16’
ANNUAL REPORT
for the year ended March 31, 2016

PROFILE

CONTENTS

In 1907, the Japanese government launched a joint

01 FINANCIAL HIGHLIGHTS (CONSOLIDATED)

venture for the purpose of domestic weapons produc-

02 MESSAGE FROM THE PRESIDENT

tion in Muroran, Hokkaido—later to become a major

04 PROGRESS OF JGP2017

steel manufacturing center—consisting of two British

08 OUR BUSINESS DOMAINS

firms (W.G. Armstrong and Vickers) and one Japanese

10 REVIEW OF OPERATIONS

company. That was the birth of The Japan Steel

12

Works, Ltd. (JSW).

14 RESEARCH AND DEVELOPMENT

After World War II, the company turned its sophisti-

SPECIAL FEATURE

16 CORPORATE GOVERNANCE

cated technologies and considerable experience to

20 ENVIRONMENTAL MANAGEMENT

meeting peacetime needs. Continuing to produce

22 BOARD OF DIRECTORS, CORPORATE AUDITORS AND

high-quality steel, it developed machinery making use

EXECUTIVE OFFICERSof this steel and endeavored to open up new business

23 FINANCIAL SECTION

fields. In addition to heavy and chemical industries

26 CONSOLIDATED FINANCIAL STATEMENTS

such as electric power, steel, shipbuilding, and petro-

32 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

chemicals, the company broadened into areas from54 CORPORATE DIRECTORY

automobiles to electrical machinery and information

55 NETWORK

equipment, earning a worldwide reputation as an integrated producer of steel materials and machinery.
Today, having grown into a comprehensive materials provider and manufacturer of mechatronics products, JSW is meeting society’s needs at the forefront.
In the steel and energy products business, we areserving the needs of the energy industry in areas suchas electrical power generation, oil refining, naturalgas, and wind power generation. In the industrial
machinery products business, we supply equipment
for manufacturing and processing plastic materials,
along with a diverse range of products in areas frominformation technology to defense.

Forward-looking statements
The performance forecasts included in this report are judgments based on theinformation that was available to the JSW Group at the time this report was
prepared and the actual results may differ significantly from these forecasts due toa variety of factors.

FINANCIAL HIGHLIGHTS (CONSOLIDATED)FINANCIAL HIGHLIGHTS (CONSOLIDATED)The Japan Steel Works, Ltd. and Consolidated Subsidiaries
Years ended March 31, 2016, 2015 and 2014

Thousands ofMillions of Yen

U.S. dollars

2014

2015

2016

2016

¥188,719¥194,674¥223,301$1,981,727

Operating income

8,864

7,517

14,423

128,000

Profit (loss) attributable to owners of parent

5,527(5,327)(16,600)(147,320)

Total assets

293,139

319,667

293,138

2,601,509

Total net assets

139,268

138,234

111,340

988,108

ROE

4.1%

−3.9%

−13.5%

Equity ratio

47.1%

42.7%

37.5%

¥14.92¥(14.39)¥(45.32)$(0.40)

5.00

4.00

5.00

0.04

For the year
Net sales

At year-end

RatiosAmounts per share (yen and U.S. dollars)Profit (loss)
Cash dividends applicable to the year

Notes 1: Amounts in U.S. dollars are presented solely for convenience and based on the rate of ¥112.68 = US$1.00, the rate of exchange on March 31, 2016.
2: The figures for 2015 have been revised due to changes in the financial results.

Net Sales

Profit (loss) attributable toowners of parent

Profit (loss)

Millions of yen

Millions of yen

Yen

0

14.92

22.33

33.93

−25.0

−20,000

2012 2013 2014 2015 2016

0(45.32)−10,000

25.0(14.39)60,000(16,600)

0(5,327)

120,000

5,527

10,0008,281

223,301

194,674

188,719

220,653

221,368

180,000

50.0

12,591

20,000240,000−50.0

2012 2013 2014 2015 20162012 2013 2014 2015 2016

01

MESSAGE FROM THE PRESIDENT
Overview of Fiscal 2015

chains. During the year, we advanced our businessactivities according to three basic policies: (1)Business performanceincrease profitability of existing business, (2) foster
new products and businesses and make them com-

02

In fiscal 2015, ended March 31, 2016, the world econ-

petitive as soon as possible, and (3) reinforce Groupomy overall continued on a moderate recovery,

management and promote alliances.

buoyed by steady personal consumption in advanced

For the year, total orders amounted to ¥211,637

Western nations. This occurred despite an economic

million (US$1,878 million), up 2.8% from the previous

slowdown in China and other emerging nations, as

fiscal year. This was due to increased orders generated

well as falling prices of crude oil and other resources.

by Industrial Machinery Products Business segment,

The Japanese economy also recovered moderately

which contrasted with a decline in the Steel andon the back of healthy corporate earnings andEnergy Products Business segment. Net sales rose

improved employment and worker income condi-

14.7%, to ¥223,301 million (US$1,981 million), owing

tions. However, the future outlook is uncertain due toto higher sales in the Steel and Energy Products Busi-

the yen’s appreciation and falling stock prices sinceness and Industrial Machinery Products Business seg-

the start of the calendar year.

ments. Operating income surged 91.9%, to ¥14,423

The operating environment for the JSW Groupmillion (US$128 million). However, we reported a loss

remained challenging. Despite expanding markets

attributable to owners of parent of ¥16,600 million

related to automobiles and IT equipment, the Group(US$147 million), from ¥5,327 million (US$47 million)

faced intensifying global competition driven by man-in the previous year. This was due to an impairment

ufacturers in emerging nations, along with a delayed

loss of ¥35,447 million (US$314 million) on non-cur-recovery in the market for nuclear power products.

rent assets owned by the Muroran Plant, based on

Fiscal 2015 was the first year of the Group’s“Accounting Standard for Impairment of Fixed Assets,”

medium-term management plan, entitled JGP2017.

reflecting recognized indications of impairment due to

The slogan of the plan is “Advancing toward Top

the declining profitability of the Steel and Energy

Global & Niche Corporate Group,” and its aim is to

Products Business segment, stemming from weakachieve the top share at key points in customer value

orders for products used in nuclear power plants.

MESSAGE FROM THE PRESIDENT

Ikuo Sato
Representative Director & President

Looking ahead, the world economy is expected to

Nevertheless, we will continue working to rebuild ourcontinue recovering moderately, driven by the U.S.

business foundation and improve earnings stability inand other industrialized economies. This should occur

this segment. By contrast, the Industrial Machinery

despite an economic slowdown in China and other

Products Business segment is attracting firm orders,emerging nations, low prices for crude oil and otherso we will expedite efforts to uncover growth oppor-

resources, and geopolitical risk and other unstable

tunities and expand our business.

elements. The Japanese economy is also forecast to

Our consolidated forecasts for fiscal 2016 are: total

recover modestly, but the outlook remains uncertain

orders of ¥220.0 billion (US$1,952 million), net sales offor several reasons. These include the economic slow-¥220.0 billion (US$1,952 million), operating income ofdown in China and the yen’s progressive appreciation,¥12.0 billion (US$106 million), and profit attributable

which is affecting export-related companies.

to owners of parent of ¥8.0 billion (US$71 million).

The JSW Group expects its operating environment
to remain difficult, forecasting a continued delay inthe recovery of demand for products for the electric
power and nuclear power sectors, the domains of theSteel and Energy Products Business segment.

June 201603

PROGRESS OF JGP2017 (JSW GROUP GROWTH PLAN FY2015-2017)
CORPORATE VISION“Advancing toward Top Global & Niche Corporate Group”
Aiming to achieve top share at key points in customer value chains

BASIC POLICIESPolicy 1
Increase profitability of existing businesses

NUMERICAL TARGETS

Renewed challenge:
Net sales of ¥250 billion in FY 2020

• Pursue product & service differentiation• Strengthen total-cost competitiveness

More than(Billions of yen)More thanNet Sales¥220.0¥250.0Operating income

Operating income

Operating income

ROA

ROA

• Develop service & solution businesses• Reinforce initiatives in growth markets

Policy 2¥194.6

Foster new products & businesses and makethem competitive as soon as possible• Promote businesses based oncore management resources• Optimize timeframe and systems forpromoting new products & businesses¥7.5

Policy 3
Reinforce Group management andpromote alliances

FY2014≧ ¥13.0≧ ¥20.0

≧ 3%

≧ 4%

ROE

ROE

≧ 8%

≧ 10%

FY2017

FY2020* The ROE target has been revised upwards.

Strict management control based on Action Plan (implement PDCA)

04

PROGRESS OF JGP2017

BUSINESS STRATEGIES

Steel and Energy Products Segment

Defensive management

Achieve steady growth and prepare for renewed growth after JGP2017(Billions of yen)

FY2015

Reduce invested capital

FY2016(Actual)• Rationalize facilities• Reallocate personnel• Promote cost-reduction measures(Plan)Net Sales

Net Sales

Operating Income

Operating Income

Operating Income¥0.6• Strengthen “profitable products”• Secure volume of “operable products”• Expand new products• Review unprofitable businesses

FY2017

Net Sales¥74.8

Review business domains(Plan)

¥58.0
−¥2.0

We expect a segment operating loss in FY
2016, resulting from an expected year-onyear decline in segment sales of around¥20 billion.

≧ ¥60.0

FY2020Regrowth≧ ¥0

We will return to profitability in the final
year of the plan through ongoing efforts
to strengthen orders to boost sales while
cutting costs.

Industrial Machinery Products Segment

Offensive management

Identify growth opportunities and accelerate business expansion
Pursue strategic investments(Billions of yen)

FY2015FY2016FY2017• Reinforce production capacity at
Hiroshima and Yokohama Plants• Reinforce personnel• Promote strategic alliances

Net Sales

Net Sales¥160.0≧ ¥158.0

Expand business domains

Operating Income

Operating Income

Operating Income• Strengthen service businesses• Acquired South Korea’s SM PLATEK• Acquired “simultaneous biaxial
stretching machine business” for film
and sheet manufacturing equipment• Expand sales of J-ADS series• Expand thin-film coating business(Actual)¥144.3¥12.3(Plan)¥15.0

Backed by strong orders, we expect segment sales and operating income to both
meet the final-year targets in FY 2016, one
year ahead of schedule.

(Plan)FY2020Net Sales≧ ¥14.0

Continuous
growthWe will revise our targets for the plan’s
final year in light of the segment’s FY
2016 results.

05

JGP2017: BASIC STRATEGIESFOSTER NEW PRODUCTS AND BUSINESSES AND
MAKE THEM COMPETITIVE AS SOON AS POSSIBLE

Groupwide effort to achieve sales of ¥30 billion in
new businesses by FY 2020
Overview of Groupwide commercialization project activities

Groupwide commercialization project activities

R&D themes
JSW Group synergies

Prioritized projects

Alliances(short- to medium-termcommercialization)

Intellectual property strategy

Targeted fields
Next-generationenergyElectronics,
information,and communications

Automotive andaerospace

06

Prioritized projects

Strategic projects(medium- to long-termcommercialization)

FY 2016 initiatives

Hydrogen business

Develop highly reliable steel pressure vessels and hydrogencompressors for use at hydrogen stations
Develop fuel cell systems

Offshore-related
equipment business

Develop offshore structure components and welding
technologies for deep-sea use

Organic EL-related business

Develop sealing film forming equipment for flexible panels
Develop excimer laser annealing systems for high definition

High-value-added film business

Develop film processing equipment for high-endurance,heat-resistant lithium ion batteries

Semiconductor business

Develop manufacturing equipment for gallium nitride
crystals and crystal-related technologies

Carbon fiber business

Develop manufacturing equipment for carbon fiber
composite parts

Aircraft components businessEnter the aircraft components businessPROGRESS OF JGP2017

JGP2017: BASIC STRATEGIESREINFORCE GROUP MANAGEMENT AND
PROMOTE ALLIANCES

Seek maximum synergistic benefits

Increase profitability ofexisting businesses

Foster new products andbusinesses andmake them competitive
as soon as possible

Continue and strengthen further

Expand and evolve further

FY 2015 initiatives

FY 2015 initiatives

Reinforce Group management

Promote alliances

Restructured the Hiroshima Plant(to be completed in July 2016)

Film and sheet equipment

Pressed ahead with the Muroran Restructuring
Project (improve production efficiency, etc.)
Transformed Meiki Co., Ltd. into a wholly-owned
subsidiary
Formulated a corporate governance policy

Acquired the simultaneous biaxial stretchingmachine business

Compound twin-screw extruders
Acquired South Korea’s SM PLATEK

Molding machines
Jointly developed small machinery with
Toyo Machinery & Metal Co., Ltd.

Large cast and forged steel products
Formed alliance with India’s LTSSHF
Formed joint venture with Brazil’s Gerdau S.A.

07

OUR BUSINESS DOMAINS
The JSW Group comprises 49 subsidiaries (of which 32 are consolidated) and three affiliates (of which one isan equity-method affiliate). Our operating domains are the Steel and Energy Products Business, the Industrial
Machinery Products Business, and the Real Estate and Other Businesses.
We maintain the Muroran, Hiroshima, and Yokohama plants. Our integrated lineup ranges from steel
manufacturing to machinery.

Steel and Energy Products Business

Sales
Composition

34%

Steel Products
At the Muroran Plant, which manufactures steel in electric furnaces, we produce a
broad range of cast products and steel ingots for forged products. In ingots forforgings, we have one of the worldʼs largest production capacities, of 670 tons.
Our range of presses and hammers of various types and sizes, including two
14,000-ton hydraulic presses, ensures that we can deliver forgings in any needed
shape. After undergoing heat treatment, machining and finishing, the cast, andforged steel products are used in the electric power generation industry (fossil
fuel, hydroelectric and nuclear) as well as for steel-making, oil refinery, and industrial machinery and facilities. In addition to being a leading global supplier ofnumerous extra-large cast and forged steel products, our plants produce a wide
range of high-quality small and medium-sized steel cast and forged products.

Business Lines
Production and sale of products
for power generation industries,
steel-making, nuclear power-related equipment, die materials,
and other areas

Steel Plates and Structures
At the Muroran Plant, which has one of Japanʼs largest 4-thick plate reversing rolling mills, we can roll high-quality, extremely thick, wide, and long steel plates(maximum thickness: 350 millimeters, maximum width: 4.8 meters, maximum
length: 20 meters). Using advanced manufacturing technology we now mainly
produce high-quality clad steel plates and clad steel pipes using clad steel plates.
All of our products are used in a wide range of industrial applications in Japanand overseas, giving this business a unique profile. In addition, the Muroran Plant
integrates the various forged steel products it manufactures and leverages theCompanyʼs state-of-the-art welding technologies and facilities to produce verylarge welded structures, such as pressure vessels for oil refineries and petrochemical plants, in an integrated process extending from raw materials to finishedproducts. As a result, we are meeting demand both in Japan and overseas.

Business Lines
Production and sale of products
for oil refining, petrochemical,
general chemical, and chemicalmachinery, as well as a wide
range of pressure vessels, clad
steel plates, clad steel pipes,
extra-thick steel plates, andother areas

Wind Turbines
The JSW Group entered the wind turbine system business in 2000. Leveraging
state-of-the-art technologies, including permanent magnet synchronous generators, we make low-noise wind turbine system equipment that excels in terms offunction, performance, and reliability and is also environment-friendly.

08

Business Lines
Production, sale and maintenance of wind turbine systemequipment

OUR BUSINESS DOMAINS

Production encompasses steel casting and forging products (Muroran), steel plate and steel structures (Muroran),wind turbines (Muroran), plastics machinery (Hiroshima and Yokohama), and other machinery (Muroran, Hiroshima,
and Yokohama). We have responded to changes in the industrial structure by diversifying our businesses andlaunching environmental businesses.

Industrial Machinery Products Business

Sales
Composition

65%

Plastics Machinery
At the Hiroshima Plant, we produce injection molding machines, pelletizers, twinscrew extruders, and film and sheet manufacturing equipment. At the Yokohama
Plant, we produce blow molding machines and spinning extruders. In injection
molding machines, we offer a lineup of electrically driven machines, all of whichfeature both improved productivity and energy-saving standards along withenhanced basic performance and molding precision. We also have leveraged power
regeneration technology already in place while creating more advanced temperature controls, thereby conserving even more energy. To respond to diversifying
needs in these product markets, we have established a Technology Development
Center within the Hiroshima Plant and engage in wide-ranging consultation withproduct users, enabling us to put in place an integrated development system tocope with changing demand, from plastic manufacturing to processing machinery.

Business Lines
Production and sale of plastic
injection molding machines, plastic production and processing
machinery (including pelletizers,
compound extruders, film andsheet manufacturing equipment,etc.), and blow molding machines

Other Machinery
Supported by proprietary technologies and facilities at the Hiroshima, Yokohama,and Muroran plants, JSW produces industrial machinery for a wide range ofdemand, including defense equipment, power plant equipment, magnesium
alloy injection molding machines, laser annealing systems, rolling stock parts,and environmental facilities.

