Financial Section

2018

Mitsubishi Materials Corporation
Keidanren Kaikan
1-3-2 Otemachi, Chiyoda-ku, Tokyo 100-8117
http://www.mmc.co.jp/corporate/en/

P2Management’s Discussion and Analysis

P4

Consolidated Balance Sheets

P6

Consolidated Statements of Income

P6

Consolidated Statements of Comprehensive Income

P7

Consolidated Statements of Changes in Net Assets

P9

Consolidated Statements of Cash Flows

P10

Notes to Consolidated Financial Statements

P42

Independent Auditor’s Report

P43

Main Consolidated Subsidiaries and Affiliates

Management’s Discussion and Analysis
Overview

Overview by segment
For the years ended March 31

Economic and Business Environment
During the consolidated fiscal year under review, signs ofrecovery were seen in the Asian economies of China, Thailand
and Indonesia. In the United States, the economy remained on amoderate recovery track.
In Japan, corporate earnings, employment, and income
conditions were on the road to recovery and capital expenditureand industrial production also increased modestly during theconsolidated fiscal year under review.
Regarding the business environment for the Mitsubishi
Materials Group, although energy prices rose, copper prices
increased and demand in cement-related business in the UnitedStates and demand for products used in the automotive andelectronics industries remained strong.

Business Performance Summary
Under these circumstances, the Company formulated a LongTerm Management Policy for the next 10 years and a MediumTerm Management Strategy (FY2018-2020) that focuses on
the planning and implementation of growth strategies, and we
implemented various measures as a theme of “Transformation
for Growth” to achieve group-wide policies for the enhancementof corporate value, namely “optimization of business portfolio,”“comprehensive efforts to increase business competitiveness,”and “creation of new products and businesses.”
As a result, consolidated net sales for the fiscal year underreview totaled ¥1,599,533 million, up 22.7% year on year.
Operating profit rose 21.9% year on year, to ¥72,819 million, andordinary income climbed 24.6%, to ¥79,621 million. Net income
attributable to owners of parent was ¥34,595 million, up 22.0%
year on year.

Financial Position and Liquidity
As of March 31, 2018, total assets amounted to ¥2,015.0
billion, up ¥118.1 billion, or 6.2%, from a year earlier. Total
current assets increased ¥86.6 billion, or 10.0%, to ¥954.1 billion
mainly due to an increase in inventories. Total non-current assets
increased ¥31.4 billion, or 3.1%, to ¥1,060.9 billion, largely as aresult of an increase in investment securities.
Total liabilities increased ¥59.8 billion, or 5.0%, year-on-year to¥1,246.5 billion. Total current liabilities rise ¥70.4 billion, or 10.0%,

to ¥777.0 billion due primarily to a rise in notes and accounts
payable-trade. Total non-current liabilities fall ¥10.5 billion, or2.2%, to ¥469.5 billion, reflecting the fall in bonds payable, loans
payable, and other factors.
The balance of interest-bearing debt, which adds bonds
payable to loans payable, came to ¥521.4 billion, down ¥6.7
billion, or 1.3%, from the previous fiscal year.
Total net assets amounted to ¥768.4 billion, up ¥58.3 billion,
or 8.2%, due mainly to an increase in retained earnings following
the recording of net income attributable to owners of parent in thefiscal year under review.
As a result, the consolidated shareholders’ equity ratio
increased from 32.8% at the previous fiscal year-end to 33.9%,
and net assets per share, based on the total number of shares
outstanding as of March 31, 2018, grew to ¥5,211.20, comparedwith ¥4,743.27 a year earlier.

Cash FlowsThe cash flows during the consolidated fiscal year underreview and their causes are as follows.
(Cash flow from operating activities)
Net cash provided by operating activities amounted to ¥50.7
billion (a decrease in net cash provided of ¥64.8 billion). This fall
was primarily due to an increase in inventories despite strong
business results.
(Cash flow from investing activities)
Net cash used in investing activities totaled ¥83.9 billion (anincrease in net cash used of ¥57.4 billion from the previous fiscal
year). This cash was primarily used for outlays related to capital
expenditure.
(Cash flow from financing activities)
Together operating and investing activities produced a net
outflow of ¥33.2 billion and the Company raised these funds
through borrowing and the issuance of bonds but also applied
some funds to the repayment of long-term loans payable.
Accordingly, net cash used in financing activities was ¥11.0 billion(a decrease in net cash used of ¥4.6 billion).
As a result of the above, as well as effect of exchange
rate change and other factors, the balance of cash and cash
equivalents at March 31, 2018 stood at ¥87.3 billion, down ¥45.2
billion from March 31, 2017.

Forecast for Fiscal Year 2019
Although the U.S. economy is expected to grow steadily,
the future of the global economy is uncertain, reflecting concern
over the political situation in the Korean Peninsula, a downturn in
the Chinese economy, and the political trends in Europe and theUnited States.
We believe the Japanese economy will continue its modest
recovery, buoyed by improvements in the employment andincome conditions, but recognize that there may be a downsiderisk due to overseas political and economic trends.
Turning to the Group’s operating environment, the Japanese
economy appears to be recovering on the back of growth inexports, etc. However, the recent yen appreciation, rising energy
prices and worsening labor shortages give cause for concern.
Against this backdrop, the Group will strive to achieve “Wewill become the leading business group committed to creating a

2<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATION

2017

2018

2018

Cement		Net sales
		Operating profit
		Operating margin

¥
		
		

192,378¥
19,428		
10.1% 		177,566
20,92311.8%$
1,810,790
		 182,878

Metals		Net sales
		Operating profit
		Operating margin

¥
		
		

862,759¥
24,059		
2.8% 		

629,470
17,3722.8%$
8,120,857
		 226,464

Advanced Materials & Tools
		Net sales
		Operating profit
		Operating margin

¥
		
		

161,177¥
18,566		
11.5% 		143,415
11,7748.2%$
1,517,103
		 174,762

Electronic Materials & Components
		Net sales
		Operating profit
		Operating margin

¥
		
		

73,462¥3,401		
4.6% 		

63,087
2,454
3.9%

$
		

Aluminum		Net sales
		Operating profit
		Operating margin

¥
		
		

148,588¥3,777
		
2.5% 		

155,962
7,886
5.1%

$
1,398,612
		
35,557

Others		Net sales
		Operating profit
		Operating margin

¥
		
		

249,503¥
13,187		
5.3% 		

218,246
10,1274.6%$
2,348,491
		 124,127

Elimination, etc.
		Net sales
		Operating profit¥		(88,337)(9,601)¥
		(83,680)(10,778)$(831,485)		
(90,377)

Total
		Net sales
		Operating profit
		Operating margin¥
1,599,533¥
1,304,068
		
72,819		
59,761
		
4.6% 		4.6%$ 15,055,845
		 685,428

691,475
32,015

Capital Expenditures
Capital expenditures undertaken by the Group are temperedby efforts to reduce interest-bearing debt, and the content ofspending plans will therefore be determined through carefulselection of projects in business areas which present high profit
and growth potential.
In fiscal 2018, capital expenditures amounted to ¥76,231
million, reflecting maintenance and repairs at existing facilities ineach business segment, as well as expansion, rationalization andrenovation at certain production facilities.

Cement businesssustainable world through materials innovation, with use of ourunique and distinctive technologies, for People, Society and theEarth.” based on a corporate philosophy of “for People, Society
and the Earth.” as well as we will improve its corporate value
by implementing the measures such as to strengthen the group
governance framework, including quality control.
For the fiscal year ending March 31, 2019, our consolidated
operating performance forecasts predict net sales of ¥1,660.0
billion, operating profit of ¥67.0 billion, ordinary income of ¥79.0
billion and net income attributable to owners of parent of ¥35.0
billion on the assumption of average exchange rates of ¥107/USD
and ¥130/EUR and a copper price of 310¢/lb.
The above forecasts are calculated based on information
available as of May 10, 2018. Accordingly, actual performance
may differ due to a variety of factors.

Thousands of U.S. dollars(Note 1)Millions of yen

The Company allocated funds to expansion works of industrial
waste processing facilities in Japan as well as maintenance andrepair of existing facilities mainly in Japan and the United States.
Capital expenditures in this segment decreased ¥3,699 million, or
18.0%, compared with ¥20,517 million recorded in the previous
fiscal year to ¥16,818 million.

Metals business
The Company allocated funds for the maintenance and repairof copper smelters and domestic copper-processing facilities.
Capital expenditures in this segment rise ¥2,697 million, or 13.9%,
compared with ¥19,339 million recorded in the previous fiscal yearto ¥22,037 million.

Advanced Materials & Tools business
Funds were mainly allocated for the expansion andrationalization of facilities to respond to increased production in
the overall business, and the maintenance and repair of existing
facilities. Capital expenditures in this segment increased ¥1,796
million, or 12.2%, compared with ¥14,719 million recorded in theprevious fiscal year to ¥16.516 million.

Electronic Materials & Components business
The Company directed funds into the maintenance andrepair of existing facilities in the overall business as well as the
expansion of production facilities that produce products mainly
for semiconductor manufacturing equipment-related products.
Capital expenditures in this segment rise ¥1,179 million, or 40.0%,
compared with ¥2,946 million recorded in the previous fiscal yearto ¥4,125 million.

Aluminum business
Funds were allocated to the maintenance and repair ofexisting facilities. Capital expenditures in this segment decreased¥1,315 million, or 15.2%, compared with ¥8,658 million recordedin the previous fiscal year to ¥7,343 million.

Others business
The Company allocated funds to the maintenance andrepair of existing facilities. Capital expenditures in this segment
decreased ¥113 million, or 1.2%, compared with ¥9,503 million
recorded in the previous fiscal year to ¥9,389 million.

MITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>3

Consolidated Balance Sheets
Mitsubishi Materials Corporation and Consolidated Subsidiaries
March 31, 2018 and 2017

Thousands of U.S. dollars(Note 1)Millions of yen

ASSETS

2017

2018

LIABILITIES

2018

2017

2018

2018

Current liabilities:

Current assets:
		 Cash and time deposits (Notes 5,16 and 21)

Thousands of U.S. dollars(Note 1)Millions of yen¥

93,389¥141,264$

879,043

		 Short-term bank loans (Notes 5 and 16)
		 Current portion of long-term debt (Notes 5 and 16)

		 Notes and accounts receivable (Notes 5,11 and 16):
			Trade		249,380		

201,013		 2,347,331

			 Unconsolidated subsidiaries and affiliates		

19,600		

16,998

		

184,489

			Other

		

7,764

		

6,870

		

73,084

		 Inventories (Notes 3 and 5)

		366,092		

288,279

		 Deferred tax assets (Note 10)

		

9,068

		

		 Leased gold bullion

		88,862		 Other current assets (Note 17)		122,506

		 Allowance for doubtful accounts

						Total current assets

		¥

154,413¥

152,668$

1,453,442

		

76,728

		

66,150		

722,221106,060

		 1,444,045

		 Notes and accounts payable (Note 16):

		
153,415

		

		

4,129

		

6,824

		

38,873

		

24,753

		

19,242

		

232,996

		 Income taxes payable

		

9,151

		

16,154

		

86,139		 Deferred tax liabilities (Note 10)

		

79

		

352

		

750

		Accrued expenses

		55,218

		

50,859		

519,751
124,519

			Trade					 Unconsolidated subsidiaries and affiliates
			Other		 3,445,896

9,375

		

85,356

		

110,458		

836,429		

95,746

		 1,153,114

		 Provision for bonuses		

13,228		

12,880		

(2,518) 		

(2,537)

				 Deposited gold bullion		

246,227		

241,406

		 2,317,657

		867,469

		 Reserve for loss on disposal of inventories

		

783

		

637

		

7,371

		 Other current liabilities (Notes 7 and 17)		38,949		

33,426

		

366,621

				Total current liabilities

		

777,080		

706,665

		 7,314,389¥

290,292¥

309,411$2,732,420
13,031

954,146(23,702)

		 8,981,043

Property, plant and equipment (Notes 4 and 5):		 Land (Note 20)¥

251,926

		 Buildings and structures				 Machinery and equipment

		 1,226,374

		 Construction in progress
		 Less accumulated depreciation			Net property, plant and equipment

		459,134

23,105¥276,216

645,559

2,371,295

467,426

		 4,321,672

		 1,248,749

		 11,543,432

		 Accrual for officers’ lump-sum severance benefits

		

1,384

		

1,365

		

		 Reserve for loss on unconsolidated subsidiaries and affiliates

		

986

		

4,137

		

9,280

		 Reserve for environmental measures		

37,833

		32,568

		

356,114

		 Net defined benefit liability (Note 6)

		51,647

		

56,037

		486,137

		 Deferred tax liabilities (Note 10)		40,039		

23,526

		

376,879

		 Deferred tax liabilities for land revaluation (Notes 10 and 20)

		24,162

		

25,590		

227,437

		 Other (Notes 7 and 17)		23,162

		

27,443

		

218,016

		

469,508		

480,079

		 4,419,317

				

23,091

		666,226

		

217,487		(12,377,464)
		 6,076,422

Investments and long-term receivables:
		 Investments in securities (Notes 5,15 and 16)

Long-term liabilities
		 Long-term debt (Notes 5 and 16)

		 (1,314,981) 		 (1,349,258)
		

$

			
¥

248,722¥

189,432$

2,341,134

Total long-term liabilities

Contingent Liabilities and Commitments (Note 11)

		 Net asset for retirement benefits (Note 6)

		

449

		

393

		

4,230

		 Unconsolidated subsidiaries and affiliates (Note 16)		72,396

		

67,005

		

681,447

		Long-term receivables

		

59

		

889

		

564

		Other		

14,138

		

24,833

		

133,081

		 Allowance for doubtful accounts		(4,297) 		

(5,549)		

(40,452)			Authorized 340,000,000 shares		

277,005

		 3,120,004

			Issued 131,489,535 shares			Total investments and long-term receivables		

331,469

Other assets:
		 Deferred tax assets (Note 10)¥

17,914¥

26,425$

168,620

		Goodwill		

44,636

		43,436

		

420,148

		 Other (Notes 5 and 17)

		21,358

		

16,377

		

201,044

Total other assets

		

83,909		

86,239		

789,813¥2,015,084¥

1,896,939$

18,967,284

			Total assets
The accompanying notes are an integral part of these statements.

NET ASSETS (Notes 9 and 26)
Shareholders’ equity
		Common stock		
¥

119,457¥

119,457$

1,124,415

		Capital surplus

		

92,422

		

92,422

		

869,942		Retained earnings		361,430

		

333,526

		 3,402,022

		 Treasury stock, at cost		

(2,089) 		

(2,017)

		

571,222		

543,390

		 5,376,714

		 Valuation difference on available-for-sale securities		

95,487

		

55,226

				 Deffered gains or losses on hedges (Note 17)

		

1,068

		

888

		

10,061		 Revaluation reserve for land (Note 20)		33,071

		

34,930		

311,293

		 Foreign currency translation adjustments		(10,312) 		

(1,418)

		

(97,072)

		 Accumulated adjustments for retirement benefits		(75,923)

			Total shareholders’ equity

		(19,665)

Accumulated other comprehensive income			

Total accumulated other comprehensive income

		898,789(8,066) 		

(11,735)

		

111,249

		

77,891		 1,047,149

Non-controlling interests		86,023

		

88,913

		Total net assets

		768,495

		

710,195

		 7,233,577

Total liabilities and net assets¥

2,015,084¥

1,896,939

			$809,713
18,967,284

The accompanying notes are an integral part of these statements.

