Consolidated Financial Statements
Toho Zinc Co., Ltd.
and Consolidated Subsidiaries
For the year ended March 31, 2015
with Independent Auditor’s ReportToho Zinc Co., Ltd. and Consolidated Subsidiaries
Contents to Consolidated Financial Statements

Independent Auditor’s Report-------------------------------------------------------------

1

Consolidated Balance Sheet---------------------------------------------------------------

2

Consolidated Statement of Income ------------------------------------------------------

4

Consolidated Statement of Comprehensive Income------------------------------------

5

Consolidated Statement of Changes in Net Assets-------------------------------------

6

Consolidated Statement of Cash Flows --------------------------------------------------

8

Notes to Consolidated Financial Statements

9--------------------------------------------

Independent Auditor’s Report
The Board of Directors
Toho Zinc Co., Ltd.
We have audited the accompanying consolidated financial statements of Toho Zinc Co., Ltd. and its consolidated subsidiaries,
which comprise the consolidated balance sheet as at March 31, 2015, and the consolidated statements of income,comprehensive income, changes in net assets, and cash flows for the year then ended and a summary of significant
accounting policies and other explanatory information, all expressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordancewith accounting principles generally accepted in Japan, and for designing and operating such internal control as management
determines is necessary to enable the preparation and fair presentation of the consolidated financial statements that are freefrom material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks ofmaterial misstatement of the consolidated financial statements, whether due to fraud or error. The purpose of an audit of theconsolidated financial statements is not to express an opinion on the effectiveness of the entity’s internal control, but inmaking these risk assessments the auditor considers internal controls relevant to the entity’s preparation and fair presentationof the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates madeby management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Toho Zinc Co., Ltd. and its consolidated subsidiaries as at March 31, 2015, and their consolidated
financial performance and cash flows for the year then ended in conformity with accounting principles generally accepted inJapan.
Convenience Translation
We have reviewed the translation of these consolidated financial statements into U.S. dollars, presented for the convenienceof readers, and, in our opinion, the accompanying consolidated financial statements have been properly translated on thebasis described in Note 2.

Ernst & Young ShinNihon LLC
June 26, 2015
Tokyo, Japan1

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Balance Sheet
March 31,2015
2014
(Millions of yen)

AssetsCurrent assets:
Cash and time deposits (Notes 14 and 16)
Notes and accounts receivable, trade (Note 14)
Inventories (Note 3)
Deferred tax assets (Note 11)
Other current assets
Less: Allowance for doubtful accounts
Total current assets¥

Property, plant and equipment:
Buildings and structures (Notes 5 and 7)
Machinery and equipment (Notes 5 and 7)
Land (Notes 4 and 7)
Leased assets
Construction in progress
Less: Accumulated depreciation
Net property, plant and equipment

Investments and other assets:
Investment securities (Notes 7, 14 and 15)
Investments in unconsolidated subsidiaries and associates(Note 6)
Deferred tax assets (Note 11)
Goodwill
Mining right (Note 5)
Other assets (Note 5)
Less: Allowance for doubtful accounts
Total investments and other assets

Total assets¥

2015(Thousands of
U.S. dollars)(Note 2)

8,628 ¥
15,95343,068
511
1,989
(0)
70,15011,493
13,59734,864
568
1,966
(0)
62,48926,64482,187
16,991
184
606
126,614(76,561)
50,05225,78979,667
16,961
183
740
123,342(71,338)
52,004

221,719
683,922
141,391
1,531
5,042
1,053,624(637,105)
416,509

3,720

3,685

30,956719
55
510
24,9962,398(634)
31,766475
330
527
23,8082,448(754)
30,521

5,983
457
4,243
208,005
19,955(5,275)
264,342

145,014$ 1,264,625

151,970¥$

71,798132,753
358,392
4,252
16,551(0)583,7562

March 31,
2015
2014
(Millions of yen)

Liabilities and net assets
Current liabilities:
Notes and accounts payable, trade (Note 14)
Short-term borrowings (Notes 7 and 14)
Current portion of long-term debt (Notes 7 and 14)
Commercial papers (Note 7)
Lease obligations (Note 7)
Accrued income taxes
Accrued expenses
Other current liabilities
Total current liabilities¥

Long-term liabilities:
Long-term debt (Notes 7 and 14)
Lease obligations (Note 7)
Deferred tax liabilities (Note 11)
Deferred tax liabilities related to land revaluation (Notes 4
and 11)
Net defined benefit liability (Note 8)
Accrued directors’ and audit & supervisory board members’
retirement benefits
Accrued environmental measures
Asset retirement obligations (Note 9)
Other long-term liabilities
Total long-term liabilities
Total liabilities
Net assets (Note 10):
Shareholders’ equity:
Common shares:
Authorized – 264,000,000 shares
Issued– 135,855,217 shares in 2015 and 2014
Capital surplus
Retained earnings
Less: Treasury shares, at cost – 58,025 shares in 2015 and57,206 shares in 2014
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized gains on other securities(Losses) gains on deferred hedges
Revaluation reserve for land (Note 4)
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

¥

6,686
16,853
7,800
6,000
48
1,575
2,607
4,639
46,210¥7,050
22,478
11,225
–
45
1,311
2,275
2,595
46,981

2015(Thousands of
U.S. dollars)(Note 2)$

55,637140,242
64,90849,929399
13,106
21,69438,603
384,538

32,332
138
345

27,196
172–

269,052
1,148
2,870

4,592
551

5,061
1,838

38,212
4,585

21
11
1,555
1,668
41,21887,428

30
112
1,359
2,487
38,257
85,239174
91
12,94013,880342,997
727,535

14,6309,876
25,226

14,6309,876
22,687

121,744
82,183
209,919(24)
49,709(24)
47,171(199)
413,655

1,054
(28)
8,759
4,822
224
14,83264,542
151,970 ¥

823
73
8,290
3,368
47
12,60359,774145,014

8,770
(233)
72,88840,126
1,864
123,425
537,089$ 1,264,625

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

3

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Income
Year ended March 31,
2015
2014
2015
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)
Net sales
Cost of sales
Gross profit¥ 121,093
103,336
17,756¥ 118,619
103,358
15,261$ 1,007,680
859,915
147,757

6,870
1,507
45
0
263
147
2,025
10,860
6,895

5,340
1,637
44
0
242
178
2,067
9,511
5,749

57,16912,540
374
0
2,188
1,223
16,85190,371
57,377

113
(542)
46
(1,002)
(174)
0
458
108
(39)
(1,033)
5,862

124
(443)
621
(1,980)
(201)
(2)
271
107
257
(1,246)
4,503

940(4,510)382(8,338)(1,447)
0
3,811
898
(324)
(8,596)48,780

2,756
362
3,119
2,743
2,743

2,576
255
2,832
1,670
1,670

22,934
3,012
25,954
22,82522,825

Selling, general and administrative expenses:
Transportation expense
Salaries and wages
Retirement benefit expenses
Provision of allowance for doubtful accounts
Depreciation
Research and development costs
Other
Operating income
Other income (expenses):
Interest and dividend income
Interest expenses
Royalty income
Foreign exchange losses
Loss on retirement of property, plant and equipment
Impairment loss on fixed assets (Note 5)
Gain on sales of investment securities, net
Corporate house rents borne by employees
Other, net
Income before income taxes and minority interests
Income taxes (Note 11):
Current
DeferredIncome before minority interests
Net income

¥

¥

$

(U.S. dollars)(Note 2)(Yen)
Per share:
Net income – basic

¥

20.20

¥

12.30

$

0.16

Cash dividends

¥

7.00

¥

5.00

$

0.05

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

4

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Year ended March 31,
2015
2014
2015
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)
Income before minority interests

¥

2,743

Comprehensive income

¥

230
(102)
468
1,453
177
2,228
4,972

Comprehensive income attributable to:
Owners of the parent
Minority interests¥

Other comprehensive income (Note 18):
Net unrealized gains on other securities
Losses on deferred hedges
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income

4,972
–

¥

1,670

$

22,825

¥

42
(408)
–
2,509
–
2,142
3,813 $

1,913
(848)
3,894
12,091
1,472
18,54041,374

3,813–

41,374–¥$

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

5

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets
Shareholders’ equity
Number ofshares ofcommonshares issued(Thousands)
Balance as of April 1, 2013
Dividends of surplus
Net income
Acquisition of treasury shares
Net changes in items other than those inshareholders’ equity
Balance as of March 31, 2014
Cumulative effect of change in accounting
policies
Balance as of April 1, 2014
Dividends of surplus
Net income
Acquisition of treasury shares
Net changes in items other than those inshareholders’ equity

