Annual Business Report
April 1, 2021 through March 31, 2022

NIPPON SHARYO, LTD. and Consolidated Subsidiaries

Financial Highlights
Comparison of Sales by Segment(Unit: millions of yen)
192nd period(2020-2021)

193rd period(2021-2022)

Business Segment

Increase/(Decrease)

Railway rolling stock

47,95851.0

50,48650.8(2,528)(5.0)

Transportation equipment
and Steel structure

13,855

14.7

18,502

18.6(4,647)(25.1)

Construction equipment

20,18621.5

21,64621.7(1,460)(6.7)

Engineering

11,957

12.7

8,738

8.8

3,219

36.8

Other

66

0.1

76

0.1

(10)

(15.0)

Total

94,022100.0

99,448100.0(5,426)(5.5)

Change in Operating Performance and Asset Status(Unit: millions of yen except Net income per share)
191st period
192nd period(2019-2020)(2020-2021)

193rd period(2021-2022)

Titles of accountNet sales

94,02299,44894,635

Income before income taxes

6,042

9,274

7,530

Net income attributableto owners of the parent

5,227

7,929

7,895

Net income per share¥362.14¥549.31¥547.00

Total assets

132,868

136,596

127,813

Total equity

48,01845,28834,504Comparison of Sales by Segment(Millions of Yen)
120,000

Other

100,000

Engineering

80,000Construction
equipment

60,000Transportationequipment and Steelstructure
Railway rolling stock

40,00020,0000
193rd period

192nd period

191st period

Contents

Message from the President

2

Review by Segment

5

Investment in Plant and Equipment

7

Financing Activities

7

Consolidated Financial Statements and Independent Auditor's Report

8

Corporate Information

61

Directory

61

Series 315 trains1Message from the President
Review of Business Operations
During the fiscal year ended March 31, 2022 (hereinafter referred to as the “fiscal year underreview”), despite the repeated imposition and lifting of restrictions on economic activity as aconsequence of novel coronavirus disease (COVID-19), the Japanese economy showed signs ofa gentle recovery. However, close attention must be paid to downside risks due to thesemiconductor shortage and trends in the prices of raw materials, the impact on both thedomestic economy and overseas economies of infectious diseases, including variants, and risingtensions in Ukraine, and the outlook remains uncertain.
As a result of this business environment, the Group’s net sales for the fiscal year under review cameto ¥94,022 million, a decrease of 5.5% from the previous year, due to decreases in the railway rollingstock business, the transportation equipment and steel structure business and the construction
equipment business, despite an increase in the engineering business. With regard to profit, despite anincrease in the engineering business, the railway rolling stock business, the transportation equipment
and steel structure business and the construction equipment business recorded decreases, resulting inoverall operating income dropping by 31.1% year on year to ¥6,238 million, income before income
taxes falling 34.9％ year on year to ¥6,042 million, and net income attributable to owners of the parent
declining 34.1% year on year to ¥5,227 million.

The Outlook
When formulating the “Nippon Sharyo Innovative Change 2030” medium-term business plan in
2021, the Group drew up a long-term vision that expressed the ideal form to become by 2030 as “abusiness partner that solves customers’ problems by providing safety and reliability in the workplace.”
Based on this long-term vision, the “Nippon Sharyo Innovative Change 2030” medium-termbusiness plan designates areas of focus and organizes them into three pillars.
(1) Thorough strengthening of profitability (the ability to generate profit)(2) Reforming the foundations of the business for growth(3) Achieving a transformation of the business modelWith the aim of enhancing corporate value over the medium and long term, the Board of Directors
has also formulated a basic policy on sustainability designed to appropriately address sustainability
issues, including social and environmental problems. In addition, an Executive Sustainability
Committee, chaired by the President and Chief Executive Officer, has been established to
identify materiality from a long-term perspective and to promote initiatives to resolve them.

2

We expect the order environment to remain difficult for the railway rolling stock business going
forward, due to contractions in upgrade demand caused by the prolongation of the impact of COVID19, etc. In response to this environment, we will leverage our strength in handling a wide variety ofrolling stock, such as Shinkansen trains, limited express trains, commuter trains, and operational
vehicles. In addition, we will continue to strengthen our competitiveness by differentiating ourselves
through our new brand “N-QUALIS” and technology development that utilizes our conditionmonitoring technology, and by striving to reduce costs mainly through reforming production processes.
With respect to the transportation equipment and steel structure business, due to the economic
uncertainty in Japan and overseas caused by the prolongation of COVID-19, which has resulted in the
suppression of capital investment and other issues, the order environment is very challenging fortransportation equipment. In this environment, we are working on launching new products aimed atmeeting market needs, and on R&D aimed at introducing new technology, primarily in the area of ourmainstay high-pressure gas tank trucks and heavy duty carriers. In addition, we will take steps toreduce costs through such actions as standardizing design, while strengthening our competitivenessand acquiring new customers. For steel structures, we forecast that a certain level of orders for theconstruction of new steel bridges will be maintained, but the order environment is likely to be difficult.
Conversely, repair and maintenance work to deal with deterioration is becoming increasingly
important, as it can be seen from the trend of increasing orders for major upgrade andrenovation programs for expressways. In response to this environment, while moving ahead withcost reduction, we will continue to strengthen our ability to provide technical proposals for new
bridges, as well as secure order volume. At the same time, in the repair and maintenance business
we will leverage the know-how we have accumulated in the course of bridge repair work
conducted during major repair work on the Tokaido Shinkansen to grow our orders for repair andmaintenance of highway bridges. Through the above initiatives, we will work to reduce losses in thetransportation equipment and steel structure business.
In the construction equipment business, due to the risk of an undershoot caused by the prolongationof the impact of COVID-19 in both domestic and overseas markets, the outlook for demand isbecoming increasingly uncertain. In this environment, we will leverage our development andmanufacturing know-how in construction equipment, including pile-driving rigs, and respond flexibly
to the needs of different regions, while striving to strengthen our competitiveness through the adoptionof automation and energy-saving technology.
In the engineering business, mechanical equipment for railway companies, country elevator, andpaper-making facility are essential components of social infrastructure, and we expect a certain levelof demand to continue going forwards. In addition to enhanced safety and reduced power consumption,customers are requiring labor-saving features and improved maintainability for such equipment to3

address labor shortages caused by the aging of the population. In response, we will provide
detailed proposals to meet market needs, enabling us to secure profits.
Furthermore, in FY2021 we began repaying the long-term debt that the Company borrowed fromthe parent company in November 2017. We will continue to work on gradually reducing long-term
debt and strengthening our financial foundation.
Moreover, although there is a possibility that the prolongation of the impact of COVID-19 affects
the performance and financial position of the Group, we have taken steps in each business to addressconcerns regarding the order environment. In addition, in order to prevent a temporary shutdown incorporate activities, we have introduced online meetings for sales activities, implemented systems forstaggered shifts and working from home that take into account the need to maintain operating rates,and put in place measures to prevent infection, such as wearing masks while working.

Kazuhiro Igarashi
President and Chief Executive Officer

4Review by Segment
Railway Rolling Stock Business
Our sales to the JR Companies, including Series N700S
Shinkansen trains and Series 315 trains to Central Japan
Railway Company, and rail transporting vehicles for East
Japan Railway Company, resulted in net sales of¥38,882million.

Odakyu Electric Railway Co., Ltd.

Sales to public and private railways included trains provided
to Odakyu Electric Railway Co., Ltd. and Nagoya City’s
Transportation Bureau, resulting in net sales of ¥9,075 million.
As a result of these decreases in rail transporting vehicles for
East Japan Railway Company and others, the railway rollingstock business recorded net sales of ¥47,958 million, down 5.0%
year on year.
Series N700S Shinkansen trains

Transportation Equipment and Steel Structure BusinessIn transportation equipment business, sales of freightcars rose year on year, but Automated Guided Vehicles andbulk tank trucks for consumer use recorded a decline.
In steel structures business, we recorded sales in relation
to work on the steel superstructure of Ono Aburasaka
Highway Nakatsugawa Viaduct, the Tanigoike Bridge, theShimana No.1 Bridge on the Ken-o Expressway, and major

Liquid Chlorine Tank Truck

repair work on the Tokaido Shinkansen, but sales related to highway bridges, etc. for government andmunicipal offices declined year on year.
As a result of the above, net sales for the transportationequipment and steel structure business came to ¥13,855
million, a decline of 25.1% year on year.

Kinuura-ohashi Bridge

5

Construction Equipment Business
Sales of construction equipment remained at high levels due to demand
for urban redevelopment projects in Japan, but due to year-on-year declines
caused by the completed withdrawal from the power generation businessand other factors, net sales in the construction equipment business were¥20,186 million, a decline of 6.7% year on year.

Mini Piling Rig

Engineering Business

The main components of sales in this business included mechanicalequipment for railway companies as well as manufacturing equipment forhousehold paper manufacturers and agricultural plant facilities for Japan
Agricultural Cooperatives all over Japan. As a result of an increase in salesof mechanical equipment for railway companies and manufacturing
equipment for household paper manufacturers, net sales in the engineeringbusiness totaled ¥11,957 million, up 36.8% from the previous year.

Grain Elevator

The order backlog at the end of the fiscal year under review was￥123,494 million. The componentsof this were ¥89,530 million in the railway rolling stock business, ¥18,026 million in the transportationequipment and steel structure business, ¥13,976 million in the construction equipment business, and¥1,962 million in the engineering business.

6

Investment in Plant and Equipment
Plant and equipment investment during the fiscal year under review totaled ¥2,749 million.
Investment was mainly targeted at renewal of equipment to maintain and improve the production
capacity at each plant.
On April 20, 2017, we transferred the plant property of Toyokawa Plant, Kinuura Plant, and Narumi
Plant to our parent company (Central Japan Railway Company). Since the relevant transaction is atransaction with our parent company, and we concluded a lease contract with our parent company andcontinuously use the transferred plant property as plants as before even after transfer, we recorded the“land” and “buildings and structures” of this plant property as tangible fixed assets instead of executing
sales and purchase accounting. The relevant transaction is not a finance lease transaction, so werecorded the transfer price of the plant property as a long-term debt (including current portion of longterm debt).
Therefore, plant and equipment investment concerning the transferred plant property was also
recorded as “buildings and structures,” “machinery and equipment,” and “other,” and some of theequipment investment amount as long-term debt (including current portion of long-term debt).

Financing Activities
As for the fiscal year under review, no significant borrowing occurred.

7

NIPPON SHARYO, LTD. ANDCONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31, 2022
AND
INDEPENDENT AUDITOR’S REPORT

8

INDEPENDENT AUDITOR'S REPORTTo the Board of Directors of NIPPON SHARYO, LTD.:
OpinionWe have audited the consolidated financial statements of NIPPON SHARYO, LTD. and its consolidated subsidiaries (the"Group"), which comprise the consolidated balance sheet as of March 31, 2022, and the consolidated statement of income,consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement ofcash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies, all expressed in Japanese yen.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Group as of March 31, 2022, and its consolidated financial performance and its consolidated cash flows
for the year then ended in accordance with accounting principles generally accepted in Japan.
Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made in accordance with the basis stated in Note 1 to the consolidated financial statements. Such U.S. dollar
amounts are presented solely for the convenience of readers outside Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under thosestandards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements sectionof our report. We are independent of the Group in accordance with the provisions of the Code of Professional Ethics in Japan,
and we have fulfilled our other ethical responsibilities as auditors. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated
financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter Description

How the Key Audit Matter Was Addressed in the Audit[Revenue recognition of performance obligations satisfied overtime]
As stated in Note 3 to the consolidated financial statements,
the Group recognizes revenue where performance obligations
are satisfied over time in construction contracts. Thisaccounting policy is applied principally to the steel structurebusiness that manufactures, builds, and sells mainly roadbridges, railway bridges, and floodgates. The revenue
recognized where performance obligations are satisfied overtime amounted to ¥8,667 million for the year ended March 31,
2022.

Our audit procedures to test the construction revenue
recognized where performance obligations are satisfied overtime included the following, among others:
Evaluated the design and operating effectiveness ofcontrols over the process of identifying construction
projects subject to the revenue recognition where
performance obligations are satisfied over time, theprocess of preparing and approving the working budgetof estimated total construction costs and the process of
calculating revenue in applying the revenue recognition
where performance obligations are satisfied over time.

9In applying revenue recognition where performanceobligations are satisfied over time , the amount of construction
revenue for each construction project is its total construction
revenue multiplied by the percentage of incurred cost of
construction to its total cost of construction based on theworking budget.
The working budget of the total construction costs includes
estimates of material costs, labor costs and subcontractor costs
for construction projects. The significant assumptions ofestimates of labor and subcontractor costs include locations andtiming of construction projects, degrees of difficulty of
construction based on the construction method and cost
improvement effects of skill levels based on past construction
performance.
In addition, since the working budget of the total cost of
construction requires updating each time when the designs ofconstruction projects are changed, it is necessary to reflect suchchanges to the revenue recognition where performanceobligations are satisfied over time, based on timely
determination of the degrees and ranges of the effects of thedesign changes on the working budget.
We have identified the revenue recognition where
performance obligations are satisfied over time as a key audit
matter since the estimate of total cost of construction used in
the revenue recognition of performance obligations satisfied
over time is affected by the significant assumptions made bymanagement.