4<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATIONMITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>5Consolidated Statements of Income

Consolidated Statements of Changes in Net Assets (Note 26)

Mitsubishi Materials Corporation and Consolidated Subsidiaries
Years ended March 31, 2018 and 2017

Mitsubishi Materials Corporation and Consolidated Subsidiaries
Years ended March 31, 2018 and 2017

Net sales (Note 19)
		 Cost of sales
			Gross profit
		 Selling, general and administrative expenses (Note 13)
			Operating profit
Other income (expenses):		 Interest and dividend income
		 Interest expenses (Note 5)		 Income from leased property
		 Expense for leased property
		 Expense for the maintenance and management of abandoned mines
		 Loss on valuation of investment securities (Note 15)
		Insurance income
		 Gain on net sales of investments in securities
		 Gain on sales of property, plant and equipment
		 Loss on disposal and sales of property, plant and equipment
		 Loss on impairment of fixed assets (Note 24)
		 Reserve for environmental measures
		 Foreign exchange losses, net
		 Loss on non-conforming products (Note 25)
		 Equity in loses (earnings) of affiliates
		Other, net		
			
Income before income taxes
		 Income Taxes (Note 10)
			 Net income
		 Net income attributable to:			 Non-controlling interests
			
Owners of parent

2018

2017

2018

¥
1,599,533
		 1,379,877
		219,655
		
146,835
		
72,819¥1,304,068
		 1,104,402
		199,665
		
139,904		
59,761$
15,055,845
		 12,988,307
		 2,067,538
		 1,382,109
		
685,428

		
		
		
		
		
		
		
		
		
		
		
		
		
		
		
		
		
		
		
¥

20,260(5,058)4,866(2,867)(4,098)
(400)
—
5,667
6,760
(4,958)(11,035)(9,092)(1,805)(3,202)(1,336)
1,259(5,042)
67,777
23,63944,137

		
		
		
		
		
		
		
		
		
		
		
		
		
		
		
		
		
		
		
¥

15,279(4,922)
4,863(3,061)(3,565)(5,049)2,400
19,072
16,545(4,292)(9,977)(23,912)(1,347)—1(2,212)(176)
59,58424,01135,573

		
		
		
		
		
		
		
		
		
		
		
		
		
		
		
		
		
		
		
$

190,705(47,618)
45,802(26,990)(38,573)(3,769)—53,34463,630(46,669)(103,876)(85,584)(16,997)(30,144)(12,575)
11,856(47,460)
637,967
222,512415,455

¥
		

9,542
34,595¥
		

7,220
28,352$
		

89,817
325,638

¥
		

264
80

¥
		

216
60

$
		

2.48
0.75

Consolidated Statements of Comprehensive Income
Mitsubishi Materials Corporation and Consolidated Subsidiaries
Years ended March 31, 2018 and 2017
Thousands of U.S. dollars(Note 1)Millions of yen

2017

2018
¥

44,137¥

2018

35,573

Other comprehensive income (Note 14):$415,455

				 Valuation difference on available-for-sale securities		

40,535

		

33,676

				 Deferred gains or losses on hedges
		 Revaluation reserve for land

		

490

		

635

		

4,620

		

(147) 		

—		

(1,384)

		 Foreign currency translation adjustments

		(9,165) 		

(6,009)		

(86,273)

		 Remeasurements of defined benefit plans
		 Share of other comprehensive income of affiliates accounted for		 using the equity method
		 Total other comprehensive income

		

3,578

		

4,758

		

33,686

		

637

		

88

		

6,001

		

35,930		

33,150		

338,198¥

80,068¥68,723$753,653

		Comprehensive income

381,548

		 Comprehensive income attributable to			

Owners of parent			

Non-controlling interests¥

73,000¥62,777$687,130

		

7,067

		

5,946

		

66,523

Capital surplus¥¥

119,457

Retainedearnings

92,266

Total
shareholders’equityTreasury stock,at cost¥303,026

		

(9,170)		

(9,170)Net income attributable to owners of parent		28,352

		

28,352

Increase due to reversal of revaluation reserve for land
Increase in cash and cash equivalents resulting from change of accounting
period of consolidated subsidiaries
Increase resulting from increase in the number of consolidated subsidiaries		(1,165)

		(1,165)

		

127

		

127

Increase due to decrease in affiliates		

12,355

		

12,355		(65) 		

(65)

		

2 		

1

		

157

(2,017) ¥543,390

Acquisition of treasury stock
Sales of treasury stock

		

(0)

Change in treasury shares of parent arising from transactions with non-controlling shareholders

		

157

¥

92,422¥(1,953) ¥512,797

Net change other than shareholders' equity¥

333,526

Dividends

Balance at March 31, 2017		(9,168)		(9,168)Net income attributable to owners of parent		34,595

		

34,595

Increase due to reversal of revaluation reserve for land
Increase in cash and cash equivalents resulting from change of accounting
period of consolidated subsidiaries
Increase resulting from increase in the number of consolidated subsidiaries

		

1,711

		

1,711

		

83

		

83

		

681

		

681

¥

119,457¥		(72) 		

(72)

		

0 		

0

		

(0)

(2,089) ¥571,222

Increase due to decrease in affiliates
Acquisition of treasury stock
Sales of treasury stock

		

(0)

Change in treasury shares of parent arising from transactions with non-controlling shareholders

		

(0)

¥

92,422

Net change other than shareholders' equity¥

119,457¥

361,430¥

Millions of yen
Accumulated other comprehensive income
Valuationdifference on
available-for-salesecurities

U.S. dollars (Note 1)

The accompanying notes are an integral part of these statements.

Net income

Balance at April 1, 2016

Common stock

Dividends

Balance at March 31, 2018

yen

Amounts per share
		 Basic net income (Note 22)
		 Cash dividends applicable to the year (Note 26)

Millions of yen
Shareholders’ equity

Thousands of U.S. dollars(Note 1)Millions of yen

Balance at April 1, 2016¥

Deferred gains
or losses onhedges21,645 ¥Accumulated Total accumulated
Revaluation
other
Foreign currency adjustments forreserve for land
retirement
comprehensive Non-controllingtranslation(Note 20):
benefits
incomeadjustmentsinterests
Total net assets(199) ¥

34,282 ¥3,647 ¥

(16,946) ¥42,430 ¥89,789 ¥ 645,017

Dividends

		(9,170)Net income attributable to owners of parent		28,352

Increase due to reversal of revaluation reserve for land
Increase in cash and cash equivalents resulting fromchange of accounting period of consolidated subsidiaries
Increase resulting from increase in the number ofconsolidated subsidiaries
Increase due to decrease in affiliates		(1,165)

		

127

		

12,355Acquisition of treasury stock

		

(65)

Sales of treasury stock
Change in treasury shares of parent arising fromtransactions with non-controlling shareholders
Net change other than shareholders' equity

		

1

		

33,581 		

Balance at March 31, 2017¥55,226¥

1,087 		888

¥647 		
34,930¥(5,066) 		

5,211 		

(1,418) ¥ (11,735) ¥35,460 		
77,891¥

		157(876) 		34,584

88,913¥ 710,195

Dividends

		(9,168)Net income attributable to owners of parent		34,595

Increase due to reversal of revaluation reserve for land
Increase in cash and cash equivalents resulting fromchange of accounting period of consolidated subsidiaries
Increase resulting from increase in the number ofconsolidated subsidiaries
Increase due to decrease in affiliates

		

1,711

		

83

		

681

Acquisition of treasury stock

		

(72)

Sales of treasury stock
Change in treasury shares of parent arising fromtransactions with non-controlling shareholders
Net change other than shareholders' equity

		

0

		

(0)

		

40,260 		(2,889) 		

30,468

Balance at March 31, 2018¥

95,487¥180 		
1,068¥

(1,858) 		
33,071(8,894) 		

¥ (10,312) ¥3,669 		33,358 		

(8,066) ¥ 111,249¥

86,023¥ 768,495

The accompanying notes are an integral part of these statements.

The accompanying notes are an integral part of these statements.

6<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATIONMITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>7Consolidated Statements of Cash Flows
Mitsubishi Materials Corporation and Consolidated Subsidiaries
Years ended March 31, 2018 and 2017

Thousands of U.S. dollars (Note 1)
Shareholders’ equity

Balance at April 1, 2017

Common stock

Capital surplus$ 1,124,415$

869,944

Retainedearnings

Treasury stock,at cost$ 3,139,372

$

Total
shareholders’equity(18,988) $ 5,114,743

Dividends

		(86,301)		

(86,301)

Net income attributable to owners of parent		325,638

		

325,638

Increase due to reversal of revaluation reserve for land
Increase in cash and cash equivalents resulting from change of accounting
period of consolidated subsidiaries
Increase resulting from increase in the number of consolidated subsidiaries		

16,109		

16,109

		

783

		

783

		

6,419

		

6,419

		

(681) 		

(681)

		

3 		

3

		

(1)

Increase due to decrease in affiliates
Acquisition of treasury stock
Sales of treasury stock

		

(0)

Change in treasury shares of parent arising from transactions with non-controlling shareholders

		

(1)

$

869,942

Net change other than shareholders’ equity
Balance at March 31, 2018

$ 1,124,415$ 3,402,022$(19,665) $ 5,376,714

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income
Valuationdifference on
available-for-salesecurities

Balance at April 1, 2017$

Deferred gains
or losses onhedges519,828 $Revaluation
reserve for land
(Note 20):

8,364 $

Foreign currencytranslation
adjustments

328,788 $Accumulated
adjustments for
retirement
benefits

Total accumulated
othercomprehensive
income(13,354) $ (110,464) $Non-controllinginterests

733,161 $Total net assets

836,912 $ 6,684,817

Dividends

		(86,301)

Net income attributable to owners of parent		325,638

Increase due to reversal of revaluation reserve for land
Increase in cash and cash equivalents resulting fromchange of accounting period of consolidated subsidiaries
Increase resulting from increase in the number ofconsolidated subsidiaries
Increase due to decrease in affiliates		

16,109

		

783

		

6,419

Acquisition of treasury stock

		

(681)

Sales of treasury stock
Change in treasury shares of parent arising fromtransactions with non-controlling shareholders
Net change other than shareholders’ equity 				3378,961 		

1,697 		

(17,494) 		

(83,718) 		

34,541 		

Balance at March 31, 2018898,789 $10,061 $311,293 $(97,072) $(75,923) $ 1,047,149 $$The accompanying notes are an integral part of these statements.

313,988 		

Thousands of U.S.
dollars(Note 1)Millions of yen

		

(1)

(27,199) 		

286,789

809,713 $ 7,233,577

2017

2018
Cash flows from operating activities:
		 Income before income taxes
		 Adjustments to reconcile income before income taxes to net cash provided by operating activities:
			Depreciation
			Amortization of goodwill
			 Decrease in allowance for doubtful accounts
			 Increase in reserve for loss on unconsolidated subsidiaries and affiliates
			 Increase in reserve for environmental measures
			 Decrease in net liability for retirement benefits and directors' retirement benefits
			 Interest and dividend income
			Interest expense
			 Gain on sales of property, plant and equipment
			 Loss on disposal of property, plant and equipment
			 Loss on impairment of fixed assets
			 Loss on non-conforming products (Note 25)
			 Gain on sales of investments in securities
			 Loss (gain) on valuation of investment securities
			 Decrease (Inrease) in notes and accounts receivable
			Decrease in inventories
			 Proceeds from sales of gold bullion deposited from customers under consuming bailment My Gold Partner
			 Payment for purchases of gold bullion from market for customers under My Gold Partner
			 Decrease (Increase) in other current assets
			 Increase in notes and accounts payable
			 Increase (decrease) in accrued expense
			 Equity in losses (earnings) of affiliates
			Other, net				 Sub-total
			 Interest and dividend received
			Interest paid
			 Income taxes (paid) refund			 Loss on non-conforming products paid
		 Net cash provided by operating activities
Cash flows from investing activities:
			 Payments for purchases of property, plant and equipment
			 Proceeds from sales of property, plant and equipment
			 Payments for purchases of intangible fixed assets
			 Payments for purchases of investments in securities
			 Proceeds from sales of investments in securities
			 Payments for additional acquisition of subsidiaries’ shares
			 Proceeds from sales of shares of subsidiaries
			 Payment for purchase of investments in subsidiaries resulting in change in scope of consolidation
			 Proceeds from purchase of subsidiaries’ shares resulting in change in scope of consolidation
			 Proceeds from sales of subsidiaries’ shares resulting in change in scope of consolidation
			 Payments for transfer of business			 Proceeds from transfer of business			 Disbursement of loan receivables
			 Proceeds from collection of loan receivables
			Other, net				 Net cash used in investing activities
Cash flows from financing activities:
			 Increase in short-term bank loans, net
			 Proceeds from long-term debt
			 Repayments of long-term debt
			 Proceeds from issuance of bonds
			 Payments for redemption of bonds
			 Payments for purchase of treasury stock			Cash dividends paid
			 Cash dividends paid to non-controlling shareholders
			Other, net				 Net cash used in financing activities
Effect of exchange rate fluctuation on cash and cash equivalents
Net decrease (increase) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of changes in consolidated subsidiaries
Increase in cash and cash equivalents resulting from change of accounting period of consolidated subsidiaries
Cash and cash equivalents at end of year (Note 22)¥

67,777¥59,584

2018$

637,967

		 57,025 		 56,748
		
4,395 		4,048		(187) 		
(173)
		
23 		
3,021
		
5,265 		 19,210
		 (1,548) 		
(761)
		 (20,260) 		 (15,279)
		
5,058 		4,922		 (6,368) 		 (16,431)
		
4,494 		4,076		 11,035 		
9,977
		
3,202 		
—		 (5,064) 		 (19,014)
		(736) 		5,049		 (39,764) 		 20,046
		 (65,635) 		 (32,982)
		 119,985 		 79,991
		 (99,460) 		 (79,599)
		 (20,182) 		
9,374
		 36,095 		
6,418
		
3,201 		(2,435)
		
1,336 		(1)
		3,124 		4,614		 62,811 		 120,406
		 22,043 		 16,426
		 (5,057) 		
(4,962)
		 (27,365) 		 (16,317)
		 (1,716) 		
—¥ 50,715 ¥ 115,552

		 536,757
		41,376
		
(1,764)
		216
		
49,560		
(14,576)		 (190,705)
		
47,618
		
(59,948)
		
42,302
		 103,876
		30,144
		
(47,668)		
(6,935)
		 (374,293)
		 (617,806)
		 1,129,385
		 (936,187)
		 (189,973)
		 339,753
		30,136
		
12,575
		
29,407
		 591,219
		 207,489
		(47,604)		 (257,582)
		
(16,155)$ 477,365¥ (71,494) ¥ (76,838)
		 10,048 		 24,359
		 (1,431) 		
(1,283)
		(757) 		(494)
		7,168 		 32,915
		(863) 		(2,224)		0 		0		 (38,829) 		
—		
273 		—
		 14,903 		
2,157
		 (1,541) 		
—
		
— 		
2,176
		 (6,202) 		
(2,253)
		
4,615 		128
		154 		
(5,199)		 (83,957) 		 (26,557)$ (672,950)
		
94,578		
(13,476)		
(7,133)
		
67,476
		(8,130)		—		 (365,489)
		
2,573
		 140,281
		
(14,506)		—		
(58,385)		
43,444
		
1,457
		 (790,261)

		 20,981 		 11,155
		 47,358 		 42,066
		 (66,251) 		 (54,488)
		 20,000 		 30,000
		 (15,000) 		 (25,100)
		(72) 		
(65)		 (9,168) 		
(9,170)		 (6,546) 		
(6,201)		 (2,334) 		
(3,899)¥ (11,034) ¥ (15,703)¥(2,927) ¥(55)
		 (47,204) 		 73,237
		 132,616 		 58,482
		714 		
896
		1,228 		
—¥ 87,355 ¥ 132,616

		 197,487
		 445,769
		 (623,605)
		 188,253
		 (141,189)
		
(683)
		
(86,301)		
(61,618)
		
(21,975)$ (103,864)$(27,558)
		 (444,318)
		 1,248,273
		
6,725
		
11,564$ 822,244

The accompanying notes are an integral part of these statements.

8<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATIONMITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>9Notes to Consolidated Financial Statements
Mitsubishi Materials Corporation and Consolidated Subsidiaries
March 31, 2018 and 2017

Note 1 Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of Mitsubishi
Materials Corporation (the “Company”) and its consolidated
subsidiaries have been prepared in accordance with the provisions
set forth in the Financial Instruments and Exchange Law and its
related accounting regulations, and in conformity with accounting
principles generally accepted in Japan (“Japanese GAAP”), which
are different in certain respects as to application and disclosure
requirements from International Financial Reporting Standards.
The accompanying consolidated financial statements
have been reformatted and translated into English from theconsolidated financial statements of the Company prepared inaccordance with Japanese GAAP and filed with the appropriate
Local Finance Bureau of the Ministry of Finance as required by the
Financial Instruments and Exchange Law. Certain supplementary
information included in the statutory Japanese language
consolidated financial statements, but not required for fairpresentation, is not presented in the accompanying consolidated
financial statements.
The translations of the Japanese yen amounts into U.S.
dollars are included solely for the convenience of readers outside
Japan, using the prevailing exchange rate at March 31, 2018,
which was ¥106.24 to U.S.$1. The convenience translation
should not be construed as representation that the Japanese yenamounts have been, could have been, or could in the future be,converted into U.S. dollars at this or any other rate of exchange.
Fractions less than one million yen (one tenth yen in respect
to per share amount) have been omitted. As a result, the total
amounts in Japanese yen and translated U.S. dollars shown in the
consolidated financial statements and notes to the consolidated
financial statements do not necessarily agree with the sum of theindividual amounts.

Note 2 Summary of Significant Accounting Policies(a) Consolidation
The accompanying consolidated financial statements include
the accounts of the Company and significant companies which
the Company controls through majority voting right or existenceof certain conditions. All significant intercompany balances andtransactions have been eliminated in consolidation. Investments
in affiliates of which the Company has the ability to exercise
significant influence over operating and financial policies, except
for insignificant companies, are accounted for by the equity
method, and accordingly, stated at cost adjusted for the earnings
and losses after elimination of unrealized intercompany profits
from the date of acquisition.
As discussed in Note 2 (q) and (r), the accounts ofconsolidated overseas subsidiaries and affiliates accounted forby the equity method are prepared in accordance with either
International Financial Reporting Standards or U.S. Generally
Accepted Accounting Principles, with adjustments for the
specified four items as applicable.
Investments in unconsolidated subsidiaries and affiliates notaccounted for by the equity method are carried at cost, adjusted
for any substantial and non-recoverable decline in value.
In the elimination of investments in subsidiaries, assets andliabilities of the subsidiaries, including the portion attributable tominority shareholders, are evaluated based on their fair values
at the time the Company acquired control of the respective
subsidiaries.
The method and period of amortization for goodwill are
determined on an individual basis and goodwill is amortized by
the straight-line method over a period not exceeding 20 years.
However, goodwill with immaterial value is fully amortized as
incurred.

(b) Translation of Foreign Currencies
Receivables and payables denominated in foreign currencies
are translated into Japanese yen at the year-end rates. Gains orlosses resulting from foreign currency transactions are credited or
charged to other income as incurred.
The financial statements of consolidated foreign subsidiaries

10<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATION

and affiliates are translated into Japanese yen amounts at thecurrent rate except for net assets, which is translated at historicalrates. The difference resulting from translation adjustments isreported as a separate component of net assets.

(c) Allowance for Doubtful Accounts
Allowance for doubtful accounts is provided in an amountsufficient to cover probable losses on collection. It consists ofindividually estimated uncollectible amounts, and an amountcalculated using the past rate of actual losses on collection.

(d) Inventories
The amounts of inventories are stated primarily at acquisition costmodified by writing down cost to net selling value. Nonferrous
metals are stated primarily at the first-in, first-out (FIFO) method.
Other inventories are primarily stated at average cost method.

