deferred tax assets

735

748

1,935

1,875

Accounts receivable-other

541

343

Other

204

204

Allowance for doubtful accounts(1,072)(1,206)

Total current assets

43,16843,237

8,433

8,465

Accumulated depreciation(3,826)(4,080)

Buildings, net

4,607

4,384

489

504

Accumulated depreciation

(285)

(308)

Structures, net

203

196

181

181

Accumulated depreciation

(81)

(95)

Machinery and equipment, net

100

86

68

68

Accumulated depreciation

(43)

(50)

Vehicles, net

2518

24,372

25,056

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

Short-term loans receivable fromsubsidiaries and affiliates

Noncurrent assets
Property, plant and equipment
Buildings

Structures

Machinery and equipment

VehiclesTools, furniture and fixtures- 40 -

(Million yen)Previous fiscal yearst
(as of March 31 , 2013)

Current fiscal yearst
(as of March 31 , 2014)(15,670)(16,313)

8,701

8,742

5,691

5,827

83

111

(77)

(86)

6

24

137

48

19,474

19,329Patent rights-

3

Leasehold rights

5

5

731

2,849

1,226

-

302

302

2,265

3,161

Investment securities

11,275

9,362

Stocks of subsidiaries and affiliates

4,475

4,672

1

1

Investments in capital of subsidiaries
and affiliates

423

423

Long-term loans receivable

88

57

7

2

2,976

4,174

23

11

Deferred tax assets

1,827

1,602

Long-term time deposits

2,500

2,000

Insurance funds

7,644

9,115

Other

260

260

Allowance for doubtful accounts(762)(1,156)

Allowance for investment loss

(300)

-

Total investments and other assets

30,441

30,52752,18053,017

95,34996,255

Accumulated depreciation
Tools, furniture and fixtures, net
Land
Lease assets
Accumulated depreciation
Lease assets, net
Construction in progress
Total property, plant and equipment
Intangible assets

Software
Software in progress
Other
Total intangible assets
Investments and other assets

Investments in capital

Long-term loans receivable from
employees
Long-term loans receivable fromsubsidiaries and affiliates
Long-term prepaid expenses

Total noncurrent assets
Total asset- 41 -

(Million yen)Previous fiscal yearst
(as of March 31 , 2013)

Current fiscal yearst
(as of March 31 , 2014)

Liabilities
Current liabilities
Accounts payable-trade

12,918

14,111

Short-term loans payable

1,850

1,850

6

1

Accounts payable-other

2,467

2,259

Income taxes payable

1,585

1,833

Advances received

53

96

Deposits received

11,681

13,254

Provision for bonuses

885

1,053

Provision for directors' bonuses

53

64

Provision for product warranties

385

309

Other

22

111

31,90834,945

1,038

1,098

-

24

Provision for retirement benefits

1,132

1,011

Long-term accounts payable-other

819

819

-

0

2,989

2,955

34,89837,900

4,621

4,621

Legal capital surplus

8,946

8,946

Other capital surplus

1,100

1,101

Total capital surpluses

10,047

10,047

1,171

1,171

Reserve for business expansion

300

300

Reserve for advanced depreciation of
noncurrent assets

53

53

Lease obligations

Total current liabilities
Noncurrent liabilities
Long-term loans payable
Lease obligations

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

Retained earnings
Legal retained earnings
Other retained earnings- 42 -

(Million yen)Previous fiscal yearst
(as of March 31 , 2013)

Current fiscal yearst
(as of March 31 , 2014)

General reserve

37,50037,500Retained earnings brought forward

14,45918,32553,48457,350Treasury stock(8,847)(14,721)

Total shareholders' equity

59,30557,298

1,144

1,056

1,144

1,056

60,45058,355

95,34996,255

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- 43 -

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

Current fiscal year

st

st

st

(April 1 , 2012 to March 31 , 2013)(April 1 , 2013 to March 31 , 2014)

