Summary Report on Financial Results for Fiscal Year Ended March 2015
(Japan GAAP)May 15th, 2015
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: June 26th, 2015
Scheduled date for commencement of dividend payment:
June 29th, 2015
Scheduled date for filing the securities report:
June 26th, 2015
Supplementary material development:
Yes
Financial results meeting: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 2015 (April 1st, 2014 through March 31st, 2015)(1) Consolidated operating results(% represent increases or decreases from the previous year)
Net sales
millionyen
Year ended
108,269
March 2015
Year ended
107,574
March 2014
(Note)Comprehensive income%

Operating income
million%yen

Ordinary income
million%yen

Net income
millionyen

0.6

10,303(12.8)

11,371

(5.4)

7,119

(5.8)

11.8

11,811

15.2

12,023

15.1

7,559

16.8

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

Year ended
March 2015
Year ended
March 2014

Net income per
share

Fully diluted net
income per
share

yen

yen

Fiscal year ended March 2014: 7,460 million yen / 6.7 %Ratio of net
income toshareholders’equity%%Ratio ofoperatingincome to net
sales%

Ratio ofordinary income
to total assets

512.10

-

8.3

9.3

9.5

516.89

-

9.2

10.2

11.0

(Reference) Profit or loss on equity method investments:
Fiscal year ended March 2015: - million yen
Fiscal year ended March 2014: (448) million yen(2) Consolidated financial situation
Total assets
Year ended
March 2015
Year ended
March 2014%

Shareholders’equity ratio

Net assets

Net assets
per share

million yen

million yen%

yen

124,582

88,99171.4

6,401.07

120,730

81,736

67.7

5,879.25(Reference) Shareholders’ equity:
Fiscal year ended March 2015: 88,991 million yen

Fiscal year ended March 2014: 81,736 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

12,851(6,592)(2,326)24,18911,122(4,350)(7,852)

20,339Year ended
March 2015
Year ended
March 2014
2. Dividends
End ofthefirstquarteryenYear ended
March 2014
Year ended
March 2015
Year ending
March 2016
(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

%

%

-

45.00

-

100.00145.00

2,015

28.1

2.6

-

50.00

-

100.00150.00

2,085

29.3

2.4

-

60.00

-

90.00

150.0028.3(Note)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 ended March 2015; ordinary dividend 40.00 yen, extra dividend 5.00 yen,commemorative dividend 5.00 yen
The detail of year-end dividend of Year ended March 2015; ordinary dividend 40.00 yen, extra dividend 60.00 yen
The detail of second quarter dividend of Year ending March 2016 (Forecast); ordinary dividend 40.00 yen, extra dividend
20.00 yen
The detail of year-end dividend of Year ending March 2016 (Forecast); ordinary dividend 40.00 yen, extra dividend 50.00
yen

3. Forecast of consolidated financial results for fiscal year ending March 2016 (April 1st, 2015 through March
31st, 2016)(% represent increases or decreases from the previous year)

millionyen%

millionyen%

millionyen%

millionyen%Netincomeper shareyen

109,000

0.7

12,00016.5

12,000

5.5

7,380

3.7

530.84

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-

※

Notes
(1) Changes in significant subsidiaries during the current fiscal year: No(2) Changes in accounting policies and procedures(i) Changes in accounting policies associated with revision of accounting standards: Yes(ii) Changes other than (i) above: None(iii) Changes in accounting projections: None(iv) Restatement: None
(Note)For details, please refer to “Change in accounting policies” on page 26.

(3) Number of outstanding shares (common stock)(i) Number of outstanding shares at the year-end (including “Treasury stock”)
Fiscal year ended March 2015: 19,588,000 sharesFiscal year ended March 2014: 19,588,000 shares(ii) Number of shares of treasury stock at the year-end:
Fiscal year ended March 2015: 5,685,418 sharesFiscal year ended March 2014: 5,685,382 shares(ⅲ) Average number of shares during the period
Fiscal year ended March 2015: 13,902,639 sharesFiscal year ended March 2014: 14,625,522 shares(Reference) Summary of non-consolidated financial results
Non-consolidated financial results for fiscal year ended March 2015 (April 1st, 2014 through March 31st,2015)(1) Non-consolidated operating results(% represent increases or decreases from the previous year)
Net sales
millionyen
Year ended
March 2015
Year ended
March 2014%

Ordinary income
million%yen

Net income
millionyen%

63,284

(0.9)

6,027

(0.6)

8,751

9.5

5,794

(0.3)

63,849

7.1

6,062

20.4

7,990

15.8

5,813

20.9

yen

Fully diluted net
income per shareyen

416.78-397.48-Net income per share
Year ended
March 2015
Year ended
March 2014

Operating income
million%yen-3-

(2) Non-consolidated financial position
Total assets

Net assets

Shareholders’ equity
ratio%

Net assets per share

million yen
million yen
yenYear ended
99,53563,33963.6
4,555.95
March 2015
Year ended
96,25258,35460.6
4,197.37
March 2014
(Reference) Shareholders’ equity:
Fiscal year ended March 2015: 63,339 million yen
Fiscal year ended March 2014: 58,354 million yen* Status of Auditing Processes
At the time of disclosure of this report, review procedures for the consolidated financial statements pursuant
to the Financial Instruments and Exchange Law had not been completed.
* Explanation about the appropriate use of the forecasts of financial results, and other noteworthy matters
1. The forecasted financial results described above are based on information available at the time ofannouncement. Actual results may differ from the results projected and presented hereby for a variety ofreasons.
2. With respect to the preconditions for the forecast of financial results, please refer to “(1) Analysis ofoperation results” under the “1. Operating results & financial situation" section on page 7.
3. As the announcement of “Fukuda Denshi Announces that it Makes Atomic Sangyo its Wholly-owned
Subsidiary through Share Exchange and Change of Largest Shareholder”, we Fukuda Denshi has resolved to
conduct a share exchange at the meeting of board of directors held on May 15th, 2015, with Fukuda Denshi
as the wholly-owning parent company and Atomic Sangyo Co., Ltd. as a wholly-owned subsidiary, and that
Fukuda Denshi concluded a share exchange agreement with Atomic Sangyo today. But the Share Exchange
is subject to approval for the Share Exchange Agreement by the general meeting of each respective
shareholders of Fukuda Denshi and Atomic Sangyo scheduled on June 26th, the influence of this shareexchange is not considered to above mentioned “2. Dividends” forecast for fiscal year ending March 2016,
and “3. Forecast of consolidated financial results for fiscal year ending March 2016”.

-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 2015 andfiscal year ending 2016 --------------------------------------------------------------------------------

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

2. The Fukuda Denshi Group3. Management policy--------------------------------------------------------------------------------------------------------------------------------------------------------------(1) Basic policies for corporate management

1214-----------------------------------------------------------

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

14(3) Medium- to long-term management strategies and issues to be addressed ----------------------

14(4) Basic policy on the relation with the related party

15(2) Targeted management indices-----------------------------------------------(5) Other important managerial matters of the Company -----------------------------------------------

15

4. Basic policy on the selection of accounting standards -------------------------------------------------

15

5. 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(4) Consolidated statements of cash flows ----------------------------------------------------------------

24(5) Notes to Consolidated Financial Statement -----------------------------------------------------------

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

26(Change in accounting policies)26---------------------------------------------------------------------------(Basic significant matters regarding the preparation of consolidated financial statements)------

26(Consolidated balance sheets) -----------------------------------------------------------------------------

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

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

32(Consolidated statements of cash flows) -----------------------------------------------------------------

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

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

34(Securities) ---------------------------------------------------------------------------------------------------

34(Derivative transactions) -----------------------------------------------------------------------------------

34

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(Retirement benefits) ---------------------------------------------------------------------------------------

34(Stock options, etc.) -----------------------------------------------------------------------------------------

35(Tax effect accounting)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)------------------------------------------------------------------------

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

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

41-----------------------------------------------------------------------------------------

41(2) Statements of income---------------------------------------------------------------------------------

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

46(4) Notes to Non-consolidated Financial Statement-----------------------------------------------------

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

48(Change in accounting policies)----------------------------------------------------------------------

48(Significant accounting policies)---------------------------------------------------------------------