(e) Derivative Transactions and Hedge Accounting
Derivative financial instruments are stated at fair value. Gainsor losses resulting from changes in fair value are recognized inincome except for the derivative financial instruments to which
hedge accounting is applied.
If derivative financial instruments are used as hedges andmeet certain hedging criteria, the Company defers recognition ofgains or losses resulting from changes in fair value of derivative
financial instruments until the related losses or gains on thehedged items are recognized.
However, in cases where forward foreign exchange contracts
are used as hedges and meet certain hedging criteria, forward
foreign exchange contracts and hedged items are accounted forin the following manner:

1. If a forward foreign exchange contract is executed to hedge anexisting foreign currency receivable or payable,(1)	the difference, if any, between the Japanese yen amount of
the hedged foreign currency receivable or payable translated
at the spot rate as of the inception date of the contract andthe carrying amount of the receivable or payable is recognizedin the consolidated statements of income in the period which
includes the inception date, and(2)	the discount or premium on the contract (that is, the difference
between the Japanese yen amount of the contract translated
at the contracted forward rate and that translated at the spot
rate as of the inception date of the contract) is recognized inincome over the term of the contract.
2. If a forward foreign exchange contract is executed to hedge afuture forecasted transaction denominated in foreign currency,
the future transaction will be recorded at the contracted forward
rate, and no gains or losses on the forward foreign exchange
contract are recognized.
Also, if interest rate swap contracts are used as hedges
and meet certain hedging criteria, the net amount to be paid or
received under the contract is added to or deducted from theinterest on the assets or liabilities for which the swap contract was
executed.

(f) Securities
Based on the intent of holding, securities are classified as (a)securities held for trading purposes, (b) debt securities intended tobe held to maturity (hereafter, “held-to-maturity debt securities”),(c) equity securities issued by unconsolidated subsidiaries andaffiliates (hereafter, “equity securities”) and (d) all other securities
that are not classified in any of the above categories (hereafter,“available-for-sale securities”).
Held-to-maturity debt securities are stated at amortizedcost. Equity securities, which are not accounted for by theequity method, are stated at moving-average cost. Available-forsale securities with available fair value are stated at fair market
value. Valuation difference on these securities is reported, net of
applicable income taxes, as a separate component of net assets.
Gains and losses on the sale of such securities are calculatedwith the moving-average cost. Available-for-sale securities withno available fair market value are stated at moving-average cost.
There are no securities held for trading purposes.
If the market value of held-to-maturity debt securities, equity
securities, and available-for-sale securities declines significantly,
such securities are stated at fair value and the difference between
the fair value and the carrying amount is recognized as losses in
the period of decline. If the fair market value of these securities is
not readily available, such securities are written down to net asset
value with corresponding charge in the consolidated statementof income, in the event that net asset value declines significantly.
In these cases, such fair value or net asset value will become thecarrying amount of the securities at the beginning of the next year.
The fair value is determined based on the average market
price during one month before the balance sheet date.

(g)	Property, Plant and Equipment and Depreciation(except for the leased assets of which theownership is not transferred to the lessee)
Property, plant and equipment are stated at cost, except for
certain revalued land as explained in Note 19. Depreciation is
calculated primarily using the declining-balance method at rates
based on the estimated useful lives of depreciable assets. The
straight-line method is applied to certain plant facilities based on
the estimated useful lives of those depreciable assets.
Cost and accumulated depreciation applicable to assets
retired or otherwise disposed of are eliminated from the related
accounts, and gain on sale or loss on disposal is credited or
charged to income. Expenditures for new facilities and thosewhich substantially increase the useful lives of existing property,
plant, and equipment are capitalized. Maintenance, repair andminor renewals are charged to income as incurred.

(h) Reserve for bonuses
Reserve for bonuses is provided for future payments of bonuses
to employees based on the amount to be attributed to the current
fiscal year.

(i) Reserve for Loss on Disposal of Inventories
Reserve for loss on disposal of inventories is provided for future
payments for disposal of inventories based on the management
estimation.

(j)	Reserve for Loss on Unconsolidated Subsidiaries
and Affiliates
Reserve for loss on unconsolidated subsidiaries and affiliates
are provided based on the estimated loss which will exceed theamount of equity investments and loans receivable made by theCompany and its consolidated subsidiaries.

(k) Reserve for Environmental Measures
Reserve for environmental measures is provided for future
payments for waste disposal and removal of soil contamination at
Kazuno (Akita Prefecture) area, based on management estimation.
In addition, costs related to a particular countermeasure work
to prevent the pollution of a mine which was suspended or
abandoned by the Company group as well as costs related tothe stabilization of storage space are recorded as Reserve forenvironmental measures, when the nature of the countermeasure
is fixed and the costs becomes estimable.
Costs related to a particular countermeasure forsuspended or abandoned mines are required for implementing
countermeasures for stabilizing large-scale storage space andharm countermeasures associated with the amendment oftechnical guidelines of the Mine Safety Act, in addition to drastic
mine pollution prevention countermeasures for preventionof discharge of untreated water to reinforce water treatment
capacities to meet the recent natural environmental changes.
Stabilization of large-scale storage space requires specificconstrcution works. However, there are certain constrcution
works in which costs cannot be reasonably estimated because
the most appropriate constrcution works corresponding to thelandform are not determined and as a result, the specific details of
the construction work cannot be fixed.

MITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>11(l) Severance and Pension Benefits
1. For employees
The Group provide two types of post-employment benefit plans,
an unfunded lump-sum severance payment plan, and a funded
defined benefit pension plan, under which all eligible employees
are entitled to benefits based on the level of wages and salaries
at the time of retirement or abolishment, the length of service, andcertain other factors.
Net liability for retirement benefits is provided based on theestimated amounts of projected benefit obligations that wereactuarially calculated on certain assumptions and the fair value ofplan assets at balance sheet dates, as adjusted for unrecognizedactuarial gains and losses and unrecognized past service costs.
Projected benefit obligations are attributed to periods on a benefit
formula basis in determining retirement benefit obligations.
Past service costs are amortized by the straight-line method
over a certain period (10 years) which falls within the averageremaining years of service of the employees when incurred.
Actuarial gains and losses are amortized in the following years
after incurred by the straight-line method over a certain period (10years) which falls within the average remaining years of service ofthe employees.
2. For officers
Officers (directors and corporate auditors) are entitled to lumpsum severance payments based on the length of service andcertain other factors. Some consolidated subsidiaries accrue a
liability for lump-sum severance payments equal to 100% of theamounts required, had all officers voluntarily retired at the balance
sheet dates.

(m) Income Taxes
The Company provides for income taxes on the basis of current
tax liabilities and reflects the tax effects of the temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and their respective tax bases.

(n) Net Income per Share
Basic net income per share is calculated based upon theweighted-average number of shares of common stock
outstanding during each period.

(o) Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investmentswith maturity of three months or less at the time of purchase.

(p) Accounting Standard for Lease Transactions as Lessee
Finance lease transactions are capitalized to recognize leaseassets and lease obligations in the balance sheet. Such leaseassets are depreciated over the lease terms without residual
values on a straight-line method. All other leases are accounted
for as operating leases.
Finance leases other than those that transfer ownership of theleased assets to the lessees, entered into on or before March 31,
2008, are treated in the same way as ordinary operating leases foraccounting purpose.

12<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATION(q) Application of the “Practical Solution on
Unification of Accounting Policies Applied toForeign Subsidiaries for Consolidated Financial
Statements”
Under Accounting Standards Board of Japan (ASBJ) Practical
Issues Task Force No. 18 “Practical Solution on Unificationof Accounting Policies Applied to Foreign Subsidiaries for
Consolidated Financial Statements” (“PITF No. 18”) issued on
March 29, 2017, accounting policies and procedures appliedby the Company and its subsidiaries to similar transactions
and events under similar circumstances are in principle unified
for the preparation of the consolidated financial statements.
PITF No. 18, however, as a tentative measure, allows a parent
company to prepare consolidated financial statements using
foreign subsidiaries’ financial statements prepared in accordancewith either International Financial Reporting Standards or
U.S. Generally Accepted Accounting Principles. In this case,adjustments for the following four items in accordance withJapanese GAAP are required in the consolidation process unlessthe impact is not material.
(a) Goodwill not subject to amortization(b)	Actuarial gains and losses of defined benefit plans recognizedas outside profit or loss(c)	Capitalized expenditures for research and development
activities(d)	Fair value measurement of investment properties, andrevaluation of property, plant and equipment, and intangible
assets(r)	Unification of Accounting Policies Applied toForeign Affiliates for the Equity Method
Under ASBJ Statement No. 16, “Accounting Standard for Equity
Method of Accounting for Investments” and Practical Issue
Task force (PITF) No. 24, “Practical Solution on Unification of
Accounting Policies Applied to Associates Accounted for Using
the Equity Method” issued on March 29, 2017, the adjustments
are made to conform the affiliate’s accounting policies for similartransactions and events under similar circumstances to those of
the Company when the affiliate’s financial statements are used inapplying the equity method unless it is impracticable to determine
adjustments. In addition, financial statements prepared by foreign
affiliates in accordance with either International Financial ReportingStandards or the generally accepted accounting principles in
the United States tentatively may be used in applying the equity
method. In this case, same adjustments as those for foreignsubsidiaries are required in the consolidation process unless theimpact is not material.

(s) Changes in accounting policies
As the deprecation method applied to production facilities forelectronic materials and components of the Company and its
consolidated subsidiaries in Japan, the declining-balance method
was mainly used, but the method has been changed to thestraight-line method for the year ended March 31, 2018. Thischange has been made based on our judgment that the straightline method is more reasonable, given that production facilities
are expected to operate stably over a long period of time and thatthe investment effect is expected to emerge evenly, as a result of
examining the depreciation method in the wake of the formulationof the Medium-Term Management Strategy (FY2018 to FY2020).
As a result of changing the depreciation method, operating
profit, ordinary income and income before income taxes haveincreased ¥ 331 million ($3,123 thousand), respectively, in theyear of the current consolidated fiscal year, compared with thecase in which the past method is used.

(t) Reclassification
Certain prior year amounts have been reclassified to conformto the current year presentation. These reclassifications andrearrangements had no impact on previously reported results ofoperations.

(u) New Accounting Standard not Adopted as Yet(“Application guidelines for accounting standard for tax effectaccounting” etc.)– “Implementation Guidance on Tax Effect Accounting” (ASBJ
Guidance No. 28, February 16, 2018 (hereinafter, “Guidance
No.28”))– “Implementation Guidance on Recoverability of Deferred Tax
Assets” (ASBJ Guidance No. 26 (revised 2018), February 16,
2018 (hereinafter, “Guidance No.26”))(1) Overview
The above guidance was revised in regard to the treatments fortaxable temporary differences for investments in subsidiaries
within the context of non-consolidated financial statements, andto clarify the treatments in determining recoverability of deferred
tax assets in a company which was categorized as ‘Type1’
according to the guidance.
(2) Scheduled date of applying the new guidance
Effective from the beginning of the fiscal year ending March 31,
2019.

(3) The effects by the application of the new guidance, etc
The Company and its consolidated domestic subsidiaries are
currently in the process of determining the effects of these newstandards on the consolidated financial statements.
(“Accounting Standard for Revenue Recognition” etc.)- “Accounting Standard for Revenue Recognition” (ASBJ
Statement No. 29, March 30, 2018 (hereinafter, “Statement
No.29”))- “Implementation Guidance on Accounting Standard for Revenue
Recognition” (ASBJ Guidance No. 30, March 30, 2018 (hereinafter,“Guidance No.30”))(1) Overview
The International Accounting Standards Board (IASB) and the U.S.
Financial Accounting Standards Board (FASB) collaborated on a
project to develop a single, comprehensive revenue recognition
model and jointly issued new revenue recognition standards“Revenue from Contracts with Customers” (IFRS 15 publishedby IASB, Topic 606 published by FASB) in May 2014. IFRS 15
is effective for annual reporting periods beginning on or after
1 January 2018 and Topic 606 is effective for annual reporting
periods beginning after December 15, 2017.
Considering the above circumstances, the Accounting Standard
Board of Japan (ASBJ) also developed a new revenue recognition
standards and issued Statement No.29 together with Guidance
No.30.
ASBJ’s basic policy in developing the new revenue recognition
standards is to first incorporate the core principle of IFRS 15 in
the light of improving the international comparability of financial
statements and then add additional alternative treatments to theextent that international comparability would not be significantly
impaired where any business practices operated in Japan need tobe considered.
(2) Scheduled date of applying the new guidance
Effective from the beginning of the fiscal year ending March 31,
2022.
(3) The effects by the application of the new guidance, etc.
The Company and its consolidated domestic subsidiaries are
currently in the process of determining the effects of these newstandards on the consolidated financial statements.

Note 3 Inventories
Inventories as of March 31, 2018 and 2017 consisted of the following:

Millions of yen

Merchandise and finished goods
Work in process
Raw materials and supplies
Total

¥
		
		
¥

91,772132,043
142,275
366,092

Thousands of U.S. dollars

2017

2018
¥
		
		
¥

85,878
101,643
100,757
288,2792018$
863,826
		 1,242,811
		 1,339,188$
3,445,896

MITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>13Note 4 Investment and Rental Property

Note 5 Short-Term Bank Loans and Long-Term Debt

Information about fair value of investment and rental property included in the consolidated financial statements at March 31, 2018 and 2017
was as follows:

Short-term bank loans outstanding as of March 31, 2018 and 2017 consisted of the following:

Millions of yen

Millions of yen

Carrying amount

Fair value

April 1, 2017

Increase/(Decrease)

March 31, 2018

March 31, 2018

¥ 76,583¥ (23,687)¥ 52,896¥ 51,853

Millions of yen

Carrying amount

Fair value

April 1, 2016

Increase/(Decrease)

March 31, 2017

March 31, 2017

¥ 76,963¥ (379)¥ 76,583¥ 70,215

Thousands of U.S. dollars

2017

2018
Unsecured
Secured
Total

¥
		
¥

119,993
34,420154,413¥
		
¥

116,678
35,990152,668

The average interest rate per annum for short-term bank loans outstanding at March 31, 2018 and 2017 was 1.1% and 0.9%,
respectively.
Long-term debt as of March 31, 2018 and 2017 consisted of the following:
Millions of yen

Thousands of U.S. dollars

Thousands of U.S. dollars

2017

2018

Carrying amount

Fair value

April 1, 2017

Increase/(Decrease)

March 31, 2018

March 31, 2018

$ 720,857$ (222,959)$ 497,898$ 488,079

Notes:
1. Carrying amount is net of accumulated depreciation and accumulated impairment loss.
2.	The decrease in the current consolidated fiscal year is mainly due to the impact of the transfer of shares of Mitsubishi Materials Real Estate
Corporation
3.	Fair values of significant properties as of March 31, 2018 and 2017 are based on appraisal by external or internal real estate appraisers.
Fair value of other properties is calculated based on the reasonable indices reflecting market prices such as posted prices or property tax
valuation, etc.
Operating performances of the investment and rental properties for the fiscal years ended March 31, 2018 and 2017 were as follows:	Banks, insurance companies and other financial institutions, maturing serially until
2032 with an average rate of 0.7% per annum as of March 31, 2018:
		Unsecured¥
		Secured		
		 1.160% unsecured yen bonds, due 2018		
		 0.790% unsecured yen bonds, due 2017				 0.780% unsecured yen bonds, due 2018		
		 0.200% unsecured yen bonds, due 2021				 0.470% unsecured yen bonds, due 2026				 0.160% unsecured yen bonds, due 2022				 0.380% unsecured yen bonds, due 2027
							Less current portion				Total¥287,132
4,889
10,000—15,00020,00010,00010,00010,000367,021(76,728)
290,292

¥
		
		
		
		
		
		
		
		
		
		
¥

294,726
10,835
10,00015,00015,00020,00010,000——375,561(66,150)
309,411

Year ending March 31,

Year ended March 31, 2018
Rental income

Rental expenses

ProfitImpairment loss

¥ 6,052¥ 3,758¥ 2,294¥ 293

Millions of yen

Year ended March 31, 2017
Rental income

Rental expenses

ProfitImpairment loss

¥ 6,499¥ 3,877¥ 2,621¥ 1,229

Millions of yen

2019
2020
2021
2022
2023
2024 and thereafter
Total

¥
		
		
		
		
		
¥

$
2,702,669
		46,023
		
94,126
		—		
141,189		
188,253
		
94,126
		
94,126
		
94,126
		 3,454,641
		 (722,221)$
2,732,420

76,72840,65640,82546,26328,881
133,665
367,021

Millions of yen

Rental income

Rental expenses

ProfitImpairment loss

$ 56,971$ 35,376$ 21,594$ 2,759

Note:
Rental expenses include costs related to depreciation, maintenance and repairs, insurance premiums, taxes and dues and others.

$
722,221		
382,689		
384,273		
435,458		
271,851
		 1,258,146$
3,454,641

Cash and time deposits
Notes and accounts receivable
Inventories
Investments:
		 Investments in securities
Property, plant and equipment, at net book value
Other assets
Total

Thousands of U.S. dollars

2017

2018

Year ended March 31, 2018

Thousands of U.S. dollars

Assets pledged as collateral for short-term bank loans and long-term debt as of March 31, 2018 and 2017 were as follows:

Thousands of U.S. dollars<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATION2018

The aggregate annual maturities of long-term debt as of March 31, 2018 were as follows:

Millions of yen

14

2018
$
1,129,451
		323,991$
1,453,442

2018

¥
		
		

20,10818,49338,708¥				

27,061
7,321
24,744

$
		
		

		
		
		
¥

6,611
42,094
5
126,021

		
		
		
¥

6,534
48,851
1
114,516

		
62,233
		
396,222		
47$
1,186,192

189,272
174,070
364,345

MITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>15

Note 6 Employees’ Severance and Pension Benefits
1. Retirement benefit plans
The Company and its consolidated subsidiaries have funded andunfunded defined benefit pension plans and defined contributionplans, which cover the benefits payable for all employees underthese plans. Under the funded defined benefit pension plan,
benefits are calculated based on the job qualifications and lengthof service of the employee, and are paid at a lump-sum or inannuities. Under the unfunded defined pension plans (they are

principally unfunded plans, however some plans are funded by aretirement benefit trust), benefits are calculated based on the job
qualifications and length of service of the employees, and are paid
at a lump-sum.
Certain consolidated subsidiaries calculate their retirement
benefits and retirement benefit costs based on the “simplified
method” allowed under Japanese GAAP.