Net sales of finished goods

15,60917,401

Net sales of goods

33,34034,665

Other sales

10,688

11,782

Total net sales

59,63863,849Beginning finished goods

1,246

1,451

Cost of products manufactured

11,168

11,339

Total

12,415

12,790Finished goods transfer to other account

2,628

2,350

Ending finished goods

1,451

1,282

Cost of finished goods sold

8,335

9,157

Beginning goods

1,731

1,521

Cost of purchased goods

27,21629,488

Total

28,94731,01072

41Ending goods

1,521

2,196

Cost of goods sold

27,352

28,772Other cost

4,765

4,877

Total cost of sales

40,45342,807

19,18521,042Advertising expenses

626

623

Packing and transportation expenses

580

601

Service and repair expenses

632

598

Provision of allowance for doubtful
accounts

384

528

2,178

2,313

Bonuses

316

360

Provision for bonuses

617

783

Retirement benefit expenses

207

168

Provision for directors' bonuses

53

64

Commission fee

895

898

Net sales

Cost of sales

Goods transfer to other accountGross profit
Selling, general and administrative expenses

Salaries and allowances- 44 -

(Million yen)Previous fiscal yearst

Current fiscal year

st

st

st

(April 1 , 2012 to March 31 , 2013)(April 1 , 2013 to March 31 , 2014)

Insurance expenses

819

888

Rent expenses

233

243

3,333

3,320

636

742

Other

2,638

2,852

Total selling, general and administrative
expenses

14,154

14,989

5,031

6,053

Interest income

103

106

Dividends income

1,227

1,187

Real estate rent

320

350

Foreign exchange gains

232

324

Other

121

101

2,006

2,069

Interest expenses

75

85

Loss on investments in partnership

66

18

Commission for purchase of treasury
shares

1

15

Other

0

21

143

141

6,893

7,981

0

10

398

357

Reversal of allowance for investment loss-

300

Surrender value of insurance

70

55

Subsidy income

-

67

468

791

Loss on sales of noncurrent assets

0-

Impairment loss-

11

Loss on valuation of investment securities-

232

Research and development expenses
Depreciation

Operating income
Non-operating income

Total non-operating income
Non-operating expenses

Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of noncurrent assets
Gain on sales of investment securities

Total extraordinary income
Extraordinary loss

- 45 -

(Million yen)Previous fiscal yearst

Current fiscal year

st

st

st

(April 1 , 2012 to March 31 , 2013)(April 1 , 2013 to March 31 , 2014)

Total extraordinary losses

0243

Income before income taxes

7,361

8,529

Income taxes-current

2,330

2,640

Income taxes-deferred

226

82

Total income taxes

2,556

2,722

Net income

4,805

5,806

- 46 -

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

stst(from April 1 , 2012 to March 31 , 2013)(Million yen)
Shareholders' equity
Capital surplus

Retained earnings
Other retained earnings

Capital
stock

Legal
capitalsurplus

Othercapitalsurplus

4,621

8,946

1,081

Total
Legal
capitalretained
surpluseearningssReserveforbusiness
expansion

Reserveforadvanced
Generaldepreciat
reserve
ion ofnoncurrent assets

Retainedearnings
brought
forwardTotal
retainedearnings

11,14850,173

Dividends from surplus(1,495)(1,495)

Net income

4,805

4,805

Balance at the beginning ofcurrent period
Changes of items during theperiod10,027

1,171

300

53

37,500Purchase of treasury stock
Disposal of treasury stock

19

19

Net changes of items otherthan shareholders' equity
Total changes of items
during the period
Balance at the end of current
period

－

－

19

19

－

－

－

－

3,310

3,310

4,621

8,946

1,100

10,047

1,171

300

53

37,50014,45953,484

Valuation and translation
adjustments

Shareholders' equity

Balance at the beginning ofcurrent period
Changes of items during theperiodTreasury
stock

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

Total valuationand translation
adjustments

Total net assets(7,580)57,241639

639

57,881Dividends from surplus
Net income(1,495)(1,495)

4,805

4,805

Purchase of treasury stock(1,438)(1,438)(1,438)

Disposal of treasury stock

171

191

191

Net changes of items otherthan shareholders' equity
Total changes of items
during the period
Balance at the end of current
period

504

504

504

(1,266)