135,855–––

Balance as of March 31, 2015

135,855

Commonshares¥

14,630–––Capitalsurplus
¥

9,876
–
–
–

Retained
Treasury
earnings
shares (*)(Millions of yen)¥

21,696
(678)
1,670
–

¥

(23)
–
–
(0)

Total
shareholders’equity¥46,179
(678)
1,670
(0)

–
135,855–
14,630–9,876–
22,687–(24)–
47,171

–
–
–
–
–

–
14,630
–
–
–

–
9,876
–
–
–

474
23,162
(678)
2,743
–

–
(24)
–
–
(0)

474
47,645
(678)
2,743
(0)

–

–
¥

14,630

–
¥

9,876

–
¥

25,226

–
¥

(24)

–
¥

49,709

Shareholders’ equity
CommonsharesBalance as of March 31, 2014
Cumulative effect of change in accounting
policies$ 121,744

Balance as of April 1, 2014
Dividends of surplus
Net income
Acquisition of treasury shares
Net changes in items other than those inshareholders’ equity
Balance as of March 31, 2015

CapitalRetained
Treasury
surplusearnings
shares (*)(Thousands of U.S. dollars )(Note 2)$

82,183$ 188,790––

121,744–––

82,183––––$ 121,174

$

(199)

$ 392,535

3,944

–

3,944

192,743(5,642)
22,825
–

(199)
–
–
(0)

396,479(5,642)
22,825(0)––82,183$ 209,919$

Total
shareholders’equity

$

–

–

(199)

$ 413,655

6

Accumulated other comprehensive incomeNet
unrealized
gains onothersecurities

Gains(losses) on
deferredhedgesForeign
Remeasurecurrency
Revaluation
ments oftranslation
reserve fordefinedadjustment benefit plans
land(Millions of yen)

Balance as of April 1, 2013
Dividends of surplus
Net income
Acquisition of treasury shares
Net changes in items other than thosein shareholders’ equity
Balance as of March 31, 2014
Cumulative effect of change inaccounting policies
Balance as of April 1, 2014
Dividends of surplus
Net income
Acquisition of treasury shares
Net changes in items other than thosein shareholders’ equity

¥

¥

¥

Balance as of March 31, 2015

¥

781
–
–
–

482
–
–
–

8,290
–
–
–

¥

859
–
–
–

¥

–
–
–
–

Total
accumulated
othercomprehensive
income¥10,413–––Total
net assets¥

56,593
(678)
1,670
(0)

42

(408)

–

2,509

47

2,190

2,190

823

73

8,290

3,368

47

12,60359,774

–
823
–
–
–

–
73
–
–
–

–
8,290
–
–
–

–
3,368
–
–
–

–
47
–
–
–

–
12,603–––474
60,249
(678)
2,743
(0)

(102)

230
1,054

¥

(28)

468
¥

8,759

1,453
¥

4,822

177
¥

2,228

2,228

14,832¥ 64,542

Total
accumulated
othercomprehensive
incomeTotal
net assets

391$ 104,876$ 497,411

224¥

Accumulated other comprehensive income

Balance as of March 31, 2014
Cumulative effect of change inaccounting policies

Net
unrealized
gains onothersecurities

Gains(losses) on
deferredhedgesForeign
RemeasureRevaluation
currency
ments ofreserve fortranslation
definedland
adjustment benefit plans(Thousands of U.S. dollars )(Note 2)

$

$

607

$ 68,985$ 28,026

–

–

–

–

–

–

3,944

6,848
–
–
–

607
–
–
–

68,985–––28,026
–
–
–

391
–
–
–

104,876–––

501,364(5,642)
22,825(0)Balance as of April 1, 2014
Dividends of surplus
Net income
Acquisition of treasury shares
Net changes in items other than thosein shareholders’ equity
Balance as of March 31, 2015

6,848

1,913
$

8,770

$

(848)

3,894

12,091(233)$ 72,888$ 40,126

$

$

1,472

18,54018,5401,864$ 123,425$ 537,089(*) There were 58,025 shares and 57,206 shares of treasury shares as of March 31, 2015 and 2014,
respectively.

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

7

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year ended March 31,
2015
2014
2015
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)
Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation
Impairment loss on fixed assets
Amortization of goodwill
Decrease in allowance for doubtful accounts
Decrease in net defined benefit liability
Interest and dividend income
Interest expenses
Foreign exchange losses
Net loss on sales and retirement of property, plant and equipment(Decrease) increase in notes and accounts receivable, trade
Increase in inventories(Decrease) increase in notes and accounts payable, trade
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities

5,862
8,349
0
43
(120)
(290)
(113)
542
835
161
(1,999)(8,057)
(539)
287
4,962
123
(393)
(2,480)2,212¥ 4,503
8,342
2
42
(0)
(278)
(124)
443
1,945
191
1,172
(3,476)
1,909(2,320)12,352111(500)(3,562)
8,401

Cash flows from investing activities:
Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for purchases of intangible assets
Payments for purchases of investment securities
Other, net
Net cash used in investing activities(3,004)12(2,343)(3)
268(5,070)(3,406)10(2,163)(4)811(4,753)(24,997)
99(19,497)(24)
2,230(42,190)

Cash flows from financing activities:
Decrease in short-term borrowings
Proceeds from long-term debt
Repayments of long-term debt
Increase (decrease) in commercial papers
Cash dividends paid
Other, net
Net cash used in financing activities(5,731)
11,427(10,989)
6,000
(678)
(52)
(25)

6,000
(2,897)(6,000)(678)(18)(3,594)(47,690)
95,090(91,445)
49,929(5,642)
(432)
(208)

18
(2,864)
11,493¥ 8,62824
78
11,414¥ 11,493

149(23,832)
95,63971,798

Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 16)

¥

$

$

48,78069,4760357(998)(2,413)
(940)
4,510
6,948
1,339
(16,634)(67,046)(4,485)
2,388
41,291
1,023(3,270)(20,637)
18,407

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

8

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2015

1.

Summary of Significant Accounting Policies(a) Basis of presentation
Toho Zinc Co., Ltd. (the “Company”) and its domestic subsidiaries maintain their books of account inconformity with accounting principles generally accepted in Japan, and its foreign subsidiaries
maintain their books of account in conformity with International Financial Reporting Standards(“IFRS”) or those of their countries of domicile.
The accompanying consolidated financial statements of the Company and its consolidated subsidiaries(collectively, the “Companies”) are prepared on the basis of accounting principles generally acceptedin Japan, which are different in certain respects as to application and disclosure requirements of IFRS,
and are compiled from the consolidated financial statements prepared by the Company as required by
the Financial Instruments and Exchange Act of Japan.
Certain amounts in the prior year’s financial statements have been reclassified to conform to thecurrent year’s presentation.
As permitted under the Financial Instruments and Exchange Act, amounts of less than one million yen
have been omitted. As a result, the totals shown in the accompanying consolidated financial
statements (both in yen and in U.S. dollars) do not necessarily agree with the sums of the individual
amounts.
Certain items presented in the consolidated financial statements submitted to the Director of Kanto
Local Finance Bureau in Japan have been reclassified in the accompanying consolidated financial
statements for the convenience of readers outside Japan.
(b) Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its
significant subsidiaries that are controlled by the Company. Under the effective control approach, allsignificant majority-owned companies are to be consolidated. Additionally, companies in whichshare ownership equals 50% or less may be required to be consolidated in cases where suchcompanies are effectively controlled by other companies through the interests held by a party who has
a close relationship with the parent. All significant intercompany transactions and accounts are
eliminated in consolidation.
(c) Foreign currency translation(1) Foreign currency transaction
All receivables and payables denominated in foreign currencies are translated into Japanese yenat the exchange rate prevailing at the balance sheet date.

