Fuji Electric Report Financials

Page

01

Fuji Electric Report Financials 2014

Consolidated Financial Highlights

Millions of yen

Thousands of
U.S. dollars*1

2009

2010

2011

2012

2013

2013

Operating Results
Net sales
Japan
Overseas
Operating income
Net income¥691,223
513,616
177,607
924
6,757¥689,065
510,843
178,221
11,917
15,104¥703,534
525,096
178,437
19,252
11,801¥745,781
567,314
178,466
21,992
26,368¥759,911
582,223
177,688
33,136
19,582$7,450,117
5,708,076
1,742,041
324,870
191,984

R&D and Capital Investment
R&D expenditures
Plant and equipment investment*2
Depreciation and amortization*3¥ 24,296
19,124
26,053¥ 32,568
27,22327,945¥ 32,247
24,98929,755¥ 31,160
31,771
31,054¥ 32,029
26,91630,849$  310,014
263,882
302,444

Cash Flows
Cash flows from operating activities
Cash flows from investing activities
Free cash flow
Cash flows from financing activities¥ 11,923(528)
11,395(62,575)¥ 53,853
84,241138,094(93,468)¥ 28,314(13,489)
14,825(32,593)¥ 55,342(24,286)
31,055(56,827)¥ 53,651(9,649)44,002(50,570)

525,998(94,604)
431,394(495,784)

Financial Position
Total assets
Total net assets
Interest-bearing debt

¥908,938
196,134
359,790¥805,797
174,935
274,019¥792,848
183,217
255,865¥765,563
215,672
226,717¥810,774
251,225
199,504$7,948,766
2,462,992
1,955,922

0.1
4.4
0.7
19.7
1.8
2.0

1.7
9.0
1.8
19.3
1.2
1.8

2.7
7.4
1.5
20.6
1.2
1.6

2.9
14.7
3.4
25.4
1.0
1.2

4.4
9.3
2.5
28.0
0.7
0.9

Per Share Data
Net income
Net assets
Cash dividends

Yen

U.S. dollars*1¥  9.46250.281.50¥ 21.14217.404.00¥ 16.52228.91
4.00¥ 36.90272.295.00¥ 27.41317.96
7.00

$0.27
3.12
0.07

OthersEmployees
Japan
Overseas

23,524
18,692
4,832

24,56218,002
6,560

24,973
17,933
7,040

24,956
18,271
6,685

Fiscal year

Financial Indicators
Ratio of operating income to net sales (%)
ROE (Return on equity) (%)
ROA (Return on assets) (%)
Total net assets ratio (%)
Net debt-equity ratio (times)*4
Debt-equity ratio (times)*5

Headcount

25,52418,022
7,502*1 The U.S. dollar amounts represent the arithmetic results of translating yen into dollars at ¥102 = U.S. $1, the approximate exchange rate at March 31, 2014.
*2 Plant and equipment investment is the total of investment in tangible fixed assets, including acquisition amounts for lease contracts.
*3 Depreciation and amortization expense is the total of the depreciation of tangible fixed assets and amortization of intangible assets.
*4 Net debt-equity ratio: Net interest-bearing debt (interest-bearing debt – cash and cash equivalents) / Net assets*5 Debt-equity ratio: Interest-bearing debt / Net assets

Contents
Consolidated Financial Highlights ���������������������������������������01
Management’s Discussion and Analysis������������������������������02
Consolidated Balance Sheets ��������������������������������������������09
Consolidated Statements of Income ����������������������������������11
Consolidated Statements of Comprehensive Income ����������12
Consolidated Statements of Changes in Net Assets ����������13
Consolidated Statements of Cash Flows ����������������������������14
Notes to the Consolidated Financial Statements ����������������15
Independent Auditor’s Report ��������������������������������������������38

Fuji Electric Report Financials 2014

Management’s Discussion and Analysis
Overview

Cost of Sales, Selling, General and Administrative
Expenses, Operating Income

In fiscal 2013, the year ended March 31, 2014, the operating

Cost of sales decreased 1.3% year on year, to ¥579,856 million.

environment for Fuji Electric saw a gradual recovery in the

Cost of sales as a percentage of net sales decreased 2.5 per-domestic market spurred on by the government’s fiscal policies

centage points, to 76.3%.
Selling, general and administrative expenses increased 7.8%

and the Bank of Japan’s monetary policies. In particular, areas
related to renewable energy and energy saving performed

year on year, to ¥146,919 million. Selling, general and adminis-­solidly. Overseas, overall activity was weak, but there was a

trative expenses as a percentage of net sales increased 1.0

recovery trend supported by the gradual recovery of major

percentage points, to 19.3%.

developed nations, such as the United States and those nations

Operating income improved ¥11,144 million year on year, toin Europe. In particular, conditions in the power electronics and¥33,136 million. This was due to the benefits of thorough cost

semiconductors areas were strong.

reduction measures as well as structural improvements.

In this environment, the Company pushed forward with initiatives under its management policies of “expand energy related

Non-Operating Income (Expenses) and Ordinary Income

businesses” and “globalize.” At the same time, having posi-

Non-operating income (net) was ¥3,595 million, a decline oftioned the fiscal year under review as the first year for aggres-¥127 million compared to the non-operating income (net) ofsive management, we established foundations for growth to¥3,722 million in the previous fiscal year. The decline was mainly

facilitate future business expansion and promoted businessdue to a ¥1,409 million decrease in interest and dividend

management with a strong focus on earnings in order to further

income from the previous fiscal year, which was partially offset

strengthen profitability.

by a ¥874 million decrease in interest expense and a ¥326
million increase in foreign exchange gains.
As a result, ordinary income was ¥36,731 million, an

Financial Performance

improvement of ¥11,017 million from the previous fiscal year.

Net Sales

Extraordinary Income (Loss), Income Before Income

In fiscal 2013, net sales increased 1.9% year on year, toTaxes and Minority Interests¥759,911 million. Domestic net sales were up 2.6% year on

Extraordinary income was ¥913 million due to gain on sales ofyear, to ¥582,223 million. Meanwhile, overseas net sales were

noncurrent assets and gain on sales of investment securities.

down 0.4% year on year, to ¥177,688 million.

Extraordinary income decreased ¥132 million year on year,
mainly due to a decline in gain on sales of investment securities.

Net Sales / Ratio of Overseas
Sales to Net Sales(Billions of yen)

Operating Income / Ratio of
Operating Income to Net Sales(%)

745.8 759.9

800.0

40

(Billions of yen)

(%)

50.0

5

25.9

25.4

23.9

2.7

30.0
20

4

30.0

2.9

1.7

2.6

2.2

3

19.6

20.0

19.3

15.1

2

10.0
1

10.0

2

1.7
11.8

1.0

11.9

10

3

26.4

22.0
20.0

200.0

40.0

3.5

33.1

23.4

400.0

(%)

4

40.0
30

25.7

(Billions of yen)

4.4

691.2 689.1 703.5

600.0

Net Income /Ratio of Net Income to Net Sales1

6.8

0.1 0.9
0

10/3

11/3

12/3

13/3

14/3

n Net Sales (left)
Ratio of Overseas Sales to Net Sales (right)

0

0

10/3

11/3

12/3

13/3

14/3

n Operating Income (left)
Ratio of Operating Income to Net Sales (right)

0

0

10/3

11/3

12/3

13/3

14/3

n Net Income (left)
Ratio of Net Income to Net Sales (right)

0

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02

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03

Fuji Electric Report Financials 2014

Extraordinary loss was ¥3,907 million, reflecting loss on dis-social information business, sales were up following a rise inposal of noncurrent assets, loss on devaluation of investment

large-scale orders and a demand rush in light of the end of

securities, impairment loss, settlement package and other items.

support for Windows XPTM. Overall, the segment saw a wors-

Extraordinary loss decreased ¥6,234 million year on year, mainly

ening in operating results because lower net sales counteracted

due to a decline in impairment loss from the previous fiscal year.

cost reductions.

As a result, income before income taxes and minority interests increased ¥17,120 million year on year to ¥33,737 million.

Industrial Infrastructure
Net sales decreased 5% year on year, to ¥188,648 million, andNet Income

operating income worsened ¥1,817 million year on year, to

Net income was ¥19,582 million, after deducting ¥11,983¥9,209 million.
In fiscal 2013, orders received (Industrial Infrastructure seg-

­million for income taxes and ¥2,172 million for minority interestsfrom income before income taxes and minority interests. The

ment of Fuji Electric Co., Ltd. non-consolidated-basis) was

net income result decreased by ¥6,786 million year on year,¥122,200 million.
In the transmission and distribution business, sales weremainly because the Company recorded a reversal of deferreddown year on year, reflecting the absence of the previous fiscal

tax assets of ¥11,427 million in the previous fiscal year.

year’s large overseas orders. In machinery and electronics systems, sales increased due to a rise in orders for energy-saving

Results by Business Segment

equipment from Japanese manufacturers. In the instrumentation

Power and Social Infrastructure

lower demand for radiation measurement equipment. In the

Net sales decreased 2% year on year to ¥153,653 million, andequipment construction business, sales were relatively

operating income worsened ¥283 million year on year tounchanged from the previous fiscal year. In the business seg-

¥8,138 million.

ment overall, operating results worsened year on year because

and control systems business, sales were down as a result of

In fiscal 2013, orders received (Power and Social Infrastructure

lower sales counteracted cost reductions.

segment of Fuji Electric Co., Ltd., non-consolidated-basis) was
Power Electronics¥131,300 million.
Sales in the power generation business were down year on

Net sales increased 12% year on year, to ¥165,523 million, andyear due to a fall back from large-scale orders for thermal

operating income improved ¥4,199 million year on year, topower generation facilities recorded in the previous fiscal year,¥5,435 million.
In fiscal 2013, orders received (sum of Power Electronics

which offset rises in orders for hydropower generation facilities
and solar power generation systems. In the social engineering

segment of Fuji Electric Co., Ltd. and Fuji Electric FA

systems business, sales were down due to lower demand for

Components & Systems Co., Ltd., non-consolidated-basis)watt-hour meters ahead of the switch to smart meters. In thewere ¥133,300 million.

Cash Dividends per Share /Net Income per ShareNet Sales by Segment*

Operating Income (Loss)by Segment*(Yen)(Billions of yen)(Billions of yen)

40.0

900.0

36.90

745.8
750.0

30.0

27.41
21.14

20.0

600.0

450.0

16.52

300.0

50.0

759.9

60.6

60.0

112.1

120.1

113.6

123.9

148.4

165.5

n Others

33.1

n Othersn Food andBeverageDistributionn Electronic
Devicesn Power
Electronics

198.7

ndustrial
188.6 n IInfrastructure

156.9

n Power andSocialInfrastructure

40.0

30.0

22.0

1.6
6.4
1.2

20.0

1.9

n Food andBeverageDistribution

8.0

n Power
Electronics

6.3

n Industrial
Infrastructure

5.4
n Power andSocialInfrastructure

11.0

9.2

8.4

8.1

n Electronic
Devices

–1.4
–5.3

–5.9

n Elimination
andCorporate

10.0
10.0

150.0

9.46

7.00
4.00

4.00

5.00

153.7

–44.5

0

–51.8 n Elimination
andCorporate

1.50
0

10/3

11/3

12/3

n Cash Dividends per Sharen Net Income per Share

13/3

14/3

–150.0

13/3

0

14/3

–10.0

13/3

14/3

* Based on figures prior to reflecting the change in subsegments that took effect from April 1, 2014

Fuji Electric Report Financials 2014

Food and Beverage Distribution

In the drive business, sales increased year on year following
higher demand for inverters and servos in Japan and overseas

Net sales increased 7% year on year, to ¥120,056 million, andand the sales contributions from large overseas orders for elec-

operating income improved ¥1,624 million year on year, totric equipment for railcars. Likewise, operating results also

¥8,047 million.

showed a year-on-year improvement due to the higher sales

In fiscal 2013, orders received (Food and Beverage Distribution

and the benefits of the business restructuring conducted in thesegment of Fuji Electric Co., Ltd., non-consolidated basis) was

previous fiscal year. As for the power supply business, sales¥116,200 million.

and operating results improved year on year as a result of

In the vending machine business, sales were up year on year

increased demand for power conditioners for mega solar facili-

as a result of steady replacement demand for energy-saving,ties and power supply equipment for data centers and otherenvironmentally friendly vending machines, and demand for

products. In the ED&C components business, sales and operat-

coffee machines for convenience stores. Operating results

ing results improved year on year due to increased demand in

improved following higher revenues and lower costs. The store

the renewable energy field and recovery in domestic demand in

distribution business recorded a year-on-year increase in sales

the machine tool and semiconductor fields.

due to higher orders for construction and renovation of convenience stores and other stores, but operating results deterio-Electronic Devices

rated as a result of the impacts of higher upfront investments for

Net sales increased 9% year on year, to ¥123,851 million, while

the expansion of new businesses.

operating income of ¥6,302 million was recorded after an
improvement of ¥7,718 million from an operating loss in the

Othersprevious year.

Net sales declined 1% year on year, to ¥60,001 million, andIn fiscal 2013, orders received (sum of Electronic Devices

operating income improved ¥285 million year on year, tosegment of Fuji Electric Co., Ltd. and Fuji Electric (Malaysia)¥1,919 million.

Sdn. Bhd., non-consolidated-basis) were ¥104,500 million.
In the semiconductors business, sales were up year on year

R&D Investment and Plant andEquipment Investment

due to strong demand in the automotive electronics business,
which continued from the previous fiscal year, as well as a recovery in demand for inverters, servos, and other industrial machinery in the industrial business. As a result of higher earnings andR&D Expenditures

the benefits of the business restructuring conducted in relation

Fuji Electric’s R&D is focused on developing products that lead toto power semiconductors in the previous fiscal year, the busi-

a responsible and sustainable society through the pursuit ofness was able to realize substantially improved operating results.