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

51

7. Others(1) Changes of directors---------------------------------------------------------------------------------

-6-

51

1. Operating results & financial situation(1) Analysis of operation results(i) Overview of the business for the current consolidated fiscal year

Net sales(million yen)
Operating income(million yen)
Ordinary income(million yen)
Net income(million yen)
Net income per share(yen)Year ended
March 2014

Year ended
March 2015

AmountAmountComparison with the previous year
Rate of change(%)

Change107,574

108,269695

0.6

11,811

10,303(1,508)(12.8)

12,023

11,371

(651)

(5.4)

7,559

7,119

(440)

(5.8)

516.89512.10(4.79)(0.9)

During the fiscal year ended March 2015, while the Japanese economy stayed on the recovery track thanks
to economic and financial measures, with continuous improvements in corporate earnings and employment
conditions as well as solid share prices, there was also a perceptible drop-off in spending in response to the risein the consumption tax rate.
The medical equipment industry was once again affected by the revision of medical treatment fees in
FY2014, which seek to establish a framework to provide healthcare services that meet the needs of aging
society, using on challenges such as the differentiation and strengthening of medical institutions’ functions,encouraging teamwork throughout Japan’s medical network, and expanding home-based healthcare services.
Medical institutions face continuous demands for efficient, high-quality healthcare
As a result, the Group posted consolidated “Net sales” of 108,269 million yen (up 0.6% year-on-year basis)for this consolidated fiscal year. With regard to incomes, the” Selling, general and administrative expenses”
such as “Selling expenses” and “Research and development expenses” and others have increased, consolidated“Operating income” totaled 10,303 million yen (down 12.8% year-on-year basis) , consolidated “Ordinary
income” totaled 11,371 million yen (down 5.4% year-on-year basis) and the consolidated “Net income” totaled
7,119 million yen (down 5.8% on a year-on-year basis).
(ii) Overview of each segment for the current consolidated fiscal year
Business segment

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

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

Year ended March 2014

Year ended March 2015

Amount(millionyen)

Ratio (%)

Amount(millionyen)

Ratio (%)

34,711

32.3

32,66130.2(2,050)

(5.9)

9,461

8.8

9,526

8.8

64

0.7

39,90937.1

42,201

39.0

2,291

5.7

23,491

21.8

23,880

22.0

388

1.7

107,574100.0

108,269

100.0

695

0.6

A. Physiological diagnostic equipment segment
Consolidated “Net sales” of electrocardiographs, vascular screening systems, and blood cell counterswere 32,661 million yen (down 5.9% year-on-year basis).

-7-

B. Patient monitoring equipment segment
Consolidated “Net sales” of patient monitoring equipment were 9,526 million yen (up 0.7%
year-on-year basis).
C. Medical treatment equipment segment
The business of renting medical equipment for home treatment and sales of pacemakers and AEDs
increased.
As a result, consolidated “Net sales” were 42,201 million yen (up 5.7% 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
23,880 million yen (up 1.7% year-on-year basis).
(iii) Outlook for fiscal year ending March 2016

Net sales(million yen)
Operating income(million yen)
Ordinary income(million yen)

Year ended
March 2015

Year ending
March 2016

AmountAmountComparison with the previous year
Rate of change(%)

Change108,269

109,000730

0.7

10,303

12,000

1,696

16.5

11,371

12,000628

5.5

Net income
7,119
7,380
260
3.7
(million yen)
Net income per share
512.10530.84
18.74
3.7
(yen)
Gradual economic recovery and companies’ earnings and consumer spending are expected domestically. 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 109,000 million yen, consolidated “Operating income” of
12,000 million yen, consolidated “Ordinary income” of 12,000 million yen, and consolidated “Net income” of
7,380 million yen for the fiscal year ending March 2016.
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 3,851 million yen from the end of the previous fiscal year to reach 124,582 million
yen. The main factors are the increase of 3,317 million yen in “Cash and deposits” and 1,856 million yen in“Investment securities”, despite a decrease of 1,795 million yen in “Deferred tax assets” and 1,226 million
yen in “Notes and accounts receivable-trade”.
“Total liabilities” decreased 3,403 million yen from the end of the previous fiscal year to reach 35,590
million yen. The main factors are the increase of 769 million yen in “Notes and accounts payable-trade”,
despite a decrease of 1,998 million yen in “Net defined benefit liability” and 1,378 million yen in “Income
taxes payable” and 1,098 million yen in ”Long-term loans payable”.
“Net assets” increased 7,254 million yen from the end of the previous fiscal year to reach 88,991 million
yen. The main factors are the increase of 5,608 million yen in “Retained earnings” and 1,106 million yen in“Valuation difference on available-for-sale securities” at the end of current period, despite the decrease of
104 million yen in “Foreign currency translation adjustment”.
(ii) Consolidated cash flows
Year ended March
2014
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 March
2015

Change11,122

12,851

1,729(4,350)(6,592)(2,241)(7,852)(2,326)

5,525

(40)

(81)

(41)

(1,121)

3,850

4,971

20,33924,1893,850(Cash flows from operating activities)
In the consolidated fiscal year, the “Cash flows from operating activities” were 12,851 million yen, up
1,729 million yen from the previous year. Including “Income before income taxes” of 11,996 million yen,
“Depreciation” of 6,161 million yen and “Increase in notes and accounts receivable-trade” of 1,321 million
yen.
(Cash flows from investing activities)“The cash flows from investing activities” were minus 6,592 million yen, down 2,241 million yen fromthe previous year. Including purchase of “Property, plant and equipment” amounted to 6,718 million yen and“Purchase of insurance funds” amount of 1,952 million yen.
(Cash flows from financing activities)“The cash flows from financing activities” were minus 2,326 million yen, up 5,525 million yen from theprevious year, mainly because of the “Cash dividends paid” of 2,090 million yen.
As a result, “Cash and cash equivalents at the end of the fiscal year” was 24,189 million yen, up 3,850
million yen compared to the end of the previous fiscal year.

-9-(Reference) Trends in cash flow indicators
Year ended
March 2011

Year ended
March 2012

Year ended
March 2013

Year ended
March 2014

Year ended
March 2015

Shareholders’ equity
ratio (%)
Market value-based
shareholders’ equity
ratio (%)
Years needed to repay
debts

73.4

72.7

71.6

67.7

71.4

42.8

37.1

45.9

52.5

75.5

0.1

0.3

0.2

0.3

0.1

Interest coverage ratio

589.6

389.3

450.9

403.4

461.7

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 2015 and fiscal year ending
2016
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 reinvesting profits in order to generate sustainable growth while maintaining an appropriate level ofretained earnings.
Year-end dividend of 100 yen per share will be paid for the fiscal year ended March 2015. As a result, annual
dividend is 150 yen per share, including interim dividend of 50 yen per share.
For the fiscal year ending March 2016, annual dividend per share is expected to be 150 yen per share(interim dividend of 60 yen per share and year-end dividend of 90 yen per share).
(4) Business risks(i) Effect of medical administration
The Japanese Government has been pushing forward with its policies of improving the quality of
medical care and curtailing the medical costs, and the remuneration for medical services, and the official
reimbursement prices for drugs and specific insurance medical materials are revised every two years.
Changes in the governmental health care policies may lead to intensified competition within the market
and lowered sales prices, thus adversely affecting the operating results and financial standing of the Group.
(ii) Legal regulations
The manufacture and sales of medical equipment are subject to regulations prescribed in the
Pharmaceutical Affairs Law, and it may take a certain period of time for a new medical equipment to beinvestigated and finally approved for sale. In addition, some medical equipment requires clinical trials,
thus taking a long period of time before it is launched in the market.
If the current regulations are revised, new ones are introduced, or any other unpredictable regulatorychange is made in the future, it is likely that this will adversely affect the operating results and financial
standing of the Group.