9(2) Foreign currency financial statements
Assets and liabilities of the foreign consolidated subsidiaries are translated into Japanese yen at
the current exchange rate prevailing at the balance sheet date. Revenue and expense accounts
are translated at the current exchange rate prevailing at the balance sheet date. Foreign
currency translation adjustments are included in net assets.
(d) Cash and cash equivalents
Cash and cash equivalents in the consolidated statement of cash flows are composed of cash on hands,bank deposits withdrawable on demand and short-term investments with original maturities of threemonths or less and minor risk for the fair value fluctuation.
(e) Inventories
Merchandise, finished goods, semi-finished goods, work in process and raw materials are stated at thelower of cost or net selling value, for which cost is primarily determined by the first-in first-out
method. Supplies are stated at the lower of cost or net selling value, for which cost is determined by
the moving average method.
(f)Financial instruments(1) Investment securities
Marketable securities classified as other securities are carried at fair value based on the averageof market price during the last month of the fiscal year with any changes in unrealized gains orlosses, net of income taxes, included directly in net assets. Cost of securities sold is determinedby the moving average method. Non-marketable securities classified as other securities arecarried at cost determined by the moving average method.
(2) Derivatives
The Company has entered into various derivative transactions, including forward foreignexchange contracts, interest rate swaps and commodity futures, in order to manage certain risks
arising from adverse fluctuations in foreign currency exchange rates, interest rates andcommodity prices, respectively.
All derivatives are recognized in the balance sheet at fair value, with changes in fair value
included in net income for the period in which they arise, except for derivatives that aredesignated as “hedging instruments” (see Note 1. (f) (3) Hedge accounting below).
(3) Hedge accounting
Gains or losses arising from changes in fair value of the derivatives designated as “hedging
instruments” are deferred as an asset or liability and included in net income in the period during
which the gains and losses on the hedged items or transactions are recognized.
Hedging instruments are derivative transactions including commodity futures and interest rate
swaps. The related hedged items are receivables and payables in connection with raw materials
and finished goods and long-term debt, respectively.
The Company has a policy to utilize the above hedging instruments in order to reduce theCompany’s exposure to the risks of the price and interest rate fluctuations.

10

The Company evaluates effectiveness of its hedging activities using the method or the likereferring to the accumulated gains or losses on the hedging instruments and the related hedged
items from the commencement of the hedging transactions regarding commodity futures. The
Company omits to assess hedge effectiveness of interest rate swaps which qualify for hedge
accounting and meet specific criteria.
(g) Property, plant and equipment and depreciation
Property, plant and equipment, except for leased assets, are stated at cost and mainly depreciated by
the straight-line method over the estimated useful lives of the respective assets.
(h) Intangible assets and amortization
Mining right is mainly amortized by using the unit-of-production method. Goodwill, software forinternal use and other assets are amortized by using the straight-line method. Amortization period of
goodwill is determined on a reasonable basis within 20 years. Software for internal use is amortizedover estimated useful lives (5 years).
(i)

LeasesLeased assets which are under finance leases and capitalized are primarily the storage equipment(structures) in Smelting business and depreciated over the lease terms of the respective assets by thestraight-line method with no residual value.

(j)

Allowance for doubtful accounts
Allowance for doubtful accounts is provided at an amount sufficient to cover possible losses oncollection. The allowance consists of the estimated uncollectible amounts with respect to specificreceivables plus an amount based on historical experience of bad debt with respect to otherreceivables.

(k) Retirement benefits(1) Method for attribution of expected retirement benefits to periods
In the calculation of retirement benefit obligations, the expected retirement benefits are
attributed to the period up to the end of the current fiscal year based on the benefit formula
method.
(2) Accounting method for actuarial gains and losses and past service costs
Actuarial gains and losses are amortized by the straight-line method over a certain period (10years) which is within the average remaining years of service of the eligible employees when
the gains or losses arise, from the year following the year in which the gains and losses arise.
Past service costs are amortized as incurred by the straight-line method over a certain period (10years) which is within the average remaining years of service of the eligible employees when
the gains or losses arise.
(3) Accounting method for unrecognized actuarial gains and losses and unrecognized past service
costs
Unrecognized actuarial gains and losses and unrecognized past service costs are recorded as11remeasurements of defined benefit plans under accumulated other comprehensive income of net
assets after tax effect adjustments.
(4) Application of the simplified method for small enterprises, etc.
Some of its consolidated subsidiaries apply the simplified method in the calculation of their net
defined benefit liability and retirement benefit expenses. Under the simplified method, thebenefits payable assuming the voluntary retirement of all eligible employees at the year-end are
deemed as retirement benefit obligations.
(l) Accrued directors’ and audit & supervisory board members’ retirement benefits
In order to prepare for the disbursements of the directors’ and audit & supervisory board members’
retirement benefits, the Companies record an amount required to be paid out at the end of the fiscal
year which is calculated based on internal rules.
Note that the Company discontinued the system for directors’ and audit & supervisory board members’
retirement benefits in accordance with a resolution by the board of directors held on May 22, 2007,
and hence the balance at the fiscal year-end is the amount based on the periods in which the directors
and audit & supervisory board members served prior to June 2007.
(m) Accrued environmental measures
Accrued environmental measures are estimated and recorded to provide for future potential costs
related to disposal of polychlorinated biphenyl waste.
(n) Provision for loss on construction contracts
Provision for loss on construction contracts is provided in amounts sufficient to cover probable loss on
construction contracts at fiscal year-end when substantial loss in the future is anticipated and can bereasonably estimated.
(o) Income taxes
Deferred tax assets and liabilities are determined based on the differences between the financial
reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates
and laws which will be in effect when the differences are expected to reverse.
(p) Recognition of revenues
Revenues and costs of construction contracts of which the percentage of completion can be reliably
estimated are recognized by the percentage-of-completion method. The percentage of completion is
calculated as the cost incurred to the estimated total cost. The completed-contract method continues tobe applied to contracts for which the percentage of completion cannot be reliably estimated.
(q) Appropriation of retained earnings
Cash dividends and transfers to legal reserve are recorded in the fiscal year in which the proposed
appropriation of retained earnings is approved at the shareholders’ meeting.

12

(r) Net income per share
Net income per share is computed based on the net income available for distribution to shareholders ofcommon shares and the weighted average number of common shares outstanding during the year.
(s) Asset retirement obligations
Asset retirement obligations are calculated based on the estimated exploration period fromcommencement of operation, which is deemed as estimated usable period, using the discount rate of
1% for the years ended March 31, 2015 and 2014. The amount presents mainly the obligations of
CBH Resources Ltd. (“CBH”) to restore its mine sites at Endeavor Mine and Rasp Mine to originalstates upon closure.
(t) Change in accounting policy(Application of the Accounting Standard for Retirement Benefits and related Guidance)
The Company has applied the main clause of Paragraph 35 of the “Accounting Standard for
Retirement Benefits” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 26, issued on
May 17, 2012) (the “Accounting Standard”) and the main clause of Paragraph 67 of the “Guidance on
Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, issued on March 26, 2015)(the “Guidance”) from the fiscal year ended March 31, 2015. Consequently, the calculation method
regarding retirement benefit obligations and current service costs was reviewed and the method of
attributing expected benefit to periods was changed from straight-line basis to benefit formula basis.
The method of determining the discount rate was also changed from that using the discount rate basedon the average remaining periods of service to that using the single weighted average discount rate
reflecting the expected retirement payment period and the amount of each expected retirement
payment period.
In accordance with the transitional treatment provided for in Paragraph 37 of the Accounting Standard,
the amount of financial impact resulting from the change in the calculation method of retirement
benefit obligations and service costs was added to, or deducted from, retained earnings as of April 1,
2014.
As a result of this change, defined benefit liability decreased by ¥737 million ($6,132 thousand) andretained earnings increased by ¥474 million ($3,944 thousand) as of April 1, 2014. Operating
income, and income before income taxes and minority interests for the year ended March 31, 2015
increased respectively by ¥25 million ($208 thousand).
In line with these, net assets per share and net income per share as of and for the year ended March 31,
2015 increased by ¥3.61 ($0.03) and ¥0.12 ($0.001), respectively.
(u) Accounting standards and guidance issued but not yet adopted- “Revised Accounting Standards for Business Combinations” (ASBJ Statement No. 21, issued on
September 13, 2013)- “Revised Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22,
issued on September 13, 2013)- “Revised Accounting Standard for Business Divestitures” (ASBJ Statement No. 7, issued on
September 13, 2013)- “Revised Accounting Standard for Earnings Per Share” (ASBJ Statement No. 2, issued on
September 13, 2013)- “Revised Guidance on Accounting Standards for Business Combinations and Accounting Standard
for Business Divestitures” (ASBJ Guidance No. 10, issued on September 13, 2013)13

- “Revised Guidance on Accounting Standard for Earnings Per Share” (ASBJ Guidance No. 4, issued
on September 13, 2013)(1) Overview
Under these revised accounting standards, the ASBJ amended accounting treatment for changes
in a parent’s ownership interest in a subsidiary when the parent retains control over thesubsidiary and acquisition-related costs. In addition, the presentation of net income, theappellation of “minority interests” (changed to “non-controlling interests”), and accounting
treatment for adjustments to provisional amounts during measurement period were also
amended.
(2) Date of application
The revised standards and guidance except for accounting treatment for adjustments toprovisional amounts are applied effective from the beginning of the year ending March 31, 2016.
Accounting treatment for adjustments to provisional amounts is applied for businesscombinations effective on or after April 1, 2015.
(3) Effect of applying revised accounting standards and guidance
The Company is currently evaluating the effect of applying the “Revised Accounting Standards
for Business Combinations” and other revised standards on its consolidated financial
statements.
(v) Reclassifications
Certain reclassifications have been made to the prior year amounts to conform to the current year
presentation.
2.

