Consolidated Financial Statements
MODEC, INC. and Consolidated Subsidiaries
For the years ended December 31,
2015 and 2014

MODEC, INC. and Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS
December 31, 2015 and 2014ASSETS

Millions of Japanese yen
2015
2014
CURRENT ASSETS:
Cash and time deposits (Notes 1(t) and 17)
Accounts receivable – trade (Notes 16, 17 and 20)
Inventories (Note 2)
Short-term loans receivable (Notes 17 and 20)
Deferred tax assets (Note 13)
Other current assets
Less- Allowance for bad debts (Note 17)
Total current assets
PROPERTY AND EQUIPMENT (Note 19):
Buildings and structures
Machinery and equipment
Other property and equipment
Construction in progress (Note 12)
Less- Accumulated depreciation
Net property and equipment
INTANGIBLE ASSETS (Note 4)
INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 3 and 17)
Long-term loans receivable from unconsolidated subsidiaries andaffiliates (Notes 17 and 20)
Deferred tax assets (Note 13)
Bankrupt and substantially bankrupt claims (Note 17)
Other investments
Less- Allowance for bad debts (Note 17)
Total investments and other assets
Total assets¥57,956
145,752
3,814
20,2394,214
11,539(1,395)242,120¥30,632
168,012
5,929
41,008
4,815
10,075(481)
259,992165
45,1664,302
16(31,165)
18,485165
39,954
4,148
26(27,370)
16,924

7,476

7,795

50,98737,38827,009
4,663
1,823
3,722
(1,823)86,381¥354,464

20,153
5,053
1,824
1,168
(1,824)
63,763¥348,477

The accompanying notes are an integral part of these consolidated financial statements.

1

LIABILITIESMillions of Japanese yen
2015
2014
CURRENT LIABILITIES:
Accounts payable – trade (Notes 17 and 20)
Short-term loans payable (Notes 5, 7 and 17)
Current portion of long-term loans payable (Notes 5, 17 and 20)
Accrued expenses
Income taxes payable (Note 13)
Provision for product warranty
Provision for repairs
Accrued employees’ bonuses
Accrued directors’ bonuses
Advances received
Deferred tax liabilities (Note 13)
Other provisions
Foreign exchange contracts
Other current liabilities
Total current liabilities
LONG-TERM LIABILITIES:Long-term loans payable (Notes 5, 17 and 20)
Net defined benefit liabilities (Notes 1(u) and 10)
Deferred tax liabilities (Note 13)
Liabilities from application of equity method
Other long-term liabilities
Total long-term liabilities¥145,230
－
6,044
8,822
4,360
6,699

¥160,077
5,967
2,198
8,677
8,521
5,692

3
12
14
4,031
0
5
87
1,940
177,251

1,137
7
15
4,657
32
7
4,119
2,040
203,152

50,219
220
－
4,906
6,884
62,22915,205
192
615
14,954
4,724
35,693¥239,481¥238,845

CONTINGENT LIABILITIES AND COMMITMENTS (Note 14)
Total liabilities

2

NET ASSETS

Millions of Japanese yen
2015
2014
NET ASSETS:SHAREHOLDERS’ EQUITY (Note 8):
Common stock
Authorized – 102,868,000 shares in 2015 and in 2014
Issued – 56,408,000 shares in 2015 and in 2014
Capital surplus
Retained earnings
Treasury stock, at cost
663 shares in 2015 and in 2014
Total shareholders’ equity¥30,12230,852
38,259¥30,12230,852
34,338(1)
99,232(1)
95,311

7(15,667)
18,1701(13,741)
15,402

Total net assets

(187)
2,322
13,428114,983

(197)
1,464
12,855
109,631

Total liabilities and net assets¥354,464¥348,477

ACCUMULATED OTHER COMPREHENSIVE INCOME
Unrealized holding gains on securities, net of tax
Unrealized losses on hedging derivatives, net of tax
Foreign currency translation adjustments
Retirement liability adjustments for foreign consolidated
subsidiaries
Total accumulated other comprehensive income
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES

3

MODEC, INC. and Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31, 2015 and 2014
Millions of Japanese yen
2015
2014
¥295,596¥378,523
275,517356,565
20,07821,958SALES (Notes 19 and 20)
COST OF SALES (Note 20)
Gross profit
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES (Note 11)
Operating profit

15,003
5,075

13,391
8,566

3,652(5,306)

2,826
236

8,345
2,078
(1,395)
(244)
12
(99)
3,117
(645)

6,694
0
(740)
(153)
－
(214)
－
－

(161)
－
(212)
614
9,754

(1,207)
(604)
(229)
1,136
7,743

INCOME BEFORE INCOME TAXES AND
MINORITY INTERESTS

14,82916,309INCOME TAXES (Note 13):
Current
Deferred

7,768
797

11,047(1,935)

INCOME BEFORE MINORITY INTERESTS

6,263

7,197

438

1,775

¥5,824¥5,422OTHER INCOME (EXPENSES):Interest income and dividend income
Foreign exchange gains (losses), net
Equity in earnings of unconsolidated subsidiaries andaffiliates, net
Gain on revaluation of derivatives (Note 1(v))
Interest expense
Commission fee
Gain on sales of investment securities (Note 3)
Loss on liquidations of subsidiaries and affiliates, net
Insurance income
Removal expenses of property and equipment
Loss on disposal of property and equipment and intangible
assetsImpairment loss on property and equipment (Note 12)
Provision of allowance for bad debts
Others, net (Note 1(v))
Total other income (expenses)

MINORITY INTERESTSNET INCOME

Japanese yen
Net income per share (Note 9)
Dividends per share (Note 9)¥103.26¥35.00

The accompanying notes are an integral part of these consolidated financial statements.

4¥101.67¥32.50MODEC, INC. and Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the years ended December 31, 2015 and 2014

Income before minority interests
Other comprehensive income
Unrealized holding gains on securities, net of tax
Unrealized losses on hedging derivatives, net of tax
Foreign currency translation adjustments
Retirement liability adjustments for foreign
consolidated subsidiaries
Share of other comprehensive loss of unconsolidated
subsidiaries and affiliates accounted for using equity
methodTotal other comprehensive income
Comprehensive income

Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests

Millions of Japanese yen
2015
2014
(Note 15)
(Note 15)
¥6,263¥7,197
6
(911)
2,987

1
(299)
7,158

18

(70)

(737)
1,362
¥7,626(3,068)
3,721¥10,919

Millions of Japanese yen
2015
2014
¥6,683¥7,703¥943¥3,215The accompanying notes are an integral part of these consolidated financial statements.

5

MODEC, INC. and Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSFor the years ended December 31, 2015 and 2014
Millions of Japanese yen

Commonstock

Capitalsurplus

Balance at January 1,
2014¥20,185¥20,915Issuance of stocks

9,936

9,936

Cash dividends paid
Net income

Retainedearnings¥30,528

Treasurystock, at cost

Unrealized
holding gains
on securities,
net of tax

Unrealized
losses on
hedging
derivatives,
net of tax

¥ (1)

¥ (0)

¥(4,977)

Foreigncurrencytranslation
adjustments

Retirement
liability
adjustments
for foreign
consolidated
subsidiaries

Minority
interests inconsolidated
subsidiaries¥4,306¥(145)¥9,633(1,612)(1,612)

5,422

5,422

1

Unrealized losses on
hedging derivatives,
net of tax

1(8,763)Adjustments fromtranslation of foreign
currency financial
statements(8,763)

11,095Adjustments fromretirement liability forforeign consolidated
subsidiaries

11,095(52)

Increase in minority
interests inconsolidated
subsidiaries¥30,122¥30,852¥34,338¥(1)¥1¥(13,741)¥15,402¥(197)

(52)

3,222

3,222

¥12,855¥109,631－

Issuance of stocks
Cash dividends paid

Net income(1,903)(1,903)

5,824

5,824

Increase due tochanges in fair market
values ofavailable-for-salesecurities

6

Unrealized losses on
hedging derivatives,
net of tax

6(1,926)

Adjustments fromtranslation of foreign
currency financial
statements(1,926)

2,767

Adjustments fromretirement liability forforeign consolidated
subsidiaries

2,767

10

Increase in minority
interests inconsolidated
subsidiaries
Balance at December
31, 2015¥80,444
19,873

Increase due tochanges in fair market
values ofavailable-for-salesecurities

Balance at January 1,
2015

Total net
assets¥30,122¥30,852¥38,259¥(1)¥7¥(15,667)¥18,170¥(187)

The accompanying notes are an integral part of these consolidated financial statements.