- 10 -

(iii) High dependence on certain business partners with which continuation of transactions is unsure
The Group imports and sells ventilators, pacemakers, defibrillators, heart catheters and other devices
and equipment. If any problem arises that will make it impossible to continue stable transactions with theexporters, the operating results and financial standing of the Group will be adversely affected. To prevent
this, sufficient care has been taken not to depend too heavily on a few specific companies for the supply of
those equipment.
(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) Fluctuations in foreign exchange rates and others
The Group has subsidiaries in foreign countries and is procuring and importing products and raw
materials from overseas companies. In case, rapid fluctuations in foreign exchange rates could adversely
affect the Company’s business performance and financial position.
(vii) Impairment accounting
In case that “Impairment losses” is needed to book for the assets of the Group, it is possible that it could
adversely affect the Company’s business performance and financial position.
(viii) Effects to the group from tremendous disaster
The Group has domestic and oversea bases; if an earthquake, electric-power shortages or any otherincidents occurs, it is possible that it could adversely affect the Company’s business performance andfinancial position.

- 11 -

2. The Fukuda Denshi GroupThe Group consists of the company, 58 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; catheters which are used for heart andvascular treatment, and other equipment.
<Major companies involved>
Production: Fukuda Denshi Co., Ltd.; Fukuda Denshi Fine Tech Sendai Co., Ltd.
Purchase:
Fukuda Denshi Co., Ltd.
Sales:
Fukuda Denshi Co., Ltd.; Fukuda Life Tech Co., Ltd.; Fukuda Denshi Hokkaido and other sales
subsidiaries- Consumables and other products segment
Production, purchase and sales of recording paper, electrodes, accessories and parts for medical equipment<Major companies involved>
Production: Fukuda Denshi Co., Ltd.; Fukuda Denshi Fine Tech Sendai Co., Ltd.
Purchase:
Fukuda Denshi Co., Ltd.
Sales:
Fukuda Denshi Co., Ltd.; Fukuda Life Tech Co., Ltd.; Fukuda Denshi Hokkaido and other sales
subsidiaries- 12 -

Diagram of the Group’s business structure

Customers
Japan

Overseas
Products andmerchandise

Products andmerchandise

Consolidated subsidiary
Fukuda Denshi USA,Inc.

RentalConsolidated
subsidiary
Fukuda Denshi
Switzerland AG

Domestic warehousemanagement andpacking/shipping

Consolidated subsidiary
Fukuda Denshi
Technology Service

Consolidated subsidiaries
Fukuda Logistics
CenterProducts andmerchandise

Entrustment of
warehousemanagement andpacking/shipping

Parts

Supply of materials

Repairs in Japan

Products and merchandise

Consolidated
subsidiary
Fukuda Life
Tech Co.,
Ltd.

Consolidated subsidiaryBeijing Fukuda
Denshi Medical
Instruments Co., Ltd.

Repairs

Products andmerchandise

Products and merchandise

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

Fukuda Denshi
Medical treatment
equipment segment

Outsourcing of processing

Patient monitoring
equipment segment
Supply of materials

Outsourcing of processing

Physiological diagnostic
equipment segment
Supply of materials

Products and merchandise

Consolidated subsidiaries
Fukuda Denshi Hokkaido and other sales subsidiaries

Products

Consumables and otherproducts segment

Supply ofmaterials

Unconsolidated subsidiaries
ME Times
Miyagi Prefecture Medical Information ResearchCenterNiigata Medical Information Development Center
Okusonic
Breath Technology Co., Ltd.
Fukuda Neurotech Co.,Ltd.
Japan Stent Technology Europe GmbH

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
FukushinAffiliated company not accounted of equity method
Fukuda Pulmo* 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 113,000 million yen or more and consolidated “Ordinary incomeof 12,200 million yen or more in the fiscal year ending March 2018. 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 and issues to be addressed
The expansion of DPC (Diagnosis Procedure Combination) in Japan, combined with revisions of medical
treatment fees, drug prices, and official reimbursement amounts for specific insurance-covered treatment
materials, mean the outlook for our market remains severe. Nonetheless, we remain devoted to providing
customers with safe, secure products by:・ Maintaining rigorous quality control and safety management regimes;
・ Developing products that provide a clear difference between Fukuda Denshi Group and our competitors;
・ Investing in the upkeep of our sales framework; and・ Cutting costs in order to maintain a competitive advantage over competitors worldwide.
Over the mid-term, we will institute a business plan to keep abreast of the changes in medical markets as
populations get progressively older, and implement a steadfast foundation for our business so that we may
better pursue our goals more efficiently.
Strategic investment in growth segments and effective research and development will enable us to provide
more comprehensive solutions to medical institutions and bolster our ability to provide community-based
solutions in the home-care segment. Meanwhile, we will seek to reinforce our governance and compliancestructures, and reinvigorate our organization by developing our human resources. Through these combined
efforts, we aim to enhance the Fukuda Denshi Group’s business administration as a whole.
Our mission is to uphold medical care in the community and, to that end, we are committed to providing a
one-stop solutions incorporating “prevention, testing, treatment, observation, rehabilitation, and home-basedcare”. By providing value through those solutions to our customers, we seek to achieve sustainable growth.

- 14 -

(4) Basic policy on the relation with the related party
Fukuda Denshi’s shareholder Atomic Sangyo Co., Ltd. holds 16.08% of the Company’s voting rights (as ofMarch 31st, 2015). Kotaro Fukuda, Chairman & CEO of Fukuda Denshi, and his close relatives own 100% of
the voting rights of Atomic Sangyo.
Atomic Sangyo manufactures and sells recording paper for medical electronic devices and also engages inreal estate leasing business. The Group 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 and considerationof market prices, and payment terms are the same as those generally adopted in the marketplace.
Office rental contracts are based on actual transactions in nearby locations.
(5) Other important managerial matters of the Company
None
4. Basic policy on the selection of accounting standards
Fukuda Denshi decided to adopt the Japanese accounting standards for the time being, because the Fukuda
Denshi Group’s business is based chiefly in Japan. We will consider implementing the IFRS (International
Financial Reporting Standards) in an appropriate manner in light of the movement toward its adaption both athome and abroad.

- 15 -

5. Consolidated financial statements(1) Consolidated balance sheets(Million yen)Previous fiscal year
(as of March 31st, 2014)

Current fiscal year
(as of March 31st, 2015)

AssetsCurrent assets
Cash and deposits

22,40825,726

Notes and accounts receivable-trade33,92432,698

273

192

7,382

8,616

149

112

Raw materials and supplies

2,294

2,128

Deferred tax assets

2,268

1,770

Other

1,984

2,010

Allowance for doubtful accounts

(172)

(24)

Total current assets

70,512

73,232

11,074

11,173

Accumulated depreciation and impairment loss

(5,344)(5,732)

Buildings and structures, net

5,729

5,440

Machinery, equipment and vehicles

1,053

1,112

Accumulated depreciation and impairment loss

(669)

(795)

Machinery, equipment and vehicles, net

383

316

26,99928,013(17,911)(17,850)

9,088

10,163

7,011

7,493

611

860

Accumulated depreciation and impairment loss

(346)

(420)

Lease assets, net

265

439

48

242

22,52624,096

Securities
Merchandise and finished goods
Work in process

Noncurrent assets
Property, plant and equipment
Buildings and structures

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

Construction in progress
Total property, plant and equipment- 16 -

Previous fiscal year
(as of March 31st, 2014)
Intangible assets

Current fiscal year
(as of March 31st, 2015)

3,826

2,551

Investment securities

9,506

11,362

Deferred tax assets

2,208

910

Insurance funds

9,334

9,474

Other

2,866

2,966

Allowance for doubtful accounts

(50)

12

Total investments and other assets

23,86524,701

50,21851,349120,730

124,582

Investments and other assets

Total noncurrent assets
Total assets- 17 -

(Million yen)Previous fiscal year
(as of March 31st, 2014)

Current fiscal year
(as of March 31st, 2015)

Liabilities
Current liabilities
Notes and accounts payable-trade21,851

22,620

Short-term loans payable

1,850

1,850

78

132

Income taxes payable

3,211

1,832

Provision for bonuses

2,488

2,034

Provision for directors' bonuses

200

173

Provision for product warranties

354

370

Other

3,939

4,478

Total current liabilities

33,97333,493

1,098－

Lease obligations

242

384

Provision for directors' retirement benefits

167

192

2,547

548

964

971

5,019

2,097

38,99335,590Capital stock

4,621

4,621

Capital surplus

10,055

10,055Retained earnings

80,76086,369Treasury stock(14,729)(14,731)