Business Lines
Production, sale and maintenance of compressors, hydraulicmachines, machinery for the production of electronic components
and displays (laser annealing systems, thin-film coating machines,etc.), magnesium alloy injection
molding machines, tightlock couplers and dampers, and defense
equipment

09

REVIEW OF OPERATIONS
Steel and Energy Products Business
Steel Products Sector
Steel Plates and Structures Sector
Wind Turbines Sector

Performance in Fiscal 2015
Total orders in the Steel and Energy Products Business amounted to ¥39,785 million (US$353 million), down 41.8% from the previous fiscal year. This was due
mainly to delayed recovery in demand for electric power and nuclear power
products, as well as a recoil in demand for clad steel pipes, which attracted
large-scale project orders in the previous year.
Sales in this segment rose 13.0%, to ¥74,854 million (US$664 million),

Shell flange used for pressure chamber
for nuclear power plant

thanks to increased sales of clad steel pipes. This was despite lower sales ofequipment for electric power and nuclear power plants.
The segment posted operating income of ¥699 million (US$6 million), compared with an operating loss of ¥39 million (US$0.3 million) in the previous
fiscal year. This was due to increased sales of clad steel pipes, cost improvements, and lower raw materials prices.

Orders Received

Sales

Millions of yen

Millions of yen

66,21560,00039,78530,00067,602

68,41857,12861,39060,00074,85490,00088,27590,000Clad steel plate

30,000J82-2.0D wind turbines system

0

0

2013

10

2014

2015

2016

2013

2014

2015

2016

REVIEW OF OPERATIONS

Industrial Machinery Products Business
Plastics Machinery Sector
Other Machinery Sector

Performance in Fiscal 2015
Total orders in the Industrial Machinery Products Business grew 24.0%, to¥167,875 million (US$1,489 million), thanks to significantly higher orders forlaser annealing equipment and plastic production and processing machinery,in addition to firm demand for molding machines and other products.
Sales in this segment rose 14.2%, to ¥144,358 million (US$1,281 million),owing to increased sales of plastic production and processing machinery,

Polyolefin extruder/pelletizer

molding machines, and laser annealing equipment, reflecting healthy orders.
Operating income increased 9.0%, to ¥12,391 million (US$109 million),benefiting from higher segment sales.

Orders Received

Sales

Millions of yen

Millions of yen

60,000144,358

126,363

118,385

120,000

130,138

167,875

135,389

126,699

120,000

180,000

121,016

180,000

Large-size all-electric injection molding
machine60,000Magnesium alloy injection molding machine

0

0

2013

2014

2015

2016

2013

2014

2015

2016

11

’16

SPECIAL FEATURE

1Completion of mass shipments of clad steel pipes
for natural gas development projects in Central Asia

We completed manufacture and shipment of clad steel pipes for which
we received large-scale orders in fiscal 2014. All shipments were madethrough Muroran Port and generated total sales exceeding ¥30 billion.
Manufacture of the clad steel pipes was done using a serial production system with continuous rolling, machining, welding, and inspection
processes. We set up the Muroran Restructuring Project team, which
made successful improvements to production processes and ensured
that shipments were made on schedule. Sales from the project made asignificant contribution to the Steel and Energy Products Business seg-

Clad steel pipe shipment

ment, which turned its first profit in four years.
As a leading company in clad steel pipes for natural gas pipelines, wewill continue focusing on attracting orders for new projects.

2

Achieved record-high orders in fiscal 2015 amid sharply rising demand
for film and sheet manufacturing equipment

With production of lithium-ion batteries for use on electric vehicles into

Electric vehicle

full swing, demand for the Group’s film and sheet equipment, for use in
making separator film for lithium-ion batteries, rose dramatically, attract-Motor

ing record-high orders in fiscal 2015.
Complementing its existing “successive biaxial stretching machine business,” in April 2015 the Group acquired a “simultaneous biaxial stretchingmachine business” and shipped its first machine in October 2015. We look forward to healthy market conditions going forward, backed by Japanese andChinese government policies promoting environmentally friendly vehicles.
The JSW Group holds the top share of the world market for products
used to manufacture separator film. We will continue working steadily tomeet demand.

12

Lithium-ion battery

SPECIAL FEATURE

3

Growing demand for Group’s ELA system used
to manufacture organic EL panels

In the autumn of 2015, Apple Inc. announced its adoption of flexible organic
EL panels in its iPhone models, spurring brisk activity among companies
associated with organic EL panels. As a result, the JSW Group’s excimer

Projected shipments of smartphones
with organic EL panels
Projections as of:January 2016
July 2015

Shipment volume(million units/year)

laser annealing (ELA) system, which is needed to make thin-film transistors

900

used in organic EL panels, attracted record-high orders in fiscal 2015.
Previously, demand for our ELA system came21%

annualgrowth rate

600

mainly from the LCD panel business, but demand from

(2015

2020)

the organic EL panel sector is now growing.
Seeking to maintain the top global market share in

300

13%

ELA systems, we will continue developing distinctive
technologies to achieve improvements in scale, performance, and productivity and thus expand our business.

4

annualgrowth rate

Smartphone withorganic EL panel

(2015

0

2020)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Meiki becomes a wholly-owned subsidiary

On March 1, 2016, the consolidated subsidiary, Meiki Co., Ltd. became a

Tail lights

wholly-owned subsidiary after conclusion of an equity swap agreement(November 30, 2015) and approval from Meiki’s Annual General Meeting

Headlightsof Shareholders. Meiki’s strength lies in large-scale injection molding
machines related to the automotive industry.
Going forward, the JSW Group and Meiki will strengthen synergies
across their technological, production, and sales activities and thus
contribute to enhancement of the Group’s business performance.
Main products made by
Meiki’s molding machines

13

RESEARCH AND DEVELOPMENT

Muroran Research Laboratory

Hiroshima Research Laboratory

Research and development activities were almost entirely

Yokohama Research Laboratory

Basic Research and Development Policy

funded by the Company during fiscal 2015. Combined spending on research and development for the Steel and Energy

We develop new products and businesses by focusing on

Products Business and the Industrial Machinery Products

new energy and energy savings, information and tele-

Business amounted to ¥4,292 million (US$38 million).

communications, nanotechnology and materials, andAs a materials and mechatronics company, we strive to

new production technologies, which relate directly toinnovate products and production techniques while also

existing businesses. We have increased collaboration

engaging in diverse technical alliances and joint develop-

between the Research and Development Headquarters

ment to deploy new oerings as quickly as possible.

and business divisions, and aim to cultivate existing busi-

Our Research and Development Headquarters collab-

ness by expanding and upgrading core technologies.

orates with business divisions and Group companies to

We engage in basic research for future technologies

1) improve the capabilities, performance, and reliability

and contemporary social needs and in researching com-of core products; 2) develop offerings in new businessponent technologies for existing products. We will build

fields based on core and differentiated technologies; andon these efforts to undertake R&D projects that create

3) promote the development and commercialization of

new products and businesses and pursue innovations for

new products through synergies with Group companies.

existing products.

The Research and Development Headquarters consist

In Steel Products, we emphasize advances in energyof the head office, and our research laboratories in Muro-and creating even more industry-leading offerings whileran, Hiroshima, and Yokohama.

commercializing new areas. The focuses in Machinery
Products are to enhance plastics machinery, IT equipment, and other industrial machinery. We will allocate
significant resources to such machinery by clarifying that
our commercialization framework is open to mergers,
acquisitions and alliances.

14

RESEARCH AND DEVELOPMENT

Activities by Business Segment

Industrial Machinery Products Business

Steel and Energy Products BusinessIn this segment, our product development activities
encompass developing advanced processing technologies

Product development centers on materials, notably forfor plastic molding machines, enhancing the performanceclad steel pipes for natural gas transportation, large steelof plastic extruders, developing advanced micro-nanocastings, and forgings and high alloys for high-efficiency

melt transcription molding machines, enhancing the func-

thermal power generation, forged steel products fortions and performance of film molding machines, develop-

advanced nuclear power plants, and high-performanceing technologies to enhance the performance and lower

nonferrous alloys, as well as manufacturing process tech-

the costs of magnesium alloy injection molding machines,

nology development. We improve materials and compo-

developing dampers that comply with European specifica-

nent technologies for existing products. In the renewabletions, and enhancing the efficiency and functions of com-arena, we develop material and component technologies

pressors. Using the latest technologies and systems, weto create lighter and more reliable pressure accumulators

also develop laser annealing systems for thin-film transis-

for hydrogen fueling stations. We create analytical tech-

tor liquid crystal display (TFT LCD) production and devices

nologies and enhance component technologies tofor other laser applications, as well as chemical vapor

improve the reliability of wind power plants.

deposition (CVD) and plasma devices.

Segment R&D spending totaled ¥1,356 million (US$12
million) in fiscal 2015.

R&D spending in this segment was ¥2,935 million(US$26 million) in fiscal 2015.

15

CORPORATE GOVERNANCE
JSW recognizes that it must earn the trust of shareholders, customers, employees, and other stakeholders to aim toenhance enterprise value and thereby contribute to the economy and society as a whole.
We therefore created a corporate governance setup that encompasses a management organization andframework to implement essential measures and pursues fair disclosure to ensure business transparency.
On November 18, 2015, we formulated “Corporate Governance Policy of The Japan Steel Works, Ltd.” based resolution of
the Board of Directors. The aim of the Policy is to clarify our basic stance, initiatives, and approach with respect to corporate
governance. The Policy can be found at the following website: http://www.jsw.co.jp/en/guide/governance.html

Overview of Corporate Governance Structure

Our Management Council also convenes once monthly,in principle. Members include directors, corporate auditors,

We employ a statutory auditor system comprising eight

divisional heads, plant general managers, headquarters

directors, two of whom are independent, and four statu-

managers, and others with executive responsibilities. This

tory auditors (hereafter, “corporate auditors”), two of

body’s tasks include assessing the business environment

whom are external.

and monitoring the progress of the Company’s business

The term of office of directors is one year. We maintainplan. Its goals are to share such knowledge throughouta corporate officer system and separate decision-making

management and reflect it in their decisions as well as toand oversight from the executive functions of corporate

ensure risk management and compliance.

officers. The goal is to accelerate decision-making andenhance oversight and execution.

16

The Board of Corporate Auditors comprises four corporate auditors, two of whom are external as part-time.

In principle, the Board of Directors convenes once

These auditors attend meetings of the Board of Directors,

monthly to decide and report on important management

the Executive Board, the Management Council, and otherissues, including basic operational policies and legallyimportant gatherings. In principle, they visit the Compa-

stipulated matters. Managing executive officers and above

ny’s plants and offices and major subsidiaries once every

attend these meetings, positioning the Board as a vehicle

six months. The auditors receive divisional reports as nec-

for mutual oversight of directors and corporate officers.

essary and exchange opinions with directors and key

The Strategy Council—consisting of two representa-

employees. Based on these efforts, the auditors express

tive directors and other directors with executive responsi-

their views to management from an objective and neutral

bilities nominated by the president, two outside directors,

perspective, and exercise strict oversight with regard toand a corporate auditor (chosen by rotation)—meetsthe execution of directors’ duties.

once a week to deliberate and decide on important man-

Seeking to ensure fairness and transparency of deci-

agement matters and important business execution deci-sion-making processes related to executive nomination

sions made by directors and executive officers. The

and remuneration, the Company established the Nomi-

Strategy Council also discusses, reports on, and monitors

nation Advisory Committee and the Remuneration Advi-

overall operational matters.

sory Committee. Consisting of five members, including

RESEARCH AND DEVELOPMENT

several outside executives, the committees serve as advisory bodies to the Board of Directors.

•	The Company has created multiple ways, including internal and external channels, for reporting and discussing
compliance-related problems uncovered by employees,

Status of Internal Control System

based on a guarantee of protection for whistleblowers.
•	In addition to its Corporate Code of Conduct, which

The Company recognizes the importance of its manage-

opposes anti-social forces, the Company maintains anment responsibilities with respect to establishing and prop-

office to share relevant information and spearheaderly managing the necessary systems to ensure appropriate

tough measures to eliminate anti-social forces.

business operations. Based on this recognition, it has set up
a specialist unit to supervise internal controls, and its Internal Control Committee also meets as necessary. The Com-

2.	Safeguarding and managing information relating
to execution of duties by directors

pany is working to improve its internal control system in line•	The Company appoints a director or corporate officer aswith its Basic Policy on Internal Control Systems, adopted by

the person responsible for safeguarding and managing

the Board of Directors, as described below.

information. Adhering to document and information
management rules and regulations, the Company stores

1.	Adhering to laws and regulations and the Articles

and manages important information relating to the exe-of Incorporation relating to execution of duties by

cution of duties by directors and corporate officers as

directors and employees

printed or digital records. This information includes the•	At the Company, compliance extends beyond preventing

minutes of important meetings and written requests forfraud and adhering to laws and regulations and in-houseapprovals. Further, directors and corporate auditors may

rules. It also encompasses the fulfillment of broad social

review or copy this information as needed.

responsibilities and establishment of various compli-•	The Company discloses financial and important manage-

ance-related rules. The essence of its compliance activities

ment information in an appropriate and timely manner.

centers on directors and corporate officers taking the leadand practicing integrity and raising employee awareness3. Rules on managing risk of lossesof compliance issues through education and training.

•	
Directors, corporate officers, and employees concur-•	The Company established the Internal Audit Division to

rently serving as general managers identify and evaluate

ensure that all of its corporate operations comply withrisks arising in the course of business. They address

all laws and regulations and in-house rules. The Divisionthese risks in keeping with regulations and the manage-

conducts regular and spot audits and submits the results

ment approval system. The Board of Directors and theof its audits to the president, and to other relevant par-Executive Board deliberate on key risks.

ties as appropriate, including the Board of Directors, the•	The Company maintains risk management rules and a

Executive Board, the Management Council, and corpo-

Companywide risk management system. Divisions oversee-

rate auditors.

ing risks in such areas as safety and hygiene, environmental

17

management, information security, and export safety con-

5. Ensuring appropriate conduct at Group companies

trols set up committees and create and administer rules for• The	 Company encourages Group subsidiaries to work toproperly managing such risks throughout the Company.

establish and build Companywide internal controls

The Company also appoints a director or corporate officer

according to JSW’s Vision, Management Philosophy, andas the person responsible for risk management. In collabo-

Corporate Code of Conduct. The Company also supports

ration with the Internal Audit Division, that person monitors

Group subsidiaries to strive for efficient business execu-

the progress of risk management and reports to the Board

tion and autonomous management by ensuring properof Directors or the Executive Board as appropriate.

division of duties and clarification of decision-making• 	
At all divisional headquarters, business units, andauthority based on their own in-house rules.

plants, the Company has risk managers who evaluate• 	The Company has formulated operational and manage-

measures and identify daily risks. It also has a crisis

ment rules for subsidiaries and defined the related man-

management headquarters to handle critical situa-

agement responsibilities and leadership structures. The

tions. Accordingly, the Company is prepared for bothCompany maintains a system for reporting, notifying,ordinary and emergency situations.

and gathering information about subsidiary decisions
on important matters and important facts. At the same

4. Ensuring efficient execution of duties by directors

time, the Company ensures that listed subsidiaries retain•	The Company ensures rapid decision-making and flexible

a degree of management autonomy.

and efficient business execution by having the president• 	In addition to dispatching directors and corporate audi-

act as chief executive officer, with directors overseeing key

tors to Group subsidiaries, the Company ensures that

headquarters divisions and business units. Under thissubsidiaries comply with all laws and regulations andcommand and management structure, corporate officers

in-house rules by mandating periodic and spot internal

appointed by the Board of Directors perform the duties

audits through relevant departments or the Internal

assigned to them. Directors and corporate officers deliber-

Audit Division. It also audits operations directly andate, decide, and report on important matters in meetings

instructs subsidiaries on internal control improvements.

of the Board of Directors and the Executive Board.

• 	The Company supports the efforts of Group subsidiaries• 	The Board of Directors formulates the medium-termto establish systems to identify and evaluate risks

management plan and annual business plans as Com-according to division of duties determined inde-panywide objectives for directors, corporate officers, andpendently based on rules concerning risk management.

employees. Directors and corporate officers plan andimplement specific policies for reaching goals, segregat-

6. 	Appointing corporate auditor assistants, securing

ing tasks in line with in-house rules. They also evaluate

their independence from directors, and ensuring

the results, review progress and submit periodic andeffectiveness of instructions given to themspot reports to the Board of Directors, the Executive
Board, and the Management Council.

18• 	On request from corporate auditors, the Company offers
employees as assistants. The Company seeks the

RESEARCH AND DEVELOPMENT

opinions and consent of these auditors for appointments,
dismissals, evaluations, and other personnel treatment
regarding these assistants to secure their independence
from directors and corporate officers.

