Annual Report
For the year ended March 31, 2013

2013

Confidence in Motion
Confidence in Motion is a unified global brand statement that encapsulates the aim of the Subaru
brand. Confidence reflects our approach towards reliable automobile manufacturing dating backto the Subaru 360 and the relationship of trust that we have built with customers by providing
enjoyment and peace of mind. In Motion expresses Subaru’s resolve to enhance customer trust
by proactively staying abreast of changing trends.
Through Confidence in Motion, Subaru aims to meet customer expectations for the freedom andfulfillment enabled by Subaru’s uniquely satisfying driving experience.

FUJI HEAVY INDUSTRIES LTD.

01 ANNUAL REPORT 2013

Contents

Consolidated Financial and Non-Financial Highlights
FUJI HEAVY INDUSTRIES LTD. AND CONSOLIDATED SUBSIDIARIES
Years ended March 31(Billions of yen)

2009

2010

2011

2012

2013

¥ 1,445.8¥ 1,428.7¥ 1,580.6¥ 1,517.1¥1,913.0

Operating income (loss)

(5.8)

27.4

84.1

44.0

120.4

Net income (loss)(69.9)(16.5)

50.3

38.5

119.6

Capital expenditures

58.0

56.1

43.1

54.3

70.2

Depreciation expenses

65.1

57.1

49.8

53.7

55.9

R&D expenses

42.8

37.2

42.9

48.1

49.1

Automobiles sales volume (thousand units)

55.5

56.3

65.7

64.0

72.4

Exchange rate (¥/$, non-consolidated)

10.2

9.3

8.6

7.9

8.2

For the Year:Net sales

03 Introduction
09 A Message to Our Stakeholders
15 Special Feature:
The Subaru Production Strategy

21 CSR at Subaru
33 Board Directors/Executive Officers
35 Financial Information
35 Consolidated Ten-YearAt Year-End:Financial Summary

Total assets

1,165.4

1,231.4

1,188.3

1,352.5

1,577.5

Net assets

394.7

381.9

414.0

451.6

596.8

36 Five-Year Automobile Sales

Interest-bearing debt

381.7

367.6

330.6

341.0

307.2

38 Management’s Discussion andNumber of employees

2,765.9

2,758.6

2,729.6

2,712.3

2,750.9

Analysis of Results of Operations
and Financial Position

46 Corporate Data/Stock Information

Financial Ratios:
ROE (%)

-

-

1.27

0.89

2.29

ROA (%):

-

0.23

0.70

0.35

0.82

1

1. ROA was calculated as “(operating income + interest and dividend income)/(average of assets at the beginning and end of the term)”

Net Sales (Billions of yen)

Operating Income (Loss) & Net Income (Loss) (Billions of yen)

2,000

150

Operating Income (Loss)

1,913.0

1,445.8

1,500

1,580.6
1,428.7

Net Income (Loss)

120.4 119.6

1201,517.1

90

84.1
50.3

60
30

1,000

0

-5.8

-60
0

-16.5

-30

500

FY

2009

2010

2011

2012

2013

-90

44.0 38.5

27.4

-69.9
FY

2009

2010

FUJI HEAVY INDUSTRIES LTD.

2011

2012

02 ANNUAL REPORT 20132013

Disclaimer Regarding Forward-Looking Statements
Statements herein concerning plans and strategies, expectations or
projections about the future, FHI’s efforts with regard to various
management issues, and other statements, except for historical facts,are forward-looking statements. These forward-looking statements
are subject to uncertainties that could cause actual results to differ
materially from those anticipated. These uncertainties include, but
are not limited to, general economic conditions, demand for andprices of FHI’s products, FHI’s ability to continue to develop andmarket advanced products, raw material prices, and currency
exchange rates. FHI disclaims any obligation to update any
forward-looking statements, whether as a result of new information,
future events, or otherwise.

At Subaru, our mission is to develop unique automobiles andprovide our customers with driving enjoyment and peace ofmind. For this reason, we create highly original technologies
that provide not only a feeling of stability and dependability
but also outstanding driving excitement.

FUJI HEAVY INDUSTRIES LTD.

03 ANNUAL REPORT 2013

Horizontally-Opposed

SUBARU
BOXER

engineSmooth rotation that cancels out vibrations + lightweight,
compact, low-center-of-gravity design = driving enjoyment
With pistons arrayed to the right and left, the layout of Subaru’s
horizontally-opposed engine is certainly distinctive. This basic structure
supports highly balanced rotation, a low level of vibration, and alightweight, compact design with a low center of gravity. Theseadvantages then contribute to the outstanding stability, handling, andcrash safety of Subaru automobiles. In sum, the horizontally-opposedengine is a core technology in our pursuit of driving enjoyment.

Excellent stability, all-conditions capability, and superior weightbalance help realize reliable driving and enhanced peace of mind
In Symmetrical All-Wheel Drive, the horizontally-opposed engine andother powertrain components are arranged in a symmetrical layout
around the propeller shaft and form a straight line down the center ofthe vehicle. This system takes thehigh driving stability andall-conditions capability of AWD to
the next level with superior weightbalance, providing the outstanding
dynamic performance of Subaru automobiles. Symmetrical
All-Wheel Drive is a concentration of advanced technologies thatreveals our passion for driving and uncompromising approach to safety.

Symmetrical

Driving
excitement

A driving experience we designed to be thrilling
In addition to crossover models, Subaru is renowned for sports models
like the SUBARU BRZ next-generation sports car. Its newly designed
chassis layout brings out the performance characteristics of thehorizontally-opposed engine, while the packaging features anextremely low center of gravity. With its turbo-charged
horizontally-opposed engine, the Subaru WRX combines high powerwith an AWD system. A Subaru’s driving
performance is truly unique: the automobile
offers total driving control to the driver withall four wheels firmly gripping the road. Our
goal is always to take driving performanceand excitement to the absolute limit.
FUJI HEAVY INDUSTRIES LTD.

04 ANNUAL REPORT 2013

All-Wheel Drive

SUBARU
ALL-AROUNDSAFETY
FUJI HEAVY INDUSTRIES LTD.

05 ANNUAL REPORT 2013

Since we first began crafting automobiles, safety has
been a critical theme. Subaru automobiles don’t onlyoffer outstanding safety performance in the event of an
accident. Our safety technologies help prevent
accidents from happening in the first place. For
example, we design our automobiles to be easy andintuitive to drive and to help lessen driver fatigue onlong trips. To us, safety means designing automobiles
that anyone can drive with peace of mind.

Primary safety
Designing cars to help avoid hazards

Active safety
Enhancing safety by maximizing driving performance

Our concept of “primary safety” means enhancing safety at the level ofdesign. We constantly ask ourselves, “What do automobiles need tohelp prevent accidents from happening in thefirst place?” To help drivers avoid fatigue andfocus on driving with peace of mind, we design
our models to offer a superior field of view, andwe pay close attention to the design of the
instrument panel and seats.

Achieving excellence in the fundamental functions of the automobile is a
key part of our advanced safety performance. Core technologies like thehorizontally-opposed engine and Symmetrical
All-Wheel Drive support superior overall
performance, which in turn helps drivers handle
a wide range of driving environments andweather conditions with peace of mind.

Primary + Active + Pre-Crash +Passive Safety
Pre-crash safety
Anticipating hazards to support safer driving

Passive safety
Protecting occupants and pedestrians in the event of an accident

Eliminating accidents completely is the ultimate goal of any automaker.
Subaru has been a pioneer in the area of pre-crash safety, in which thegoal is to anticipate hazards and thereby lessen the severity of accidents.
One of our latest pre-crash safety successes is the “EyeSight” Driving
Assist System (Version 2), which continuously monitors traffic with astereo camera system mounted by the rearview
mirror. This advanced system has received praisein Japan and other countries where it has been
implemented.

A key responsibility of an automaker is designing automobiles to protect
occupants from crash forces in the event of an accident. Developing
automobiles that help ensure the safety of occupants and pedestrians
alike, Subaru has earned top ratings in crash tests performed around theworld. Subaru’s own ring-shaped reinforcement frame enhances
automobile body crash safety, and we’ve
designed an engine layout that helps preventthe engine from imparting crash forces to theoccupants. In our unique approach tomaximizing safety performance, we take every
element of the automobile into consideration.

FUJI HEAVY INDUSTRIES LTD.

06 ANNUAL REPORT 2013

Combining environmental friendliness with driving enjoyment
Subaru seeks always to combine environmental friendliness with enjoyable driving. To accomplish this goal, we
engage in a wide variety of initiatives, including the development of highly efficient engines and transmissions
and advanced devices that help drivers reduce fuel consumption. Our horizontally-opposed gasoline engine isa key part of our first hybrid system. We are also marketing the world’s first horizontally-opposed diesel
engine.* Going forward, we will continue to develop and refine environmentally responsible technologies that
also realize driving enjoyment in the Subaru tradition.
*First in world among mass-produced passenger cars

FUJI HEAVY INDUSTRIES LTD.

07 ANNUAL REPORT 2013

Enhancing engine and transmission efﬁciency for reduced fuel consumption
Currently featured on all of our main models, ourLineartronicTM CVT (Continuously Variable Transmission)
selects the optimum gear ratio at all times, resulting in greatly
enhanced fuel economy. Lightweight and compact, thissystem continues to evolve. It serves as the perfect complement to our third-generation
SUBARU BOXER engine, which offers excellent balance between driving performance andhigh fuel economy. Together, they compose the ideal powertrain for our main models andan excellent system for further efficiency advances going forward.
In Europe, we offer a lineup of models featuring our unique horizontally-opposed diesel
engines. New in 2013, the Subaru Outback Diesel features the Lineartronic TM CVT for the
first time and caters to a wide range of customer needs.

Lineartronic
Hybrid System
A fun-to-drive crossover hybrid from Subaru
In 2013, we introduced the SUBARU XV Hybrid, our first hybrid. With oneof our core technologies, the horizontally-opposed engine, at the heartof its advanced hybrid system, this world-class hybrid crossover model
offers sporty driving at its finest while delivering outstanding fueleconomy. Developing an original hybrid is just one of our many initiatives
that anticipate the coming era of vehicle electrification.

FUJI HEAVY INDUSTRIES LTD.