[Valuation of work in process and provision for loss on orders
received in railway rolling stock business]
As stated in Note 6 to the consolidated financial statements,
the Group recognized work in process of ¥27,431 million as ofMarch 31, 2022. Most of the work in process was the railway
rolling stock business related assets. In addition, as stated in
Note 3 to the consolidated financial statements, the cost of sales
included the write-down of work in process and otherinventories and provision for loss on orders received of ¥1,151
million for the year ended March 31, 2022.
The Group compares the order amount and the estimatedtotal cost for each order when calculating write-down andprovision for loss on orders received related to work in process
in railway rolling stock business. The estimated total cost isbased on the working budget prepared for each order andincludes estimated material costs, labor costs, subcontracting
costs and other expenses at each related department in thebusiness unit. The significant assumptions of the estimates ofthese costs include the applicability of know-how based on thepast design and manufacturing of similar railway rolling stock,load forecast based on actual results and cost improvement due
to progress in mass production of the similar railway rollingstock and improvement of cost proficiency.
We have identified the valuation of work in process andprovision for loss on orders received in railway rolling stockbusiness as a key audit matter since the estimated total cost perorder is affected by the significant assumptions made bymanagement.

Our audit procedures to evaluate the reasonableness ofvaluation of work in process and provision for loss on orders
received included the following, among others:
Evaluated the design and operating effectiveness ofcontrols over the process of identifying orders for which
order losses had occurred in the railway rolling stockbusiness, the process of preparing and approving
working budgets of the total estimated costs and theprocess of evaluating work in process and provision forloss on orders received.

Examined the consistency of the schedule forcalculating the estimated loss on orders received andthe list of construction contracts outstanding as ofMarch 31, 2022 for testing the completeness ofidentifying the estimated loss on orders received.
Compared the Group’ judgement of the estimated loss
on orders received with the profit/loss experience of thesimilar railway rolling stock in the prior periods and themost recent estimated cost of construction projects andevaluated the reasonableness of the estimated loss onorders received.
Regarding the subject of the order with expected loss,
we compared the amount of each item of cost
breakdown between the past production of similar
railway rolling stock and the subject of the order inprocess, and examined whether the items to be reflectedin the estimated total cost were comprehensively
considered. In addition, the accuracy of the estimatedtotal cost was evaluated by comparing the labor hours
for each manufacturing process included in the latest
work results of similar railway rolling stock with the

10







Examined whether the amount of the estimated total
cost for each construction contract unit were consistent
with the working budget approved by the generalmanager of the steel structure business division.
Compared the labor cost ratio and subcontractor cost
ratio for construction works based on characteristics ofconstruction projects by contractor, bridge types, timing,
location, term and method of constructions with thosefor past years and examined if the monthly costs by cost
category were consistent with the cost structure and thework progress.
Tested whether the estimated total cost of construction
had changed for the construction projects with designchange agreements selected from those accounted for by
the revenue recognition where performance obligations
are satisfied over time.
Made site inspection for selected construction projects
subject to the revenue recognition where performanceobligations are satisfied over time and tested theconsistency of cost of construction incurred with thestage of the completion of the contract by comparing the
progress toward completion to the whole contract period
or total construction process.

labor hours included in the estimates made bymanagement.

Other Information
Management is responsible for the other information. Audit & Supervisory Board members and the Audit & Supervisory Board
are responsible for overseeing the Directors' execution of duties relating to the design and operating effectiveness of the controls
over the other information. The other information comprises the information included in the Annual business report, but does
not include the consolidated financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form ofassurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Audit & Supervisory Board Members and the Audit & Supervisory Board for
the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance withaccounting principles generally accepted in Japan, and for such internal control as management determines is necessary toenable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as agoing concern, disclosing, as applicable, matters related to going concern in accordance with accounting principles generally
accepted in Japan and using the going concern basis of accounting unless management either intends to liquidate the Group or
to cease operations, or has no realistic alternative but to do so.
Audit & Supervisory Board members and the Audit & Supervisory Board are responsible for overseeing the Directors'
execution of duties relating to the design and operating effectiveness of the controls over the Group's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonableassurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards
generally accepted inJapan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.

11

As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks. The procedures selected depend on the auditor's judgment. In
addition, we obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentionalomissions, misrepresentations, or the override of internal control.
• Obtain, when performing risk assessment procedures, an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on theGroup's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention
in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However,
future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate whether the overall presentation and disclosures of the consolidated financial statements are in accordance withaccounting principles generally accepted in Japan, as well as the overall presentation, structure and content of the consolidated
financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within theGroup to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision andperformance of the group audit. We remain solely responsible for our audit opinion.
We communicate with Audit & Supervisory Board members and the Audit & Supervisory Board regarding, among othermatters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide Audit & Supervisory Board members and the Audit & Supervisory Board with a statement that we havecomplied with relevant ethical requirements regarding independence, and communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

12

From the matters communicated with Audit & Supervisory Board members and the Audit & Supervisory Board, we determine
those matters that were of most significance in the audit of the consolidated financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicatedin our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required to be disclosed
pursuant to the provisions of the Certified Public Accountants Act of Japan.

Shumpei Kano
Designated Engagement Partner
Certified Public Accountant

September 28, 2022

13

NIPPON SHARYO, LTD. and Consolidated Subsidiaries
Consolidated Balance Sheet
March 31, 2022

ASSETS

Millions of Yen
2022
2021

Thousands of
U.S. Dollars(Note 1)
2022

29,112$CURRENT ASSETS:
Cash and cash equivalents (Notes 15 and 17)¥

Notes and accounts receivable, and contract assets(Notes 5, 15 and 17)¥

20,767

238,620

20,51031,031

27,61032,112

168,115254,354

709

1,272

5,815

81,362

81,761

666,904

Land (Note 11)

14,171

14,380116,159

Buildings and structures (Note 11)

26,345

26,159215,944

Machinery and equipment

35,52135,550291,156

Construction in progress

178

148

1,453

76,21576,237624,712(47,852)(47,635)(392,227)

28,36328,602

232,485

Investment securities (Notes 7, 11 and 15)
Investments in an unconsolidated subsidiary and associatedcompanies (Note 15)

15,67319,091

128,463

947

885

7,762

Asset for employees’ retirement benefits (Note 10)

5,128

4,917

42,032

149

138

1,218

1,246

1,202

10,22023,143

26,233

189,695

136,596$ 1,089,084

Inventories (Notes 2.i and 6)
Other current assets (Note 11)
Total current assets

PROPERTY, PLANT AND EQUIPMENT:

Total
Accumulated depreciation
Net property, plant and equipment

INVESTMENTS AND OTHER ASSETS:

Deferred tax assets (Note 14)
Other assets (Note 11)
Total investments and other assets
TOTAL

¥

132,868¥(Continued)

14

NIPPON SHARYO, LTD. and Consolidated Subsidiaries
Consolidated Balance Sheet
March 31, 2022

LIABILITIES AND EQUITYCURRENT LIABILITIES:Current portion of long-term debt (Notes 9, 15 and 17)
Current portion of lease obligations (Notes 12 and 15)
Notes and accounts payable (Notes 8 and 15)
Accrued expenses (Note 17)
Advances received
Income taxes payable (Note 14)
Allowance for work in process on construction contracts
Provision for losses on orders received (Note 2.n)Other current liabilities
Total current liabilities
LONG-TERM LIABILITIES:Long-term debt (Notes 9, 11, 15 and 17)
Liability for employees’ retirement benefits (Note 10)
Lease obligations (Notes 12 and 15)
Provision for compensation for health damage fromasbestos
Deferred tax liabilities (Note 14)
Other long-term liabilities
Total long-term liabilities

EQUITY (Note 13):
Common stock,authorized, 32,800,000 shares;
issued, 14,675,012 shares in 2022 and 2021
Retained earnings
Treasury stock, at cost, 242,928 shares in 2022
and 242,109 shares in 2021
Accumulated other comprehensive income:Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total equity
TOTAL
See notes to consolidated financial statements.

15

Thousands of
U.S. Dollars(Note 1)
2022

Millions of Yen
2022
2021
¥

¥

3,370
633
20,510
3,987
1,076
712
272
49
365
30,974

¥

3,360
906
21,442
4,694
1,109
1,347
32
399
33,289$27,626
5,187
168,115
32,683
8,820
5,833
2,228
405
2,985
253,882

48,763280
1,299

51,946259
1,092

399,695
2,295
10,646

105

92

861

3,266
163
53,876

4,329
301
58,01926,768
1,341
441,606

11,81130,396

11,811
25,40996,809249,149

(522)

(520)

(4,276)

6,329(2,243)
2,096
6,182
151
48,018132,868

8,646(2,228)
2,031
8,449
139
45,288
136,596

51,879(18,385)
17,181
50,675
1,239
393,596$ 1,089,084(Concluded)¥

NIPPON SHARYO, LTD. and Consolidated Subsidiaries
Consolidated Statement of Income
Year Ended March 31, 2022
Thousands of
U.S. Dollars(Note 1)
2022

Millions of Yen
2022
2021
NET SALES (Notes 17 and 20)¥

COST OF SALES (Notes 2.i, 2.m and 2.t)
Gross profit
SELLING, GENERAL, AND ADMINISTRATIVE
EXPENSES (Note 2.t)Operating income
OTHER (EXPENSES) INCOME
Interest and dividend income (Note 17)
Interest expense (Note 17)
Equity in earnings of associated companies
Gain on sales of investment securities, net (Note 7)
Loss on impairment of property, plant and equipment(Note 16)
Loss (gain) on sales and disposals of property, plant andequipment
Other – net
Other (expenses) income – net
INCOME BEFORE INCOME TAXESINCOME TAXES (Note 14):
Current
Deferred
Total income taxes
NET INCOME
NET INCOME ATTRIBUTABLE TO NON-CONTROLLINGINTERESTS
NET INCOME ATTRIBUTABLE TO OWNERS OF
THE PARENT¥

94,022¥99,448¥

See notes to consolidated financial statements.

16

770,675

80,732

83,395

661,737

13,29016,053

108,938

7,052

7,005

57,810

6,238

9,048

51,128

281
(345)
64
157

286
(354)
47
115

2,301
(2,826)
523
1,291

(245)

(29)

(2,008)

(164)

(123)

(1,342)

56
(196)
6,042

284
226
9,274

456
(1,605)49,523

886
(87)
799

1,188
144
1,332

7,264
(716)
6,548

5,243

7,942

42,975

16

13

134

5,227

¥

7,929

Yen
PER SHARE OF COMMON STOCK (Note 2.u):
Basic net income
Cash dividends applicable to the year$

362.1420.00$

42,841

U.S. Dollars¥

549.31
10.00

$

2.97
0.16

NIPPON SHARYO, LTD. and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Year Ended March 31, 2022
Thousands of
U.S. Dollars(Note 1)
2022

Millions of Yen
2022
2021
NET INCOME¥

OTHER COMPREHENSIVE (LOSS) INCOME (Note 18):
Unrealized (loss) gain on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans
Share of other comprehensive income in associatedcompanies
Total other comprehensive (loss) income
COMPREHENSIVE INCOME¥
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE
TO:
Owners of the parent¥
Non-controlling interests

See notes to consolidated financial statements.

17

5,243

¥

7,942

$

42,975(2,321)
(15)
65

1,783
14
1,048

(19,026)
(120)
526

4

3

35

(2,267)
2,976

2,959
17

¥

¥

2,848
10,79010,776
14$$(18,585)
24,39024,256134

NIPPON SHARYO, LTD. and Consolidated Subsidiaries
Consolidated Statement of Changes in Equity
Year Ended March 31, 2022
Millions of Yen
Accumulated other comprehensive income

BALANCE, APRIL 1, 2020
Net income attributable to ownersof the parent
Increase in treasury stock, net
Net changes in the year
BALANCE, MARCH 31, 2021
(April 1, 2021, as previously
reported)
Cumulative effect of change inaccounting policy
BALANCE, April 1, 2021
(as restated)
Cash dividends
Net income attributable to ownersof the parent
Increase in treasury stock, net-

Retainedearnings¥ 17,480

Treasury
stock
¥
(519)

Unrealized gain
on available-forsale securities
¥
6,860

-

-

7,929

-

-

-

-

-

-

7,929

(404)

-

-

-

(1)

-

-

-

-

-

(1)

-

-

-

-

-

1,786

14

1,047

2,847

9

2,856

14,432,903

11,811-

25,409

(520)

8,646

(2,228)

2,031

8,449

139

45,288

-

-

-

49

-

-

-

-

-

-

49

14,432,903

11,811-25,458

(520)

8,646

(2,228)

2,031

8,449

139

45,337

-

-

-

(289)

-

-

-

-

-

-

(289)

-

-

-

5,227

-

-

-

-

-

-

5,227

(819)

-

-

-

(2)

-

-

-

-

-

(2)

-

-

-

-

-

(2,317)(15)

65(2,267)12(2,255)

14,432,084¥ 11,811-¥ 30,396

Number ofshares ofcommon stock
outstanding
14,433,307

Commonstock¥ 11,811-

Net changes in the year
BALANCE, MARCH 31, 2022

Definedretirement
benefit plans
¥
984

Total
accumulated
othercomprehensive
income¥5,602

Foreigncurrencytranslation
adjustments¥ (2,242)

Capitalsurplus
¥

¥

¥

(522)

¥

6,329

¥

(2,243)

¥

2,096

¥

6,182

Non-controllinginterests
¥
130

¥

151

Total
equity¥ 34,504¥

48,018

Thousands of U.S. Dollars (Note 1)
Accumulated other comprehensive income

Commonstock
BALANCE, MARCH 31, 2021
(April 1, 2021, as previously
reported)
Cumulative effect of change inaccounting policy
BALANCE, April 1, 2021
(as restated)
Cash dividends
Net income attributable to ownersof the parent
Increase in treasury stock, net
Net changes in the year
BALANCE, MARCH 31, 2022

Capitalsurplus

Unrealized gain
on available-forsale securities

Retainedearnings

Treasurystock-$ 208,272$ (4,262)

-

-

402

-

-

96,809-208,674(4,262)70,872--(2,366)---42,841---$ 96,809$ 96,809$$$

70,872Foreigncurrencytranslation
adjustments

Definedretirement
benefit plans$$(18,266)$

69,261

Non-controllinginterests$

Total
equity1,136$ 371,216

-

-

-

402

(18,266)

16,65569,261

1,136

371,618

-

-

-

-

-

(2,366)

-

-

-

-

-

-

42,841

-

(14)

-

-

-

-

-

(14)

-

-

-

(18,993)

(119)

526

(18,586)

103(18,483)-$ 249,149$ (4,276)

1,239$ 393,596

See notes to consolidated financial statements.