Total shareholders' equity

80,70786,315

Valuation difference on available-for-sale securities

1,057

2,164

Foreign currency translation adjustment

(47)

(152)

Remeasurements of defined benefit plans

19

664

1,029

2,676

81,73688,991

120,730

124,582

Lease obligations

Noncurrent liabilities
Long-term loans payable

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 , 2013 to March 31 , 2014)

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

Net sales

107,574

108,269

Cost of sales

58,88459,966Gross profit

48,68948,302

Selling, general and administrative expenses

36,87837,999Operating income

11,811

10,303

Interest income

7566

Dividend income

125

140

Foreign exchange gains

377

647

-

19

Other

178

234

Total non-operating income

756

1,109

Interest expenses

27

27

Share of loss of entities accounted for using

448-

Loss on investments in partnership

18

-

Other

49

13

Total non-operating expenses

544

40

12,023

11,371Gain on sales of noncurrent assets

111

5Gain on sales of investment securities

357

301

Subsidy income

67

27

Surrender value of insurance

55

315

Gain on step acquisitions

186-

Gain on forgiveness of debts

-

960

Other

7

-

785

1,609

Non-operating income

Gain on investments in partnership

Non-operating expenses

equity method

Ordinary income
Extraordinary income

Total extraordinary income- 19 -

(Million yen)Previous fiscal yearst

Current fiscal year

stst

(April 1 , 2013 to March 31 , 2014)

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

Extraordinary losses
Loss on sales of noncurrent assets

0-

Impairment loss

14

66

Loss on valuation of investment securities

232-

Loss on business withdrawal

-

915

Other

0

2

248

985

Income before income taxes and minority interests

12,56011,996

Income taxes-current

5,007

4,062

Income taxes-deferred

6)

814

Total income taxes

5,001

4,876

Income before minority interests

7,559

7,119

Net income

7,559

7,119

Total extraordinary losses- 20 -

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

Current fiscal year

stst

(April 1 , 2013 to March 31 , 2014)

Income before minority interests

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

7,559

7,119

Valuation difference on available-for-salesecurities

(87)

1,106

Foreign currency translation adjustment

(11)

(104)

-

645

(99)

1,647

Comprehensive income

7,460

8,766

Comprehensive income attributable toComprehensive income attributable to owners of
the parent

7,460

8,766

Other comprehensive income

Remeasurements of defined benefit plans,
net of tax
Total other comprehensive income- 21 -

(3) Consolidated statements of changes in net assets
Previous fiscal year (April 1st, 2013 to March 31st, 2014)(Million yen)
Shareholders' equity

Capital stock
Balance at the beginning ofcurrent period
Cumulative effects of changes
in accounting policies
Restated balance

4,621

4,621

CapitalsurplusRetainedearnings

Total
shareholders'equityTreasurystock

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

8

3

(8)

3

10,05575,155(8,855)80,977

Changes of items during theperiodDividends from surplus(1,946)(1,946)

Employees’ bonuses andwelfare funds

(7)

(7)

7,559

7,559

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

5,604

(5,873)

(269)

4,621

10,05580,760(14,729)80,707

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at the beginning ofcurrent period
Cumulative effects of changes
in accounting policies
Restated balance

Foreigncurrencytranslation
adjustment

1,145

(36)

1,145

(36)

Remeasurementsof defined
benefit plans

-

-

Total
accumulated
othercomprehensive
incomeTotal net
assets

1,108

82,082

-

3

1,108

82,086

Changes of items during theperiodDividends from surplus(1,946)

Employees’ bonuses andwelfare funds(7)

Net income

7,559

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)

(349)

1,057

(47)

19

1,029

81,736- 22 -

Current fiscal year (April 1st, 2014 to March 31st, 2015)(Million yen)
Shareholders' equity

Capital stock
Balance at the beginning ofcurrent period
Cumulative effects of changes
in accounting policies
Restated balance

4,621

CapitalsurplusRetainedearnings

10,055

Total
shareholders'equityTreasury
stock

80,760(14,729)

591
4,621

10,05580,707591

81,351(14,729)

81,298Changes of items during theperiodDividends from surplus(2,092)(2,092)

Employees’ bonuses andwelfare funds

(8)

(8)

7,119

7,119

Net income
Purchase of treasury stock

(2)

(2)

Disposal of treasury stock00

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

-

-

5,017

(1)

5,016

4,621

10,05586,369(14,731)

86,315

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at the beginning ofcurrent period
Cumulative effects of changes
in accounting policies
Restated balance

Foreigncurrencytranslation
adjustment

1,057

(47)

1,057

(47)

Remeasurementsof defined
benefit plans

19

19

Total
accumulated
othercomprehensive
incomeTotal net
assets

1,029

81,736

-

591

1,029

82,328Changes of items during theperiodDividends from surplus(2,092)

Employees’ bonuses andwelfare funds(8)

Net income

7,119

Purchase of treasury stock(2)

Disposal of treasury stock0

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

1,106

(104)

645

1,647

1,647

1,106

(104)

645

1,647

6,663

2,164

(152)

664

2,676

88,991

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 , 2013 to March 31 , 2014)

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

Cash flows from operating activities
Income before income taxes and minority
interests

12,56011,996

Depreciation

5,636

6,161

Impairment loss

14

66

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

158

190)

230

454)

66

26)

57)

15

2,884)

-

2,610

293

50)

25

201)

207)

27

27

Loss (gain) on sales of noncurrent assets

110)

5)

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

357)

301)

232

-

55)

315)

Subsidy income

67)

27)

Loss (gain) on step acquisitions

186)

-

Share of (profit) loss of entities accounted
for using equity method

448-

Gain on forgiveness of debt

-

960)

Loss on withdrawal from business-

915

6,836)

1,321

Decrease (increase) in inventories

535)

913)

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

4,735

796

194

838

Other, net

236)

356)

Subtotal

15,337

18,112

Interest and dividend income
Interest expenses

Decrease (increase) in notes and accounts
receivable-trade- 24 -

(Million yen)
Current fiscal year

Previous fiscal year
st

st

st

(April 1 , 2013 to March 31 , 2014)

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

Interest and dividends income received

199

206

Interest expenses paid

27)

27)

Income taxes paid

4,386)

5,440)Net cash provided by (used in) operating
activities

11,122

12,851

Decrease (increase) in time deposits

1,171

532

Purchase of property, plant and equipment

4,345)(6,718)Purchase of intangible assets

1,025)

274)

106)

767)

1,893

838

1,977)

1,952)

Proceeds from maturity of insurance funds

568

2,132

Purchase of investments of subsidiaries-

20)

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

136)

-

Payments of loans receivable

130)

90)

Proceeds from compensation

67

27

330)

300)

4,350)

6,592)

Proceeds from long-term loans payable

60

2

Repayments of long-term loans payable

-

141)

5,874)

1)

0-

1,945)

2,090)

94)

96)

7,852)

2,326)

40)

81)

1,121)

3,850

21,461

20,33920,33924,189Net cash provided by (used in) investing activities

Purchase of short-term and long term
investment securities
Proceeds from sales of short-term and longterm investment securities
Purchase of insurance funds

Other, net
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
periodCash and cash equivalents at end of period- 25 -