­cutting-edge energy technologies. The Company has also been

In the magnetic disks business, net sales declined and operating

realizing companywide synergies and advancing the globalization

results deteriorated due to lower demand from customers.

of its R&D functions, as well as stepping up open innovation initiatives with universities, research institutes, and other companies.

R&D Expenditures / Ratio of
R&D Expenditures to Net Sales(Billions of yen)

(%)

40.0

8

32.6

32.2

31.2

Total Net Assets / ROE(Billions of yen)(Billions of yen)

40.0

251.2
30.0

26.1
4.6
4.2

30

31.8 31.1
30.8
29.8
6

4.7

27.2 27.9
25.0

215.7

26.9
200.0

196.1
174.9

4.2

20.0

(%)

300.0

32.0

30.0

24.3

Plant and Equipment Investment /Depreciation and Amortization

4

20.0

20

183.2
14.7

19.1

3.5
100.0
10.0

2

9.3

9.0

10.0

10

7.4
4.4

0

10/3

11/3

12/3

13/3

14/3

n R&D Expenditures (left)
Ratio of R&D Expenditures to Net Sales (right)

0

0

10/3

11/3

12/3

13/3

n Plant and Equipment Investment (left)
n Depreciation and Amortization (right)

14/3

0

10/3

11/3

n Total Net Assets (left)
ROE (right)

12/3

13/3

14/3

0

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04

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05

Fuji Electric Report Financials 2014

For fiscal 2013, Fuji Electric’s total R&D expenditures amounted

In the Food and Beverage Distribution segment, we invested

to ¥32,029 million. R&D results and expenditures by segment are

in development of new models of vending machines andas follows.

streamlining of the existing vending machines. In Dalian, China,

The number of industrial property rights held by Fuji Electric

we invested in strengthening production capabilities in response

in Japan and overseas was 10,426 as of March 31, 2014.

to market expansion.

Capital Expenditure

Company’s own funds.

All of these investments were funded mainly using the
In fiscal 2013, the Company’s capital expenditure, including
leases, totaled ¥26,916 million. We bolstered investment in thePower Electronics and Industrial Infrastructure segments, where
we expect future sales growth.

Financial Position

Key investments were as follows.

Total Assets

In the Power Electronics segment, we constructed a new

Total assets at the end of the fiscal year stood at ¥810,774

factory in Thailand for expanding global sales, mainly in Asia,

million, an increase of ¥45,211 million from the end of the previ-and invested in production facilities for the local production ofous fiscal year.

inverters, uninterruptible power supply systems, and otherequipment. In the ED&C components business, we invested in

Current Assets and Current Liabilities

production facilities for new products to be sold in China andTotal current assets amounted to ¥429,338 million as of Marchother Asian markets.

31, 2014, up ¥4,632 million from the previous fiscal year-end.

In the Industrial Infrastructure segment, we invested in theThis was attributable to an increase from the previous fiscal

replacement of production facilities for switchgears in the trans-

year-end of ¥13,721 million in inventories, which outweighed amission and distribution business. In the instrumentation anddecrease of ¥6,276 million in cash and cash equivalents.

control systems business, we invested in areas mainly for

Total current liabilities stood at ¥359,457 million, down

streamlining high-density assembling lines.

¥21,009 million from the previous fiscal year-end. ThisIn the Power and Social Infrastructure segment, we invested

stemmed from a decrease of ¥28,000 million in commercial

in the construction of new assembly lines and test lines for mass

paper and a decrease of ¥10,000 million in current portion of

production of smart meters. In the power generation business,long-term debt, which outweighed an increase of ¥13,818

we invested in the replacement of machine work facilities.

million in short-term debt.

In the Electronic Devices segment, we invested in production facilities for 6-inch SiC mass production lines. We also

Noncurrent Assets

invested in the construction of a building and production facili-

Net property, plant and equipment stood at ¥172,619 million,

ties for expanding production of semiconductors in Shenzhen,

an increase of ¥4,177 million from the previous fiscal year-end.

China in addition to investment for increasing production forin-vehicle IGBT.

Total Assets / ROA(Billions of yen)
1,000.0

Further, total investments and other assets amounted to¥208,817 million, up ¥36,402 million from the previous fiscal

(%)
5

908.9
805.8 792.8

800.0

Total Net Assets Ratio

Interest-bearing Debt /Debt-equity Ratio(%)(Billions of yen)

28.0

30.0

400.0

4

359.8

25.4

810.8
765.6

(Times)

4

3.4

19.7
20.0

600.0

300.0

19.3

3

274.0
255.9

20.6

226.7

3

199.5

2.0
1.8

400.0

1.8

200.0

2.5

2

1.6
2

1.2

10.0

1.5

0.9

100.0

1

1

200.0

0.7
0

10/3

11/3

n Total Assets (left)
ROA (right)

12/3

13/3

14/3

0

0

10/3

11/3

12/3

13/3

14/3

0

10/3

11/3

12/3

n Interest-bearing Debt (left)
Debt-equity Ratio (right)

13/3

14/3

0

Fuji Electric Report Financials 2014

year-end. This was attributable to an increase of ¥29,403 million

Cash Flowsin investment securities, owing to factors such as the rise in thevalue of available-for-sale securities following differences in

In fiscal 2013, consolidated free cash flow (cash flows frommark-to-market valuation.

operating activities + cash flows from investing activities) was apositive ¥44,002 million, an improvement of ¥12,947 million

Long-term Liabilities

compared with ¥31,055 million in the previous fiscal year.

Total long-term liabilities were ¥200,092 million, an increase of¥30,667 million from the previous fiscal year-end. This reflected a

Cash Flows from Operating Activities

the recording of net defined retirement liability of ¥34,236 million

Net cash provided by operating activities was ¥53,651 million,at the end of the fiscal year under review, and increases ofcompared with ¥55,342 million for the previous fiscal year. This

¥20,000 million in corporate bonds and ¥10,285 million in

was due to the recording of income before income taxes and an

deferred tax liabilities, which outweighed a decrease of ¥23,031

increase in trade payables, which outweighed an increase inmillion in long-term debt and the recording of provision for retire-

inventories. This was a deterioration of ¥1,691 million year on year.

ment benefits of ¥11,681 million at the previous fiscal year-end.
Cash Flows from Investing Activities
Net Assets

Net cash used in investing activities was ¥9,649 million, com-

Total net assets as of March 31, 2014, were ¥251,225 million,

pared with ¥24,286 million in the previous fiscal year. This wasup ¥35,552 million from the previous fiscal year-end. This rise

primarily related to purchase of property, plant and equipment.

was mainly due to the increases in valuation difference on available-for-sale securities of ¥24,385 million and in retained earn-Year on year, this was a decrease in cash used of ¥14,637
million.

ings of ¥15,011 million from the previous fiscal year-end,
despite decreases due to the posting of remeasurements ofCash Flows from Financing Activities

defined benefit plans of ¥10,614 million at the end of the fiscal

Net cash used in financing activities was ¥50,570 million, com-

year under review. As a result, the total net assets ratio waspared with ¥56,827 million in the previous fiscal year. This was

28.0%, an increase of 2.6 percentage points from the previous

principally due to a decrease in commercial paper.

fiscal year-end.

As a result, consolidated cash and cash equivalents at fiscal
year-end amounted to ¥33,412 million, down ¥6,276 million, orDebt

15.8%, from the previous fiscal year-end.

Interest-bearing debt as of March 31, 2014, was ¥199,504 million,
down ¥27,212 million from the previous fiscal year-end. The ratio
of interest-bearing debt to total assets was 24.6%, a decrease of
5.0 percentage points from the previous fiscal year-end.

Cash Flows

Free Cash Flow /Cash and Cash Equivalents(Billions of yen)(Billions of yen)

100.0

150.0

84.2

138.1

75.0

55.3

53.9

53.7

120.0

50.0

28.3
25.0

11.9

0

–0.5

90.0

–32.6

–50.0

60.0

–24.3

–56.8

–62.6

64.3

–9.6

–13.5
–25.0

81.8

39.7

37.3

–50.6

31.1

44.0
33.4

30.0

14.8

11.4

–75.0

–93.5
–100.0

10/3

11/3

12/3

13/3

n Cash Flows from Operating Activitiesn Cash Flows from Investing Activitiesn Cash Flows from Financing Activities

14/3

(FY)

0

10/3

11/3

12/3

n Free Cash Flown Cash and Cash Equivalents

13/3

14/3

Page

06

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07

Fuji Electric Report Financials 2014

Risk Factors(2) Risks Related to Product Quality
Fuji Electric has put in place a quality assurance system

Fuji Electric takes appropriate measures to minimize the impact

designed to ensure the highest level of quality for all of the prod-of business risks and other risks by managing them in a sys-

ucts that it manufactures and sells. Although the Company has

tematic and methodical manner. Currently, the main risks could

taken precautions in the form of product liability insurance tohave a negative effect on the operating results and financial

provide compensation for product liability claims, in the event

position of Fuji Electric are as follows. These are the factors thatthat major defects are found in any Fuji Electric products due tothe Company judged to have a potential future effect as of

unforeseen factors, there could be a negative effect on the

March 31, 2014.

Company’s operating results and financial position.

(1) Risks Related to Changes in the Operating Environment(3) Risks Related to Investments(a) In addition to increasing raw material and components prices

Fuji Electric concentrates its management resources on quickly

against the background of a weak yen, such changes as theidentifying potential business growth areas and conducts invest-

drastically increasing demand in emerging nations may result

ment in facilities and R&D with the objective of expanding andin tightened supply and demand as regards materials anddeveloping the Company’s business. The large-scale invest-

raw materials. Consequently, although Fuji Electric strives toment necessary and short product cycles in the magnetic disks

lessen the risk of rising raw material prices through com-and semiconductors fields, in particular, as well as the rapid

modity swap transactions and other measures, significant

shifts in product demand and intensifying competition, increase

increases in these prices could have a negative effect on thethe possibility that the Company might not be able to recoup its

Company’s operating results.

investments. Such events could thereby have a negative effect(b) Fuji Electric is developing operations actively in overseas

on the Company’s operating results.

markets, focusing particularly on expanding sales in China
and other Asian markets. In addition, economic trends in(4) Risks Related to Technology Development

Japan, such as private sector capital investment and public

Fuji Electric makes a concerted effort to develop technology

investment affect the Company significantly. In order to mini-that matches the needs of the market. However, there is amize the effect on operating results of overseas and domes-

possibility that competing companies will gain an advantage

tic market trends, the Company is implementing overall costthrough faster development, or that the Company will beand expense reductions. However, a deterioration of theunable to bring products to market in a timely manner should

business climate or a change of economic policy in China, adevelopment not progress according to plan. Such events

dramatic change in product supply and demand or intensi-

could thereby have a negative effect on the Company’s operat-

fied competition in the market, or a steep decrease in priceing results.

levels as a result of such factors could have a negative effecton the Company’s operating results.
(c) Based on an established set of management criteria, Fuji

(5) Risks Related to Overseas Business Activities
Fuji Electric is seeking to expand its overseas presence, with aElectric systematically employs forward-exchange contracts

particular focus on Asia, including China. Consequently, theto minimize the risk of exchange rate fluctuations on its

Company is exposed to the following risks, which could have aoperating results. However, the forward-exchange contract

negative effect on its operating results and financial position:

policy is not capable of entirely mitigating exchange rate risk.

- ‌Unforeseen changes in laws and regulations as well as tax

Consequently, fluctuations in yen exchange rates, primarilysystems that could have a detrimental effect on the Company

against the U.S. dollar, could have a negative effect on the- ‌Disadvantages arising from political conditions

Company’s operating results and financial position.

- ‌Social turmoil related to social unrest, terrorist incidents, war,(d) Fuji Electric’s interest-bearing debt totaled ¥199,504 million

and other events

as of March 31, 2014. A higher-than-anticipated increase ininterest rates could lead to a significant additional interest(6) Risks Related to Intellectual Property

payment burden, which could have a negative effect on the

Fuji Electric effectively manages its intellectual property rights

Company’s operating results.

and develops new products and technologies in a manner that(e) Trends in the financial markets or deterioration in Fuji

does not infringe on third-party patent rights. However, sinceElectric’s financial indicators could impact on Fuji Electric’s

the pace of technological innovation is accelerating and thefund procurement or interest payments, for example byCompany’s operations are becoming more global, the possibility

prompting early repayment due to infringement on financialof disputes over intellectual property rights is increasing. A

covenants relating to certain loans. Such an event could

dispute of this nature could have a negative effect on thehave a negative effect on the Company’s operating results

Company’s operating results and financial position.

and financial position.

Fuji Electric Report Financials 2014

(7) Risks Related to Business Alliances(12) Risks Related to Retirement Benefit Liabilities

Fuji Electric actively collaborates with third-party entities in

Fuji Electric has a lump-sum payment plan and a corporate

mergers, tie-ups, and other forms of alliances with the objective

pension plan for its employees when they retire. The Companyof enhancing competitiveness in each of its fields of business.

records retirement benefit costs and liabilities calculated on

Cooperative relations are essential to the success of suchassumptions accepted as reasonable for actuarial calculations.