9.	Ensuring effectiveness of audits conducted bycorporate auditors•	The Company encourages directors, corporate officers,
and employees to recognize the importance and value of•	The Company ensures that employees assigned as assis-

audits conducted by corporate auditors and to accord

tants can perform their duties according to the direc-

them their fullest cooperation. These auditors can request

tions and instructions of corporate auditors.

assistance from the Internal Audit Division, other headquarters divisions, and all other divisions for auditing tasks.

7.	Reporting to corporate auditors by directors and•	The Company enables corporate auditors to collaborate

employees and preventing unfavorable treatment

closely with the accounting auditor and the Internal

based on its content

Audit Division.

•	Corporate auditors are guaranteed the opportunity to•	Corporate auditors have the discretion to employ theattend meetings of the Board of Directors, the Executive

services of legal advisors and other outside experts.

Board, the Management Council, and other managerial
meetings that deliberate, decide, and report on impor-

10. Ensuring reliable financial reportingtant matters.

•	The Company evaluates the effectiveness of internal•	Based on its management approval system, the Com-

controls for financial reports in keeping with basic poli-pany presents approval records to corporate auditors.

cies for such controls. The Board of Directors and the

Corporate auditors can at any time request reports from

Executive Board deliberate and report on the findings of

directors, corporate officers, and employees of the Com-

such evaluations.

pany and Group subsidiaries. Also, persons who havereceived reports from directors, corporate officers, andemployees of the Company and Group subsidiaries can

Policy Regarding Large-Scale Purchaseof Company Sharesconvey such reports to corporate auditors.
•	The Company guarantees that persons making reports

On May 7, 2014, the Board of Directors resolved to amend

to corporate auditors are not subject to unfavorable

Measures against Large-Scale Share Acquisitions (takeover

treatment based on the content of such reports.

defense measures), a set of rules and procedures for parties
seeking to purchase our shares (namely, holders of Compa-

8.	Policies on advance payment and compensation

ny-issued shares seeking to increase their stakes to more thanpertaining to costs and obligations incurred in exe-

20% through purchases, or those making a tender offer tocution of duties by corporate auditors

boost their combined shareholding ratio with the inclusion of•	The Company assumes responsibility for any necessary

the holdings of special parties to more than 20% through acosts incurred in the execution of duties by corporate

tender offer). The amendment was approved at the 88th Reg-auditors.

ular General Meeting of Shareholders on June 25, 2014.

19

ENVIRONMENTAL MANAGEMENT
As a responsible member of society, JSW regards operating in harmony with the environment as an important corporate responsibility. In our pursuit of production activities and environmental technologies that respect environmental
integrity, we engage in business activities that contribute to the ecologically sustainable development of society.
Action Plan
1.	We aim to carry out environmental tasks in an organized way, andto implement environmental preservation activities continuously.

(1)	We endeavor to increase the social value of our products interms of environmental protection, safety and hygiene.

2. 	We will set appropriate objectives and targets for reducing the(2)	We will provide products and services that reduce environmen-

burden our activities impose on the environment with conserv-

tal loads by obtaining a clear grasp of environmental needs

ing biodiversity.

and developing technologies.

3. 	We aim to provide society with products and services that contribute to the preservation of the environment.

Environmental Management Structure

ISO 14001 Certification Progress

The Environmental Management Committee, headed by the direc-

The Company’s Muroran, Hiroshima, and Yokohama plants and its

tor in charge of environmental management, determines matters

Group companies, Meiki Co., Ltd., Fine Crystal Precision (S.Z.) Co.,such as annual environmental management policies and programsLtd., and NIKKO-YPK SHOJI CO., LTD., have obtained certificationof environmental activities for the whole company. Each plant has

under ISO 14001, an international standard for environmental

its own Environmental Supervisory Committee, which promotes

management systems.

environmental management activities and works hand in hand

We leverage third-party certification bodies and internalwith other Group companies including affiliates to reduce theinspections to conduct checks at least once annually to ensure thatenvironmental impact of the Company’s activities.

ISO 14001-certified business sites are endeavoring to maintain andimprove their environmental management systems.
The Company and Group companies have adhered strictly to laws

President

and ordinances, and there were again no violations in fiscal 2015.

Chief Environmental Management Supervisor/
Environmental Management Committee Chairman(Director in charge of Environmental Management)

ISO 14001 Certifications of Business Sites

Environmental
Management Committee
JSW Group companies Environmental
Management Supervisors(Company presidents)

JSW plants Environmental
Management Plant Supervisors(Plant general managers)

Environmental
Supervisory
Committees

Environmental
Supervisory
Committees

JSW Group companies Environmental
Management Supervisors

Affiliatedcompanies

20

Departments

JSW plants Environmental
Management Supervisors

Departments

Affiliatedcompanies

Business Site

Certification Date

Current Certification Body

Muroran Plant

December 18, 1998

Lloyd’s Register Quality
Assurance

Hiroshima Plant

December 18, 1998

Japan Quality Assurance
Organization

Yokohama Plant

September 4, 2006

Lloyd’s Register Quality
Assurance

Meiki Co., Ltd.

March 4, 2005

ASR International Corporation

Fine Crystal Precision(S.Z.) Co., Ltd.

March 7, 2007

Intertek

NIKKO-YPK SHOJI
CO., LTD.

February 7, 2005

Japan Value-Added
Certification Co., Ltd.

ENVIRONMENTAL MANAGEMENTBusiness activities and environmental impact
In the process of manufacturing activities related to our core business sectors, steel and energy products business and industrial machinery products
business, the environmental impact status is shown below.
We measure both inputs (consumption of energy, water, and the like) and outputs (such as waste, carbon dioxide, and water resulting frommanufacturing processes), and use the data in our environmental improvement activities.

INPUT

MANUFACTURING

Materials

Steel and energy products• Metals(including steel,
non-ferrous metal)• Plastics• Rubber, timber, etc.

• Forged steel components for nuclear power reactors• Monobloc rotor shafts

3,633 TJ
Chemical
substances
5,835 t
Water

Waste emission volume

12,874 t• Reactors for petroleum refineries

Recycling volume

99,773 t

Eco-friendly
product• Wind Turbines

Industrial machinery products• Twin-screw extruders

89%

of total
waste volume
is recycled

CO2 (from electric power and fuel)226,871 t-CO2
CO2 (from domestic transportation)
2,555 t-CO2• Single-screw extruders• Film and sheet equipment• Electric servo drive molding machines• Blow molding machines

24.09 million m3

Total waste volume112,648 t• Turbine casings for thermal power generation• Clad steel plates/clad steel pipes

EnergyOUTPUT• Magnesium alloy injection molding machines• Excimer laser annealing systems

Chemical substances(amounts emitted and transferred)

236 t

Waste water
17.96 million m3

Electric servo drive molding machine

Boasting world-class performance, our lineup of molding

to a high-efficiency power transmission mechanism and powermachines delivers clamping force of between 35 tons and 3,000

regeneration function. The medium-sized J-ADS Series,

tons. Moreover, the use of a high-performance servo motor forlaunched in March 2015, allows power consumption reductions

the driving mechanism through our own control systems,of around 10% compared with the existing J-AD Series thanks toensure consistent molding quality. Variation in molding quan-use of energy-saving injection cylinders.

tity achieves an 80% improvement in performance comparedwith conventional hydraulic servo drive molding machines,
while minimizing defective units and reducing material usage.
On the energy-efficiency side, we have achieved major reductions in power consumption (between one-third and one-half)
compared with hydraulic servo drive molding machines thanks

21

BOARD OF DIRECTORS,CORPORATE AUDITORS AND EXECUTIVE OFFICERS
Board of Directors and Corporate Auditors

Executive Officers

As of September 1, 2016

As of September 1, 2016

Representative Director &President

Ikuo Sato

Senior Managing
Executive Officers

Kazuo Kitamura
Yoshinao Ishibashi

Representative Director &Executive Vice President

Yoshitomo Tanaka

Managing Executive
Officer

Hiroshi Fujimura

Directors and Managing
Executive Officers

Kenji Watanabe
Yutaka Higashiizumi
Naotaka Miyauchi
Takashi Shibata

Senior Executive Officers

Makoto Shimizu
Katsutoshi Orita

Executive Officers

Masao Ooshita
Hiroshi Murakami
Toyohiko Kagawa
Junichiro Deguchi
Toshio Matsuo
Kenji Kikukawa
Takashi Iwamoto

Directors

Motonobu Sato (Outside)
Nobuo Mochida (Outside)

Corporate Auditors

Yutaka Mizutani
Akira Kadota
Kazuya Jono (Outside)
Itaru Masuda (Outside)

Organization
General Meeting of Shareholders
Board of Directors

Nomination
Advisory Committee

Corporate Planning Office

Domestic Office

Personnel Dept.

Overseas OfficeSecretary Office
General Affairs Dept.
Finance & Accounting Dept.
Research & Development Headquarters

Remuneration
Advisory Committee

Muroran Research Laboratory
Hiroshima Research Laboratory

President

Yokohama Research Laboratory
Laser & Plasma System OfficeInternal Auditors Office
Board of Corporate Auditors

Wind Power Business Office
Steel Business Division

Muroran Plant

Machinery Business Division

Hiroshima Plant

Molding Machines Business Division

Yokohama Plant

Ordnance Business Headquarters22

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

FINANCIAL SECTION

The Japan Steel Works, Ltd.

Six-Year SummaryYears ended March 31

Millions of yen

2011

2012

2013

2014

2015

2016

¥212,929¥221,368¥220,653¥188,719¥194,674¥223,301

Consolidated
Net sales
Profit (loss) attributable toowners of parent

16,532

12,591

8,281

5,527

(5,327)(16,600)

Total assets

339,263

325,653

303,970

293,139

319,667

293,138

Total net assets

120,820

128,613

134,368

139,268

138,234

111,340¥44.54¥33.93¥22.33¥14.92¥(14.39)¥(45.32)¥179,325¥189,329¥184,312¥155,211¥153,455¥176,116

Amounts per share (yen):
Profit (loss)
Non-Consolidated
Net sales
Profit (loss)

14,527

11,257

7,519

6,645

(5,658)(18,719)

Total assets

316,176

302,550

277,086

267,241

291,793

263,112

Total net assets

109,734

116,255

120,866

127,416

124,381

97,107

Profit (loss)¥39.14¥30.33¥20.28¥17.93¥(15.28)(51.11)

Cash dividends applicable to the year

¥12.00¥10.00¥10.00

¥5.00

¥4.00

¥5.00

Amounts per share (yen):

Note: The figures for 2015 have been revised due to changes in the financial results.

Contents
23
24
26
28
29
30
31
32
53

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report23Financial Performance (Consolidated)
Operating Results

Operating Results

Net Sales

At year-end, cash and cash equivalents stood at ¥61,458 million

Net sales increased ¥28,626 million, or 14.7% year on year, to(US$545 million), increase ¥12,306 million from a year earlier.

¥223,301 million (US$1,981 million), owing to increases in the Steeland Energy Products Business and the Industrial Machinery Prod-

Cash Flow from Operating Activities

ucts Business.

Net cash provided by operating activities amounted to ¥19,721 million, compared with ¥11,580 million in the previous year. This was

Operating Income

mainly because depreciation and impairment loss exceeded the

Operating income increased ¥6,906 million, or 91.9%, to ¥14,423

loss before income taxes.

million (US$128 million). The operating income margin stood at

Cash Flow from Investing Activities

6.5%, a 2.6 percentage-point up compared with the previous year.

Net cash used in investing activities totaled ¥12,135 million, from

Loss Attributable to Owners of Parent¥2,675 million in the previous year. Main factors included purchase

Loss attributable to owners of parent was ¥16,600 million (US$147

of property, plant and equipment and intangible assets, purchasemillion), compared with ¥5,327 million (US$47 million) in the previ-of shares of subsidiaries, and payments for transfer of business.

ous fiscal year. This equates to loss of ¥45.32 for the year on a pershare basis.

Sales by Region
The Japanese market accounted for sales of ¥100,304 million(US$890 million), the Chinese market for ¥30,299 million (US$268
million), with all other markets accounting for ¥92,697 million(US$822 million).

55.1

2012 2013 2014 2015 2016

60

40,00045

30,00030

20,00015

10,0002012 2013 2014 2015 2016

0

0

19,721

122,996

40,00000Millions of yen

48.4
94,256

115,472

92,752

14,423
7,517

8,864

10,000

24

49.1

49.8
16,68080,000110,211

120,000

23,911

20,00052.3

160,000

30,000%

11,580Millions of yen

Net Cash Provided byOperating Activities

11,549Millions of yen% of total sales

23,735

Overseas Sales

32,507

Operating Income

2012 2013 2014 2015 2016

Financial Position

Cash Flow from Financing Activities
Net cash provided by financing activities was ¥4,788 million, compared with ¥2,964 million in net cash used in the previous year. The

As of March 31, 2016, total assets amounted to ¥293,138 million,

main factor was proceeds from long-term loans payable, which

down ¥26,529 million from a year earlier. This was due primarily tocontrasted with repayments of long-term loans payable, redemp-

a decline in property, plant and equipment stemming from impair-tion of bonds, and purchase of treasury shares.

ment treatment of non-current assets owned by the Muroran Plant.
By contrast, there was an increase in cash and deposits.
Total liabilities stood at ¥181,797 million, up ¥365 million froma year earlier. This was due mainly to an increase in non-current
liabilities such as long-term loans payable, which contrasted withdecreases in advances received, provision for loss on wind power

Interest-Bearing Debt

generator business, and other current liabilities. Interest-bearing
debt was ¥51,341 million, up ¥9,994 million from a year earlier.

Millions of yen

Net assets amounted to ¥111,340 million, down ¥26,894 million

80,000from a year earlier. This was due mainly to a decline in retained

51,341

41,34642,09240,00053,24263,607

earnings stemming from a loss attributable to owners of parent.
60,00020,00002012 2013 2014 2015 2016

Net Assets

Equity Ratio

ROE

Millions of yen

%

%

0

15

−10

4.1

10.2

(13.5)

0

6.3

37.5

42.7

47.1

43.8

30

0

2012 2013 2014 2015 2016

10

(3.9)

40,00020

39.2

138,234

139,26845

111,340

80,000134,368

120,000

60

128,613160,000−20

2012 2013 2014 2015 20162012 2013 2014 2015 201625

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheet
March 31, 2016 and 2015

AssetsMillions of yen

Thousands of
U.S. dollars(Note 3)

2015

2016

2016

¥ 49,176¥ 62,018

Current assets:
Cash on hand and in banks (Notes 14 and 16)$

550,390

Notes and accounts receivable:
Unconsolidated subsidiaries and affiliates
Trade (Note 16)

204

257

2,281

56,48252,493465,859

179

286

2,538

(157)

(248)

(2,201)Inventories (Note 4)

68,327

67,195596,335

Deferred tax assets (Note 20)

9,235

7,120

63,188Other current assets

7,529

6,451

57,251   Total current assets

190,976

195,574

1,735,659

Land

10,897

10,33491,711

Buildings and structures

97,77077,287

685,898

Machinery and equipment  OtherLess allowance for doubtful accounts

Property, plant and equipment, at cost (Notes 6 and 7):

142,464

134,348

1,192,297

Leased assets

3,711

3,206

28,452

Construction in progress

1,404

3,530

31,328Less accumulated depreciation
Property, plant and equipment, net

Intangible assets

256,248

228,7072,029,704(174,270)(179,991)(1,597,364)

81,97848,715432,330

710

1,676

14,874

Investments and other assets:
Investments in unconsolidated subsidiaries and affiliates

1,003

1,002

8,892

Investment securities (Notes 16 and 17)

38,731

29,939265,699

74

63

559

Retirement benefit asset (Note 19)

3,063

1,872

16,613

Deferred tax assets (Note 20)

1,002

12,157

107,890

Other assets

2,714

2,707

24,024

Less allowance for doubtful accounts

(588)

(573)

(5,085)46,002

47,171

418,628¥ 319,667¥ 293,138$ 2,601,509

Long-term loans receivable

Total investments and other assets   Total assets

26

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

Liabilities and net assets

Millions of yen

Thousands of
U.S. dollars(Note 3)

2015

2016

2016

¥ 12,255¥ 12,569$ 111,546

21,768940

8,342

Current liabilities:
Short-term borrowings (Notes 9 and 16)
Current portion of long-term debt (Notes 9 and 16)
Notes and accounts payable:   Unconsolidated subsidiaries and affiliates   Trade (Note 16)

80

107

950

42,33753,727

476,810

2,563

1,461

12,966

34,697

18,984

168,477

Accrued income taxes (Note 20)

1,171

1,456

12,922

Provision for loss on wind power generator business

13,203

8,687

77,094

Other current liabilities

17,43920,540182,286

145,520

118,475

1,051,429

7,322

37,831

335,738  Other
Advances received for products   Total current liabilities
Long-term liabilities:
Long-term debt (Notes 9 and 16)
Accrued retirement benefits   For directors and corporate auditors

109

108

958

Retirement benefit liability (Note 19)

10,857

11,315

100,417

Deferred tax liabilities (Note 20)

3,064

230

2,041

Other long-term liabilities

14,55913,836

122,790

35,912

63,322561,963   Total long-term liabilities
Net assets:
Shareholders’ equity (Note 13)
Common stock:  Authorized —1,000,000,000 shares

19,694

19,694

174,778

Capital surplus

5,425

5,467

48,518Retained earnings

103,330

84,554

750,390(731)(2,302)(20,430)

127,718

107,413953,257

Unrealized holding gain (loss) on securities

9,195

3,830

33,990

Unrealized gain (loss) from hedging instruments

(194)

337

2,991

Translation adjustments

239

51

453

Remeasurement of retirement benefit plans(399)(1,609)(14,279)    Total accumulated other comprehensive income

8,839

2,609

23,154Non-controlling interests

1,676

1,318

11,697   Total net assets

138,234

111,340

988,108    Total liabilities and net assets¥319,667¥293,138$2,601,509  Issued— 371,463,036 shares

Treasury stock, at cost (3,995,515 shares in 2016 and 1,192,297 shares in 2015)   Total shareholders’ equity
Accumulated other comprehensive income:The accompanying notes are an integral part of these statements.