(5) Notes to Consolidated Financial Statement(Notes regarding the assumption for going concern)
Not applicable(Change in accounting policies)(Application of Accounting Standards for Retirement Benefits)
Fukuda Denshi has applied the “Accounting Standard for Retirement Benefits” (Accounting Standards
Board of Japan(ASBJ) Statement No. 26 issued on May 17th, 2012, hereinafter, the “Accounting Standard for
Retirement Benefits”) and the “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance
No. 25 issued on March 26th, 2015, hereinafter, the “Retirement Benefits Guidance”) from the start of thecurrent fiscal year with regard to the provisions stipulated in the text from Item 35 of the AccountingStandard for Retirement Benefits and the text from Item 67 of the Retirement Benefits Guidance.
Accordingly, the Company reviewed the calculation method of retirement benefit liabilities and service costs,
changed the method of attribution period for estimated amount of retirement benefits from the fix-amount tothe benefit formula, and changed the method of determining the discount rate from a method using thediscount rate based on the average remaining service period of employees to a method using the weighted
average discount rate which are reflected the approximate number of years of payment and its amount ofeach year.
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 “Retained earnings”
at the start of this consolidated fiscal year to reflect the effects of that change.
Consequently, 892 million yen in “Retirement benefit liabilities” decreased at the start of this consolidated
fiscal year and “Retained earnings” increased 591 million yen.
The impact on profit and loss is minor.
(Application of Practical Solution on Transactions of Delivering the Company’s Own Stock to Employees,
etc., through Trusts)
Fukuda Denshi has adopted the “Practical Solution on Transactions of Delivering the Company’s Own
Stock to Employees, etc., through Trusts” (PITF No. 30 issued by the Accounting Standards Board of Japanon March 26th, 2015) at the start of this consolidated fiscal year ended March 31st, 2015. Accordingly, thecompany recognizes, at the time the company’s own stock is disposed to trust, the difference on disposal, andposts gain/loss on sales associated with the shares sold by the trust to an employee stock ownership plan,
dividends from the company for the shares held by the trust, and miscellaneous expenses concerning the trust
to liabilities on a net basis. This change in the accounting policy was applied retroactively, and consequently,
the consolidated financial statements for the previous fiscal year present the results after the retroactive
application.
The impact of retroactive application is minor.
(Basic significant matters regarding the preparation of consolidated financial statements)
1. Scope of consolidation(1) Number of consolidated subsidiaries: 50
Major consolidated subsidiaries are as follows:
Fukuda Life Tech Co., Ltd.
Fukuda Denshi Hokkaido Co., Ltd.
The newly-established Fukuda Life Tech Tokyo-Nishi Co., Ltd. is included within the scope of
consolidated accounts starting in the fourth quarter.

- 26 -

(2) Names and other details of major unconsolidated subsidiaries(8)Of the subsidiaries, ME Times Co., Ltd., Fukushin Co., Ltd. and six (6) other companies were notincluded in the scope of consolidation, because their business sizes are small, and their “Total assets”,“Net sales”, ”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
methodThe eight (8) unconsolidated subsidiaries and the affiliate company Fukuda Pulmo Co., Ltd. had nomaterial effect on consolidated income and loss(amount corresponding to the owned equity) and“Retained earnings”(amount corresponding to the owned equity), and they were not important as a wholein terms of material influence on the consolidated interim financial statements. Accordingly, we did not
apply equity method accounting to them.
3. Accounting period, etc. of consolidated subsidiaries
The accounts of consolidated subsidiaries Fukuda Denshi USA, Inc.; and Fukuda Denshi Switzerland AG
close on December 31st of each year. In the preparation of consolidated financial statements, consolidated
subsidiaries’ financial statements as of the said date were used, and with respect to significant transactions that
occurred between the said date and the consolidated book-closing, adjustments necessary for consolidation are
made.
4. Accounting standards(1) Valuation standards and methods for principle assets(i) Securities
Held-to-maturity securities;- Amortized cost method (straight-line method)
Other securities
Marketable securities;- Stated at fair value based on the market price as of the end of current fiscal year.
(Unrealized holding gains or losses are reported in a component of net assets, while the cost of
securities sold is calculated by the moving average method.)
Non-marketable securities;- Stated at cost based on the moving average method.
For investments in the investment enterprise limited Liability association and similar associations(deemed to be securities pursuant to Article 2, Paragraph 2 of the Financial Instruments andExchange Law), the net amount corresponding to the ownership percentage is used, based on themost recent financial statements available as of the reporting date and other material stipulated in
the partnership contract.
(ii) Inventories
The cost method (the amounts stated in the balance sheets are calculated by writing down the bookvalues based on lower profitability) is used as a valuation standard.
Merchandise and finished goods-Mainly stated at cost determined by the first-in, first-out method.
Work in process-Mainly stated at cost based on the specific cost method.
Raw materials-Mainly stated at cost based on the gross average method.
Supplies-Stated at cost based on the last purchase price method.

- 27 -

(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 1st, 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.
(3) Basis for provision of allowances(i) Allowance for doubtful accounts
To prepare for losses incurred by bad debts, the amount of potential loss is calculated by using thehistorical loss ratio in the case of general loans or receivables. Potential loss for specific loans or
receivables, for which we have concerns regarding their collectability, is calculated by assessing thepossibility of collection for each individual account.
(ii) Provision for bonuses
To prepare for the payment of bonuses to employees, an amount corresponding to current fiscal year’s
portion of estimated bonus payments was reserved.
(iii) Provision for directors' bonuses
To prepare for the payment of bonuses to directors and corporate auditors, an amount corresponding tocurrent fiscal year’s portion of estimated bonus payments was reserved.
(iv) Provision for directors' retirement benefits
To prepare for the payment of retirement benefits to directors and corporate auditors, some consolidated
subsidiaries reserve the estimated amount to be paid at the end of the fiscal year, in accordance with theinternal regulations.
(v) Provision for product warranties
To prepare for the expenses incurred by the free repair to be implemented after the delivery of the
products, estimated amount of the repair expenses was reserved on the basis of the estimated proportionof such expenses to net sales and the estimated amount of such expenses for individual products.

- 28 -

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

Previous fiscal yearstst

(as of March 31 , 2014)

Investment securities(Stocks)(as of March 31 , 2015)

141

161

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

Previous fiscal yearstst

(as of March 31 , 2014)

Discount on notes receivable - trade
Discount on export bills- 29 -(as of March 31 , 2015)

-

480

49

102

(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)
Current fiscal year

Previous fiscal year
st

st

st

(April 1 , 2013 to March 31 , 2014)

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

(63)

(182)

*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 , 2013 to March 31 , 2014)

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 , 2014 to March 31 , 2015)

12,876

13,206

3,715

3,042

30

39

797

1,329

1,055

1,410

200

173

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

Previous fiscal year
st

st

st

(April 1 , 2013 to March 31 , 2014)

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

3,591

4,148

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

Previous fiscal year
st

st

st

(April 1 , 2013 to March 31 , 2014)

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

st

(April 1 , 2014 to March 31 , 2015)

89

-

9

5

0

0

11

-

111

5

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

Previous fiscal year
st

st

st

(April 1 , 2013 to March 31 , 2014)

Machinery, equipment and vehicles
Tools, furniture and fixtures
Total- 30 -st(April 1 , 2014 to March 31 , 2015)

0

-

0

-

0

-

*6. Impairment losses:
Previous fiscal year (April 1st, 2013 to March 31st, 2014)
The Group booked the following assets as “Impairment loss”.
Location of assets
Use of assets
Type of assets
Bunkyo-ku, Tokyo
Operational assets
Tools, furniture and fixtures
Nasu, Tochigi Prefecture
Idle assets
Land
The Company mainly groups its operations by business segment, and consolidated subsidiaries form theirgrouping with each company or office as one unit. “Impairment losses” on “Leased real estate” and “Idleassets” are recognized separately.
Because of a decrease in cash flows caused by a declined “Operating income” and a fall of the market
price, we have written down the book values of the above assets to recoverable values. These write-offs
have resulted in “Impairment losses” (of 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.
Current fiscal year (April 1st, 2014 to March 31st, 2015)
The Group booked the following assets as impairment loss.
Location of assets
Use of assets
Type of assets
Bunkyo-ku, Tokyo
Operational assets
Tools, furniture and fixtures
Sakai, Osaka
Operational assets
Tools, furniture and fixtures
Nasu, Tochigi Prefecture
Idle assets
Land
The Company mainly groups its operations by business segment, and consolidated subsidiaries form theirgrouping with each company or office as one unit. “Impairment losses” on “Leased real estate” and “Idleassets” are recognized separately.
Because of a decrease in cash flows caused by a declined “Operating income” and a fall of the market
price, we have written down the book values of the above assets to recoverable values. These write-offs
have resulted in “Impairment losses” (of 66 million yen), which were booked as “Extraordinary losses”.
These “Impairment losses” consist of the losses on “Tools, furniture and fixtures” of 16 million yen and on“Land” of 50 million yen.
The recoverable value was assessed according to the net sale value, and the market prices were evaluatedaccording to roadside land prices or the assessed value of “Noncurrent asset tax”, with reasonable adjustments.
(Consolidated statements of comprehensive income)*1. Amount of Reclassification adjustments and Tax effects for other comprehensive income(Million yen)
Current fiscal year