­collaborations. However, differences in business systems,

Fuji Electric and certain domestic consolidated subsidiaries­corporate cultures, or other aspects could impede the smooth

have also entrusted listed marketable securities to employee

integration of business strategies, technologies, products, per-retirement benefit trusts. Consequently, when differences occur

sonnel, or other elements necessary for a successful collabora-

between the expected and actual values of the discount ratetion. Such circumstances could thereby have a negative effectand the expected rate of return on pension assets, and whenon the Company’s operating results.

changes occur in the stock prices that are used as the basis ofcomputing pension benefit obligations, differences between(8) Risks Related to Human Resources

these expectations and actual performance, changes in the

The business activities of Fuji Electric depend heavily on its

prices of entrusted listed marketable securities, and other items

human resources. Retaining and training superior personnel in

could have a negative effect on the Company’s operating results

such fields as technology, production, sales, and administration isand financial position.

essential to the growth of the Company. Should the Company beunable to retain and/or train such necessary human resources,(13) Risks Related to Compliance

there could be a negative effect on its operating results.

Fuji Electric conducts business in a variety of fields and regions
throughout the world, and as such is subject to the laws and(9) Risks Related to the Leakage of Personal Information

regulations of numerous countries. The Company has put inAs a part of its business activities, Fuji Electric handles personal

place an appropriate internal control system to ensure compli-

information about numerous individuals, including customers,

ance, but the possibility of legal violations cannot be dis-

suppliers, and employees. Fuji Electric has formulated andcounted entirely. Should such a violation occur, this could havestrictly enforces thorough internal regulations regarding thea negative effect on the Company’s social credibility and/or

gathering, use, and management of personal information.

operating results.

However, the Company cannot entirely rule out the possibility
that such information could be leaked due to unforeseen cir-

(14)	Risks Related to Lawsuits andcumstances. Any leak of this kind could damage trust in Fuji

Other Legal Proceedings

Electric and thereby have a negative effect on the Company’s

Fuji Electric, in the course of its business, could become theoperating results.

subject of a lawsuit or other legal proceeding, and could as aresult unexpectedly become liable for the payment of large(10) Risks Related to Major Natural Disasters

amounts of compensation. Depending on the content of such a

Fuji Electric has a network of bases throughout the world. In

decision, this could have a negative effect on the Company’s

the event of a major natural disaster, production facilities could

operating results.

be damaged, operations at manufacturing facilities could be
halted, shipments of products could be delayed, and otherrelated problems could occur. These events could thereby havea negative effect on the Company’s operating results and financial position.
(11) Risks Related to Soil Contamination
Based on the international standards for environmental protection systems, the Company works to prevent, measure, andmonitor soil contamination at its operating sites. Prior to selling
any land, the Company carries out soil surveys and takes otherappropriate steps in accordance with relevant laws and regulations. However, as a result of these measurements and surveys,
the Company may incur costs for soil remediation measures,
which could have a negative effect on its operating results.

Page

08

Page

09

Fuji Electric Report Financials 2014

Consolidated Balance Sheets
As of March 31, 2014 and 2013

Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

2014

2013

AssetsCurrent Assets:
Cash and cash equivalents (Note 6)
Short-term investments (Notes 5, 6 and 7)
Trade receivables (Note 6)¥   33,412¥   39,688

613

61

$   327,576
6,012

222,481

216,852

2,181,188

(532)

(401)

(5,218)Inventories (Note 4)

121,443

107,722

1,190,623

Deferred tax assets (Note 17)

17,55418,047

172,104

Other current assets

34,36742,737

336,912429,338

424,706

4,209,197

Land

35,19936,201

345,098

Buildings and structures

218,327

209,738

2,140,463

Machinery and equipment

186,283

174,099

1,826,308

Lease assets (Note 20)

59,65147,822584,816

Construction in progress

4,551

9,386

44,600504,011477,246

4,941,285(331,392)(308,804)(3,248,934)

172,619

168,442

1,692,351

Unconsolidated subsidiaries and affiliates

13,75022,203

134,806

Other

135,117

97,261

1,324,682

1,893

1,259

18,560Prepaid pension expense (Note 11)—27,884—

Net defined benefit asset (Note 11)

31,263—

306,505

Allowance for doubtful accounts

Total Current Assets

Property, Plant and Equipment (Note 5):Less accumulated depreciation
Net Property, Plant and Equipment

Investments and Other Assets:
Investment securities (Notes 5, 6 and 7):

Long-term loans receivable

Deferred tax assets (Note 17)

4,519

4,381

44,313

Other investments and other assets

23,01921,225

225,655(744)(1,798)(7,303)

Allowance for doubtful accounts
Total Investments and Other Assets
Total Assets
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

208,817

172,415

2,047,218¥ 810,774¥ 765,563$ 7,948,766

Fuji Electric Report Financials 2014

Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

2013

2014

$  516,799

Liabilities and Net Assets
Current Liabilities:¥ 52,713¥ 77,413

Current portion of long-term debt (Notes 5, 6 and 9)

23,69823,180232,342

Trade payables (Notes 5 and 6)

142,087

129,934

1,393,018

Lease obligations (Notes 6 and 10)

13,521

11,832

132,563

Advances received

33,93339,620332,683

Short-term debt (Notes 5, 6 and 9)

Income taxes payable (Note 17)

4,543

2,918

44,544

Other current liabilities (Note 24)

88,962

95,569872,144

Total Current Liabilities

359,457

380,466

3,524,093

Long-term debt (Notes 5, 6, and 9)

123,092

126,123

1,206,791

Lease obligations (Notes 6 and 10)

20,726

18,555203,206—

11,681—

34,236—335,651

Long-term Liabilities:

Provision for retirement benefits (Note 11)
Net defined benefit liability (Note 11)
Provision for directors' retirement benefits
Deferred tax liabilities (Note 17)

215

266

2,114

17,911

7,626

175,602

Other long-term liabilities (Note 24)

3,912

5,174

38,317

Total Long-term Liabilities

200,092

169,425

1,961,681

Total Liabilities

559,549

549,891

5,485,774

466,530

Contingent Liabilities (Note 19):
Net Assets (Note 25)
Shareholders' Equity:
Capital stock (Note 12):
Authorized— 1,600,000,000 shares
Issued—746,484,957 shares as of March 31, 2014

47,586—

		

746,484,957 shares as of March 31, 2013—

47,586—

Capital surplus

46,73446,734458,185

Retained earnings

102,631

87,6201,006,193(70,079)

Treasury stock at cost (Note 12):		

31,985,886 shares as of March 31, 2014

(7,148)—

		

31,912,522 shares as of March 31, 2013—

(7,115)—

189,803

174,825

1,860,829

44,76820,383438,910

Total Shareholders’ Equity
Accumulated Other Comprehensive Income (Loss)
Valuation difference on available-for-sale securities

20

(83)

198

Foreign currency translation adjustments

3,205

(553)

31,398Remeasurements of defined benefit plans(10,614)—(104,068)

37,37919,747366,438

24,043

21,100235,725

Deferred gains or losses on hedges (Notes 6 and 8)

Total Accumulated Other Comprehensive Income
Minority Interests in Consolidated Subsidiaries
Total Net Assets

251,225

215,672

2,462,992

Total Liabilities and Net Assets¥810,774¥765,563$7,948,766

Page

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11

Fuji Electric Report Financials 2014

Consolidated Statements of Income
Years ended March 31, 2014 and 2013

Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

2013

2014

Net Sales¥759,911¥745,781$7,450,117

Cost of Sales (Note 13)579,856

587,458

5,684,867

180,055

158,323

1,765,250

146,919

136,3311,440,380

33,13621,992324,870

Gross Profit
Selling, General and Administrative Expenses (Notes 13 and 14)
Operating Income
Non-Operating Income (Expenses):
Interest and dividend income

1,471

2,880

14,423

Interest expense(2,855)(3,729)(27,996)

Foreign exchange gains

1,772

1,446

17,375Equity in earnings of affiliates

2,348

2,562

23,028Other, net
Ordinary Income
Extraordinary Loss, Net (Notes 15 and 16)
Income Before Income Taxes and Minority Interests
Income Taxes (Note 17)
Income Before Minority Interests
Minority Interests in Net Income of Consolidated Subsidiaries
Net Income (Note 25)
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

859

563

8,411

3,595

3,722

35,241

36,731

25,714360,111(2,994)(9,097)(29,353)

33,737

16,617

330,758

11,983(11,427)

117,474

21,75428,044

213,284(2,172)(1,676)(21,300)¥ 19,582¥ 26,368$  191,984

Fuji Electric Report Financials 2014

Consolidated Statements of Comprehensive Income
Years ended March 31, 2014 and 2013

Thousands of
U.S. dollars(Note 3)

Millions of yen

Income Before Minority Interests

2014

2013

2014

¥21,754¥28,044$213,284

24,468

1,554

239,889

97

(2)

957

4,351

5,762

42,663

Other Comprehensive Income (Loss) (Note 18)
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Share of other comprehensive income (loss) of associates accounted for using
equity method
Total Other Comprehensive Income
Comprehensive Income

30

35

268

28,946

7,349

283,777¥50,700¥35,393$497,061¥47,826¥33,187$468,885

2,874

2,206

28,176Comprehensive Income Attributable to:Shareholders of the Company
Minority interests
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

Page

12

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13

Fuji Electric Report Financials 2014

Consolidated Statements of Changes in Net Assets
Years ended March 31, 2014 and 2013

Thousands

Balance at March 31, 2012

Millions of yen
RemeasureForeign
Valuation
ments ofdifference on Deferred gains currency
definedavailable-for- or losses on translation
adjustments benefit planshedgessale securities

Number ofshares ofcapital stock

Capitalstock

CapitalsurplusRetainedearnings

746,484¥47,586¥46,734¥ 63,438¥18,848¥ (81)———

26,368——Net income for the year¥(5,838) ¥       —
—

—

Total

Minority
interests inconsolidated
subsidiaries

Total
net assets¥(7,110)¥163,577¥19,640¥183,217—

26,368—26,368Treasurystock

Change of scope ofequity method

—

—

—

672

—

—

—

—

—

672

—

672

Cash dividends

—

—

—

(2,858)

—

—

—

—

—

(2,858)—(2,858)(5)Purchase of treasury stock

—

—

—

—

—

—

—

—

(5)

(5)

—

Sale of treasury stock

—

—

(0)

—

—

—

—

—

0

0

—

0

Net change in the year

—

—

—

—

1,535

(2)

5,285

—

—

6,818

1,460

8,278

746,484¥47,586¥46,734¥ 87,620¥20,383¥ (83)¥  (553) ¥       —

¥(7,115)¥194,572¥21,100¥215,672———

19,582———

19,582—

19,582

Balance at March 31, 2013
Net income for the year——

Change of scope of
consolidation

—

—

—

(285)

—

—

—

—

—

(285)

—

(285)

Cash dividends

—

—

—

(4,286)

—

—

—

—

—

(4,286)—(4,286)(34)

Purchase of treasury stock

—

—

—

—

—

—

—

—

(34)

(34)

—

Sale of treasury stock

—

—

0

—

—

—

—

—

1

1

—

1

Net change in the year

—

—

—

—

24,385

103

3,758(10,614)—

17,632

2,943

20,575746,484¥47,586¥46,734¥102,631¥44,768¥ 20¥ 3,205¥(10,614)¥(7,148)¥227,182¥24,043¥251,225

Balance at March 31, 2014

Thousands of U.S. dollars (Note 3)

Balance at March 31, 2013

$466,530 $458,178 $  859,024 $199,835$ (819)$  (5,410) $       —

$(69,764) $1,907,574 $206,866 $2,114,440

Net income for the year——

191,984

—

—

—

—

—

191,984—

191,984

Change of scope of consolidation——(2,781)

—

—

—

—

—

(2,781)—(2,781)

Cash dividends——(42,034)

—

—

—

—

—

(42,034)—(42,034)

Purchase of treasury stock

—

—

—

—

—

—

—

(321)

(321)

—

(321)

Sale of treasury stock

—

7

—

—

—

—

—

6

13

—

13

Net change in the year

—

—

—

239,075

1,017

36,808(104,068)—

172,832

28,859201,691$466,530 $458,185 $1,006,193 $438,910$  198$31,398 $(104,068) $(70,079) $2,227,267 $235,725 $2,462,992

Balance at March 31, 2014

The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

Fuji Electric Report Financials 2014

Consolidated Statements of Cash Flows
Years ended March 31, 2014 and 2013

Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

Cash Flows from Operating Activities:
Income before income taxes and minority interests
Depreciation and amortization
Decrease in allowance for doubtful accounts
Interest and dividend income
Interest expense
Foreign exchange losses (gains)
Gain on sales of noncurrent assets
Gain on sales of investment securities
Loss on disposal of noncurrent assets
Loss on devaluation of investment securities
Impairment loss
Loss on liquidation of subsidiaries
Changes in operating assets and liabilities:
Trade receivables
Inventories
Trade payables
Advances received
Other, net
Cash generated from operations
Interest and dividends received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Cash Flows from Investing Activities:
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of investments in subsidiaries
Purchase of investments in subsidiaries resulting in change in scope of
consolidation
Payments of loans receivableCollection of loans receivable
Other, net
Net cash used in investing activities
Cash Flows from Financing Activities:
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of bonds
Repayments of lease obligations
Proceeds from sales of treasury stock
Purchase of treasury stock
Cash dividends paid
Cash dividends paid to minority shareholders
Other, net
Net cash used in financing activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Decrease in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Increase in Cash and Cash Equivalents Resulting from
Change of Scope of Consolidation
Increase in Cash and Cash Equivalents Resulting from Merger with
Unconsolidated Subsidiaries
Cash and Cash Equivalents at End of Year
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

2013

2014

¥ 33,737
30,849(941)(1,471)
2,855
1,125
(543)
(370)
1,304
1,134
641
—

¥  16,617
31,054(135)(2,880)
3,729
(256)
(29)
(750)
404
520
6,446
827

$ 330,758
302,444(9,230)(14,423)
27,996
11,036(5,330)(3,628)12,786
11,124
6,292—(1,185)(9,964)8,290(6,445)3,545
62,561
1,451(2,958)(7,403)53,651(11,034)
36,873(10,643)(9,553)
131
61,321
2,859(4,096)(4,742)
55,342(11,620)(97,688)
81,275(63,194)
34,752
613,350
14,230(29,004)(72,578)
525,998(13,823)
2,280(3,666)9,464—(17,912)510(7,688)
8,628
(321)

(135,521)
22,363(35,943)
92,790——(6,939)6,986(3,951)(9,649)(3,823)(4,535)4,294(3,439)(24,286)—(68,034)
68,492(38,751)(94,604)(26,595)
95(23,798)
20,000(15,214)1(32)(4,286)(645)(96)(50,570)(76)(6,644)
39,688

9,668
52,224(123,071)
20,000(12,431)0(5)(2,858)(262)(92)(56,827)
1,196(24,575)
64,261(260,744)
932(233,320)
196,078(149,163)14(321)(42,034)(6,332)(894)(495,784)(754)(65,144)
389,103

368

—

3,617

—
¥ 33,412

2¥  39,688—$ 327,576

Page

14

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15

Fuji Electric Report Financials 2014

Notes to the Consolidated Financial Statements
Note 1. Basis of Preparing Consolidated Financial Statements
The accompanying consolidated financial statements of Fuji ElectricCo., Ltd. (the “Company”) and consolidated subsidiaries (together,
the “Companies”) are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain
respects as to application and disclosure requirements of International Financial Reporting Standards, and are compiled from theconsolidated financial statements prepared by the Company as
required by the Financial Instruments and Exchange Law of Japan.
In preparing these statements, certain reclassifications andrearrangements have been made to the consolidated financial
statements prepared domestically in Japan in order to present
these statements in a form that is more familiar to readers outside Japan.
In addition, the notes to the consolidated financial statements
include additional information which is not required under accounting principles generally accepted in Japan.
Certain amounts in the prior year’s financial statements havebeen reclassified to conform to the current year’s presentation.