08 ANNUAL REPORT 2013

A Message to Our Stakeholders

With our unique automotive engineering andhigh-value-added products, we will steadily increase
our presence in the world market.
In fiscal 2013 on a consolidated basis, Subaru sold 724,000 automobiles and achieved
net sales of ¥1,913.0 billion, operating income of ¥120.4 billion, and net income of ¥119.6
billion. Each of these figures was the highest in our company’s history, and we attribute
this success to the following factors: 1 We introduced new automobiles worthy of the
Subaru tradition that offer our customers driving enjoyment and peace of mind. 2 We
increased automobile sales, especially in the United States, our most important market.
3 We achieved a high operating rate at our production sites. 4 We further reduced costs.
5 And finally, the Japanese yen’s appreciation was corrected during the fiscal year.
I am pleased to report that our automobiles are continuing to sell well in fiscal 2014,
and we are forecasting consolidated automobile unit sales, net sales, and operating
income that each set a new Subaru record for the second year in a row.
Based on comprehensive consideration of our business results and the economic
environment, we paid shareholders a dividend of ¥15 per share for fiscal 2013, ¥6 higher
than for fiscal 2012. Moreover, we are forecasting a dividend payment of ¥20 per share forfiscal 2014, ¥5 per share higher than for fiscal 2013. All of us at Subaru are working
together as one to achieve new growth and fulfill the expectations of our shareholders.
I would like to thank all of our stakeholders for your continued support and feedback in the
new fiscal year.

Yasuyuki Yoshinaga
Representative Director of the Board,
President and CEO
FUJI HEAVY INDUSTRIES LTD.

09 ANNUAL REPORT 2013

A Message to Our Stakeholders

Sales of Subaru automobiles continue
Q to be excellent. What do you think is thereason for this trend?

Third-party testing in the United States has resulted in
the highest crash test ratings possible for our vehicles—
another factor that has helped us achieve our current
excellent sales results in America.
In February 2012, Subaru discontinued thedevelopment and production of mini vehicles. The reason
is that, in order for a smaller automaker like Subaru tosurvive, it needs to focus its limited corporate resources on
its core competencies. For Subaru, that meantconcentrating on passenger vehicles. We have thus been
applying to passenger vehicles the human and financial
resources we used to develop mini vehicles. As a result,
we have been able to introduce extremely originalautomobiles like the SUBARU XV and SUBARU BRZ, whichhave received a fantastic response in the marketplace.
By focusing our corporate resources in this way, we’vebeen able to offer high-value-added products and service,
which in turn have led to the excellent sales we are
currently enjoying.

I think people are really appreciating our unique andA distinctive products, which offer our customers
driving enjoyment and peace of mind.
The activities of our whole Subaru team, including both
employees and suppliers, have received a fantastic
response on the part of our customers, which in turn has
led to our favorable business results.
For an automaker with a 1% global share to win in themarketplace and survive, it must offer customers
high-value-added automobiles that are differentiated fromthose of its competitors. For Subaru, the value-adding
factors are driving enjoyment and peace of mind. We wereoriginally an airplane manufacturer, and we continue toserve the aerospace industry today. This factor is a very big
part of our originality as a company. From our previous
incarnation as an airplane manufacturer, we have inherited
our uncompromising approach to safety and peace ofmind. In turn, this approach has produced ourhorizontally-opposed engine, Symmetrical AWD(All-Wheel Drive), top-level crash safety, and now our“EyeSight” Driving Assist System. These advances allow us
to offer a combination of driving enjoyment and peace ofmind that is unique to Subaru.

Q

What kind of results are you forecastingfor fiscal 2014?
We are expecting our consolidated net sales andA operating income to be the highest in Subaru history
for the second year running.

For fiscal 2014 on a consolidated basis, we are forecasting
automobile sales of 752,000 units, net sales of ¥2,080.0
billion, operating income of ¥198.0 billion, and net incomeof ¥121.0 billion. For the second year in a row, we expect
automobile unit sales, net sales, and operating income tobe the highest in Subaru history.
In terms of current sales trends, the SUBARU XV is

FUJI HEAVY INDUSTRIES LTD.

10 ANNUAL REPORT 2013selling very well. We totally redesigned the Forester at theend of 2012, and it too has been very well received by themarket, especially in North America. I think these positive
factors will contribute to our business results throughout
the fiscal year.
According to our “Motion-V” mid-term management
plan, we intend to sell 850,000 automobiles in fiscal 2016,
which is the final year of the plan. The plan further specifies
that 380,000 units out of that total will be sold in the UnitedStates. Yet in our near-term plan for fiscal 2014, we are
already forecasting automobile sales in United States of385,000 units, putting us two years ahead of the mid-termschedule.

A Message to Our Stakeholders

How is the correction of Japanese yen’s
Q appreciation affecting Subaru?
It is having a positive effect on profitability, which we

A will feed back into increased capacity and R&D.

In fiscal 2013, the exchange rate was ¥82 to the US dollar,
and we are using a figure of ¥92 to the US dollar for fiscal
2014. The correction of yen appreciation since thebeginning of 2013 has indeed been positive for ouroverseas sales and overall profitability. Going forward,
however, Subaru needs to be profitable even when the yen
is on the rise, and we are focused on increasing thestrength of our company without dependence on any
particular exchange rate scenario.
We are going to invest the additional profit the weaker
yen has brought us into increased production capacity andR&D so as to grow the company further. We will also invest
in enhancing our workplace environments and in otherinitiatives that make our group stronger as a whole.

What is Subaru doing to increase
Q production capacity?
We are making an all-out effort to increase production

A and supply of Subaru automobiles in the US.

Thus far, in our initiatives to increase sales, we haveachieved our best results in the US market. For this reason,
going forward, we need to fortify our operations in the US
so as to delight our customers there. Although our
automobiles continue to sell well in the US, we have hadinsufficient inventory of certain models, causing ourdealers and customers to wait. To address this issue, when
we announced our results for fiscal 2013, we alsoannounced that we would be increasing production
capacity at Subaru of Indiana Automotive, Inc. (SIA). We
plan to raise capacity there from the current figure of
170,000 units per year to 200,000 in fiscal 2015 and 300,000
in fiscal 2017. Since a high percentage of our customers arein the US, we intend to increase capacity at our local
production site in order to supply automobiles in a more
timely manner. We also think that this production capacity
increase will create an environment for Subaru local dealers

FUJI HEAVY INDUSTRIES LTD.

11 ANNUAL REPORT 2013that allows them to invest in their businesses with a senseof assurance.
Moreover, since the end of 2012, we have been
partnering with a Malaysian company to assemble
automobiles locally from complete knock-down (CKD)*
kits. Because the ASEAN countries have a high tariff on
automobile imports, there is a limit to the business we candevelop there based on exports from Japan. Goingforward, however, the ASEAN population and therefore its
automobile market are expected to grow. Currently, weare producing on a small scale there, just 5,000 units per
year. But if we move steadily ahead, I think that local
production will contribute to sales growth in the ASEAN
region, and we intend to proceed with a long-term
perspective.
*Complete knock-down kits contain all major parts, making possible
importation and local assembly and sales of finished vehicles.

A Message to Our Stakeholders

What markets do you see as promising for
Q the future?
The American Sun Belt, China, and Russia are among

A several markets that we plan to develop further.

There are several frontier markets that have had a lot of
hidden growth potential, and the one for which we havethe highest expectations is the Sun Belt region of theUnited States. Thanks to our increased sales in recent
years in the US, we have grown our market share in the
country from 1.2% in 2007 to 2.3% in 2012. But the region
that has led the sales increase is the Snow Belt, where wehave a market share of over 3%, whereas our market
share in the Sun Belt is currently around 1%. Our brandrecognition in the US also continues to increase, so I think
we have considerable room for growth in the Sun Belt.
A second important market is China. Beyond the factthat it’s the largest automobile market in the world,
recognition of our unique products is increasing there,
and we are building a very positive brand image. In fiscal
2013, our automobile sales in China totaled just 50,000

units, but we plan to sell 100,000 units there in fiscal 2016per our current mid-term management plan.
We also see Russia as a market with upside sales
potential. It’s a large market with yearly automobile salesof around 3 million units. The country gets plenty ofsnowfall, making it the ideal driving environment topromote AWD, a core feature of Subaru automobiles.
At the same time, we don’t intend to build markets
just to increase unit sales volume. Rather, our plan is tofocus on markets in which we can strategically leverage
the added value and differentiating features of ourautomobiles and grow our business.

What is Subaru’s product strategy
Q going forward?
Since we are currently enjoying strong sales, it’s

A important that we take on new challenges.

We are dedicated to offering unique products thatcombine safety and peace of mind with driving pleasure.
In fiscal 2013, we redesigned the Forester and introduced
two new models, the SUBARU XV and the SUBARU BRZ.
All of these models are currently selling very well.
The fact that customers are responding so favorably
to our new products puts additional pressure on the
Subaru engineers who are developing future products.
The scariest possibility to me, however, is our engineers
fearing failure and therefore developing automobiles
based on past successes and keeping the concepts ofcurrent models intact. The practice of retaining model

FUJI HEAVY INDUSTRIES LTD.

12 ANNUAL REPORT 2013

concepts makes new models hard to distinguish fromtheir predecessors and reduces their competitivenesswith automobiles from other companies. In order for asmall-scale automaker like Subaru to compete with the
big companies in the marketplace, it’s essential for us totake on new challenges in automobile development thatcompetitors are not addressing. For this reason, thesedays when I talk to our PGMs (Project General Managers),
who are responsible for development, I encourage themnot to play defense and tell them to take on challenges
without fear of failure.

A Message to Our Stakeholders

To achieve these goals, what kinds ofQ initiatives is Subaru undertaking
in development?

directly to the opinions of our customers and feedingthat information back into new automobile development.
For example, one of our PGMs has been visiting thehomes of Subaru owners in the United States andlistening to what they think about our automobiles andwhat they want to see in the future.
Of course, until now we’ve listened to the voice of thecustomer via our dealers, analyzed the findings of market
research companies, and applied all this information to
new automobile development. But when it comes todetermining the direction of new automobile
development, since the PGMs are the ones responsible for
new ideas, I think their direct exploration of customer
opinions and reactions is an extremely effective initiative.

Subaru engineers responsible for development are
A listening directly to the voice of the customer andapplying what they learn to developing new vehicles.
As compared to the development functions ofcompetitors, Subaru’s is smaller and less divided into
specialized units. Thus, each of our engineers participatesin a wider range of development activities. In fact, we havethe reputation of having more engineers than any othercompany with such a comprehensive understanding of
automotive technologies. Having to cover so muchterritory is certainly a tough part of being an engineer at
Subaru. Nevertheless, even as we keep an eye on costs,
we’ve established an environment in which engineers arefree to research what interests them. And having theengineers in each section understand the entire
automobile while participating in development is adistinguishing feature of our approach to developing
automobiles.
Our PGMs are the people who guide our engineers
and lead our new product development projects. A
recent trend has taken off among our PGMs of listening

Q

What kinds of challenges is Subaru
taking on in the area of technology?
We have introduced the first Subaru hybrid, which

A offers not only high fuel economy but an outstanding
driving experience.