Previous fiscal year
stst

(April 1 , 2013 to March 31 , 2014)

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
Remeasurements of defined benefit plans：
Amount incurred in current fiscal year
Other comprehensive income344- 31 -

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

1,810

(303)

(295)

40

1,515

(128)

(408)

(87)

1,106

(11)

(104)

-

645

(99)

1,647

(Consolidated statements of changes in net assets)
Previous 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
Decrease in number Number of shares at
Increase in number
the beginning of
the end of theof shares for current of shares for current
current fiscal year
fiscal year
current fiscal year
fiscal year under(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
Note: (i) The shares of Trust & Custody Services Bank, Ltd. owns are included in the number of our“Treasury stock”(50 thousand shares at the start of the fiscal year and 49 thousand shares at the endof the fiscal year).
(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 dateOrdinary General
Meeting ofJune 28th,
March 31st,*1
Common stock
1,319
85
Shareholders held on
2013
2013
June 27th, 2013
Board of Directors’
September 30th,
December 9th,*2
meeting held on
627
45
Common stock
2013
2013
October 31st, 2013
(Note):*1: The total dividend amount resolved at the ordinary general meeting of shareholders held on June 27th,
2013, includes the dividend 4 million yen for the share Trust & Custody Services Bank, Ltd. owns.
*2: The total dividend amount resolved at the board of directors' meeting held on October 31st, 2013,
includes the dividend 2 million yen for the share Trust & Custody Services Bank, Ltd. owns.

- 32 -

(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
Effective
Type of
Source fordividend
pershare (inRecord date
(Resolution)amountdatesharesdividends
yen)(million yen)
Board of Directors’
March 31st,
Retained
CommonJune 30th,
100
1,395
meeting held on
earnings
stock
2014
2014
May 15th, 2014
(Note): The total dividend amount resolved at the board of directors' meeting held on May 15th, 2014, includes
the dividend 4 million yen for the share Trust & Custody Services Bank, Ltd. owns.
Current fiscal year (from April 1st, 2014 to March 31st, 2015)
1. Type and total number of issued shares and type and number of shares of treasury stock
Number of shares at
Decrease in number Number of shares at
Increase in number
the beginning of
the end of theof shares for current of shares for current
current fiscal year
fiscal year
current fiscal year
fiscal year under(1,000 shares)(1,000 shares)(1,000 shares)(1,000 shares)
Number ofissued shares
Common stock
19,58819,588
Total
19,58819,588Treasury stock
Common stock
5,685
0
0
5,685
(Note)
Total
5,685
0
0
5,685
Note: (i) The shares of Trust & Custody Services Bank, Ltd. owns are included in the number of our“Treasury stock”(49 thousand shares at the start of the fiscal year and 49 thousand shares at the endof the fiscal year).
(ii) The increase of 0 thousand shares in “Treasury stock” of common stock reflects the increase of
0 thousand shares owing to the acquisition of “Treasury stock”.
(iii) The decrease of 0 thousand shares in “Treasury stock” of common stock reflects the decrease of 0
thousand shares of disposal of “Treasury stock” by Trust & Custody Services Bank, Ltd. toemployees’ stock ownership associations, 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

Board of Directors’
March 31st,June 30th,*1
meeting held on
1,395
100
Common stock
2014
2014
May 15th, 2014
Board of Directors’
December 8th,
September*2
meeting held on
697
50
Common stockth2014
30 , 2014
October 31st, 2014
(Note):*1: The total dividend amount resolved at the board of directors' meeting held on May 15th, 2014, includes
the dividend 4 million yen for the share Trust & Custody Services Bank, Ltd. owns.

- 33 -

*2: The total dividend amount resolved at the board of directors' meeting held on October 31st, 2014,
includes the dividend 2 million yen for the share Trust & Custody Services Bank, Ltd. owns.
(2) Of the dividends whose record date belongs to the current fiscal year, and those whose effective date of thedividends will be in the next fiscal year
Total
Dividends
Type ofEffective
Source fordividend(Resolution)
pershare (inRecord dateamountsharesdate
dividends
yen)(million yen)
Board of Directors’CommonRetained
March 31st,June 29th,
meeting held on
1,395
100
stock
earnings
2015
2015
May 15th, 2015
(Note): The total dividend amount, resolved at the board of directors' meeting held on May 15th, 2015, includes
the dividend 4 million yen for the share Trust & Custody Services Bank, Ltd. owns.
(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 , 2013 to March 31 , 2014)

Cash and deposits
Time deposits with a deposit period ofover three months
Cash and cash equivalentsstst(April 1 , 2014 to March 31 , 2015)

22,40825,726(2,068)(1,536)

20,33924,1892. 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 , 2013 to March 31 , 2014)

The amounts of assets and liabilities infinance lease transactions

st

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

103

299

(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)
As the Group did not use derivative transactions, there are no applicable item.
(Retirement benefits)
Disclosure of retirement benefits is omitted, as there is no significant necessity of such disclosure in thesummary report on financial results.

- 34 -

(Stock options, etc.)
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)
Disclosure of rent and other real estate matters is omitted, as there is no significant necessity of suchdisclosure in the summary report on financial results.
(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”.
(Application of Accounting Standards for Retirement Benefits)
As mentioned in “Change in accounting policies” on page 26, Fukuda Denshi has reviewed thecalculation of retirement benefit liabilities and service costs from the current fiscal year, the calculationof retirement benefit liabilities and service costs is also reviewed in segment information.
The impact on profit and loss is minor.

- 35 -

(Application of Practical Solution on Transactions of Delivering the Company’s Own Stock to Employees,
etc., through Trusts)
Fukuda Denshi has adopted the “Practical Solution on Transactions of Delivering the Company’s Own
Stock to Employees, etc., through Trusts” (PITF No. 30 issued by the Accounting Standards Board ofJapan on March 26th, 2015) at the start of this consolidated fiscal year ended March 31st, 2015. Thischange in the accounting policy was applied retroactively, and consequently, the consolidated financial
statements for the previous fiscal year present the results of after the retroactive application.
The impact on profit and loss is minor.
3. Information regarding sales, gains (or losses), assets, liabilities and other amounts by reportablesegments(i) Previous fiscal year

(from April 1st, 2013 to March 31st, 2014)（Million yen)

Reporting Segments
Total

Adjustments*1

Consolidated
financialstatements*2

23,491

107,574-

107,574

-

-

-

-

-

9,461

39,90923,491

107,574-

107,574

3,225

936

5,346

2,302

11,811-

11,811

19,423

6,172

31,081

14,25270,93049,800120,730

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

Physiologicaldiagnostic
equipment

Patient
monitoring
equipment

Medicaltreatment
equipment

Consumables
and otherproducts

34,711

9,461

39,909--34,711

Net sales
Sales toexternalcustomers
Internal sales
or transfers

Total
Segment profit
Segment
assetsOther items

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

Adjustment of segment assets of 49,800 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, 2014 to March 31st, 2015)
Reporting Segments

Physiologicaldiagnostic
equipment

Patient
monitoring
equipment

Medicaltreatment
equipment

Consumables
and otherproducts

32,661

9,526

42,201（Million yen)
Consolidated
financialstatements
*2

Total

Adjustments*1

23,880108,269-

108,269

Net sales
Sales toexternalcustomers
Internal sales
or transfers
Total

-

-

-

-

-

-

-

32,661

9,526

42,201

23,880108,269-

108,269

Segment profit

2,474

830

4,736

2,261

10,303-

10,303

18,4206,452

32,316

13,93971,12853,453

124,582

Depreciation

560

163

5,027

409

6,161

-

6,161

Amortizationof goodwill

-

-

175

-

175

-

175

428

124

5,912

313

6,778

-

6,778

Segment
assetsOther items

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

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

b. Related Information(i) Previous 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”.