Note 2. Summary of Significant Accounting Policies
a. Principles of Consolidation
The consolidated financial statements for the year ended March 31,
2014 include the accounts of the Company and its 48 significant
subsidiaries and its 5 subsidiaries and affiliates are accounted forby the equity method (47 and 5 in 2013).
Under the control or influence concept, the accompanying consolidated financial statements include the accounts of the Company
and, with minor exceptions, those of its subsidiaries, whether
directly or indirectly controlled, and those companies over which theCompanies have the ability to exercise significant influence areaccounted for by the equity method. All significant intercompany
balances and transactions have been eliminated in consolidation. All
material unrealized profit included in assets resulting from transactions within the Companies is eliminated. The Company does notconsolidate nor apply the equity method to subsidiaries or affiliates
whose gross assets, net sales, net income (loss) and retained earnings are not significant to the consolidated financial statements.
Investments in unconsolidated subsidiaries and affiliates arestated at cost.
The balance sheet date of certain consolidated subsidiaries is
December 31. The financial statements of such subsidiaries weretentatively prepared in accordance with the fiscal year of the Company, and those were consolidated.
In the elimination of investments in subsidiaries, the assets andliabilities of the subsidiaries, including the portion attributable tominority shareholders, are evaluated using the fair value at the time
the Company acquired control of the respective subsidiaries.
Goodwill and negative goodwill (incurred before March 31, 2010)
resulting from the difference between the cost and the underlying
net assets at the respective dates of acquisition are being amortized over a period of 5 years, except that immaterial amounts arecharged to income as incurred.

b. Cash Equivalents
For the purpose of the consolidated statements of cash flows, theCompanies consider all short-term, highly liquid instruments with amaturity of three months or less to be cash equivalents.

c. Inventories
Raw materials are mainly stated at cost, determined by the mostrecent purchase price method. Finished goods and work in process
are mainly stated at actual cost determined by accumulated production cost for contract items or average cost for regular production items, except that finished goods of certain consolidated

subsidiaries are priced by the most recent purchase price method.
In accordance with accounting practices generally accepted in theheavy electric industry, inventories include items with a manufacturing period exceeding one year.
Inventories with lower profitability were written down and thelosses on valuation were included in cost of sales.

d. Securities
Marketable securities classified as other securities are stated at fairvalue. Unrealized gains and losses, net of taxes, are reported in a
separate component of net assets.
Nonmarketable securities classified as other securities are statedat cost determined by the moving-average method.

e. Derivatives and Hedging Activities
The Companies enter into derivative financial instruments (“derivatives”), including foreign currency forward contracts to hedge foreign exchange risk associated with certain assets and liabilities
denominated in foreign currencies and interest rate swap agreements as a means of managing its interest rate exposures on certain liabilities. In addition, the Companies enter into commodity
swap agreements to hedge the risk of fluctuation of commodity
prices for raw materials.
Derivative financial instruments and foreign currency transactions
are classified and accounted for as follows:a) ‌Except as described in the following paragraph b) and c), allderivatives are recognized as either assets or liabilities andmeasured at fair value, and forward contracts applied forforecasted transactions are measured at fair value but theunrealized gains/losses are deferred until the underlying transactions are completed if the forward contracts qualify forhedge accounting.
b) ‌Trade receivables and trade payables denominated in foreign
currencies for which foreign exchange forward contracts areused to hedge the foreign currency fluctuations are translated
at the contracted rate if the forward contracts qualify forhedge accounting.
c) ‌The interest rate swaps which qualify for hedge accounting
and meet specific matching criteria are not remeasured atmarket value but the differentials paid or received under theswap agreements are recognized and included in interest
expense or income.

Fuji Electric Report Financials 2014

f. Depreciation
1) Tangible fixed assets (excluding leased assets)
Depreciation is computed by the declining-balance method at rates
based on the estimated useful lives of the assets, while the straightline method is applied to the buildings of the Company and its
domestic consolidated subsidiaries acquired after April 1, 1998.
The range of useful lives is from 7 to 50 years for buildings and from
5 to 12 years for machinery and equipment.

($104,068 thousand) as of March 31, 2014. In addition, net assets
per share decreased by ¥14.86 ($0.15).

i. Provision for Directors’ Retirement Benefits
For certain consolidated subsidiaries, the accrued retirement benefits for directors were provided mainly at an amount to be requiredat the year-end according to internal regulations.

j. Research and Development Costs
2) Leased assets
Depreciation is computed by the straight-line method over the lease
period assuming no residual value. Finance leases other than thosethat were deemed to transfer the ownership of the leased assets tothe lessees and contracted before April 1, 2008, are accounted forby the method that is applicable to ordinary operating leases.

g. Allowance for Doubtful Accounts
The allowance for doubtful accounts is stated in amounts considered to be appropriate based on the Companies’ past credit loss
experience and an evaluation of potential losses in the receivables
outstanding.

h. Retirement Benefits(1) ‌The retirement benefit obligation for employees is attributed toeach period by the straight-line method over the estimated yearsof service of the eligible employees.
(2) ‌The prior service costs are amortized by the straight-line method
within the average remaining years of service of the employee
participants. The actuarial gains and losses are amortized by thestraight-line method within the average remaining years of service of the employee participants from the next period in which
they arise, respectively.
(Changes in accounting policies)
The company has adopted “Accounting Standard for Retirement
Benefits” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 26 of May 17, 2012) and “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25 of May 17,2012) (except for certain provisions described in the main clause of
Section 35 of the standard and in the main clause of Section 67 of
the guidance) as of the end of the fiscal year ended March 31,
2014. These accounting standards require entities to apply arevised method for recording the retirement benefit obligation, after
deducting pension plan assets, as net defined benefit liability (orasset). In addition, unrecognized actuarial gains and losses andunrecognized prior service costs are recorded as net defined benefit liability (or asset). Concerning the application of the AccountingStandard for Retirement Benefits, based on the provisional treatment set out in Clause 37 of the standard, the effects of suchchanges in the current fiscal year have been recorded in remeasurements of defined benefit plans through accumulated other comprehensive income. As a result of this change, net defined benefit
liability was recognized in the amount of ¥34,236 million ($335,651
thousand), net defined benefit asset was recognized in the amountof ¥31,263 million ($306,505 thousand), deferred tax liabilities
decreased by ¥4,960 million ($48,627 thousand), and accumulated
other comprehensive income decreased by ¥10,614 million

Research and development costs are charged to income as
incurred.

k. Recognition for Revenue and Costs
For long-term construction contracts whose outcome can be estimated reliably, the percentage-of-completion method is adopted.
The stage of completion of a contract is determined by the percentage of the cost incurred to date to the estimated total cost. Whenthe outcome of the construction contracts can not be estimatedreliably, the completed-contract method is adopted.

l. Income Taxes
The provision for income taxes is computed based on the pretax
income included in the consolidated statements of income. The
Company filed a consolidated tax return, which allows companies
to file tax payments on the combined basis of profits or losses ofthe parent company and its wholly owned domestic subsidiaries.
The asset and liability approach is used to recognize deferred tax
assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax
bases of assets and liabilities. Deferred taxes are measured byapplying currently enacted tax laws to the temporary differences.

m. Foreign Currency Transactions
All monetary receivables and payables denominated in foreign
currencies are translated into Japanese yen at the exchange rates
at the balance sheet date. The foreign exchange gains and losses
from translation are recognized in the consolidated statements ofincome to the extent that they are not hedged by forward
exchange contracts.

n. Foreign Currency Financial Statements
Assets, liabilities, and revenue and expense accounts of the foreign
consolidated subsidiaries are translated into Japanese yen at thecurrent exchange rate as of the balance sheet date except forshareholders’ equity, which is translated at the historical rate.
Differences arising from such translation are included in foreign
currency translation adjustments and minority interests in consolidated subsidiaries as a separate component of net assets.

o. Accounting for Consumption Taxes
The Japanese consumption taxes withheld and consumption taxes
paid are not included in the accompanying consolidated statements of income.

p. Amounts Per Share
Basic net income per share is computed based on the net income
available for distribution to shareholders of common stock and theweighted average number of shares of common stock outstanding

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Fuji Electric Report Financials 2014

during the year, and diluted net income per share is computed
based on the net income available for distribution to the shareholders and weighted average number of shares of common stock
outstanding during each year after giving effect to the dilutive
potential of shares of common stock to be issued upon the exercise of warrants and stock subscription rights.
Net assets per share are computed based on the net assets
excluding share subscription rights and minority interests and thenumber of shares of common stock outstanding at year end.

q. Standards Issued But Not Yet Effective
On May 17, 2012, the ASBJ issued “Accounting Standard for
Retirement Benefits” (ASBJ Statement No. 26) and “Guidance on
Accounting Standard for Retirement Benefits” (ASBJ Guidance
No. 25), which replaced the Accounting Standard for Retirement
Benefits that had been issued by Business Accounting Council in1998 with an effective date of April 1, 2000 and the other related
practical guidance, being followed by partial amendments fromtime to time through 2009.
(1) Overview
The standard provides guidance for the accounting for unrecognizedactuarial gains and losses and unrecognized prior service costs, thecalculation methods for retirement benefit obligation and service
costs, and enhancement of disclosures taking into consideration
improvements to financial reporting and international trends.
(2) Scheduled date of adoption
The revised accounting standard and guidance have been adopted
as of the end of the fiscal year ended March 31, 2014. Revisions tothe calculation methods for the retirement benefit obligation andservice costs are scheduled to be adopted from the beginning of
the fiscal year ending March 31, 2015. In addition, no retroactive
application to the Company’s consolidated financial statements inprior periods will be made based on the provisional treatment set
out in the standard.
(3) ‌Impact of adopting revised accounting standard andguidance
The Company is currently evaluating the effect that revisions to thecalculation methods for the retirement benefit obligation and service
costs will have on its consolidated results of operations and financial position.

Note 3. U.S. Dollar Amounts
The U.S. dollar amounts included in the accompanying consolidated financial statements and notes thereto represent the arithmetic results of translating yen into U.S. dollars at ¥102=U.S.$1, theapproximate exchange rate as of March 31, 2014. The U.S. dollar
amounts are presented solely for the convenience of the readers
outside Japan.

Note 4. Inventories
Inventories as of March 31, 2014 and 2013 consisted of the following:Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

2013

¥ 43,180¥ 42,464$  423,341

Work in process

48,03039,294

470,891

Raw materials

30,23325,964296,391

Inventories¥121,443¥107,722$1,190,623

Merchandise and finished goods

2014

Losses (gains) on valuation of inventories with lower profitability were ¥(522) million ($(5,120) thousand) and ¥(266) million for the years
ended March 31, 2014 and 2013, respectively. These were included in cost of sales.