6

10

572

572

¥13,428¥114,983

MODEC, INC. and Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWSFor the years ended December 31, 2015 and 2014
Millions of Japanese yen
2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments to reconcile income before income taxes andminority interests to net cash provided by operating activities:
Depreciation and amortization
Impairment loss on property and equipment
Amortization of goodwill
Increase (decrease) of allowance for bad debts
Increase (decrease) of net defined benefit liabilities
Increase (decrease) of accrued directors’ bonuses
Increase (decrease) of provision for product warranty
Increase (decrease) of provision for repairs
Interest income and dividend income
Interest expense
Foreign exchange (gains) losses, net
Equity in earnings of unconsolidated subsidiaries and affiliates,
net
Loss (gain) on revaluation of derivatives (Note 1(v))
Insurance income
Removal expenses of property and equipment
Loss on disposal of property and equipment and intangible
assetsLoss (gain) on sales of investment securities
Loss (gain) on liquidations of subsidiaries and affiliates, net
Changes in assets and liabilities:
Decrease (increase) in– Accounts receivable – trade– Inventories– Bankrupt and substantially bankrupt claims
Increase (decrease) in– Accounts payable – trade– Consumption tax payable
Others, net (Note 1(v))
Total adjustments
Interest and dividend received
Interest paid
Income taxes paid
Proceeds from insurance income
Net cash provided by operating activities2014¥14,829¥16,309

5,652
－
386
913
27
(1)
1,007
(1,133)(3,652)
1,395
4,099

5,257
604
399
226
16
4
2,040
1,137
(2,826)740
884(8,345)(2,078)(3,117)645(6,694)
0
－
－

161
(12)
99

1,207
－
214

20,472(1,628)0(74,482)(1,916)(229)(13,168)
110(4,739)11,924
7,299(1,079)(12,799)
3,117¥8,462

63,499(1,179)9,419
14,633
3,693(860)(5,133)－¥12,333

The accompanying notes are an integral part of these consolidated financial statements.

7

Millions of Japanese yen
2015
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment and intangible assets
Proceeds from sale on property and equipment and intangible
assetsDisbursements of removal of property and equipment
Purchases of investments in subsidiaries and affiliates
Proceeds from sales of investments in affiliates
Decrease (increase) in short-term loans receivable
Proceeds from sales of investment securities (Note 3)
Disbursements of long-term loans receivableCollections of long-term loans receivable
Proceeds from liquidation of subsidiaries and affiliates
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of stocks
Cash dividends paid
Repayments of finance lease obligations
Net cash provided by financing activities
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
(Note 1 (t))

8

2014

¥(3,415)¥(3,755)－(645)(6,425)
1(28,387)
161(6,639)32,643
3(12,703)3－(3)－(4,826)－(12,349)
2,876
20(18,033)(4,064)38,902(1,478)－(1,902)(30)
31,426(4,584)－(1,935)19,873(1,611)(29)
11,713137

2,833

27,32330,632

8,846
21,786¥57,956¥30,632

MODEC, Inc. and Consolidated Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Significant Accounting and Reporting Policies(a) Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of MODEC, Inc. (“the Company”) havebeen prepared in accordance with the provisions set forth in the Japanese Financial Instruments
and Exchange Act and its related accounting regulations, and in conformity with accounting
principles generally accepted in Japan (“Japanese GAAP”), which are different in certain
respects as to application and disclosure requirements of International Financial ReportingStandards.
The accounts of the Company’s foreign subsidiaries are based on their accounting records
maintained in conformity with generally accepted accounting principles prevailing in therespective countries of domicile and significant differences between Japanese GAAP and Local
GAAP are adjusted in consolidation. The accompanying consolidated financial statements havebeen restructured and translated into English with some expanded descriptions from theconsolidated financial statements of the Company prepared in accordance with Japanese GAAP
and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by
the Financial Instruments and Exchange Act. Some supplementary information reported in thestatutory Japanese language consolidated financial statements, but not required for fairpresentation, is not presented in the accompanying consolidated financial statements.
All of the Japanese yen and U.S. dollar amounts presented in the accompanying consolidated
financial statements and notes of the Company are rounded down to the million.
(b) Principles of Consolidation and Equity Method
The accompanying consolidated financial statements include the accounts of the Company and
20 of its subsidiaries for the year ended December 31, 2015 and 22 of its subsidiaries for theyear ended December 31, 2014. Material inter-company balances, transactions and profits havebeen eliminated in consolidation.
Investments in significant unconsolidated subsidiary and affiliates, which were 18 companies
for the years ended December 31, 2015 and 2014 were accounted for using the equity method.
Another 4 subsidiaries for the year ended December 31, 2015 and 5 subsidiaries for the year
ended December 31, 2014 were not consolidated or not applied equity method as they would
not have a material effect on the accompanying consolidated financial statements.
The consolidated financial statements are required to include the accounts of the Company andsignificant companies that are controlled by the Company through substantial ownership ofmore than 50% of the voting rights or through ownership of a high percentage of the voting
rights, even if it is equal to or less than 50%, and existence of certain conditions evidencing
control by the Company of decision-making bodies of such companies.
Investments in significant unconsolidated subsidiary and affiliates, of which the Company has
ownership of 20% or more but less than or equal to 50%, and of 15% or more and less than 20%
and can exercise significant influences over operating financial policies of investees, have beenaccounted for using the equity method.
All consolidated subsidiaries have the same balance sheet date, December 31, corresponding
with that of the Company.
9(c) Valuation of Assets and Liabilities of Subsidiaries
In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries,
including the portion attributable to minority shareholders, were evaluated by using the fairvalue at the time the Company acquired the control of the respective subsidiaries.
(d) Goodwill
The excess of cost over the underlying investments in consolidated subsidiaries is recognized as
goodwill and is amortized using the straight-line method over their estimated useful lives.
The excess of cost over the underlying investments in affiliates accounted for using the equity
method is treated in the same manner.
(e) Securities
In accordance with the Japanese accounting standard for financial instruments, all companies
are required to examine the intent of holding each security and classify those securities as (a)securities held for trading purposes (“trading securities”), (b) debt securities intended to be held
to maturity (“held-to-maturity debt securities”), (c) equity securities issued by unconsolidated
subsidiaries and affiliates, and (d) all other securities that are not classified in any of the above
categories (“available-for-sale securities”).
Based on the examination of the intent of holding, the Company classifies its securities as
equity securities issued by unconsolidated subsidiaries and affiliates and available-for-salesecurities. Available-for-sale securities maturing within one year from the balance sheet date
are recorded in current assets. Other securities are recorded in investment securities. The
Company does not have trading securities or held-to-maturity debt securities.
Equity securities issued by unconsolidated subsidiaries and affiliates that are not accounted forusing the equity method are stated at moving-average cost. Available-for-sale securities withavailable fair market values are stated at fair market value as of balance sheet dates. Unrealized
gains and losses on these securities are reported, net of applicable income taxes, as a separate
component of net assets. Realized gains and losses on sale of such securities are computed
using moving-average cost. Available-for-sale securities without available fair market values
are stated at moving-average cost.
(f) Inventories
Both raw materials and costs of uncompleted contracts are stated at cost, determined on an
individual project basis (Balance sheet value reflects downturn in profitability).
(g) Property and Equipment
Property and equipment are stated at cost. Depreciation of Floating Production Storage &Offloading Systems (“FPSOs”) and Floating Storage & Offloading Systems (“FSOs”) ownedby the consolidated foreign subsidiaries are calculated using the straight-line method based on
their lease terms or their economic useful lives.
Depreciation of property and equipment other than FPSOs and FSOs are calculated as follows.
The Company depreciates property and equipment using the declining-balance method basedon their useful lives and residual values prescribed by the Japanese corporation tax laws andregulations, except for buildings which are depreciated using the straight-line method.
Consolidated foreign subsidiaries depreciate property and equipment using the straight-line
method based on their estimated useful lives.