U.S. Dollar Amounts

U.S. dollar amounts presented in the accompanying consolidated financial statements and notes areincluded solely for the convenience of readers outside Japan, at the prevailing exchange rate of ¥120.17 to
U.S. $1 on March 31, 2015. These translations should not be construed as representations that the yenamounts actually represent, or have been or could be converted into U.S. dollars at that or any other rate.

14

3.

Inventories

Inventories as of March 31, 2015 and 2014 consisted of the following:
March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)
Merchandise and finished goods
Work in process
Raw materials and supplies¥

14,082
9,114
19,871¥

11,045
7,752
16,066

$

Total

¥

43,068¥34,864$

117,183
75,842
165,357
358,392

Inventories for construction contracts with anticipated substantial loss and provision for loss on
construction contracts were not offset. The amount of the inventories based on the construction contracts
for the year ended March 31, 2015, for which provision for loss on construction contracts was provided,was ¥48 million ($399 thousand). The amount was all included in work in process. No inventories wererecorded, for which provisions for loss on construction contracts was provided, for the year ended March
31, 2014.
Provision for loss on construction contracts included in the cost of sales for the year ended March 31, 2015was ¥48 million ($399 thousand).

4.

Land Revaluation

In accordance with the Act on Revaluation of Land, the Company’s land used for its business operations
was revalued as follows:
Date of revaluation: March 31, 2000
The differences between total fair value of land and the total book value after revaluation of land as ofMarch 31, 2015 and 2014 were ¥7,569 million ($62,985 thousand) and ¥7,219 million, respectively.
The tax effect of the excess on revaluation is recorded as deferred tax liabilities related to land revaluation
which is included in liabilities, and the remainder, net of income taxes portion of the excess on revaluation,is presented as revaluation reserve for land which is included in net assets.

5.

Impairment Loss on Fixed Assets

The Companies recognized impairment losses on the assets group for the years ended March 31, 2015 and2014 as follows:

Location
Annaka City, Gunma

Year ended March 31, 2015
Use
Category
Idle assets
Machinery and equipment
Other
Total

(Millions of
yen)
¥
0
0
¥
0

(Thousands of
U.S. dollars)
$
0
0
$
0

15

Year ended March 31, 2014
Location
Annaka City, Gunma

Use
Idle assets

Category
Machinery and equipment
Other
Total

(Millions of
yen)
¥
2
0
¥
2

Business assets of the Company are grouped based on the categories used for its managerial accounting.
With respect to idle assets, each asset is treated as an individual unit to apply the accounting for the
impairment.
For the year ended March 31, 2015 and 2014, the Company recognized impairment losses for entire bookvalue of idle assets on the ground that they were projected to generate no future cash inflows and were notreadily salable either.

6.

Investments in Unconsolidated Subsidiaries and Associates

Investments in unconsolidated subsidiaries and associates as of March 31, 2015 and 2014 are summarized
as follows:
March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)
Unconsolidated subsidiaries
Associates

7.

¥

625
94

¥

¥

719

¥

381
94
475

$

5,200
782
5,983

$

Short-Term Borrowings and Long-Term Debt

Short-term borrowings and long-term debt as of March 31, 2015 and 2014 consisted of the following:
March 31,

Amount(Millions ofyen)
Short-term borrowings
Commercial papers
Current portion of
long-term debt
Current portion of leaseobligations
Long-term debt
Lease obligations

¥

Total

¥

2015
Weighted
averageinterest rate

Due in2014

2015

Amount(Millions ofyen)Amount(Thousands of
U.S. dollars)¥$

22,478–16,853
6,000

1.4%
0.1

7,800

0.9

11,22564,90848
32,332138–
0.7

2016.4 – 2023.10–

2016.4 – 2025.3

45
27,196
172
61,118399
269,0521,148
525,696

63,173¥$140,242
49,92916

Average interest rates are calculated by using weighted-average interest rates as of March 31, 2015.
Average interest rates on lease obligations are not provided because interest equivalents included in the
total lease payments are allocated to each applicable fiscal year on a straight-line basis.
The maturities of long-term debt and lease obligations outstanding as of March 31, 2015 were as follows:
Long-term
debtYear ending March 31,
2016
2017
2018
2019
2020
Thereafter
Total

¥

¥

Lease
obligations(Millions of yen)
7,800 ¥
48
6,727
35
3,647
35
7,848
9
9,438
9
4,672
48
40,132 ¥186

Long-term
debt

Lease
obligations(Thousands of U.S. dollars)$
64,908 $399
55,979291
30,348291
65,30774
78,53874
38,878399$
333,960 $1,547

Assets pledged as collateral for the long-term debt, including the current portion, as of March 31, 2015 and2014 were as follows:
March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)

Pledged assets

Land (*1)
Buildings and structures (*1)
Machinery and equipment (*1)
Investment securities (*2)¥

13,792
4,782
6,667
125

¥

13,792
4,768
6,883
79

$

114,770
39,79355,479
1,040

Total

¥

25,367¥25,524$211,092(*1) For the above assets, a revolving mortgage is set at the maximum amount of ¥1 million($8 thousand) with one bank as of March 31, 2015 and 2014.
(*2) These assets are pledged for the long-term debt, including the current portion, of ¥20 million($166 thousand) and ¥29 million as of March 31, 2015 and 2014, respectively.

8.

Retirement Benefit Plans

The Company and its domestic consolidated subsidiaries have funded and unfunded defined benefit plans
and lump-sum payment plans. The defined benefit corporate pension plans, all of which are funded, provide
lump-sum or pension benefits based on salaries and the length of service. The lump-sum payment plans,
which are unfunded, provide lump-sum benefits based on salaries and the length of service. In addition,certain consolidated subsidiaries apply the simplified method to calculate retirement benefit liabilities andretirement benefit expenses, where the required contributions to the pension fund are accounted for as
retirement benefit expenses.
Information regarding the Company’s defined benefit plans for the years ended March 31, 2015 and 2014
was as follows:17

(a) The changes in the retirement benefit obligations for the years ended March 31, 2015 and 2014 are as
follows:
Year ended March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)
Retirement benefit obligation at beginning of year
Cumulative effects of changes in accounting
policies
Restated balance
Service costs
Interest costs
Actuarial gains and losses arising during year

¥

4,137

¥

(737)
3,399
258
22
65
(251)
3,494

Retirement benefits paid
Retirement benefit obligation at end of year

¥

4,062

$

34,426

¥

–
4,062
212
46
(38)
(146)
4,137 $

(6,132)28,284
2,146
183
540
(2,088)29,075(b) The changes in plan assets for the years ended March 31, 2015 and 2014 are as follows:Year ended March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)
Plan assets at beginning of year
Expected return on plan assets
Actuarial gains and losses arising during year
Contributions from employer
Retirement benefits paid

¥

2,488
49
369
476
(251)

¥

1,913 $
38
211
471
(146)

20,704
407
3,070
3,961
(2,088)Plan assets at end of year

¥

3,133

¥

2,488

26,071$(c) The changes in net defined benefit liabilities accounted for using the simplified method for the years
ended March 31, 2015 and 2014 are as follows:Year ended March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)
Net defined benefit liability at beginning of year
Retirement benefit expenses
Retirement benefits paid

¥

190
11
(11)
–

¥

¥

190

¥

Contribution to plans
Net defined benefit liability at end of year

199 $
13
(22)
–
190 $

1,581
91
(91)
–
1,581

18

(d) The following table sets forth the funded status of the plans and the amounts recognized in the
consolidated balance sheets as of March 31, 2015 and 2014.
March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)
Retirement benefit obligation for funded plans
Plan assets

¥

3,494
(3,133)361¥

4,137 $
(2,488)
1,648

29,075(26,071)
3,004

Retirement benefit obligation for unfunded plans
Net balance of liability and asset recognized on the
consolidated balance sheet

190

190

1,581

551

1,838

4,585

Net defined benefit liability
Net balance of liability and asset recognized on the
consolidated balance sheet

551

1,838

4,585

¥

551

¥

1,838

$

4,585

(e) The components of retirement benefit expenses for the years ended March 31, 2015 and 2014 are as
follows:
Year ended March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)Service costs
Interest costs
Expected return on plan assets
Amortization of actuarial gains and losses
Amortization of past service costs
Retirement benefit expenses calculated using thesimplified method
Retirement benefit expenses under defined benefit
plans
(f)

¥

255
22
(49)
(5)
(38)