Note 5. Pledged Assets and Financial Assets Accepted as Collateral
The amounts of assets pledged as collateral for trade payables, short-term debt and long-term debt as of March 31, 2014 and 2013 wereas follows:
Thousands of
U.S. dollars(Note 3)

Millions of yen

Time deposits
Investment securities
Property, plant and equipment
Total

2014

2013

2014

¥    60¥    60$    588

418

297

4,105

16,325

16,491160,048¥16,803¥16,848$164,741

Fuji Electric Report Financials 2014

Collateralized liabilities as of March 31, 2014 and 2013 were as follows:
Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

2013

2014

Trade payables¥   12¥    15$   124

Short-term debt

3,200

3,900

31,373Long-term debt

859

7,665

8,421

¥4,071¥11,580$39,918

Total

Note 6. Financial Instruments
1. Status of financial instruments(1) Policy regarding financial instruments
The Companies limit the scope of their cash and fund management
activities to short-term deposits. When raising funds, the Companies have a policy of relying principally on bank borrowings, bonds
payable and commercial paper. The Companies mainly raise theoperating funds through short-term loans payable and commercial
paper, and the funds relating to capital investments through longterm loans payable and bonds payable. The Companies make useof derivatives to reduce risk, as explained below, and have a policyof not engaging in derivative transactions for speculative purposes.
(2) Details of financial instruments and associated risk
In the course of its business activities, trade receivables are
exposed to customer credit risk.
In addition, trade receivables denominated in foreign currencies
arising from international business are exposed to exchange risk.
The Companies hedge the exchange risk, by using foreignexchange forward contracts within the range prescribed relating to
the net amount of the trade receivables denominated in foreign
currencies, offset by the amount of the trade payables denominated in the same currencies.
Short-term investments and investment securities are comprised
primarily of stocks of companies with which the Companies havebusiness relation and are exposed to market price risk.
Trade payables are mostly payable within one year. Some trade
payables are denominated in foreign currencies and exposed to
exchange risk. The Companies hedge the exchange risk of the trade
payables denominated in foreign currencies in principle, except for
the amount within that of trade receivables denominated in thesame currencies, by using foreign exchange forward contracts.
Short-term loans payable and commercial paper are primarilyraised for the purpose of maintaining operating funds. Bonds payable, long-term loans payable and lease obligations on financelease transactions are primarily raised for the purpose of preparing
capital investment. The maturities of these bonds payable, longterm loans payable and lease obligations on finance lease transactions are up to 10 years at the longest after the balance sheet date.
Some are exposed to interest rate fluctuation risk and the Companies hedge such risk by interest rate swap transactions.
Regarding derivatives, the Companies employ foreign exchange
forward contracts to reduce the risk of foreign currency exchange
movements that arise from the previously mentioned receivables
and payables denominated in foreign currencies. In addition, theCompanies use interest rate swap transactions to reduce the interest rate fluctuation risk of loans, and use commodity swap

transactions to reduce the risk of fluctuation of commodity prices
for raw materials. As hedging instruments under hedge accounting,
the Companies enter into these derivative transactions in accordance with the Companies’ policies to reduce the corresponding
risk to each hedged item. The Companies compare the market
change of hedged items and hedging instruments or the cash flowchanges. Assessment of effectiveness for hedging activities
depends on the ratio of the amount of change.
(3) Systems for management of financial instruments riska) ‌Credit risk management (the risk that transaction partners may
default on their obligations to the Companies)
The credit risk in relation to trade receivables from customers, pursuant to criteria for managing credit exposure, is managed by controlling due dates and balances of each customer. In addition, theCompanies manage to identify doubtful receivables earlier and mitigate their risk caused by aggravation of the financing position, etc.
Because the counterparties to derivative transactions are limited
to authentic financial institutions, the Companies do not anticipate
any losses arising from credit risk.
b) ‌Market risk management (the risks arising from fluctuations in
exchange rates, interest rates and other indicators)
The Companies, in principle, employ foreign exchange forward
contracts to reduce the risk of foreign currency exchange movements that arise from the previously mentioned receivables andpayables denominated in foreign currencies. In addition, the Companies use interest rate swap transactions to reduce the interest rate
fluctuation risk of loans, and use commodity swap transactions to
reduce the risk of fluctuation of commodity prices for raw materials.
Regarding investment securities, the Companies periodicallyreview the market value of such financial instruments and the financial position of the issuer (the company having business transactions with the Companies). In addition, other than debt securities tobe held until maturity, the Companies review the status of theseinvestments on a continuing basis.
Derivative transactions have been entered into in accordancewith the Companies’ policies. The execution of derivatives, which isbased on the application of each section, is mainly controlled by
the Finance Department of each company, or by the Material Section regarding commodity swap transactions. In addition, theFinance Department periodically reports to the management andeach section, and strictly performs risk management relating toderivative transactions.

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Fuji Electric Report Financials 2014c) ‌Liquidity risk management (the risk that the Companies may not
be able to meet its payment obligations on the scheduled date)
The Companies reduce the liquidity risk by having each company
review and revise cash management plans monthly or timely.
(4) ‌Supplementary explanation of the estimated fair value offinancial instruments and related matters
The estimated fair value of financial instruments is their price basedon their market price and other indicators. When there is no market
price available, it includes prices which are reasonably computed.
Since variable factors are taken into account in computing theprice, this price may fluctuate depending on different assumptions
adopted. In addition, the contract (notional) amount of derivatives in“Note 8. Derivatives” is not an indicator of the actual market risk
involved in derivative transactions.

2. Estimated fair value and other matters related to financial instruments
Carrying amounts on the consolidated balance sheets as of March 31, 2014 and 2013, estimated fair value and the variance between them
are shown in the following table. Financial instruments whose estimated fair value is deemed to be extremely difficult to obtain are notincluded (Please refer to Note 2).
Millions of yen

2014
Carrying amounts

Fair value

Variance¥  33,412¥  33,412¥    —

Trade receivables

222,481

222,449(32)

Investment securities

127,601

127,601—

Trade payables(142,087)(142,087)—

Short-term debt

(52,713)(52,713)——

Cash and cash equivalents

Current portion of long-term debt

(23,698)(23,698)

Lease obligations (Current Liabilities)(13,521)(13,521)—Long-term debt

(123,092)(124,107)

1,015

Lease obligations (Long-term Liabilities)(20,726)(20,810)84

Derivative transactions to which hedge accounting is not applied

(61)

(61)

—

Derivative transactions to which hedge accounting is applied

27

27

—

Derivatives

Millions of yen
2013
Carrying amounts

Cash and cash equivalents

Fair value

Variance¥  39,688¥  39,688¥    —

Trade receivables

216,852

216,820(32)

Investment securities

90,06590,065—Trade payables(129,934)(129,934)—

Short-term debt

(77,413)(77,413)—

Current portion of long-term debt

(23,180)(23,180)—

Lease obligations (Current Liabilities)(11,832)(11,832)—

Long-term debt

(126,123)(126,322)

199

Lease obligations (Long-term Liabilities)(18,555)(18,665)110

Derivative transactions to which hedge accounting is not applied

(232)

(232)

—

Derivative transactions to which hedge accounting is applied

(129)

(129)

—

Derivatives

Thousands of U.S. dollars (Note 3)

2014
Carrying amounts

Fair value$   327,576$   327,576$      —

Trade receivables

2,181,188

2,180,875(313)

Investment securities

1,250,999

1,250,999—

Trade payables(1,393,018)(1,393,018)—

Short-term debt

(516,799)(516,799)—

Current portion of long-term debt

(232,342)(232,342)—

Lease obligations (Current Liabilities)(132,563)(132,563)—(1,206,791)(1,216,743)

9,952(203,206)(204,027)

821

Derivative transactions to which hedge accounting is not applied

(599)

(599)

—

Derivative transactions to which hedge accounting is applied

268

268

—

Cash and cash equivalents

Long-term debt
Lease obligations (Long-term Liabilities)

Variance

Derivatives(*1) Figures shown in parentheses are liability items.
(*2) The value of assets and liabilities arising from derivatives is shown at net value, and a net liability position is shown in parentheses.

Fuji Electric Report Financials 2014

Notes: 1. Methods for computing the estimated fair value of financial instruments, and information on securities and derivatives		 (1) Cash and cash equivalents			
Since these items are settled in a short period of time, estimated fair values are virtually the same as the carrying amounts.
		 (2) Trade receivables			‌Fair values of trade receivables, classified by each maturity, are based on the present value discounted by the interest rate determined taking into account the term until
maturity and the credit risk.
		 (3) Investment securities
			
Stocks are valued at the exchange trading price. For information on securities classified by the purpose of holding, please refer to “Note 7. Securities.”		 (4) Trade payables, (5) Short-term debt, (6) Current portion of long-term debt (except bonds) and (7) Lease obligations (Current Liabilities)			
Since these items are settled in a short period of time, estimated fair values are virtually the same as the carrying amounts.
		 (6) Current portion of long-term debt (bonds) and (8) Long-term debt (bonds)
			
Fair values of bonds issued by the Company are based on each market price.
		 (8) Long-term debt (except bonds) and (9) Lease obligations (Long-term Liabilities)			‌Fair values of these items are based on the present value of the total of principal and interest discounted by the interest rate applied if similar new borrowings and newlease transactions were entered into.
		 (10) Derivatives
			Please refer to “Note 8. Derivatives.”
2. Items for which obtaining an estimated fair value is deemed to be extremely difficult
Thousands of
U.S. dollars(Note 3)

Millions of yen
Carrying amounts

Carrying amounts

Carrying amounts

2014

2013

2014

¥21,266

Unlisted stocks (including stocks of unconsolidated subsidiaries and affiliates)¥29,399$208,491

		‌Because the items in the preceding table do not have market price and obtaining the estimated fair values of these items is deemed to be extremely difficult, fair value has notbeen disclosed in (3) Investment securities.
3. Redemption schedule for monetary assets and securities with maturity dates as of March 31, 2014 and 2013:
Millions of yen
2014
Within 1 year

Between 1 and5 years

Between 5 and10 years

Over 10 years

Cash and cash equivalents¥ 33,412¥    —¥—¥—

Trade receivables

218,615

3,866

—

—

Investment securities
Debt securities with maturity date classified as other securities
0

—

—

—

¥252,027¥3,866¥—¥—

Within 1 year

Between 1 and5 years

Between 5 and10 years

Over 10 years

Cash and cash equivalents¥ 39,688¥      —¥—¥—

Trade receivables

213,793

3,059

—

—

(Public bonds )Total

Millions of yen
2013

Investment securities
Debt securities with maturity date classified as other securities(Public bonds)

0

—

—

—

¥253,481¥3,059¥—¥—Within 1 year

Between 1 and5 years

Between 5 and10 years

Over 10 years

Cash and cash equivalents$  327,576$    —$—$—

Trade receivables

2,143,283

37,905

—

—

Total

Thousands of U.S. dollars (Note 3)
2014

Investment securities
Debt securities with maturity date classified as other securities(Public bonds)
Total
		 4.
			

3

—

—

—

$2,470,862$37,905$—$—

Repayment schedule for long-term debt and lease obligations:
Please refer to “Note 9. Short-term Debt and Long-term Debt” and “Note 10. Lease Obligations.”

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Fuji Electric Report Financials 2014

Note 7. Securities
1. Other securities as of March 31, 2014 and 2013 were as follows:
Millions of yen

2014
Cost

Carrying amounts

Unrealized gains

Unrealized losses¥572

Marketable securities classified as other securities
Equity securities¥58,693¥127,601¥69,480

Debt securities

0

0

—

—

Others

—

—

—

—

Total

¥58,693¥127,601¥69,480¥572

Carrying amounts

Unrealized gains

Unrealized losses¥4,549Millions of yen
2013
Cost

Marketable securities classified as other securities
Equity securities¥59,364¥90,065¥35,250

Debt securities

0

0

—

—

Others

—

—

—

—

Total

¥59,364¥90,065¥35,250¥4,549Thousands of U.S. dollars (Note 3)

2014
Cost

Carrying amounts

Unrealized gains

Unrealized losses$5,616

Marketable securities classified as other securities
Equity securities$575,430$1,250,996$681,182

Debt securities

3

3

—

—

Others

—

—

—

—

Total

$575,433$1,250,999$681,182$5,616

Note: ‌The following is not included in the preceding tables because it does not have market price and obtaining an estimated fair value is deemed to be extremely difficult:
Unlisted stocks (Values in the consolidated balance sheets as of March 31, 2014 and 2013 were ¥6,507 million ($63,801 thousand) and ¥7,195 million, respectively.)

2. Sales of other securities for the years ended March 31, 2014 and 2013 were as follows:
Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

2014

2013

Proceed from sales¥767¥1,216$7,529Gain on sales

359

750

3,526

Loss on sales

9

1

92

3. Impairment of other securities for the years ended March 31, 2014 and 2013 were as follows:
Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

Impairment losses

2013¥1,134¥511

2014$11,124

4. Investments in unconsolidated subsidiaries and affiliates as of March 31, 2014 and 2013 were as follows:
Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

Investments in the stock of jointly controlled companies included in investments inunconsolidated subsidiaries and affiliates¥5,1102013

2014¥13,087$50,104

Fuji Electric Report Financials 2014

Note 8. Derivatives
1. Derivative transactions to which hedge accounting is not applied
Millions of yen

2014
Contract amountContract amountover 1 year

Unrealized
gain/loss

U.S. dollars¥2,358

¥—

¥(23)

¥(23)

Euro

1,465

—

(27)

(27)

Korean Won

175

—

(3)

(3)

Canadian dollars

71

—

(8)

(8)

Fair value

Foreign currency forward contracts:
Receivables:

Payables:Korean Won
Total

8

—

0

0

¥4,077

¥—

¥(61)

¥(61)

Millions of yen

2013
Contract amountContract amountover 1 year

Unrealized
gain/loss

U.S. dollars¥3,391¥—¥(182)¥(182)

Euro

1,409

—

(47)

(47)

163

—

(2)

(2)

Singapore dollars

92

—

(1)

(1)

Vietnamese Dong

1

—

0

0

¥5,056¥—¥(232)¥(232)

Fair value

Foreign currency forward contracts:
Receivables:

Korean Won
Payables:Total

Thousands of U.S. dollars (Note 3)

2014
Contract amountContract amountover 1 year

Unrealized
gain/loss

Fair value

Foreign currency forward contracts:
Receivables:
U.S. dollars$23,094$—$(216)$(216)

Euro

14,372

—

(271)

(271)

Korean Won

1,723

—

(35)

(35)

702

—

(81)

(81)

Canadian dollars
Payables:Korean Won
Total
Note: The fair value is estimated based on forward exchange rates.