18$

51,879-16,655

Total
accumulated
othercomprehensive
income$(18,385)$

17,181$

50,675$NIPPON SHARYO, LTD. and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2022
Thousands of
U.S. Dollars(Note 1)Millions of Yen
2022
2021
OPERATING ACTIVITIES:
Income before income taxes
Adjustments for:
Income taxes (paid) refunded
Depreciation
Loss on impairment of property, plant and equipment
Loss (gain) on sales and disposals of property, plant andequipment
Loss on valuation of investment securities
Gain on sales of investment securities
Changes in assets and liabilities:
Decrease in trade notes and accounts receivable, andcontract assets(Increase) decrease in inventories
Increase (decrease) in trade notes and accounts payable
Increase (decrease) in allowance for work in process on
construction contracts
Increase (decrease) in provision for losses on orders
received
Increase in provision for compensation for health damage
from asbestos(Decrease) increase in advances received
Increase (decrease) in liability for employees’ retirement
benefits
Other-net
Net cash provided by operating activities
INVESTING ACTIVITIES:
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of investment securities
Proceeds from sales of investment securities
Other-net
Net cash used in investing activities

¥

6,042

¥

2022

9,274

$

49,523(1,401)
2,693
245

203
2,657
29

(11,485)
22,077
2,008

15
43
(157)

1
(115)

121
349
(1,291)

9,319(1,405)
967

740
1,256
(2,308)76,389(11,519)
7,929

240

(89)

1,969

49

(313)

405

13
(95)

30
496

107
(779)

21
(2,082)
14,507(194)(130)
11,537171(17,062)
118,912(2,561)
59
(3)
44
(176)
(2,637)(3,120)
14
(4)
1,003
(188)
(2,295)(20,991)
485
(24)
363
(1,448)(21,615)-(Continued)

19

Millions of Yen
2022
2021

Thousands of
U.S. Dollars(Note 1)
2022

FINANCING ACTIVITIES:
Proceeds from long-term debt
Repayments of long-term debt
Dividends paid
Other-net
Net cash used in financing activities

191(3,364)(287)(111)(3,571)177(1,685)(130)(1,638)

1,564(27,572)(2,353)(912)(29,273)

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS
NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

46
8,345
20,767(93)
7,511
13,256377
68,401
170,219

CASH AND CASH EQUIVALENTS, END OF YEAR¥

29,112¥

20,767$

238,620(Concluded)
See notes to consolidated financial statements.

20

NIPPON SHARYO, LTD. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
Year Ended March 31, 2022

1. BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with theprovisions set forth in the Japanese Financial Instruments and Exchange Act and its related
accounting regulations and in accordance with accounting principles generally accepted in Japan(“Japanese GAAP”), which are different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards (IFRS).
In preparing these consolidated financial statements, certain reclassifications and rearrangements
have been made to the consolidated financial statements issued domestically in order to present
them in a form which is more familiar to readers outside Japan. In addition, certain
reclassifications have been made in the 2021 consolidated financial statements to conform to theclassifications used in 2022.
The consolidated financial statements are stated in Japanese yen, the currency of the country inwhich NIPPON SHARYO, LTD. (the “Company”) is incorporated and operates. The translationsof Japanese yen amounts into U.S. dollar amounts are included solely for the convenience ofreaders outside Japan and have been made at the rate of ¥122 to $1, the approximate rate ofexchange at March 31, 2022. Such translations should not be construed as representations that theJapanese yen amounts could be converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation
The consolidated financial statements as of March 31, 2022, include the accounts of the Company
and its significant subsidiaries (together, the “Group”). Under the control and influence concepts,
those companies in which the Company, directly or indirectly, is able to exercise control over
operations are fully consolidated and those companies over which the Group has the ability to
exercise significant influence are accounted for by the equity method.
Investments in associated companies are accounted for by the equity method. Investments in theremaining unconsolidated subsidiary and associated company are stated at cost. If the equity
method of accounting had been applied to the investments in these companies, the effect on theaccompanying consolidated financial statements would not be material.
All significant intercompany balances and transactions have been eliminated on consolidation.
All material unrealized profit included in assets resulting from transactions within the Group was
also eliminated.

21

The number of the consolidated subsidiaries, unconsolidated subsidiary, and associatedcompanies for the years ended March 31, 2022 and 2021, was as follows:
2021
2022
Consolidated subsidiaries
4
6
Unconsolidated subsidiary stated at cost
1
1
Associated companies accounted for by the equity method22
Associated company stated at cost
1
1
NIPPON SHARYO U.S.A., INC. and NIPPON SHARYO ENGINEERING & MARKETING,
LLC have been excluded from the scope of consolidation because of an absorption-type merger
with NIPPON SHARYO MANUFACTURING, LLC on January 1, 2021.
The fiscal year-end of NIPPON SHARYO MANUFACTURING, LLC is December 31 and its
financial statements with the closest closing date prior to that of the Company are used forconsolidation purposes. Necessary adjustments for significant transactions from January 1 toMarch 31 are made for consolidation purposes.
For the equity method associated companies that have a different fiscal year from that of theCompany, the associated companies’ financial statements with the closest closing date prior tothat of the Company are used for consolidation purposes.
b. Unification of accounting policies applied to foreign subsidiaries for the consolidated financial
statements
Under Accounting Standards Board of Japan (“ASBJ”) Practical Issues Task Force (“PITF”) No.
18, “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for
the Consolidated Financial Statements,” the accounting policies and procedures applied to aparent company and its subsidiaries for similar transactions and events under similar
circumstances should, in principle, be unified for the preparation of the consolidated financial
statements. However, financial statements prepared by foreign subsidiaries in accordance witheither IFRS or generally accepted accounting principles in the United States of America(Financial Accounting Standards Board Accounting Standards Codification ― “FASB ASC”)
tentatively may be used for the consolidation process, except for the following items that should
be adjusted in the consolidation process so that net income is accounted for in accordance withJapanese GAAP, unless they are not material: (a) amortization of goodwill; (b) scheduled
amortization of actuarial gain or loss of pensions that has been recorded in equity through othercomprehensive income; (c) expensing capitalized development costs of research and development(R&D); (d) cancellation of the fair value model of accounting for property, plant and equipment
and investment properties and incorporation of the cost model accounting; and (e) a gain or loss
through profit or loss on the sale of an investment in an equity instrument for the difference
between the acquisition cost and selling price, and recording impairment loss through profit orloss for other-than-temporary declines in the fair value of an investment in an equity instrument,
where a foreign subsidiary elects to present in other comprehensive income subsequent changes
in the fair value of an investment in an equity instrument.

22

c. Unification of accounting policies applied to associated companies for the equity method
ASBJ Statement No. 16, “Accounting Standard for Equity Method of Accounting forInvestments,” requires adjustments to be made to conform the associate’s accounting policies for
similar transactions and events under similar circumstances to those of the parent company when
the associate’s financial statements are used in applying the equity method, unless it isimpracticable to determine adjustments. In addition, financial statements prepared by foreign
associated companies in accordance with either IFRS or FASB ASC tentatively may be used inapplying the equity method if the following items are adjusted so that net income is accounted
for in accordance with Japanese GAAP, unless they are not material: (a) amortization of goodwill;(b) scheduled amortization of actuarial gain or loss on pensions that has been recorded in equity
through other comprehensive income; (c) expensing capitalized development costs of R&D; (d)cancellation of the fair value model of accounting for property, plant and equipment andinvestment properties and incorporation of the cost model of accounting; and (e) recording a gainor loss through profit or loss on the sale of an investment in an equity instrument for the difference
between the acquisition cost and selling price, and recording impairment loss through profit orloss for other-than-temporary declines in the fair value of an investment in an equity instrument,
where a foreign associate elects to present in other comprehensive income subsequent changes in
the fair value of an investment in an equity instrument.
d. Business combinations
Business combinations are accounted for using the purchase method. Acquisition-related costs,
such as advisory fees or professional fees, are accounted for as expenses in the periods in which
the costs are incurred. If the initial accounting for a business combination is incomplete by theend of the reporting period in which the business combination occurs, an acquirer shall report inits financial statements provisional amounts for the items for which the accounting is incomplete.
During the measurement period, which shall not exceed one year from the acquisition, theacquirer shall retrospectively adjust the provisional amounts recognized at the acquisition date toreflect new information obtained about facts and circumstances that existed as of the acquisition
date and that would have affected the measurement of the amounts recognized as of that date.
Such adjustments shall be recognized as if the accounting for the business combination had been
completed at the acquisition date. A parent’s ownership interest in a subsidiary might change if
the parent purchases or sells ownership interests in its subsidiary. The carrying amount of noncontrolling interest is adjusted to reflect the change in the parent’s ownership interest in its
subsidiary while the parent retains its controlling interest in its subsidiary. Any difference
between the fair value of the consideration received or paid and the amount by which the noncontrolling interest is adjusted is accounted for as capital surplus for as long as the parent retains
control over its subsidiary.
e. Cash equivalents
Cash equivalents are short-term investments that are readily convertible into cash and exposed toinsignificant risk of changes in value.
Cash equivalents include time deposits and Cash Management System (“CMS”) funds due fromCentral Japan Railway Company (“CJR”) group, all of which mature or become due within threemonths from the date of acquisition. CJR is the parent company of the Company.

23

f. Investment securities
Investment securities are classified and accounted for, depending on management’s intent, as
follows:
Available-for-sale securities other than equity securities without market price are reported at fairvalue, with unrealized gains and losses, net of applicable taxes, reported in a separate componentof equity.
Available-for-sale securities such as equity securities without market price are stated at cost
determined by the moving-average method. For other-than-temporary declines in fair value,
investment securities are reduced to net realizable value by a charge to income.
g. Derivatives and hedging activities
The Group uses derivative financial instruments to manage its exposures to fluctuations in foreignexchange rate. Forward foreign currency contracts are utilized by the Group to reduce foreign
currency exchange risks. The Group does not enter into derivatives for trading or speculative
purposes.
Derivative financial instruments and foreign currency transactions are classified and accounted
for as follows: 1) all derivatives are recognized as either assets or liabilities and measured at fairvalue and gains and losses on derivative transactions are recognized in the consolidated statementof income and 2) for derivatives used for hedging purposes, if such derivatives qualify for hedge
accounting because of high correlation and effectiveness between the hedging instruments andthe hedged items, gains and losses on derivatives are deferred until maturity of the hedgedtransactions.
The forward foreign currency contracts are utilized to hedge foreign currency exposures in salesof merchandise and finished goods to overseas customers and procurement of raw materials fromoverseas suppliers. Trade notes and accounts receivable and trade notes and accounts payable
denominated in foreign currencies are translated at the contracted rates if the forward foreign
currency contracts qualify for hedge accounting.
h. Allowance for doubtful accounts
An allowance for doubtful accounts is provided for at the aggregate amount of estimated credit
loss based on an individual analysis of certain doubtful or troubled receivables and a generalreserve for other receivables is calculated based on the historical loss experience.
i. Inventories
Inventories are stated at the lower of cost, determined principally by the specific identification
method for merchandise, finished goods and work in process and by the moving-average method
for semi-finished goods, raw materials, and supplies, or net selling value, which is defined as theselling price, less additional estimated manufacturing costs and estimated direct selling expenses.
The replacement cost may be used in place of the net selling value, if appropriate. Net gain on
write-downs of inventories (after offsetting the reversal of loss on write-downs of inventories in
the previous fiscal years) in the amounts of ¥75 million ($616 thousand) and ¥2,803 million forthe years ended March 31, 2022 and 2021, respectively, were included in cost of sales.