5.	Reconciliation between net liability or asset for retirement benefits recorded in the consolidated balance sheets and the balances of retirement
benefit obligations and plan assets
Millions of yen

Unfunded retirement benefit obligations
Net liability recorded in the consolidated balance sheets

¥
		
		
		
¥

2.	Movement in retirement benefit obligations for the years ended March 31, 2018 and 2017, was as follows (excluding plans to which a
simplified method is applied):
Millions of yen

2017

2018
Balance at beginning of year		Service costs
		Interest costs
		 Actuarial gains and losses
		Benefits paid
		 Past service costs
		 Reduction associated with transition to defined contribution plans
		 Increase due to business combination
		Other
Balance at end of year

¥
		
		
		
		
		
		
		
		
¥

Thousands of U.S. dollars

143,242
6,941
299
360
(8,986)
555
(532)
5,548
69
147,499

¥
		
		
		
		
		
		
		
		
¥

2018

146,514
6,953
300
256
(9,137)
(651)
—
—
(993)
143,242

1,348,293$
		
65,333
		
2,819
		
3,395
		
(84,585)
		
5,227
		
(5,010)		
52,227
		
661
1,388,360$

3. Movement in plan assets for the years ended March 31, 2018 and 2017, was as follows (excluding plans to which a simplified method is applied):
Millions of yen

Balance at beginning of year
		 Expected return on plan assets
		 Actuarial gains and losses
		 Contributions paid by the employer
		Benefits paid
		 Increase due to business combination
		Other
Balance at end of year

¥
		
		
		
		
		
		
¥

Thousands of U.S. dollars

2017

2018
89,950
1,522
1,600
5,283
(3,943)3,701
557
98,672

¥
		
		
		
		
		
		
¥

2018

85,583
1,434
2,413
5,310
(4,321)—(470)
89,950

$
		
		
		
		
		
		
＄

846,675
14,32815,06949,727(37,116)
34,843
5,244
928,772

4.	Movement in net liability for retirement benefits under the plans to which a simplified method is applied for the years ended March 31, 2018 and2017, was as follows:
Millions of yen

Balance at beginning of year
		 Retirement benefit costs
		Benefits paid
		 Contributions to the plans
		Other
Balance at end of year

¥
		
		
		
		
¥

2,351
302
(228)
(67)
13
2,371

¥
		
		
		
		
¥

2018

131,704(90,275)
41,428
14,21555,643

137,150¥(99,017) 		
38,132 		
13,064 		
¥51,197
Millions of yen¥		¥Thousands of U.S. dollars

2017

2018
Net liability for retirement benefits
Net asset for retirement benefits
Net liability recorded in the consolidated balance sheets

1,290,950$
		 (932,018)
		358,932		
122,974$
481,907¥51,647(449) 		
¥51,1972018

56,037(393)
55,643$
		$486,137(4,230)481,907

6. The components of retirement benefit costs for the years ended March 31, 2018 and 2017, were as follows:
Millions of yen

Service costs
Interest costs
Expected return on plan assets
Amortization of actuarial gains and losses
Amortization of past service costs
Retirement benefit costs on defined benefit plans
Gains and losses associated with the transition to the defined contribution plan

¥
		
		
		
		
¥
		

Thousands of U.S. dollars

2017

2018
7,244
299
(1,522)
4,002
(849)
9,175
532

¥
		
		
		
		
¥
		

2018
7,245
300
(1,434)
3,901
(304)
9,708
—

$
		
		
		
		
$
		

68,181
2,819(14,328)
37,676(7,991)86,356
5,010

Notes:
1. Retirement benefit costs under the plans to which a simplified method is applied are included in “Service costs.”
2. Gains and losses associated with the transition to the defined contribution plan are included in “Other, net .”7. Adjustments for retirement benefits
Components of adjustments for retirement benefits (before adjusting for tax effects) for the years ended March 31, 2018 and 2017, were as follows:
Millions of yen

Past service costs
Actuarial gains and losses
Total

Thousands of U.S. dollars

2017

2018
(339)
¥
5,242 		
4,903
¥

¥
		
¥

2018
450
6,101
6,552

$
		
$

(3,197)49,35046,152Thousands of U.S. dollars

2017

2018

2017

2018
Funded retirement benefit obligations
Plan assets

Thousands of U.S. dollars

2018
2,271
291
(167)
(69)
25
2,351

$
		
		
		
		
$

22,136
2,847(2,152)(636)
124
22,3188. Accumulated adjustments for retirement benefits
Components of accumulated adjustments for retirement benefits (before adjusting for tax effects) as of March 31, 2018 and 2017, were as follows:
Millions of yen

2018
Unrecognized past service costs
Unrecognized actuarial gains and losses
Total

¥
		
¥

(854)
¥
11,808 		
10,954¥

Thousands of U.S. dollars

2017(1,193)
17,051
15,858

2018
$
		
$

(8,039)111,153
103,113

9. Plan assets(1) Components of plan assets
Plan assets consisted of the followings:
Bonds
Equity securities
Insurance assets (general account)
Cash and deposits
Other
Total

2018

2017

35%
47
11
6
1
100%

34%
48
11
6
1
100%

Note:	Total plan assets include retirement benefit trust established on lump-sum severance payment plans or corporate pension plans by 26% and
27% at March 31, 2018 and 2017, respectively.

16<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATIONMITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>17

(2) Method of determining the long-term expected rate of return on plan assets
The long-term expected rate of return on plan assets is determined by considering the allocation of plan assets which are expected currently and in
the future and long-term rates of return which are expected currently and in the future from the various components of the plan assets.

The income taxes reflected in the accompanying consolidated statements of income for the fiscal years ended March 31, 2018 and 2017consisted of the following:

10. The principal assumptions used for the years ended March 31, 2018 and 2017, were set forth as follows:
Discount rateLong-term expected rate of return on plan assets

2018

2017

Mainly 0.05%
Mainly 2.0%

Mainly 0.05%
Mainly 2.0%

11. Defined contribution plans
The amount of the required contribution to the defined contribution plans of the consolidated subsidiaries was ¥816 million ($7,683 thousand) and¥753 million for the years ended March 31, 2018 and 2017, respectively.

In computing the amount of asset retirement obligations, theGroup estimates the expected terms until expenditure (maximum
68 years) and applies discount rates ranging from 0.1% to 2.7%.
The changes in asset retirement obligations for the fiscal years
ended March 31, 2018 and 2017 are as follows:
Millions of yen

Year ended March 31,
Beginning balance
Increase associated with acquisitions of tangible fixed assets
Reconciliation associated with passage of time
Reduction associated with settlement of asset retirement obligations
Decrease due to changes in estimates
Foreign currency translation adjustments
Other, net
Ending balance

¥
		
		
		
		
		
		
¥

Thousands of U.S. dollars

2017

2018
3,493
112
23
(68)
612
(161)
(201)
3,811

¥
		
		
		
		
		
		
¥

2018
3,592
70
24
(58)
(19)
(72)
(43)
3,493

$
		
		
		
		
		
		
$

32,887
1,063
220
(647)
5,760
(1,522)(1,891)35,875Note 8 Notes Receivable and Notes Payable
The balance sheet date for the years ended March 31, 2018
fell on a bank holiday. Consequently, notes receivable of ¥2,785
million ($26,214 thousand) and notes payable of ¥2,675 million($25,185 thousand) with the due date of March 31, 2018 isincluded in the consolidated balance sheets and were settled on
the next business day.

Note 9 Net Assets
Under the Japanese Corporate Law (“the Law”) and regulations,the entire amount paid for new shares is required to be designatedas common stock. However, a company may, by a resolution of
the Board of Directors, designate an amount not exceeding onehalf of the price of the new shares as additional paid-in-capital,
which is included in capital surplus.
Under the Law, in cases where a dividend distribution of
surplus is made, the smaller of an amount equal to 10% of thedividend or the excess, if any, of 25% of common stock over the
total of additional paid-in-capital and legal earnings reserve must
be set aside as additional paid-in-capital or legal earnings reserve.
Legal earnings reserve is included in retained earnings in theaccompanying consolidated balance sheets.

18<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATION

Millions of yen

Current
Deferred
Total

¥
		
¥

Thousands of U.S. dollars

2017

2018
18,941
4,698
23,63924,594(583)
24,011¥		¥

Under the Law, both elimination and capitalization related
to legal earnings reserve and additional paid-in capital generally
require a resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not
be distributed as dividends. Under the Law, all additional paid-in
capital and all legal earnings reserve may be transferred to othercapital surplus and retained earnings, respectively, which arepotentially available for dividends.
The maximum amount that the Company can distribute as
dividends is calculated based on the non-consolidated financial
statements of the Company in accordance with the laws andregulations.

2018
$
		
$

178,290
44,221
222,512

The following table summarizes the significant differences between the statutory income tax rate and the effective income tax rate for the
fiscal years ended March 31, 2018 and 2017:2018

Note 7 Asset Retirement Obligations
The asset retirement obligations are based on the reasonably
estimated amount for the obligation regarding treatment of
hazardous substances such as asbestos and PCB as prescribedby the various laws and ordinances, and greening obligation formine closure of coal and limestone.

Note 10 Income Taxes

Statutory income tax rate
Nondeductible expenses
Temporary differences for which tax effect cannot be recognized
Differences in statutory tax rates of consolidated subsidiaries
Equity in earnings of affiliates
Nontaxable dividends received
Nondeductible foreign withholding taxes
Amortization of goodwill
Impact of U.S. tax reform
Other
Effective tax rate

30.9%
1.0
1.5
(0.4)
0.6
(7.1)
3.2
2.0
3.3
(0.1)
34.9%

2017
30.9%
0.3
6.2
0.1
(0.0)
(3.5)
3.8
2.1
—
0.4
40.3%

Significant components of deferred tax assets and liabilities as of March 31, 2018 and 2017 were as follows:
Millions of yen

Year ended March 31,
Deferred tax assets:
		 Net operating loss carried forward¥
		 Loss on write-down of securities				 Net liability for retirement benefits				 Nondeductible loss on impairment of fixed assets				 Reserve for environmental measures				 Retirement benefit trust asset
				Intercompany profits				 Loss on write-down of buildings				 Accrued employees’ bonuses				 Allowance for doubtful accounts
				Depreciation
				 Loss on write-down of inventories
				Temporary difference related to the goodwill on overseas consolidated subsidiaries 				Other					Subtotal				Valuation allowance				 Total deferred tax assets¥

18,607
16,202
16,057
15,888
11,584
7,591
4,941
4,222
4,059
1,982
1,851
1,821
—
14,345
119,160(64,813)54,346

Thousands of U.S. dollars

2017

2018
¥
		
		
		
		
		
		
		
		
		
		
		
		
		
		
		
¥

16,055
16,343
17,66815,929
9,983
7,113
4,824
4,348
3,783
2,166
1,775
1,950
1,779
21,232
124,955(63,246)
61,7092018$
175,141
		
152,504		
151,145
		
149,551
		
109,042
		
71,458
		
46,513
		
39,742
		
38,210		
18,660		
17,427
		
17,143		—		
135,073		 1,121,616
		 (610,071)$
511,545

MITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>19

Millions of yen

Year ended March 31,
Deferred tax liabilities:
		 Valuation difference on available-for-sale securities
		 Excess of fair value over the book value of the assets and liabilities of the		 consolidated subsidiaries and affiliates at the acquisition date
		 Gain on contribution of securities to retirement benefit trust
		 Deferred gain on sale of property, plant and equipment
		 Accelerated depreciation of property, plant and equipment
		 Retained earnings of overseas consolidated subsidiaries
		 Revaluation of land, as a result of the merger
		 Deferred gains or losses on hedges
		 Temporary difference related to the goodwill on overseas consolidated
		 subsidiaries
		 Reserve for special account for advanced depreciation of fixed assets
		 Reserve for mining exploration
		 Reserve for loss on particular business reorganization
		Other
			 Total deferred tax liabilities
Net deferred tax assets
Net deferred tax liabilities for land revaluation

Adjustments to deferred tax assets and liabilities due to thechange in income tax rates
The U.S. tax reform act, “Tax Cuts and Jobs Act of 2017”, wasenacted on December 22, 2017and the federal corporate income
tax rate in the U.S. was reduced from 35% to 21% from the year
beginning January 1, 2018.

Thousands of U.S. dollars

2017

2018

(22,723)$(385,101)		

(10,237) 		

(8,577)

		(96,359)

		
		
		
		
		
		

(3,603)(3,382)(1,937)(1,915)(1,502)
(818)

		
		
		
		
		
		

(3,810)(3,200)(3,338)(1,810)(1,502)
(724)

		
		
		
		
		
		

(33,920)(31,842)(18,238)(18,025)(14,141)(7,700)(764) 		

—		(7,196)

		
		
		
		
		
¥
¥

(65)
(0)
(1,198)(2,834)(49,787)
11,921(25,590)

		
		
		
		
		
$
$

(2,739)(100)—(19,830)(635,197)(123,652)(227,437)¥(40,913)

		
		
		
		
		
		
¥
¥

(290)
(10)
—
(2,106)(67,483)(13,136)(24,162)¥2018

As a result, deferred tax assets, net of deferred tax liabilities,
decreased by ¥1,234 million ($11,618 thousand), income taxesdeferred increased by ¥1,194 million ($11,245 thousand) and foreign
currency translation adjustments decreased by ¥39 million ($ 372
thousand), respectively.

Note 11 Contingent Liabilities
1. Contingent liabilities regarding notes and loans guaranteed:Contingent liabilities for notes receivable discounted with banks,
notes receivable endorsed with recourse, notes and accounts
receivable securitized with recourse, and loans guaranteed by

the Group primarily on behalf of unconsolidated subsidiaries andaffiliates, including employees’ housing loans from banks, as ofMarch 31, 2018 and 2017 were as follows:

Millions of yen

Notes receivable discounted
Notes receivable endorsed
Notes and accounts receivable securitized with recourse
Loans guaranteed
Total

¥
		
		
		
¥

275
0
4,169
21,04325,488

Thousands of U.S. dollars

2017

2018
¥
		
		
		
¥

300
14
3,522
28,84532,682

March 31, 2018
In response to the opposition filed by PT. Smelting on March 20,
2017, PT. Smelting received a notice of determination from theIndonesian National Tax Authority on February 28, 2018 and an
objection of PT. Smelting has been granted in amounts of US$28
million (¥3,012 million).
Regarding US$5 million (¥625 million) which was rejected an
objection of PT. Smelting, PT. Smelting filed a complaint to the Tax
Court in Indonesia on May 22, 2018 to present the fairness of theview of the Company and PT. Smelting.
On November 29, 2017, PT. Smelting received a notice ofreassessment in an amount of US$22 million (¥2,425 million)
from the Indonesian National Tax Authority, primarily regarding its
posting of gains or losses on hedging for the fiscal year ended
December 2012. On December 27, 2017, PT. Smelting made a
provisional deposit of US$6 million (¥668 million) as part of theadditional collection.
However, PT. Smelting submitted a written objection to theIndonesian National Tax Authority, because this assessment
was a view that unilaterally negated the act of recording gains
or losses on hedges, etc. of PT. Smelting and was found to beunacceptable by the Company and PT. Smelting.
(Matters concerning Non-Conforming Products)
March 31, 2018
With regard to certain products produced and sold in the past,
Mitsubishi Cable Industries, Ltd., Mitsubishi Shindoh Co., Ltd.,
Mitsubishi Aluminum Co., Ltd., Tachibana Metal Mfg. Co., Ltd.
and Diamet Corporation, which are all consolidated subsidiaries
of Mitsubishi Materials Corporation (MMC), were found to havedelivered products, etc. deviated from customer standards orinternal company specifications due to misconduct, including therewriting of inspection records data and the insufficient testing
concerning some of the products manufactured and sold in thepast.
Based on the above fact, some of the aforementioned
subsidiaries received notification of revocation of their JIS
certification and ISO certifications from the accrediting agencies.
Since quality control related problems were also discovered
with respect to the copper slag products manufactured at MMC’s
Naoshima copper smelter and refinery, MMC reported the fact
to the Japan Quality Assurance Organization (JQA) and a special
inspection was conducted. As a result, JQA revoked the JIS
certification for copper slag products manufactured at MMC’s
Naoshima copper smelter and refinery.
Depending on the progress of the above mentioned issues,
the Company’s consolidated business results may be affected,
due to costs incurred to compensate customers and other parties
and other losses. However, such amounts which are currently
difficult to estimate are not reflected in the consolidated financial
statements.
(On-site inspection by the Japan Fair Trade Commission)
Universal Can Corporation, a consolidated subsidiary of theCompany, was on-site inspected by the Japan Fair Trade
Commission on February 6, 2018, due to suspected of violating
the Antimonopoly Act concerning the transaction of empty cansfor beverages.
Depending on the future progress of the inspection, there is apossibility that our consolidated business results may be affected.
However since it is difficult to reasonably estimate the impactof this incident at present,it is not reflected in the consolidated
financial statements.