10(h) Intangible Assets
The Company amortizes software costs used internally using the straight-line method over theestimated useful lives mainly of 5 years, and amortizes other intangible assets using thestraight-line method based on the useful lives prescribed by the Japanese corporation tax laws
and regulations.
(i) Finance Lease Transaction without Transfer of Ownership
Lessee:The method of amortization of the lease assets related to finance lease transactions withouttransfer of ownership is by the straight-line method corresponding to lease period with zero
residual value.
(j) Allowance for Bad Debts
The Company provides for a sufficient allowance for bad debts to cover probable losses oncollection by estimating uncollectable amounts individually in addition to amounts for possible
losses based on actual losses on collection in the past.
(k) Accrued Employees’ Bonuses
The Company accrues employees’ bonuses based on the estimated amounts to be paid in thesubsequent period.
(l) Accrued Directors’ Bonuses
The Company accrues directors’ bonuses based on the estimated amounts to be paid in thesubsequent period.
(m) Provision for Product Warranty
Provision for product warranty is provided based on the estimated amounts for covering theprobable product warranties.
(n) Provision for Repairs
Provision for repairs is provided based on the estimated amounts for foreseeable periodic repair
expenses deemed to correspond to normal wear and tear of equipments as of the end of the
fiscal year to be paid in the subsequent period.
(o) Severance and Retirement Benefits for Employees
The Company and certain foreign consolidated subsidiaries have unfunded lump-sum
severance and retirement payment plans for employees. Under these plans, employees whose
employment is terminated or who retire are entitled to benefits which are, in general,
determined on the basis of length of service and basic salary at the time of termination orretirement. If the termination is involuntary, the employees are generally entitled to larger
benefits than in the case of voluntary termination or retirement.
In accordance with the Japanese accounting standard for employees’ severance and pension
benefits, a “simpler method” can be adopted to calculate severance and retirement benefits for
employees if the number of employees is less than 300. Therefore the Company adopts the“simpler method”, and records severance and retirement benefits for employees at the amounts
payable if all employees voluntarily terminated their employment at the balance sheet date.
The Company and certain foreign consolidated subsidiaries also adopt defined contribution
pension plans.

11(p) Translation of Foreign Currency Accounts
Foreign currency transactions are translated into Japanese yen using the exchange rate in effectat the time of each transaction or at the applicable exchange rates under forward exchange
contracts.
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at
appropriate year-end current exchange rates, and the resulting gains or losses are recorded inother income (expenses) in the consolidated statements of income.
Financial statements of foreign consolidated subsidiaries are translated into Japanese yen using
the exchange rates prevailing at the end of each fiscal year, except the exchange rates in effect at
the date of transactions are used for shareholders’ equity. The Company records foreign
currency translation adjustments as a component of net assets in the consolidated balance
sheets.
(q) Derivative Transactions and Hedge Accounting
Derivative financial instruments of the Company are stated at fair value and gains or losses arerecognized for changes in the fair value unless derivative financial instruments are used forhedging purposes.
If derivative financial instruments are used as hedges and meet certain hedging criteria, theCompany defers recognition of gains or losses resulting from changes in fair value of derivative
financial instruments until the related losses or gains on the hedged items are recognized.
However, in cases where forward foreign exchange contracts and currency swap contracts areused as hedges and meet certain hedging criteria, forward foreign exchange contracts andcurrency swap contracts and hedged items are accounted for in the following manner.
1) If a forward foreign exchange contract or a currency swap contract is executed to hedge
existing foreign currency receivables or payables,a) the difference, if any, between the Japanese yen amount of the hedged foreign currency
receivable or payable translated using the spot rate at the inception date of the contract
and the book value of the receivable or payable is recognized in the income statement in
the period which includes the inception date, andb) the discount or premium on the contract (that is, the difference between the Japanese
yen amount of the contract translated using the contracted forward rate and thattranslated using the spot rate at the inception date of the contract) is recognized over theterm of the contract.
2) If a forward foreign exchange contract or a currency swap contract is executed to hedge afuture transaction denominated in a foreign currency, the future transaction will be recorded
using the contracted forward rate, and no gains or losses on the forward foreign exchange
contracts and currency swap contracts are recognized.
Also, if interest rate swap contracts are used as hedges and meet certain hedging criteria, the net
amount to be paid or received under the interest rate swap contract is added to or deducted fromthe interest on the assets or liabilities for which the swap contract was executed.
Certain foreign consolidated subsidiaries adopt hedge accounting in accordance with
U.S.GAAP.
(r) Revenue Recognition
The Company applied the percentage of completion method to the construction contracts incase that the outcome of construction contracts can be reliably estimated. The percentage ofcompletion is calculated by percentage of cost method or units of work performed method
which is based on physical progress measure. The other construction contracts are recognized12

by the completed contract method. Consolidated subsidiary located in the U.S.A. recognizedrevenues on all contracts by the percentage of completion method.
(s) Income Taxes
The Company provides income taxes at the amounts currently payable based on taxable income
for tax purposes that may be different from income for the accounting purposes. The Company
recognizes tax effects of temporary differences between the carrying amounts of assets andliabilities for tax and financial reporting purposes. The asset and liability approach is used torecognize deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
(t) Cash Flow Statements
In preparing the consolidated statements of cash flows, cash on hand, readily available deposits
and short-term highly liquid investments with maturities not exceeding three months at the timeof purchase are considered to be cash and cash equivalents.
Reconciliations of cash and time deposits shown in the consolidated balance sheets and cash
and cash equivalents in the consolidated statements of cash flows as of December 31, 2015 and2014 are as follows:
Millions of Japanese yen
2015