88

—

4

4

$39,979$—$(599)$(599)

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Fuji Electric Report Financials 2014

2. Derivative transactions to which hedge accounting is applied(1) Currency-related contacts
Millions of yen

2014
Hedge accounting
methodType of derivative

Principal items hedged

Contract amountContract amountover 1 year

Fair value

Foreign currency forward contracts:
Receivables:

Accounts receivable–trade¥ 3,069

¥363

Euro

607

—

(2)

Canadian dollars

702

123

(88)

9,495

—

187

Euro

211

—

20

Singapore dollars

26

—

1

U.S. dollars¥ 1,782¥    —

Total¥15,892¥486

U.S. dollars
Deferral hedge
methodPayables:¥(80)

Accounts payable–trade

U.S. dollars

Foreign currency forward contracts:
Allocation method

Receivables:(Note 2)

Accounts receivable–trade¥ 38

Millions of yen

2013
Hedge accounting
methodContract amountContract amountover 1 year

U.S. dollars¥  705¥    —¥ (74)

Canadian dollars

1,157

627

(112)

Type of derivative

Principal items hedged

Fair value

Foreign currency forward contracts:
Receivables:

Deferral hedge
methodPayables:Accounts receivable–trade

Accounts payable–trade

U.S. dollars

169

—

3

Euro

726

13

34

Swedish krona

56

—

5

Pounds sterling

47

—

(0)

U.S. dollars¥  614¥    —

Total¥3,474¥640

Foreign currency forward contracts:
Allocation method

Receivables:

Accounts receivable–trade(Note 2)¥(144)

Thousands of U.S. dollars (Note 3)

2014
Hedge accounting
methodType of derivative

Principal items hedged

Contract amountContract amountover 1 year

Fair value

Foreign currency forward contracts:
Receivables:

Accounts receivable–trade$ 30,089¥3,562

Euro

5,954

—

(22)

Canadian dollars

6,886

1,209

(864)

U.S. dollars
Deferral hedge
methodPayables:$ (794)

Accounts payable–trade

U.S. dollars

93,097

—

1,842

Euro

2,069

—

205

242

—

9

U.S. dollars$ 17,474$      —

Total

$155,811$4,771

Singapore dollars
Foreign currency forward contracts:
Allocation method

Receivables:(Note 2)

Accounts receivable–trade¥  376

Notes 1. The fair value is estimated based on forward exchange rates.
2.	‌Since amounts in foreign currency forward contracts treated by the allocation method are handled together with accounts receivable–trade and accounts payable–trade that are
subject to hedging, the estimated fair value of such contracts is included in the fair value of accounts receivable–trade or accounts payable–trade.

Fuji Electric Report Financials 2014(2) Interest-rate-related contracts
Millions of yen

2014
Hedge accounting method

Specific treatment forinterest rate swaps

Type of derivative

Interest rate swaps
Receive floating pay fixed

Principal items hedged

Contract amountContract amountover 1 year

¥28,735¥25,897

Fair value

Long-term loans payable(Note 2)Millions of yen

2013
Hedge accounting method

Specific treatment forinterest rate swaps

Type of derivative

Interest rate swaps
Receive floating pay fixed

Principal items hedged

Contract amountContract amountover 1 year

¥24,500¥24,500

Fair value

Long-term loans payable(Note 2)Thousands of U.S. dollars (Note 3)

2014
Hedge accounting method

Specific treatment forinterest rate swaps

Type of derivative

Interest rate swaps
Receive floating pay fixed

Principal items hedged

Contract amountContract amountover 1 year

$281,717$253,902

Fair value

Long-term loans payable(Note 2)

Notes 1. The fair value is principally based on the quotes obtained from the correspondent financial institutions.
2.	‌Since amounts in interest rate swaps which qualify for hedge accounting and meet specific matching criteria are handled together with long-term loans payable that are subject
to hedging, the estimated fair value of such interest rate swaps is included in the fair value of the long-term loans payable.

(3) Commodity-related contracts
Millions of yen

2014
Hedge accounting method

Deferral hedge method

Type of derivative

Commodity swap
Receive floating pay fixed

Principal items hedged

Contract amountContract amountover 1 year

¥233

¥—

Fair value

Raw materials¥(10)

Millions of yen

2013
Hedge accounting method

Deferral hedge method

Type of derivative

Commodity swap
Receive floating pay fixed

Principal items hedged

Contract amountContract amountover 1 year

¥250

¥—

Fair value

Raw materials¥15

Thousands of U.S. dollars (Note 3)

2014
Hedge accounting method

Deferral hedge method

Type of derivative

Commodity swap
Receive floating pay fixed

Principal items hedged

Contract amountContract amountover 1 year

$2,291$—

Fair value

Raw materials$(108)

Note: The fair value is principally based on the quotes obtained from the correspondent financial institutions.

Note 9. Short-term Debt and Long-term Debt
Short-term debt as of March 31, 2014 and 2013 consisted of the following:Thousands of
U.S. dollars(Note 3)

Millions of yen

Loans, principally from banks

2014

2013

2014

¥52,713¥49,413$516,799

Commercial paper—

28,000—

Short-term Debt

¥52,713¥77,413$516,799

The weighted average interest rates on short-term debt as of March 31, 2014 and 2013 were 1.16% and 0.73%, respectively.

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Fuji Electric Report Financials 2014

Long-term debt as of March 31, 2014 and 2013 consisted of the following:Thousands of
U.S. dollars(Note 3)

Millions of yen

Loans, principally from banks and insurance companies

2014

2013

¥ 86,290¥ 98,8042014$  845,996

Bonds issued by the Companies:
1.44% Yen unsecured straight bonds due 2013—

10,000—0.79% Yen unsecured straight bonds due 2015

15,00015,000147,059

0.86% Yen unsecured straight bonds due 2016

20,00020,000196,078

1.00% Yen unsecured straight bonds due 2017

5,000

5,000

49,0200.90% Yen unsecured straight bonds due 2018

20,000—196,078

500

500

4,902

146,790

149,3031,439,133

Zero coupon convertible bonds with stock acquisition rights due 2016

23,69823,180232,342¥123,092¥126,123$1,206,791

Less: Portion due within one year
Long-term Debt

The weighted average interest rates on loans, principally from banks and insurance companies, as of March 31, 2014 and 2013 were 0.79% and 0.93%, respectively.

As of March 31, 2014, the aggregate annual maturities of long-term debt were as follows:

Years ended March 31,

Millions of yen

Thousands of
U.S. dollars(Note 3)2016

¥ 34,733$  340,528

2017

36,443357,2932018

29,740291,574

2019

20,084

196,9052020 thereafter

2,092

20,491¥123,092$1,206,791

Total

Note 10. Lease Obligations
Lease obligations as of March 31, 2014 and 2013 consisted of the following:Thousands of
U.S. dollars(Note 3)

Millions of yen

Short-term

2014

2013

2014

¥13,521¥11,832$132,563

Long-term

20,726

18,555203,206

Total¥34,247¥30,387$335,769

The weighted average interest rates on lease obligations as of March 31, 2014 and 2013 were 2.28% and 2.24%, respectively.

As of March 31, 2014, the aggregate annual maturities of lease obligations were as follows:

Millions of yen

Thousands of
U.S. dollars(Note 3)2016

¥ 8,159$ 79,995

2017

5,447

53,406

2018

3,721

36,484

2019

2,280

22,3552020 thereafter

1,119

10,966¥20,726$203,206

Years ending March 31,

Total

Fuji Electric Report Financials 2014

Note 11. Retirement Benefits
For the year ended March 31, 2014

1. Outline of retirement benefits for employees
The Company and most of its consolidated subsidiaries havefunded or unfunded defined benefit plans and defined contribution
pension plans.
Defined benefit corporate pension plans are all funded and coversubstantially all employees who are entitled to lump-sum or annuity
payments determined by reference to their basic rates of pay andlength of service. As of March 31, 2014, the Company and certain
domestic consolidated subsidiaries revised defined benefit corporate
pension plans and transferred all benefit accrual occurred after April
1, 2014 to defined contribution pension plans. In addition, retirement
benefit trust has been established in certain pension plans.
Lump-sum payment plans are either unfunded or funded as aresult of establishing retirement benefit trust. They cover substantially all employees who are entitled to lump-sum payments determined by reference to either points obtained with interest credits ortheir basic rates of pay and length of service.
Certain domestic consolidated subsidiaries adopted a simplified
method in the calculation of net defined benefit liability and retirement benefit expense.
Certain domestic consolidated subsidiaries have multiemployer
pension plans accounted for by the same methods used for
defined contribution pension plans because they cannot reasonably
calculate their portion of pension assets corresponding to theircontributions.

2. Information on defined benefit plans(1)	The changes in the retirement benefit obligation except for plans accounted for by a simplified method during the year
ended March 31, 2014 were as follows:
Millions of yen

2014

Thousands of
U.S. dollars(Note 3)

2014

¥199,254$1,953,473

Service cost

4,764

46,711

Interest cost

4,903

48,070

Actuarial loss

1,148

11,263Retirement benefits paid

(12,818)(125,667)

Prior service cost

(9,730)(95,393)Retirement benefit obligation at April 1, 2013

34

320

¥187,555$1,838,777

OthersRetirement benefit obligation at March 31, 2014
Note : Prior service cost occurred due to the revision of defined benefit plans as of March 31, 2014.

(2)	The changes in plan assets at fair value except for plans accounted for by a simplified method during the year ended
March 31, 2014 were as follows:
Millions of yen

2014

Plan assets at fair value at April 1, 2013

Thousands of
U.S. dollars(Note 3)2014

¥153,278$1,502,733

Expected return on plan assets

2,535

24,859Actuarial gain

31,429308,130

Contributions by the Companies

9,395

92,115Retirement benefits paid

(9,821)(96,290)28

265¥186,844$1,831,812

OthersPlan assets at fair value at March 31, 2014(3)	The changes in net defined benefit liability calculated by a simplified method during the year ended March 31, 2014 wereas follows:

Net defined benefit liability at April 1, 2013

Millions of yen

Thousands of
U.S. dollars(Note 3)

2014

2014

¥2,545$24,958

5

57

Retirement benefits paid

(80)

(787)

Contributions(292)(2,864)Retirement benefit expenses

OthersNet defined benefit liability at March 31, 2014

84

817

¥2,262$22,181

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27

Fuji Electric Report Financials 2014(4)	The reconciliation of retirement benefit obligation and plan assets at fair value with net defined benefit liability and net
defined benefit asset recognized in the consolidated balance sheet were outlined as follows:
Millions of yen

Thousands of
U.S. dollars(Note 3)

2014

2014

Funded retirement benefit obligation¥ 188,014$  1,843,276

Plan assets at fair value(190,101)(1,863,744)(2,087)(20,468)

Unfunded retirement benefit obligation

5,060

49,614

Net amount of liabilities and assets recognized in the consolidated balance sheet

2,973

29,146

Net defined benefit liability

34,236335,651

Net defined benefit asset(31,263)(306,505)¥   2,973$     29,146

Net amount of liabilities and assets recognized in the consolidated balance sheet
Note: Plans accounted for by a simplified method are included.

(5) The components of retirement benefit expenses for the year ended March 31, 2014 were as follows:
Millions of yen

Service costThousands of
U.S. dollars(Note 3)

2014

2014

¥ 4,764$ 46,711

Interest cost

4,903

48,070

Expected return on plan assets(2,535)(24,859)

Amortization of actuarial loss

9,485

92,995

Amortization of prior service cost

33

324

Retirement benefit expenses calculated by a simplified method

5

57

754

7,381

¥17,409$170,679

OthersRetirement benefit expenses(6) ‌Unrecognized prior service cost and unrecognized actuarial loss included in accumulated other comprehensive income(before tax effect) as of March 31, 2014 were as follows:
Millions of yen

Unrecognized prior service cost
Unrecognized actuarial loss
Total

Thousands of
U.S. dollars(Note 3)

2014

2014

¥ (7,884)$ (77,300)

23,079226,274¥15,195$148,974(7) The breakdown of plan assets by major category as of March 31, 2014 was as follows:
Equity securities

54%

Debt securities

31

General accounts at life insurance companies

12

Others

3

Total

100

Note: Retirement benefit trust established for the corporate pension plans is included and equivalent to 24% of total amount of plan assets.

The long-term expected rates of return on plan assets have been determined as a result of consideration of both the portfolio allocation atpresent and in the future, and long-term rates of return from multiple plan assets at present and in the future.
The assumptions used in accounting for the defined benefit plans as of March 31, 2014, were as follows:
Discount rates

Mainly 2.5%

Long-term expected rates of return on plan assets

Mainly 2.5%

3. Information on defined contribution pension plans
Contributions of defined contribution pension plans for the year ended March 31, 2014 were ¥1,563 million ($15,324 thousand).

Fuji Electric Report Financials 2014

4. Information on multiemployer pension plans
Contributions to multiemployer pension plans accounted for by the same methods used for defined contributions plans for the year ended
March 31, 2014 were ¥68 million ($668 thousand).
For the year ended March 31, 2013
The Company and its domestic consolidated subsidiaries have a pension fund, and contract-type corporate pension plans and lump-sum
payment plans as defined benefit plans and defined contribution pension plans.
In certain cases, the Companies pay additional retirement benefits other than the above plans.
The liability (asset) for employees’ retirement benefits as of March 31, 2013 consisted of the following:
Millions of yen

2013

Projected benefit obligation¥(204,703)

Fair value of plan assets

156,182

Excess projected benefit obligation over plan assets(48,521)

Unrecognized actuarial loss

62,845

Unrecognized prior service cost
Carrying amountPrepaid pension expense
Net liability

1,879
16,203
27,884¥ (11,681)

Note: Certain domestic consolidated subsidiaries adopted a simplified method in the calculation of their retirement benefit obligation.