Note 12 Lease Transactions

2018
$
		
		
		
$

2,589
7
39,243
198,075
239,914

In relation to Note 2 (p) “Accounting Standard for Lease Transactions as Lessee” , pro-forma information of finance leases that do nottransfer ownership of leased assets to the lessee commenced prior to April 1, 2008, the first year of implementation of the new accounting
standard, which are accounted for as operating leases, was as follows:
1. Noncancelable operating lease commitments as lessee were as follows:
Millions of yen

2. Contingent liabilities regarding the consolidated subsidiary:(Matters concerning Taxation in Indonesia)
March 31, 2017
On December 30, 2014, PT. Smelting in Indonesia, a consolidated
subsidiary of the Company received a notice of reassessment
in an amount of US$47 million (¥5,370 million based on theexchange rate at the end of the previous consolidated fiscal year)
from the Indonesian National Tax Authority regarding the sales
transaction pricing of PT. Smelting for the year ended December
2009.
On January 28, 2015, PT. Smelting made a provisional
deposit of US$14 million (¥1,570 million) as a part of the additional
collection.
However, PT. Smelting submitted a written objection to theIndonesian National Tax Authority on March 25, 2015, because
this assessment, which claimed there was a sales shortage on thepart of PT. Smelting based on a comparison of the profit margin

20<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATION

ratio with other companies selected by the Indonesian
National Tax Authority, was highly unreasonable and found to
be unacceptable by the Company and PT. Smelting.
The written objection submitted by PT. Smelting on March 25,2015 was dismissed by the Indonesian National Tax Authority on
March 16, 2016. Therefore, PT. Smelting filed a complaint to theTax Court in Indonesia on June 6, 2016 to present the fairness ofthe view of the Company and PT. Smelting.
On December 22, 2016, PT. Smelting received a notice ofreassessment in an amount of US$34 million (¥3,841 million) fromthe Indonesian National Tax Authority, regarding its posting of raw
material costs for the fiscal year ended December 2011.
However, PT. Smelting submitted a written objection to theIndonesian National Tax Authority on March 20, 2017, because
this assessment was a view that unilaterally negated the basis forrecording raw materials costs, etc. of PT. Smelting and found to
be unacceptable by the Company and PT. Smelting.

2017

2018
Due within one year
Due after one year
Total

¥
		
¥

Thousands of U.S. dollars

2,719
6,641
9,361

¥
		
¥

2018
2,307
6,535
8,842

$
		
$

25,59962,514
88,114

2. Noncancelable operating lease commitments as lessor were as follows:
Millions of yen

Due within one year
Due after one year
Total

¥
		
¥

Thousands of U.S. dollars

2017

2018
752
1,394
2,146

¥
		
¥

2018
920
5,427
6,348

$
		
$

7,078
13,122
20,201

MITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>21

Note 13 Research and Development Expenses

Note 15 Securities

Research and development expenses for the fiscal years ended March 31, 2018 and 2017 were ¥11,614 million ($109,323 thousand) and¥11,344 million, respectively, and were included in selling, general and administrative expenses.

1. The following tables summarize carrying amounts and acquisition costs of securities with available fair values as of March 31, 2018:
Available-for-sale securities(1) Securities with carrying amount exceeding acquisition cost
At March 31, 2018

Note 14 Other Comprehensive Income

Millions of yen

The components of other comprehensive income for the years ended March 31, 2018 and 2017 were as follows:
Millions of yen

2017

2018
Valuation difference on available-for-sale securities:
		 Gains (losses) incurred during the year
		 Reclassification adjustment to net income
			 Amount before tax effect			Tax effect			 Valuation difference on available-for-sale securities
Deferred gains or losses on hedges:
		 Gains incurred during the year
		 Reclassification adjustment to net income
			 Amount before tax effect			Tax effect			 Deferred gains or losses on hedges
Revaluation reserve for land			Tax effectForeign currency translation adjustments:
		 Gains incurred during the year
		 Reclassification adjustment to net income
			 Amount before tax effect			Tax effect			 Foreign currency translation adjustments
Remeasurements of defined benefit plans:
		 Gains incurred during the year
		 Reclassification adjustment to net income
			 Amount before tax effect			Tax effect			 Remeasurements of defined benefit plans

¥
		
		
		
		

59,057(332)
58,725(18,189)
40,535

		
		
		
		
		

¥
		
		
		
		

2018

49,289(1,572)47,717(14,041)
33,676555,888(3,125)552,763(171,214)
381,549

7,057(6,245)
811
(176)
635

		
		
		
		
		

66,139(59,310)
6,830(2,210)4,620(147) 		

—		

(1,384)

		
		
		
		
		

(8,719)(446)(9,165)—(9,165)

		
		
		
		
		

(6,009)—(6,009)—(6,009)

		
		
		
		
		

(82,069)(4,205)(86,274)—(86,274)

		
		
		
		
		

1,217
3,686
4,903
(1,324)
3,578

		
		
		
		
¥

2,955
3,597
6,552
(1,793)
4,758

		
		
		
		
		

11,457
34,695
46,153(12,467)
33,686

Millions of yen

Thousands of U.S. dollars

2017

2018
Share of other comprehensive income of affiliates accounted for using
the equity method:
		 Gains incurred during the year
		 Reclassification adjustment to net income
Share of other comprehensive income of affiliates accounted for using
the equity method
Total other comprehensive income(loss)

$
		
		
		
		

		
		
		
		
		

7,026
(6,301)
725
(234)
490

		

Thousands of U.S. dollars

2018

Type

Carrying amount

Acquisition cost

Equity securities

¥

¥

Bonds

		

Total

¥

230,397— 		
230,397¥

90,789Thousands of U.S. dollars
Difference¥— 		90,789¥139,608—
139,608

Carrying amount

Acquisition cost

$ 2,168,655

$

		

— 		

$ 2,168,655$

854,573

Difference$ 1,314,082— 		884,573—$ 1,314,082(2) Securities with carrying amount not exceeding acquisition cost
At March 31, 2018
Millions of yen
TypeCarrying amount

Acquisition cost

Equity securities

¥

¥

Bonds

		

Total

¥

11,073— 		
11,073¥

12,537

Thousands of U.S. dollars
Difference

Carrying amount

Acquisition cost$¥

(1,464)

$

— 		

—

		

(1,464)$

12,537¥104,231— 		
104,231$

118,013Difference$(13,782)— 		
118,013$—(13,782)

Note:
Unlisted equity securities of which carrying amount is ¥7,250 million ($68,247 thousand) are not included in the above table, because there
is no market price and it is extremely difficult to recognize their fair values.
2.The following tables summarize carrying amounts and acquisition costs of securities with available fair values as of March 31, 2017:
Available-for-sale securities(1) Securities with carrying amount exceeding acquisition cost
At March 31, 2017
Millions of yen
TypeCarrying amount

Acquisition cost

Equity securities

¥

¥

Bonds

		

Total

¥

172,994— 		
172,994¥

91,749Difference¥

81,245— 		—¥81,24591,749(2) Securities with carrying amount not exceeding acquisition cost
At March 31, 2017
Millions of yen

				

831 		
(193) 		

83
5

		
		

7,822
(1,820)Type

Carrying amount

Acquisition cost

Equity securities

¥

¥

		

637

		

88

		

6,002

Bonds

		

338,198

Total

¥

¥

35,930¥33,150

$

9,805

— 		
9,805

¥

11,685Difference¥(1,879)

— 		

—

¥

(1,879)

11,685

Note:
Unlisted equity securities of which carrying amount is ¥6,631 million are not included in the above table, because there is no market priceand it is extremely difficult to recognize their fair values.
3.The Group did not hold any available-for-sale securities with maturity, and held-to-maturity debt securities as of March 31, 2018 and 2017.

22<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATIONMITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>23

4.	Total amounts of available-for-sale securities sold, and the resulting gains and losses, for the fiscal years ended March 31, 2018 and 2017
were as follows:
Millions of yen

Sales amount
Gains
Losses¥				Thousands of U.S. dollars

2017

2018
705
¥
471 		(—) 		

2018
4,930
1,716
(—)

$
		
		

6,639
4,442
(—)

5.	The amounts of write-down of investments in securities for the years ended March 31, 2018 and 2017 were ¥400 million ($3,769 thousand) and ¥5,049 million, respectively.
When the fair value of each issue of securities declined more than 50% of the acquisition cost, losses on write-down were recognized.
When the fair value declined between 30% and 50% of the acquisition cost, the write-down amount was determined by considering therecoverability, etc. by each issue.

1. Qualitative information on financial instruments(1) Policies for using financial instruments
The Group raises the necessary funds for its capital investment
plans to conduct its business mainly by bank loans or issuanceof bonds. The Group invests temporary cash surpluses in highly
secured financial instruments and raises short-term working funds
by bank loans. The Group follows the policy of using derivatives
not for speculative purposes, but for managing financial risks as
described later.
(2)	Details of financial instruments used and the exposures to risk
and how they arise
Notes and accounts receivable are exposed to customer’s credit
risk. As trade receivables denominated in foreign currencies arisingfrom the development of global business are exposed to foreign
currency exchange fluctuation risk, they are principally hedgedusing forward foreign exchange contracts. Investment securities,
mainly consisting of equity securities related to customers andsuppliers in relation to business or capital alliances, are exposedto the risk of market price fluctuations.
Payment terms of notes and accounts payable are less than
one year. As certain payables in foreign currencies arising fromthe import transactions of raw materials are exposed to foreign
currency exchange fluctuation risk, they are principally hedgedusing forward foreign exchange contracts. Short-term bank loans
are used for raising funds related to operating transactions.
Long-term debt including corporate bonds is used mainly forraising the necessary funds related to capital investments. The
longest maturity of long-term debt including corporate bonds is2026. As some of them with floating interest rates are exposed tointerest rate fluctuation risk, they are hedged using derivatives.
Derivative transactions mainly include forward foreign
currency contracts and currency swap contracts for the purposeof hedging foreign currency exchange fluctuation risk on tradereceivables and payables denominated in foreign currencies,
forward commodity contracts and commodity price swap
contracts for the purpose of hedging commodity price fluctuation
risk on nonferrous metal and interest rate swaps for the purposeof hedging interest rate fluctuation risk on debt and reducing fund24<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATION(4) Supplemental information on fair values
Fair values of financial instruments include market prices andvalues calculated reasonably when there is no market price. Sincevariable factors are incorporated in calculating the relevant fairvalues, the fair values may change depending on the different
assumptions. The contract amounts described in Note 17“Derivative Transactions” do not indicate the amounts of market
risk or credit risk related to derivative transactions.

c. Liquidity Risk Management on Fund Raising
The Group manages its liquidity risk by preparing and updating
cash flow plans on a timely basis at each company.

2. Fair values of financial instruments
Carrying amounts, fair value of the financial instruments and the difference between them as of March 31, 2018 and 2017 were as follows(Financial instruments whose fair values are not readily determinable are excluded from the following table):

Note 16 Financial Instruments
Information on financial instruments for the fiscal years ended
March 31, 2018 and 2017 was as follows.

controlled by the Finance Department; and forward commodity
contracts are utilized and controlled by each responsible
department. Furthermore, departments utilizing derivativetransactions are required to report the status and results ofderivative transactions to the Management Audit Department for
financial transaction at each annual and semi-annual year-end.
Consolidated subsidiaries utilizing derivative transactions haveprovided the operational standards individually, according to the
purpose of derivative transactions.

raising costs. Interest rate swaps which convert fixed interest
rates into floating rates are exposed to market interest rate
fluctuation. Hedging instruments and hedged items, hedge policy,
assessment method for hedge effectiveness and others related
to hedge accounting, are described in Note 2. (e) “Derivative
Transactions and Hedge Accounting” and Note 17 “Derivative
Transactions.”(3) Policies and processes for managing the risk
a. Credit Risk Management (customers’ default risk)
The Company manages and mitigates customers’ credit risk on
trade receivables in accordance with the Credit Control Policy,
which includes monitoring of payment term and balances ofcustomers by each responsible department of each company
to recognize the customers’ default risk at an early stage.
Consolidated subsidiaries also manage and mitigate the risk inaccordance with a similar credit control policy based on the GroupAccounting Policy and Manual. The Company deals with highly
creditworthy foreign or domestic financial institutions or trading
firms only to mitigate the default risk.
b.	Market Risk Management (foreign currency exchange andinterest rate fluctuation risks)
The Company and its certain consolidated subsidiaries use
principally forward foreign exchange contracts to hedge foreign
currency exchange fluctuation risk identified by currency andmonthly basis for trade receivables and payables denominatedin foreign currencies. In addition, interest rate swap contracts areused to manage interest rate fluctuation risk on debt.
With respect to investment securities, the Company identifies
and monitors fair values and financial positions of the issuers
on a regular basis and continuously reviews its status of thesesecurities considering the relationships with the issuers.
With respect to derivative transactions, the Company has“Rules on Utilizing Derivative Transactions” in its “Operation
Standards” applicable to the whole Company. In addition, there
are specific rules and standards for derivative transactions
provided for each business unit based on the type of business. In
accordance with the authority and limits provided in these rules
and standards, forward foreign currency contracts are utilized
and controlled by the Finance Department and other responsible
departments; interest rate swap contracts are utilized andMillions of yen

March 31, 2018
(1) Cash and time deposits(2) Notes and accounts receivable(3) Investment securities:
			Shares in affiliates
			Available-for-sale securities
Total assets(1) Notes and accounts payable(2) Short-term bank loans(3) Current portion of bonds(4) Bonds(5) Long-term loans payable
Total liabilities
Derivative transactions (*)
a. Derivatives to which hedge accounting is not appliedb. Derivatives to which hedge accounting is applied
Total derivative transactions

Carrying amount

Fair value

Difference¥		

93,389260,427¥
		

93,389260,427

¥
		

—
—

		
		
¥
¥
		
		
		
		
¥

8,571
241,471
603,859
158,369
206,142
25,00050,000240,292
679,804

		
		
¥
¥
		
		
		
		
¥

19,129241,471
614,417
158,369
206,142
25,02548,757242,110680,404

		
		
¥
¥
		
		
		
		
¥

10,558—10,558——25(1,243)
1,817
599

(171)
¥
(378) 		(550)¥

—(1,448)(1,448)

¥
		
¥

(171)
¥
1,069 		898
¥Millions of yen

March 31, 2017
(1) Cash and time deposits(2) Notes and accounts receivable(3) Investment securities:
			Shares in affiliates
			Available-for-sale securities
Total assets(1) Notes and accounts payable(2) Short-term bank loans(3) Current portion of bonds(4) Bonds(5) Long-term loans payable
Total liabilities
Derivative transactions (*)
a. Derivatives to which hedge accounting is not appliedb. Derivatives to which hedge accounting is applied
Total derivative transactions

Carrying amount

Fair value

Difference¥		

141,264
213,343¥
		

141,264
213,343

¥
		

—
—

		
		
¥
¥
		
		
		
		
¥

13,813
182,800
551,222
114,502203,819
15,00055,000254,411642,733

		
		
¥
¥
		
		
		
		
¥

15,517
182,800
552,925
114,502203,819
15,01655,221
254,311642,870

		
		
¥
¥
		
		
		
		
¥

1,703
—
1,703
—
—
16
221
(99)
137

1,794
¥
(2,684) 		
(890)
¥

—
(2,356)(2,356)

¥
		
¥

1,794
¥
(328) 		1,465¥

(*) Receivables and payables arising from derivative transactions are presented in net. Net payables are presented in parenthesis.

MITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>25

Thousands of U.S. dollars

March 31, 2018
(1) Cash and time deposits(2) Notes and accounts receivable(3) Investment securities:
			Shares in affiliates
			Available-for-sale securities
Total assets(1) Notes and accounts payable(2) Short-term bank loans(3) Current portion of bonds(4) Bonds(5) Long-term loans payable
Total liabilities
Derivative transactions (*)
a. Derivatives to which hedge accounting is not appliedb. Derivatives to which hedge accounting is applied
Total derivative transactions

Millions of yen

Carrying amount

Fair value$
879,043
		 2,451,311$
879,043
		 2,451,311

$
		

—
—

		
		
$
$
		
		
		
		
$

		
		
$
$
		
		
		
		
$

		
		
$
$
		
		
		
		
$

99,379—99,379——235(11,699)
17,1105,645(1,616)$(3,563) 		
(5,179)$—(13,632)(13,632)

80,6772,272,886
5,683,919
1,490,680
1,940,347
235,316
470,632
2,261,787
6,398,764$
		$

Difference

180,057
2,272,886
5,783,299
1,490,680
1,940,347
235,551
458,932
2,278,897
6,404,410(1,616)$
10,069 		
8,453$(*) Receivables and payables arising from derivative transactions are presented in net. Net payables are presented in parenthesis.
Notes:
1. Calculation method of fair values of financial instruments as well as securities and derivative transactions are as follows:
Assets:(1) Cash and time deposits and (2) Notes and accounts receivable
	The fair values approximate book values because of their short-term maturities. Therefore, the fair values are recognized using bookvalues.
(3) Investment securities (Shares in affiliates and available-for-sale securities)
	The fair values of equity securities are determined based on the market price. The information of securities categorized by holding purposes is described in Note 15 “Securities.”
Liabilities:(1) Notes and accounts payable and (2) Short-term bank loans
	The fair values approximate book values because of their short-term maturities. Therefore, the fair values are recognized using bookvalues.
(3) Current portion of bonds and (4) Bonds
	The fair values of these liabilities are determined based on the market price.
(5) Long-term loans payable	The fair values of long-term loans payable are determined by discounting the aggregated values of the principal and interest using anassumed interest rate if the same type of loans were newly made.