2014

Cash and time deposits¥57,956¥30,632

Cash and cash equivalents¥57,956¥30,632

Changes in Accounting Policies:(u) Implementation of Accounting Standard for Retirement Benefits
The Accounting Standard for Retirement Benefits (ASBJ Statement No. 26, “AccountingStandard for Retirement Benefits,” May 17, 2012 (hereinafter, the “Accounting Standard”));
and Guidance on Application of Accounting Standard for Retirement Benefits (ASBJ Guidance
No. 25, “Application Guidelines of Accounting Standards for Business Enterprises,” May 17,
2012 (hereinafter, the “Guidance”)) were applied at the end of the fiscal year 2014 (excluding
rules cited in the main text of Item 35 in the Accounting Standard and Item 67 in the Guidance).
As a result, for the year ended December 31, 2014, net defined benefit liabilities amounted to ¥192 million. This implementation had no effect on previously reported net assets.
Changes in Presentation:(v) Reclassifications
The Company made certain reclassifications to the previously reported fiscal year 2014
amounts to conform to fiscal year 2015 presentation. These reclassifications had no effect onpreviously reported net income or net assets.
2. Inventories
Inventories as of December 31, 2015 and 2014 consisted of the following:
Millions of Japanese yen
2015
Raw materials
Costs of uncompleted contracts

13

¥278
3,535
¥3,8142014¥4,382
1,547¥5,929

3. Marketable Securities and Investment Securities(a) The following tables summarize acquisition costs, book values (fair values) of securities
with available fair values as of December 31, 2015 and 2014

2015:
Available-for-sale securities:
Securities with book values exceedingacquisition costs:
Equity securities
Securities with book values not exceedingacquisition costs:
Equity securities

Acquisition cost

Total

2014:
Available-for-sale securities:
Securities with book values exceedingacquisition costs:
Equity securities
Securities with book values not exceedingacquisition costs:
Equity securities

Difference

¥64

¥90

¥25

100
¥164

86
¥176

(13)
¥11

Acquisition cost

Total

Millions of Japanese yen
Book value

Millions of Japanese yen
Book value

Difference

¥64

¥79

¥14

49
¥114

37
¥116

(12)
¥1

(b) Proceeds from sales of available-for-sale securities and realized gains and losses on sales ofavailable-for-sale securities for the years ended December 31, 2015 and 2014

Millions of Japanese yen
2015
2014
Proceeds from sales of investment securities

¥161

－

Realized gains on sales of investment securities¥12－

Realized losses on sales of investment securities－－

4. Goodwill
Goodwill included in intangible assets as of December 31, 2015 and 2014 were ¥3,423 million and¥3,810 million, respectively.

5. Loans Payable
Short-term loans payable represent notes payable to banks due generally in twelve months andbearing an average interest rate of 1.12% as of December 31, 2014.

14

Long-term loans payable as of December 31, 2015 and 2014 are summarized below:
Millions of Japanese yen
2015
Loans from banks and others due through 2025
Less: Current portion included in current liabilities, at average rate of
1.64%
Loans from banks and others, at average rate of 1.14% due through 2025
(Excluding current portion)

2014¥56,263¥17,404(6,044)(2,198)¥50,219¥15,205

The aggregate annual maturities of long-term loans payable are summarized below:
Year ending December 31,
2016
2017
2018
2019
2020
2021 and thereafter

Millions of Japanese yen¥6,044
7,618
12,605
5,631
13,736
10,627¥56,263

6. Asset Retirement Obligation
The Company and its subsidiaries recognized the asset retirement obligation following the officerental contract. The note is not required to disclose due to total amount of this liability is immaterial.
The Company and its subsidiaries estimated the unrecoverable security deposit amount as the asset
retirement obligation. This loss is recognized as the expense instead of the liability.
7. Unused Balance of Overdraft Facilities and Lending Commitment
The Company has a commitment line agreement with a syndicate of seven as of 2015 and six as of2014 financial institutions, an overdraft facility agreement with two as of 2015 and 2014 financial
institutions and a notes payable agreement denominated in U.S. dollars with eight as of 2014
financial institutions for the purpose of efficient providing operating funds. The commitment line
amount is $160 million as of December 31, 2015 and $110 million as of December 31, 2014 without
any drawdown. The overdraft facility line amount is ¥3,000 million and $30 million without any
drawdown as of December 31, 2015 and 2014. The unused balance of notes payable denominated in
U.S. dollars is $253 million as of December 31, 2014.
8. Shareholders’ Equity
Under Japanese laws and regulations, the entire amount paid for new shares is required to be
designated as common stock. However, a company may, by a resolution of the Board of Directors,
designate an amount not exceeding one-half of the prices of the new shares as additional paid-in
capital, which is recorded in capital surplus.
Under the Japanese Corporate Law (“the Law”), in cases where a dividend distribution of surplus ismade, the smaller of an amount equal to 10% of the dividend or the excess, if any, of 25% ofcommon stock over the total of additional paid-in-capital and legal earnings reserve must be set
aside as additional paid-in-capital or legal earnings reserve. Legal earnings reserve is included inretained earnings in the accompanying consolidated balance sheets.
Under the Law, all additional paid-in-capital and all legal earnings reserve may be transferred toother capital surplus and retained earnings, respectively, which are potentially available fordividends.
The maximum amount that the Company can distribute as dividends is calculated based on theunconsolidated financial statements of the Company in accordance with the Law.
At the annual shareholders’ meeting held on March 27, 2015, the shareholders approved cash
dividends amounting to ¥916 million for the year ended December 31, 2014. At the annual
15

shareholders’ meeting held on March 24, 2016, the shareholders approved cash dividends
amounting to ¥987 million for the year ended December 31, 2015. Such appropriations have notbeen accrued in the consolidated financial statements. Such appropriations are recognized in the
period in which they are approved by the shareholders.
For the year ended December 31, 2014, the company issued stocks of 10,000,000 shares. 3,096,000
shares were issued through public offering (open to all parties) and 6,439,800 shares were issued
through third-party allotment with Mitsui Engineering & Shipbuilding Co., Ltd. and Mitsui & Co.,
Ltd. as allottees on April 22, 2014. In addition, 464,200 shares were issued through sales of shares(sales through over-allotment) on May 21, 2014.
9. Per Share Data
Net income per share is calculated based on the weighted average number of shares of common
stock outstanding during the fiscal year.
Diluted net income per share reflects the effect of potential dilution that could occur if securities orother contracts to issue common stock were exercised or converted into common stock. There is no
outstanding potential common stock for the years ended December 31, 2015 and 2014.
Cash dividends per share shown for each fiscal year in the accompanying consolidated statements
of income represent dividends declared as applicable to the respective years.
10. Severance and Retirement Benefits for Employees(a) Defined benefit pension plans
The net defined benefit liabilities recorded in the liability section of the consolidated balance
sheets as of December 31, 2015 and 2014 consisted of the following:i)Movements of net defined benefit liabilities recorded in the consolidated balance sheets(simpler method)
Millions of Japanese yen
2015
Balance at beginning of year

ii)

2014
¥192

¥176

Severance and retirement benefit expenses

35

45

Benefits paid

(7)

(29)

Balance at end of year

¥220

¥192

Reconciliation of projected retirement benefit obligation and net defined benefit liabilities
recorded in the consolidated balance sheets
Millions of Japanese yen
2015

2014

Projected retirement benefit obligation(Unfunded termination and retirement allowance plan)

¥220

¥192

Net defined benefit liabilities recorded in the consolidated balance sheets

¥220

¥192

iii) Severance and retirement benefit expenses
Millions of Japanese yen
2015
Severance and retirement benefit expenses (simpler method)

16

2014
¥35

¥45

(b) Defined contribution pension plans
Contribution to pension plans amounted to ¥54 million and ¥53 million for the years ended
December 31, 2015 and 2014, respectively.
11. Research and Development Expenses
Research and development expenses included in selling, general and administrative expenses are ¥103 million and ¥150 million for the years ended December 31, 2015 and 2014, respectively.
12. Impairment Losses on Property and Equipment
Impairment losses on property and equipment for the year ended December 31, 2014 consisted of
the following:(a) Overview of the impairment losses on property and equipment
Location
Saga, Japan

Use
Floating wind & current hybrid
power generator

Type of Assets
Construction in progress(Machinery and equipment)(b) Grouping unit
The business assets have been grouped by each company. FPSOs, FSOs, and floating wind &current hybrid power generator have been grouped by each cash-generating unit.
(c) The recognition and the amount of the impairment losses
Floating wind & current hybrid power generator is under construction. The Company
conservatively assessed the future cash flow of the asset and realized it is below the book value
because forecast of purchase price of electricity is unpredictable.
As a result, the Company reduced the carrying amount of the asset to the recoverable amountand recognized the impairment loss of ¥604 million for the year ended December 31, 2014.
(d) The measurement of the impairment losses
The Company measured the recoverable amount based on a value in use and calculated it bydiscounting future cash flow at an interest rate of 2.0%.