27

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Income
For the years ended March 31, 2016 and 2015

Millions of yen

Thousands of
U.S. dollars(Note 3)

2015

2016

2016

Net sales¥194,674¥223,301$1,981,727

Cost of sales (Note 10)

159,188

179,197

1,590,318

35,48644,103

391,400

27,96929,680263,401

7,517

14,423

128,000

Gross profit
Selling, general and administrative expenses (Note 10)
Operating income
Other income (expenses):
Interest and dividend income

718

772

6,851

Interest expense

(264)

(345)

(3,062)(805)(35,447)(314,581)(15,967)——

Impairment loss (Note 7)
Provision for loss on wind power generator business

3,277(1,451)(12,877)(13,041)(36,472)(323,678)(5,523)(22,049)(195,678)

Current

3,534

3,357

29,792

Deferred(3,945)(8,996)(79,837)

Loss (Note 26)(5,112)(16,409)(145,625)

Other, net (Note 11)
Loss before income taxes
Income taxes (Note 20):

Profit attributable to non-controlling interests
Loss attributable to shareholders of The Japan Steel Works, Ltd.
The accompanying notes are an integral part of these statements.

28

215

191

1,695

¥ (5,327)¥ (16,600)$ (147,320)

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Comprehensive Income
For the years ended March 31, 2016 and 2015

Loss

Millions of yen

Thousands of
U.S. dollars(Note 3)

2015

2016

2016

¥(5,112)¥(16,409)$(145,625)

Other comprehensive income:
4,902(5,364)(47,604)

Unrealized gain (loss) from hedging instruments

(64)

531

4,712

Translation adjustments

358

(229)

(2,032)Remeasurement of retirement benefit plans

617(1,231)(10,925)

Unrealized holding gain (loss) on securities

Total other comprehensive income (Note 12)

5,814(6,294)(55,857)¥

701¥(22,703)$(201,482)

Shareholders of The Japan Steel Works, Ltd.

¥

487¥(22,831)$(202,618)

Non-controlling interests

¥

213

¥

$

Comprehensive income
Total comprehensive income attributable to:

127

1,127

The accompanying notes are an integral part of these statements.

29Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Changes in Net Assets
For the years ended March 31, 2016 and 2015

Millions of yen

Shareholders’ equity

Accumulated other comprehensive income

Treasurystock (Note
13)

Total
shareholders’ equity

Total
Unrealized
Remeasurement accumulated
Unrealized
benefit plansotherholding gain gain (loss)
from hedging Translation adjustments comprehensive Non-controlling(loss) on(Note 19)
incomeinterest
instruments adjustments
securities

Commonstock

CapitalsurplusRetainedearnings

Balance at April 1, 2014
Cumulative effect of change inaccounting principle (Note 2)
Restated balance at April 1, 2014
Changes during the year
Cash dividends paid
Loss attributable toshareholders of
The Japan Steel Works, Ltd.
Purchases of treasury stock
Disposal of treasury stock
Changes in the scopeof consolidation
Net changes in items otherthan those in shareholders’ equity
Total changes during the year
Balance at March 31, 2015

¥19,694¥5,425¥110,635¥(730) ¥135,026¥4,293¥(130)¥ (96)¥(1,042)¥3,024¥1,218¥139,268

5,425

(555)
110,080(555)
134,471

4,293

(130)

(96)

(1,042)

3,024

1,218

(555)
138,713

Balance at April 1, 2015
Cumulative effect of change inaccounting principle (Note 2)
Restated balance at April 1, 2015
Changes during the year
Cash dividends paid
Loss attributable toshareholders of
The Japan Steel Works, Ltd.
Purchase of shares of
consolidated subsidiaries
Purchases of treasury stock
Disposal of treasury stock
Transfer of loss on disposalof treasury shares
Changes in the scopeof consolidation
Net changes in items otherthan those inshareholders’ equity
Total changes during the year
Balance at March 31, 2016

19,694(730)(1,666)

Total net
assets(1,666)(1,666)(5,327)(1)
0(5,327)
(1)
0

242

242

242

—
¥19,694(0)(6,750)¥5,425 ¥103,330(1)(6,752)¥(731) ¥127,718

4,902
4,902
¥9,195(64)(64)¥(194)

335
335
¥239

642
642
¥ (399)

5,815
5,815
¥8,839457
457¥1,676¥19,694¥5,425 ¥103,330¥ (731) ¥127,718¥ 9,195¥(194)¥ 239¥ (399)¥ 8,839¥1,676 ¥138,234

19,694

5,425

9,195

(194)

239

(399)

8,839

(5,327)

(1)
0

(0)

103,330

41¥5,467

1,676—
138,234(1,653)(1,653)(16,600)(16,600)(16,600)45(2,940)842

45(2,940)
842

—

—

—

—

45

–
¥19,694

127,718(1,653)(2,940)
1,368

(525)
521

(731)

6,273
(478)
¥138,234(521)(18,775)¥ 84,554(1,571) (20,305)¥(2,302) ¥107,413(5,364)(5,364)¥ 3,830

531
531
¥ 337

(187)
(187)
¥ 51

(1,210)(1,210)¥(1,609)(6,230)(6,230)¥ 2,609(358)(6,588)(358) (26,894)¥1,318 ¥111,340

Thousands of U.S. dollars (Note 3)

Shareholders’ equity

Balance at April 1, 2015
Cumulative effect of change inaccounting principle (Note 2)
Restated balance at April 1, 2015
Changes during the year
Cash dividends paid
Loss attributable toshareholders of
The Japan Steel Works, Ltd.
Purchase of shares of
consolidated subsidiaries
Purchases of treasury stock
Disposal of treasury stock
Transfer of loss on disposalof treasury shares
Changes in the scopeof consolidation
Net changes in items otherthan those inshareholders’ equity
Total changes during the year
Balance at March 31, 201630

Accumulated other comprehensive income

Treasurystock (Note
13)

Total
shareholders’ equity

Total
Unrealized
Remeasurement accumulated
Unrealized
benefit plansotherholding gain gain (loss)
from hedging Translation adjustments comprehensive Non-controlling(loss) on(Note 19)
incomeinterest
instruments adjustments
securities

Commonstock

CapitalsurplusRetainedearnings$174,778$48,145$ 917,022$ (6,487) $1,133,458$ 81,603$(1,722)$ 2,121$ (3,541)$ 78,443$14,874$1,226,784

174,778

48,145917,022(6,487)81,603(1,722)

2,121(3,541)

78,443

14,874—1,226,784(14,670)(14,670)(14,670)(147,320)(147,320)(147,320)

399(26,092)
7,472

399(26,092)
7,472

—

—

—

—

399

(26,092)
12,141(4,659)4,624—$174,778

364$48,518

1,133,458

Total net
assets(4,624)(166,622)$ 750,390(13,942)(180,201)$(20,430) $ 953,257(47,604)(47,604)$ 33,990

4,712
4,712
$ 2,991(1,660)(1,660)$ 453(10,738)(10,738)$(14,279)(55,289)(55,289)$ 23,154(3,177)(58,466)(3,177)(238,676)$11,697 $ 988,108

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Cash Flows
For the years ended March 31, 2016 and 2015

Operating activities
Loss before income taxes
Depreciation and amortization
Impairment loss
Interest and dividend income
Interest expense
Equity in (earnings) losses of affiliates(Gain) loss on sales of property, plant and equipment
Loss on disposal of tangible and intangible assets(Gain) loss on sales of investment securities
Gain on bargain purchase
Gain on settlement of long-term guarantee deposited
Increase (decrease) in provision for loss on wind power generator business
Loss on sales of shares of subsidiaries and associates
Changes in operating assets and liabilities:   Trade assets (Note 16)  Trade liabilities   Inventories (Note 4)  Other   Subtotal
Interest and dividends received
Interest paid
Income taxes paid    Net cash provided by operating activities
Investing activities
Investments into time deposits
Proceeds from withdrawal of time deposits
Increase in tangible and intangible assets
Decrease in tangible and intangible assets
Proceeds from sale of investment securities
Purchases of investment securities
Reimbursement of long-term deposits on contracts(Increase) decrease in short-term loans receivableCollection of long-term loans receivable
Payments for transfer of business
Purchase of investments in subsidiaries
Proceeds of investments in subsidiaries
Other   Net cash used in investing activities
Financing activities (Notes 9 and 16)
Net increase (decrease) in short-term borrowings
Increase in long-term debt
Decrease in long-term debt
Redemption of bonds
Cash dividends paid
Acquisition of treasury stock
Repayments of finance lease obligations
Other   Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents(Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Increase in cash and cash equivalents resulting from merger
Cash and cash equivalents at end of the year (Notes 14 and 16)

Millions of yen

Thousands of
U.S. dollars(Note 3)

2015

2016

2016

¥ (5,523)
10,936
805
(718)
264
0
(6)
343
(2,214)(218)(709)
13,203
55¥(22,049)
10,84335,447
(772)
345
0
(112)
892
(54)
—
—
(4,515)—$(195,678)
96,228314,581(6,851)
3,062
0
(994)
7,916
(479)
—
—
(40,069)
—

3,834
(151)
(2,714)(1,860)15,325712(255)(4,201)
11,580(11,637)
11,5572,363
122
22,431771(336)(3,144)
19,721(103,275)
102,565
20,971
1,083
199,068
6,842(2,982)(27,902)
175,018(6)
14(5,392)
260
2,835
(11)
(192)
215
13
(200)
(56)
3
(159)
(2,675)(964)
757(9,976)
322
839
(11)
(378)
0
14
(531)
(2,293)—
87(12,135)(8,555)
6,718(88,534)
2,858
7,446
(98)
(3,355)0
124(4,712)(20,350)—
772(107,694)

(37)
2,250
(2,712)—(1,668)(1)(803)
8(2,964)415
6,356
42,297498¥49,152313
30,900(11,105)(10,000)(1,653)(2,940)
(724)
(1)
4,788
(68)
12,30649,152—¥ 61,458

2,778
274,228(98,553)(88,747)(14,670)(26,092)(6,425)(9)42,492(603)
109,212436,209—$ 545,421

The accompanying notes are an integral part of these statements.

31

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
1. Basis of Presentation
The Japan Steel Works, Ltd. (the “Company”) and its domestic subsidiaries maintain their books of account in conformity with the financial
accounting standards of Japan, and its foreign subsidiaries maintaintheir books of account in conformity with those of their respective countries of domicile.
The accompanying consolidated financial statements have been
prepared in accordance with accounting principles generally acceptedin Japan, which are different in certain respects as to the application anddisclosure requirements of IFRS, and have been compiled from the consolidated financial statements prepared by the Company as required by
the Financial Instruments and Exchange Law of Japan.
As permitted by the Financial Instruments and Exchange Law ofJapan, amounts of less than one million yen have been omitted. As aresult, the totals shown in the accompanying consolidated financial
statements (both in yen and in U.S. dollars) do not necessarily agreewith the sums of the individual amounts.
Certain amounts in the prior year’s consolidated financial statements
have been reclassified to conform to the current year’s presentation.

32

interests which are translated at their historical exchange rates. Revenue
and expense accounts are translated at the average rates of exchange in
effect during the year. Differences arising from the translation are presented as translation adjustments and Non-controlling interests in the
consolidated financial statements.
Revenue and expense items arising from transactions denominatedin foreign currencies are generally translated into yen at the rates of
exchange in effect at the respective transaction dates.
All monetary assets and liabilities denominated in foreign currencies are translated into yen at the rates of exchange in effect at the balance sheet date and differences arising from the translation are includedin the consolidated statements of income.
(c) Cash equivalents
Short-term investments with a maturity of three months or less whenpurchased which can easily be converted to cash and are subject to little
risk of change in value are considered to be cash equivalents.
(d) Inventories
Real estate held for sale, finished products and work in process arestated at the lower of cost or net realizable value determined principallyby the specific identification method. Raw materials are stated at thelower of cost or replacement cost determined principally by the moving
average method.

2. Summary of Significant Accounting Policies(a)	Principles of consolidation and accounting for investments inunconsolidated subsidiaries and affiliates
The accompanying consolidated financial statements include theaccounts of the Company and any significant companies controlled
directly or indirectly by the Company.
Companies over which the Company exercises significant influencein terms of their operating and financial policies have been accounted
for by the equity method. All significant intercompany balances andtransactions have been eliminated in consolidation.
As of March 31, 2016, the numbers of consolidated subsidiaries, andsubsidiaries and affiliates accounted for by the equity method were 32
and 1 (31 and 1 in 2015), respectively. SM PLATEK Co.,LTD. is included asa consolidated company due to the acquisition of its shares in the current fiscal year.
Certain foreign subsidiaries are consolidated on the basis of fiscal
periods ended December 31, which differ from that of the Company.
However, the necessary adjustments have been made if the effect of thedifference is material.
Investments in subsidiaries and affiliates which are neither consolidated nor accounted for by the equity method are carried at cost or less.
Where there has been a permanent decline in the value of such investments, the Company has written them down.
Differences between the cost and the underlying net equity at fairvalue of investments in consolidated subsidiaries and in companies
accounted for by the equity method have been amortized by thestraight-line method over five years after acquisition and are included inselling, general and administrative expenses.

(h) Provision for loss on construction contracts
The Company provides a provision for loss on construction contracts,
which has not been delivered by the fiscal year end, by estimating theamount of total losses anticipated in the following fiscal year and thereafter to be incurred, when the amounts can be reasonably estimated.

(b) Foreign currency translation
The balance sheet accounts of the foreign consolidated subsidiaries aretranslated into yen at the rates of exchange in effect at the balance sheet
date, except for the components of net assets excluding Non-controlling(i) Provision for loss on wind power generator business
The Company provides a provision for loss on wind power generator
business by estimating the amount of total losses caused by the defectsof certain parts used in wind power generators.

(e) Investment securities
Marketable securities classified as other securities are carried at fairvalue with changes in unrealized holding gain or loss, net of the applicable income taxes, included directly in net assets. Non-marketable securities classified as other securities are carried at cost. Cost of securities
sold is determined by the moving average method.
(f) Allowance for doubtful accounts
The allowance for doubtful accounts is provided for possible bad debts
at an amount estimated based on the historical experience with bad
debts on normal receivables plus an additional allowance for specificuncollectible amounts determined by reference to the collectability of
individual doubtful accounts.
(g) Provision for warranties for completed construction
The Company provides a provision for warranties for completed construction by estimating losses on possible future claims.