The components of retirement benefit expenses for the year ended March 31, 2013 were as follows:
Millions of yen

2013

Service cost

¥ 5,192

Interest cost

5,056

Expected return on plan assets(3,518)

Recognized actuarial loss

9,386

Amortization of prior service cost
Retirement benefit expenses
Contributory portion to a defined contribution pension plan
Total

35
16,151
1,443¥17,594

Notes 1.	‌Special additional termination benefits which have not been included in the amounts shown in the preceding table were ¥924 million for the year ended March 31, 2013, andwere charged to income as paid.
2. Retirement benefit expenses for domestic consolidated subsidiaries adopting the simplified method are included in “Service cost.”

Assumptions used for the year ended March 31, 2013 were as follows:
Discount rates

Mainly 2.5 %Expected rates of return on plan assets

Mainly 2.5 %The prior service costs are amortized by the straight-line method within the expected remaining working lives of the employees.
The actuarial gains and losses are amortized by the straight-line method within the expected remaining working lives of the employees
from the next period in which they arise, respectively.

Note 12. Shareholders’ Equity
1. Shares issued and outstanding / Treasury stock
The Companies Act of Japan provides that an amount equal to 10% of the amount to be disbursed as distributions of capital surplus (otherthan 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 capital reserve and the legal reserve equals 25% of the capital stock account. Such distributions can bemade at any time by resolution of the shareholders or by the Board of Directors if certain conditions are met.

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29

Fuji Electric Report Financials 2014

Movements in shares outstanding and treasury stock during the years ended March 31, 2014 and 2013 were as follows:
Thousands of shares
Increase in
the yearMarch 31, 2013

Decrease in
the yearMarch 31, 2014

Shares outstanding:Common stock
Total

746,484——

746,484

746,484——

746,484

31,91276

331,98531,91276

331,985

Treasury stock:
Common stock
Total

Thousands of shares
Increase in
the yearMarch 31, 2012

Decrease in
the yearMarch 31, 2013

Shares outstanding:Common stock
Total

746,484——

746,484

746,484——

746,484

31,88827

331,912

31,88827

331,912

Treasury stock:
Common stock
Total

The increases of treasury stock were due to purchase of shares of less than one voting unit and the decreases of treasury stock were
due to sales of shares at requests of shareholders who own less than one voting unit for the years ended March 31, 2014 and 2013.

2. Dividends(1) Dividends paid
For the year ended March 31, 2014
Resolution

Meeting of the Board of
Directors on May 23, 2013

Type ofsharesTotal
dividends(millions of yen)

Commonstock¥2,143

Meeting of the Board of
CommonDirectors on October 24, 2013 stock

Total dividends(thousands of U.S. dollars(Note 3))$21,017

2,143

21,017

Dividends per
Dividends
share (U.S.
per share (yen) dollars (Note 3))

¥3.0
3.0

Cut-off date

Effective date

$0.03

March 31, 2013

June 4, 2013

0.03

September 30,
2013

December 3,
2013

For the year ended March 31, 2013
Resolution

Meeting of the Board of
Directors on May 24, 2012

Type ofsharesTotal Dividends (millions of yen)

Dividends per share (yen)Cut-off date

Effective dateCommonstock¥1,429¥2.0

March 31, 2012

June 5, 2012

2.0

September 30,
2012

December 3,
2012

Meeting of the Board of
CommonDirectors on October 25, 2012 stock

1,429(2) Dividends with the cut-off date in the year ended March 31, 2014 and effective date in the year ending March 31, 2015
Resolution

Meeting of the Board of
Directors on May 27, 2014

Type ofsharesCommonstock

Total
Total dividends
dividends(thousands of U.S.
(millions of yen)dollars (Note 3))¥2,857$28,020

Source ofdividends

Retained
Earnings

Dividends per
Dividends
share (U.S.
per share (yen) dollars (Note 3))

¥4.0

$0.04

Cut-off date

Effective date

March 31, 2014

June 9, 2014

Dividends with the cut-off date in the year ended March 31, 2013 and effective date in the year ended March 31, 2014
Resolution

Meeting of the Board of
Directors on May 23, 2013

Type ofsharesCommonstock

Total dividends (millions of yen)

¥2,143

Source ofdividends

Dividends per share (yen)Cut-off date

Effective date

Retained
Earnings¥3.0

March 31, 2013

June 4, 2013

Fuji Electric Report Financials 2014

Note 13. Research and Development Costs
Research and development costs charged to income were ¥32,029 million ($314,014 thousand) and ¥31,160 million for the years ended
March 31, 2014 and 2013, respectively.

Note 14. Selling, General and Administrative Expenses
Major components of Selling, General and Administrative Expenses for the years ended March 31, 2014 and 2013 were as follows:
Thousands of U.S.
dollars (Note 3)

Millions of yen

Salaries and wages

2014

2013

2014

¥67,891¥67,657$665,603

Retirement benefit expenses

6,944

7,088

68,079Research and development costs

25,96925,747

254,601

Note 15. Extraordinary Loss, Net
Extraordinary loss, net, for the years ended March 31, 2014 and 2013 were as follows:
Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

2014

2013

Extraordinary income¥   543¥     29$  5,330

Gain on sales of investment securities

370

750

3,628

Insurance income

—

265

—

Loss on disposal of noncurrent assets(1,304)(404)(12,786)

Loss on devaluation of investment securities(1,134)(520)(11,124)

Impairment loss

(641)

(6,446)(6,292)

Settlement package

(420)

(700)

(4,118)

—

(827)

—

(408)

(1,244)(3,991)¥(2,994)¥(9,097)$(29,353)

Gain on sales of noncurrent assets

Extraordinary loss

Loss on liquidation of subsidiaries
OthersExtraordinary Loss, Net

Note 16. Impairment Loss
For the year ended March 31, 2014, impairment loss has not been disclosed because it does not have significant impact on the consolidated financial statements.

Note 17. Income Taxes
The components of income taxes for the years ended March 31, 2014 and 2013 were as follows:
Thousands of
U.S. dollars(Note 3)

Millions of yen

Current
DeferredIncome Taxes

2014

2013

2014

¥ 9,005¥  5,725$ 88,292

2,978(17,152)

29,182¥11,983¥(11,427)$117,474

The Company and its domestic consolidated subsidiaries are subject to corporate income tax, prefectural and municipal inhabitants’taxes and enterprise tax, based on income.

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31

Fuji Electric Report Financials 2014

The significant components of deferred tax assets and liabilities as of March 31, 2014 and 2013 were as follows:
Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

2013

2014

Deferred tax assets—¥       

¥ 24,311

Net defined benefit liability

28,760—281,961

The investment deduction of the foreign consolidated subsidiaries

20,952

19,414205,412Investment securities

8,501

8,443

83,350Tax loss carryforwards

6,872

9,653

67,382

Accrued employees’ bonuses

6,574

6,640

64,452Inventories

5,458

4,582

53,513

Tangible fixed assets

3,693

5,850

36,211

Other

6,247

7,604

61,22487,05786,497

853,505(32,318)(32,905)(316,840)

54,73953,592536,665

Unrealized gain on other securities(24,561)(11,458)(240,800)

Gain on securities contribution to employee retirement benefit trust(19,422)(20,853)(190,416)

Investment securities(5,717)(5,718)(56,053)

(877)

(761)

(8,581)Gross deferred tax liabilities(50,577)(38,790)(495,850)

Net deferred tax assets (liabilities)¥  4,162¥ 14,802$  40,815

Employees' retirement benefits

Gross deferred tax assets
Less: Valuation allowance
Total deferred tax assets$        
—Deferred tax liabilities

Other

The reconciliation between the statutory income tax rate and the effective income tax rate for the years ended March 31, 2014 and 2013
was as follows:
2014

2013

Statutory income tax rate

38.0%

38.0%

Valuation allowance(6.9)(97.4)Tax credits

(4.8)

(3.3)

Tax rate difference of overseas consolidated subsidiaries

(2.2)

(3.6)

Permanent difference resulting from non-taxable income, including dividends received(2.0)(10.0)

Decrease in deferred tax assets due to the revision of statutory income tax rate

4.4—

Permanent difference resulting from expenses not deductible for income tax purposes

3.7

5.1

Foreign taxes

0.6

2.2

Other

4.7

0.2

Effective income tax rate

35.5%

(68.8)%

Decrease in deferred tax assets due to the revision of statutory
income tax rate
The “Act for Partial Amendment of the Income Tax Act, etc.” (ActNo. 10 of 2014) was promulgated on March 31, 2014 and, as aresult, the Company is no longer subject to the Special Reconstruction Corporation Tax effective for fiscal years beginning on orafter April 1, 2014.
As a result, the effective statutory tax rate used to measure theCompany’s deferred tax assets and liabilities was changed from
38.0% to 35.6% for the temporary differences expected to berealized or settled in the fiscal year beginning April 1, 2014. The
effect of the announced reduction of the effective statutory tax rate
was to decrease deferred tax assets after offsetting deferred tax
liabilities by ¥995 million ($9,758 thousand) and increase deferredincome taxes by ¥995 million ($9,764 thousand) as of and for theyear ended March 31, 2014, respectively.
In addition, the “Act for Partial Amendment of the Local Corporate Tax Act, etc.”(Act No. 11 of 2014) was promulgated on March
31, 2014 and, as a result, a reduction of in inhabitant tax rate andimposition of the local corporate tax will be effective for fiscal years
beginning on or after October 1, 2014. As a result, there was nochange in the effective statutory tax rate used to measure theCompany’ deferred tax assets and liabilities, but the inhabitant tax
rate will be reduced by 4.4%. The effect of the above was todecrease deferred tax assets after offsetting deferred tax liabilitiesby ¥496 million ($4,870 thousand) and increase deferred income
taxes by the same amount, respectively.

Fuji Electric Report Financials 2014

Note 18. Consolidated Statements of Comprehensive Income
Amounts reclassified to net income (loss) in the current period that were recognized in other comprehensive income in the current or previous periods and the tax effects for each component of other comprehensive income were as follows:
Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

2014

2013

Valuation difference on available-for-sale securities:¥ 37,567¥1,864

(12)

42

(118)

Before tax effect37,555

1,906

368,187

Tax effect(13,087)(352)(128,298)

Valuation difference on available-for-sale securities

24,468

1,554

239,889

Amount arising during this year

170

(26)

1,670

Asset acquisition cost adjustments

(14)

23

(137)

Before tax effect

156

(3)

1,533

Tax effect

(59)

1

(576)

Deferred gains or losses on hedges

97

(2)

957

Amount arising during this year

4,279

5,762

41,954

Reclassification adjustments

72

—

709

4,351

5,762

42,663

Amount arising during the year
Reclassification adjustments$ 368,305

Deferred gains or losses on hedges:

Foreign currency translation adjustments:

Before tax effect

—

—

—

4,351

5,762

42,663Tax effectForeign currency translation adjustments
Share of other comprehensive income of associates accounted for using equity method:

30

35

268

¥ 28,946¥7,349$ 283,777

Amount arising during this year
Total Other Comprehensive Income

Note 19. Contingent Liabilities
Contingent liabilities as of March 31, 2014 and 2013 were as follows:
Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

Guarantees¥9,7052013¥3,584

2014$95,148

Note 20. Leases
1. Finance lease transactions(1) Leased assets
Leased assets primarily consist of machinery and equipment and software.
(2) Depreciation method for leased assets
Depreciation is computed by the straight-line method over the lease period assuming no residual value.
Finance leases other than those that were deemed to transfer the ownership of the leased assets to the lessees and contracted before
April 1, 2008, are accounted for by the method that is applicable to ordinary operating leases.
Finance leases other than those that were deemed to transfer the ownership of the leased assets to the lessees and contracted before April
1, 2008, are accounted for by the method that is applicable to ordinary operating leases.
Pro forma information of those leased property such as acquisition cost, accumulated depreciation, accumulated impairment loss,­obligations under finance leases, lease expense, depreciation expense, interest expense and impairment loss on an “as if capitalized” basis
for the years ended March 31, 2014 and 2013 were as follows:

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Fuji Electric Report Financials 2014

(1) Acquisition cost, accumulated depreciation and accumulated impairment loss under finance leases:
Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

2013

2014

Acquisition cost

¥5,518¥11,598$54,106

Accumulated depreciation

4,114

8,030

40,333

—

1,132

—

¥1,404¥ 2,436$13,773

Accumulated impairment loss
Net leased property(2) Obligations under finance leases:
Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

2014

2013

Due within one year¥  710¥2,462

Due after one year

863

1,650

8,462

¥1,573¥4,112$15,424

Total$ 6,962(3) ‌Lease expense, reversal of accumulated impairment loss on leased assets, depreciation expense, interest expense andimpairment loss under finance leases:
Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

2014

2013

Lease expense¥2,202¥3,696$21,592

Reversal of accumulated impairment loss on leased assets

1,132

113

11,104

Depreciation expense

1,132

3,518

11,103

Interest expense

77

131

757

Impairment loss

—

1,132

—

(4) Method of calculating estimated depreciation expense
Depreciation is computed by the straight-line method over the lease period assuming no residual value.
(5) Method of calculating estimated interest expense
Interest expense is computed and allocated to each period using the interest method assuming interest expense to be the excess of totallease payments over the acquisition cost.