24

j. Property, plant and equipment
Property, plant and equipment, including significant renewals and additions, are stated at cost andare depreciated principally by the straight-line method for buildings and building improvements
and structures acquired on or after April 1, 2016, and by the declining-balance method for otherproperty at rates based on the estimated useful lives of the assets.
Depreciation of leased assets relating to financial lease transactions without transfer of ownershipis computed by the straight-line method over the leased period. For leases with a guaranteed
minimum residual value, the contracted residual value is considered to be the residual value. For
other leases, the residual value is zero.
The range of useful lives is principally from 10 to 60 years for buildings and structures and from
6 to 17 years for machinery and equipment.
The Company has transferred its factory assets of Toyokawa Plant, Kinuura Plant, and Narumi
Plant to CJR on April 20, 2017. The transfer was not treated as a purchase or sales transaction
since the relevant factory assets were transferred to CJR, but the Company continues to utilize
these factory assets as before based on a lease agreement concluded between the Company and
CJR. Therefore, the relevant factory assets were still recorded under property, plant andequipment of the Company. As the relevant transactions do not fall under a finance leasetransaction, the total transfer price was recorded as long-term debt (including the current portion).
In addition, capital expenditure related to the transferred factory assets was recorded under“buildings and structures” and “machinery and equipment,” and a part of the capital expenditure
was recorded as long-term debt (including the current portion), for the years ended March 31,
2022 and 2021.
As a result, the relevant factory assets as of March 31, 2022, were recorded under property, plantand equipment with carrying amounts of ¥11,975 million ($98,159 thousand) as land, of ¥5,545
million ($45,447 thousand) as buildings and structures and ¥119 million ($973 thousand) as
machinery and equipment, while long-term debt (including the current portion) was recorded witha carrying amount of ¥22,336 million ($183,083 thousand) as of March 31, 2022. As of March
31, 2021, the relevant factory assets were recorded under property, plant and equipment withcarrying amounts of ¥11,975 million as land, of ¥5,767 million as buildings and structures and¥153 million as machinery and equipment, while long-term debt (including the current portion)
was recorded with a carrying amount of ¥22,609 million.
k. Long-lived assets
The Group reviews its long-lived assets for impairment whenever events or changes incircumstance indicate that the carrying amount of an asset or asset group may not be recoverable.
An impairment loss is recognized if the carrying amount of an asset or asset group exceeds thesum of the undiscounted future cash flows expected to result from the continued use and eventual
disposition of the asset or asset group. The impairment loss would be measured as the amount bywhich the carrying amount of the asset exceeds its recoverable amount, which is the higher of the
discounted cash flows from the continued use and eventual disposition of the asset or the net
selling value at disposition.
l. Intangible assets
Intangible assets that are included in other assets are amortized by the straight-line method.
Software costs are amortized over 5 years.

25

m. Allowance for work in process on construction contracts
An allowance for work in process on construction contracts is provided based on an estimate of
the total loss on construction projects for which eventual losses are deemed inevitable and forwhich the amount of loss can be reasonably estimated. Provisions and (reversal of provisions) for
work in process on construction contracts with an amount of ¥240 million ($1,969 thousand) and¥(89) million for the years ended March 31, 2022 and 2021, respectively, were included in costof sales.
n. Provision for losses on orders received
A provision for losses on orders received, except for construction contracts, is recorded based onan estimate of the total anticipated loss on contracts for which eventual losses are deemed
inevitable and for which the amount of loss can be reasonably estimated.
o. Retirement and pension plans
The Company has a lump-sum retirement benefit plan, a defined contribution pension plan and adefined benefit pension plan. The Company’s domestic consolidated subsidiaries have similar
retirement benefit plans.
Liabilities for employees’ retirement benefits are calculated based on the projected benefit
obligations and plan assets at the consolidated balance sheet date. The projected benefit
obligations are attributed to periods on a benefit formula basis. Prior service costs are amortizedon a straight-line basis over 15 years, which is within the average remaining service period.
Actuarial gains and losses are amortized on a straight-line basis over 15 years, which is within
the average remaining service period from the following the fiscal year.
p. Provision for compensation for health damage from asbestos
A provision for compensation for health damage from asbestos has been recorded based on theestimated compensation amount for former employees who suffered health damage from asbestos.
q. Income taxes
The provision for income taxes is computed based on the pretax income included in the
consolidated statement of income. 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 aremeasured by applying currently enacted tax rates to the temporary differences.
r. Foreign currency transactions
All short-term and long-term monetary receivables and payables denominated in foreign
currencies are translated into Japanese yen at the exchange rates at the consolidated balance sheet
date. The foreign exchange gains and losses from translation are recognized in the consolidated
statement of income to the extent that they are not hedged by forward foreign currency contracts.
s. Foreign currency financial statements
The balance sheet accounts of the consolidated foreign subsidiaries are translated into Japanese
yen at the current exchange rate as of the consolidated balance sheet date, except for equity, which
is translated at the historical rate. Revenue and expense accounts of consolidated foreignsubsidiaries are translated into Japanese yen at the average exchange rate. Differences arisingfrom such translation are shown as foreign currency translation adjustments under accumulated
other comprehensive income in a separate component of equity.

26

t. R&D expenses
Expenses related to R&D activities are charged to income as incurred. R&D expenses amounted
to ¥2,127 million ($17,437 thousand) and ¥1,773 million for the years ended March 31, 2022 and
2021, respectively, and are included in selling, general and administrative expenses and cost of
sales in the accompanying consolidated statement of income.
u. Per share information
Basic net income per share is computed by dividing net income attributable to commonshareholders by the weighted-average number of shares of common stock outstanding during therespective year. Weighted-average number of shares of common stock for the years ended March
31, 2022 and 2021, were 14,432 thousand shares and 14,433 thousand shares, respectively.
Diluted net income per share for the years ended March 31, 2022 and 2021, was not applicablebecause the Company had no dilutive common shares. Cash dividends per share presented in theaccompanying consolidated statement of income are dividends applicable to the respective years,
including dividends to be paid after the end of the year.
v. Accounting changes and error corrections
Under ASBJ Statement No. 24, “Accounting Standard for Accounting Changes and Error
Corrections” and ASBJ Guidance No. 24, “Guidance on Accounting Standard for Accounting
Changes and Error Corrections,” accounting treatments are required as follows: (1) Changes in
Accounting Policies—When a new accounting policy is applied following revision of an
accounting standard, the new policy is applied retrospectively, unless the revised accounting
standard includes specific transitional provisions, in which case the entity shall comply with thespecific transitional provisions. (2) Changes in Presentation—When the presentation of financial
statements is changed, prior-period financial statements are reclassified in accordance with thenew presentation. (3) Changes in Accounting Estimates—A change in an accounting estimate isaccounted for in the period of the change if the change affects that period only, and is accounted
for prospectively if the change affects both the period of the change and future periods. (4)Corrections of Prior-Period Errors—When an error in prior-period consolidated financial
statements is discovered, those statements are restated.

27

w. Revenue recognition
The Group recognizes revenue from contracts with customers based on the following five-step
approach.
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
The Group is engaged in offering a variety of products and services in Railway Rolling Stock,
Transportation Equipment and Steel Structure, Construction Equipment, and Engineeringbusinesses, etc.
(1) Performance obligations satisfied at a point in time
The Group considers that control of finished products or merchandises is, in principle,
transferred to customers at the time of customer acceptance, and the performance obligations
are satisfied. Therefore, revenue from sales of finished products and merchandises is mainly
recognized at the time of customer acceptance.
However, the Group considers that control of finished products is transferred to customers at
the time of shipment if the period from the time of shipment to the time of delivery is very
short, and revenue from such sales is recognized at a time of shipment.
(2) Performance obligations satisfied over time
The Group recognizes revenue over time if one of the following criteria is met.
a. the customer simultaneously receives and consumes of the benefits provided by theGroup’s performance as the Group performsb. the Group’s performance creates or enhances an asset that the customer controls as theasset is created or enhanced; orc. the Group’s performance does not create an asset with an alternative use to the Group,and the Group has an enforceable right to payment for performance completed to date.
The Group’s revenue from performance obligations satisfied over time relates to construction
contracts and others. If reasonable estimates of the total contract cost and the progress towards
complete satisfaction of performance obligations under the contracts are available, the Group
determines that it is appropriate to use the input method to measure the progress based on thecosts incurred to date relative to the total expected costs by contract. Additionally, revenue isrecognized based on the cost recovery method when it is not possible to reasonably estimate
the progress towards complete satisfaction of performance obligations, but it is probable thatthe costs incurred will be recovered.

28

x. Changes in accounting policies(Application of Accounting Standard for Fair Value Measurement, etc.)
The Group has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement
No. 30, July 4, 2019, hereinafter the “Fair Value Measurement Accounting Standard”), etc. fromthe beginning of the year ended March 31, 2022, and it has prospectively applied the new
accounting policy provided for in the Fair Value Measurement Accounting Standard, etc. inaccordance with the transitional treatments provided for in Paragraph 19 of the Fair Value
Measurement Accounting Standard and Paragraph 44-2 of the “Accounting Standard for
Financial Instruments” (ASBJ Statement No. 10, July 4, 2019). There is no impact on the
consolidated financial statements.
Additionally, the Group added information of financial instruments categorized by fair value
hierarchy described in Note 15 “Financial Instruments and Related Disclosures.” However,information of financial instruments categorized by fair value hierarchy of the year ended March
31, 2021 were omitted since the Group followed transitional treatment provided for in Paragraph
7-4 of the “Implementation Guidance on Disclosures about Fair Value of Financial Instruments”(ASBJ Guidance No. 19, July 4, 2019).
(Application of Accounting Standard for Revenue Recognition, etc.)
The Group has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement
No. 29, March 31, 2020, hereinafter the “Revenue Recognition Accounting Standard”) etc. fromthe beginning of the year ended March 31, 2022.
Accordingly, the Group recognizes revenue from construction contracts and other contracts as
contracts that performance obligation is satisfied over time. If reasonable estimates of the total
contract cost and the progress towards complete satisfaction of performance obligations under
the contracts are available, the Group determines that it is appropriate to use the input method tomeasure the progress based on the costs incurred to date relative to the total expected costs bycontract. Additionally, revenue is recognized based on the cost recovery method when it is notpossible to reasonably estimate the progress towards complete satisfaction of performanceobligations, but it is probable that the costs incurred will be recovered.
In applying the Revenue Recognition Accounting Standard, etc., the Group followed thetransitional treatment provided for in the provision of Paragraph 84 of the Revenue Recognition
Accounting Standard. The cumulative effect of retrospective application, assuming the new
accounting policy had been applied to periods prior to the beginning of the year ended March 31,
2022, was added to or subtracted from retained earnings at the beginning of the year ended March
31, 2022, and thus the new accounting policy was applied from the beginning balance of the year
ended March 31, 2022. However, the Group has applied the method provided for in Paragraph
86 of the Revenue Recognition Accounting Standard, and thus new accounting policy has notbeen applied retrospectively to contracts for which substantially all of the revenue was recognizedin accordance with the previous treatment prior to the beginning of the year ended March 31,
2022. Additionally, the Group has applied the method provided for in item (1) of the
supplementary provisions of Paragraph 86 of the Revenue Recognition Accounting Standard.
Contract modifications that occur before the beginning of the year ended March 31, 2022 were
accounted for based on the contractual terms after all contract modifications were reflected, andthe cumulative effect is added to or subtracted from retained earnings at the beginning of the year
ended March 31, 2022.
As a result, for the year ended March 31, 2022, net sales increased by ¥80 million ($656 thousand),cost of sales increased by ¥77 million ($632 thousand) and operating income and income before
income taxes increased by ¥3 million ($24 thousand), respectively. In addition, the beginningbalance of retained earnings increased by ¥49 million ($402 thousand).
The effect on per share information is immaterial.
Additionally, disaggregation of revenue from contracts with customers for the year ended March29

31, 2021 were omitted, since the Group followed transitional treatment provided for in Paragraph89-3 of the Revenue Recognition Accounting Standard.
3. SIGNIFICANT ACCOUNTING ESTIMATES
In preparing the consolidated financial statements of the Group, management makes judgments,
estimates and assumptions that affect the application of the accounting policies and the reported
amounts of assets, liabilities, income, and expenses. The Group’s significant estimates andunderlying assumptions are reviewed on an ongoing basis. Those revisions could result in amaterial adjustment to carrying amounts of assets and liabilities in the future periods due touncertainty of estimates and assumptions. The Group’s significant estimates and assumptions
used are as follows:(1) Revenue recognition (performance obligations satisfied over time)(a) Amount recognized for the fiscal years ended March 31, 2022 and 2021

Millions of Yen
2022
2021
¥
8,667
¥
7,333

Net sales

Thousands of
U.S. Dollars
2022$
71,043(b) Information on the nature of significant account estimates useful for the users of theconsolidated financial statements(i)

Calculation method
In recognizing revenue for performance obligations satisfied over time, the amountof revenue for each construction project is mainly its total construction revenue
multiplied by the percentage of incurred cost of construction to its total cost of
construction based on the working budget.

(ii) Key assumptions
The working budget of the total construction costs includes estimates of material
costs, labor costs and subcontractor costs for construction projects. The significant
assumptions of estimates of labor and subcontractor costs include locations andtiming of construction projects, degrees of difficulty of construction based on theconstruction method and cost improvement effects of skill levels based on past
construction performance.
(iii) Impact on the next fiscal year’s consolidated financial statements
In case of engineering design change of a contract construction, the working budget
is reviewed by assessing the impact level and extent of the design change in a timely
manner. The revenue amount may vary, if the percentage of completion is to bechanged significantly based on such a revision of the working budget.