We’ve achieved impressive results by proactively
developing such new technologies as the “EyeSight”
Driving Assist System, a new horizontally-opposed engine,a new CVT, and a new direct-injection turbo engine. At thesame time, we’re also proactively developing newtechnologies to compete in the new era of vehicle
electrification.
The first achievement of our electromotive
technologies is our first hybrid vehicle, the SUBARU XVHybrid, which we launched in the Japanese market in June

FUJI HEAVY INDUSTRIES LTD.

13 ANNUAL REPORT 20132013. We plan to launch this model in the US market late fall2013. This model features a new Subaru-developed hybrid
system based on our original powertrain structure, which
includes a horizontally-opposed engine and Symmetrical
AWD. Since Subaru is the last automaker to introduce a
hybrid vehicle, we couldn’t expect customers to choose our
hybrid if it had only a conventional hybrid system. For thisreason, we designed the system not merely to offer highfuel economy but also to provide motor assist thatenhances acceleration performance in the low speed
range. The result is a hybrid vehicle that offers outstanding
driving enjoyment in the Subaru tradition.
In order to take the Subaru tradition to the next stage
in the era of vehicle electrification, we plan to strengthen
further our R&D function. Fully expressing our uniquenessin both electromotive and gasoline engine vehicles will
help Subaru grow even more.

A Message to Our Stakeholders

Please talk more about Subaru’s
Q management policies going forward.
We aim to achieve steady growth as an automaker

A with a unique presence in the market.

If we can make steady progress on our initiatives this fiscal
year, then it is possible we will achieve the profit objectivesof our mid-term management plan two years ahead ofschedule. To accomplish this, we at Subaru are currently
engaged in a discussion about our initiatives going
forward. Part of this discussion deals with what direction
we should pursue not just to achieve numerical targets but
also to make Subaru an even more appealing company
overall. Since we are currently close to achieving our goalof selling 850,000 vehicles per year worldwide, it is only
natural to set an even higher objective and pursue a
strategy for growth. At the same time, when we consider
our position in the global automotive industry, our firstpriority is not quantitative growth based on expanding
unit sales. Rather, a more pressing goal of management isenhancing profitability via qualitative growth, in which wedevelop automobiles that appeal to customers in ways thecompetition can’t match.
Reflecting upon the significance of our existence as an
automaker, we will determine the direction we need totake and share that vector throughout our group. Further,
as we continue to focus corporate resources on our corecompetencies, we will introduce new products
differentiated with added value unique to Subaru whilefurther expanding the supply of our products in our mainmarkets.
We will continue to develop unique Subaru products
and provide our customers with driving enjoyment andpeace of mind. And we will achieve solid growth, aiming
to be an appealing and high-presence company in theworld.

Yasuyuki Yoshinaga
Representative Director of the Board,
President and CEO

FUJI HEAVY INDUSTRIES LTD.

14 ANNUAL REPORT 2013

The Subaru Production Strategy

Empoweredby Management
Gunma and SIA gear up for global sales of over1 million vehicles per year.

FUJI HEAVY INDUSTRIES LTD.

15 ANNUAL REPORT 2013

The Subaru Production Strategy
Commenced in 2011, Subaru’s “Motion-V” mid-term
management plan set forth the objective of achieving annualautomotive sales volume of more than 1 million units within 10
years to support long-term, sustainable corporate growth. Since
then, we have pursued a sales strategy with a strong focus on
our core competencies and have supported this strategy byreorganizing our global production system. Due to changes incircumstances, we determined that one goal of the plan,
beginning local production in China, would be difficult toachieve during the period of the mid-term plan. To compensate,
we have been working to increase production at our existing
plants in Japan while further fortifying our
production system in our most important
market, North America, where sales
results continue to exceed plan.
We plan to increase yearly
automobile output at Subaru of Indiana
Automotive, Inc. (SIA) from the current
170,000 units to 200,000 units by the end
With a view to achieving our long-term objective of selling more thanof fiscal 2015, and to 300,000 units by the
1 million vehicles per year, we are currently reorganizing our global
end of fiscal 2017. In addition, we plan for
production system. In addition to proactively investing to increase
SIA to begin producing the Impreza,
production in North America, the largest market for Subaru
which continues to sell extremely well.
automobiles, we are refining our production processes and operational
At our Gunma Manufacturing
efficiency at our facilities in Japan. Through these initiatives, we are
Division in Japan, we have achieved
ramping up production while taking cost-performance to the next level.
incremental increases in production
capacity by refining production
processes, while our “bridge production”
initiative has allowed us to produce multiple models on multiple
production lines, optimizing our output of each in response to
demand. Through these efforts, we are maximizing efficiency
and increasing production at our current facilities while holding
investment in new facilities to a minimum. Based on thisstrategy, we will raise our yearly production capacity ofpassenger vehicles in Japan from 422,000 units in FY2012 to602,000 units by summer 2013.
To achieve our goal of selling more than 1 million vehicles
globally per year, we are raising our production capacity bypracticing optimal management of facilities and humanresources at each production site.

Unit: thousand vehicles

742

16 ANNUAL REPORT 2013

802

757

170

170

SIA

170

130

30

772

692

To produce over 1 million vehicles
per year, we are becoming evenmore ﬂexible and efﬁcient.

FUJI HEAVY INDUSTRIES LTD.

902

Automobile production
capacity plan

SIA

200

300

170

170

170
15

15
50
Main
Plant

Main
Plant

Main
Plant

150

165

180

100

100

150

165

180

180

422

422

422

422

422

422

March
2012

August2012

Yajima Plant

January2013

Summer Summer
2013 2014 (plan)

Main Plant

SIA

2016
(plan)

The Subaru Production Strategy
Leading Subaru production
since 1960, Gunma is
implementing new initiatives
to enhance efficiency.

Ever since its previous incarnation as an
airplane manufacturer, Subaru has
maintained the same stringent philosophyof designing and producing vehicles, which
includes the following three goals: pursuing
the ultimate in Subaru vehicle performance;
condensed, lean packaging; and top-levelsafety in all driving environments.
Established in 1960, our Gunma
Manufacturing Division has faithfully put
these principles into practice and served as
the heart of our global automobile

In Japan

Gunma
Gunma

To deliver highest-quality vehicles in a timely
manner, we will continue to improve and enhance
our production lines and technologies.

After discontinuing minivehicle production, we arefocusing on value-added
passenger vehicles.

production for more than a half-century.
The Gunma Manufacturing Divisioncomprises the Main Plant and Yajima Plant,
which assemble finished automobiles; theOizumi Plant, which produces automobile
engines and transmissions; and otherfacilities. While carrying on the tradition oftechnology and expertise we have built
since the foundation of our company, theGunma Manufacturing Division strives
always to produce vehicles that truly delight
our customers, delivering them in as timely

Tochigi

Main Plant
Yajima Plant

Tokyo

Oizumi Plant

Naganoa manner as possible. Moreover, theDivision aims to be the best in the world in
the areas of product quality, manufacturing
efficiency, environmental responsibility, andworker well-being.

Automobile production
per year in units
Figures correct as ofMarch 31, 2013

583,000
units

Saitama

To focus corporate resources on
manufacturing passenger vehicles thatoffer even more value than mini vehicles,
we discontinued the design andproduction of mini vehicles in February
2012. To this end, we have transformed ourMain Plant from our main mini vehicle
production site to a passenger vehicle
assembly plant. This plant now produces
the SUBARU BRZ/Toyota 86/Scion FR-S, amodel that we co-developed with Toyota

FUJI HEAVY INDUSTRIES LTD.

Motor Corporation.
In August 2012, we began our “bridge
production” initiative at the Main and
Yajima Plants, which allows us to produce
the Subaru Impreza and SUBARU XV atboth sites. Thanks to this new production
system, we can rapidly and flexibly adjust
the proportion of the two models we
produce at each plant in response tochanging circumstances. Plus, in our“stepwise expansion” initiative, we have

17 ANNUAL REPORT 2013refined our production processes on acontinuous basis, thereby expanding
automobile production in Japan to 583,000
units per year as of March 31, 2013—a 24.6
percent increase over the previous year.
While we focus our corporate resources oncapital investments that support our corecompetencies, our employees are working
hard to raise production capacity to deliver
Subaru automobiles to our customers as
quickly as possible.

The Subaru Production Strategy
Initiative No. 1: Stepwise expansion

We efficiently expand production
capacity with minimal investment.

Annual passenger vehicle
production capacity
February 2012

422,000

From an early date, we have been engaged
in refining our production processes toraise production capacity step by step
while minimizing new investment infacilities and equipment. An automobile
production line includes many separate
production processes, including pressing,welding, painting, and final assembly.
Differences in capacity between thevarious machines used in production
cause bottlenecks. In this unique stepwise
expansion initiative, we thoroughly analyze

these bottlenecks and improve processes
with small investments in precisely tailoredsolutions. As a result, we can increase
capacity incrementally across the entire
production line. As one example of thismethod, we have gradually increased
production by increasing the number of
welding robots and optimizing theirconfiguration. Through making continuous
improvements of this kind, we are realizing
a highly efficient production system while
holding new investment to a minimum.

2012 reorganization of production lines at Gunma Manufacturing Division

March

May

AugustNovember

Production begins of
SUBARU BRZ/Toyota
86

Updated Legacy
launched

Bridge production
begins of Subaru
Impreza and SUBARU
XV at both the Main
and Yajima Plants

All-new Forester
launched

units

Initiative No. 2: Bridge production

The Main and Yajima Plants
coordinate to meet changing
demand rapidly and flexibly.

Summer 2013

602,000
units

When a company produces as small anumber of vehicles as Subaru does, it is
crucial to fulfill the actual demand for eachmodel as precisely and rapidly as possible.
We call our method of achieving this goal
“bridge production,” in which two or moreproduction lines are able to produce
multiple models. Each line flexibly changes
its output of each model in order to meetdemand in real time. In the Gunma
Manufacturing Division, the Yajima Plant
was the first to implement bridge
FUJI HEAVY INDUSTRIES LTD.

production. Then in August 2012, after theMain Plant switched from mini vehicle topassenger vehicle production, it joined the
Yajima Plant in a two-plant bridge
production system. Both plants are able toproduce the Subaru Impreza and the
SUBARU XV, adjusting the number they
produce of each model as needed. Thissystem helps produce a level utilization
rate of the lines at both plants while making
Subaru able to respond to changing
demand flexibly and rapidly.

18 ANNUAL REPORT 2013

Bridge production at Main and
Yajima Plants
Exiga

Impreza

BRZ

Forester

Impreza

YajimaPlant
Line B

Main
Plant
Line C

LegacyForester

YajimaPlant
Line A

Bridge production of the Impreza and Forester models
serves as a kind of control valve, allowing the lines to
respond flexibly to demand for each model andmaximize the utilization of production capacity.

The Subaru Production Strategy
Unique Subaru engineering andproducts continue to earn new
customers in America.