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report(j) Property, plant and equipment and depreciation
Property, plant and equipment is stated on the basis of cost. Depreciation of property, plant and equipment is determined by the declining-balance method over the estimated useful lives of the respective
assets, except for buildings to which the straight-line method is applied.
Significant renewals and additions are capitalized at cost. Maintenance and repairs are charged to income as incurred.
(k) Leases and depreciation
Finance lease transactions which do not stipulate the transfer of ownership of the leased assets to the lessee are accounted for as purchase andsales transactions.
With regard to the depreciation method of leased assets, thestraight-line method is applied using the lease period as the estimateduseful life and a residual value of zero.
(l) Retirement benefit
The retirement benefit obligation for employees is attributed to eachperiod by the benefit formula method.
Prior service cost is being amortized as incurred by the straight-line
method over ten years, which is shorter than the average remaining
years of service of the eligible employees.
Actuarial gain or loss is amortized in the year following the year inwhich the gain or loss is recognized by the straight-line method over ten
years, which is shorter than the average remaining years of service of theemployees participating in the plans.
Certain subsidiaries use a simplified method in the calculation of
their retirement benefit obligation.
(m) Income taxes
Deferred tax assets and liabilities have been recognized in the consolidated balance sheets with respect to the differences between financial
reporting and the tax bases of the assets and liabilities, and are measured using the enacted tax rates and laws which will be in effect when
the differences are expected to reverse.
(n) Research and development expenses
Research and development expenses are charged to income whenincurred.
(o) Revenue and cost recognition
Revenues on sales of products are generally recognized at the time of
shipment.
Revenues and costs, of which the percentage of completion can bereliably estimated, are recognized by the percentage-of-completion
method. The percentage of completion is calculated at the cost incurred
as a percentage of the estimated total cost. The completed-contract
method is applied to contracts for which the percentage of completioncannot be reliably estimated.
(p) Derivative financial instruments
Derivative financial instruments are carried at fair value. Gain or loss onderivatives designated as hedging instruments is deferred as acomponent of net assets until the loss or gain on the underlying hedged
items is recognized. Foreign currency receivables and payables aretranslated at the applicable forward foreign exchange rates when certain conditions are met. In addition, the related interest differential paidor received under interest-rate swaps utilized as hedging instruments is
recognized over the terms of the swap agreements as an adjustment to
the interest expense of the underlying hedged items when certain conditions are met.
(q) Consumption tax
Accounting treatment of consumption tax is the tax exclusion method.
(r) Provision for directors’ bonuses
Provision for directors’ bonuses is provided based on estimatedamounts to be paid in the subsequent period that are applicable to thecurrent period.
(s) Provision for directors’ retirement benefits
Provision for directors’ retirement benefits is provided based on estimated amounts determined by internal rules.
(t) Accounting changes
The Company and its domestic consolidated subsidiaries adopted“Revised Accounting Standard for Business Combinations” (ASBJ Statement No. 21 of Sep 13, 2013), “Revised Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22 of Sep 13, 2013),
and others effective from April 1, 2015. As a result, any change resulting
from the Company’s ownership interests in its subsidiary when the Company retains control over the subsidiary is accounted for as capital surplus, and acquisition related costs are expensed in the year in which thecosts are incurred. For any business combinations on or after the beginning of the current fiscal year, subsequent adjustment to the provisionalamount recognized based on the purchase price allocation is reflectedin the consolidated financial statements for the period in which the business combination occured. In addition, the presentation method of
profit (loss) was amended and “minority interests” was changed to“non-controlling interests.” To reflect these changes in presentation,
reclassifications have been made to the consolidated financial statements for the prior fiscal year presented herein.
The aforementioned accounting standards are applied prospectively from the beginning of the current fiscal year, according to the transitional treatment provided in Paragraph 58-2 (4) of the AccountingStandard for Business Combinations and Paragraph 44-5 (4) of the Consolidation Accounting Standard.
The effect of these changes on operating income, ordinary income
and loss before income taxes for the current fiscal year, and capital surplus as of the end of the current fiscal year is immaterial.
In the consolidated statement of cash flows for the current fiscal
year, cash flows from the purchase or sale of shares in subsidiaries that
do not result in change in scope of consolidation are presented under“Cash flows from financing activities,” whereas cash flows concerning
the costs related to the purchase of shares in subsidiaries that result in achange in the scope of consolidation or the expenses incurred in33relation to purchase or sales of shares in subsidiaries that do not resultin change in scope of consolidation are presented under “Cash flows
from operating activities.”
The effect on the amounts per share is immaterial.
(u) Standards issued but not yet effective
Implementation Guidance on Recoverability of Deferred Tax Assets
On March 28, 2016, the ASBJ issued “Revised Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26)(1) Overview
Regarding the treatment of the recoverability of deferred tax assets,a review was conducted on the framework of Japanese Institute ofCertified Public Accountants Audit Committee Report No. 66 “Audit
Treatment on Determining the Recoverability of Deferred Tax
Assets,” whereby companies are categorized into five categories anddeferred tax assets are estimated based on each of thesecategories.
(Revisions on category requirements and deferred tax assets to berecorded)• Treatment of companies that do not satisfy any of the requirements for (Category 1) through (Category 5)•C ategory Requirements for (Category 2) and (Category 3)• Treatment related to future deductible temporary differences whichcannot be scheduled in companies that qualify as (Category 2)• Treatment related to the reasonably estimable period of future
pre-adjusted taxable income in companies that qualify as (Category 3)•Treatment in cases where a company satisfies the category
requirements for (Category 4) but qualify as (Category 2) and (Category 3)(2) Scheduled date of adoption
The Company expects to adopt the revised implementation guidance from the fiscal year beginning on or after April 1, 2016.
(3)	Impact of adopting revised accounting standards and guidance
The Company is currently evaluating the effect of adopting thisrevised implementation guidance on its consolidated financial
statements.
3. U.S. Dollar Amounts
The translation of yen amounts into U.S. dollars is included solely forconvenience, as a matter of arithmetic computation only, at ¥112.68 =U.S.$1.00, the approximate rate of exchange prevailing on March 31,
2016. This translation should not be construed as a representation that
all amounts shown could be converted into U.S. dollars at such rate.

34

4. Inventories
Inventories at March 31, 2016 and 2015 consisted of the following:
Millions of yen

Thousands of
U.S. dollars

2016

2016

2015
Real estate held for sale
Finished products
Work in process
Raw materials and supplies
Total

¥

6
2,096
60,9885,234¥68,327¥

283 $ 2,512
1,703
15,11458,878 522,524
6,328
56,159¥67,195 $596,335

Work in process related to construction contracts of which a loss isanticipated to be incurred was offset with a provision for loss on construction contracts of ¥172 million ($1,526 thousand) at March 31, 2016and ¥791 million at March 31, 2015.
5. Depreciation
Depreciation expense on property, plant and equipment for the years
ended March 31, 2016 and 2015 were as follows:

Depreciation expense

Millions of yen

Thousands of
U.S. dollars

2015

2016

2016

¥11,008¥10,669$94,684

6. Advanced Depreciation
Accumulated advanced depreciation related to government grants
received has been deducted directly from the acquisition costs of certain tangible fixed assets (plant, machinery and equipment). Suchaccumulated depreciation at March 31, 2016 and 2015 are summarized as follows:

Accumulated advanced
depreciation expense

Millions of yen

Thousands of
U.S. dollars

2015

2016

2016

¥1,286¥1,283$11,386

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

7. Impairment Loss
Current fiscal year (From April 1, 2015 to March 31, 2016)
The Group recorded an impairment loss on the following groups ofassets in the current fiscal year:
Use

Steel and Energy
Products:
Business assets
Steel and Energy
Products:
Business assets atinvestee subsidiary

Asset type

Buildings, structures,
machinery andequipment, land,
construction inprogress, etc.
Machinery andequipment, etc.

Location

Muroran, Hokkaido

Muroran, Hokkaido
and Guangdong,China(1) Grouping of assets
The Company and its consolidated subsidiaries (hereinafter collectively known as the “Group”) determine whether to recognize an
impairment loss and measures the loss by grouping assets basedon the smallest units used in management accounting that generate cash flows which are largely independent and whose revenue
and expenditures are identified on an ongoing basis.
However, the Group determines whether to recognize impairment and measures the impairment on an individual asset basis if
the asset is idle and not expected to be used in the future.
(2) Circumstances that led to the recognition of the impairment loss
Carrying amounts of non-current assets were reduced to recoverable amounts and the reduced amounts were recognized in
extraordinary losses as impairment loss because investment
amounts were no longer expected to be recovered due to adecrease in profitability.
Breakdown of the impairment loss is as follows:
Buildings and structures
Machinery, equipment
and vehicles
Tools, furniture and fixtures
Land
Leased assets (property, plantand equipment)
Construction in progress
Leased assets (intangible assets)
Other (intangible assets)
Total¥19,744 million $175,222 thousand
10,764401
770

95,527
3,559
6,834

232
3,439
16
79
¥35,447

2,059
30,520142
701$314,581

Prior fiscal year (From April 1, 2014 to March 31, 2015)
The Group recorded an impairment loss on the following groups ofassets in the prior fiscal year:
Use

Steel and Energy
Products:
Business assets atinvestee subsidiary
Steel and Energy
Products:
Business assets atinvestee subsidiary

Asset type

Location

Buildings, leased
assets, etc.

Muroran, Hokkaido

Machinery

Guangdong, China(1) Grouping of assets
The Group determines whether to recognize an impairment loss
and measure the loss by grouping assets based on the smallest unit
used in management accounting that generate cash flows which
are largely independent and whose revenue and expenditures are
identified on an ongoing basis.
However, the Group determines whether to recognize impairment and measures the impairment on an individual asset basis if
the asset is idle and not expected to be used in the future.
(2) Circumstances that led to the recognition of the impairment loss
Carrying amounts for asset groups that generate operating cash flowsthat are continually negative or expected to be continually negative
were reduced to recoverable amounts and the reduced amounts
were recognized in extraordinary losses as impairment loss.
Breakdown of the impairment loss is as follows:
Buildings and structures
Machinery, equipment
and vehicles
Tools, furniture and fixtures
Leased assets (property, plantand equipment)
Other (intangible assets)
Total¥383 million
272
9
132
8
805

(3) Calculation method for recoverable amounts
Recoverable amounts are calculated based on value in use. Value in
use is calculated based on future cash flows. A description of discount rates is omitted because undiscounted future cash flows arenegative.

(3) Calculation method for recoverable amounts
Recoverable amounts of the groups of assets are calculated at value
in use. Future cash flows are discounted at 7.52%.

35

8. Contingent Liabilities
Contingent liabilities at March 31, 2016 and 2015 consisted of thefollowing:
Millions of yen

Thousands of
U.S. dollars

2016

2016

75

$ 666

473

421

3,736

—
1,236
95

62
1,107
50

550
9,824
444

2015
As endorsers of trade notes receivable:
Endorsed to otherAs guarantors of loans:
Muroran Environmental Plant
Service Co., Ltd.
Obligation to guarantee
uncollected receivables ofleasing companies
Gotsu Wind Power Co., Ltd
Employees and other

¥

68

¥

9. Short-Term Borrowings and Long-Term Debt
All short-term borrowings, with interest at annual rates ranging from0.3490% to 1.4750% at March 31, 2016 and 0.4218% to 1.5293% at March
31, 2015, were unsecured.
Long-term debt at March 31, 2016 and 2015 were as follows:

2015
Loans from banks and insurancecompanies with interest atannual rates ranging from0.1007% to 1.2500%
Less those maturing within one year
Lease obligations
Less those maturing within one year
0.48% straight bonds, due 2015
Less those maturing within one year
Long-term indebtedness
reflected in the consolidatedbalance sheets

Millions of yen

Thousands of
U.S. dollars

2016

2016

¥ 17,332(11,105)
1,758
(663)
10,000(10,000)¥37,127 $329,491
(320)
2,840
1,644
14,590
(620)
5,502
—
—
—
—

¥ 7,322¥37,831 $335,738

The aggregate annual maturities of long-term debt and lease obligations subsequent to March 31, 2016 are summarized as follows:
Millions of yen

36

Thousands ofThousands of
U.S. dollars Millions of yen
U.S. dollars

Year ending March 31,

Long-term loans

2017
2018
2019
2020
2021
2022 and thereafter

¥

320
3,175
1,092
40
5,000
27,500$ 2,840
28,177
9,691
355
44,373244,054

Lease obligations
¥620
482
306
181
49
3

$5,502
4,278
2,716
1,606
435
27

10. Research and Development Expenses
Research and development expenses included in manufacturing costs,
and selling, general and administrative expenses for the years ended
March 31, 2016 and 2015 were as follows:

Research and development
expensesMillions of yen

Thousands of
U.S. dollars

2015

2016

2016

¥4,104¥4,292$38,090

11. Other Income (Expenses) – Other, Net
The details of “Other, net” in “Other income (expenses)” for the years
ended March 31, 2016 and 2015 were as follows:2015
Foreign exchange gain (loss)
Gain on settlement of long-term
guarantee deposited
Amortization of negative
goodwillCommission fee
Non-deductible consumption tax
Equity in losses of affiliates
Gain on sales of property,
plant and equipment
Gain on sales of investment
securities
Gain on bargain purchase
Loss on sales or disposal ofproperty, plant and equipment
Loss on valuation of subsidiaries
and associates
Loss on business of subsidiaries
and associates
Other, net
Total

¥ 357

Millions of yen

Thousands of
U.S. dollars

2016

2016

¥ (205) $ (1,819)

709

—

—

71
(310)
(135)
(0)

—
—
(40)
(0)

—
—
(355)
(0)

6

117

1,038

2,214
218

126
—

1,118
—

(343)

(892)

(7,916)

(55)

—

—

(6)
551
¥3,277——(557)(4,943)¥(1,451) $(12,877)

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

12. Other Comprehensive Income
The following table presents reclassification adjustments and tax effects
allocated to each component of other comprehensive income for theyears ended March 31, 2016 and 2015:

2015
Unrealized holding gain (loss)
on securities:
Amount arising during the year
Reclassification adjustments
for gains and losses realized
in net income
The amount of unrealized
holding gain (loss) on
securities before tax effectTax effectUnrealized holding gain (loss)
on securities
Unrealized gain (loss) fromhedging instruments:
Amount arising during the year
Tax effectUnrealized gain (loss) fromhedging instruments
Translation adjustments:
Amount arising during the year
Translation adjustments
Remeasurement benefits
plans adjustments:
Amount arising during the year
Reclassification adjustments
for gains and losses realized
in net income
The amount of unrealized
holding gain (loss) on
securities before tax effectTax effectRemeasurement benefits
plans adjustments
Total other comprehensive income¥ 7,399

Millions of yen

Thousands of
U.S. dollars

2016

2016

13.	
Supplementary Information for Consolidated Statement of
Changes in Net Assets
Year ended March 31, 2016(a)	Information regarding the number and type of shares issued
and treasury stock:
Number of sharesYear ended Increase Decrease Year ended
March 31, during
duringMarch 31,2015
the year the year2016¥(8,031) $(71,723)

(502)

6

53

6,897
(1,994)(8,024)2,660(71,211)23,607

4,902(5,364)(47,604)

(86)
21

774
(242)

6,869
(2,148)

(64)

531

4,712

358
358

(229)
(229)

(2,032)(2,032)

Shares issued:
Common stock
Treasury stock:
Common stock(Note 1 and 2)

371,463,036—

1,192,297

5,177,789— 371,463,036
2,374,571

3,995,515

Notes: 1.	Increase of 5,177,789 ordinary shares held in treasury was attributable to purchase of 5,173,000 shares under a resolution approved at the Board of Directors meeting on May 26, 2015, purchase of 4,782 shares that was less than
one share unit, and acquisition of 7 shares resulting from fractional sharesarising from an exchange of shares in making Meiki Co.,Ltd. a wholly owned
subsidiary of the Company.
2.	Decrease of 2,374,571 ordinary shares held in treasury attributable to the distribution of 2,373,831 treasury shares resulting from the exchange of sharesfor making Meiki Co.,Ltd. a wholly owned subsidiary of the Company, and saleof 740 shares resulting from the sale of shares to shareholders at their request.

(b) Dividends(i) Dividends paid to shareholders① Resolution:	Annual general meeting of shareholders458(2,122)(18,832)

545

381

3,381

1,004
(386)

(1,741)
509(15,451)4,517

617¥5,814(1,231) (10,925)¥(6,294) $(55,857)

Type of shares:
Total amount ofdividends:
Dividends per share:
Cut-off date:
Effective date:

held on June 24, 2015
Common stock¥740 million ($6,567 thousand)¥2 ($0.018)
March 31, 2015
June 25, 2015

② Resolution:	
Meeting of Board of Directors held on

Type of shares:
Total amount ofdividends:
Dividends per share:
Cut-off date:
Effective date:November 2, 2015
Common stock¥912 million ($8,094 thousand)¥2.5 ($0.022)
September 30, 2015
December 3, 201537

(ii)	Dividends of which the cut-off date was in the year ended March 31,
2016, but the effective date is in the following fiscal year(ii)	Dividends of which the cut-off date was in the year ended March 31,
2015, but the effective date is in the following fiscal year

Resolution:	Annual general meeting of shareholders
held on June 24, 2016
Type of shares:
Common stock
Total amount ofdividends:¥918 million ($8,147 thousand)
Dividends per share: ¥2.5 ($0.022)
Cut-off date:
March 31, 2016
Effective date:June 27, 2016
Source of dividends: Retained earnings

Resolution:	Annual general meeting of shareholders
held on June 24, 2015
Type of shares:
Common stock
Total amount ofdividends:¥740 million
Dividends per share: ¥2
Cut-off date:
March 31, 2015
Effective date:June 25, 2015
Source of dividends: Retained earnings

Year ended March 31, 2015(a)	Information regarding the number and type of shares issued
and treasury stock:

14. Cash Flow Information(a) Cash and cash equivalents
The reconciliation between cash and cash equivalents in the accompanying consolidated statements of cash flows and cash on hand and inbanks in the accompanying consolidated balance sheets at March 31,
2016 and 2015 are summarized as follows:

Number of sharesYear ended Increase Decrease Year ended
March 31, during
duringMarch 31,2014
the year the year
2015
Shares issued:
Common stock
Treasury stock:
Common stock(Note 1 and 2)

2015
371,463,036
1,189,350—
3,350— 371,463,036
403

1,192,297

Notes: 1.	The increase in treasury stock – common stock of 3,350 was due to the acquisition of fractional shares of less than one unit.
2.	The decrease in treasury stock – common stock of 403 was due to sales offractional shares of less than one unit.