30(2) Valuation of inventories and provision for losses on orders received(a) Amount recognized for the fiscal years ended March 31, 2022 and 2021 (before
offsetting the amount of gains on reversals in the previous fiscal years)

Millions of Yen
2022
2021
Loss on write-downs of inventories
and provision for losses on orders
received

¥

1,151

¥

1,177

Thousands of
U.S. Dollars
2022
$

9,436

(b) Information on the nature of significant account estimates useful for the users of theconsolidated financial statements(i)

Calculation method
In calculating write-down and provision for loss on orders received related to workin process in the Railway Rolling Stock business, the order amounts are comparedto the estimated total cost for each order.

(ii) Key assumptions
The estimated total cost is based on the working budget prepared for each order andincludes estimated material costs, labor costs, subcontracting costs and otherexpenses at each related department in the business unit. The significant
assumptions of the estimates of these costs include the applicability of know-how
based on the past design and manufacturing of similar railway rolling stock, load
forecast based on actual results and cost improvement due to progress in mass
production of the similar railway rolling stock and improvement of cost proficiency.
(iii) Impact on the next fiscal year’s consolidated financial statements
In case of engineering design change, the working budget is reviewed by assessing
the impact level and extent of the design change in a timely manner. The amount ofloss on valuation of work in process and provision for losses on orders received
may vary if the working budget is to be changed significantly.
(3) Recoverability of deferred tax assets (before offsetting the balance of deferred tax liabilities)(a) Carrying amounts as of March 31, 2022 and 2021

Millions of Yen
2022
2021
¥
2,222
¥
2,163

Deferred tax assets

Thousands of
U.S. Dollars
2022$
18,213(b) Information on the nature of significant account estimates useful for the users of theconsolidated financial statements(i)

Calculation method
In judgment for recoverability of deferred tax assets, the Group recognizes deferred
tax assets within the expected range of amount for the future period where taxable
income is reasonably estimated, depending on the fiscal year where temporary31

differences are expected to be eliminated by scheduling of temporary differences
and tax loss carried forward.
(ii) Key assumptions
For calculating the expected amount of taxable income, projected business results
are used which are based on the business strategies of each business unit
considering its market volume, customer need, capital investments, etc.
(iii) Impact on the next fiscal year’s consolidated financial statements
Changes in taxation system and tax rates could affect the calculation results for thetax purpose, while changes in market environment and a shortfall of management
objectives could affect the future business results, thus such changes and shortfalls
could affect valuation of deferred tax assets.
4. CHANGE IN PRESENTATION“Allowance for PCB disposal expenses,” which was presented separately in “LONG-TERM
LIABILITIES” in the consolidated balance sheet as of March 31, 2021, became immaterial,and is included in “Other long-term liabilities” as of March 31, 2022. To reflect this change inpresentation, the consolidated balance sheet as of March 31, 2021 has been reclassified.
As a result, ¥106 million that was presented as “Allowance for PCB disposal expenses” in“LONG-TERM LIABILITIES” in the consolidated balance sheet as of March 31, 2021 isincluded in “Other long-term liabilities” in the amount of ¥301 million.
5. NOTES AND ACCOUNTS RECEIVABLE, AND CONTRACT ASSETS
Notes and accounts receivable, and contract assets as of March 31, 2022 and 2021, consisted of
the following:Thousands ofMillions of Yen
U.S. Dollars
2022
2021
2022
Trade notes receivable
¥
3,323
¥
4,419
$
27,234- Unconsolidated subsidiary and associatedcompanies
92
98
756
Trade accounts receivable and contract assets
12,271
18,637
100,584- CJR, unconsolidated subsidiary andassociated companies
4,427
4,272
36,291
Other
427
200
3,498
Less allowance for doubtful accounts
(30)
(16)
(248)
¥
20,510¥27,610$168,115
Total
Note: Allowance for doubtful accounts was not recognized for accounts receivable-other, which
was included in Other above.

32

6. INVENTORIESInventories as of March 31, 2022 and 2021, consisted of the following:

Merchandise
Finished goods
Semi-finished goods
Work in process
Raw materials and supplies

¥

¥

Total

Millions of Yen
2022
2021
257
¥
224
708
1,046
1,148
1,228
27,432
28,133
1,486
1,481
31,031¥
32,112Thousands of
U.S. Dollars
2022
$
2,109
5,805
9,409
224,850
12,181$
254,354Work in process and the allowance for work in process on construction contracts are presented in
the gross amount in the consolidated balance sheet. At March 31, 2022 and 2021, the balances ofwork in process for which an allowance for work in process on construction contracts were
provided were ¥23 million ($185 thousand) and ¥16 million, respectively.
7. INVESTMENT SECURITIESInvestment securities as of March 31, 2022 and 2021, consisted of the following:

Equity securities
Total

¥
¥

Millions of Yen
2022
2021
15,673¥19,091
15,673¥19,091Thousands of
U.S. Dollars
2022$
128,463$
128,463

The costs and aggregate carrying amount (fair value) of investment securities as of March 31,
2022 and 2021, were as follows:
Millions of Yen
2022
Cost
Securities classified asavailable-for-sale:
Equity securities
Total

¥
¥

5,052
5,052

33

Gross unrealized
gains

Gross unrealized
lossesCarrying
amount(Fair value)

¥
¥

¥
¥

¥
¥

9,088
9,088

(45)
(45)

14,095
14,095

Millions of Yen
2021
Cost
Securities classified asavailable-for-sale:
Equity securities
Total

¥
¥

5,115
5,115

Gross unrealized
gains

Gross unrealized
lossesCarrying
amount(Fair value)

¥
¥

¥
¥

¥
¥

12,407
12,407(19)(19)

17,503
17,503Thousands of U.S. Dollars
2022

Securities classified asavailable-for-sale:
Equity securities
Total

$
$

Cost

Gross unrealized
gains

Gross unrealized
losses41,41141,411$$$$

74,48974,489Carrying
amount(Fair value)

(371)
(371)

$
$

115,529
115,529

The information of available-for-sale securities which were sold for the years ended March 31,
2022 and 2021, was as follows:

Proceeds
Available-for-sale:
Equity securities
Total

¥
¥

191
191

Proceeds
Available-for-sale:
Equity securities
Total

¥
¥

1,003
1,003

Proceeds
Available-for-sale:
Equity securities
Total

Millions of Yen
2022
Realized
gains
¥
¥

158
158

Realized
losses¥¥Millions of Yen
2021
Realized
gains
¥
¥

148
148

0
0

Realized
losses¥¥33
33

Thousands of U.S. Dollars
2022
Realized
gains

Realized
losses

$

1,563

$

1,291

$

1

$

1,563

$

1,291

$

1

34

8. NOTES AND ACCOUNTS PAYABLE
Notes and accounts payable as of March 31, 2022 and 2021, consisted of the following:Thousands ofMillions of Yen
U.S. Dollars
2022
2021
2022
Trade notes payable
¥
263
¥
479
$
2,156
Electronically recorded obligations-operating
10,509
10,11086,137-Unconsolidated subsidiary and associated410
36companies
Trade accounts payable
7,948
7,145
65,144-Unconsolidated subsidiary and associated
20
32
163
companies
Other
1,766
3,666
14,479¥20,510¥21,442$
168,115Total
9. LONG-TERM DEBT
Long-term debt as of March 31, 2022 and 2021, consisted of the following:Thousands of
U.S. Dollars
2022

Millions of Yen
2022
2021
Loans from CJR due through 2027 (Note) withaverage interest rate of 0.61%¥
Less current portion
Total¥

52,133(3,370)48,763¥¥55,306(3,360)51,946$$427,321(27,626)
399,695

The aggregate annual maturities of long-term debt as of March 31, 2022, were as follows:
Thousands ofYears ending March 31
Millions of Yen
U.S. Dollars
2023
¥
2,900
$
23,7702024
2,900
23,7702025
2,900
23,7702026
2,900
23,7702027
2,900
23,7702028 and thereafter
15,297125,388
Total¥
29,797$244,238
Note: Long-term debt recorded for the transfer price of the factory assets transferred to CJR andfor a part of capital expenditure related to the transferred factory assets in the total
amount of ¥22,336 million ($183,083 thousand) was not reflected.

35

10. RETIREMENT AND PENSION PLANS
Employees who terminate their service with the Company and its domestic consolidated
subsidiaries are entitled to retirement benefits generally determined by reference to the basic rateof pay at the time of termination, length of service and conditions under which the termination
occurs. The Company has a lump-sum retirement benefit plan, a defined contribution pension
plan and a defined benefit pension plan, which are assumed to cover retirement benefits for
employees who have retired voluntarily. The Company contributed certain assets to the employee
retirement benefit trust. The Company’s domestic consolidated subsidiaries have similar
retirement benefit plans.
(1) Defined benefit plans(a) The changes in defined benefit obligation for the years ended March 31, 2022 and 2021, wereas follows:
Thousands ofMillions of Yen
U.S. Dollars
2022
2021
2022
Balance at beginning of year¥
13,668¥13,731$ 112,032
Current service cost
721
746
5,912
Interest cost
121
122
989
Actuarial losses (gains)
34
(474)
283
Benefits paid
(593)
(457)
(4,865)
Prior service cost
(63)
(513)
Balance at end of year¥
13,888¥13,668$ 113,838
Note: The domestic consolidated subsidiaries of the Company apply the simplified method in
calculating the defined benefit obligation.
(b) The changes in plan assets for the years ended March 31, 2022 and 2021, were as follows:

Millions of Yen
2022
2021
¥
18,326¥
16,642
275
255
51
1,223
330
423
(246)
(217)
¥
18,736¥18,326

Balance at beginning of year
Expected return on plan assets
Actuarial gains
Contribution from the employer
Benefits paid
Balance at end of year

36

Thousands of
U.S. Dollars
2022$ 150,211
2,250
421
2,704
(2,011)$ 153,575

(c) Reconciliation between the liability (asset) recorded in the consolidated balance sheet and thebalances of defined benefit obligation and plan assets as of March 31, 2022 and 2021, was asfollows:

Funded defined benefit obligation
Plan assets
Total
Unfunded defined benefit obligation
Net asset arising from defined benefit
obligation
Asset for employees’ retirement benefits
Liability for employees’ retirement benefits
Net asset arising from defined benefit
obligation

Millions of Yen
2022
2021
¥
13,608¥13,409(18,736)(18,326)(5,128)(4,917)280
259

Thousands of
U.S. Dollars
2022$ 111,543(153,575)(42,032)
2,295¥(4,848)¥(4,658)$(39,737)¥(5,128)280¥(4,917)259$(42,032)
2,295¥(4,848)¥(4,658)$(39,737)(d) The components of net periodic benefit costs for the years ended March 31, 2022 and 2021,
were as follows:
Thousands ofMillions of Yen
U.S. Dollars
2022
2021
2022
Service cost (Note)
¥
721
¥
746
$
5,912
Interest cost
121
122
989
Expected return on plan assets
(275)
(255)
(2,250)Recognized actuarial losses (gains)
27
(176)
222
Amortization of prior service cost
(14)
(12)
(115)
Net periodic benefit costs
¥
580
¥
425
$
4,758
Note: Retirement benefit costs of the consolidated subsidiaries applying the simplified method
are included in service cost.
(e) Amounts recognized in other comprehensive income (before income tax effect) in respect ofdefined retirement benefit plans for the years ended March 31, 2022 and 2021

Millions of Yen
2022
2021
¥
49
¥
(12)
44
1,522
¥
93
¥
1,510

Prior service cost
Actuarial gains
Total

37

Thousands of
U.S. Dollars
2022
$
398
361
$
759

(f) Amounts recognized in accumulated other comprehensive income (before income tax effect)
in respect of defined retirement benefit plans as of March 31, 2022 and 2021

Millions of Yen
2022
2021
¥
(163)
¥
(114)
(2,857)(2,814)¥(3,020)¥(2,928)Unrecognized prior service cost
Unrecognized actuarial gains
Total

Thousands of
U.S. Dollars
2022$(1,336)(23,421)$(24,757)(g) Plan assets(i) Components of plan assets
Plan assets as of March 31, 2022 and 2021, consisted of the following:
2022
15%
68%
5%
12%
100%

Debt securities
Equity securities
Cash and deposits
Other
Total

2021
17%
72%
5%
6%
100%

Note: The employees’ retirement benefit trusts for the contributory pension plans accounted
for 14% and 15% of total plan assets as of March 31, 2022 and 2021, respectively.
(ii) Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the current and future
asset portfolio and the long-term rates of return which are expected currently and in the futurefrom the various components of the plan assets.
(h) Assumptions used for the years ended March 31, 2022 and 2021, were set forth as follows:
2022
0.9%
2.0%

Discount rate
Expected rate of return on plan assets

2021
0.9%
2.0%

(2) Defined contribution plans
The required contribution of the Company and its consolidated subsidiaries for defined
contribution plans amounted to ¥150 million ($1,231 thousand) and ¥143 million for the years
ended March 31, 2022 and 2021, respectively.