The United States is currently the biggest
market for Subaru, representing about 50%
of our worldwide sales volume. We’ve
earned the support of American customers
through our unique engineering andautomobiles, which offer exceptional crashsafety, utility, and driving performance. In
addition, we’ve responded directly to theneeds of the US market by introducing
larger models and built a strong network ofdealers, resulting in robust sales growth.
Subaru of Indiana Automotive, Inc.

growing local demand by producing andsupplying automobiles in a timely manner,
thereby realizing sustainable sales growthin the US.

(SIA), our US automobile production plant,
has also been crucial to the growth of ourbusiness in the US market. Whilecoordinating with the Gunma
Manufacturing Division, the heart of ourglobal production system, SIA serves as
the sole production site of the Tribeca,
Legacy and Outback models which areespecially popular in the US. Producing
locally lets us reduce the risk we incur fromfluctuating exchange rates. More
importantly, we can fulfill continuously

Change in yearly US automobile unit sales over time

In the US

IndianaPrevious record
units

Fiscal 2012

When SIA became a full Subaru subsidiaryin January 2003, we began a new initiative
to enhance its productivity and increase
the level of coordination between it andSubaru of America, Inc. (SOA), our US sales
and marketing subsidiary. As a result, wewere able to expand our production
capacity in the US significantly. Moreover,
we began consignment production of the
Toyota Camry at SIA in April 2007, further
stabilizing our operating rate at thislocation.
FUJI HEAVY INDUSTRIES LTD.

New record

Unit sales objective

280,000 358,000 385,000 380,000

We are expanding local production capacity tosupport further growth in our most important market.

We’re increasing capacity at SIA,
which has been our foundation forgrowth in the US.

Unit sales objective
to be achieved 2 years
in advance
units

Fiscal 2013

In 2010, building on robust US sales,
we invested in equipment for several main
production processes, including thoserelated to painting, and interior andexterior finishing. We also replaced
outdated systems, taking overall
production capacity at SIA to the nextlevel. This initiative put us in position toincrease output of two popular models,the Legacy and the Outback. By investingin equipment as needed andimplementing our “stepwise expansion”

19 ANNUAL REPORT 2013

units

Fiscal 2014
(plan)

units

Fiscal 2016

(last year of current mid-term plan)

method of enhancing efficiency, we are
increasing production capacity at SIA on acontinuous basis and giving full support toour healthy sales in the US market.

The Subaru Production Strategy
With a $400M investment, weplan to take SIA production
capacity to 300k units/year
in fiscal 2017.

Plan to increase SIA production
capacity
By end of fiscal 2015
Subaru vehicle
production
capacity at SIA

200

200
k units/year

Subaruvehicle line

k units/year

In the United States, automobile sales inrecent years have exceeded our
projections, resulting in insufficientinventory on a regular basis. In Japan aswell, our passenger vehicles sold extremely
well in fiscal 2013, and we were unable toincrease production in Japan enough toease the lack of supply in the US market.
To address the insufficient supply of
Subaru automobiles in the US, we arefurther expanding production at SIA. First,
by increasing and improving equipment on

our current production lines, we plan toincrease production capacity to 200,000
units per year by the end of fiscal 2015.
Then, we plan to take production capacity
to 300,000 units per year by the end of
fiscal 2017 at a total investment ofapproximately $400 million. As part of our
production expansion, we will begin
production at SIA of the Impreza, a modelthat is extremely popular in the US. In
addition, we plan to implement at SIA“bridge production”, our method of$400M investment in SIA production capacity
Current line expansion
Bridge production implementation
New painting facility$ 160M$ 40M$ 200M100

By end of fiscal 2017
Subaru vehicle
production
capacity at SIA

300

200

k units/year

k units/
year

100
100
k units/year

k units/year
k units/year
SubaruSubaru + OEM
vehicle line
vehicle line

OEMvehicle line

To grow our business in the US,
we are developing anautonomous US workforce.

producing multiple models on multiple
production lines, which has been a successin Japan. Through initiatives like these, weplan to increase production capacity in the
United States on a continuous basis going
forward.

To achieve its major production capacity
expansion objectives for fiscal 2017 andbegin producing new models, SIA isproactively expanding its workforce with aplan for 900 new hires in total.
Concurrently, SIA is fortifying its employee
training programs and other humanresources initiatives. As one example, SIA
sends engineers to Japan to participate ina new automobile development projectfrom the beginning. The engineers are

FUJI HEAVY INDUSTRIES LTD.

then able to leverage this real-world
experience when they launch productionof a new vehicle back home. Further, theyeach gain deeper ownership of Subaru’s
unique approach to manufacturing
automobiles. Ultimately, this initiative
helps SIA develop outstanding andautonomous human resources that
contribute to enhanced productivity andproduct quality.
At an early date, SIA achieved

20 ANNUAL REPORT 2013

certification in the internationallyrecognized management systems ISO
9001 (quality management), ISO 14001(environmental management), and ISO
50001 (energy management). All
employees participate in these systems,
applying their principles and methods
throughout the company and thereby
contributing to enhanced efficiency andsustainable environmental management.

CSR at Subaru
The 8 CSR Action Items
Customers and Products

Employees

Provide society useful and optimally safe
products and services that earn customers’satisfaction and confidence.

Respect the diversity, individuality, and personality of
employees and ensure that work environments are assafe and comfortable as possible.

Environment

Compliance

Address environmental issues proactively inrecognition of their importance for all mankind.

Respect laws and moral standards; engage in fair,transparent, and free competition; and conduct business
equitably. Honor confidentiality, carefully protecting andmanaging data, particularly personal information.

Information Disclosure

Social Contribution

Communicate transparently with stockholders
and other stakeholders, disclosing corporate
information proactively and fairly.

Maintain proactive social action programs as a good
corporate citizen.

Procurement

Corporate GovernanceConduct procurement appropriately and workwith suppliers to promote corporate social
responsibility.

Make it a key responsibility of management to ensurethat appropriate CSR policies are adopted throughout
the corporate group, and undertake appropriate
initiatives to address any emergencies that may arise.

Subject and Period of CSR Report
The report covers Group companies in Japan and overseas with a focus on Fuji Heavy Industries Ltd.
The report covers performance for the period of fiscal 2013 (April 2012 to March 2013) and a number of activities before and up
to the release of the report.
The departments, titles, etc., of the people introduced in this report are correct as of the time of writing.

FUJI HEAVY INDUSTRIES LTD.

21 ANNUAL REPORT 2013

Customers and Products

Communicating with Customers

CSR at Subaru

we have added “level of trust,” which measures customers’

workplace environments in which HR development initiatives

future expectations based on the quality of service they

can be successful.

have experienced. We will use survey results to help us

Putting Customers First with the Subaru
Declaration

provide the “Enjoyment and Peace of Mind” expressed in
the Subaru Declaration while building relationships withIn October 2011, Subaru issued the Subaru Declaration,customers that encourage them to continue choosing us

which specified the goal of being chosen by customers forover the long term.

International CS Initiatives
With the goal of achieving uniformly high after-sales service
around the world and helping Subaru customers drive with

“Enjoyment and Peace of Mind” and the attitude andpeace of mind, the Subaru Customer Center works withactions needed to achieve this goal. Sharing the same goal,

Results of External Customer Satisfaction Survey

importers around the world to help them and their dealers

our dealers have also posted their own Subaru Declarations

In the second Japanese Customer Service Index (JCSI)

enhance their educational systems and overall structures.

and are engaging in initiatives to implement them.

survey conducted by Service Productivity & Innovation for

Through initiatives like the Service Advisor Development

Growth (SPRING) in fiscal 2013, Subaru achieved the No. 2

Program and After-Sales Service CS No. 1 Committee, weranking in the automobile industry for customer satisfaction

are building a corporate structure that can deliver customers

Subaru Declaration• We aim to be No. 1 by being the automobile brandthat offers customers “Enjoyment and Peace of Mind.”• All Subaru employees will present “Enjoyment andPeace of Mind” as brand values to customers andoffer them the highest level of service.

service that meets their needs while ensuring that ourwith dealers.

importers and dealers worldwide offer service worthy of

CS Activities Focused on
Subaru Dealers in Japan
With the goal of building the Subaru brand throughcontinuous enhancement of CS, we offer support andpromotional services to Subaru dealers in Japan. We
implement our own customer satisfaction surveys to learn
how customers view our products, product quality, sales
service, after-sales service and other topics. We use theresults of these surveys to provide feedback to our dealers
and the Subaru departments that support them.

Revised Customer Satisfaction Survey Criteria

Developing Dealer Employees in JapanTo realize the Subaru Declaration, which we issued as partAs part of our efforts to continuously enhance CS, theof the fiscal 2012 mid-term management plan, we have

Subaru Academy provides support to dealers in Japanrevised our Subaru Customer Satisfaction Survey criteria. To

based on the principles of the Subaru Declaration. Throughthe survey criterion “level of satisfaction,” which measures

education services and general guidance, the Subaru

customers’ assessment of the service provided by dealers,Academy helps dealers develop employees and create
FUJI HEAVY INDUSTRIES LTD.

22 ANNUAL REPORT 2013

Subaru.

Fiscal 2013 Initiatives• Educational
We developed STEP (Subaru Technician Education
Program), which provides technical education to
our overseas service technicians.
• Structural
With the goal of working closely with our importers
worldwide to raise CS, we established the AfterSales Service CS No. 1 Committee, which met
twice last year.

Customers and Products

Making Vehicles Safer

CSR at Subaru

Fiscal 2013 Automobile Assessment Results
In fiscal 2013, the Impreza and Legacy both won the Japan

Philosophy of Making Vehicles Safer

New Car Assessment Program (JNCAP)1 Five Star Award2

JNCAP

under its new overall evaluation of safety performance. For• Impreza received JNCAP Five
Star Award 2012.

We craft each Subaru vehicle so that anyone at any time

the Legacy, this was its second consecutive year to win thecan enjoy driving it with comfort and peace of mind.

award. Overseas, all models in the Subaru lineup sold in the3

Essential to this vision is the pursuit of safety performance

U.S. were selected as 2013 Top Safety Picks by theat the highest level. In fact, our first priority is to make our

Insurance Institute for Highway Safety (IIHS). In addition, as avehicles as safe as possible in all driving conditions. To thisresult of their performance in the small overlap frontal

end, we develop advanced vehicle safety technologies incollision test newly introduced by the IIHS, the Legacy andthe following categories:

4

Outback received a 2013 Top Safety Pick Plus award, thehighest rating currently established by the IIHS.

Active safety: Core capabilities that support driver

Additionally, the Forester received Euro New Car

awareness and responsiveness, thereby helping toAssessment Program (Euro NCAP)’s5 highest safety rating of

prevent accidents.

five stars in 2012, while the Forester and SUBARU BRZ
received the highest rating of five stars by the AustralasianPre-crash safety: Technologies that help prevent accidents

New Car Assessment Program (ANCAP)6.