March 31, 2017
Cash and time deposits
Notes and accounts receivable
Total

Within 1 year¥		¥

1 to 2 years

141,264¥
213,343 		
354,608¥

2 to 3 years

—
¥
— 		
—
¥

3 to 4 years

—
¥
— 		
—
¥

More than
5 years
—
¥
—
— 		
—
—
¥
—

4 to 5 years

—
¥
— 		
—
¥

Thousands of U.S. dollars

March 31, 2018
Cash and time deposits
Notes and accounts receivable
Total

Within 1 year

1 to 2 years$ 879,043$
		 2,451,311 		
$ 3,330,354$

2 to 3 years

$
—
— 		
—
$

3 to 4 years

$
—
— 		
—
$

More than
5 years
$
—
—
— 		
—
—
$
—

4 to 5 years

$
—
— 		
—
$

4. Repayment schedule of short-term bank loans, bonds and long-term loans payable as of March 31, 2018 and 2017
Millions of yen

March 31, 2018
Short-term bank loans
Bonds
Long-term loans payable
Total

Within 1 year
¥
		
		
¥

1 to 2 years

206,142¥
25,000 		— 		
¥
231,142

2 to 3 years

—
¥
— 		
40,656 		
¥40,6563 to 4 years

—
¥
— 		
40,825 		
¥40,8254 to 5 years—¥
20,000 		
26,263 		
¥46,263—
10,00018,881
28,881More than
5 years¥—		
20,000		 113,665¥ 133,665

Millions of yen

March 31, 2017
Short-term bank loans
Bonds
Long-term loans payable
Total

Within 1 year
¥
		
		
¥

1 to 2 years

203,819¥
15,000 		— 		
218,819¥

2 to 3 years—¥
25,000 		
51,734 		
76,734¥3 to 4 years

—
¥
— 		
41,481 		
41,481¥4 to 5 years

—
¥
— 		
37,418 		
37,418¥—20,00018,73038,730More than
5 years—¥		
10,000		 105,045¥ 115,045

Thousands of U.S. dollars

March 31, 2018
Short-term bank loans
Bonds
Long-term loans payable
Total

Within 1 year

1 to 2 years$ 1,940,347$
		 235,316 				— 		
$ 2,175,663$

2 to 3 years

—
$
— 		
382,689 		
382,689$

3 to 4 years

—
$
— 		
384,273 		
384,273$

4 to 5 years—$
188,253 		
247,205 		
435,458$—
94,126
177,725
271,851

More than
5 years$—
		 188,253
		 1,069,893$ 1,258,146

Derivative financial instruments:
The information on derivative transactions is described in Note 17 “Derivative Transactions.”
2. Financial instruments that fair values are extremely difficult to calculate
Carrying amountMillions of yen

Category
Shares in affiliates (unlisted equity securities)
Available-for-sale securities (unlisted equity securities)¥		

Thousands of U.S. dollars

2017

2018
46,631
7,250

¥
		

2018

48,8216,631$
		

438,922
68,247

It is extremely difficult to calculate their fair values because there is no market price. Therefore, these items are not included in “(3) Investment
securities.”
3. Redemption schedule of monetary assets with contractual maturities as of March 31, 2018 and 2017
Millions of yen

March 31, 2018
Cash and time deposits
Notes and accounts receivable
Total

26

Within 1 year¥		¥<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATION

1 to 2 years

93,389¥260,427 		
353,816¥

2 to 3 years

—
¥
— 		
—
¥

3 to 4 years

—
¥
— 		
—
¥

More than
5 years
—
¥
—
— 		
—
—
¥
—

4 to 5 years

—
¥
— 		
—
¥

MITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>27

Note 17 Derivative Transactions
Derivative financial instruments currently utilized by the Group
include forward foreign currency contracts, interest rate swap
contracts, currency swap contracts, forward commodity contracts
and commodity price swap contracts.
The Company utilizes forward foreign currency contracts tohedge the impact of foreign exchange fluctuations on receivables
and payables, and on advance payments for purchase of ores.
The Company enters into interest rate swap contracts to
reduce exposure to adverse movements in interest rates, and tolower finance costs on debts.
The Company also utilizes forward commodity contracts tohedge the impact of future price fluctuations of nonferrous metal
inventories and sold gold bullion deposited from customers underconsuming bailment named “My Gold Partner.”
Some consolidated subsidiaries utilize forward foreign

currency contracts and interest swap contracts to hedge theimpact of foreign currency fluctuations on foreign currency
receivables and payables, and forward commodity contracts andcommodity price swap contracts to hedge the impact of pricefluctuations of nonferrous metal inventories.
The Company evaluates hedge effectiveness by comparing
the cumulative changes in cash flows or the changes in fairvalue of the hedged items with the corresponding changes in
the hedging derivative instruments. Furthermore, the Company
periodically controls the transaction volume of forward commodity
contracts in order to balance them with hedged nonferrous metal
inventories and to evaluate their hedge effectiveness at eachannual and semi-annual year-end.
As of March 31, 2018 and 2017, the Group had outstanding
derivative transactions as follows:

1. Derivative transactions to which hedge accounting is not applied at March 31, 2018 and 2017
(1) Currency related derivatives
Millions of yen

March 31, 2018
Transactions other than market transactions
Forward foreign exchange contracts:
		 Sell U.S. dollars
			Other		 Buy U.S. dollars
			Other
Currency swaps:
		 Pay Japanese yen / Receive U.S. dollars
Total

Contract amountContract amount due
after one year

Fair value(2) Interest rate related derivatives
Not applicable(3) Interest rate and currency swaps
Millions of yen

March 31, 2018
Transactions other than market transactions
Interest rate currency swap:
		 Euro pay fixed / U.S.dollars receive floating
Total

Contract amount¥¥Contract amount due
after one year

4,657
—

¥
¥

¥
¥

Gain (Loss)

(414)
—

¥
¥

(414)
(414)

Millions of yen

March 31, 2017
Transactions other than market transactions
Interest rate currency swap:
		 Euro pay fixed / U.S.dollars receive floating
		 Indian rupee pay fixed / Japanese yen receive floating
Total

Contract amount

¥
		
¥

4,487
692
—

Contract amount due
after one year¥		¥Gain (Loss)

4,487
692
—

Fair value¥		¥Gain (Loss)¥
202(49) 		
¥
—

202
(49)
153

Thousands of U.S. dollars

Contract amountContract amount due
after one year

¥
		
		
		

6,967
830
2,850
628

¥
		
		
		

—
—
—
—

¥
		
		
		

¥
99
10 		
(30) 		
13 		

99
10
(30)
13

March 31, 2018
Transactions other than market transactions
Interest rate currency swap:
		 Euro pay fixed / U.S.dollars receive floating
Total

		
¥

5,288
—

		
¥

—
—

		
¥

6
—

6
99

Note:
Fair value is determined based on the price obtained from financial institutions.

		
¥

4,657
—

Fair value$$

43,837—$$

43,837—

Fair value

Gain (Loss)(3,903)—$$(3,903)(3,903)$$(4) Commodity related derivatives
Millions of yen

March 31, 2017
Transactions other than market transactions
Forward foreign exchange contracts:
		 Sell U.S. dollars
			Other		 Buy U.S. dollars
			Other
Currency swaps:
		 Pay Japanese yen / Receive U.S. dollars
Total

Contract amountContract amount due
after one year

Millions of yen

Fair value

Gain (Loss)

¥
		
		
		

2,455
—
—
492

¥
		
		
		

—
—
—
—

¥
		
		
		

36
—
—
2

¥
		
		
		

36
—
—
2

		
¥

6,264
—

		
¥

—
—

		
¥

(99) 		
—
¥

(99)
(59)

Thousands of U.S. dollars

March 31, 2018
Transactions other than market transactions
Forward foreign exchange contracts:
		 Sell U.S. dollars
			Other		 Buy U.S. dollars
			Other
Currency swaps:
		 Pay Japanese yen / Receive U.S. dollars
Total

Contract amountContract amount due
after one year

$
		
		
		

65,5807,818
26,834
5,916

$
		
		
		

—
—
—
—

$
		
		
		

		
$

49,774
—

		
$

—
—

		
$

Note:
Fair value is determined based on the price obtained from financial institutions.

28<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATION

Fair value

Gain (Loss)

933
$
99 		
(286) 		130 		
60
—

		
$

933
99
(286)
130
60
938

March 31, 2018
Transactions other than market transactions
Nonferrous metals forward:
		Sell		Buy
Total

Contract amount¥		¥

68,381
144,937—

Contract amount due
after one year

¥
		
¥

—
—
—

Fair value¥		¥Gain (Loss)

296¥(153) 		
—
¥

296
(153)
143

Millions of yen

March 31, 2017
Transactions other than market transactions
Nonferrous metals forward:
		Sell		Buy
Total

Contract amount¥		¥

33,49785,948—Contract amount due
after one year

¥
		
¥

—
—
—

Fair value¥		¥Gain (Loss)(606)¥
2,256 		
—
¥

(606)
2,256
1,650

Thousands of U.S. dollars

March 31, 2018
Transactions other than market transactions
Nonferrous metals forward:
		Sell		Buy
Total

Contract amount$
643,650
		 1,364,248$—

Contract amount due
after one year

$
		
$

—
—
—

Fair value$		$Gain (Loss)

2,794$(1,446) 		
—
$

2,794
(1,446)
1,348

Note:
Fair value is determined based on the price obtained from financial institutions.

MITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>29

(2) Interest rate related derivatives

2. Derivative transactions to which hedge accounting is applied at March 31, 2018 and 2017
(1) Currency related derivatives
March 31, 2018
Hedge accounting method

March 31, 2018

Millions of yen

Millions of yen

Transaction typeForward foreign exchange contracts:
Sell U.S. dollars
Principle method
Other
Buy U.S. dollars
Other
Forward foreign exchange contracts:
Sell U.S. dollars
Hedged items are translated
Other
using forward contract rates
Buy U.S. dollars
Other
Currency swaps:
Hedged items are translated
Pay Japanese yen /using currency swaps
Receive U.S. dollars

Major hedged items

Contract amountContract amount due after one year¥
Accounts
receivable,		accounts payable 				

77,713 ¥1,576 		1,984 		267 		

— ¥
— 		
— 		
82 		

¥
Accounts		
receivable,accounts payable 				

12,052 ¥4,929 		824 		
0 		

—
—
—
—

Long-term debt

7,300

¥

¥

Fair value

1,006
1
17
(3)

Hedge accounting method

Interest income or expense on theInterest rate swap contracts:
hedged items reflects net amount to be
paid or received under the derivatives Pay fixed rate, receive floating rate

7,000

Hedge accounting method

Forward foreign exchange contracts:
Sell U.S. dollars
Other
Principle method
Buy U.S. dollars
Other
Forward foreign exchange contracts:
Sell U.S. dollars
Hedged items are translated
Other
using forward contract rates
Buy U.S. dollars
Other
Currency swaps:
Hedged items are translated
Pay Japanese yen /using currency swaps
Receive U.S. dollars

Major hedged items

Contract amountContract amount due after one year¥
Accounts
receivable,		accounts payable 				

42,620 ¥7,104 		861 		
18,973 		

¥Accounts		
receivable,accounts payable 				

10,598 ¥4,571 		1,906 		582 		

Long-term debt

11,800¥¥— ¥2,310 		
— 		
— 		
—
—
—
—

Hedge accounting method

Fair value

137
11
11
82

7,300

Forward foreign exchange contracts:
Sell U.S. dollars
Principle method
Other
Buy U.S. dollars
Other
Forward foreign exchange contracts:
Sell U.S. dollars
Hedged items are translated
Other
using forward contract rates
Buy U.S. dollars
Other
Currency swaps:
Hedged items are translated
Pay Japanese yen /using currency swaps
Receive U.S. dollars

Major hedged items

Contract amountContract amount due after one year$
Accounts
receivable,		accounts payable 				

731,489 $
14,839 		
18,677 		
2,516 		

— $
— 		
— 		
772 		$
Accounts		
receivable,accounts payable 				

113,447 $46,396 		
7,763 		
7 		

—
—
—
—

Long-term debt

68,712

9,474
16
161
(33)

$

Note 2¥Contract amountdue after one
year

Contract
amount¥70,193¥(1,449)Fair value

63,238Transaction type

Major hedged
items

Contract
amountContract amountdue after one
year

Long-term debt

$ 629,391$ 480,261¥(2,104)

Fair value$(13,646)(3) Interest rate and currency swaps
March 31, 2018

Principle method

Principle method

Millions of yen

Transaction typeInterest rate currency swap:
Indonesian rupiah pay fixed / U.S.
dollars receive floating

Major hedged items

Contract amountContract amount due after one year

Long-term debt¥

Major hedged items

Contract amountContract amount due after one year

Long-term debt¥

Hedge accounting method

1,199

¥

976

Fair value¥

65

Millions of yen

Transaction typeInterest rate currency swap:
Indonesian rupiah pay fixed / U.S.
dollars receive floating

March 31, 2018

Principle method$

Long-term debt

March 31, 2017

Fair value

51,023

Note:
Fair value is determined based on the price obtained from financial institutions.

Hedge accounting method

Note 2¥Thousands of U.S. dollars

Interest income or expense on theInterest rate swap contracts:
hedged items reflects net amount to be
paid or received under the derivatives Pay fixed rate, receive floating rate

Thousands of U.S. dollars

Transaction type

Major hedged
items

Transaction typeInterest income or expense on theInterest rate swap contracts:
hedged items reflects net amount to be
paid or received under the derivatives Pay fixed rate, receive floating rate

Hedge accounting method
March 31, 2018

66,866

March 31, 2018

Millions of yen

Transaction type¥

Fair value

Millions of yen

Hedge accounting method
March 31, 2017

Long-term debt

Contract
amountMarch 31, 2017
Hedge accounting method

Note 2Major hedged
items

Transaction type

Contract amountdue after one
year

1,458

¥

1,278

Fair value¥

111

Thousands of U.S. dollars

Transaction typeInterest rate currency swap:
Indonesian rupiah pay fixed / U.S.
dollars receive floating

Major hedged items

Contract amountContract amount due after one year

Long-term debt$

11,290¥9,192

Fair value

¥

613

Note:
Fair value is determined based on the price obtained from financial institutions.

65,888Notes:
1. Fair value is determined based on the price obtained from financial institutions.
2.	Fair value of derivatives is included in the fair values of the related accounts receivable, accounts payable and long-term debt, since accounts receivable, accounts payable and long-term debt in foreign currencies as hedged items are translated into Japanese yen using theforward contract rates, etc.

30<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATIONMITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>31

(4) Commodity related derivatives
March 31, 2018

Millions of yen

Hedge accounting method

Transaction type

Principle method

Nonferrous metals forward:
Sell
Buy

Major hedged items

Contract amountContract amount due after one year

Accounts
receivable,¥accounts payable 		March 31, 201746,637 ¥36,397 		

20,455 ¥14,865 		

Fair value

2,096(2,113)

Millions of yen

Hedge accounting method

Transaction type

Principle method

Nonferrous metals forward:
Sell
Buy

Major hedged items

Contract amountContract amount due after one year

Accounts
receivable,¥accounts payable 		March 31, 2018

37,374 ¥21,070 		

14,336 ¥7,855 		Fair value(1,343)
743

Thousands of U.S. dollars

Hedge accounting method

Transaction type

Principle method

Nonferrous metals forward:
Sell
Buy

Major hedged items

Contract amountContract amount due after one year

Accounts
receivable,$accounts payable 		

438,985 $342,598 		

192,541 $
139,924 		

Fair value

19,736(19,890)

Note:Fair value is determined based on the price obtained from financial institutions.

Note 18 Business Combinations(Business Combinations by Acquisition Method)
1. Overview of the Business Combination(1) The acquired company and the description
i. Stock acquisition
Acquired companies: Luvata Pori Oy		Luvata Wolverhampton Ltd.
		
Luvata Malaysia Sdn Bhd
		Luvata Appleton LLC		Luvata Ohio Inc.
		
Luvata Welwyn Garden Ltd.
		
Luvata Sao Paulo		ZAO Luvata St.Petersburg
		
Luvata Waterbury Inc.
		
Luvata Superconductors (Zhongshan) Limited		
Accurate Wire Inc.
		
Luvata Fabrication North America		
Luvata Kenosha Inc.
Type of the business: Manufacture and sale of copper processed
products
ii. Transfer of business
Name of company transferring business: Luvata Suzhou Ltd.
	Type of the business: Manufacture and sale of copper
processed products	MM Metal Products (Suzhou) Co., Ltd. received the businessfrom Luvata Suzhou Ltd.
(2) Main reason for the business combination
The purpose of the business combination is to accelerate
the global expansion of the Copper & Copper Alloy Products
business of the Company by pursuing various synergies though
the business and customer bases of the Special Products Divisionof Luvata and to lead it to the establishment of a high-profitablebusiness structure.
(3) Date of the business combination
May 2, 201732<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATION

6. Major assets acquired and liabilities assumed on the date of business combination:
Assets;Millions of yen
Thousands of U.S,dollars
		Current assets¥
34,996$
329,412		Fixed assets
		
23,998
		 225,892
		Total¥58,995$555,305
Liabilities
		Current liabilities¥
18,530$174,422
		Non-current liabilities
		
4,663
		
43,899		Total¥23,194$
218,321(4) Legal form of the business combination
Acquisition of shares and business transfer(5) Name of the companies after the business combination
No change(6) Percentage of voting rights acquired
100%(7) Main grounds for deciding on the acquisition of the companies
The Company came to practically control the acquired companies.
2. Period of the operating results of the acquired company
included in the accompanying consolidated financial statements
From May 2, 2017, through December 31, 2017
3. Acquisition Cost and Breakdown
Consideration transferred for acquisition: cash and deposits of¥43,859 million ($412,829 thousand)Acquisition cost: ¥43,859 million ($412,829 thousand)
4. Major acquisition-related costs and nature
Advisory fees and charges: ¥1,187 million ($11,180 thousand)
5. Amount, cause, amortization method and amortization periodof the goodwill generated(1) Amount of goodwill: ¥8,057 million ($75,846 thousand)(2) Cause of the generation of goodwill: As the cost exceeded thenet of assets acquired and liabilities assumed, the difference wasrecognized as goodwill.
(3) Amortization method and period: Straight-line basis over 20
years.