¥

11
¥

193

¥

212 $
46
(38)
19
(38)

2,121
183
(407)
(41)
(316)

13

91

214

$

1,606

Remeasurements of defined benefit plans
The components of remeasurements of defined benefit plans included in other comprehensive income(before tax effect) for the years ended March 31, 2015 and 2014 are as follows:Year ended March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)
Actuarial gains and losses
Past service costs

¥

304
–

¥

Total

¥

304

¥

–
–
–

$

2,529
–

$

2,529

19

The components of remeasurements of defined benefit plans included in accumulated othercomprehensive income (before tax effect) as of March 31, 2015 and 2014 are as follows:
March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)
Unrecognized actuarial gains and losses¥

Unrecognized past service costs
¥

Total

215
116
332

¥
¥

(82) $
155
73 $

1,789
965
2,762

(g) Plan assets(1) Breakdown of plan assets
Percentage of each main category to total plan assets is as follows:Year ended March 31,
2014
2015
Debt securities
Equity securities
General account
Other

27%
58
12
3

26%
57
14
3

Total

100%

100%

(2) Determination of expected long-term rate of return on plan assets
In determining the expected long-term rate of return on plan assets, the Company takes into
consideration the current and future plan asset allocation as well as the current and expectedlong-term rate of return on various asset categories comprising plan assets.
(h) Actuarial assumptions
Year ended March 31,
2014
2015
Weighted-average actuarial assumptions at end of year:
Discount rate
Expected long-term rate of returnLump-sum election rate

0.4%
2.0
100.0

1.1%
2.0
100.0

20

9.

Asset Retirement Obligations

The changes in asset retirement obligations for the years ended March 31, 2015 and 2014 were as follows:Year ended March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)
Balance at beginning of year
Additional provisions associated with the purchasesof property, plant and equipment
Adjustment associated with the passage of time
Decrease associated with the settlement

¥

1,359

¥

140
12
(15)
58
1,555

Other
Balance at end of year

¥

1,368

¥

–
13
–
(22)
1,359

$

11,308

$

1,165
99
(124)
482
12,940

10. Net Assets
Information regarding changes in net assets for the years ended March 31, 2015 and 2014 is as follows:(a) Shares issued and outstanding / Treasury shares
For the year ended March 31, 2015

Types of shares
Shares issued and outstanding:Common shares
Treasury shares:
Common shares (Note)

Number ofshares as ofApril 1, 2014

Increase
Decrease(Thousands of shares)

Number ofshares as ofMarch 31, 2015

135,855––

135,855

57

0

–

58

Note: The increase of 0 thousand shares is due to purchase of shares of less than standard unit.
For the year ended March 31, 2014

Types of shares
Shares issued and outstanding:Common shares
Treasury shares:
Common shares (Note)

Number ofshares as ofApril 1, 2013

Increase
Decrease(Thousands of shares)

Number ofshares as ofMarch 31, 2014

135,855––

135,855

56

0

–

57

Note: The increase of 0 thousand shares is due to purchase of shares of less than standard unit.

21

(b) Dividends(1) Dividends paid
For the year ended March 31, 2015
Type ofsharesResolution
Annual general meeting of theshareholders on June 27, 2014

Total dividends

Dividends per
share(Millions of yen)

(Yen)

Commonshares¥678

Cut-off
date

Effective
date

March 31,2014

June 30,
2014

Cut-off
date

Effectivedate5

March 31,2013

June 28,2013

Dividends per
share

Cut-off
date

Effective
date

March 31,2014

June 30,
2014

¥

5

For the year ended March 31, 2014
Resolution

Type ofsharesTotal dividends(Millions of yen)

Dividends per
share
(Yen)

Annual general meeting of theshareholders on June 27, 2013

Commonshares¥¥Type ofsharesTotal dividends

678

For the year ended March 31, 2015
Resolution(Thousands of U.S.
dollars)
Annual general meeting of theshareholders on June 27, 2014

Commonshares$

5,642(U.S. dollars)

$

0.04

(2) Dividends with the cut-off date in the year ended March 31, 2015 and the effective date in theyear ending March 31, 2016

Resolution

Type ofsharesTotal
dividends

Source ofdividends

Dividends
per share(Millions of

Cut-off
date

Effective
date

(Yen)

yen)

Annual general meeting of theshareholders on June 26, 2015

Commonshares¥950

Retainedearnings¥

7

March 31,2015

June 29,2015

Resolution

Type ofsharesTotal
dividends

Source ofdividends

Dividends
per share

Cut-off
date

Effective
date

March 31,2015

June 29,
2015(Thousands of(U.S. dollars)

U.S. dollars)

Annual general meeting of theshareholders on June 26, 2015

Commonshares$7,905

Retainedearnings$

0.05

The Companies Act of Japan provides that an amount equal to 10% of the amount to be disbursed as
distributions of capital surplus (other than the capital reserve) and retained earnings (other than the legal
reserve) be transferred to the capital reserve and the legal reserve, respectively, until the sum of the capitalreserve and the legal reserve equals 25% of the common shares. Such distributions can be made at any
time by resolution of the shareholders, or by the board of directors if certain conditions are met.

2211. Income Taxes
As of March 31, 2015 and 2014, significant components of deferred tax assets and liabilities were as
follows:
March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)
Deferred tax assets:
Net defined benefit liability
Asset retirement obligations
Inventories write-off
Property, plant and equipment
Accrued employees’ bonus
Accrued enterprise tax¥

Deferred losses on hedges
Elimination of intercompany profits
Other
Gross deferred tax assets
Less: Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized gains on other securities
Mining right
Deferred gains on hedges
Special tax-purpose reserve for reduction entry oftangible assets
Reserve for special depreciation
Asset retirement obligations
Other
Total deferred tax liabilities

161
461
201
653
167
119
13
61
1,857

¥

683
398
284
458
181

$

1,339
3,836
1,672
5,433
1,389

101
–
39
1,629

990
108
507
15,453

3,697(1,686)
2,010

3,776
(1,335)2,441

30,764(14,030)
16,726

(481)
(578)

(454)
(421)

(4,002)(4,809)

–

(40)

–

(10)

(13)

(83)

(70)

–

(582)

(1)
(646)

$

(8)
(5,375)(14,887)
1,839$

38,212

Net deferred tax assets¥(1,789)221

Deferred tax liabilities:
Deferred tax liabilities related to land revaluation

¥

4,592

¥

(6)
(606)
(1,543)
898

¥

5,061

23

The reconciliation between the statutory tax rate and the effective tax rate for the years ended March 31,
2015 and 2014 was as follows:Year ended March 31,
2014
2015
Statutory tax rate
Increase (decrease) due to:Loss of foreign consolidated subsidiaries
Reduction of deferred tax assets due to change in income tax
rate
Other

35.6%

38.0%

17.3

23.4

0.2
0.1

1.2
0.2

Effective tax rate

53.2%

62.9%

The “Act for Partial Revision of the Income Tax Act, etc.” (Act No. 9 of 2015) and the “Act for Partial
Revision of the Local Tax Act, etc.” (Act No. 2 of 2015) were promulgated on March 31, 2015, and thecorporate tax rate will be reduced from the year beginning on or after April 1, 2015. Consequently, thestatutory tax rate used to calculate deferred tax assets and deferred tax liabilities was changed from 35.64%
to 33.10% for temporary differences expected to be settled or realized in the year beginning April 1, 2015
and to 32.34% for temporary differences expected to be settled or realized in or after the year beginning
April 1, 2016.
As a result of this change, deferred tax assets, after deducting deferred tax liabilities, and gain on deferredhedges, decreased by ¥24 million ($199 thousand) and ¥1 million ($8 thousand) while income taxes –deferred, net unrealized gain on other securities and remeasurements of defined benefit plans increased by¥83 million ($690 thousand), ¥49 million ($407 thousand) and ¥10 million ($83 thousand), respectively, forthe year ended March 31, 2015.
In addition, deferred tax liabilities related to land revaluation decreased by ¥468 million ($3,894 thousand)and revaluation reserve for land increased by the same amount.

12.

LeasesAs lessee:
Pro forma information on an “as if capitalized” basis of finance lease contracts commencing prior to April 1,
2008, which are accounted for in the same manner as operating leases, is not shown as they are immaterial.
There were no impairment losses allocated to leased assets for the years ended March 31, 2015 and 2014.

24

13.