• Legacy received JNCAP Five
Star Award 2012.

IIHS• All 2012 model year Subaru
cars received 2013 Top Safety
Pick.
• 2013 model year Legacy andOutback (manufactured afterAug. 2012) received 2013 Top
Safety Pick Plus.

from happening and reduce damage when they do happen.
Passive safety: Technologies that help minimize damage inthe event of an accident.

1 A program in which the Ministry of Land, Infrastructure, Transport and Tourism and the
National Agency for Automotive Safety & Victims’ Aid (NASVA) jointly assess vehicle
safety performance and disclose the results to the public.
2 To earn five stars, a vehicle must attain a minimum 170 points in the new overall safety
performance rating, fulfilling level 4 or better in the full-wrap frontal collision test, offset
frontal collision test, side collision test, neck injury protection performance test in a rear
collision, pedestrian head protection performance test, and pedestrian leg protection
performance test.
3 A car safety performance index. To be listed, a vehicle must achieve "good" ratings inmoderate overlap frontal crash and side crash tests, a rollover test, and evaluations ofseat/head restraints for protection against neck injuries in rear impacts.
4 To receive a Top Safety Pick Plus award, a vehicle must attain four “good” and one“acceptable” ratings or better in moderate overlap frontal crash and side crash tests,
evaluations of seat/head restraints for protection against neck injuries in rear impacts, arollover test and small overlap frontal crash test.
5 Car safety assessment program conducted since 1997 by an independent bodycomprising transport authorities and vehicle-related organizations in European
countries.
6 Car safety assessment program conducted since 1993 by an independent bodycomprising transport authorities and vehicle-related organizations in Australia and New
Zealand.

FUJI HEAVY INDUSTRIES LTD.

23 ANNUAL REPORT 2013

Euro NCAP• Forester awarded five stars in2012 rating.

ANCAP• Forester awarded five stars.
• SUBARU BRZ awarded fivestars.

Employees

Occupational Health and Safety

CSR at Subaru

talks to workplace leaders about the health and safety
policies and initiatives for the fiscal year. All Subaru sites

Work-Life Balance Initiatives

strive to continuously improve their health and safety

Philosophy of Occupational Health and Safety
In line with the Subaru Corporate Philosophy, we consider
occupational health and safety to be a critical responsibilityof management. Our Health and Safety Philosophy is, “Wemake health and safety the first priority in all of our work.”

management systems and risk assessment activities so as toprevent industrial accidents and raise the overall level ofcontinuously striving to make the working environment

Aiming for Zero Industrial Accidents
At the start of each fiscal year, each Subaru business site

employees to raise children and take care of family

Rate of lost work time injuries (manufacturing industry average)

members in need. We believe that for employees to feelRate of lost work time injuries (automobile industry average)
Rate of lost work time injuries (Subaru Automobile Business Unit)fulfilled and empowered in their work, they need to be able

(Number of accidents)

(%)

1.12

60

0.99

1.05

0.98

1.04
1.00

40

40

0.52

30

1.0

29

29
0.43

29
0.43

0.63

to enjoy family and community activities while choosing thevalues and lifestyles that are right for them. For this reason,
we support work-life balance through a variety of initiatives.

0.6

Diversity Initiatives

23
0.4

20

0.21
10
0

1.2

0.8

Basic Policy of Health and Safety
Aiming for zero incidents of occupational accidents, traffic
accidents, diseases, and fire disasters, all employees
recognize the importance of health and safety; strive toimprove equipment, environments, and work methods;
and raise the level of management and awareness inorder to create safe and comfortable workplaces.

we therefore strive to create a work environment that allows

Number of occupational accidents

50

Health and Safety Philosophy“We make health and safety the firstpriority in all of our work.”

employees express their abilities at the highest level, andOccurrence of Industrial Accidents and Rate of
Lost-Worktime Injuries

to ensure health and safety in their workplaces whilemore pleasant and comfortable for all.

We believe that supporting work-life balance helps

health and safety in the workplace.

Based on this philosophy, all managers and employees work

Work-Life Balance Philosophy

0.19

FY

2009

2010

2011

0.2

0.12
0.05

0
2012

2013

0

Promoting Diversity
For our company to continue offering customers value notfound in competing products, each Subaru employee needs

In fiscal 2013, 29 industrial accidents occurred at Subaru

to be able express his or her abilities as an individual withworkplaces; 1.04% of these accidents caused the victim to

unique values. For this reason, Subaru values differences intake time off from work, a higher than average rate. In fiscal

gender, nationality, culture, and lifestyles of employees and2014, with the goal of achieving zero industrial accidents

strives to create workplace environments in which everyone

and consequently reducing to zero the rate of accidents

finds it easy to work.

conducts a Health and Safety Kickoff Meeting that aims tothat result in lost work time, we are working to raise

raise awareness about industrial accidents, road safety, andawareness of occupational safety and our initiatives tohealth management. With the ultimate goal of zero industrial

enhance it.

accidents for the year, the general manager of each site

FUJI HEAVY INDUSTRIES LTD.

24 ANNUAL REPORT 2013

Employees

CSR at Subaru

Supporting Employees with Disabilities

also provide Japanese employees opportunities to receive

logical problem solving. With the goal of helping employees

language training and engage in extended training

obtain and enhance business skills, we also offer training

At Subaru, we strive to create workplace environments inprograms overseas, helping them enhance theirprograms for each type of position within the company. As

which people with disabilities can truly shine. To achievecommunication with people from other countries anda new initiative for fiscal 2013, we established a program tothis goal, we leverage the ideas and opinions of ourunderstand cultures different from their own.

help employees attend business school. With a view to

employees with disabilities and their family members. Asof March 31, 2013, Subaru employed 162 persons withdisabilities, mainly in manufacturing work. The percentageof employees with disabilities for fiscal 2013 was 1.62%,

accelerating our global HRD, we also established programs
to facilitate foreign language acquisition and training in

Universal Design Initiatives

companies overseas.

With the goal of establishing more comfortable workplaces,

which was below the legally mandated rate of 1.8%. We

we systematically plan continuous workplace improvements

are working to hire more people with disabilities andin the areas of work environment, work methods, andmake our workplace environments even more conducive

environmentally responsible facilities, among others. We
practice universal design

to their employment.

in our facilities, aiming to

HRD Philosophy
We seek to realize the Subaru human resources ideal ofhighly engaged and autonomous employees by helping
employees develop the ability to identify and solve
problems themselves.

make break areas, toilets,
smok ing area s , andcafeterias as barrier-free
In Subaru workplaces, we set the height of automatic door switches and work
stations at a level that is convenient for those using wheelchairs.

as possible.

Subaru Technical School
We opened the Subaru Technical School (STS) in 2005 with

Barrier-free entrance

the goal of training young technicians to become future
leaders. By transmitting to the next generation technicalGlobal Human Resources Initiatives
At our Gunma Manufacturing Division, we welcome
employees from Brazil, Peru, China, and many other

Human Resource Development (HRD)
Initiatives

countries. Even people whose conversational Japanese isadvanced may have difficulty with complex instructions
abou t manuf ac tur ing
processes or specialized

Manual in Portuguese

expertise and work methods that are tailored to all skill
levels and reflect the highest standards of safety andexcellence, STS is helping to ensure the high quality ofSubaru products going forward.

HRD Philosophy
We offer a variety of training programs to help each

vocabulary. For this reason,

employee create a vision of his or her future self and makewe produce manuals in aproactive efforts to realize this vision.

wide variety of languages

Among our level-based training programs, the Startup

and offer interpretation

Program helps all employees who have risen to a higher

services as needed. We

level adapt to their new responsibilities and focuses on
FUJI HEAVY INDUSTRIES LTD.

25 ANNUAL REPORT 2013

Machining training at STS

Environment

CSR at Subaru

Summary of 5th Voluntary Environmental Plan
(Fiscal 2013 to Fiscal 2017)

Environmental Management
Organization

the automobile industry. Based on this plan, we willcontribute to society through our products, striving always

Subaru has established the 5th Voluntary Environmental Plan

to produce even greener products at green plants andfor the period fiscal 2013 to fiscal 2017. Based on our

offices and delivering them to customers via green logistics

Environmental Policy, we have set even higher environmental

and green dealers. Our entire Group shares this plan andEstablished to implement the Environmental Policy andprotection targets while adding new environmental

works together to ameliorate and eliminate environmental

Voluntary Environmental Plan, Subaru’s environmental

measures to ensure compliance with laws and regulations

problems on a continuous basis.

management organization comprises two main entities thatand to foster cooperation on environmental issues withincross corporate divisions: the Companywide Environmental
Management System (EMS) and the Environmental
Committee. Serving as the head of the Companywide EMS
and the chairperson of the Environmental Committee, thedirector responsible for environmental issues conducts
environmental reviews twice a year. We proactively
implement environmental pro t ec tion ac tivities,
comprehensively managing our progress and continuously
revising the direction of future efforts.

Head Office

Utsunomiya Plant

Saitama Plant

Pollution Prevention DivisionTokyo Office

FHI Environmental Committee

Global Warming Prevention Division

Resource Recycling

Launched hybrid carsin the Japanesemarket in 2013

Improved fueleconomy by 30% vs.
previous models

Continued collection of used bumpers

Introduced horizontally-opposed direct
injection turbo engine

Introduced Eco
Driving Assist Devices

Designed new vehicles to be highly recyclable, aiming for 95%
recycling rate by 2015

Maintained zero waste emissions from production sites in Japan

Fully met fuel economy and greenhousegas standards worldwide

FHI Companywide EMS
Gunma Plant

Zero-Emissions Division

Global Warming Countermeasures

Made horizontally-opposed diesel engine
compliant with Euro 6

Environmental Management Organization
Production Environment Committee

5th Voluntary Plan

Implemented CO2 emissions reduction
initiatives in plants in Japan and overseas
Pollution Prevention and Reduction of Hazardous Chemical Usage
Added models achieving emissions 75% lower than 2005 government requirements

Domestic AffiliatedCompanies Division
Sales, Service, and Logistics Division
Logistics Division

5 Subsidiaries in Japan
Yusoki Kogyo Co., Ltd.
Fuji Machinery Co., Ltd.
Ichitan Co., Ltd.
Kiryu Kougyo Co., Ltd.
SUBARU Logistics Co., Ltd.