2. ‌Operating lease transactions
The minimum rental commitments under noncancellable operating leases as of March 31, 2014 and 2013 were as follows:
Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

2014

2013

Due within one year¥  759¥  831

Due after one year

729

416

7,142

¥1,488¥1,247$14,593

Total$ 7,451

Note 21. Segment Information
1. Segment information(1) Outline of reporting segments
The Companies’ reporting segments are components for which
separate financial information is available and whose operating
results are reviewed regularly by the Board of Directors of the Company in order to make decisions about resource allocation and toassess performance. The Company has business headquarters by
products and services at its head office. The business headquarters
prepare comprehensively global strategies related to their products

and services and control their business activities. Accordingly, theCompanies have five reporting segments, principally based on thebusiness headquarters, that take into account the similarity of
category and nature of products and services: Power & Social
Infrastructure, Industrial Infrastructure, Power Electronics, Electronic
Devices and Food & Beverage Distribution. These segments consist of 2 or more business segments.
As of April 1, 2013, reflecting change of organization structure,Fuji Electric Report Financials 2014

the reporting segments were reclassified in Power and Social Infrastructure, Industrial Infrastructure and Power Electronics, andcontents of Others were changed. The reporting segment

information for the year ended March 31, 2013 has been reclassified to reflect this change.

Main products and services of each reporting segment consisted of the following:
Reporting segments

Main products and services

Power and Social Infrastructure

Thermal/geothermal/hydroelectric power generation, nuclear power-related equipment, solar power
generation systems, energy management systems, watt-hour meters, information systems

Industrial Infrastructure

Power receiving and distribution substation equipment, industrial power supply equipment, industrial
drive systems, heating and induction furnace equipment, factory energy management systems, data
centers, plant control systems, measurement system, radiation control systems, electrical equipment
installation work, water supply/drainage installation work

Power Electronics

Inverters/servo systems, motors, EV systems, transport systems, uninterruptible power supply systems(UPSs), power conditioners (PCSs), power distribution and control equipment

Electronic Devices

Power semiconductors, photoconductive drums, solar cells, magnetic disks

Food and Beverage Distribution

Food and beverage vending machines, retail distribution systems, showcases, currency handling equipment(2) ‌Calculation method of net sales, profit or loss, assets, liabilities and other items on each reporting segment
The accounting policies applied by each reporting segment are consistent with those described in “Note 2. Summary of Significant Accounting Policies.” Segment profit or loss presented in segment information is calculated based on operating income in the consolidated statements of income. Intersegment sales and transfer are determined by market value.
(3) Information on net sales, profit or loss, assets, liabilities and other items by each reporting segment
Reporting segment information as of March 31, 2014 and 2013 and for the years then ended were as follows:
Millions of yen

Year ended March 31, 2014

Power andSocialIndustrial
Infrastructure Infrastructure

PowerElectronics

Electronic
Devices

Food andBeverageDistribution

Others¥150,932¥120,231¥119,830¥31,863

Total

Adjustments

Consolidated¥759,911¥      —

¥759,911

Sales, profits or losses andassets by reporting segments
Net Sales
Sales to third parties
Inter-segment sales andtransfers
Total sales¥151,881¥185,174

1,772

3,474

14,5913,620

226

28,13851,821(51,821)—

153,653

188,648

165,523

123,851

120,056

60,001

811,732(51,821)759,911

Segment profits (losses)¥  8,138¥  9,209¥  5,435¥  6,302¥  8,047¥ 1,914¥ 39,045¥  (5,909)¥ 33,136

Segment assets¥123,919¥142,629¥143,110¥164,161¥ 65,909¥33,750¥673,478¥137,296¥810,774

Depreciation and amortization¥  2,080¥  2,565¥  4,189¥ 17,839¥  2,574¥   751¥ 29,998¥    851¥ 30,849

Investments for companies
applied equity method¥  6,107¥    683¥      —

¥      —

¥      —

¥      —¥  6,790¥      —¥  6,790

Capital expenditures¥  2,027¥  2,857¥  8,741¥ 15,150¥  3,412¥   532¥ 32,719¥    931¥ 33,650

Other items

Millions of yen

Year ended March 31, 2013

Power andSocialIndustrial
Infrastructure Infrastructure

PowerElectronics

Electronic
Devices

Food andBeverageDistribution

Others

Total

Adjustments

Consolidated¥140,539¥110,584¥111,891¥ 31,742¥745,781¥       —

¥745,781

Sales, profits or losses andassets by reporting segments
Net Sales
Sales to third parties
Inter-segment sales
and transfers
Total sales¥155,546¥195,479

1,349

3,246

7,818

3,007

195

28,84444,459(44,459)—

156,895

198,725

148,357

113,591

112,086

60,586790,240(44,459)745,781

Segment profits (losses)¥  8,421¥ 11,026¥  1,236¥  (1,416)¥  6,423¥ 1,629¥ 27,319¥    (5,327)¥ 21,992

Segment assets¥131,693¥133,889¥125,808¥160,771¥ 64,421¥34,075¥650,657¥114,906¥765,563

Depreciation and amortization¥  2,033¥  2,371¥  3,758¥ 18,661¥  2,613¥   805¥ 30,241¥    813¥ 31,054

Investments for companies
applied equity method¥ 13,946¥    612¥       —

¥       —

¥       —

¥        —¥ 14,558¥       —

¥ 14,558

Capital expenditures¥  2,758¥  3,199¥  7,269¥  8,515¥  2,750¥   706¥ 25,197¥    947¥ 26,144

Other items

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35

Fuji Electric Report Financials 2014

Thousands of U.S. dollars (Note 3)

Year ended March 31, 2014

Power andSocialIndustrial
Infrastructure Infrastructure

PowerElectronics

Electronic
Devices

Food andBeverageDistribution

Others

Total

Adjustments

Consolidated

Sales, profits or losses andassets by reporting segments
Net Sales
Sales to third parties
Inter-segment sales
and transfers
Total sales$1,489,030 $1,815,433 $1,479,734 $1,178,739 $1,174,806$312,375 $7,450,117 $        — $7,450,117

17,37834,059143,044

35,492

2,218

275,849

508,040

1,506,408

1,849,492

1,622,778

1,214,231

1,177,024

588,224

7,958,157(508,040)—(508,040) 7,450,117

Segment profits (losses)$   79,790 $   90,292 $   53,292 $   61,787 $   78,894$ 18,746 $  382,801 $  (57,931) $  324,870

Segment assets$1,214,896 $1,398,329 $1,403,048 $1,609,430 $  646,169$330,857 $6,602,729 $1,346,037 $7,948,766

Depreciation and amortization$   20,396 $   25,151 $   41,071 $  174,892 $   25,239$  7,356 $  294,105 $    8,339 $  302,444

Investments for companies
applied equity method$    59,875 $    6,698 $        — $        — $       —$       — $   66,573 $        — $   66,573

Capital expenditures$   19,882 $   28,012 $   85,704 $  148,530 $   33,460$  5,187 $  320,775 $    9,131 $  329,906

Other items

Notes: 1.	‌Others segment consisted of business segments not attributable to reporting segments and included financial services, real estate operations, insurance agency services, travel
agency services, printing and information services, and etc.
2. The adjustments for segment information above were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen
2014

Corporate expense*¥(5,581)

(15)

254

(139)

¥(5,909)¥(5,327)$(57,931)

Elimination of intersegment sales
Total

2014

2013

¥(5,894)$(57,792)*Corporate expense mainly consisted of administration cost of the Company
Thousands of
U.S. dollars (Note 3)

Millions of yen

Corporate assets*
Elimination of intersegment transactions
Total

2014

2013

¥ 256,485¥ 230,387

2014$ 2,514,565(119,189)(115,481)(1,168,528)¥ 137,296¥ 114,906$ 1,346,037* ‌Corporate assets mainly consisted of invested cash surpluses (cash and cash equivalents), long-term invested assets (investment securities), assets relating to administration
department and assets of a financing subsidiary company.
3. Segment profits (losses) were reconciled to operating income (loss) in the consolidated statements of income.

2. Related Information
Related information as of March 31, 2014 and 2013 and for the years then ended were as follows:
Geographic information(a) Sales
Thousands of
U.S. dollars(Note 3)

Millions of yen

Japan

2014

2013

¥582,223¥567,314$5,708,076

2014

Asia (except for China), Others

77,26095,782757,440

China

68,40154,553

670,603

Europe17,362

14,355170,216

America

14,665

13,777

143,782¥759,911¥745,781$7,450,117

Consolidated
Note: Net sales information above is based on customer location.

Fuji Electric Report Financials 2014(b) Tangible fixed assets
Thousands of
U.S. dollars(Note 3)

Millions of yen

Japan

2014

2013

¥126,032¥121,878$1,235,613

2014

Asia (except for China), Others

32,67434,742

320,329

China

13,368

11,394

131,060

Europe

414

299

4,061

America

131

129

1,288

¥172,619¥168,442$1,692,351

Consolidated

3. Information on impairment loss of fixed assets by each reporting segment
Information on impairment loss of fixed assets by each reporting segment for the year ended March 31, 2014 and 2013 were as follows:
Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

2014

2013

Industrial Infrastructure¥—¥    0$—Power Electronics

—

5

—

Electronic Devices

—

6,408

—

Others

—

33

—

Total

¥—

¥6,446$—

Note: ‌Information for the year ended March 31, 2014 has not been disclosed because it does not have significant impact on the consolidated financial statements.

4. Information on amortization of goodwill and unamortized balance by each reporting segment
Information on amortization of goodwill and unamortized balance by each reporting segment has not been disclosed because it does nothave significant impact on the consolidated financial statements.

5. Information on gain on negative goodwill by each reporting segment
None

Note 22. Information on Transactions with Related Parties
Note to a significant affiliate
Summarized financial information of a significant affiliate
METAWATER Co., Ltd. was a significant affiliate for the years ended March 31, 2014 and 2013, and its summarized financial information
were as follows:
Thousands of
U.S. dollars(Note 3)

Millions of yen

METAWATER Co., Ltd.

2014

2013

2014

Total Current Assets¥61,643¥69,454$604,350

Total Fixed Assets

11,25910,667110,389

Total Current Liabilities

49,831

43,892

488,542

Total Long-term Liabilities

2,219

1,957

21,756

Total Net Assets

20,852

34,272

204,441

Net Sales

95,146

96,733932,806

Income Before Income Taxes and Minority Interests

7,480

7,696

73,341Net Income

4,326

4,737

42,421

Note 23. Business Combinations
For the year ended March 31, 2014, business combinations have not been disclosed because they do not have significant impact on the
consolidated financial statements.

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36

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37

Fuji Electric Report Financials 2014

Note 24. Asset Retirement Obligations
Asset retirement obligations recorded on the consolidated balance sheets
1. Outline of asset retirement obligations
The Companies record asset retirement obligations related to the expenses to remove asbestos from company-owned buildings upon theirdismantlement and the obligations to restore head offices, sales offices and other premises to their original condition upon termination of
their lease contracts.
Regarding some of the obligations to restore head offices, sales offices and other premises to their original condition, the Companies
estimate nonrecoverable amounts of deposits for those premises and record the portion attributable to the current year as expenses,
instead of recording asset retirement obligations.

2. Calculation method of asset retirement obligations
In calculating the amounts of asset retirement obligations, the Companies estimate a period of use between 4 and 49 years and use a­discount rate equivalent to the interest rate of government bonds corresponding to the use period (0.2% to 2.3%).

3. Changes in the total amounts of asset retirement obligations
Changes in the total amounts of asset retirement obligations for the years ended March 31, 2014 and 2013 were as follows:
Thousands of
U.S. dollars(Note 3)

Millions of yen

2014

2014

2013

¥2,370¥2,293

Increase due to change in scope of consolidation

—

19

—

Increase due to acquisition of property, plant and equipment

49

68

489

Balance at beginning of year

8

8

82

(223)

(18)

(2,205)¥2,204¥2,370$21,610Adjustment due to passage of time
Decrease due to fulfillment of obligations
Balance at end of year

$23,244

Note 25. Amounts Per ShareInformation of amounts per share for the year ended March 31, 2014 and 2013 were as follows:
U.S. dollars(Note 3)

Yen

2014

2013

Net assets per share¥317.96¥272.29$3.117

Net income per share¥ 27.41¥ 36.90$0.269Diluted net income per share¥ 27.39¥ 36.87$0.269Note 26. Subsequent Events
For the year ended March 31, 2014
None

2014

Fuji Electric Report Financials 2014

Independent Auditor’s Report
Ernst & Young ShinNihon LLC
Hibiya Kokusai Bldg.
2-2-3 Uchisaiwai-cho
Chiyoda-ku, Tokyo, Japan 100-0011
Tel: +81 3 3503 1100
Fax: +81 3 3503 1197
The Board of Directors
Fuji Electric Co., Ltd.
We have audited the accompanying consolidated financial statements of Fuji Electric Co., Ltd. and its consolidated subsidiaries,
which comprise the consolidated balance sheet as at March 31, 2014, 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 otherexplanatory 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 perform the audit toobtain 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 of material
misstatement of the consolidated financial statements, whether due to fraud or error. The purpose of an audit of the consolidated
financial statements is not to express an opinion on the effectiveness of the entity’s internal control, but in making these risk
assessments the auditor considers internal controls relevant to the entity’s preparation and fair presentation of 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 made bymanagement, 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 Fuji Electric Co., Ltd. and its consolidated subsidiaries as at March 31, 2014, and their consolidated financial
performance and cash flows for the year then ended in conformity with accounting principles generally accepted in Japan.
Convenience Translation
We have reviewed the translation of these consolidated financial statements into U.S. dollars, presented for the convenience ofreaders, and, in our opinion, the accompanying consolidated financial statements have been properly translated on the basis
described in Note 3.

June 25, 2014
Tokyo, Japan

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38

Gate City Ohsaki, East Tower,
11-2, Osaki 1-chome, Shinagawa-ku, Tokyo 141-0032, Japan
Contacts: Public and Investor Relations Dept.
TEL: +81-3-5435-7111 http://www.fujielectric.com/

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