38

11. ASSETS PLEDGED AS COLLATERAL(1) Assets pledged as collateral for long-term debt borrowed from CJR in November 2017 forthe payment of settlement money related to a large railway rolling stock project in the U.S.A.
were as follows. The balance of the long-term debt, including current portion, as of March
31, 2022 and 2021 was ¥29,797 million ($244,238 thousand) and ¥32,697 million,
respectively.
Thousands ofMillions of Yen
U.S. Dollars
2022
2021
2022
Buildings and structures
¥
249
¥
259
$
2,042
Land
15
15
123
Investment securities
13,98017,225
114,592
Total¥ 14,244¥ 17,499$ 116,757(2) Other assets pledged as collateral as of March 31, 2022 and 2021, were as follows:
Thousands ofMillions of Yen
U.S. Dollars
2022
2021
2022
Other assets under Investments and Other¥
10¥
Assets (Note)
Total
¥
10
¥
Note: Guarantee deposit required by the Real Estate Brokerage Act

39

10

$

82

10

$

82

12. LEASE TRANSACTIONSThe Group uses certain machinery and equipment under finance lease contracts.
All finance lease transactions are accounted for in a manner similar to ordinary sale or purchasetransactions.
The aggregate annual maturities of lease obligations as of March 31, 2022, were as follows:

Years ending March 31
2023
2024
2025
2026
2027
2028 and thereafter
Total

Millions of Yen
¥
633
495
428
176
131
69
¥
1,932

Thousands of
U.S. Dollars
$
5,187
4,059
3,508
1,440
1,075
564
$
15,833

A consolidated subsidiary subleases machinery.
Investments in leases and lease obligations, which include an interest portion, resulting fromsublease transactions as of March 31, 2022 and 2021, were as follows:
Thousands of
U.S. Dollars
2022

Millions of Yen
2022
2021
Investments in leases:
Due within one year
Due after one year
Total

¥
¥

130
371
501

¥
¥

163
160
323

$
$

Thousands of
U.S. Dollars
2022

Millions of Yen
2022
2021
Lease obligations:Due within one year
Due after one year
Total

¥
¥

40

142
426
568

¥
¥

187
180
367

1,065
3,042
4,107

$
$

1,171
3,488
4,659

13. EQUITY
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The
significant provisions in the Companies Act that affect financial and accounting matters are
summarized below:(1) Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in
addition to the year-end dividend upon resolution at the shareholders’ meeting. Additionally, forcompanies that meet certain criteria including (1) having a Board of Directors, (2) having
independent auditors, (3) having an Audit & Supervisory Board, and (4) the term of service ofthe directors being prescribed as one year rather than the normal two-year term by its articles ofincorporation, the Board of Directors may declare dividends (except for dividends-in-kind) at
any time during the fiscal year if the company has prescribed so in its articles of incorporation.
However, the Company cannot do so because it does not meet all the above criteria.
The Companies Act permits companies to distribute dividends-in-kind (noncash assets) toshareholders subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of
Directors if the articles of incorporation of the company so stipulate. The Companies Act
provides certain limitations on the amounts available for dividends or the purchase of treasury
stock. The limitation is defined as the amount available for distribution to the shareholders, but
the amount of net assets after dividends must be maintained at no less than ¥3 million.
(2) Increases/decreases and transfer of common stock, reserve and surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated asa legal reserve (a component of retained earnings) or as additional paid-in capital (a componentof capital surplus) depending on the equity account charged upon the payment of such dividends,
until the aggregate amount of legal reserve and additional paid-in capital equals 25% of thecommon stock. Under the Companies Act, the total amount of additional paid-in capital and legal
reserve may be reversed without limitation. The Companies Act also provides that common stock,legal reserve, additional paid-in capital, other capital surplus and retained earnings can betransferred among the accounts within equity under certain conditions upon resolution of theshareholders.
(3) Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stock and dispose of suchtreasury stock by resolution of the Board of Directors. The amount of treasury stock purchased
cannot exceed the amount available for distribution to the shareholders which is determined by aspecific formula. Under the Companies Act, stock acquisition rights are presented as a separate
component of equity. The Companies Act also provides that companies can purchase bothtreasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights arepresented as a separate component of equity or deducted directly from stock acquisition rights.

4114. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income
taxes which, in the aggregate, resulted in a normal effective statutory tax rate of approximately
30.6% for the years ended March 31, 2022 and 2021.
The tax effects of significant temporary differences and tax loss carryforwards that resulted indeferred tax assets and liabilities as of March 31, 2022 and 2021, were as follows:
Thousands of
U.S. Dollars
2022

Millions of Yen
2022
2021
Deferred tax assets:
Tax loss carryforwards (Note 2)
Liability for employees’ retirement benefits
Loss on write-downs of inventories
Land and building of plants
Loss on impairment of long-lived assets
Accrued bonuses to employees
Other
Sub-total
Less valuation allowance for tax loss
carryforwards (Note 2)Less valuation allowance pertaining to total
amount of deductible temporary differences
Valuation allowance, total (Note 1)
Total

¥

4,605
2,468
338
1,509
477
521
1,593
11,511

¥

¥

5,239
2,509
360
1,514
418
559
1,756
12,355$37,75020,231
2,765
12,370
3,913
4,269
13,052
94,350(4,237)(4,595)(34,726)(5,052)(9,289)2,222(5,597)(10,192)
2,163 $

(41,411)(76,137)
18,213¥

Deferred tax liabilities:
Unrealized gain on available-for-sale securities ¥(2,764)¥ (3,788) $(22,659)
Other(2,575)(2,566)(21,104)
Total(5,339)(6,354)(43,763)
Net deferred tax liabilities¥(3,117)¥ (4,191) $(25,550)
Notes 1: Valuation allowance decreased by ¥904 million ($7,407 thousand) during the year
ended March 31, 2022. This is mainly due to the decreases in valuation allowance for
the Company’s tax loss carryforwards and valuation allowances for loss on impairmentof long-lived assets.
2: The expiration of tax loss carryforwards, the related valuation allowances and theresulting net deferred tax assets as of March 31, 2022 and 2021, were as follows:
Millions of Yen
2022
Deferred tax assets
relating to tax loss
carryforwards (*)
Less valuation allowancefor tax loss carryforwards
Net deferred tax assets
relating to tax loss
carryforwards

Over 1 year Over 2 years Over 3 years Over 4 years
but within but within
but within
but within Over 5 years
2 years
3 years
4 years
5 years

Within1 year

Total

-

-

-

-

- ¥

4,605 ¥

4,605

-

-

-

-

-

(4,236)(4,236)

-

-

-

-

-

369

(**) 369

42Millions of Yen
Over 1 year Over 2 years Over 3 years Over 4 years
but within but within
but within
but within Over 5 years
2 years
3 years
4 years
5 years

Within1 year2021
Deferred tax assets
relating to tax loss
carryforwards (*)
Less valuation allowancefor tax loss carryforwards
Net deferred tax assets
relating to tax loss
carryforwards

Total

-

-

-

-

- ¥

5,239 ¥

5,239

-

-

-

-

-

(4,595)(4,595)

-

-

-

-

-

644

(**) 644

Thousands of U.S. Dollars
Over 1 year Over 2 years Over 3 years Over 4 years
but within but within
but within
but within Over 5 years
2 years
3 years
4 years
5 years

Within1 year2022
Deferred tax assets
relating to tax loss
carryforwards (*)
Less valuation allowancefor tax loss carryforwards
Net deferred tax assets
relating to tax loss
carryforwards

Total

-

-

-

-

- $

37,750 $37,750

-

-

-

-

-

(34,725)(34,725)

-

-

-

-

-

3,025

(**) 3,025(*)

The amount of deferred tax assets relating to tax loss carryforwards was calculated byusing the normal effective statutory tax rate.
(**) The amount of net deferred tax assets relating to tax loss carryforwards is determined tobe recovered based on the expected future taxable income.
A reconciliation between the normal effective statutory tax rates and the actual effective tax rates
reflected in the accompanying consolidated statement of income for the year ended March 31,
2022, with the corresponding figures for 2021, is as follows:

Normal effective statutory tax rate
Increase (decrease) due to:Permanently non-deductible expenses for income tax
purposes
Permanently non-taxable income for income tax
purposes
Changes in valuation allowance
Per capita inhabitant tax
Higher (lower) income tax rates applicable to taxable
income in certain foreign countries
Income tax credit

Other
Actual effective income tax rate

43

2022
30.6 %

2021
30.6

0.1

0.1

(0.4)

(0.3)

(15.4)
0.5(16.4)
0.4

(0.2)

0.1

(0.4)
(1.6)
13.2

(1.4)
1.3
14.4

%

%

%

15. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group policy for financial instruments
The Group finances capital investments and necessary funds mainly internally and with CMS
provided by a consolidated subsidiary of CJR. The Company also operates funds by utilizing
CMS. Derivative transactions are not used for speculative purposes but to manage exposure torisks as described in (2) below.
(2) Nature and extent of risks arising from financial instruments
Trade notes and accounts receivables, such as trade notes receivable, trade accounts receivableand electronically recorded monetary claims, are exposed to customer credit risk.
Although trade notes and accounts receivable in foreign currencies are exposed to the risk offluctuation in foreign currency exchange rates, the position, net of payables in foreign currencies,
is, in principle, hedged by using forward foreign currency contracts.
Investment securities, mainly equity securities of customers and suppliers of the Group, areexposed to the risk of market price fluctuations.
Payment terms of trade notes and accounts payable, such as trade notes payable, trade accounts
payable and electronically recorded obligation, are generally less than one year. Although tradenotes and accounts payables in foreign currencies are exposed to the risk of fluctuation in foreign
currency exchange rates, the position, net of receivables in foreign currencies, is, if necessary,hedged by using forward foreign currency contracts.
Long-term debt recorded for the transfer price of the factory assets transferred to CJR and for apart of capital expenditure related to the transferred factory assets is not exposed to market risks
from changes in variable interest rates since the Company repays a constant lease fee including
the interest portion based on the lease agreement. Long-term debt borrowed from CJR in
November 2017 for the payment of settlement money related to a large railway rolling stock
project in the U.S.A. is also not exposed to market risks from changes in variable interest rates
due to the fixed interest rate. Lease obligations are primarily used for financing capital
investments.
Derivatives mainly include forward foreign currency contracts, which are used to manage
exposure to risks associated with fluctuations in foreign currency exchange rates related to tradenotes and accounts receivable and trade notes and accounts payable denominated in foreign
currencies and forecasted transactions denominated in foreign currencies. Please see Note 2“Summary of Significant Accounting Policies,” “g. Derivatives and hedging activities” for more
information about derivatives.
(3) Risk management for financial instruments
Credit risk management
The Group manages its credit risk from trade notes and accounts receivable by periodicallymonitoring circumstances of the financial position of major customers and managing due dates
and balances by each customer.

44Market risk management (foreign exchange risk and market price risk)
Trade notes and accounts receivable and trade notes and accounts payable in foreign currencies
are exposed to market risk resulting from fluctuations in foreign currency exchange rates. Suchforeign exchange risk is hedged principally by forward foreign currency contracts.
Investment securities are managed by monitoring the market values and the financial position ofissuers on a regular basis.
Liquidity risk management
The Group establishes or updates its cash management plan according to the monthly cash
management plan from each subsidiary in order to monitor its liquidity risk associated with tradenotes and accounts payable and long-term debt.
(4) Fair values of financial instruments
Since various assumptions and factors are reflected in estimating fair value, different assumptions
and factors could result in different fair value.
Fair value of financial instruments
Millions of Yen
2022

Investment securities
Total

Carrying
amount¥ 14,095¥ 14,095

Fair value¥ 14,095¥ 14,095

Long-term debt, including current portion
Lease obligations, including current portion
Total¥ 29,797
1,932¥ 31,729¥ 30,017
1,920¥ 31,937

Unrealized
gain (loss)
¥
¥

(220)
12
(208)

Millions of Yen
2021

Investment securities
Total

Carrying
amount¥ 17,503¥ 17,503

Fair value¥ 17,503¥ 17,503

Long-term debt, including current portion
Lease obligations, including current portion
Total¥ 32,697
1,998¥ 34,695¥ 33,268
1,934¥ 35,20245

Unrealized
gain (loss)
¥
¥

(571)
64
(507)

Investment securities
Total

Thousands of U.S. Dollars
2022
Carrying
Unrealized
amountFair value
gain (loss)$ 115,529$ 115,529$ 115,529$ 115,529-

Long-term debt, including current portion
Lease obligations, including current portion
Total$ 244,238
15,833$ 260,071

Notes: 1.

2.