Sales and Service Division

44 Subaru authorized dealers in Japan

North American
Environmental Committee

4 North American subsidiaries
Subaru of Indiana
Automotive, Inc. (SIA)
Subaru of America, Inc. (SOA)
Subaru Canada, Inc. (SCI)
Subaru Research &Development, Inc. (SRD)

Reduced volatile organic compounds (VOCs) and substances on the Pollutant Release andTransfer Register (PRTR)
Developed technologies to enhance fuel economy, improve and reduce emissions, and reduce noise

Complied with laws and regulations ineach region (e.g. EU directives)
Continued initiative to reduce to zeroenvironmental accidents or claims thatexceed legal standards in each country

Environmental Management
Expanded development and implementationof advanced safe driving assist systems (e.g.,
EyeSight Version 2)

Promoted Group-wide ISO 14001
certification, including affiliates

Expanded implementation of Supplier CSR
Guidelines to business partners of Aerospaceand Industrial Products Company

Publicly disclosed wide range
of environmental information

FUJI HEAVY INDUSTRIES LTD.

26 ANNUAL REPORT 2013

Supported maintenance of Eco Action 21 certification
by dealers in Japan
Publicly disclosed Life Cycle Assessment (LCA) data
Implemented greening initiatives that respected biodiversity

Environment

CSR at Subaru

Environmentally Responsible
Automobiles(ASR), air conditioning refrigerant gases, and airbags. In

America—SIA, SOA, SCI, and SRD—which have a relatively

fiscal 2013, our ASR recycling rate was 95.9%, much higher

high environmental impact among our overseas subsidiaries.

than the legal minimum of 50%, and we logged another

With the goal of promoting efficient and streamlined

year of sending zero ASR waste to landfills, which we firstenvironmental activities, the committee discusses the results

Compliance with Government Fuel Economy
Standards

achieved in May 2011. Our airbag recycling rate of 93.5%

of successful initiatives and shares best practices withalso exceeded the legal minimum of 85%, and we took

member companies.

Japan : 2010 fuel economy standards met in all weight

possession of and appropriately processed all refrigerant

categories

gasses from end-of-life Subaru vehicles.

Compliance with 2010 fuel economy standards

2010 fuel economy standard
Fuel economy (km/L)

35
30

Subaru ASR and airbag recycle rates vs. Japanese
government legal minimums
Airbags

(%)

30.1

94.4

100

94.1

94.1

25.8

25
20

18.8

15
10

93.7
93.6

80

17.9 16.8
16.1
16.0
13.8
13.0
10.5

77.7

82.1

84.0

CSR and environmental activities and learned about
environmental initiatives in Japan, helping to share
ASR

All Subaru companies in North America received

93.5

certification in the ISO 14001 environmental management

Legally mandated airbag
recycling rate

and other measures, they strive proactively to minimize
Legally mandated ASR recycling rate

40

1,000

1,250

1,500

1,750

(corporate average fuel economy) and GHG(greenhouse gas) standards

pollution and environmental impact. In May 2012, SIA
became the first automobile manufacturing plant in the US
to achieve ISO 50001 energy management system

20875

system by the end of 2005. Through educational programs,
training, on-site legal compliance programs, internal audits,60

certification. Since SIA was also the first automobile

Weight category (kg)US : 2012 model year vehicles fully compliant with CAFE

environmental information across the Subaru Group.

95.9

5
0

In fiscal 2013, the NAEC held meetings in June andNovember. NAEC member companies reported on their

0

FY

2009

Legally mandated
recycling rates

2010

2011

ASR: (FY2006-FY2010)(FY2011-FY2015)(FY2016-)

2012

2013

Airbags: 85%

manufacturing plant in the US to achieve ISO 9001 quality
management system certification and ISO 14001
certification, the company’s ISO 50001 certification further
signifies its industry leadership in the area of environmental
responsibility.

Automobile Recycling

Processing End-of-Life Vehicles

Global Initiatives

Global Environmental Initiatives

Taking effect in 2005, End-of-Life Vehicle Recycling Law

The member companies of the Nor th American

requires automobile manufacturers to take possession ofEnvironmental Committee (NAEC) are the Subaru Group’s

and appropriately process all automobile shredder residue

four manufacturing and sales subsidiary companies in North
FUJI HEAVY INDUSTRIES LTD.

27 ANNUAL REPORT 2013

Celebrating ISO certification at SIA

Compliance

Compliance with Laws and Regulations

CSR at Subaru

Compliance System and Administration

Compliance Hotline (flow from consultation to solution)
Consultation

corporate compliance, the Compliance Committee
conducts deliberations and discussions, renders
determinations, and encourages the exchange of

Outside company
Consultation

ReportAnonymous
reportSpecialized industrial
counselor provides
services

Report ofinvestigation
and actions

Alleged wrongdoer

Corporate Code of Conduct and Conduct
Guidelines

A companywide committee established to promote

Compliance
Hotline Desk

Compilance Philosophy
Subaru views compliance to be a key responsibility ofmanagement and firmly believes that only throughcompanywide implementation of compliance can ourbusiness have a strong foundation. Subaru strives toengage in fair and just corporate activities that comply
with laws and regulations, our own internal rules, andthe standards of society.

Compliance System/Organization and
Administration

Hotline user

Compliance Philosophy

Investigation
and actions

Reportinformation on key compliance issues. Every year, eachdepartment plans its own compliance program, continuously
and autonomously implementing compliance initiatives.

Personal Information Protection Initiatives
To comply with the Personal Information Protection Act,

Compliance Hotline

Subaru has reviewed its internal systems and rules andIn addition to discussing with their supervisors any

publicly disclosed its privacy policy. Since Subaru dealers incompliance issues they encounter, Subaru Group company

Japan handle a wide range of customer information, we

Conduct Guidelines as standards to help ensure complianceemployees have the option of using the Compliance Hotline

have reviewed each dealer’s compliance with Subaru ruleswith laws and regulations. They are explained in detail in theand reporting issues directly to the Hotline Desk locatedand created a Personal Information Protection Handbook

Subaru has established a Corporate Code of Conduct andCompliance Manual, which is given to all Subaru executives

within Subaru. After receiving information via mail,for Subaru Dealers. In this way, we are working to ensureand employees to help them maintain compliance in theirtelephone, or email, employees assigned to the Hotlinethat all Subaru employees understand the importance ofdaily actions.

Desk research situations and take appropriate actions based

protecting personal information.

on Subaru’s internal rules. The names and departments of
those making reports are kept strictly confidential to prevent
reprisals. Since April 2008, a company external to the Subaru
Group has provided services to the Hotline Desk, allowing
the Compliance Hotline to extend its hours and helping toensure the confidentiality of the names and departments of
those making reports. The result has been greater ease ofuse for all employees making use of the hotline.

FUJI HEAVY INDUSTRIES LTD.

28 ANNUAL REPORT 2013

Information Disclosure / Social Contribution

Information Disclosure

CSR at Subaru

Plant Tours for Shareholders

Social Contribution

We hold plant tours for shareholders to allow them toInformation Disclosure Philosophy
By disclosing information about our corporate strategy andexperience our actual production workplaces and gain adeeper understanding of our production policies andactivities. We also hold Q&A sessions after the tours to

Donating Vehicles for Earthquake Relief in Ya’an,
Sichuan Province, China

activities in a fair, proper, and timely manner, we seek tofacilitate communication between our executives andAfter a severe earthquake struck Sichuan Province on April

increase the transparency of management and increase theshareholders and to receive our shareholders’ valuable

20, 2013, Subaru of China, Ltd. donated five Forester

understanding of Subaru on the part of our stakeholders,

opinions and insights, which we feed back into our

automobiles to five government entities in Ya’an, a city hit

thereby building with them a relationship of trust.

continuous improvement efforts.

especially hard by the disaster: the Bifengxia Panda Base,the Lushan County Forestry Bureau, the Lushan County
Education Bureau, the Tianquan County Sanitation Bureau,

Information Disclosure on Our Website

and the Tianquan County Agriculture Bureau. These entities

Our website includes an Investor Relations section thatare using the vehicles in a variety of relief projects, such asprovides up-to-date IR information. We also distribute therepairing and constructing housing, fortifying the structures

latest financial reports and other IR-related information byof schools and other buildings, transporting victims, andemail to those who register. Currently more than 900 people

delivering medicine and other relief supplies.

take advantage of this free email service. We also provide

Shareholder tour of Yajima Plant

an Investor Relations site designed specifically forsmartphone access.

Private Investor Briefings
Subaru holds private investor briefings to provide easy-tounderstand information on a range of topics, from company

Donated Forester automobiles

history to recent business results. In addition, we hold Q&A
sessions to help investors gain a deeper understanding of
our company and its activities.

FUJI HEAVY INDUSTRIES LTD.

29 ANNUAL REPORT 2013

Social Contribution / Procurement

Subaru Visitor CenterFirst open to the public on July 15, 2003, the Subaru Visitor

CSR at Subaru

Establishing Mutually Beneficial
Relationships with Business Partners

Center welcomes people who visit the Yajima Plant for toursof the facility and other reasons. Inside, visitors can viewhistoric Subaru models and cars that set world records, as

environmental issues that arose in the area of procurement. In
fiscal 2012, the committee changed its name to the Procurement
Committee and expanded its mission to include both
environmental and CSR issues. The policy of the Procurement
Committee is to facilitate fair procurement practices andProcurement Policy

encourage CSR at suppliers, thereby helping to ensure fairwell as learn more about Subaru’s unique technologies andIn keeping with our Corporate Philosophy, Subaru strives totrade with business partners and cooperative CSR-based

environmental initiatives. The Center also receives many

procure parts, materials, and equipment that offer excellent

procurement throughout the Subaru supply chain.

classes of grade school students who tour the Yajima Plant

quality, environmental performance, and cost performance.

to learn more about automobile manufacturing in

To realize this goal, it is necessary for us to establish

connection with the Japanese government’s new curriculum

relationships with our business partners based on equality,

guidelines. In fiscal 2013, a total of 94,676 people visitedtrust, mutual benefit, and dedication to continuous

the Center.

improvement.

• Fiscal 2012: Automobile Business suppliers• Fiscal 2013: Industrial Products Company suppliers• Fiscal 2014: Aerospace Company suppliers (planned)

Promoting Fair Trade
Subaru strictly observes the Antimonopoly Act, the Act
against Delay in Payment of Subcontract Proceeds, Etc., to
Subcontractors, and other laws and regulations related to
procurement. We are also engaged in fair trade programs insupport of the Fair Trade Guidelines for the Automotive
Industry issued by the Ministry of Economy, Trade andSubaru Visitor CenterIndustry in June 2007. As part of these efforts, we offer ahotline for business partners in our supply chain to call inshould they have any questions or concerns about Subaru’sfair trade practices.

CSR Initiatives in Procurement
In the past, the procurement departments of the Subaru
Automobile Business, Aerospace Company, and Industrial
Products Company participated in the Procurement
Students tour Yajima Plant

Environmental Committee, which strived to solve
FUJI HEAVY INDUSTRIES LTD.