(b) Dividends(i) Dividends paid to shareholders① Resolution:

Type of shares:
Total amount ofdividends:
Dividends per share:
Cut-off date:
Effective date:② Resolution:

Type of shares:
Total amount ofdividends:
Dividends per share:
Cut-off date:
Effective date:

38

Annual	
general meeting of shareholders
held on June 25, 2014
Common stock¥925 million¥2.5
March 31, 2014
June 26, 2014
Meeting	of Board of Directors held on
November 4, 2014
Common stock¥740 million¥2
September 30, 2014
December 5, 2014

Cash on hand and in banks inthe consolidated balance sheet
Other current assets
Time deposits with maturities ofmore than three months
Cash and cash equivalents inthe consolidated statementof cash flows¥49,176—(24)¥49,152

Millions of yen

Thousands of
U.S. dollars

2016

2016

¥62,018 $550,390
322
2,858
(881)

(7,819)¥61,458 $545,421(b) Significant transactions without cash flows
Assets and liabilities corresponding to finance lease transactions thathave been recorded by the Company and its domestic consolidated
subsidiaries at March 31, 2016 and 2015 were as follows:

Lease assets
Lease obligations

Millions of yen

Thousands of
U.S. dollars

2015

2016

2016

¥485
522

¥581
631

$5,1565,600

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

15. Leases
Year ended March 31, 2016
Future minimum lease payments subsequent to March 31, 2016 under
non-cancelable operating leases are summarized as follows:Year ending March 31,

Millions of yen

Thousands of
U.S. dollars

20172018 and thereafter
Total

¥186
284
¥470

$1,651
2,520$4,171

Year ended March 31, 2015
Future minimum lease payments subsequent to March 31, 2015 under
non-cancelable operating leases are summarized as follows:Year ending March 31,
20162017 and thereafter
Total

Millions of yen¥2,3482,328¥4,676

16. Financial Instruments
Overview(a) Policy for financial instruments
In consideration of plans for operations and capital investment, theCompany and its consolidated subsidiaries (collectively, the “Group”)
utilize funds provided by operating cash flows first. The Group uses bondissuances and bank borrowings in order to raise additional funds, if
needed. The Company manages temporary cash surpluses throughlow-risk financial assets. The Company uses derivatives for the purposeof reducing risks and does not enter into derivative contracts for speculative or trading purposes.
(b) Types of financial instruments and related risk
Trade receivables – trade notes and accounts receivable – are exposedto credit risk in relation to customers. In addition, the Company is
exposed to foreign currency exchange risk arising from receivables
denominated in foreign currencies. The foreign currency exchange risks
deriving from the trade receivables denominated in foreign currencies
are hedged by forward foreign exchange contracts, if needed.
Investment securities are exposed to market risk. These securities
are mainly composed of the shares of common stock of companies withwhich the Company has business relationships.
Trade payables – trade notes and accounts payable – have payment
due dates within one year. Since the Company is exposed to foreign currency exchange risk arising from those payables denominated in foreign
currencies, forward foreign exchange contracts are arranged to reduce
the risk, if needed.
Loans payable and bonds are used to raise funds mainly in connection with capital investments. The repayment dates of the long-term
debts extend up to seven years from the balance sheet date. Long-term
debt with variable interest rates is exposed to interest rate fluctuation

risk. However, to reduce such risk and fix the interest payments for longterm debt with variable rates, the Company utilizes interest rate swap
transactions as hedging instruments.
Regarding derivatives, the Company enters into forward foreignexchange contracts to reduce the foreign currency exchange risk arising from the receivables and payables denominated in foreign currencies. The Company also enters into interest rate swap transactions to
reduce the fluctuation risk of interest payments for long-term debt
with variable rates.
Information regarding the method of hedge accounting, hedging
instruments and hedged items, hedging policy, and the assessment of
the effectiveness of hedging activities is found in Note 2 (p).
(c) Risk management for financial instruments(i)	Monitoring of credit risk (the risk that customers or counterparties
may default)
In accordance with the internal policies of the Company for managing credit risk arising from receivables, each related division monitors credit worthiness of their main customers periodically, andmonitors due dates and outstanding balances by individual customer. In addition, the Company is making efforts to identify andmitigate risks of bad debts from customers who are having financial
difficulties. The consolidated subsidiaries also manage credit risk
using the Company’s internal policies and methods.
The Company also believes that the credit risk of derivatives isinsignificant as it enters into derivative transactions only with financial institutions which have a high credit-rating.
(ii)	Monitoring of market risk (the risk arising from fluctuations in foreign exchange rates, interest rates and others)
For trade receivables and payables denominated in foreign currencies, the Company identifies the foreign currency exchange risk foreach currency on a monthly basis and enters into forward foreignexchange contracts to hedge such risk. In order to mitigate the interest rate risk for loans payable bearing interest at variable rates, theCompany may also enter into interest rate swap transactions.
For investment securities, the Company periodically reviews
the fair values of such financial instruments and the financial position of the issuers. In addition, the Company continuously evaluates
whether securities should be maintained taking into account theirfair values and relationships with the issuers.
In conducting derivative transactions, the division in charge ofeach derivative transaction follows the internal policies, which set
forth delegation of authority. Monthly reports including actual transaction data are submitted to top management for their review. The
consolidated subsidiaries also conduct derivative transactions
using the Company’s internal policies.

39

(iii)	Monitoring of liquidity risk (the risk that the Company may not beable to meet its obligations on scheduled due dates)
Based on the report from each division, the Company prepares andupdates its cash flow plans on a timely basis to manage liquidity
risk. The consolidated subsidiaries manage the liquidity risk using
cash flow plans and report to the Company periodically.
(d)	Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market
price, if available. When there is no available quoted market price, fairvalue is reasonably estimated. Since various assumptions and factors
are reflected in estimating the fair value, different assumptions and factors could result in different fair value. In addition, the notional amountsof derivatives in Note 18 Derivative Transactions are not necessarily
indicative of the actual market risk involved in derivative transactions.
Estimated Fair Value of Financial Instruments
Carrying value of financial instruments on the consolidated balance
sheet as of March 31, 2016 and estimated fair value are shown in the following table. The following table does not include financial instruments
for which it is extremely difficult to determine the fair value (Please refer
to Note (ii) below).

Thousands of U.S. dollars

Carrying Estimatedamount fair value Difference
AssetsCash on hand and in banks$ 550,390
Trade notes and accounts
468,033
receivable
Securities:  Other securities
258,440
Total assets$1,276,873
Liabilities
Trade notes and accounts$ 477,769
payableShort-term borrowings
111,546
Current portion of long-term debt
2,840
Current portion of bonds
Long-term debt
326,651
Total liabilities$ 918,805
Derivatives (*)$ 4,313$ 550,390$ —468,033

0258,440$1,276,864—$ 0$ 477,769
111,546
2,858

$ —
—
18

327,307$ 919,489$ 4,313

648
$674
—

(*) The value of assets and liabilities arising from derivatives is shown at net value, withthe amount in parentheses representing net liability position.

Year ended March 31, 2016
Millions of yen

Year ended March 31, 2015

Carrying Estimatedamount fair value Difference
AssetsCash on hand and in banks¥ 62,018
Trade notes and accounts
52,738
receivable
Securities:  Other securities
29,121
Total assets¥143,878
Liabilities
Trade notes and accounts
payable¥ 53,835
12,569
Short-term borrowings
Current portion of long-term debt
320—
Current portion of bonds
36,807Long-term debt
Total liabilities¥103,531
Derivatives (*)¥
486¥ 62,018¥ —52,738(0)29,121¥143,877—¥ (0)¥ 53,835
12,569322—
36,881¥103,608
¥
486

¥ —
—
2
—
73
¥76
—

Millions of yen

Carrying Estimatedamount fair value Difference
AssetsCash on hand and in banks
Trade notes and accounts
receivable
Securities:  Other securities
Total assets
Liabilities
Trade notes and accounts
payableShort-term borrowings
Current portion of long-term debt
Bonds
Long-term debt
Total liabilities
Derivatives (*)¥ 49,176¥ 49,176¥ —56,67856,675(2)

37,408¥143,263

37,408¥143,261—¥ (2)¥ 42,418 ¥ 42,418
12,255
12,255
11,105
11,11810,00010,0146,227
6,301¥ 82,006 ¥ 82,108¥ (288) ¥ (288)

¥ —
—
13
14
74
¥101
—

(*) The value of assets and liabilities arising from derivatives is shown at net value, withthe amount in parentheses representing net liability position.

40

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report(i)	Method to determine the estimated fair value of financial instruments and other matters related to securities and derivativetransactions(iii)	Redemption schedule for receivables and securities with maturities
at March 31, 2016 and 2015.
Year ended March 31, 2016

AssetsCash on hand and in banks
The carrying amount is used for bank deposits without maturities,
because the fair value approximates the carrying value. The fairvalue of time deposits in banks with maturities is calculated basedon the present value of the total principal and interest discounted at
a rate supposing a newly made deposit.
Trade notes and accounts receivables
The fair value is calculated by categories of the remaining periods ofthe receivables based on the present value using discount rates
determined by the period to maturity and credit risk.
Securities
The carrying amount is used for other securities with maturities,
because the fair value approximates the carrying amount.
Quoted market price is used for other securities.
Liabilities
Trade notes and accounts payable and short-term borrowings
The carrying amount is used for these items because the fair value
approximates the carrying amount.
Current portion of long-term debt, bonds and long-term debt
The fair values are calculated by applying a discount rate, based on
the assumed interest rate if a similar new debt is issued, to the totalof the principal and interest. The current portion of long-term debt
and long-term debt with variable interest rates are subject to thespecial treatment of interest rate swaps and is calculated by applying a discount rate, based on the assumed interest rate if a similar
new debt is issued, to the total of the principal and interest including that of the interest rate swap.
Derivative Transactions
Please refer to Note 18, Derivative Transactions, of the notes to theconsolidated financial statements.
(ii)	Financial instruments for which it is extremely difficult to determine
the fair value

Unlisted stocks

Millions of yen

Thousands of
U.S. dollars

2015

2016

2016

¥1,722¥1,217$10,800

Millions of yen

Due after
Due in one year
one year through Due afteror less five years five years
Cash on hand and in banks
Trade notes and accounts
receivable
Total¥ 62,018¥ ——52,576¥114,594

162
¥162

—
—

Thousands of U.S. dollars

Due after
Due in one year
one year through Due afteror less five years five years
Cash on hand and in banks
Trade notes and accounts
receivable
Total$ 550,390$——

466,596$1,016,986

1,438$1,438——Year ended March 31, 2015
Millions of yen

Due after
Due in one year
one year through Due afteror less five years five years
Cash on hand and in banks
Trade notes and accounts
receivable
Total¥ 49,176¥ ——56,050¥105,226

628
¥628

—
—

Because the fair values of these financial instruments are extremely
difficult to determine, given that they do not have quoted market
prices and future cash flows cannot be estimated, they are notincluded in “Securities” in the preceding table.

4117. Securities
Other securities:(iv) The redemption schedule for long-term debt
Year ended March 31, 2016
Millions of yen

Bonds
Due in 1 year or lessDue after 1 year through 2 years
Due after 2 years through 3 years
Due after 3 years through 4 years
Due after 4 years through 5 years
Due after 5 years

¥—
—
—
—
—
—

Long-term Leaseloans obligations
¥

320
3,175
1,092
40
5,000
27,500

¥620
482
306
181
49
3

Thousands of U.S. dollars

Bonds
Due in 1 year or lessDue after 1 year through 2 years
Due after 2 years through 3 years
Due after 3 years through 4 years
Due after 4 years through 5 years
Due after 5 years

March 31, 2016
Millions of yen

Acquisition Carrying Unrealized
cost
amount gain (loss)
Carrying amount exceeding
the acquisition cost:
StocksCarrying amount not exceeding
the acquisition cost:
StocksTotal

Long-term Leaseloans obligations$— $ 2,840—
28,177
—
9,691
—
355
—
44,373— 244,054$5,502
4,278
2,716
1,606
435
27

Year ended March 31, 2015

¥12,987¥21,432¥ 8,445

10,217¥23,204

7,283¥28,716(2,934)¥ 5,511

Thousands of U.S. dollars

Acquisition Carrying Unrealized
cost
amount gain (loss)
Carrying amount exceeding
the acquisition cost:
StocksCarrying amount not exceeding
the acquisition cost:
StocksTotal$115,256$190,202$ 74,947

90,673$205,928

64,634$254,846(26,038)$ 48,908

Millions of yen

Bonds
Due in 1 year or lessDue after 1 year through 2 years
Due after 2 years through 3 years
Due after 3 years through 4 years
Due after 4 years through 5 years
Due after 5 years¥10,000—————

Long-term Leaseloans obligations¥11,105
240
4,095
52
40
1,800

¥663
495
342
180
71
5

March 31, 2015
Millions of yen

Acquisition Carrying Unrealized
cost
amount gain (loss)
Carrying amount exceeding
the acquisition cost:
StocksCarrying amount not exceeding
the acquisition cost:
StocksTotal¥16,672¥30,882¥14,210

6,800¥23,472

6,126¥37,008(674)¥13,536

When their fair values have declined by 50% or more, impairment
losses are recorded on those securities. When their fair values havedeclined by 30% up to 50%, impairment losses are recorded on
those securities on an individual basis to the values considered tobe recoverable.

42

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

18. Derivative Transactions(a) Derivatives not subject to hedge accounting
Year ended March 31, 2016
None applicableYear ended March 31, 2015
None applicable(b) Derivatives subject to hedge accounting
The contract amounts or the amount corresponding to principal as specified by the contract as of the date of the closing of the consolidated accounts isshown below by type of hedge accounting method.
(i) Currency-related transactions
Year ended March 31, 2016
Millions of yen

Hedge accounting method

Type of derivative

Principal items hedged

Allocation method

Foreign exchange forward contracts
Sell:
U.S. dollars
Euros
Sterling pound
Foreign exchange forward contracts
Buy:
U.S. dollars
Euros
Sterling pound
Swiss franc

Accounts receivable

Contract Over one
amountyear
Fair value¥13,805
715
—

¥210
158
—

¥587
17
—

—
—
—
—

¥ (52)(21)(44)—

Accounts payable
¥

922
388
758
—

Thousands of U.S. dollars

Hedge accounting method

Type of derivative

Principal items hedged

Allocation method

Foreign exchange forward contracts
Sell:
U.S. dollars
Euros
Sterling pound
Foreign exchange forward contracts
Buy:
U.S. dollars
Euros
Sterling pound
Swiss franc

Accounts receivable

Contract Over one
amountyear
Fair value$122,515
6,345—$1,864
1,402—$5,209
151
—

—
—
—
—

$ (461)
(186)
(390)
—

Accounts payable
$

8,182
3,443
6,727
—

Note: Calculation of fair value is based on the forward exchange rates.

43

Year ended March 31, 2015
Millions of yen

Hedge accounting method

Type of derivative

Principal items hedged

Allocation method

Foreign exchange forward contracts
Sell:
U.S. dollars
Euros
Sterling pound
Foreign exchange forward contracts
Buy:
U.S. dollars
Euros
Sterling pound
Swiss franc

Accounts receivable

Contract Over one
amountyear
Fair value¥16,857
1,419
277¥2,76411—¥(1,413)54(8)¥11,815
1,014
157
13

—
—
—
—

¥1,178(96)(2)
0Accounts payable

Note: Calculation of fair value is based on the forward exchange rates(ii) Interest-related transactions
Year ended March 31, 2016
Millions of yen

Hedge accounting method

Type of derivative

Principal items hedged

Special treatment for interest
rate swaps

Receive / floating and pay / fixedLong-term borrowings

Contract Over one
amountyear
Fair value¥29,000¥29,000(*)

Thousands of U.S. dollars

Hedge accounting method

Type of derivative

Principal items hedged

Special treatment for interest
rate swaps

Receive / floating and pay / fixedLong-term borrowings

Contract Over one
amountyear
Fair value$257,366 $257,366(*)(*) Since interest rate swap contracts accounted for by the special treatment for interest rate swaps are treated together with the long-term borrowings subject to hedging, the estimatedfair value of such interest rate swap contracts is included in the estimated fair value of the corresponding long-term borrowings.
Note: Calculation of fair value is based on the stated price by financial institutions.

Year ended March 31, 2015
Millions of yen

Hedge accounting method

Type of derivative

Principal items hedged

Special treatment for interest
rate swaps

Receive / floating and pay / fixed

Current portion of
long-term borrowings
Long-term borrowings

Contract Over one
amountyear
Fair value¥4,000¥4,000(*)(*) Since interest rate swap contracts accounted for by the special treatment for interest rate swaps are treated together with the long-term borrowings subject to hedging, the estimatedfair value of such interest rate swap contracts is included in the estimated fair value of the corresponding long-term borrowings.
Note: Calculation of fair value is based on the stated price by financial institutions.