17

13. Income Taxes
The statutory income tax rate in Japan arising out of the aggregation of corporate, enterprise andinhabitants taxes is 36.0% and 38.0% for the years ended December 31, 2015 and 2014,
respectively.
1) The following table summarizes the significant differences between the statutory tax rate and theCompany and its consolidated subsidiaries’ effective tax rate for financial statement purposes forthe years ended December 31, 2015 and 2014.
2015

2014

Statutory income tax rates
Difference of statutory tax rate between the Company and foreign subsidiaries
Equityin earnings of unconsolidated subsidiaries and affiliates, net
subsidiaries
Valuation allowance
Income of foreign subsidiaries taxed at lower than Japanese statutory rate
Income taxes for prior periods
Others36.0 %(6.4)(20.3)
45.8
0.0
(0.4)
3.0

38.0 %(6.2)(15.6)
35.2
1.0
0.1
3.3

Effective tax rates

57.7 %

55.8 %

2) Significant components of deferred tax assets and liabilities as of December 31, 2015 and 2014
are as follows:
Millions of Japanese yen
2015
2014
Deferred tax assets:
Current assets:
Enterprise tax payable
Accrued employees’ bonuses
Provision for product warranty
Allowance for bad debts
Tax loss carry forward
Estimated costs for construction contracts, etc.
Difference on percentage-of-completion method (Note 1(v))
Others (Note 1(v))
Sub total
Valuation allowance
Offset to deferred tax liabilities (short-term)
Total
Fixed assets:
Unrealized inter-company profit on fixed assets
Tax loss carry forward
Net defined benefit liabilities
Depreciation
Long-term foreign tax credit
Temporary difference for investment in subsidiaries
Allowance for bad debts
Impairment loss
Others
Sub total
Valuation allowance
Offset to deferred tax liabilities (long-term)
Total
Total deferred tax assets

18

－
¥4
1,222
345
277
1,182
2,770
1,757
7,561
(905)
(2,441)

¥349
3
1,037
172
－
2,755
1,654
421
6,395
(353)
(1,226)

4,214

4,815

4,499
6,685
72
56
1,535
850
581
－
2,310

4,094
6,925
69
87
1,268
956
656
1,542
2,069

16,591(9,452)(2,476)
4,663¥8,877

17,670(9,249)(3,367)
5,053¥9,869

Millions of Japanese yen
2015
2014
Deferred tax liabilities:
Current liabilities:
Difference on percentage-of-completion method
Others
Sub total
Offset to deferred tax assets (short-term)
TotalLong-term liabilities:
Depreciation
Long-term foreign exchange gain
Difference on percentage-of-completion method
Others
Sub total
Offset to deferred tax assets (long-term)
Total
Total deferred tax liabilities
Net deferred tax assets¥(2,045)(396)¥(1,070)(188)(2,442)
2,441(1,258)
1,226

(0)

(32)

(922)
(1,071)(469)(13)(1,034)(1,725)(1,211)(10)(2,476)
2,476
－
(0)

(3,982)
3,367
(615)
(647)

¥8,877¥9,221

3) The revision of the corporate income tax rate after December 31, 2015
On March 31, 2015, amendments to the Japanese tax regulations were enacted into law. Basedon the amendments, the statutory income tax rates utilized for the measurement of deferred tax
assets and liabilities expected to be settled or realized from January 1, 2016 to December 31,
2016 and on or after January 1, 2017 are changed from 36.0% for the fiscal year ended
December 31, 2015 to 33.0% and 32.0%, respectively, as of December 31, 2015.
Due to these changes in statutory income tax rates, net deferred tax assets (after deducting thedeferred tax liabilities) decreased by ¥162 million as of December 31, 2015, income
taxes-deferred recognized for the fiscal year ended December 31, 2015 increased by ¥79 million,
unrealized holding gains on securities, net of tax, increased by ¥0 million and unrealized losses
on hedging derivatives, net of tax, decreased by ¥83 million.
14. Contingent Liabilities and Commitments
As of December 31, 2015 and 2014, the Company was contingently liable for the following:
Millions of Japanese yen
Guarantees of bank loans and other indebtedness for affiliates

2015¥135,521

2014¥167,569

For the years ended December 31, 2015 and 2014, the share of the fair market values of swap
contracts of affiliates accounted for using the equity method are included in the consolidated
financial statements due to the adoption of “Practical Solution on Unification of Accounting
Policies Applied to Associates Accounted for Using the Equity Method” (PITF No.24 issued by the
Accounting Standards Board of Japan on March 10, 2008).

19

15. Comprehensive Income
Each component of other comprehensive income for the years ended of December 31, 2015 and2014 was the followings:
Millions of Japanese yen
2015

2014

Unrealized holding gains on securities, net of tax
Amount of generation¥9¥2

Amount of rearrangement adjustment－－

Before adjusting the tax effect92

Tax effect

(3)

(0)

Unrealized holding gains on securities, net of tax

6

1(1,310)(163)

Amount of rearrangement adjustment

(155)

(250)

Before adjusting the tax effect(1,465)(414)

Tax effect

553

115

Unrealized losses on hedging derivatives, net of tax

(911)

(299)

2,929

7,628

Amount of rearrangement adjustment

94

(214)

Before adjusting the tax effect

3,023

7,413

Tax effect

(36)

(254)

Foreign currency translation adjustments

2,987

7,158

Amount of generation

21

(177)

Amount of rearrangement adjustment

56

20

Before adjusting the tax effect

77

(157)

Tax effect

(58)

86

Retirement liability adjustments for foreign consolidated subsidiaries

18

(70)

Amount of generation(6,374)(2,392)

Amount of rearrangement adjustment

5,636

(676)

(737)

(3,068)¥1,362¥3,721

Unrealized losses on hedging derivatives, net of tax
Amount of generation

Foreign currency translation adjustments
Amount of generation

Retirement liability adjustments for foreign consolidated subsidiaries

Share of other comprehensive loss of unconsolidated subsidiaries and affiliates
accounted for using equity method

Share of other comprehensive loss of unconsolidated subsidiaries and affiliates
accounted for using equity method
Total

20

16. Leases
Lessor:Future lease receivables related to the non-cancellable operating leases are as follows:
Millions of Japanese yen
2015