Application to Suppliers of the Subaru
Supplier CSR Guideline

30 ANNUAL REPORT 2013

Corporate Governance

CSR at Subaru

Corporate Governance Systemevaluating the performance and determining thewho serves to further strengthen Subaru’s corporate

compensation of executives.

governance. The Board of Corporate Auditors is composedof four corporate auditors, including two outside corporate

Since June 1999, Subaru has employed an executive officer
system that clarifies the managerial responsibilities ofexecutives in each division. In June 2003, we reduced theBoard of Directors and Board of Corporate
Auditors
The Board of Directors determines important policies andauditors. Corporate auditors participate in the meetings ofthe Board of Directors, the Board of Corporate Auditors,
the Executive Management Board, and other important

term of directors and executive officers from two years tostrategies and monitors their execution and company

company meetings. Corporate auditors provide appropriate

one. Moreover, since June 2004, based on a decision of theoperations, while individual corporate auditors and theadvice and direction from a wide perspective while

Board of Directors, the Executive Nomination Meeting isBoard of Corporate Auditors audit the performance ofconducting audits relating to proceedings conducted byresponsible for the selection of corporate officer candidates,

directors. Currently, the Board of Directors is composed ofbusiness sites, subsidiaries, and the Internal Audit

and the Executive Compensation Meeting is responsible foreight directors, including an independent outside director

Department. In addition, with the goal of increasing thetransparency of Subaru management, corporate auditors
disclose information in a fair and timely manner.

Corporate Governance System
General Meeting of Shareholders

Board of Corporate Auditors
Meeting (four auditors including
two Outside Corporate Auditors)

Executive Nomination Meeting

Internal controls are an indispensable mechanism for

Executive Compensation Meeting

responsible for establishing them and maintaining their

Committees

Planning Department (which plays a central role in theachieving corporate objectives, and management isBoard of Directors Meeting(eight directors including
one outside director)

Accounting Auditors

Internal Controls Systemeffectiveness and efficiency. At Subaru, the Corporate
common f unc tions of each business ) and other
CSR Committee

Representative Director,
President & CEO

Environmental Committee

Internal Audit Department(Audit Department)

Compliance Committee
Executive Management Board Meeting

Recall Committee

Corporate Vice Presidents

Export Control Committee

companywide departments maintain close links with otherdepartments and companies to enhance risk management.
In addition, the Audit Department performs planned auditsof each department and Group company. To support
internal controls, Subaru has created a system andorganization to ensure compliance, which is the foundationof risk management.
Further, in compliance with the Standards forManagement Assessment and Audit Concerning Internal
Control Over Financial Reporting issued by the BusinessCorporate Operations at HQ, Automobile Business, Group Companies and Affiliates

FUJI HEAVY INDUSTRIES LTD.

31 ANNUAL REPORT 2013

Accounting Deliberation Council of the Financial Services

Corporate Governance

CSR at Subaru

Agency on February 15, 2007, we work to continuously(Millions of yen)

Basic compensation

strengthen the internal controls system of the entire Groupso as to achieve the following:
1. Effective and efficient operations
2. Reliable financial reporting
3. Compliance with laws and regulations inall business activities
4. Safeguarding of assets

Executive Compensation

Classification

Fixed
Number amountPerformancebased
amount

Total

108

345

Directors(excluding outside
directors)

7

Corporate auditors(excluding outside
corporate auditors)

2

Outside executive
officers

5

45

-

45

Total

14

333

108

441

237

Location-Specific Business Continuity Plans(BCPs)
With the goal of minimizing any reduction of service tocustomers and preventing loss of market share andcorporate value, we have created a BCP for each Subaru
location to maintain business operations or restore them as

51

-

51

Note: This table includes one director and two corporate auditors who retired by theend of the fiscal year. As of March 31, 2013, the Company maintains eight
directors (including one outside director) and four corporate auditors(including two outside corporate auditors).

quickly as possible in the event of an emergency. Should ourresources (employees, physical assets, monetary assets) be
affected by an emergency, we will leverage our remaining
resources to minimize the shutdown of priority operations
and restore all operations to their original state as quickly as
possible. We have also established an Emergency Response

As approved by the Ordinary General Meeting of

Policy, in accordance with which we strive to maintain

Shareholders in June 2006, the total amount of yearly

operations in the event of an emergency.

compensation paid to directors and corporate auditors islimited to ¥600 million and ¥100 million, respectively. The

Risk Management
Emergency Response Policy

compensation paid to directors must be approved by the
Board of Directors and is divided into a fixed amount (based

We define risk as uncertain elements with the potential foron position, the business environment, and other factors)

negative impact on our business operations. While there are

and a performance-based amount (based on consolidated

many types of risk, we call those risks that are particularly

ordinary income for the fiscal year under review, thedangerous to our business operations and that we cannot

business environment, and other factors). In fiscal 2013,

handle through regular decision-making channels “crisis-levelcompensation for directors and corporate auditors was asrisks” and categorize them as follows: natural disaster,follows:

accident, internal human factors, external human factors,social factors (domestic, overseas), and compliance. We
have created manuals for dealing with each type of
emergency, which delineate what communication channels
are to be used once a risk is recognized, how to form crisis
management headquarters, and other methods to follow to
respond optimally to the situation.

FUJI HEAVY INDUSTRIES LTD.

32 ANNUAL REPORT 2013

• Give first priority to people’s survival andphysical safety.
• Minimize loss of stakeholder interests andcorporate value.
• Act always with honesty, fairness, andtransparency, even in an emergency.

Board Directors / Executive Officers (as of June 21, 2013)

Director of the Board

Yasuyuki Yoshinaga

Jun Kondo

Akira Mabuchi

Representative Director of the Board
President & CEO

Representative Director of the Board
Deputy President

Director of the Board
Corporate Executive Vice President

April 1977 Joined the Company
April 2005 Corporate Vice President, Senior General Manager of Strategy Development
Division, and General Manager of Corporate Planning Department
June 2006 Corporate Vice President and Chief General Manager of Strategy
Development Division
April 2007 Corporate Vice President, Chief General Manager of Subaru Japan Sales &Marketing Division, and General Manager of Sales Promotion Department
June 2007 Corporate Senior Vice President and Chief General Manager of Subaru Japan
Sales & Marketing Division
June 2009 Director of the Board and Corporate Executive Vice President
June 2011 Representative Director of the Board, President & CEO

April 1976 Joined the Company
June 2003 Corporate Vice President, Chief General Manager of Subaru Manufacturing
Division, and Chief General Manager of Gunma Plant
May 2004 Corporate Vice President, Chief General Manager of Subaru Cost Planning &Management Division, and General Manager of Cost Planning Department
June 2004 Corporate Senior Vice President and Chief General Manager of Subaru Cost
Planning & Management Division
June 2006 Corporate Senior Vice President, Chief General Manager of Subaru Cost
Planning & Management Division, and Senior General Manager of Subaru
Purchasing Division
April 2007 Corporate Senior Vice President, Chief General Manager of Strategy
Development Division, and Chief General Manager of Subaru Cost Planning& Management Division
June 2008 Director of the Board and Corporate Executive Vice President
June 2011 Representative Director of the Board and Deputy President

April 1979 Joined the Company
April 2005 Corporate Vice President, Senior General Manager of Subaru Engineering
Division, and General Manager of Engineering Administration Department
June 2007 Corporate Senior Vice President and Chief General Manager of Subaru
Engineering Division
April 2009 Corporate Senior Vice President and Chief General Manager of Strategy
Development Division
June 2010 Director of the Board and Corporate Executive Vice President

Naoto Muto

Tomohiko Ikeda

Mitsuru Takahashi

Director of the Board
Corporate Executive Vice President

Director of the Board
Corporate Executive Vice President

Director of the Board
Corporate Executive Vice President

April 1977 Joined the Company
April 2005 Corporate Vice President, Senior General Manager of Subaru Product &Portfolio Planning Division, and General Manager of Subaru Product &Portfolio Planning Division
June 2006 Corporate Vice President and Chief General Manager of Subaru Product &Portfolio Planning Division
June 2007 Corporate Senior Vice President and Chief General Manager of Subaru
Product & Portfolio Planning Division
April 2009 Corporate Senior Vice President and Chief General Manager of Subaru
Purchasing Division
June 2010 Corporate Executive Vice President and Chief General Manager of Subaru
Purchasing Division
June 2011 Director of the Board and Corporate Executive Vice President

April 1977 Joined the Company
June 2006 Corporate Vice President and Chief General Manager of Subaru Overseas
Division
April 2007 Corporate Vice President, Chief General Manager of Subaru Overseas
Division 1, and Chairman, President & CEO of Subaru of America, Inc.
April 2009 Corporate Senior Vice President and General Manager of Human Resources
Department
June 2011 Director of the Board and Corporate Executive Vice President

FUJI HEAVY INDUSTRIES LTD.

33 ANNUAL REPORT 2013

April 1978 Joined the Company
June 2006 Corporate Vice President and General Manager of Finance & Accounting
Department
April 2009 Corporate Senior Vice President, CFO, and General Manager of Finance &Accounting Department
April 2010 Corporate Senior Vice President, CFO, General Manager of Finance &Accounting Department, and President of Eco Technologies Company
June 2010 Corporate Executive Vice President, CFO, General Manager of Finance &Accounting Department, and. President of Eco Technologies Company
April 2011 Corporate Executive Vice President, CFO, and President of Eco Technologies
Company
June 2012 Director of the Board, Corporate Executive Vice President, CFO, andPresident

Board Directors / Executive Officers (as of June 21, 2013)

Executive Officers

Outside Directors

Corporate Executive Vice President Shuzo HaimotoTakeshi Tachimori
Director of the Board
Corporate Executive Vice President
April 1977 Joined the Company
June 2006 Corporate Vice President and Senior General Manager of Subaru Product &Portfolio Planning Division
April 2009 Corporate Vice President, Chief General Manager of Subaru Product &Portfolio Planning Division, and President of Subaru Tecnica International Inc.
April 2010 Corporate Senior Vice President and Chief General Manager of Subaru
Product & Portfolio Planning Division
April 2011 Corporate Senior Vice President and Chairman, President & CEO of Subaru
of America, Inc.
June 2011 Corporate Senior Vice President; Chairman, President & CEO of Subaru ofAmerica, Inc.; and Chief General Manager of Subaru Overseas Sales &Marketing Division 1
April 2013 Corporate Executive Vice President, Chairman & CEO of Subaru of America,
Inc., and Chief General Manager of Subaru Overseas Sales & Marketing
Division 1
June 2013 Director of the Board and Corporate Executive Vice President

Corporate Senior Vice President

Corporate Vice President

Toshio Arima
Outside Director

The Company has appointed Toshio Arima to the position

Mitsuru Takada

of outside director. Possessing considerable experience

Hisashi Nagano

as an executive and a high degree of expertise in the area

Tamaki Kamogawa

of CSR, Mr. Arima offers sound advice to and ensures theMasahiro Kasai

independent monitoring of the Board of Directors andHidetoshi Kobayashi

other bodies. The Company has appointed Nobushige

Yoshio Hirakawa

Imai to the position of outside auditor. Mr. Imai is fully

Tatsuhiko Mukawa

qualified for this position owing to the wealth of

Yasuo Kosakai

management experience and knowledge he acquired as

Tsuyoshi Nakaian executive in the financial industry, and he has the

Yasunobu Nogai

character and ability needed to undertake audits in an

Masashi Takahashi

objective manner. In addition, the Company has

Masami Iida

appointed Takatoshi Yamamoto to the position of outside

Tomomi Nakamura

auditor. Mr. Yamamoto is fully qualified for this position

Toshio Masuda

owing to the wealth of knowledge of corporate activities

Kazuo Hosoya

he gained as a securities analyst and the corporate

Masaki Okawara

management experience he gained as an executive in the

Satoshi Maeda

manufacturing industry. Further, since they possess

Hiromi Tsutsumi

exemplary backgrounds and no conflict with the interests

Shoichiro Tozukaof ordinary shareholders can be foreseen, the Company

Toshiaki Okada

has appointed Mr. Arima and Mr. Yamamoto as
independent directors under Tokyo Stock Exchange (TSE)

June 2011 Outside Director

regulations.