44

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

19. Retirement Benefit Plans
The Company and its consolidated subsidiaries have either funded or
unfunded defined benefit plans and/or defined contribution plans.
The Company and its domestic consolidated subsidiaries havedefined benefit plans, i.e. lump-sum payment plans, defined benefit
plans, welfare pension fund and tax-qualified pension plans, covering
substantially all employees who are entitled to lump-sum or annuity
payments, the amounts of which are determined by reference to theirbasic rates of pay, length of service, and the conditions under which termination occurs.
The changes in the retirement benefit obligation for the years ended
March 31, 2016 and 2015 are as follows:

2015
Balance at the beginning of the year
Cumulative effect of change inaccounting principle
Restated balance atthe beginning of the year
Service cost
Interest cost
Actuarial gain and loss
Retirement benefit paid
Balance at the end of the year

¥19,819840
20,659972
244
528(1,915)¥20,489

Millions of yen

Thousands of
U.S. dollars

2016

2016

¥20,489 $181,834——

20,489 181,834
1,030
9,141
197
1,748
1,097
9,736
(1,804) (16,010)¥21,011 $186,466

The changes in plan assets for the years ended March 31, 2016 and 2015
are as follows:

2015
Balance at the beginning of the year
Expected return on plan assets
Actuarial gain and loss
Contributions by the Company
Retirement benefits paid
Balance at the end the year

¥15,524
310
987
429(1,149)¥16,101

Millions of yen

Thousands of
U.S. dollars

2016

2016

¥16,101 $142,891
322
2,858
(1,025)(9,097)422
3,745(1,091)(9,682)¥14,729 $130,715

The following table sets forth the funded status of the plans and theamounts recognized in the consolidated balance sheets as of March 31,
2016 and 2015 for the Company’s and the consolidated subsidiaries’
defined benefit plans:

Balance at the beginning of the year
Retirement benefit expenses
Retirement benefit paid
Contributions
Other
Balance at the end the year

Millions of yen

2015

2016

2016

¥3,729
470
(606)
(193)
36
¥3,436¥3,436
686
(757)
(203)
—
¥3,161$30,493
6,088(6,718)(1,802)—$28,053

Thousands of
U.S. dollars

2016

2016

2015

Funded retirement benefit obligation ¥ 19,668 ¥ 20,145 $ 178,781
Plan assets at the value(17,013) (15,769) (139,945)
2,655
4,375
38,827
Unfunded retirement benefit
obligation
5,138
5,067
44,968Net liability for retirement
benefits in the balance sheet
7,793
9,442
83,795Retirement benefit liability
10,857
11,315 100,417
Retirement benefit assets(3,063)(1,872) (16,613)
Net liability for retirement
benefits in the balance sheet¥ 7,793 ¥ 9,442 $ 83,795
The components of retirement benefit expense for the years ended
March 31, 2016 and 2015 are as follows:

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial gain
and loss
Amortization of prior service cost
Simplified method for retirement
benefit expenses
Other
Retirement benefit expense

Millions of yen

Thousands of
U.S. dollars

2015

2016

2016

¥ 972
244
(310)

¥1,030197(322)$ 9,141
1,748(2,858)

380
180

397
—

3,523
—

470
48
¥1,986702
49¥2,054

6,230
435$18,229

The components of retirement benefits plans adjustments included inother comprehensive income (before tax effect) for the years ended
March 31, 2016 and 2015 are as follows:

The changes in retirement benefit liability accounted for using the simplified method for the years ended March 31, 2016 and 2015 are as follows:
Thousands of
U.S. dollars

Millions of yen

Millions of yen

Thousands of
U.S. dollars

2016

2016

2015
Prior service cost
Actuarial gain and loss
Total

¥ 180
823
¥1,004¥— $        —(1,741) (15,451)¥(1,741) $(15,451)

45

The components of retirement benefits plans adjustments included inaccumulated other comprehensive income (before tax effect) as ofMarch 31, 2016 and 2015 are as follows:

Unrecognized prior service cost
Unrecognized actuarial gain
and loss
Total

Millions of yen

Thousands of
U.S. dollars

2015

2016

2016

¥    —¥       —

(618)
¥(618)(2,359) (20,935)¥(2,359) $(20,935)$—

The fair value of plan assets, by major category, as a percentage of total
plan as of March 31, 2016 and 2015 as follows:
March 31,

2015

2016

Bonds
StocksCash on hand and in banks
General account
Other
Total

28%
41
0
16
15
100%

31%
38
0
20
11
100%

Retirement benefit trust set for the lump-sum and corporate pension
plans accounts for 17% and 19% of the total plan assets, for the years
ended March 31, 2016 and 2015, respectively.
The expected return on assets has been estimated based on the anticipated allocation to each asset class and the expected long-term returns
on assets held in each category.
The assumptions used in accounting for the above plans are as follows:
March 31,
Discount rates
Expected rates of return on plan assets

2015

2016

1.09%
2.00

0.59%
2.00

Contributions made to defined contribution plans for the years ended
March 31, 2016 and 2015 were ¥61 million ($541 thousand) and ¥32 million, respectively.

46

20. Income Taxes
The significant components of the Company’s deferred tax assets andliabilities at March 31, 2016 and 2015 were as follows:
Millions of yen

Thousands of
U.S. dollars

2016

2016

176 $
951
1,081

1,562
8,440
9,594

111

105

932

798

1,018

9,034

214
46
4,558

193
11,026
4,921

1,713
97,852
43,672

724

670

5,946

486

390

3,461

4,295

2,667

23,669

195
410
948
2,142

216
393
544
2,217

1,917
3,488
4,828
19,675

215
506

886
100

7,863
887

2015
Deferred tax assets:
Accrued enterprise taxes
Accrued bonuses
Depreciation
Amortization of long-term
prepaid expenses
Loss on revaluation of
inventory items
Loss on revaluation offinancial instruments
Impairment loss
Retirement benefit liability
Provision for warranties forcompleted construction
Provision for loss on construction
contracts
Provision for loss on wind power
generator business
Less allowance for doubtful
accounts
Asset retirement obligations
Percentage-of-completion method
Tax loss carry forwards
Unrealized loss on investment
securities
Deferred loss on hedges
Unrealized gain on intercompany
transactions
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Reserve for advanced depreciation
Reserve for special depreciation
Net defined benefit asset
Disposal cost with asset
retirement obligations
Unrealized gain on investment
securities
Deferred gain on hedges
Other
Total deferred tax liabilities
Net deferred tax assets

¥

142
996
913

¥

688
570
18,927(3,576)
15,390

720
6,390
704
6,248
28,986 257,242(4,194) (37,220)
24,792 220,021

1,479
411
984

1,342
181
937

11,910
1,606
8,316

250

232

2,059

4,568
413
110
8,217
¥ 7,173

2,579
22,888
250
2,219
221
1,961
5,744
50,976¥19,048 $169,045

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

The reconciliation between the effective tax rates reflected in the consolidated statement of income and the statutory tax rates for the years
ended March 31, 2016 and 2015 were as follows:
2015
No reconciliation items areapplicable for the year as theCompany recorded net loss
before income taxes

2016
No reconciliation items areapplicable for the year as theCompany recorded net loss
before income taxes

Adjustment of deferred tax liabilities and deferred tax assets due tochange in the corporate tax rate
In accordance with the “Act for Partial Amendment of the Income Tax
Act, etc.” (Act No. 15 of 2016) and the “Act for Partial Amendment of the
Local Tax Act, etc.” (Act No. 13 of 2016) enacted by the Diet on March 29,
2016, the reduction of income tax rates and other amendments will takeeffect from the fiscal year beginning on or after April 1, 2016. As a result,the statutory tax rate used for calculating deferred tax assets and liabilities has been changed from 32.1% to 30.7% for the temporary differences expected to be realized or settled in the fiscal years beginning on
April 1, 2016 and April 1, 2017, and 30.5% for the temporary differences
expected to be realized or settled in the fiscal years beginning on or after
April 1, 2018, respectively.
These tax rate changes resulted in a decrease of deferred tax
assets after offsetting deferred tax liabilities by ¥866 million, deferred
tax liabilities after offsetting deferred tax assets by ¥1 million, remeasurement of retirement benefit plans by ¥31 million and increase ofdeferred income taxes by ¥929 million, unrealized holding gain (loss)
on securities by ¥88 million and unrealized gain (loss) from hedging
instruments by ¥6 million.

21. Business Combinations
Transaction under common control
1. Outline of transaction
Meiki Co.,Ltd. became a wholly owned subsidiary through share exchange① Name and business of companies
Combining company: The Japan Steel Works, Ltd.
Business:	
Steel and energy products business;
industrial machinery products business;and real estate and other businesses
Combined company: Meiki Co.,Ltd.
Business:	Manufacture and sale of plastic injection
molding machines, hot presses, molds,
peripheral equipment, etc.
② Date of business combination
March 1, 2016
③ Legal form of business combination	
Share exchange between the Company as parent of thewholly owned subsidiary and Meiki Co.,Ltd. as the wholly
owned subsidiary④ Name of company after business combination
Company names remain unchanged⑤ Purpose of transaction
	The Company intends to maximize synergies between the twocompanies by making Meiki Co.,Ltd. a wholly owned subsidiary.
2. Outline of accounting treatment
The Company treated the transaction as a transaction with a non-controlling-interest shareholder under the classification of transactions
under common control, based on Accounting Standard for Business
Combinations (Accounting Standards Board of Japan (ASBJ), Statement
No. 21 issued on September 13, 2013) and the Guidance on AccountingStandard for Business Combinations and Accounting Standard for Business Divestitures (ASBJ Guidance No. 10, issued on September 13, 2013).

47

22. Asset Retirement Obligations
The following table presents the changes in asset retirement obligations
for the years ended March 31, 2016 and 2015:

3. Additional acquisition of shares in subsidiaries① Breakdown by acquisition cost and type of consideration
Consideration for acquisition:
Ordinary shares of the Company
Acquisition cost

¥842 million¥842 million②	Exchange ratio by type of shares and calculation method and thenumber of shares issueda) Exchange ratio by type of shares
The Company
Meiki Co.,Ltd.
(parent of wholly(wholly owned
owned subsidiary in subsidiary in share
share exchange)
exchange)
Exchange ratio of shares

1

4. 	Matters regarding changes in equity of the Company related totransactions with non-controlling shareholders① Key factors causing changes in capital surplus

Additional acquisition of shares in subsidiaries② 	
Increased capital surplus amounts through transactions with48

Thousands of
U.S. dollars

2015

2016

2016

¥1,271¥1,295$11,493

—
20
(17)
19
¥1,295

—
21
(2)
(6)
¥1,307

—
186
(18)
(53)
$11,599

0.21b) Calculation method for exchange ratio of sharesTo	 ensure fairness and adequacy, the Company and Meiki
Co.,Ltd. determined the exchange ratio of shares above after aseries of discussions based on calculations by SMBC Nikko Securities Inc. and Mizuho Securities Co., Ltd. requested by the Company and Meiki Co.,Ltd.
c) The number of shares issued
2,373,831 shares	 hares of the Company issued in the share exchange are treasury
S
stocks held by the Company and no new shares were issued.

non-controlling shareholders¥45 million

Balance at beginning of year
Liabilities incurred due tothe acquisition of property,
plant and equipment
Accretion expense
Liabilities settled
Other
Balance at end of year

Millions of yen

23. Investment and Rental Properties
The Company has omitted the disclosure of investment and rental properties due to immateriality for the years ended March 31, 2016 and 2015.

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

24. Segment Information
The reportable segments of the Group are components for which discrete financial information is available and whose operating results are regularly
reviewed by the Executive Committee to make decisions about resource allocation and to assess performance.
The Steel and Energy Products segment includes steel castings and forgings, steel plates, pressure vessels and steel structures. The Industrial Machinery Products segment includes injection molding machines, film and sheet machinery, blow molding machines, magnesium injection molding machines,
waste treatment equipment and manufacturing equipment for electronic products. The Real Estate and Other Businesses segment includes regional
development.
Millions of yen

Year ended March 31, 2016
Sales and operating income:Sales to third parties
Intra-segment sales and transfers
Total sales
Operating income
Assets, depreciation, and capital expenditures
Total assets
Depreciation and amortization
Capital expenditures

Reportable segments
Steel andIndustrial
Real Estate
EnergyMachineryand Other
Products
Products
Businesses

Total

AdjustmentsandEliminations

Consolidated¥74,854
4,684
79,539¥ 699¥144,358
1,883
146,242¥ 12,391¥ 4,087
3,362
7,449¥ 2,018¥223,301
9,930
233,232¥ 15,109¥—(9,930)(9,930)¥ (685)¥223,301—
223,301¥ 14,423¥60,256
7,294
9,053

¥124,383
3,009
4,940

¥12,055271
67¥196,694
10,576
14,062¥96,44392(51)¥293,138
10,66914,010Thousands of U.S. dollars

Year ended March 31, 2016
Sales and operating income:Sales to third parties
Intra-segment sales and transfers
Total sales
Operating income
Assets, depreciation, and capital expenditures
Total assets
Depreciation and amortization
Capital expenditures

Reportable segments
Steel andIndustrial
Real Estate
EnergyMachineryand Other
Products
Products
Businesses

Total

AdjustmentsandEliminations

Consolidated$664,306
41,569705,884$ 6,203$1,281,132
16,711
1,297,852$ 109,966$ 36,271
29,837
66,108$ 17,909$1,981,727
88,126
2,069,862$ 134,088$—(88,126)(88,126)$ (6,079)$1,981,727—
1,981,727$ 128,000$534,753
64,73280,343$1,103,860
26,704
43,841$106,984
2,405
595$1,745,598
93,859124,796$855,902816(453)$2,601,509
94,684
124,334

Notes: 1.	Adjustments and eliminations for segment profit of ¥685 million ($6,079 thousand) include elimination of inter-segment profit on inventories and corporate general administration expense which are not allocable to a reportable segment.
2.	Adjustments and eliminations for segment assets of ¥96,443 million ($855,902 thousand) include offset of inter-segment debt and credit, and corporate assets which are notallocable to a reportable segment.
3. Adjustments and eliminations for depreciation and amortization of ¥92 million ($816 thousand) include depreciation and amortization for corporate assets.
		 Adjustments and eliminations for capital expenditures of ¥51 million ($453 thousand) include capital expenditures for corporate assets.

49

Millions of yen

Reportable segments
Steel andIndustrial
Real Estate
EnergyMachineryand Other
Products
Products
Businesses

Year ended March 31, 2015
Sales and operating income:Sales to third parties
Intra-segment sales and transfers
Total sales
Operating income
Assets, depreciation, and capital expenditures
Total assets
Depreciation and amortization
Capital expenditures

Total

AdjustmentsandEliminations

Consolidated¥ 66,215
5,093
71,308¥ (3,900)¥126,363
1,379
127,743¥ 11,370¥ 2,095
3,446
5,542
¥ 962

¥194,674
9,919
204,593¥ 8,433¥—(9,919)(9,919)¥   (915)¥194,674—
194,674¥ 7,517¥111,415
8,043
3,474

¥108,440
2,563
4,414

¥13,097291
72¥232,953
10,8987,960¥86,713109
31¥319,667
11,008
7,992

Notes: 1.	Adjustments and eliminations for segment profit of ¥915 million include elimination of inter-segment profit on inventories and corporate general administration expense
which are not allocable to a reportable segment.
2.	Adjustments and eliminations for segment assets of ¥86,713 million include offset of inter-segment debt and credit, and corporate assets which are not allocable to areportable segment.
3. Adjustments and eliminations for depreciation and amortization of ¥109 million include depreciation and amortization for corporate assets.
Adjustments and eliminations for capital expenditures of ¥31 million include capital expenditures for corporate assets.

(a) Product and service information
Millions of yen

Year ended
March 31, 2016

Steel and Industrial Real Estate
Energy Machinery and Other
Products Products Businesses

Sales to third parties¥74,854 ¥144,358

Year ended
March 31, 2016

Steel and Industrial Real Estate
Energy Machinery and Other
Products Products Businesses

Sales to third parties$664,306 $1,281,132¥4,087 ¥223,301

Total$36,271 $1,981,727
Millions of yen

50

Year ended
March 31, 2015

Steel and Industrial Real Estate
Energy Machinery and Other
Products Products Businesses

Total

Sales to third parties¥66,215¥194,674¥2,095

2015

Total

Thousands of U.S. dollars¥126,363(b) Geographical information(i) Sales

Japan
China
OthersConsolidated

Millions of yen

Thousands of
U.S. dollars

2016

2016

¥100,417 ¥100,304 $ 890,167
29,13130,299268,894
65,12592,697
822,657¥194,674 ¥223,301 $1,981,727

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

(ii) Tangible assets
The Company has omitted the disclosure of tangible assets bycountry or region as of March 31, 2016 and 2015 because theamount of tangible assets in Japan accounted for more than 90% of
the carrying amount in the consolidated balance sheet.
(c) Significant customer information
The Company has omitted the disclosure of significant customer information for the years ended March 31, 2016 and 2015 because no individual customer accounted for more than 10% of net sales in the
consolidated statement of income.