2014

Due within one year

¥1,535¥1,531

Due after one year

1,275

2,810

¥2,810¥4,342Total

17. Financial Instruments(a) Concerning status of financial instrumentsi) Policies for financial instruments
The Company and its consolidated subsidiaries adopt only short-term financial instruments for
operating funds.
The Company and its consolidated subsidiaries have the policy of procuring bank-loans to raise
funds.
The Company and some of its consolidated subsidiaries transfer funds to each other through aninter-company cash management systems (CMS).
As to derivative financial instruments, the Company and its consolidated subsidiaries utilize
them not for speculation but for hedging purpose only.
ii) Substances and risks of financial instruments and managing of financial instruments
Accounts receivable - trade are exposed to credit risks of customers. The Company and its
subsidiaries research the credit standings and select credit worthy customers, and manage thebalance of accounts receivable - trade at regular intervals to reduce credit risks.
Short-term and long-term loans receivable that are granted to cater the affiliates mainly
established to accomplish charter projects are exposed to credit risks of their customers. The
Company reduces the share of risks by arranging project finance or by the cooperation withgeneral trading companies and other business partners.
Majority of accounts receivable - trade and loans receivable are denominated in foreign
currencies and net of these balances with accounts payable - trade and loans payable areexposed to currency fluctuation risks. These risks are basically hedged by using forward foreignexchange contracts.
Investment securities are exposed to market fluctuation risks. The Company and its subsidiaries
have the business relationships with the issuers of most of investment securities andperiodically research the fair market value and financial position of the issuers.
Majority of accounts payable - trade are due within one year. Accounts payable - tradedenominated in foreign currencies arising from overseas procurement of materials are exposed
to currency fluctuation risks, but these accounts payable - trade are controlled not to exceed
accounts receivable - trade in the same foreign currencies.
Short-term and long-term loans payable are mainly raising funds for the affiliates. Majority ofloans payable are exposed to currency fluctuation risks, but these loans payable are not exceedloans receivable in the same foreign currencies. In addition, the Company arranges the interest
rate swap transaction for some of long-term loans payable by each contract to fix the interest
expense and to reduce the interest rate fluctuation risks.
21

Derivative transactions are consisted of mainly forward foreign exchange contracts andcurrency swap contracts arranged for the purpose of hedging currency fluctuation risks arisingfrom foreign currency accounts receivable - trade and accounts payable - trade, and interest rate
swap transaction for the purpose of interest rate fluctuation risks arising from loans payable.
Accounts payable – trade and loans payable are exposed to the liquidity risks. To manage theliquidity risks, our finance sections appropriately prepare and update the cash management
plan.
iii) Supplementary explanation about fair value of financial instruments
The fair value is based on their fair market value quoted market price, if available, or reasonably
estimated value if market price is not available. Since various assumptions and factors arereflected in estimating the fair value, different assumptions and factors could result in different
fair value.
The contract amounts of derivative transactions mentioned in Note 18. Derivative Transactions
do not indicate the actual market risks involved in the derivative transactions.
(b) Concerning fair value of financial instruments
Consolidated balance sheets amounts, fair value of financial instruments and the difference
between them for the years ended December 31, 2015 and 2014 are as follows. Financial
instruments for which the fair value is considered to be extremely difficult to obtain are notincluded in the list below.
2015:(1) Cash and time deposits(2) Accounts receivable – trade(3) Short-term loans receivable
Allowance for bad debts (*1)

Millions of Japanese yen
Book Value
Fair Value¥57,956¥57,956
145,752
145,752
20,239(4) Investment securities(5) Long-term loans receivable from unconsolidated
subsidiaries and affiliates(6) Bankrupt and substantially bankrupt claims
Allowance for bad debts (*2)
Assets total(7) Accounts payable – trade(8) Current portion of long-term loans payable(9) Long-term loans payable
Liabilities total(10) Derivative transactions (*3)i) Derivative transactions for which hedge
accounting has not been appliedii) Derivative transactions for which hedge
accounting has been applied
Derivative transactions total

Difference
－
－

(212)
20,02720,027

－

176

176

－

27,0091,823(1,823)－¥250,920

27,566¥557－¥251,477－¥557¥145,230
6,044
50,219¥145,230
6,044
50,219－－－¥201,493¥201,493－¥2,011¥2,011－(2,291)¥(279)(2,430)¥(419)(139)¥(139)*1: Individual allowance for bad debts is deducted from short-term loans receivable.
*2: Individual allowance for bad debts is deducted from bankrupt and substantially bankrupt claims.
*3: Derivative transactions are presented net of receivables and payables. Figures with parenthesis indicate payables.

22

2014:
Book Value¥30,632
168,01241,008116(1) Cash and time deposits(2) Accounts receivable – trade(3) Short-term loans receivable(4) Investment securities(5) Long-term loans receivable from unconsolidated
subsidiaries and affiliates(6) Bankrupt and substantially bankrupt claims
Allowance for bad debts (*1)

Millions of Japanese yen
Fair Value¥30,632
168,01241,008116

Difference－－－－

21,283¥1,130Assets total

20,153
1,824(1,824)－¥259,923－¥261,054－¥1,130(7) Accounts payable – trade(8) Short-term loans payable(9) Current portion of long-term loans payable(10) Long-term loans payable¥160,077
5,967
2,198
15,205¥160,077
5,967
2,198
15,205－－－－

Liabilities total(11) Derivative transactions (*2)i) Derivative transactions for which hedge accounting
has not been appliedii) Derivative transactions for which hedge accounting
has been applied
Derivative transactions total¥183,449¥183,449

－

－

－

－

¥(4,473)¥(4,473)¥(4,473)¥(4,473)－－*1 Individual allowance for bad debts is deducted from bankrupt and substantially bankrupt claims.
*2 Derivative transactions are presented net of receivables and payables. Figures with parenthesis indicate payables.

(note 1) Articles concerning calculation method of fair value, marketable securities andderivative transaction
Assets(1) Cash and time deposits, (2) Accounts receivable – trade and (3) Short-term loans
receivable
Fair values of these accounts are stated at the balance sheet amounts because they are
considered to be close to the balance sheet amounts and these accounts are settled in
short-term.
(4) Investment securities
Fair value of this account is based on available market price. Securities held by intent aredescribed in the corresponding pages. (Please see Note 3. Marketable Securities andInvestment Securities.)(5) Long-term loans receivable from unconsolidated subsidiaries and affiliates
Fair value of this account is stated at the present value calculated from the future cash
flows discounted by the premium-added rate on the proper index like yield on thegovernment bonds.
(6) Bankrupt and substantially bankrupt claims
Fair value of this account is stated at the balance sheet amounts because the estimatedamounts of bad debts are calculated based on the collectible amounts and fair value of theamounts are considered to be close to the balance sheet amounts.

23

Liabilities(7) Accounts payable – trade and (8) Current portion of long-term loans payable
Fair values of these accounts are stated at the balance sheet amounts because they are
considered to be close to the balance sheet amounts and these accounts are settled in
short-term.
(9) Long-term loans payable
Fair value of long-term loans payable with fixed interest rate is calculated using the total
amount of the principal and interest discounted by the interest rate on condition that theborrowing is newly executed at the date of fair value evaluation.
Fair value of long-term loans payable with floating interest rate is stated at the balance
sheet amounts. Considering that floating interest rate reflects latest market conditions andcredit of the Company considered being almost same as before, fair value of long-termloans payable is close to the balance sheet amounts.
Derivative Transactions
Please see Note 18. Derivative Transactions.
(note 2) Consolidated balance sheets amounts of financial instruments for which the fair value
is considered to be extremely difficult to obtain are as follows:
Millions of Japanese yen
2015
2014
Privately owned equity
securities¥50,810¥37,271

As to these financial instruments, there is no available fair market value and it is considered tocost a great deal to estimate future cash flows. So these financial instruments are not includedin (4) Investment securities because it is considered to be extremely difficult to obtain fairvalue.
(note 3) The expected redemption amount of monetary asset and securities with maturity after
December 31, 2015 and 2014 are as follows:
2015:
Within one year