(Sales of shares of a subsidiary)
At the meeting of the Board of Directors held on November
29, 2017, the Company passed a resolution to sell all sharesof Mitsubishi Materials Real Estate Corporation (“MMRE”), a
consolidated subsidiary of the Company, to Fortress Value
Properties Holdings GK (“Fortress”), and transferred all shares on
February 26, 2018.
Ahead of the share transfer, the Company passed a resolution
at the Board of Directors’ meeting held on November 29, 2017 tohave MMRE take over part of the Company’s real estate businessthrough an absorption-type company split, and conducted suchcompany split on February 1, 2018.
MMRE passed a resolution at the Board of Directors’
meeting held on November 29, 2017 to transfer part of its
real estate business to Materials Real Estate Corporation (the“New Company”), a company incorporated through a split-off
type of incorporation-type company split, and carried out theincorporation-type company split on February 1, 2018.
1. Transactions, etc. under common control (absorption-typecompany split)(1) Overview of transaction
i. Name and details of the applicable business
Name of the business: Part of the Company’s real estatebusiness
Type of the business: Sales and leasing of real estate, etc.
ii. Date of the business combination
February 1, 2018iii. Legal form of the business combination
Simple absorption-type company split in which the Company
is split through an absorption-type company split and MMRE
is the successor company
iv. Name of the company after the business combination
Mitsubishi Materials Real Estate Corporationv. Other matters concerning the overview of transaction
The purpose of this company split is to transfer part of theCompany’s real estate business to MMRE ahead of thetransfer of all shares of MMRE to Fortress based on theagreement with Fortress.
(2) Overview of accounting procedures to implement
The procedures will be treated as transactions under common
control based on the “Accounting Standard for Business
Combinations” and “Implementation Guidance on AccountingStandard for Business Combinations and Accounting Standard
for Business Divestitures.”
2. Transactions, etc. under common control (Newly establisheddivision)(1) Overview of transaction

i. Name and details of the applicable business
Name of the business: Part of MMRE’s real estate businessType of the business: Contract management of real estate,
forests, etc.
ii. Date of the business combination
February 1, 2018iii. Legal form of the business combination
Simple incorporation-type company split in which MMRE is
split through an incorporation-type company split and the
New Company is the successor company.
iv. Name of the company after the business combination
Materials Real Estate Corporationv. Other matters concerning the overview of transaction
The company split is an incorporation-type of a company
split where all dividends related to the newly incorporated
company’s shares are paid upon the effective date of thecompany split. The purpose of this company split is to retain
a portion of MMRE’s real estate business to the Mitsubishi
Materials Group prior to the transfer of all shares of MMRE to
Fortress, based on the agreement with Fortress.
(2) Overview of accounting procedures to implement
The procedures will be treated as transactions under common
control based on the “Accounting Standard for Business
Combinations” and “Implementation Guidance on AccountingStandard for Business Combinations and Accounting Standard
for Business Divestitures.”3.Business divestitures (sales of shares of a subsidiary)(1) Overview of business divestitures
i. Name of the buyer
Fortress Value Properties Holdings GK
ii. Details of divested business
Mitsubishi Materials Real Estate Corporation (details of
business: real estate lease and sports facility operation)iii. Main reason for the business divestitures
The Company has established group-wide policy of“optimization of business portfolio,” “Comprehensive Efforts
to Increase Business Competitiveness,” and “creation of new
products and business” in its Medium-Term Management
Strategy (the “Mid-term Strategy”) for the period between
FY2018 and FY2020.
Regarding the“optimization of business portfolio,” theCompany plans to determine the appropriate direction
for business characteristics and define issues before
implementing business selection and concentration to
improve its capital efficiency.
MMRE primarily operates the real estate lease business as thecore real estate company in the Mitsubishi Materials Group.
The Company, however, has concluded that transferring

MITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>33

MMRE operating a lease business to Fortress, which has
considerable expertise in real estate management, will be theoptimal strategy for achieving the Group’s Mid-term Strategy
and for the future development of MMRE. The Company has
implemented the share transfer for this reason.

iv. Date of the business divestitures
February 26, 2018v. O
 ther matters concerning the overview of transaction
including legal form
Share transfer in which only cash and other assets arereceived as compensation received.

(2) Overview of accounting procedures to implementi. Amount of gain on net sales of investments in securities
Gain on net sales of investments in securities: ¥4,560 million ($42,925 thousand)ii. Appropriate book value of assets and liabilities transferred
Assets;Millions of yen
Thousands of U.S,dollars
		Current assets
¥
1,820
$
17,132
		Fixed assets
		
26,044
		 245,146
		Total¥27,864$
262,278
Liabilities
		Current liabilities¥
15,769$148,430
		Non-current liabilities
		
3,169
		
29,830		Total¥18,938$178,260
iii. Accounting treatment
The difference between the carrying value and selling price of Mitsubishi Materials Real Estate Corporation is recorded as “Gain on net
sales of investments in securities” in “Other income (expenses)”.
(3) Reporting segment in which the divested business was included
Others(4) Approximate operating performance of divested business included in the consolidated statements of income for the fiscal year ended
March 31, 2018
Net sales: ¥2,953 million ($27,795 thousand)Operating profit: ¥1,192 million ($11,222 thousand)Note 19 Segment Information(a) General information about reportable segments
The Company’s reportable segments are composed of thoseindividual business units for which separate financial information
is available, about which the Board of Directors makes decisions
regarding the allocation of management resources and for which
operating performance can be evaluated.
The Company operates a system of in-house companies.
Each in-house company and business department formulates
comprehensive domestic and overseas strategies for its own
products and services and advances its business accordingly.
Consequently, the in-house companies are classified into
segments along these in-house companies’ product and service
lines. There are five segments: Cement, Metals, Advanced
Materials & Tools, and Electronic Materials & Components, as well
as Aluminum which has high performance within the Company’sbusiness departments.
Primary products and services included in each segment are as follows:
Cement: Cement, cement-related products, ready-mixed concrete
and aggregate
Metals: Copper smelting (copper, gold, silver, sulfuric acid, etc.)
and copper alloy products
Advanced Materials & Tools: Cemented carbide products, highperformance alloy productsElectronic Materials & Components: Advanced materials,

34<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATION

electronic components, polycrystalline silicon and chemical
products
Aluminum: Aluminum cans, rolled aluminum products andprocessed aluminum products(b) Basis of measurement of reported segment profit or loss,
segment assets, segment liabilities and other material items
The accounting method for business segments reported in thisnote is consistent with those stated in Note 2 “Summary of
Significant Accounting Policies.” Segment profit or loss is basedon the figures of ordinary income or loss. Intersegment sales are
based on the market prices.
As stated in “Changes in accounting policies”, as thedeprecation method applied to production facilities for electronicmaterials and components of the Company and its consolidated
subsidiaries in Japan, the declining-balance method was mainly
used, but the method has been changed to the straight-line
method for the year ended March 31, 2018.
As a result of changing the depreciation method, segment
income has increased ¥331 million ($3,123 thousand),
respectively, in the year of the current consolidated fiscal year,
compared with the case in which the past method is used.
(c) Information about reportable segment profit or loss, segment
assets, segment liabilities and other material items.

(1) Segment information as of and for the fiscal year ended March 31, 2018 is as follows:

March 31, 2018
Sales:
		External customers¥
		Intersegment
					Total¥¥
Segment profit
Segment assets
		Segment liabilities
		
Other items:¥
		Depreciation
		 Amortization of goodwill 				Interest income				Interest expense				 Equity in earnings of affiliates 				Investments in affiliates accounted				 for by the equity method
		 Increase in tangible and intangible				 fixed assets

AdvancedElectronicmaterials & materials &tools
components

Millions of yen

CementMetals

Aluminum

Others188,612 ¥3,766 		192,378 ¥21,044 ¥323,857 		
150,384 		

853,615 ¥
9,144 		862,759 ¥36,263 ¥835,532 		
652,683 		

149,635 ¥ 64,535 ¥
11,542 		
8,927 		161,177 ¥ 73,462 ¥
16,808 ¥4,595 ¥
217,735 		 179,701 		
118,773 		 101,859 		

11,533 ¥2,873 		80 		1,233 		1,891 		17,420 ¥288 		
540 		
2,525 		2,242 		11,227 ¥
1,230 		41 		892 		
43 		2,646 ¥
— 		245 		
543 		
409 		

7,401 ¥
— 		16 		568 		
8 		3,663 ¥
2 		329 		
513 		
(5,940) 		

53,893 ¥4,395 		1,253 		6,277 		(1,343) 		

3,131 ¥
— 		(441) 		(1,218) 		
7 		

57,025
4,395
812
5,058
(1,336)

21,569 		

13,421 		— 		

1,786 		869 		

4,948 		42,594 		

(150) 		42,444

16,818 		

22,037 		

16,516 		

4,125 		7,343 		5,106 		71,948 		

4,283 		76,231

147,753 ¥834 		
148,588 ¥3,025 ¥
155,074 		
113,318 		

Total

Adjustment Consolidated

195,381 ¥ 1,599,533 ¥— ¥ 1,599,533
54,122 		
88,337 		 (88,337) 		
—249,503 ¥ 1,687,870 ¥ (88,337) ¥ 1,599,533
8,312 ¥ 90,049 ¥ (10,428) ¥ 79,621
163,442 		 1,875,342 		 139,741 		 2,015,084
106,939 		 1,243,959 		
2,629 		 1,246,589

Thousands of U.S. dollars

AdvancedElectronicmaterials & materials &tools
components

CementMetals
Aluminum
Others
Total
Adjustment Consolidated
March 31, 2018
Sales:
		External customers$ 1,775,341 $ 8,034,784 		 $1,408,462 $ 607,446 $ 1,390,755 $ 1,839,055 $ 15,055,845 $— $ 15,055,845
		Intersegment		35,448 		
86,072 		 108,641 		
84,029 		
7,857 		 509,436 		 831,485 		 (831,485) 		
—			Total$ 1,810,790 $ 8,120,857 $ 1,517,103 $ 691,475 $ 1,398,612 $ 2,348,491 $ 15,887,330 $ (831,485) $ 15,055,845
Segment profit$ 198,085 $ 341,334 $ 158,215 $
43,254 $28,474 $78,240 $ 847,605 $(98,158) $ 749,447
Segment assets
		 3,048,356 		 7,864,571 		 2,049,466 		 1,691,465 		 1,459,658 		 1,538,429 		 17,651,946 		 1,315,337 		 18,967,284
Segment liabilities
		 1,415,517 		 6,143,482 		 1,117,973 		 958,769 		 1,066,624 		 1,006,588 		 11,708,955 		
24,751 		 11,733,706
Other items:
		Depreciation$ 108,560 $ 163,969 $ 105,683 $
24,912 $69,667 $34,483 $ 507,277 $
29,479 $ 536,757
		 Amortization of goodwill 		
27,051 		
2,716 		11,580 		
— 		
— 		
27 		
41,376 		
— 		
41,376
		Interest income		756 		
5,085 		387 		
2,312 		157 		
3,100 		11,801 		
(4,152) 		
7,649
		Interest expense		
11,609 		
23,768 		
8,400 		5,119 		5,354 		4,837 		59,089 		
(11,471) 		
47,618
		 Equity in earnings of affiliates 		
17,808 		
21,107 		
412 		
3,855 		83 		(55,911) 		
(12,644) 		
69 		
(12,575)
		Investments in affiliates accounted
		 203,030 		 126,327 		— 		
16,816 		
8,180 		46,576 		 400,930 		
(1,419) 		 399,510
		 for by the equity method
		 Increase in tangible and intangible
		 158,306 		 207,432 		 155,464 		
38,834 		
69,119 		
48,068 		 677,226 		
40,315 		 717,541
		 fixed assets

Notes:
1.	“Others” includes nuclear energy-related services, environmental and recycling-related business, real estate business and engineeringrelated services.
2.	Included in “Adjustment” of “Segment profit” in an amount of ¥(10,428) million ($(98,158) thousand) are intersegment transaction
elimination in an amount of ¥2 million ($26 thousand) and corporate expenses that cannot be allocated to each reportable segment in
an amount of ¥(10,431) million ($(98,185) thousand). Corporate expenses consist mainly of general and administrative expenses, basic
research and development expenses and financial income or expenses which are not attributable to any reportable segment.
3.	“Adjustment” of “Segment assets” in an amount of ¥139,741 million ($1,315,337 thousand) includes intersegment transaction eliminationof ¥(32,459) million ($(305,525) thousand) and corporate assets that are not allocated to each reportable segment in an amount of¥172,200 million ($1,620,863 thousand). Corporate assets are mainly assets related to administrative departments which do not belong
to any reportable segment and assets related to basic research and development.
4.	“Adjustment” of “Segment liabilities” in an amount of ¥2,629 million ($24,751 thousand) includes intersegment transaction elimination of¥(31,417) million ($(295,722) thousand) and corporate liabilities that are not allocated to each reportable segment in an amount of ¥34,047
million ($320,473 thousand). Corporate liabilities are mainly liabilities related to administrative departments which do not belong to any
reportable segments and liabilities related to basic research and development.
5.	“Adjustment” of “Increase in tangible and intangible fixed assets” in an amount of ¥4,283 million ($40,315 thousand) mainly refers tocapital expenditures related to the Central Research Institute.
6.	“Segment profit” is reconciled with ordinary income. Ordinary income is calculated by adding “Interest and dividend income,” “Income
from leased property,” “ Equity in earnings of affiliates,” etc. and deducting “Interest expense,” “Expense for leased property,” “Loss on
disposal and sales of property, plant and equipment,” etc. from operating profit or loss.

MITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>35

(e) Information about loss on impairment of fixed assets by reportable segments(2) Segment information as of and for the fiscal year ended March 31, 2017 is as follows:

March 31, 2017
Sales:
		External customers¥
		Intersegment
					Total¥
Segment profit¥
Segment assets
		Segment liabilities
		
Other items:
		Depreciation¥
		 Amortization of goodwill 				Interest income				Interest expense				 Equity in earnings of affiliates 				Investments in affiliates accounted				 for by the equity method
		 Increase in tangible and intangible				 fixed assets

AdvancedElectronicmaterials & materials &tools
components

Millions of yen

Millions of yen

CementMetals

Aluminum

Others174,361 ¥3,205 		177,566 ¥
20,520 ¥345,604 		
168,274 		

621,313 ¥8,157 		629,470 ¥
27,513 ¥685,941 		
520,075 		

126,834 ¥ 56,472 ¥
16,581 		
6,614 		143,415 ¥ 63,087 ¥
9,913 ¥
2,802 ¥
212,347 		 134,817 		
120,358 		
85,767 		

11,463 ¥2,798 		93 		1,513 		914 		

16,041 ¥— 		
340 		
1,686 		357 		

11,873 ¥1,243 		21 		934 		
158 		

3,442 ¥
— 		163 		
840 		
1,293 		7,323 ¥
— 		13 		672 		
118 		

3,706 ¥
6 		323 		
744 		
(2,878) 		

53,851 ¥4,048 		956 		
6,391 		(35) 		

2,896 ¥
— 		(369) 		(1,469) 		
36 		

56,748
4,048
587
4,922
1

20,653 		

14,143 		

5,922 		1,768 		840 		

10,949 		

54,277 		

(155) 		54,122

20,517 		

19,339 		

14,719 		

2,946 		8,658 		4,185 		70,367 		

5,318 		75,685

154,017 ¥
1,944 		155,962 ¥7,480 ¥
150,770 		
111,069 		

Total

Adjustment Consolidated

171,069 ¥ 1,304,068 ¥— ¥ 1,304,068
47,177 		
83,680 		 (83,680) 		
—218,246 ¥ 1,387,748 ¥ (83,680) ¥ 1,304,068
7,177 ¥ 75,407 ¥ (11,481) ¥ 63,925
183,453 		 1,712,934 		 184,005 		 1,896,939
133,179 		 1,138,725 		
48,018 		 1,186,744(d) Related information
1. Information about products and services
This information is omitted because the same information is disclosed above.
2. Information about geographic areas

Net sales
Tangible fixed assets

¥
		

Japan

U.S.A.

865,373¥523,681 		

144,243¥
80,496 		

Europe52,315¥5,383 		Asia520,350¥
34,254 		

Others

Net sales
Tangible fixed assets

¥
		

Japan

U.S.A.

752,169¥
538,516 		

133,646¥
86,544 		

Europe37,851¥
1,982 		Net sales
Tangible fixed assets

Japan

U.S.A.

$ 8,145,459$ 1,357,711$
		 4,929,232 		 757,686 		

Europe

31

¥

171

¥

¥

4,785

¥

5,875

—

Others¥Eliminationand corporate
Consolidated
assets or
expenses¥ 11,029 ¥6 ¥ 11,035
Total

165

Millions of yen

CementMarch 31, 2017
Loss on impairment¥

36

Metals¥183

AdvancedElectronicmaterials & materials &tools
components

Aluminum

¥

¥

7,045

¥

1,699

—

Others¥Eliminationand corporate
Consolidated
assets or
expenses
9,484 ¥
493 ¥ 9,977

Total

519

¥

Thousands of U.S. dollars

CementMarch 31, 2018
Loss on impairment$

295

Metals$1,615

AdvancedElectronicmaterials & materials &tools
components

Aluminum$ 45,040$$ 55,304—

Others$Eliminationand corporate
Consolidated
assets or
expenses$ 103,816 $60 $ 103,876
Total

1,559

Note:
“Elimination and corporate assets or expenses” of “Loss on impairment” for the fiscal year ended March 31, 2018 in an amount of ¥6 million($60 thousand) mainly refers to loss on impairment of idle assets“Elimination and corporate assets or expenses” of “Loss on impairment” for the fiscal year ended March 31, 2017 in an amount of ¥493
million mainly refers to loss on impairment of rental property.