2,063

504

504

2,568

(8,847)59,305

1,144

1,144

60,450- 47 -

(ii) Current fiscal year

stst(from April 1 , 2013 to March 31 , 2014)(Million yen)
Shareholders' equity
Capital surplus

Retained earnings
Other retained earnings

Capital
stock

Legal
capitalsurplus

Othercapitalsurplus

4,621

8,946

1,100

Total
Legal
capitalretained
surpluseearningssReserveforbusiness
expansion

Reserveforadvanced
Generaldepreciat
reserve
ion ofnoncurrent assets

Retainedearnings
brought
forwardTotal
retainedearnings

14,45953,484

Dividends from surplus(1,940)(1,940)Net income

5,806

5,806

Balance at the beginning ofcurrent period
Changes of items during theperiod

10,047

1,171

300

53

37,500Purchase of treasury stock
Disposal of treasury stock00

Net changes of items otherthan shareholders' equity
Total changes of items
during the period
Balance at the end of current
period

－

－

0

0

－

－

－

－

3,866

3,866

4,621

8,946

1,101

10,047

1,171

300

53

37,50018,32557,350

Valuation and translation
adjustments

Shareholders' equity

Balance at the beginning ofcurrent period
Changes of items during theperiodTreasury
stock

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

Total valuationand translation
adjustments

Total net assets(8,847)59,305

1,144

1,144

60,450

Dividends from surplus
Net income(1,940)(1,940)

5,806

5,806

Purchase of treasury stock(5,874)(5,874)(5,874)

Disposal of treasury stock

0

0

0

Net changes of items otherthan shareholders' equity
Total changes of items
during the period
Balance at the end of current
period

(87)

(87)

(87)

(5,873)(2,007)

(87)

(87)

(2,095)(14,721)57,298

1,056

1,056

58,355- 48 -

(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 securities(1) Held-to-Maturity Securities- Amortized cost method (straight-line method)(2) Shares of subsidiaries and affiliates- Stated at cost based on the moving average method(3) 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 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 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
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.
3. 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, 1998 were depreciated using the straight-line method.
In addition, the lifetime are as follows:
Buildings:
3 to 50 years
Structures:
10 to 60 years
Machinery and equipment:
8 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 by the straight-line method with the estimated rental period (four years) as adepreciation year.

- 49 -

(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 Company 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.
4. 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 specific loans or
receivables, for which we have concerns regarding their collectability, are calculated by assessing thepossibility 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
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.

- 50 -

(6) Allowance for investment loss
In view of the financial position of subsidiaries, the Company recorded an allowance for investment
loss in preparation for any loss expected to be incurred by investing in subsidiaries.

5. Other important matters for preparation of financial statements(i) 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.
(ii)Accounting treatment of consumption tax, and other taxes, etc.
The Consumption tax and other taxes, etc. are excluded from profits and losses.
(Changes in the presentation)(Profit and loss statement)“Commission for purchase of treasury stock”, which was listed under “Other” of “Non-operating
expenses” in last year’s accounts, is listed as a separate line this year because the amount thereof
exceeded 10% of total “Non-operating expenses”. The previous business year’s financial statements
have been revised to reflect this reclassification.
Consequently, 1 million yen listed under “Other” of “Non-operating expenses” in the previous year’s
statement of income has been re-classified into two lines: “Commission for purchase of treasury stock”,
which totals 1 million yen; and “Others”, which total 0 million yen.
6. Others(1)Changes of directors(i) Representative Director
Not applicable(ii) Other directors
・New Director candidates
Director: Mr. Masaaki Sugiyama (Office of the president)*Mr. Masaaki Sugiyama is an outside Director as stipulated in article 2(15) of the Companies
Act.
・Directors to retire
Senior Managing Director: Mr. Junzo Fujiwara (General Manager of Office of the President)
Managing Director: Mr. Yuichiro Tani (General Manager of System Solution Division)
Director: Yukio Nakagawa (General Manager of Production Head Office)・Effective from
June 27th, 2014

*This English translation is for reference purposes only. The original Japanese version will prevail as theofficial authoritative version.

- 51 -