Millions of Japanese yen
Over one year but
Over five years but
within five years
within ten years

Over ten years

Cash and time deposits¥57,956－－－

Accounts receivable – trade145,752－－－

Short-term loans receivable

20,239Long-term loans receivablefrom unconsolidated
subsidiaries and affiliates－－¥5,806－¥10,663－¥10,539

2014:
Within one year
Cash and time deposits
Accounts receivable – trade

Millions of Japanese yen
Over one year but
Over five years but
within five years
within ten years

Over ten years¥30,632－－－

168,012－－－

Short-term loans receivable

41,008Long-term loans receivablefrom unconsolidated
subsidiaries and affiliates－－¥5,807－¥4,067－¥10,27824

(note 4) The aggregate annual maturities of long-term loans payable are as follows:
Millions of Japanese yen¥7,61812,605
5,631
13,736
10,627¥50,219

2017
2018
2019
2020
2021 and thereafter
Total

18. Derivative Transactions
The Company and its consolidated subsidiaries utilize forward foreign currency contracts andcurrency swap contracts in order to hedge currency fluctuation risks arising from export of products
in addition to hedging through increases in overseas production and overseas procurement ofmaterials.
The Company and its consolidated subsidiaries also utilize interest rate swaps as derivativetransactions in order to hedge interest rate risks of loans payable.
As the derivative transactions are made solely with leading financial institutions, the Company andits consolidated subsidiaries do not expect any credit risks.
The Company follows its internal regulations for derivatives, which stipulates the policy, objective,
scope, organization, procedures, and financial institutions to deal with, and has a reporting systemfor derivative transactions reflecting proper internal control functions.
The following summarizes hedging derivative financial instruments used and items hedged:
Hedging instruments:
Foreign exchange forward contracts
Currency swap contracts
Interest rate swap contracts

Hedged items:
Foreign currency receivables and payables
Future transactions
Foreign currency receivables and payables
Loans payable

The Company evaluates hedge effectiveness on a quarterly basis by comparing the cumulativechanges in cash flows from or the changes in fair value of hedged items with the corresponding
changes in the hedging derivative instruments.
The following tables summarize market value information as of December 31, 2015 and 2014 ofderivative transactions:(a) Derivative transactions for which hedge accounting has not been applied
2015:
Currency related derivatives
Type
Forward contract
To sell U.S. dollars
Currency swap
To receive Japanese yen, to pay U.S. dollars
Total

Millions of Japanese yen
Contract AmountDue after one
Contract Amount
Total
year
less Market Value

Unrealized
gain (loss)¥8,665

－

¥(79)

¥(79)

26,990¥35,656¥24,050¥24,050

2,090¥2,011

2,090¥2,01125

(b) Derivative transactions for which hedge accounting has been applied
Millions of Japanese yen
Contract AmountDue after one
Contract Amount
Total
year
less Market Value

2015:
Currency related derivatives
Type
Forward contract (principle method)
To buy EuroTo buy Norwegian krone
To buy Japanese yen
To buy STG pounds
To buy Singapore dollars
To buy Brazilian Real

Hedged Items

Accounts payable – tradeand others

Total

Forward contract (principle method)
To buy EuroTo buy Norwegian krone
To buy Japanese yen
To buy STG pounds
To buy Singapore dollars
To buy Switzerland franc

Hedged Items
Accounts receivable –trade and others

Accounts payable – tradeand others

Total

Hedged Items¥19,702－¥(3,494)

3,446
1,359
455
1,117
194
1,012
¥27,287

¥26
－
－
－
－
－
¥26

(242)
(237)
(67)
(8)
(0)
(68)
¥(4,119)

Long-term loans payable¥29,375¥25,376¥(2,267)

Long-term loans payable

9,130¥38,505

8,587¥33,963(139)(2,406)

Millions of Japanese yen
Contract AmountContract AmountDue after one
less Market
Total
year
Value

2014:
Interest related derivatives
TypeInterest rate swap (principle method)
To receive float, pay fix

¥5
(4)
3
(12)
(10)
(5)
¥(23)

Millions of Japanese yen
Contract AmountDue after one
Contract Amount
Total
year
less Market Value

2015:
Interest related derivatives
TypeInterest rate swap (principle method)
To receive float, pay fix
Interest rate swap
(exceptional method(*))
To receive float, pay fix
Total

¥70
－
－
－
－
－
¥70

Millions of Japanese yen
Contract AmountDue after one
Contract Amount
Total
year
less Market Value

2014:
Currency related derivatives
Type
Forward contract (principle method)
To sell U.S. dollars¥4,910
69
112
682
1,147
315
¥7,238Hedged Items
Long-term loans payable26¥4,252¥3,246¥(354)

19. Segment Information(1) Overview of reportable segment
The Company and its subsidiaries construct FPSOs and FSOs and operate their related services
as single business therefore overview of reportable segment is not presented.
(2) Information by products and services
The Company and its subsidiaries construct FPSOs and FSOs and operate their related services
as single business therefore information by products and services is not presented.
(3) Information by geographical area(a) Sales
2015:
BrazilMillions of Japanese yen
Oceania
Asia

Ghana

¥205,932¥43,906¥16,969

Other¥17,258

Total¥11,529¥295,596

2014:
BrazilMillions of Japanese yen
Oceania
Asia

Ghana

¥241,873¥91,376¥21,087

Other¥12,156

Total¥12,029¥378,523(Note) Sales amount is classified by country or geographical area based on the location of customers.

(b) Property and equipment
2015:
Millions of Japanese yen
Australia

Vietnam¥6,919Netherlands¥5,351

U.S.A.

¥3,594Other¥1,809

Total¥810¥18,485

2014:
Millions of Japanese yen
Australia¥7,946

VietnamU.S.A.

¥6,087

Other¥1,929

Total¥960¥16,924(4) Information by major customer
2015:
Millions of Japanese yen
Customers

Sales

Related Segment

Tartaruga MV29 B.V.

¥66,990(note 1)

Carioca MV27 B.V.

¥53,438(note 1)

Cernambi Norte MV26 B.V.

¥35,896(note 1)

2014:
Millions of Japanese yen
Customers

Sales

Related Segment

Carioca MV27 B.V.

¥98,604(note 1)

T.E.N. Ghana MV25 B.V.

79,295(note 1)

Cernambi Norte MV26 B.V.

56,083(note 1)

Cernambi Sul MV24 B.V.

38,136(note 1)

(note 1) The Company and its subsidiaries construct FPSOs and FSOs and provide related services as single businesstherefore related segment is not presented.

27

(5) Information about losses on impairment of property and equipment for each reportablesegment
The company and its subsidiaries construct FPSOs and FSOs and operate their related services
as singles business therefore information about losses on impairment of property andequipment for each reportable segment is not presented.
(6) Information about goodwill amortization amount and year-end balance for eachreportable segment
The company and its subsidiaries construct FPSOs and FSOs and operate their related services
as singles business therefore information about goodwill amortization amount and year-end
balance for each reportable segment is not presented.
(7) Information about gains on negative goodwill for each reportable segment
The company and its subsidiaries construct FPSOs and FSOs and operate their related services
as singles business therefore information about gains on negative goodwill for each reportablesegment is not presented.