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report(d) Information on loss on impairment of fixed assets
Impairment losses on fixed assets by reportable segment for the years
ended March 31, 2016 and 2015 are summarized as follows:
Millions of yen

Year ended
March 31, 2016

Steel and Industrial Real Estate
Energy Machinery and Other
Products Products Businesses

Total

Impairment loss

¥35,447¥35,447

Year ended
March 31, 2016

Steel and Industrial Real Estate
Energy Machinery and Other
Products Products Businesses

Impairment loss

$314,581——

Millions of yen

Thousands of U.S. dollars—

Impairment loss—

Amortization
Balance as ofMarch 31—

Industrial Real Estate Adjustments
Machinery and Other
and
Products Businesses Eliminations

Total

—

¥174

—

—

¥174

—

912

—

—

912

Thousands of U.S. dollars— $314,581

Steel and Industrial Real Estate
Energy Machinery and Other
Products Products Businesses¥805

Year ended
March 31, 2016

Steel andEnergyProducts

Total

Millions of yen

Year ended
March 31, 2015(e) Amortization and balance of goodwill
The following table presents the amortization and balance of negative
goodwill arising from business combinations on or prior to March 31,
2010 as of and for the years ended March 31, 2016 and 2015 by reportable segment:

Total
¥805

Year ended
March 31, 2016

Steel andEnergyProducts

Amortization
Balance as ofMarch 31

Industrial Real Estate Adjustments
Machinery and Other
and
Products Businesses Eliminations

Total

—

$1,544——$1,544

—

8,094

—

—

8,094
Millions of yen

Year ended
March 31, 2015

Steel andEnergyProducts

Amortization
Balance as ofMarch 31

Industrial Real Estate Adjustments
Machinery and Other
and
Products Businesses Eliminations

Total

—

¥71

—

—

¥71

—

—

—

—

—

(f) Information on gain on negative goodwill
Year ended March 31, 2016
None applicableYear ended March 31, 2015
In the Industrial Machinery Products segment, JSW AFTY Co., Ltd., a consolidated subsidiary takes over retail deposition business from MES
AFTY Co., Ltd. This resulted in a gain on negative goodwill of ¥218 million
in the fiscal year ended March 31, 2015.

51

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

25. Shareholders’ Equity
The Corporation Law of Japan provides that an amount equal to 10% of
the amount to be disbursed as distributions of capital surplus (otherthan the capital reserve) and retained earnings (other than the legal
reserve) be transferred to the capital reserve and the legal reserve,
respectively, until the sum of the capital reserve and the legal reserve
equals 25% of the capital stock account. Such distributions can bemade at any time by resolution of the meeting of shareholders, or by the
Board of Directors if certain conditions are met.
26. Amounts per ShareProfit (loss) attributable to owners of parent per share is calculated
based on the Profit (loss) attributable to owners of parent available for
distribution to shareholders of common stock and the weighted-average number of shares of common stock outstanding during the year.
Net assets per share are calculated based on the number of shares ofcommon stock outstanding at year end. Amounts per share at March 31,
2016 and 2015 and for the years then ended were as follows:

Profit (loss) attributable toowners of parent
Net assets

Yen

U.S. dollars

2015

2016

2016

¥ (14.39)
368.81¥ (45.32)
299.41$(0.40)2.66

27. Subsequent Events(Significant subsequent events)
On May 16, 2016, the Board of Directors resolved to submit proposals to
the 90th general meeting of shareholders scheduled on June 24, 2016 tochange the number of share units, consolidate shares and partiallyamend the articles of incorporation.
(1) Purpose of consolidating shares
The “Action Plan for Consolidating Trading Units” announced by all
domestic stock exchanges aims to consolidate share trading units for ordinary shares of all listed companies in Japan to 100 share trading units.
Consequently, the Company, which is listed on Tokyo Stock
Exchange and Nagoya Stock Exchange, will change the trading unit ofshares from 1,000 to 100 and every 5 shares will be consolidated into 1
share in order to maintain level of investment units of at least ¥50,000
but less than ¥500,000 that is recommended by the stock exchanges.
(2) Details of consolidating shares① Type and ratio of shares to be consolidated	Every 5 ordinary shares of the Company will be consolidated into
1 share② Effective date of consolidation of shares
October 1, 2016(3) Effect on amounts per share
Amounts per share for the current fiscal year shown below are calculated as if the consolidation of shares had been carried out at the beginning of the period:① Net assets per share: ¥1,497.04② Loss per share: (¥226.62)

52

Six-Year Summary
Financial Performance (Consolidated)
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

INDEPENDENT AUDITOR’S REPORT53

CORPORATE DIRECTORY

Stock Information

Corporate Data

Authorized Shares

1,000,000,000 shares

Trade Name

The Japan Steel Works, Ltd.

Issued and Outstanding Shares

371,463,036 shares

Head Office

Shareholders

26,324Gate City Ohsaki-West Tower,
11-1, Osaki 1-chome,
Shinagawa-ku, Tokyo, Japan

Stock Listings

Tokyo and Nagoya

Foundation

November 1, 1907

Transfer Agent and Registrar

Sumitomo Mitsui Trust Bank, Ltd.
4-1, Marunouchi 1-chome, Chiyoda-ku,
Tokyo, Japan

Paid-in Capital¥19,694 million

Employees

2,294 (Consolidated 5,224)

AuditorErnst & Young ShinNihon LLC
Hibiya Kokusai Bldg.,
2-3, Uchisaiwai-cho 2-chome,
Chiyoda-ku, Tokyo, Japan

Major Shareholders (holding %)The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
Mitsui Life Insurance Co., Ltd.
Sumitomo Mitsui Banking Corp.
Mitsui Sumitomo Insurance Co., Ltd.
Sumitomo Mitsui Trust Bank, Ltd.
BBH for the Advisor’s Inner Circle Fund II / Kopernik Glo All-cap Fund
Nippon Steel & Sumitomo Metal Corp.
State Street Bank and Trust Company
Hitachi, Ltd.

6.26%
5.33%
3.85%
3.42%
2.40%
2.22%
1.90%
1.78%
1.41%
1.37%

(as of March 31, 2016)(as of March 31, 2016)

JSW’s Stock Price
Stock price (Yen)

Tokyo stock price index (TOPIX) (points)

800

1,800

600

1,200

400

600

200

0

Trading volume (Thousands of shares)
30,00020,00010,0000
2015/4

54

5

6

7

8

9

10

11

12

2016/1

2

3

NETWORK
Düsseldorf
Ansan (near Seoul)
Shanghai
GurgaonShenzhen(near Delhi)
Taipei
Hanoi Hong Kong
ManilaBangkokCorona(near Los Angeles)

Detroit

New York

Houston

Kuala Lumpur
Singapore
JakartaDomestic
Head Office

Hiroshima Office

Muroran Plant

Nagoya Office

Fukuoka Office

Hiroshima Plant

Gate City Ohsaki-West Tower, 11-1, Osaki 1-chome,
Shinagawa-ku, Tokyo 141-0032, Japan
Phone: +81-3-5745-2001 Facsimile: +81-3-5745-2025
Mitsui Sumitomo Kaijo Nagoya Shirakawa Bldg. 7F, 9-15,
Sakae 2-chome, Naka-ku, Nagoya-shi, Aichi 460-0008, Japan
Phone: +81-52-222-1271 Facsimile: +81-52-222-1275

6-1, Funakoshi-Minami 1-chome, Aki-ku,
Hiroshima-shi, Hiroshima 736-8602, Japan
Phone: +81-82-822-0991 Facsimile: +81-82-822-0997
23-2, Sakuragaoka 1-chome, Kasuga-shi, Fukuoka 816-0872, Japan
Phone: +81-92-582-8111 Facsimile: +81-92-582-8124

Osaka Office

4, Chatsumachi, Muroran-shi,
Hokkaido 051-8505, Japan
Phone: +81-143-22-0143 Facsimile: +81-143-24-3440
6-1, Funakoshi-Minami 1-chome, Aki-ku,
Hiroshima-shi, Hiroshima 736-8602, Japan
Phone: +81-82-822-3181 Facsimile: +81-82-285-2038

Yokohama Plant

Shinanobashi Mitsui Bldg., 11-7, Utsubohonmachi 1-chome,
Nishi-ku, Osaka-shi, Osaka 550-0004, Japan
Phone: +81-6-6446-2480 Facsimile: +81-6-6446-2488

2-1, Fukuura 2-chome, Kanazawa-ku,
Yokohama-shi, Kanagawa 236-0004, Japan
Phone: +81-45-781-1111 Facsimile: +81-45-787-7200

Overseas
Japan Steel Works America, Inc.
Head Office
122 East 42nd Street, Suite 3810 New York, NY 10168, USA
Phone: +1-212-490-2630 Facsimile: +1-212-490-2575
Detroit Office24387 Halstead Road Unit B, Farmington Hills,
MI 48335, USA
Phone: +1-248-536-0288 Facsimile: +1-212-490-2575
Houston Office9801 Westheimer Road, Suite 220 Houston, TX 77042, USA
Phone: +1-713-588-1303 Facsimile: +1-713-588-1322

JSW Plastics Machinery, Inc.
Head Office
555 South Promenade Ave., Unit 104 Corona,
CA 92879, USA
Phone: +1-951-898-0934 Facsimile: +1-951-898-1747
Chicago Office
540 Capital Drive, Suite 130, Lake Zurich, IL 60047, USA
Phone: +1-847-550-0704 Facsimile: +1-847-550-0725
Detroit Office
24300 Catherine Industrial Drive, Unit 118, Novi,
MI 48375, USA
Phone: +1-248-308-2822 Facsimile: +1-248-449-6018
Atlanta Office1395 S. Marietta Parkway, Bldg. 200, Suite 201,
Marietta, GA 30067, USA
Phone: +1-770-575-0383 Facsimile: +1-678-403-1846

JAPAN STEEL WORKS INDIA PRIVATE LIMITED

611, Time Tower, MG Road, Sector 28, Gurgaon,
Haryana, 122001, India
Phone: +91-124-469-4444 Facsimile: +91-124-469-4433

PT. JSW Plastics Machinery Indonesia

Gajah Building, Unit K Jl. Dr. Saharjo Raya No.111Tebet, Jakarta
Selatan 12810, Indonesia
Phone: +62-21-8370-2536/2537 Facsimile: +62-21-829-8264

JSW IT KOREA CO., LTD.

1805, 6, Samseong-ro 96-gil, Gangnam-gu, Seoul, Korea
Phone: +82-2-2191-5294/5295 Facsimile: +82-2-2191-5296

SM PLATEK CO., LTD.

29, Cheomdan-ro, 181beon-gil, Danwon-gu, Ansan-si, Kyeonggi-do,
Korea
Phone: +82-31-488-3401 Facsimile: +82-31-488-9982

THE JAPAN STEEL WORKS (SINGAPORE) PTE. LTD.
17, Gul Lane, Singapore 629413, Republic of Singapore
Phone: +65-6861-4511 Facsimile: +65-6862-3166

The Japan Steel Works (Thailand) Co.,Ltd.

78/6 JST Building 4th Floor, Moo7, Kingkaew Road, Rachatewa,
Bangplee, Samutprakarn 10540, Thailand
Phone: +66-2-738-5272~6 Facsimile: +66-2-738-5277

JSW Plastics Machinery (TAIWAN) Corp.
Head Office
1F., No. 21, Dahu 1st Rd., Gueishan Shiang, Taoyuan,County 33373, Taiwan, R.O.C.
Phone: +886-3-396-2102 Facsimile: +886-3-396-2104
Tainan Branch
15F-7, No.689-78, Xiaodong Rd., Yongkang City,
Tainan County 71052, Taiwan, R.O.C.
Phone: +886-6-311-4192 Facsimile: +886-6-311-4193

Fine Crystal (H.K.) Co., Ltd.

Room 903, 9/F Aitken Vanson Centre, 61 Hoi Yuen Road,Kwun Tong,
Kowloon, Hong Kong
Phone: +852-2345-7485 Facsimile: +852-2357-9104

Fine Crystal Precision (S.Z.) Co., Ltd.

No.14, Tong Fu Yu Industrial Zone, Long Tian She Qu, Keng Zi Ban Shi
Chu, Ping Shan New District, Shenzhen, China
Phone: +86-755-8411-6005 Facsimile: +86-755-8411-5009

JSW Machinery Trading (Shanghai) Co., Ltd.
Head Office
28A, Strength Plaza, No.600-4 Tianshan Road,
Shanghai, 200051, China
Phone: +86-21-5206-7031/7032 Facsimile: +86-21-5206-7033
Beijin Branch
Room 622, B Section, Xingfu Plaza, No.3,
DongSanHuan North Road, Chaoyang District,
Beijing, 100027, China
Phone: +86-010-6590-8967 Facsimile: +86-010-6590-8968
Dalian Branch
Room1055, Development Building, Rong Hui Road,
Area No.9, Dalian Development District,
Dalian Liaoning 116600, China
Phone: +86-411-8761-0339 Facsimile: +86-411-8750-9182
Tianjin Branch
Room 407, Guotou Office Building, 6, Youyi Road,
Hexi District, Tianjin, 300074, China
Phone: +86-22-8837-1113 Facsimile: +86-22-8837-1153
Suzhou Branch
C-219, Dong Chuang Technical Park, No. 216 Jinfeng Rd,
Mudu, Wuzhong District, Suzhou, Jiansu 215101, China
Phone: +86-512-6831-6246 Facsimile: +86-512-6831-6249

JSW Plastics Machinery (H.K.) Co., Ltd.

Room 907, Corporation Park, 11 On Lai Street, Shatin,
New Territories, Hong Kong
Phone: +852-2648-0720 Facsimile:+852-2686-8204

JSW Injection Machine Maintenance (Shenzhen) Co., Ltd.

NINGBO TONGYONG PLASTIC MACHINERYMANUFACTURING CO., LTD.

No.1 Zhuhan Industrial Zone Hengzhang Village Shiqi
Street Yinzhou District Ningbo 315155, China
Phone: +86-574-8832-6999 Facsimile: +86-574-8821-4801

JSW Machinery (Ningbo) Co., Ltd.

No.1 Zhuhan Industrial Zone Hengzhang Village Shiqi
Street Yinzhou District Ningbo 315155, China
Phone: +86-574-8823-6758 Facsimile: +86-574-8308-1589

YPK TRADING (HONG KONG) CO., Ltd.

Flat C, 20/F, Young Ya Industrial Bldg., 381-389,
Sha Tsui Road Tsuen Wan, N.T., Hong Kong
Phone: +852-3521-0437 Facsimile:+852-3905-7216

YPK Machine Trading (Shenzhen) Co., Ltd.

Flat C, 10/F, Laifu Bldg., Fuyong Road, Baoan Shenzhen, Guangdong,
518103, China
Phone: +86-755-2733-2114 Facsimile: +86-755-2733-2106

Japan Steel Works Europe GmbHFriedrichstr. 19, 40217 Düsseldorf, Germany
Phone: +49-211-3116660 Facsimile:+49-211-31166640

JSW Plastics Machinery (Philippines) Inc.

Unit 802 Alabang Business Tower 1216 Acacia Avenue, Madrigal
Business Park, Alabang Muntinlupa City Metro
Manila 1771, Philippines
Phone: +63-2-478-2533/2534 Facsimile: +63-2-809-6221

JSW Plastics Machinery Vietnam Ltd.
Head Office
Room 103, Techno-Center Thang Long Industrial Park,
Kim Chung Commune, Dong Anh District, Hanoi, Vietnam
Phone: +84-4-3951-6383 Facsimile: +84-4-3951-6384
Ho Chi Minh Office
G-Floor, DC Tower, 111D Ly Chinh thang Ward 7, Dist3,
Ho Chi Minh, Vietnam
Phone: +84-8-3526-1295 Facsimile: +84-8-3526-1296

JSW Plastics Machinery (M) SDN. BHD.
Head Office
D6-5-G Block D6, Pusat Perdagangan Dana, 1 Jalan
PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan,
Malaysia
Phone: +60-3-7842-6076 Facsimile: +60-3-7842-6078
Johor Office
No.207, Ground Floor Industry Center, Technovation Park UTM
KM20, Jalan Pontian Lama, 81300 Skudai, Johor Bahru, Malaysia
Phone: +60-7-554-3637 Facsimile: +60-7-554-3711

1F, YiBen Electronic & Business Industrial Park,
NO.1063 Chaguang Road, Xili Town, Nanshan District, Shenzhen City,
Guangdong Province, P.R.C)P.C.:518055
Phone: +86-755-8602-0930 Facsimile: +86-755-8602-0934

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ANNUAL REPORT 2016