- 37 -

(ii) Current fiscal year (from April 1st, 2014 to March 31st, 2015)
1. Information about each products and services
Information about each products and services is omitted, as categories of products and services are
identical to segment information.
2. Information by geographical area
(1) Sales
Information about “Sales” is omitted because our domestic “Sales” accounted for more than 90% ofconsolidated “Sales”.
(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, 2013 to March 31st, 2014)（Million yen)Physiologicaldiagnostic
equipment
Impairment
loss

Patient
monitoring
equipment

1

Medicaltreatment
equipment
0Consumables
and otherproducts
1

Elimination/ Corporate

0

Total

11

14

(ii) Current fiscal year (from April 1st, 2014 to March 31st, 2015)（Million yen)Physiologicaldiagnostic
equipment
Impairment
loss

Patient
monitoring
equipment

4

Medicaltreatment
equipment
1

Consumables
and otherproducts
6

Elimination/ Corporate

3

Total

50

66

d. Information about amortization and depreciation expense on goodwill of each reportable segment(i) Previous fiscal year (from April 1st, 2013 to March 31st, 2014)
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

- 38 -

(ii) Current fiscal year (from April 1st, 2014 to March 31st, 2015)（Million yen)Physiologicaldiagnostic
equipment
Depreciation ofcurrent period
Balance at theend of current
periodPatient
monitoring
equipment

Medicaltreatment
equipment

Consumables
and otherproducts

Elimination/ Corporate

Total

-

-

175

-

-

175

-

-

-

-

-

-

e. Information about gain on negative goodwill of each reportable segment(i) Previous fiscal year (from April 1st, 2013 to March 31st, 2014)
Not applicable(ii) Current fiscal year (from April 1st, 2014 to March 31st, 2015)
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, 2013 to March 31st, 2014)(April 1st, 2014 to March 31st, 2015)

Net assets per share

5,879.25 yen

6,401.07 yen

Net income per share

516.89 yen

512.10 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, 2013 to March 31st, 2014)(April 1st, 2014 to March 31st, 2015)

7,559

7,119

Net income (million yen)Amount not belonging toordinary shareholders (million
yen)
Net income in relation to
7,559
7,119
common stock (million yen)
Average number of shares
during the fiscal year (1,000
14,625
13,902shares)Note: Fukuda Denshi has adopted the “Practical Solution on Transactions of Delivering the Company’s Own
Stock to Employees, etc., through Trusts” (PITF No. 30 issued by the Accounting Standards Board ofJapan on March 26th, 2015) at the start of this consolidated fiscal year ended March 31st, 2015. Thischange in the accounting policy was applied retroactively, and consequently, the consolidated financial
statements for the previous fiscal year present the results after the retroactive application.

- 39 -

(Significant subsequent events)
Fukuda Denshi resolved to conduct a share exchange at the meeting of Board of Directors held on May 15th,
2015, effective as of October 1st, 2015, with Fukuda Denshi as the wholly-owning parent company andAtomic Sangyo as a wholly-owned subsidiary, and that Fukuda Denshi concluded a share exchange
agreement with Atomic Sangyo at the same day.
Please refer the “Fukuda Denshi Announces that it Makes Atomic Sangyo its Wholly-owned Subsidiarythrough Share Exchange and Change of Largest Shareholder” for details.

- 40 -

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

Previous fiscal year
(as of March 31st, 2014)
AssetsCurrent assets
8,419

10,22518

39

26,621

26,536

273

192

3,225

3,792

21

7

Raw materials and supplies

1,849

1,712

Advance payments-trade

385

164

Deferred tax assets

748

462

1,907

1,490

973

1,118

Allowance for doubtful accounts(1,206)(1,243)

Total current assets

43,23744,499Buildings

4,384

4,211

Structures

196

178

Machinery and equipment

86

75

Vehicles18

26

Tools, furniture and fixtures

8,742

9,774

Land

5,827

6,303

Lease assets

24

224

Construction in progress

48

242

19,32921,038

2,849

2,363

-

41

311

25

3,161

2,430

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

Short-term loans receivable
Other

Noncurrent assets
Property, plant and equipment

Total property, plant and equipment
Intangible assets
Software
Software in progress
Other
Total intangible assets- 41 -

(Million yen)
Current fiscal year
(as of March 31st, 2015)

Previous fiscal year
(as of March 31st, 2014)
Investments and other assets
Investment securities

9,362

11,198Stocks of subsidiaries and affiliates

4,672

3,247

1

1

423

423

Long-term loans receivable

4,234

5,488

Deferred tax assets

1,599

1,665

Long-term time deposits

2,000

2,000

Insurance funds

9,115

9,255

272

272

Allowance for doubtful accounts(1,156)(1,986)

Total investments and other assets

30,52431,56653,01455,03596,252

99,535

Accounts payable-trade

14,11113,809

Short-term loans payable

1,850

1,850

1

53

Accounts payable-other

2,259

1,812

Income taxes payable

1,833

964

Deposits received

13,254

14,390

Provision for bonuses

1,053

684

Provision for directors' bonuses

64

53

Provision for product warranties

309

308

Other

208

653

34,94534,578Investments in capital
Investments in capital of subsidiaries
and affiliates

Other

Total noncurrent assets
Total asset
Liabilities
Current liabilities

Lease obligations

Total current liabilities- 42 -

(Million yen)
Current fiscal year
(as of March 31st, 2015)

Previous fiscal year
(as of March 31st, 2014)
Noncurrent liabilities
24

188

Long-term loans payable

1,098

-

Provision for retirement benefits

1,001

599

Long-term accounts payable-other

819

816

7

13

2,952

1,617

37,89736,195

4,621

4,621

Legal capital surplus

8,946

8,946

Other capital surplus

1,109

1,109

Total capital surpluses

10,055

10,055

1,171

1,171

Reserve for business expansion

300

300

Reserve for advanced depreciation of
noncurrent assets

53

53

General reserve

37,50037,500Retained earnings brought forward

18,324

22,20457,34961,230Treasury stock(14,729)(14,731)

Total shareholders' equity

57,297

61,176

1,056

2,163

1,056

2,163

58,354

63,33996,252

99,535

Lease obligations

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

Retained earnings
Legal retained earnings
Other retained earnings

Total retained earnings

Valuation and translation adjustments
Valuation difference on
available-for-sale securities
Total valuation and translation
adjustments
Total net assets
Total liabilities and net assets- 43 -

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

Current fiscal year

st

st

st

(April 1 , 2013 to March 31 , 2014)(April 1 , 2014 to March 31 , 2015)

63,84963,28442,80742,514

21,042

20,77014,97914,743

6,062

6,027

Interest income

106

99

Dividends income

1,187

1,712

776

1,006

2,069

2,818

Interest expenses

85

89

Other

56

3

Total non-operating expenses

141

93

7,990

8,751

Gain on sales of noncurrent assets

102Gain on sales of investment securities

357

301

Reversal of allowance for investment loss

300-

Surrender value of insurance

55

315

Subsidy income

67

27

Gain on forgiveness of debts-

960

Total extraordinary income

791

1,606

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

Other
Total non-operating income
Non-operating expenses

Ordinary income
Extraordinary income- 44 -

(Million yen)Previous fiscal yearst

Current fiscal year

st

st

st

(April 1 , 2013 to March 31 , 2014)(April 1 , 2014 to March 31 , 2015)

Impairment loss

11

50

Loss on valuation of investment securities

232-

Loss on business withdrawal

-

2,521

Total extraordinary losses

243

2,572

Income before income taxes

8,538

7,786

Income taxes-current

2,640

2,280

Income taxes-deferred

84

(288)

Total income taxes

2,724

1,991

Net income

5,813

5,794

Extraordinary loss

- 45 -

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

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

Retained earnings
Other retained earnings
Reserve

Capitalstock

Reserve
Other Total
Legalcapital capitalretained forsurplus surpluses earnings businessexpansionLegalcapitalsurplusfor

Retained

advanced

General earnings
depreciat
reserve brought
ion ofTotal
retainedearnings

forwardnoncurrent assets

Balance at the beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies

14,45953,484(0)(0)

14,45853,483

Dividends from surplus(1,946)(1,946)