28

20. Related Party Transactions
Significant related party transactions and corresponding balances between the Company andunconsolidated subsidiaries or affiliates for the year ended December 31, 2015 are as follows:
2015:
Related parties
Cernambi Sul MV24 B.V.
Cernambi Sul MV24 B.V.
T.E.N. Ghana MV25 B.V.
T.E.N. Ghana MV25 B.V.
T.E.N. Ghana MV25 B.V.
T.E.N. Ghana MV25 B.V.
T.E.N. Ghana MV25 B.V.
Cernambi Norte MV26 B.V.
Cernambi Norte MV26 B.V.
Cernambi Norte MV26 B.V.
Cernambi Norte MV26 B.V.
Carioca MV27 B.V.
Carioca MV27 B.V.
Carioca MV27 B.V.
Carioca MV27 B.V.
Carioca MV27 B.V.
Tartaruga MV29 B.V.
Tartaruga MV29 B.V.
Tartaruga MV29 B.V.
Tartaruga MV29 B.V.

Transactions
Disbursements of loans for capital expenditure
Collections of loans for capital expenditure
Construction of FPSO (Sales)
Disbursements of loans for capital expenditure
Collections of loans for capital expenditure
Guarantees of contract fulfillment
Guarantees of bank loans
Disbursements of loans for capital expenditure
Collections of loans for capital expenditure
Guarantees of bank loans
Guarantees of derivative transactions
Construction of FPSO (Sales)
Disbursements of loans for capital expenditure
Collections of loans for capital expenditure
Guarantees of bank loans
Guarantees of derivative transactions
Construction of FPSO (Sales)
Disbursements of loans for capital expenditure
Collections of loans for capital expenditure
Guarantees of bank loans

2015:
Related parties
Song Doc MV19 B.V.
Gas Opportunity MV20 B.V.
Tupi Pilot MV22 B.V.
T.E.N. Ghana MV25 B.V.
T.E.N. Ghana MV25 B.V.
Cernambi Norte MV26 B.V.
Carioca MV27 B.V.
Carioca MV27 B.V.
Tartaruga MV29 B.V.

Consolidated balance sheets accounts
Short-term loans receivable
Long-term loans receivable from unconsolidated
subsidiaries and affiliates
Long-term loans receivable from unconsolidated
subsidiaries and affiliates
Accounts receivable - trade
Short-term loans receivable
Short-term loans receivable
Accounts receivable - trade
Short-term loans receivable
Accounts receivable - trade

Millions ofJapanese yen¥104
31,42428,566
12,245
6,095
6,026
24,11822,355
13,50946,796
3,581
2,704
28,253
10,30040,2085,010
69,798
7,396
11,958
12,846
Millions ofJapanese yen¥3,760
4,066
5,881
18,924
6,038
8,694
16,093
17,64539,914Significant related party transactions and corresponding balances between the consolidated
subsidiaries and unconsolidated subsidiaries or affiliates for the year ended December 31, 2015 are
as follows:
2015:
Related parties
Cernambi Sul MV24 B.V.
Carioca MV27 B.V.
MODEC and TOYO Offshore
Production Systems Pte. Ltd.

Transactions
Disbursements of loans for working capital
Construction of FPSO (Sales)
Construction of FPSO (Cost of sales)

29

Millions ofJapanese yen¥6,50245,702
52,2992015:
Related parties
Guara MV23 B.V.
Cernambi Sul MV24 B.V.
Carioca MV27 B.V.
MODEC and TOYO Offshore
Production Systems Pte. Ltd.

Consolidated balance sheets accounts
Long-term loans receivable from unconsolidated
subsidiaries and affiliates
Long-term loans receivable from unconsolidated
subsidiaries and affiliates
Accounts receivable - trade
Accounts payable - trade

Millions ofJapanese yen¥6,597
6,502
3,133
1,354

A significant related party transaction between the Company and its parent company for the year
ended December 31, 2014 is as follows:
2014:
Related party

Transaction

Mitsui Engineering & Shipbuilding Co., Ltd.

Allotment of capital increase

Millions ofJapanese yen¥10,105

Significant related party transactions and corresponding balances between the Company andunconsolidated subsidiaries or affiliates for the year ended December 31, 2014 are as follows:
2014:
Related parties
Cernambi Sul MV24 B.V.
Cernambi Sul MV24 B.V.
T.E.N. Ghana MV25 B.V.
T.E.N. Ghana MV25 B.V.
T.E.N. Ghana MV25 B.V.
T.E.N. Ghana MV25 B.V.
Cernambi Norte MV26 B.V.
Cernambi Norte MV26 B.V.
Carioca MV27 B.V.
Carioca MV27 B.V.
Carioca MV27 B.V.
Carioca MV27 B.V.
Tartaruga MV29 B.V.
Tartaruga MV29 B.V.
MODEC and TOYO Offshore
Production Systems Pte. Ltd.

Transactions
Disbursements of loans for working capital
Guarantees of bank loans
Construction of FPSO (Sales)
Collections of loans for capital expenditure
Guarantees of contract fulfillment
Guarantees of bank loans
Construction of FPSO (Sales)
Guarantees of bank loans
Construction of FPSO (Sales)
Disbursements of loans for capital expenditure
Collections of loans for capital expenditure
Guarantees of bank loans
Construction of FPSO (Sales)
Disbursements of loans for capital expenditure
Construction of FPSO (Cost of sales)

Millions ofJapanese yen¥12,349
23,92581,4382,875
6,028
18,518
7,210
55,504
19,11021,011
20,891
57,868
5,667
4,705
10,8272014:
Related parties
Song Doc MV19 B.V.
Gas Opportunity MV20 B.V.
Tupi Pilot MV22 B.V.
Cernambi Sul MV24 B.V.
T.E.N. Ghana MV25 B.V.
Cernambi Norte MV26 B.V.
Carioca MV27 B.V.
Tartaruga MV29 B.V.
Tartaruga MV29 B.V.
MODEC and TOYO Offshore
Production Systems Pte. Ltd.

Consolidated balance sheets accounts
Short-term loans receivable
Long-term loans receivable from unconsolidated
subsidiaries and affiliates
Long-term loans receivable from unconsolidated
subsidiaries and affiliates
Short-term loans receivable
Accounts receivable - trade
Accounts receivable - trade
Accounts receivable - trade
Accounts receivable - trade
Short-term loans receivable
Accounts payable - trade30

Millions ofJapanese yen¥3,761
4,067
5,883
31,04841,257
11,99020,182
5,667
4,786
964

Significant related party transactions and corresponding balances between the consolidated
subsidiaries and the major shareholders (corporation only) for the year ended December 31, 2014
are as follows:
2014:
Related parties
Mitsui & Co., Ltd.

Transactions
Repayments of long-term loans payable

2014:
Related party
Mitsui & Co., Ltd.
Mitsui & Co., Ltd.

Consolidated balance sheets accounts
Current portion of long-term loans payable
Long-term loans payable

Millions ofJapanese yen¥642
Millions ofJapanese yen
¥764
2,239

Significant related party transactions and corresponding balances between the consolidated
subsidiaries and unconsolidated subsidiaries or affiliates for the year ended December 31, 2014 are
as follows:
2014:
Related parties
Cernambi Norte MV26 B.V.
Carioca MV27 B.V.
MODEC and TOYO Offshore
Production Systems Pte. Ltd.

Transactions
Construction of FPSO (Sales)
Construction of FPSO (Sales)
Construction of FPSO (Cost of sales)

2014:
Related parties
Guara MV23 B.V.
Cernambi Norte MV26 B.V.
Carioca MV27 B.V.
MODEC and TOYO Offshore
Production Systems Pte. Ltd.

Consolidated balance sheets accounts
Long-term loans receivable from unconsolidated
subsidiaries and affiliates
Accounts receivable - trade
Accounts receivable - trade
Accounts payable - trade31

Millions ofJapanese yen¥50,796
85,92880,249Millions ofJapanese yen¥6,59910,1273,496
5,292