Commitments and Contingent Liabilities

The Companies were contingently liable as guarantors for loans of an unconsolidated subsidiary and an
associate in the aggregate amount of ¥354 million ($2,945 thousand) and ¥228 million as of March 31,
2015 and 2014, respectively.
The Company has entered into loan commitment agreements amounting to ¥5,600 million($46,600 thousand) and ¥5,600 million with two financial institutions as of March 31, 2015 and 2014,
respectively. The loans payable outstanding was zero, and therefore, the unused balance was ¥5,600
million ($46,600 thousand) and ¥5,600 million under the credit facilities as of March 31, 2015 and 2014,
respectively.
The Company has repurchase obligations of ¥606 million ($5,042 thousand) and ¥552 million inconnection with securitization of receivables as of March 31, 2015 and 2014, respectively.

14.

Financial Instruments(a) Overview(1) Policy for financial instruments
The Companies raise funds mainly through bank borrowings in consideration of their business plans.
The Companies invest their temporary surplus funds in highly liquid financial assets and raise
short-term operating capital through bank borrowings and issuances of commercial papers. The
Companies use derivatives to avoid after-mentioned risks and do not enter into derivatives for
speculative or trading purposes.
(2) Descriptions of financial instruments and related risks
Trade receivables––notes and accounts receivable, trade––are exposed to customer credit risk. Trade
receivables denominated in foreign currencies which are derived from foreign operations are exposed
to foreign currency risk, and such risk is hedged by forward foreign exchange contracts.
Investment securities are mainly composed of equity securities of companies with business
relationships and exposed to market risk.
Trade payables––notes and accounts payable, trade––are mostly due within two months or less.
Certain trade payables denominated in foreign currencies are exposed to foreign currency risk, andsuch risk is hedged by forward foreign exchange contracts.
Trade receivables and payables in connection with the Smelting business are exposed to commodity
price fluctuation risk of London Metal Exchange (“LME”), and such risk is hedged by metal futurescontracts.
Long-term debt is principally for the purpose of making capital investments, and due up to 9 years
from the consolidated balance sheet date. Certain long-term debt is exposed to interest rate
fluctuation risk, and such risk is hedged by derivatives (interest rate swaps).
As for derivatives, the Companies have entered into the forward foreign exchange contracts to hedge
the foreign currency risk arising from the trade receivables and payables denominated in foreign
currencies, metal futures contracts to hedge the commodity price fluctuation risk of LME arising fromthe trade receivables and payables on the Smelting business and interest rate swaps to hedge the25fluctuation risk deriving from interest payment of long-term debt. See Note 1. (f) (3) Hedge
accounting for information about the method of hedge accounting, hedging instruments and hedged
items, hedging policy, and assessment of hedge effectiveness.
(3) Risk management for financial instruments(i)Management of credit risk (risk of default by customers or counterparties)
In accordance with the internal rules of the Company, sales departments of each division of theCompanies periodically monitor creditworthiness of their main customers and manage due dates
and outstanding balances by customer. In addition, the Companies are making efforts to
identify uncollectibility in the earlier stage and mitigate risks of bad debts, due to customers withfinancial difficulties.
The Companies believe that the credit risk of derivatives is insignificant as they enter into
derivative transactions only with financial institutions with high credit ratings.

(ii)Management of market risks (risks of fluctuations in foreign exchange rates, commodity prices,interest rates and others)
For trade receivables and payables denominated in foreign currencies, the foreign currency riskof the Company identified by currency on a monthly basis is hedged by forward foreignexchange contracts. In order to mitigate the commodity price fluctuation risks of LME for
trade receivables and payables on the Smelting business, the Company has entered into the metal
futures contracts. In addition, the Company has entered into interest rate swap transactions to
mitigate the interest rate fluctuation risk for interest payment of long-term debt.
For investment securities, the Companies periodically monitor the fair values and financial
position of the issuers and continuously review the holding status taking into account market
conditions and relationships with the issuers.
Derivative transactions are conducted and managed by treasury personnel including directors
and each division, and risk management is sufficiently conducted by making reports tomanagement every time transactions are executed as well as on a periodical basis.

(iii) Management of liquidity risk on funding (risk of default at due dates)
Based on the report from each department, subsidiaries and associates, the department in chargeof the Company prepares and updates its cash flow plan on a timely basis and manages liquidity
risk by maintaining liquid funds.
(4) Supplementary explanation of the fair value of financial instruments
Fair values of financial instruments are based on their respective market prices if available. When
there is no market price available, fair value is reasonably calculated. Since various assumptions andfactors are reflected in the calculation of the fair value, different assumptions and factors could resultin different fair value. In addition, the notional amounts of derivatives in Note 17. Derivative
Transactions are not indicative of the market risk involved in derivative transactions.

26

(b) Fair Values of Financial Instruments
Carrying values of financial instruments on the consolidated balance sheets as of March 31, 2015 and 2014
and their fair values are shown in the following table. Financial instruments whose fair value is extremely
difficult to determine are not included in the following table (Please refer to Note 2 below).

Carrying value

March 31, 2015
Fair value(Millions of yen)

(1) Cash and time deposits(2) Notes and accounts receivable, trade(3) Investment securities
Total assets

¥

8,628
15,953
3,108
27,689¥(1) Notes and accounts payable, trade(2) Short-term borrowings(3) Long-term debt (*1)
Total liabilities

¥

¥

¥

6,686
16,85340,132
63,672¥(73)

Derivatives (*2)

(1) Cash and time deposits(2) Notes and accounts receivable, trade(3) Investment securities
Total assets(1) Notes and accounts payable, trade(2) Short-term borrowings(3) Long-term debt (*1)
Total liabilities
Derivatives (*2)

¥

8,628
15,953
3,108
27,689

¥

¥

¥

6,686
16,85340,81664,356

¥

–
–
683
683

¥

(73)

¥

–

¥

Carrying value

March 31, 2014
Fair value(Millions of yen)¥

11,493
13,597
3,072
28,162

¥

¥

¥

7,050
22,47838,422
67,950

¥

116

¥
¥

Difference

¥

–
–
–
–

Difference

11,493
13,597
3,072
28,162

¥

¥

¥

7,050
22,47838,94368,471

¥

–
–
521
521

¥

116

¥

–

¥

¥

–
–
–
–

March 31, 2015
Carrying value
Fair value
Difference(Thousands of U.S. dollars)(1) Cash and time deposits(2) Notes and accounts receivable, trade(3) Investment securities
Total assets(1) Notes and accounts payable, trade(2) Short-term borrowings(3) Long-term debt (*1)
Total liabilities
Derivatives (*2)$

71,798132,753
25,863
230,415$$$

55,637140,242333,960
529,849

$

(607)

$
$

71,798132,753
25,863
230,415$$$

55,637140,242
339,652
535,541

$

–
–
5,683
5,683

$

(607)

$

–

$

$

–
–
–
–

(*1) Current portion of long-term debt is included in long-term debt as of March 31, 2015 and 2014.
(*2) The value of assets and liabilities arising from derivatives is shown at net value, and the net liability
position is shown in parentheses.

27Notes:1.

Methods to calculate the fair value of financial instruments and other matters related to securities andderivative transactions
Assets(1) Cash and time deposits and (2) Notes and accounts receivable, trade
Since these items are settled in a short period of time, their carrying value approximates fair value.
(3) Investment securities
The fair value of equity securities is based on a quoted market price. For information on securities
classified by holding purpose, please refer to Note 15. Investment Securities.
Liabilities(1) Notes and accounts payable, trade and (2) Short-term borrowings
Since these items are settled in a short period of time, their carrying value approximates fair value.
(3) Long-term debt
For long-term debt with floating interest rates, its carrying value approximates fair value since thedebt reflects the market interest rates in a short period of time and the credit condition of theCompany does not change significantly after the debt is executed. For long-term debt with fixedinterest rates, the fair value is based upon the present value of the total of principal and interest
discounted by the interest rate to be applied if similar new borrowings were entered into.
Derivative transactions
Please refer to Note 17. Derivative Transactions.

2.

Financial instruments whose fair value is extremely difficult to determine

2015

Unlisted equity securities¥

March 31,
2014
(Millions of yen)

696

¥

696

2015
(Thousands of
U.S. dollars)
$

5,791

These are not included in (3) Investment securities in the above table because there were no market
prices available and it was extremely difficult to determine the fair value.

28

3.

Redemption schedule for monetary receivables as of March 31, 2015

Due in one
year or less

Cash and time deposits
Notes and accounts receivable, trade
Total

¥
¥

8,620
15,953
24,573

Due in one
year or less

Cash and time deposits
Notes and accounts receivable, trade$

71,731
132,753$ 204,485

Total

March 31, 2015
Due after
Due after
one yearfive years
through fivethrough ten
years
years
(Millions of yen)
¥

–
–
–

¥

¥

–
–
–

¥

Due after
ten years¥¥

March 31, 2015
Due after
Due after
one yearfive years
through fivethrough ten
years
years
(Thousands of U.S. dollars)
$

–
–
–

$

$

–
–
–

$

–
–
–

Due after
ten years

$
$

–
–
–

4.