Asia
366,916¥
37,525 		

Asia492,425$ 4,897,881$
50,671 		 322,428 		

Millions of yen

17,250¥ 1,599,533
1,742 		 645,559

Others

Total

CementMarch 31, 2018
Amortization
Unamortized balance

Metals¥ 2,873 ¥		 27,405 		

AdvancedElectronicmaterials & materials &tools
components

288 ¥8,697 		1,230 ¥
8,525 		Total162,368$ 15,055,845
16,403 		 6,076,422

Notes:
1. Countries or regions have been classified in terms of their geographic proximity.
2. Main countries or regions that belong to the geographic segments other than Japan and the United States are as follows:(1) Europe: Germany, United Kingdom, Spain, France, Finland(2) Asia:
Indonesia, South Korea, Malaysia, Singapore, China, Taiwan, Hong Kong, Thailand(3) Others: Australia, Canada, Brazil
3. Information about major customers
This information is omitted because the Company does not have any major customers that account for 10% or more of net sales in the
consolidated statements of income.

Others— ¥— 		Eliminationand corporate
Consolidated
assets or
expenses2 ¥ 4,395 ¥— ¥ 4,395
7 		 44,636 		— 		 44,636
Total

Millions of yen

CementOthers

Aluminum— ¥— 		13,484¥ 1,304,068
1,656 		 666,226

Thousands of U.S. dollars

March 31, 2018¥

Aluminum

Total

Millions of yen

March 31, 2017

March 31, 2018
Loss on impairment

Metals(f) Information about amortization and unamortized balance of goodwill by reportable segments

Millions of yen

March 31, 2018

CementAdvancedElectronicmaterials & materials &tools
components

March 31, 2017
Amortization
Unamortized balance

Metals¥ 2,798 ¥		 33,676 		

AdvancedElectronicmaterials & materials &tools
components

— ¥
— 		

1,243 ¥
9,756 		Aluminum— ¥— 		Others— ¥— 		Eliminationand corporate
Consolidated
assets or
expenses
6 ¥ 4,048 ¥— ¥ 4,048
2 		 43,436 		— 		 43,436
Total

Thousands of U.S. dollars

CementMarch 31, 2018
Amortization
Unamortized balance

MetalsAdvancedElectronicmaterials & materials &tools
components$ 27,051 $ 2,716 $ 11,580 $		257,957 		 81,866 		 80,250 		

Aluminum— $— 		Eliminationand corporate
Consolidated
assets or
expenses
27 $ 41,376 $— $ 41,376
74 		420,148 		
— 		420,148

Others

— $
— 		

Total

Amortization and unamortized balance of negative goodwill incurred from business combinations that were conducted prior to April 1, 2010
are as follows:
Millions of yen

CementMarch 31, 2018
Amortization
Unamortized balance¥		

Metals— ¥— 		AdvancedElectronicmaterials & materials &tools
components— ¥2,221 		— ¥— 		Aluminum— ¥— 		Others

— ¥
— 		

— ¥
— 		

Eliminationand corporate
Consolidated
assets or
expenses— ¥— ¥—2,221 		— 		 2,221

Total

Millions of yen

CementMarch 31, 2017
Amortization
Unamortized balance

36<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATION¥		

Metals— ¥— 		AdvancedElectronicmaterials & materials &tools
components— ¥2,221 		— ¥— 		Aluminum— ¥— 		Others

— ¥
— 		

— ¥
— 		

Eliminationand corporate
Consolidated
assets or
expenses— ¥— ¥—2,221 		— 		 2,221

Total

MITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>37

Thousands of U.S. dollars

CementMarch 31, 2018
Amortization
Unamortized balance$		

MetalsEliminationand corporate
Consolidated
Aluminum
OthersTotal
assets or
expenses
— $
— $
— $
— $
— $
—
— 		
— 		
— 		 20,908 		— 		 20,908

AdvancedElectronicmaterials & materials &tools
components— $— $— 		 20,908 		

— $
— 		

(g) Gain from negative goodwill by reportable segment
Fiscal years ended March 31, 2018 and 2017
Not applicable

Note 20 Revaluation Reserve for Land
Pursuant to Article 2, Paragraphs 3, 4 and 5 of the Enforcement
Ordinance for the Law concerning Revaluation Reserve for Land(the “Revaluation Law”), effective on March 31, 1998, and to thepartial revision to this law on March 31, 2001, the Company andits certain consolidated subsidiaries revalued their own lands forbusiness at fair value. The related unrealized gain, net of income
taxes and non-controlling interests, was directly credited to“Revaluation reserve for land” in net assets in the consolidatedbalance sheets, and the applicable income tax effect wasrecorded as “Deferred tax liabilities for land revaluation” in liabilities
in the consolidated balance sheets. When such land is sold,the revaluation reserve for land is reversed and credited to theretained earnings.
According to the Revaluation Law, the Group is not permitted
to revalue the land at any time even if fair value of the land
declines. Such unrecorded revaluation losses at March 31, 2018and 2017 amounted to ¥42,193 million ($ 397,151 thousand) and¥44,503 million, respectively.

Major assets and liabilities transferred of a company which is no longer a consolidated subsidiary due to the sale of shares during the year
ended March 31, 2018
Information about assets and liabilities transferred, sales price and proceeds from sales of shares as of the date of deconsolidation, inregards to the sales of Mitsubishi Materials Real Estate Corporation, is as follows:
Millions of yen

Current assets
Fixed assets
Current liabilities
Non-current liabilities
Other
Gain on net sales of investments in securities
Sales price of shares
Cash and cash equivalents
Proceeds from sales of subsidiaries’ shares resulting in change in scope of consolidation

Millions of yen

2017

Cash and deposits
Less time deposits with original maturities greater than three months
Less restricted cash
Cash and cash equivalents

¥
		
		
¥

¥
93,389(5,850) 		
(184) 		
¥87,355

141,264(8,516)(131)
132,616

2018
$
		
		
$

879,043(55,065)(1,732)822,244

Major assets acquired and liabilities assumed of the companies which newly became consolidated subsidiaries through acquisitions during
the year ended March 31, 2018
Information about assets acquired, liabilities assumed, acquisition cost and payment for purchase as of the date of consolidation, in regards
to the consolidations of Luvata Pori and 13 other newly acquired companies, is as follows:
Millions of yen

Current assets
Fixed assets
Goodwill
Current liabilities
Non-current liabilities
Acquisition cost of shares
Foreign exchange losses, etc
Cash and cash equivalents
Payment for purchase of investments in subsidiaries resulting in change in the scope of consolidation
Payments for the transfer of business38<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATION

¥
		
		
		
		
		
		
		
¥
¥

34,99623,998
8,057(18,530)(4,663)43,8591,562(5,051)
38,829
1,541

$
		
		
		
		
		
		
$
$

17,132
245,146(148,430)(29,830)
12,47942,925
139,422(1512)
137,909

Year ended March 31, 2017
Basic net income per share:
Net income attributable to owners of parent
Net income attributable to common Shareholders of parent

Millions of yen

Thousands

Yen

U.S. dollars

Net income

Weighted average
shares

Net income
per share

Net income
per share¥		

Thousands of U.S. dollars

2018

Thousands of U.S. dollars

Reconciliation of the numbers and amounts used in the basic net income per share of common stock computation for the fiscal years ended
March 31, 2018 and 2017 is as follows:

Basic net income per share:
Net income attributable to owners of parent
Net income attributable to common Shareholders of parent

Reconciliation between cash and cash equivalents in the consolidated statements of cash flows and the year-end balance of theconsolidated balance sheets is as follows:

1,820
26,044(15,769)(3,169)1,325
4,560
14,812(160)
14,651

Note 22 Net Income per Share of Common StockYear ended March 31, 2018

Note 21 Notes to the Consolidated Statements of Cash Flows

¥
		
		
		
		
		
		
¥
¥

34,59534,595 		

130,972

264.15¥

Millions of yen

Thousands

Yen

Net income

Weighted average
shares

Net income
per share¥		

28,35228,352 		

130,993

¥

$

2.49

216.44

Notes:
1. The Company consolidated its shares at a 10:1 ratio of its common stock, with an effective date of October 1, 2016.Accordingly, net
income per share is calculated on the assumption that the consolidation of its shares was conducted at the beginning of the previous
consolidated fiscal year.
2. Diluted net income per share has not been disclosed since there were no dilutive securities for the fiscal years ended March 31, 2018 and2017.

Thousands of U.S. dollars

$
		
		
		
		
		
		
		
$
$

329,412
225,892
75,846(174,422)(43,899)
412,829
14,710(47,544)
365,489
14,506Note 23 Related party Information
1. Transactions with related parties
Transactions by consolidated subsidiaries of the Company with non-consolidated subsidiaries and affiliated companies of the Company
The information for the fiscal year ended March 31, 2018 and 2017 was omitted because there were no significant transactions with relatedparties for the fiscal year ended March 31, 2018 and 2017.
2. There was no applicable information about a significant affiliate for the fiscal years ended March 31, 2018 and 2017.

MITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>39

Note 24 Loss on Impairment of Fixed Assets

Note 26 Information on Net Assets

In reviewing fixed assets for impairment, the Group categorizes their operating assets mainly by product group within the reportablesegments, and idle assets by asset unit.

(a) Type and Number of Shares Issued and Treasury Stock
For the fiscal years ended March 31, 2018 and 2017, information on shares issued and treasury stock is presented as follows:

For the fiscal years ended March 31, 2018 and 2017, the Company and the domestic consolidated subsidiaries recognized the loss on
impairment of fixed assets amounting to ¥11,035 million ($103,876 thousand) and ¥9,977 million, respectively, as other expenses in the
consolidated statements of income by devaluating the carrying amount of each fixed asset to its recoverable amount. The devalued assets
were in operating asset groups whose profitability has significantly deteriorated due to the decline in market value of products or others andalso were idle assets whose recoverable amounts were lower than their carrying amounts due to the decline in market value of each asset,
etc.
The details for the fiscal year ended March 31, 2018 were as follows:
Loss on impairment
Asset group

Location

CementOnojo, Fukuoka prefecture, etc.

Advanced materials & tools

Niigata, Niigata prefecture, etc.

Electronic materials & components Mobile in Alabama, America
OthersRental property
Idle assets
Total

Chuo-ku, Tokyo prefecture, etc.
Osaka, Osaka prefecture, etc.
Sakai, Osaka prefecture, etc.

Asset typeMillions of yen

Tools, instruments, etc.
¥
Machinery and equipment, tools,
		
instruments, etc.
Machinery and equipment, buildings,
		
etc.
		
Software, buildings, etc
Land
		
		
Land, buildings, etc.
¥

Thousands of U.S. dollars

0

$

0

4,785

		

45,0405,875

		

55,30481
1
292
11,035

		
771
		
9
		
2,749
$
103,876*Details of loss on impairment by account
Buildings ¥896 million ($8,437 thousand), Machinery and equipment ¥7,267 million ($68,403 thousand), Land ¥313 million ($2,950
thousand) and Others ¥2,558 million ($24,085 thousand).
The details for the fiscal year ended March 31, 2017 were as follows:
Loss on impairment
Asset group

CementLocation

Asset typeMillions of yen

Onojo, Fukuoka prefecture, etc.

Machinery and equipment, etc.
¥
Machinery and equipment, buildings,
Advanced materials & tools
Niigata, Niigata prefecture, etc.
		
etc.
Machinery and equipment, buildings,
Electronic materials & components Sunto-gun, Shizuoka prefecture, etc		etc.
Rental property
Osaka, Osaka prefecture, etc.
Land, buildings, etc.
		Land, buildings, etc.
Idle assets
Sakai, Osaka prefecture, etc.
		
Total
¥

3
7,045
1,699
1,003
226
9,977

*Details of loss on impairment by account
Buildings ¥1,987 million, Machinery and equipment ¥4,337 million, Land ¥1,030 million and Others ¥2,623 million.

Note 25 Loss on Non-Conforming productsThis expense was temporarily incurred for an investigation into the revealed fact that some of the products that the Group manufactured andsold in the past deviated from customer standards or internal company specifications as a result of misconduct, including the rewriting of
inspection records data and the insufficient testing.

Type of shares issued

Type of treasury stock

Common stock

Common stock *1,2,3,4,5

		 1,314,895,351
		—		 1,183,405,816
		 131,489,535
		
—
		
—
		 131,489,535

Number of shares as of March 31, 2016
Increase during the fiscal year ended March 31, 2017
Decrease during the fiscal year ended March 31, 2017
Number of shares as of March 31, 2017
Increase during the fiscal year ended March 31, 2018
Decrease during the fiscal year ended March 31, 2018
Number of shares as of March 31, 2018

*1. Decrease in the number of shares issued during the fiscal year ended March 31, 2017
Decrease due to stock consolidation*2. Increase in the number of treasury shares during the fiscal year ended March 31, 2017
Purchase of less-than-one-unit shares*3. Decrease in the number of treasury shares during the fiscal year ended March 31, 2017
Decrease due to stock consolidation
Sales of less-than-one-unit shares*4. Decrease in the number of shares issued during the fiscal year ended March 31, 2018
Decrease due to stock consolidation*5. Increase in the number of treasury shares during the fiscal year ended March 31, 2018
Purchase of less-than-one-unit shares

		
		
		
		
		
		
		

4,886,174
71,9374,450,248
507,863
19,32498
527,089

1,183,405,816 shares
71,937 shares
4,447,865 shares
2,388 shares
98 shares
19,324 shares(b) Dividends
1. Dividend payment
Approvals by the Board of Directors’ meeting held on May 11, 2017 are as follows:		 Type of shares:
Common stock		 Total amount of dividends:¥5,239 million ($49,316 thousand)		 Dividends per share:¥40.00 ($0.38)
		 Record date:
March 31, 2017
		 Effective date:June 1, 2017
Approvals by the Board of Directors’ meeting held on November 8, 2017 are as follows:		 Type of shares:
Common stock		 Total amount of dividends:¥3,929 million ($36,984 thousand)		 Dividends per share:¥30.00 ($0.28)
		 Record date:
September 30, 2017
		 Effective date:
December 4, 2017
2. Dividends whose record date is attributable to the fiscal year ended March 31, 2018, but to be effective in the following fiscal year.
Approvals by the Board of Directors’ meeting held on May 10, 2018 are as follows:		 Type of shares:
Common stock		 Total amount of dividends:¥6,548 million ($61,636 thousand)		 Source:
Retained earnings
		 Dividends per share:¥50.00 ($0.47)
		 Record date:
March 31, 2018
		 Effective date:June 1, 2018

Note 27 Subsequent Events
Not applicable40<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATIONMITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>41

Independent Auditor’s Report

Main Consolidated Subsidiaries and Affiliates (As of March 31, 2018)

To the Board of Directors of Mitsubishi Materials Corporation:

Main Consolidated Subsidiaries
Line of Business

Percentage of Ownership(including indirectownership)

		 MCC Development Corp.

Investment in ready-mixed concrete businesses in the U.S.

70.0%

		 Mitsubishi Cement Corp.

Production and sales of cement in the south-west area of the U.S.

67.0%

		 Robertson’s Ready Mix, Ltd.

Production and sales of ready-mixed concrete and aggregate in thesouth-west area of the U.S.

100.0%

		 Mitsubishi Cable Industries, Ltd.

Production and sales of sealing products

100.0%

		 Materials Eco-Refining Co., Ltd.

Smelting, processing and recycling of non-ferrous metals

100.0%

		 Mitsubishi Shindoh Co., Ltd.

Production and sales of processed copper products and processed
copper alloy products

100.0%

		 MMC Copper Products Oy

Business administration of subsidiaries that produce and sell
processed copper products

100.0%

		 Onahama Smelting & Refining Co., Ltd.

Smelting on consignment of copper concentrate

55.7%

		 PT. Smelting

Production and sales of copper cathode in Indonesia

60.5%

		 Sambo Metals Corp.

Sales of rolled copper products and electric wires

100.0%

		 Diamet Corp.

Production and sales of sintering parts

100.0%

		 Mitsubishi Hitachi Tool Engineering, Ltd.

Production and sales of cemented carbide tools

51.0%

Production and sales of polycrystalline silicon for semiconductorin the U.S.

100.0%

CementMetalsAdvanced Materials & Tools

Electronic Materials & Components
		 Mitsubishi Polycrystalline Silicon America Corp.
Aluminum		 Mitsubishi Aluminum Co., Ltd.

Production and sales of rolled and processed aluminum products

90.4%

		 Universal Can Corp.

Production and sales of aluminum beverage cans

80.0%

		 Materials’ Finance Co., Ltd.

Financing the Company and its affiliates

100.0%

		 Mitsubishi Materials Techno Corp.

Technical construction and civil engineering; production and sales ofindustrial machinery

100.0%

		 Mitsubishi Materials Trading Corp.

Sales of the Company’s products and other non-ferrous metal
products

100.0%

Line of Business

Percentage of Ownership(including indirectownership)

		 NM Cement Co., Ltd.

Investment in Nghi Son Cement Corp. (Vietnam)

30.0%

		 P.S. Mitsubishi Construction Co., Ltd.

Pre-stressed concrete works, civil engineering and sales ofconcrete products

33.9%

		 Ube-Mitsubishi Cement Corp.

Sales of cement and cement-related products

50.0%

Production and sales of copper tubes and fabricated copper tubes

45.0%

		 LM Sun Power Co., Ltd.

Operation of solar power generation

50.0%		 Japan Drilling Co., Ltd.

Offshore drilling for oil and gas exploration and development,
construction and other work

20.05%

OthersMain Affiliates

CementMetals		 Kobelco & Materials Copper Tube Co., Ltd.
Others42<<< Financial Data 2018_MITSUBISHI MATERIALS CORPORATIONMITSUBISHI MATERIALS CORPORATION_Financial Data 2018 >>>43