$ 246,044
15,734$ 261,778$$(1,806)99(1,707)

Cash and cash equivalents are omitted as their carrying amounts approximate the fairvalues since they are cash or scheduled to be settled in a short period of time. Additionally,
notes and accounts receivable, short-term, notes and accounts payable and income taxes
payable are also omitted as their carrying amounts approximate the fair values since they
are scheduled to be settled in a short period of time.
Carrying amounts of equity securities without market price

Unlisted securities¥
Investments in an unconsolidated subsidiary andassociated companies
Long-term debt recorded for the transfer price ofthe factory assets transferred to CJR and for apart of capital expenditure related to thetransferred factory assets (including the current
portion)Millions of Yen
2022
2021
1,578
¥
1,588

Thousands of
U.S. Dollars
2022$
12,934

947

885

7,762

22,336

22,609183,083(5) Maturity analysis for financial assets and securities with contractual maturities

Due in 1
year or less
Cash and cash equivalents
Notes and accounts receivable
Total¥ 29,112
17,548¥ 46,660

46

Millions of Yen
2022
Due after 5
Due after 1
years
year throughthrough
5 years
10 years

¥
¥

215
215

-

Due after
10 years-Due in 1
year or less
Cash and cash equivalents
Notes and accounts receivable
Total$ 238,620
143,837$ 382,457

Thousands of U.S. Dollars
2022
Due after 5
Due after 1
years
year throughthrough
5 years
10 years

$
$

1,763
1,763

Due after
10 years--

Please see Note 9 for annual maturities of long-term debt and Note 12 for obligations underfinance leases.
(6) Financial Instruments Categorized by Fair Value Hierarchy
The fair value of financial instruments is categorized into the following three levels, dependingon the observability and significance of the inputs used in making fair value measurements:
Level 1:
Level 2:
Level 3:

Fair values measured by using quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Fair values measured by using inputs other than quoted prices included within Level
1 that are observable for the assets or liabilities, either directly or indirectly.
Fair values measured by using unobservable inputs for the assets or liabilities.

If multiple inputs are used that have a significant impact on the measurement of fair value, fairvalue is categorized at the lowest level in the fair value measurement among the levels to which
each of these inputs belongs.

(a) The financial assets and liabilities measured at the fair values in the consolidated balance
sheet

As of March 31, 2022
Level 1
Investment securities
Available-for-sale securities
Equity securities
Total assets

47

Millions of Yen
Fair value
Level 2
Level 3

Total

¥ 14,095--¥ 14,095¥ 14,095--¥ 14,095

Thousands of U.S. Dollars
Fair value
Level 2
Level 3As of March 31, 2022
Level 1
Investment securities
Available-for-sale securities
Equity securities
Total assets

Total$ 115,529--$ 115,529$ 115,529--$ 115,529(b) Financial instruments other than those recorded at fair value in the consolidated balance sheet

Millions of Yen
Fair value
Level 2
Level 3As of March 31, 2022
Level 1

Total

Long-term debt, including current portion
Lease obligations, including current portion-¥ 30,017
1,920-¥ 30,017
1,920

Total liabilities-¥ 31,937-¥ 31,937

As of March 31, 2022
Level 1Thousands of U.S. Dollars
Fair value
Level 2
Level 3Total

Long-term debt, including current portion
Lease obligations, including current portion-$ 246,044
15,734-$ 246,044
15,734

Total liabilities-$ 261,778-$ 261,778

Note: Explanation of valuation techniques and valuation inputs used in fair value measurements
Investment securities
The fair values of listed equity securities are measured at the quoted market prices. Since listed
equity securities are traded in active markets, their fair values are classified as Level 1.
Long-term debt and lease obligations
The fair values of long-term debt (including the current portion) and lease obligations aremeasured using the discounted cash flow method based on the total amount of the principal andinterest, and interest rates reflecting the remaining periods of such obligations and credit risks,
and are classified as Level 2.

48

16. LOSS ON IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENTThe Group recognized impairment losses on the following asset groups.
For the year ended March 31, 2022:

Asset group
Idle assets

Location
Agui, Aichi
Kawasaki, Miyagi
Koga, Ibaraki, etc.

AccountLand,
buildings andstructures
Total

Millions of Yen
2022

Thousands of
U.S. Dollars
2022

¥

245 $

2,008

¥

245 $

2,008

For the year ended March 31, 2021:

Asset group
Idle assets

Location
Shinanomachi,
NaganoAssets for
Nagoya, Aichi
generator businessAccount

Millions of Yen
2021

Land

¥

Machinery andequipment, etc.
Total

3
26

¥

29

The Group reviewed its long-lived assets for impairment as of March 31, 2022 and 2021.
The Group recognized an impairment loss for idle assets by writing down the property to its net
selling value (based on estimated sales amount of contract for the year ended March 31, 2022 andreasonably adjusted amount of property tax assessment value for the year ended March 31, 2021).
The impairment loss of ¥245 million ($2,008 thousand) for the year ended March 31, 2022
consisted of ¥208 million ($1,707 thousand) on land and ¥37 million ($301 thousand) on
buildings and structures.
The Company resolved at the Board of Directors held on November 26, 2020 to withdraw fromthe generator business. The Group recognized an impairment loss for assets related to thegenerator business by writing down the assets to their net selling value (memorandum value asno sale is expected). The impairment loss of ¥26 million consisted of ¥26 million on machineryand equipment and ¥0 million on other.

49

17. RELATED-PARTY DISCLOSURES(1) Parent and major shareholders
CJR directly owned 51.2% of the total shares of the Company as of March 31, 2022 and 2021.
The Company distributes transportation vehicles to CJR.
Transactions of the Company with CJR for the years ended March 31, 2022 and 2021, were as
follows:
For the year ended March 31, 2022

Net sales
Borrowing of funds
Repayment of debt
Interest expense

Millions of
Yen
2022
¥
41,807
191
3,364
337

Thousands of
U.S. Dollars
2022$
342,683
1,564
27,572
2,764

Borrowing of funds, repayment of debt, and interest expense of ¥191 million ($1,564 thousand),¥464 million ($3,802 thousand), and ¥141 million ($1,156 thousand), respectively, were recorded
for the transfer of the factory assets transferred to CJR and for a part of capital expenditure related
to the transferred factory assets.
For the year ended March 31, 2021

Net sales
Borrowing of funds
Repayment of debt
Interest expense

Millions of
Yen
2021
¥
31,606
177
1,685
346

Borrowing of funds, repayment of debt, and interest expense of ¥177 million, ¥461 million, and¥142 million, respectively, were recorded for the transfer of the factory assets transferred to CJR
and for a part of capital expenditure related to the transferred factory assets.
The balances due to or from CJR as of March 31, 2022 and 2021, were as follows:
As of March 31, 2022
Millions ofYen
2022
Trade accounts receivable and contract
assetsCurrent portion of long-term debt
Long-term debt
Accrued expenses

¥

4,357
3,370
48,76340

Thousands of
U.S. Dollars
2022$

35,70927,626399,695
329

Current portion of long-term debt, long-term debt, and accrued expenses of ¥470 million ($3,855
thousand), ¥21,866 million ($179,228 thousand), and ¥40 million ($329 thousand), respectively,

50

were the balances related to long-term debt for the transfer price of the factory assets transferred
to CJR and for a part of capital expenditure related to the transferred factory assets.
As of March 31, 2021

Trade accounts receivable
Current portion of long-term debt
Long-term debt
Accrued expenses

Millions of
Yen
2021
¥
4,199
3,360
51,94641

Current portion of long-term debt, long-term debt, and accrued expenses of ¥460 million, ¥22,149
million, and ¥41 million, respectively, were the balances related to long-term debt for the transfer
price of the factory assets transferred to CJR and for a part of capital expenditure related to thetransferred factory assets.
(2) Fellow subsidiaries and subsidiaries of other affiliates
Transactions of the Company with the fellow subsidiaries for the years ended March 31, 2022
and 2021, were as follows:
For the year ended March 31, 2022
Millions ofYen2022
JR Central Financial Management Co., Ltd.
Loan of funds and interest income¥

26

Thousands of
U.S. Dollars
2022
$

216

Transactions related to loan of funds are omitted since the transactions are conducted using
CMS provided by a consolidated subsidiary of CJR.
For the year ended March 31, 2021
Millions ofYen
2021
JR Central Financial Management Co., Ltd.
Loan of funds and interest income¥

12Transactions related to loan of funds are omitted since the transactions are conducted using CMS
provided by a consolidated subsidiary of CJR.
The balances due to or from the fellow subsidiaries as of March 31, 2022 and 2021, were as
follows:
As of March 31, 2022
Millions ofYen2022
JR Central Financial Management Co., Ltd.
Cash and cash equivalents¥

51

25,752Thousands of
U.S. Dollars
2022$

211,084

As of March 31, 2021
Millions ofYen
2021
JR Central Financial Management Co., Ltd.
Cash and cash equivalents¥

52

16,07918. OTHER COMPREHENSIVE (LOSS) INCOME
The components of other comprehensive (loss) income for the years ended March 31, 2022 and
2021, were as follows:
Thousands ofMillions of Yen
U.S. Dollars
2022

2021

2022

Unrealized (loss) gain on available-for-salesecurities:(Losses) gains arising during the year¥

Reclassification adjustments to profit or loss

(3,262)

¥

2,662

$

(26,738)

(83)

(93)

(679)

Amount before income tax effect(3,345)

2,569(27,417)

Income tax effect

1,024

(786)

8,391

Total

¥

(2,321)

¥

1,783

$

(19,026)

¥

(15)

¥

14

$

(120)

¥

(15)

¥

14

$

(120)

¥

80

¥

1,697

$

651

Foreign currency translation adjustments:
Adjustments arising during the year
Total
Defined retirement benefit plans:
Adjustments arising during the year
Reclassification adjustments to profit or loss

13

(187)

108

Amount before income tax effect

93

1,510

759

Income tax effect

(28)

(462)

(233)

Total
Share of other comprehensive income inassociated companies
Gains arising during the year

¥

65

¥

1,048

$

526

¥

4

¥

3

$

35

Income tax effect

-

Total
Total other comprehensive (loss) income

-

-

¥

4

¥

3

$

35

¥

(2,267)

¥

2,848

$

(18,585)

19. SUBSEQUENT EVENT

Appropriation of Retained Earnings
The following appropriation of retained earnings at March 31, 2022, was approved at the Company’s shareholders’meeting held on June 29, 2022:
Millions ofThousands of
Yen
U.S. Dollars
Year-end cash dividends, ¥10 ($0.08) per share
¥
144
$
1,183

53

20. REVENUE RECOGNITION(1) Disaggregation of revenue from contracts with customers
The businesses of the Group are composed of Railway Rolling Stock, Transportation Equipment
and Steel Structure, Construction Equipment, Engineering, and Other. The Group presented
revenue from these businesses as net sales. Additionally, there is no performance obligations inwhich the Group acts as an agent.
The disaggregation of revenue from contracts with customers by reportable segment for the year
ended March 31, 2022 is as follows.
Millions ofYen
2022
Reportable segment:
Railway Rolling Stock:
JR
Public operated or private operated companies
Sub-total
Transportation Equipment and Steel Structure:
Transportation equipment
Steel structure
Sub-total
Construction Equipment
Engineering
Other (Note 1)
Total
Revenue recognized from contracts with customers:
Goods transferred at a point in time
Goods transferred over time
Total
Revenue recognized from other sources (Note 2)
Sales to external customers
Notes: 1:
2:

¥

¥

¥

¥

38,882
9,075
47,957
7,238
6,611
13,84919,34011,957
66
93,16984,502
8,667
93,169853
94,022Thousands of
U.S. Dollars
2022

$

$

$

$

318,70974,385393,094
59,32554,191
113,516
158,516
98,015
538
763,679

692,636
71,043
763,679
6,996
770,675“Other” represents operating segments, etc. that are not included in any
reportable segment.
“Revenue recognized from other sources” includes lease transactions, etc.
stipulated in “Accounting Standard for Lease Transaction” (ASBJ Statement
No.13), which is outside of the scope of Revenue Recognition Accounting Standard.

(2) Basic information to understand revenue from contracts with customers(a) Information on contracts and performance obligations
With respect of information on contracts, performance obligations and the timing ofsatisfactions of performance obligations, please see Note 2 “Summary of Significant
Accounting Policies” “w. Revenue recognition.” Payment terms are on general terms, andconsideration is primarily received within one year. The amount of consideration promised
does not include a significant financing component.

54

(b) Information on determining the amounts allocated to performance obligations
Transaction price is primarily allocated to each performance obligation based on observablestand-alone selling prices when contracts contain multiple performance obligations.
(3) Information on the relationship between the satisfactions of performance obligations basedon contracts with customers, the cash flows from such contracts and the amount and timingof revenue expected to be recognized in subsequent fiscal years from the contracts with thecustomers that existed as of March 31, 2022(a) Balance of contract assets and contract liabilities, etc.

Trade notes receivable (Balance at beginning of year)
Trade notes receivable (Balance at end of year)
Trade accounts receivable (Balance at beginning ofyear)
Trade accounts receivable (Balance at end of year)
Contract assets (Balance at beginning of year)
Contract assets (Balance at end of year)
Advances received (Balance at beginning of year)
Advances received (Balance at end of year)

Millions of
Yen
2022
¥
2,846
2,020

Thousands of
U.S. Dollars
2022$
23,325
16,55521,714

177,987

13,833
3,065
2,747
1,169
1,076

113,384
25,12522,5159,583
8,820

Contract assets relate to the Group’s rights to consideration for performance obligations
satisfied under the construction contracts, etc. but not billed as of the end of the fiscal year.
The contract assets are reclassified to trade accounts receivables when the Group’s rights
become unconditional. Considerations for those performance obligations are billed andreceived by the Group in accordance with the terms and conditions of the transactions withcustomers.
Advances received primarily related to payments received in advance under construction
contracts, etc. for which revenues are recognized over time. Advances received decreases
as revenue is recognized. Of the revenue recognized during the year ended March 31, 2022,
the amounts included in the balance of advances received at the beginning of the year ended
March 31, 2022, was ¥1,169 million ($9,583 thousand).
Additionally, the amount of revenue recognized during the year ended March 31, 2022 fromperformance obligations satisfied (or partially satisfied) in previous periods was ¥154
million ($1,259 thousand).