The redemption schedule for long-term debt is disclosed in Note 7. Short-Term Borrowings andLong-Term Debt.

15.

Investment Securities

Investment securities held by the Companies are all classified as other securities.
The aggregate cost and fair value (carrying value) of marketable securities classified as other securities asof March 31, 2015 and 2014 were as follows:

Cost
Securities whose fair value exceeds theircost:
Equity securities
Securities whose fair value does notexceed their cost:
Equity securities
Total

¥

1,262

¥

304
1,567

March 31, 2015
Fair value(carrying value)(Millions of yen)

Unrealized gains(losses)

¥

2,869

¥

1,606

¥

239
3,108

¥

(65)
1,540

29

Cost
Securities whose fair value exceeds theircost:
Equity securities
Securities whose fair value does notexceed their cost:
Equity securities
Total

¥

1,463

¥

324
1,787

Cost

March 31, 2014
Fair value(carrying value)(Millions of yen)

Unrealized gains(losses)

¥

2,861

¥

1,397

¥

210
3,072

¥

(113)
1,284

March 31, 2015
Fair value
Unrealized gains(carrying value)(losses)(Thousands of U.S. dollars)

Securities whose fair value exceeds theircost:
Equity securities$

10,501$

23,874$

13,364

Securities whose fair value does notexceed their cost:
Equity securities
Total

$

2,529
13,039$1,988
25,863$(540)
12,815

As of March 31, 2015 and 2014, unlisted equity securities amounting to ¥696 million ($5,791 thousand)and ¥612 million, respectively, are not included in the above table because there were no market prices
available and it was extremely difficult to determine the fair value.
Information about sales of securities classified as other securities for the years ended March 31, 2015 and2014 was as follows:Year ended March 31,
2015
2014
2015
(Millions of yen)(Thousands of
U.S. dollars)
Sales proceeds
Aggregate gains
Aggregate losses

¥

682
458
–

¥

915
417
146

$

5,675
3,811
–

30

16. Cash and Cash Equivalents
Cash and cash equivalents as of March 31, 2015 and 2014 were composed of the followings:
March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)
Cash and time deposits
Less: Time deposits with maturities in excess of
three months
Cash and cash equivalents

17.

¥

8,628

¥

11,493¥–
11,493

–
¥

8,628

$

71,798$–71,798Derivative Transactions(a) Summarized below are the notional amounts and the fair value of derivative instruments outstanding
as of March 31, 2015 and 2014, for which hedge accounting has not been applied.
(1) Currency-related transactions
March 31, 2015
Notional amountContract
Maturing after
Fair value
amountone year(Millions of yen)

Unrealized
gains (losses)

OTC transactions:
Forward foreign exchange
contracts
Sell:
US Dollar
Buy:

¥

3

¥

2,787
2,790

Australian Dollar
Total

¥

–

¥

–
–

¥

(0)

¥

(29)
(29)

¥

(0)

¥

(29)
(29)

March 31, 2014
Notional amountContract
Maturing after
amountone year
Fair value(Millions of yen)

Unrealized
gains (losses)

OTC transactions:
Forward foreign exchange
contracts
Sell:
US Dollar
Total

¥
¥

70
70

¥
¥

–
–

¥
¥

(0)
(0)

¥
¥

(0)
(0)

31

March 31, 2015
Notional amountContract
Maturing after
amountone year
Fair value(Thousands of U.S. dollars)

Unrealized
gains (losses)

OTC transactions:
Forward foreign exchange
contracts
Sell:
US Dollar
Buy:Australian Dollar
Total

$

24

$

–

$

(0)

$

(0)

$

23,192
23,217

$

–
–

$

(241)
(241)

$

(241)
(241)

Note: The calculation of fair value is based on prices obtained from counterparty financial
institutions and others.
(2) Commodity-related transactions
March 31, 2015
Notional amountContract
Maturing after
amountone year
Fair value(Millions of yen)

Unrealized
gains (losses)

OTC transactions:
Commodity futures contracts
Sell:
Metals
Total

¥
¥

113
113

¥
¥

–
–

¥
¥

(1)
(1)

¥
¥

(1)
(1)

March 31, 2014
Notional amountContract
Maturing after
Fair value
amountone year(Millions of yen)

Unrealized
gains (losses)

OTC transactions:
Commodity futures contracts
Sell:
Metals
Total

¥
¥

117
117

¥
¥

–
–

¥
¥

1
1

¥
¥

1
1

March 31, 2015
Notional amountContract
Maturing after
Fair value
amountone year(Thousands of U.S. dollars)

Unrealized
gains (losses)

OTC transactions:
Commodity futures contracts
Sell:
Metals
Total

$
$

940
940

$
$

–
–

$
$

(8)
(8)

$
$

(8)
(8)

Note: The calculation of fair value is based on prices obtained from counterparties and others.

32(b) Summarized below are the notional amounts and the fair value of derivative instruments outstanding
as of March 31, 2015 and 2014, for which hedge accounting has been applied.
(1) Interest-related transactions
March 31, 2015
Notional amountContract
Maturing after
amountone year(Millions of yen)Interest rate swaps hedging long-term
debt, accounted for by exceptional
treatment:
Receive/floating and pay/fixed
Total

¥
¥

10,392
10,392

¥
¥

7,987
7,987

March 31, 2014
Notional amountContract
Maturing after
amountone year(Millions of yen)Interest rate swaps hedging long-term
debt, accounted for by exceptional
treatment:
Receive/floating and pay/fixed
Total

¥
¥

7,065
7,065

¥
¥

4,705
4,705

Fair value(Note)

Fair value(Note)March 31, 2015
Notional amountContract
Maturing after
amountone year
Fair value(Thousands of U.S. dollars)Interest rate swaps hedging long-term
debt, accounted for by exceptional
treatment:
Receive/floating and pay/fixed
Total

$
$

86,47786,477$$

66,464
66,464(Note)

Note: Interest rate swaps to which exceptional treatment is applied are accounted for together withlong-term debt designated as a hedged item. Therefore, their fair values are included in thefair value of long-term debt.

33

(2) Commodity-related transactions
March 31, 2015
Notional amountContract
Maturing after
amountone year(Millions of yen)
Commodity futures contracts, accounted
for as part of raw materials andfinished goods:
Sell: Metals
Total

¥
¥

11,462
11,462¥¥––

Fair value¥¥

March 31, 2014
Notional amountContract
Maturing after
amountone year(Millions of yen)
Commodity futures contracts, accounted
for as part of raw materials andfinished goods:
Sell: Metals
Total

¥
¥

11,278
11,278

¥
¥

–
–

(42)
(42)

Fair value

¥
¥

114
114

March 31, 2015
Notional amountContract
Maturing after
amountone year
Fair value(Thousands of U.S. dollars)Commodity futures contracts, accounted
for as part of raw materials andfinished goods:
Sell: Metals
Total

$
$

95,381
95,381

$
$

–
–

$
$

(349)
(349)

Note: The calculation of fair value is based on prices obtained from counterparties and others.

34

18.

Other Comprehensive Income

Reclassification adjustments and tax effects allocated to each component of other comprehensive income
for the years ended March 31, 2015 and 2014 were as follows:
Years ended March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)
Net unrealized gains on other securities:
Gains arising during the year
Reclassification adjustments
Amount before tax effectTax effect

¥

714
(458)
255
(24)
230

(Losses) gains on deferred hedges:
Gains arising during the year
Reclassification adjustments

494
(651)

Amount before tax effectTax effectRevaluation reserve for land:Tax effectForeign currency translation adjustment:
Adjustments arising during the year
Remeasurements of defined benefit plans:
Gains arising during the year
Reclassification adjustments
Amount before tax effectTax effectTotal other comprehensive income

¥

¥

362
(271)
91
(49)
42

$

5,941
(3,811)
2,121
(199)
1,913

(156)
54

2,429
(3,092)
(663)
254

4,110
(5,417)(1,298)
449

(102)

(408)

(848)

468
468

–
–

3,894
3,894

1,453
1,453

2,509
2,509

12,091
12,091

304
(44)
259
(81)
177

–
–
–
–
–

2,529
(366)
2,155
(674)
1,472

2,228

¥

2,142

$

18,54035

19.