Net income

5,813

5,813

Restated balance

4,621

8,946

4,621

8,946

1,100

10,047

8

8

1,109

10,055

1,171

1,171

300

300

53

53

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

0

0

-

-

0

0

-

-

-

-

3,866

3,866

4,621

8,946

1,109

10,055

1,171

300

53

37,50018,32457,349Valuation and translation
adjustments

Shareholders' equity

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

Totalshareholders'equity8,847)

59,305(8)(0)

8,855)

59,305

Valuationdifference on
available-for-s
ale securities

1,144

Total valuation

Total net assets

and translation
adjustments

1,144

60,450
(0)

1,144

1,144

60,449Changes of items during theperiodDividends from surplus

1,946)

1,946)Net income

5,813

5,813

- 46 -

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(ii) Current fiscal year

87)

(87)

87)

(5,873)

2,007)(87)(87)(2,095)(14,729)57,297

1,056

1,056

58,354(from April 1st, 2014 to March 31st, 2015)(Million yen)
Shareholders' equity
Capital surplus

Retained earnings
Other retained earnings
Reserve

Capitalstock

Reserve
Other Total
Legalcapital capitalretained forsurplus surpluses earnings businessexpansionLegalcapitalsurplusfor

Retained

advanced

General earnings
depreciat
reserve brought
ion ofTotal
retainedearnings

forwardnoncurrent assets

Balance at the beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies

18,32457,349178

178

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

Net income

5,794

5,794

Restated balance

4,621

4,621

8,946

8,946

1,109

1,109

10,055

10,055

1,171

1,171

300

300

53

53

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

-

-

-

-

-

-

-

-

3,701

3,701

4,621

8,946

1,109

10,055

1,171

300

53

37,50022,204

61,230- 47 -

Valuation and translation
adjustments

Shareholders' equity
Total
shareholders'equityTreasurystock
Balance at the beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

14,729)Valuationdifference on
available-for-s
ale securities

57,297

1,056

Total valuation
adjustments

1,056

178
14,729)57,476

Total net assets

and translation

58,354
178

1,056

1,056

58,533

Changes of items during theperiodDividends from surplus

2,092)

2,092)Net income

5,794

5,794

Purchase of treasury stock

2)

(2)

2)

Disposal of treasury stock

0

0

0

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

1,106

1,106

1,106

(1)

3,699

1,106

1,106

4,806

(14,731)

61,176

2,163

2,163

63,339(4) Notes to Non-consolidated Financial Statement(Notes regarding the assumption for going concern)
Not applicable(Change in accounting policies)(Application of Accounting Standards for Retirement Benefits)
Fukuda Denshi has applied the “Accounting Standard for Retirement Benefits” (AccountingStandards Board of Japan (ASBJ) Statement No. 26 issued on May 17th, 2012, hereinafter, the“Accounting Standard for Retirement Benefits”) and the “Guidance on Accounting Standard for
Retirement Benefits” (ASBJ Guidance No. 25 issued on March 26th, 2015) from the start of thecurrent fiscal year. Accordingly, the Company reviewed the calculation method of retirement benefit
liabilities and service costs, changed the method of attribution period for estimated amount of retirement
benefits from the fix-amount to the benefit formula, and changed the method of determining the discountrate from a method using the discount rate based on the average remaining service period of employees
to a method using the weighted average discount rate which are reflected the approximate number ofyears of payment and its amount of each year.
The company is complying with the transitional measures prescribed under Clause 37 of the
Accounting Standards for Retirement Benefits regarding its application, and has adjusted the amount“Retained earnings” at the start of this fiscal year to reflect the effects of that change.
Consequently, 277 million yen in “Retirement benefit liabilities” decreased at the start of this fiscal
year and “Retained earnings” increased 178 million yen.
The impact on profit and loss is minor.

- 48 -

(Application of Practical Solution on Transactions of Delivering the Company’s Own Stock to
Employees, etc., through Trusts)
Fukuda Denshi has adopted the “Practical Solution on Transactions of Delivering the Company’s
Own Stock to Employees, etc., through Trusts” (PITF No. 30 issued by the Accounting Standards
Board of Japan on March 26th, 2015) at the start of this fiscal year ended March 31st, 2015.
Accordingly, the company recognizes, at the time the company’s own stock is disposed to trust, thedifference on disposal, and posts gain/loss on sales associated with the shares sold by the trust to an
employee stock ownership plan, dividends from the company for the shares held by the trust, andmiscellaneous expenses concerning the trust to liabilities on a net basis. This change in the accounting
policy was applied retroactively, and consequently, the financial statements for the previous fiscal year
present the results after the retroactive application.
The impact of retroactive application is minor.
(Significant accounting policies)
1. Valuation standards and methods for assets(1) Valuation standards and methods for securities
a. Held-to-maturity securities;- Amortized cost method (straight-line method)b. Shares of subsidiaries and affiliates- Stated at cost based on the moving average method
c. Other securities
Marketable securities;- Stated at fair value based on the market price as of the end of the fiscal year.
(Unrealized holding gains or losses are reported in a component of “Net assets”, with the costof “Securities” sold is calculated by the moving average method.)
Non-marketable securities;- Stated at cost based on the moving average method.
For investments in the investment enterprise limited Liability association and similar
associations (deemed to be “Securities” pursuant to Article 2, Paragraph 2 of the Financial
Instruments and Exchange Law), the net amount corresponding to the ownership percentage isused, based on the most recent financial statements available as of the reporting date and othermaterials stipulated in the partnership contract.
(2) Valuation standards and methods for inventories
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.

- 49 -

2. Depreciation method for noncurrent assets(1) Property, plant and equipment (excluding lease assets)
Depreciated by the declining balance method. However, buildings (except for building
attachments) acquired on or after April 1st, 1998 were depreciated using the straight-line method.
In addition, the expected lifetime are as follows:
Buildings:
3 to 50 years
Structures:
10 to 60 years
Machinery and equipment:
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 using the straight-line method with the estimated rental period (four years) used as thenumber of depreciation years.
(2) Intangible assets (excluding “Lease assets”)
Depreciated by the straight-line method.
Software for internal use is amortized by the straight-line method over its useful life of five years.
As for software for sale in the market, the 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.
3. Basis for provision of allowances(1) Allowance for doubtful accounts
To prepare for losses incurred by bad debts, the amount of potential loss is calculated by using thehistorical loss ratio in the case of general loans or receivables.
Potential losses for specificloans or receivables, for which we have concerns regarding their collectability, are calculated byassessing the possibility of collection for each individual account.
(2) Provision for bonuses
To prepare for the payment of bonuses to employees, we reserve an amount corresponding to current
fiscal year’s portion of estimated bonus payments to employees.
(3) Provision for director’s bonuses
To prepare for the payment of bonuses for directors and corporate auditors, we reserve an amountcorresponding to current fiscal year’s portion of estimated bonus payments to directors and corporate
auditors.
(4) Provision for retirement benefits
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.

- 50 -

(ii) Accounting for actuarial differences and prior service costs
Prior service costs are amortized, using the straight-line basis over a certain number of years (10years), which are less than the average remaining years of service of the employees when they
incurred.
Actuarial differences are amortized, using the straight-line basis over a certain number of years (10years), which are less than the average remaining years of service of the employees when they
incurred, from the fiscal year after the one in which they arise.
(5) Provision for product warranties
To prepare for the expenses incurred by free repair to be implemented after the delivery of the
products, an estimated amount of the repair expenses was reserved on the basis of the estimatedproportion of such expenses to net sales and the estimated amount of such expenses forindividual products.
4. Other important matters for preparation of financial statements(1) Accounting for retirement benefits
The method of accounting for unrecognized actuarial differences and unrecognized prior service
costs relating to retirement benefits differs from the method used in the consolidated financial
statements.
(2) Accounting treatment of consumption tax, and other taxes, etc.
The Consumption tax and other taxes, etc. are excluded from profits and losses.
7. Others(1)Changes of directors(i) Representative Director
Not applicable(ii) Other directors
・Directors to retire
Managing Director: Mr. Koji Takahashi (General Manager of Business Development Head
Office)・New Auditor candidates
Statutory Auditor (permanent): Mr. Junzo Fujiwara (Consultant)・Directors to retire
Statutory Auditor (permanent): Mr. Yutaka Yasuda
・Effective from
June 26th, 2015

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

- 51 -