55

(b) Transaction prices allocated to the remaining performance obligations
The aggregate amount of transaction prices allocated to unsatisfied (or partially unsatisfied)
performance obligations by reportable segment as of March 31, 2022 is as follows.

Reportable segment:
Railway Rolling Stock
Transportation Equipment and Steel Structure
Construction Equipment
Engineering
Other (Note)
Total
Note:

Millions of
Yen
2022
¥
89,53018,021
13,976
1,962¥
123,489

Thousands of
U.S. Dollars
2022$
733,851
147,714
114,563
16,080$ 1,012,208“Other” represents operating segments, etc. that are not included in any
reportable segment.

Remaining performance obligations for each reportable segment are expected to be satisfied
and recognized as revenue within the number of the years from March 31, 2022.
Within 4 years(of which approximately 60% within 1 year)- Railway Rolling Stock- Transportation Equipment and Steel Structure Within 3 years- Construction Equipment

Within 2 years- Engineering

Within 1 year56

21. SEGMENT INFORMATION
Under ASBJ Statement No. 17, “Accounting Standard for Segment Information Disclosures,” and ASBJ Guidance No. 20, “Guidance on Accounting Standard for Segment Information Disclosures,” an entity is required to report financial
and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate
financial information is available and such information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, segment information is required to be reported
on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments.
(1) Description of reportable segments
The Group’s reportable segments are those for which separate financial information is available and regular evaluation by the Company’s management is being performed in order to decide how resources are allocated among the Group.
The Group has operational headquarters by each product or service. Each of the operational headquarters develops comprehensive strategies and engages in business activities relating to each product and service. Accordingly, the Groupis comprised of segments organized by products or services based on the operational headquarters, and there are four reportable segments: “Railway Rolling Stock,” “Transportation Equipment and Steel Structure,” “Construction
Equipment,” and “Engineering.”“Railway Rolling Stock” consists of manufacture and sales of rolling stock, such as EMUs and railway motor cars.
“Transportation Equipment and Steel Structure” consists of manufacture and sales of transportation equipment, such as freight cars, tank trucks, heavy-duty industrial vehicles and manufacture and construction of roadway and railway
bridges.
“Construction Equipment” consists of manufacture and sales of pile driving rigs, crawler cranes, casing rotators, portable diesel generator sets and emergency generators.
“Engineering” consists of manufacture and sales of mechanical equipment for railway companies, manufacturing equipment for household paper manufacturers, and agricultural plants.
(2) Method of measurement for the amount of sales, profit (loss), assets and other items for each reportable segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2 “Summary of Significant Accounting Policies.” Reporting segment profit represents operating income. Intersegment transactions aremainly based upon market prices or manufacturing costs.
As described in Note 2 (x), the Group has changed accounting treatment for revenue recognition and the method for measuring reportable segment profit or loss by applying the “Accounting Standard for Revenue Recognition” (ASBJ
Statement No. 29, March 31, 2020) from the beginning of the year ended March 31, 2022. As a result, in the year ended March 31, 2022, net sales increased by ¥92 million ($758 thousand) and segment profit decreased by ¥60 million($492 thousand) in Railway Rolling Stock business, and net sales decreased by ¥12 million ($102 thousand) and segment profit increased by ¥63 million ($516 thousand) in Transportation Equipment and Steel Structure business.
(3) Information of sales, profit (loss), assets and other items was as follows:
Millions of Yen
2022
Reportable segment
Transportation
Equipment andConstruction
Steel Structure
Equipment

Railway Rolling
Stock
Net sales
Sales to external customers
Intersegment sales or transfers
Total
Segment profit (loss)
Segment assets
Other:
Depreciation
Increase in property, plant andequipment and intangible assets

¥

¥
¥
¥

47,958217
48,175
4,419
40,848

¥

982

¥

1,422

¥

¥
¥
¥

13,855
198
14,053(1,265)
18,249¥697
209

Engineering
¥

¥
¥
¥

20,18664
20,2503,393
20,773

¥

714

Other
¥

¥
¥
¥

11,957
11,957
609
4,805

¥

59

1,094

45

57

Total
¥

¥
¥
¥

66
264
330
53
618

¥

2
1

Reconciliations¥¥¥

94,022743
94,765
7,209
85,293

¥

2,454
2,771

Consolidated
¥

¥
¥
¥
¥

(743)
(743)
(971)
47,575¥¥¥94,022
94,022
6,238
132,868

¥

239

¥

2,693

169

2,940

Millions of Yen
2021
Reportable segment
Transportation
Equipment andConstruction
Steel Structure
Equipment

Railway Rolling
Stock
Net sales
Sales to external customers
Intersegment sales or transfers
Total
Segment profit
Segment assets
Other:
Depreciation
Increase in property, plant andequipment and intangible assets

¥

¥
¥
¥

50,486110
50,596
5,007
45,316

¥

944

¥

¥

¥
¥
¥

18,502
66
18,568712
20,117

¥

676

1,332

Engineering
¥

¥
¥
¥

21,646102
21,7483,981
22,397

¥

720

806

Other
¥

¥
¥
¥

8,738
15
8,753
332
5,901

¥

75

666

Total
¥

¥
¥
¥

76
231
307
92
648

¥

2

62

Reconciliations¥¥¥

99,448524
99,972
10,124
94,379

¥

2,417

2

Consolidated

¥
¥
¥
¥

(524)
(524)
(1,076)42,217¥¥¥99,44899,4489,048
136,596

¥

240

¥

2,657

2,868

¥

335

3,203

Thousands of U.S. Dollars
2022
Reportable segment
Transportation
Equipment andConstruction
Steel Structure
Equipment

Railway Rolling
Stock
Net sales
Sales to external customers
Intersegment sales or transfers
Total
Segment profit (loss)
Segment assets
Other:
Depreciation
Increase in property, plant andequipment and intangible assets

$

$
$
$

393,102
1,772
394,874
36,218334,824

$

8,050

$

11,651$$$$

113,568
1,619
115,187(10,368)
149,579

$

5,711
1,714

Engineering
$

$
$
$

165,452
530
165,982
27,811
170,271

$

5,855

Other
$

$
$
$

98,01598,015
4,989
39,384

$

486

8,967

370

Total
$

$
$
$

538
2,167
2,705
443
5,062

$

14
10

Reconciliations

Consolidated$$$

770,675
6,088
776,763
59,093
699,120$$$$(6,088)(6,088)(7,965)389,964$$$770,675
770,675
51,1281,089,084$

20,116

$

1,961

$

22,07722,712

1,389$

24,101

Notes: 1. “Other” represents operating segments, etc. that are not included in any reportable segment.
2. “Reconciliations” in segment profit (loss) include corporate expenses of ¥(995) million ($(8,155) thousand) and ¥(1,085) million for the years ended March 31, 2022 and 2021, respectively, and elimination of intersegment
transactions of ¥16 million ($127 thousand) and ¥16 million for the years ended March 31, 2022 and 2021, respectively. Corporate expenses principally consist of general and administrative expenses that are not
attributable to any reportable segment.
3. “Reconciliations” in segment assets include total corporate assets of ¥45,418 million ($372,277 thousand) and ¥40,283 million, elimination of intersegment balances of ¥(78) million ($(640) thousand) and ¥(134) million,
and adjustments in inventories of ¥(60) million ($(494) thousand) and ¥(67) million as of March 31, 2022 and 2021, respectively. Total corporate assets principally consist of investment securities and general management
properties as of March 31, 2022 and 2021.
4. Segment profit (loss) is reconciled to operating income in the consolidated statement of income.

58

Associated Information(1) Information about products and services is not disclosed since similar information is disclosed
above.
(2) Information about geographical areas for the years ended March 31, 2022 and 2021 was asfollows.
Millions of Yen
2022

Net salesJapan¥90,738

U.S.A.
¥275

Asia¥2,978

Other
¥31

Total
¥94,022

Other
¥26

Total
¥99,448

Millions of Yen
2021

Net salesJapan¥96,082

U.S.A.
¥68

Asia¥3,272Thousands of U.S. Dollars
2022
Japan
U.S.A.
Asia
Other
Total
Net sales$743,754$2,255$24,414$252$770,675
Note: Net sales are based on the location of the customers and grouped by country or area.
Millions of Yen
2022
Japan
Property, plantand equipment

U.S.A.

¥28,318

Asia

¥32

Other

¥13

Total
¥0

¥28,363

Millions of Yen
2021
Japan
Property, plantand equipment

U.S.A.

¥28,521

Asia

¥63

Other

¥18

Total
¥0

¥28,602

Thousands of U.S. Dollars
2022
Japan
Property, plantand equipment$232,110

U.S.A.
$266

59

Asia
$109

Other

Total
$0

$232,485

(3) Information about major customers
Net sales
Millions of Yen
2022
2021

Name of major
customer

CJR¥

41,807¥31,606

Thousands of
U.S. Dollars
2022$

Relatedsegment

342,683

Railway Rolling
Stock, Transportation
Equipment and Steel
Structure,Engineering(4) Information about loss on impairment of property, plant and equipment by reportable segment
Millions of Yen
2022
Reportable segment
Transportation
Equipment and Construction
Steel Structure
Equipment

Railway
Rolling
Stock
Impairment
loss

-

-

-

Engineering

Other

Total

-

-

-

Other

Total

Reconciliations
¥

245 ¥

Consoli-dated245

Millions of Yen
2021
Reportable segment
Transportation
Equipment and Construction
Steel Structure
Equipment

Railway
Rolling
Stock
Impairment
loss

-

¥

26

-

- ¥

Thousands of U.S. Dollars
2022
Reportable segment
Transportation
Equipment and Construction EngineerSteel Structure
Equipment
ing
Other

Railway
Rolling
Stock
Impairment
loss-

Engineering

-

-

-

-

-

26

Total
-

Reconciliations¥

3 ¥Reconciliations$

2,008 $

Note: “Reconciliations” for the year ended March 31, 2022, represents an impairment loss ofidle assets which are not attributable to any reportable segment.
＊＊＊＊＊＊

60

Consoli-dated29

Consoli-dated2,008

Corporate Information
Corporate Profile
Company Name: NIPPON SHARYO, LTD.

Company History
Sep. 1896 Established in Nagoya City.

Capital Stock
Common Stock:Authorized

32,800,000 shares

Jun. 1938 Founded Narumi Plant.

Common Stock:Issued

14,675,012 shares

May. 1949 Re-listed on Tokyo Stock Exchange.

Number of Shareholders

11,725 persons

Jan. 1959 Began Construction Machinery Business.

(March 31, 2022)

Oct. 1961 Started Bridge Manufacturing.
Jul. 1964 Founded Toyokawa Plant.
Jun. 1975 Founded Kinuura Plant.
Sep. 1996 100th Anniversary.
Aug. 2008 Equity and business tie-up entered into with
Central Japan Railway Company.
Aug. 2019 Manufactured 4000th Shinkansen.

Line of Business
Overview of the Main Segments
NIPPON SHARYO manufactures and sells the following products:
Lines of businessBusiness segment
Railway rolling stock

EMUs, DMUs, Passenger Cars, Linear Motor Cars, Track Maintenance Machines and Rolling Stock Components

Transportation equipment
and Steel structure

Tank Trucks, Tank Trailers, Containers, Storage Tanks,Heavy Duty Carriers, Automated Guided Vehicles, Freight Cars,
Roadway Bridges and Railway Bridges

Construction equipment

Pile Driving Rigs, Casing Rotators, Earth Drilling Rig, Obstacle Removal Equipment,Crawler Cranes, Other Products Related
to Foundation WorkEngineering

Agricultural Plants, Railway Rolling Stock Inspection/Maintenance System and Pulp and Paper Facilities

Directory
OFFICEHEAD OFFICE (NAGOYA)TOKYO OFFICEOSAKA BRANCHNIPPON SHARYO MANUFACTURING, LLC

1-1 Sanbonmatsu-cho,

12th Fl. Marunouchi Central Bldg.

14th FL,North Gate Building.

1051 Perimeter Drive, Suite 270
Schaumburg, IL 60173 U.S.A.

Atsuta-ku, Nagoya 456-8691 JAPAN

1-9-1 Marunouchi,

3-1-3 Umeda,

Phone: +81-52-882-3316

Chiyoda-ku, Tokyo 100-0005 JAPANKita-ku, Osaka 530-0001 JAPAN Phone: +1-847-228-2700

TOYOKAWA PLANTKINUURA PLANT

NARUMI PLANT(Railway rolling stock)(Transportation equipment and Steel structure) (Construction equipment)

Fax: +81-52-882-3781

PLANT

2-20 Honohara,

20 11-gouchi,

80 Ryucho, Narumi-cho,

Toyokawa, Aichi 442-8502 JAPANHanda, Aichi 475-0831 JAPAN

Midori-ku, Nagoya 458-8502 JAPAN

Phone: +81-533-85-4900

Phone: +81-52-623-3529

Fax: +81-533-85-4123

Fax: +81-52-623-4349

61