Segment Information(a) Overview of reportable segments
The Company defines reportable segments as components of the Company for which separate
financial information is available and whose operating results are regularly evaluated by the board of
directors to make decisions about how resources are allocated and assess its performance.
Operating departments of the Company are organized according to products and services, and eachdepartment plans comprehensive domestic and overseas strategies for its products and services anddevelops business activities through the Company and its consolidated subsidiaries. Thus, reportablesegments of the Company are determined based on such operating departments; namely, “Smelting,”“Electronic Components and Materials” and “Environment and Recycling,” and “Mineral Resource”
organized based on CBH, the consolidated subsidiary.
· Smelting segment engages in sales and production of zinc and lead products, electric silver andsulfuric acid.
· Mineral Resource segment engages in exploration, development and production of non-ferrous
metal resources and sales of their output.
· Electronic Components and Materials segment engages in sales and production of electronic parts,
electrolytic iron, plating and machine parts.
· Environment and Recycling segment engages in sales and production of zinc oxide and recyclingof waste materials.
(b) Basis of measurement for the amounts of net sales, profit or loss, assets and other items for eachreportable segment
The accounting policies of each reportable segment are generally consistent to those described in Note
1. Summary of Significant Accounting Policies. The segment profit is based on operating income, andintersegment sales and transfers are based on actual market prices.
(Application of the Accounting Standard for Retirement Benefits and related Guidance)
The Company has applied the main clause of Paragraph 35 of the “Accounting Standard for
Retirement Benefits” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 26, issued on
May 17, 2012) (the “Accounting Standard”) and the main clause of Paragraph 67 of the “Guidance on
Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, issued on March 26, 2015)(the “Guidance”) from the fiscal year ended March 31, 2015. Consequently, the calculation method
regarding retirement benefit obligations and current service costs was reviewed and the method of
attributing expected benefit to periods was changed from straight-line basis to benefit formula basis.
The method of determining the discount rate was also changed from that using the discount rate basedon the average remaining periods of service to that using the single weighted average discount rate
reflecting the expected retirement payment period and the amount of each expected retirement
payment period.
The impact of these changes on segment profit (loss) for the year ended March 31, 2015 is immaterial
compared to the method previously applied.

36

(c) Information about net sales, profit or loss, assets and other items
Year ended March 31, 2015
Reportable segment
Electronic
CompoEnvironMineral nents and ment andSmelting Resource Materials Recycling

Other(Note 1)

Total

Total

Reconciliation(Note 2)

Amounts on
consolidated
financialstatements(Note 3)¥–
(15,024)¥ (15,024)¥(109)¥ 14,060¥¥¥¥

121,093–
121,093
6,895
151,970

¥

¥

8,349

(Millions of yen)
Net sales:
External customers
Intersegment
Total
Segment profit (loss)
Segment assets
Other items:
Depreciation
Increase in property,
plant and equipment
and intangible assets
Impairment losses on
fixed assets
Amortization of
goodwill
Unamortized balanceof goodwill¥ 81,262
5,604¥ 86,866¥ 5,138¥ 71,098¥ 18,853 ¥ 7,049
5,233
39¥ 24,086 ¥ 7,088¥ (1,641) ¥ 1,050¥ 45,354 ¥ 11,006¥ 2,695 ¥ 4,896 ¥306¥ 5,978
0¥ 5,978¥ 1,715¥ 5,140¥113,143
10,877¥124,020¥ 6,262¥132,600

¥

7,949
4,146
¥ 12,096¥
742¥ 5,310¥278¥ 8,176¥¥ 121,093
15,024¥ 136,117¥ 7,005¥ 137,910

111 ¥

8,288

60

1,741

3,313

217

293

5,566

96

5,663

12

5,675

–

–

–

–

–

–

–

0

0

–

43

–

–

43

–

43

–

43

–

510

–

–

510

–

510

–

510

Reconciliation(Note 2)

Amounts on
consolidated
financialstatements(Note 3)¥–
(14,211)¥ (14,211)¥
38¥ 18,462¥¥¥¥

118,619–
118,619
5,749
145,014

¥

¥

8,342

Year ended March 31, 2014
Reportable segment

Smelting

Electronic
CompoEnvironMineral nents and ment andResource Materials Recycling

Other(Note 1)

Total

Total

(Millions of yen)
Net sales:
External customers
Intersegment
Total
Segment profit (loss)
Segment assets
Other items:
Depreciation
Increase in property,
plant and equipment
and intangible assets
Impairment losses on
fixed assets
Amortization of
goodwill
Unamortized balanceof goodwill¥ 80,078
3,006¥ 83,085¥ 4,341¥ 60,736¥ 14,085 ¥ 6,803
6,203
115
¥ 20,288 ¥ 6,919¥ (1,664) ¥999¥ 43,888 ¥ 11,012¥ 2,766 ¥ 4,795 ¥300¥ 4,9099¥ 4,918¥959¥ 5,189¥¥ 105,876
9,334¥ 115,211¥ 4,635¥ 120,826¥¥¥¥

12,742
4,877
17,6191,076
5,724¥ 118,619
14,211¥ 132,831¥ 5,711¥ 126,551

314 ¥

8,176 ¥

96 ¥

8,273

69

1,126

3,154

187

219

4,687

433

5,120

39

5,160

–

–

–

–

–

–

–

2

2

–

42

–

–

42

–

42

–

42

–

527

–

–

527

–

527

–

527

37

Year ended March 31, 2015
Reportable segment

Smelting

MineralResource

Electronic
CompoEnvironnents and ment andMaterials Recycling

Other(Note 1)

Total

Reconciliation(Note 2)

Total

Amounts on
consolidated
financialstatements(Note 3)(Thousands of U.S. dollars)
Net sales:
External customers
Intersegment
Total
Segment profit (loss)
Segment assets
Other items:
Depreciation
Increase in property,
plant and equipment
and intangible assets
Impairment losses on
fixed assets
Amortization of
goodwill
Unamortized balanceof goodwill$ 676,225 $156,886
46,63343,546$ 722,859 $200,432$ 42,756 $ (13,655)$ 591,645 $ 377,415$ 58,658
324$ 58,983$ 8,737$ 91,586$ 22,426 $ 40,742 $2,546$ 49,7460$ 49,746$ 14,271$ 42,772$ 941,524
90,513$ 1,032,037$ 52,109$ 1,103,436

$

$

2,313

$ 66,147 $ 1,007,680
34,501125,022$ 100,657 $ 1,132,703$ 6,174 $ 58,292$ 44,187 $ 1,147,624$–(125,022)$ (125,022)$(907)$ 117,000

68,036 $923 $68,968 $499$ 1,007,680–$ 1,007,680$
57,377$ 1,264,625$

69,476

14,48727,569

1,805

2,438

46,317798

47,12499

47,224

–

–

–

–

–

–

–

0

0

–

357

–

–

357

–

357

–

357

–

4,243

–

–

4,243

–

4,243

–

4,243

Notes 1. “Other” represents business segments not belonging to reportable segments and includes
sound insulation building materials, civil engineering, construction and plant engineering,transportation, environmental analysis and others.
2. “Reconciliation” included the followings:
Year ended March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)

Segment profit (loss):
Intersegment elimination
Corporate expenses (*)

¥

Total

¥

(20)
(89)
(109)

¥
¥

162
(124)
38

$
$

(166)
(740)
(907)

(*) “Corporate expenses” represents mainly general and administrative expenses that are notallocated to reportable segments.
Year ended March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)

Segment assets:
Corporate assets (*)¥

14,060¥18,462$

117,000(*) “Corporate assets” represents mainly the Company’s investments of surplus funds
including cash and investment securities and assets relating to administrative divisions.

38Year ended March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)

Other items:
Depreciation
Increase in property, plant and equipment
and intangible assets (*)

¥

60

¥

69

$

39

12

499
99

(*) “Increase in property, plant and equipment and intangible assets” represents mainly
capital expenditures that do not belong to reportable segments.
3. Segment profit or loss is reconciled to operating income on the consolidated statement ofincome.
(d) Related information(1) Information by product and service
Information by product and service has been omitted since similar information is disclosed insegment information described above.
(2) Information by geographical area
Net sales information by geographical area for the years ended March 31, 2015 and 2014 was asfollows:
Year ended March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)
Japan
Asia
Oceania¥ 100,590
12,158
8,344¥

103,108
9,192
6,318

$

Total

¥ 121,093¥

118,619$ 1,007,680

837,064
101,173
69,434

Property, plant and equipment information by geographical area as of March 31, 2015 and 2014
was as follows:
March 31,
2014
2015
2015
(Millions of yen)(Thousands of
U.S. dollars)

(3)

Japan
Australia

¥

Total

¥

34,687
15,36550,052¥¥

36,024
15,97952,004$$

288,649
127,860
416,509

Information by major customer
Information by major customer has been omitted since there were no sales to single externalcustomer accounting for 10% or more of the consolidated sales.

39