Auditors
Standing Corporate Auditor

Nobushige Imai
Masakazu Kimura
Norio Saito

Corporate Auditor
FUJI HEAVY INDUSTRIES LTD.

Takatoshi Yamamoto

34 ANNUAL REPORT 2013

Consolidated Ten-Year Financial Summary FUJI HEAVY INDUSTRIES LTD. AND CONSOLIDATED SUBSIDIARIES Years ended March 31(Millions of yen)(Thousands of U.S. dollars)

2013

2013

¥ 1,439,451 ¥ 1,446,491 ¥ 1,476,368 ¥ 1,494,817 ¥ 1,572,346 ¥ 1,445,790 ¥ 1,428,690 ¥ 1,580,563 ¥ 1,517,105 ¥ 1,912,968
1,241,427
1,501,809
1,222,419
1,152,763
1,164,564
1,125,293
1,142,674
1,085,716
1,107,718
1,217,662
339,136
411,159
294,686
275,927
281,226
351,075
352,143
353,735
338,773354,684
255,001
290,748
250,727
248,577
287,029292,736304,237
303,411296,756
309,004
84,135
120,411
43,95927,35058,33947,90650,32442,01745,680（5,803）63,21493,082
52,87928,67445,58956,266
21,06631,906（443）（21,517）$ 20,352,889
15,978,392

2004

2005

2006

2007

2009

2008

2010

2011

2012

For the Year:Net sales
Cost of sales
Gross profit
Selling, general andadministrative expenses
Operating income (loss)
Income (loss) before income taxes
and minority interests
Net income (loss)
Comprehensive income

38,64918,23815,611

31,89918,481

-

-

-

-

-

4,374,497
3,093,393
1,281,104
990,339（69,933）-（16,450）

50,32638,453

119,588

1,272,348（13,416）

34,90044,474

152,0091,617,289

394,719 ¥393,946

381,893 ¥380,587

413,963 ¥412,661

451,607 ¥ 596,813
595,365
450,302$ 6,349,750
6,334,344
16,783,211

At Year-End:
Net assets2¥

Shareholders' equity
Total assets
Ratio of shareholders' equity
to total assets (%)

457,027 ¥453,708

474,616 ¥471,149

467,786 ¥465,522495,703 ¥494,004

494,423 ¥493,397

1,349,727

1,357,459

1,348,400

1,316,041

1,296,388

1,165,431

1,231,367

1,188,324

1,352,532

1,577,454

33.6%

34.7%

34.5%

37.5%

38.1%

33.8%

30.9%

34.7%

33.3%

37.7%

50.62 ¥
49.66

23.27 ¥
23.27

20.66 ¥
20.66

44.46 ¥
44.44

25.73 ¥
25.73

（91.97）¥-（21.11）¥-64.56 ¥-

49.27 ¥-

153.23--582.60604.51649.41687.81687.02505.59488.58528.88576.97762.87

8.12

74,036 ¥95,15365,785 ¥89,07756,062 ¥67,37858,611 ¥67,03561,544

Per Share: (in yen and U.S. Dollars)
Net income (loss):
Basic

¥

DilutedNet assets

$

1.63

Other Information:
Depreciation/amortization
Capital expenditures(addition to fixed assets)¥

71,112 ¥71,010 ¥80,073 ¥81,454 ¥87,164 ¥128,026

147,759

119,289

126,329

118,869

522,832

57,541

52,962

46,89350,70952,02042,831

37,17542,907

48,11549,141

782,865

782,865

782,865

782,865

782,865

782,865

782,865

782,865

782,865

782,865

Number of shareholders3

34,70434,55846,36742,92044,48440,83939,22334,24033,13928,890Parent only

12,92812,703

11,99811,752

11,90912,137

12,483

12,42912,35912,717

Consolidated

27,29626,98926,11525,59826,40427,65927,58627,29627,12327,509Number of employees3:

FUJI HEAVY INDUSTRIES LTD.

35 ANNUAL REPORT 2013

654,793
1,010,597

Research and development expenses
Number of shares issued(thousands of shares) 3

Notes:
1. U.S. dollar figures have been translated from yen, for convenience only, at the rate of ¥93.99 to US$1.00, the approximate rate of exchange at March 31, 2013.
2. Prior year amounts have been reclassified to conform to the current year presentation.
3. As of March 31$

94,986

Five-Year Automobile Sales Years ended March 31
Consolidated Automobile Sales by Region (Number of units)
Japan

United States

China

OthersCanadaRussiaEuropeConsolidated automobile sales (Number of units)
Australia

2010

2011

2012

2013

Legacy20,41528,862

22,673

22,812

24,207

Impreza

19,733

21,721

20,184

29,12253,250Forester

16,424

11,87912,68513,80318,044

Exiga

11,126

10,789

7,859

8,020

7,392

-

-

-

249

6,711

OEM

2,034

1,523

4,430

5,844

2,778

Others

363

323

303

303

368

Passenger cars

70,09575,097

68,13480,153112,750

Minicars

108,694

96,17589,971

92,18950,372

Domestic total

178,789

171,272

158,105

172,342

163,122U.S.

188,240

227,028

278,959

280,356

357,569

Canada18,873

22,82828,05928,23932,644

Russia20,711

1,563

11,32015,86014,719Europe56,76437,34048,24439,07546,382Australia

36,71634,992

41,15036,92838,120China

26,184

48,93862,412

48,32350,185

Domestic Units:

800,000

724,466
656,964
600,000

2009

639,862

562,837

555,333

SUBARU BRZ
400,000

200,000

0

Overseas units by region:
FY 2009

2010

2011

2012

2013

Consolidated Automobile Sales by Model (Number of units)
LegacyImpreza

SUBARU BRZForesterOEM

Tribeca

OthersExiga

Minicars

800,000

724,466
656,964
600,000

555,333

Others

29,056

18,87628,71518,73921,725

Overseas total

376,544391,565

498,859

467,520561,344

Legacy102,106

146,099

225,388

210,194

207,460

Impreza

97,472

74,99887,06690,149190,864

Forester

153,289

156,288

176,453

157,833

147,679

Tribeca

17,658

7,564

5,643

5,702

4,243

639,862

562,837

Overseas units by model:

400,000

SUBARU BRZ
200,000OEM

FY 2009

2010

2011

2012

2013

-

-

38

10,100

5,994

3,865

3,372

591

439

622

444

232

407

Overseas total

376,544391,565

498,859

467,520561,344

Grand total

555,333

562,837

656,964

639,862

724,466

Others0

5,580

FUJI HEAVY INDUSTRIES LTD.

36 ANNUAL REPORT 2013

Non-consolidated automobile sales (Number of units)2009

Non-Consolidated Domestic Automobile Sales by Model

2010

2011

2012

2013

LegacyImpreza
Forester
Exiga
SUBARU BRZ
OEM
Passenger cars
Minicars
Domestic total

22,05921,935
16,954
12,787
2,651
76,386
110,043
186,429

30,92723,316
12,542
11,893
1,575
80,253
97,230177,483

23,212
20,85913,1608,150
5,313
70,69492,752
163,446

23,96830,56613,990
8,477
585
5,993
83,57996,457
180,036

25,42454,306
18,951
7,845
6,850
2,953
116,329
50,381
166,710

LegacyImpreza
ForesterTribeca
Exiga
SUBARU BRZOEMOthersExport total

28,787
99,688
164,960
1,227
328
5,312
111
300,41343,937
69,386
159,463
318
526
5,994
96
279,720

67,926
83,921
174,541
374
3,865
70
330,697

48,304
100,350
162,199
331
232
211
3,372
314,999

30,559198,232
142,745222
407
11,542316
384,023

LegacyImpreza

SUBARU BRZ

200,000

ForesterOEM

186,429(Number of units)

Exiga

Minicars

180,036

177,483

166,710

163,446
150,000

100,000

50,0000

FY 2009

66,87849,09860,748
10,975
187,699

86,33046,61177,781
5,930
216,652

131,873
44,39585,0802,472
263,820

146,806
41,19676,196
2,791
266,989

164,680
89,19576,3472,075
4,144
336,441

CKD2 overseas(SIA protion)

77,871
77,871

113,605
113,605

163,469
163,469

175,256
175,256

185,709
183,729

SIA Production Units3
LegacyTribeca

73,473
18,108100,149
4,197

159,215
5,558

164,968
5,661

177,471
3,713

LegacyImpreza

ForesterOEM

FUJI HEAVY INDUSTRIES LTD.

Tribeca

Others

2013

Exiga

300,000(Number of units)CKD Overseas

384,023
330,697
300,413

314,999

279,720200,000
163,469

175,256

185,709

113,605
77,871

037 ANNUAL REPORT 20132012

400,000

100,000

1. U.S. Retail Sales are the aggregate fi gures for the calendar year from January through December.
2. Completely Knocked Down
3. SIA Production Units are the aggregate fi gures for the calendar year from January through December until 2009.

2011

Non-Consolidated Automobile Export Units by Model
SUBARU BRZ

U.S. retail sales1
LegacyImpreza
ForesterTribeca
SUBARU BRZ
U.S. total

2010

FY 2009

2010

2011

2012

2013

Management'S Discussion and Analysis of Results of Operations and Financial Position
The Fuji Heavy Industries Ltd. Group

These measures corresponded to shifts in the operating

The Fuji Heavy Industries Ltd. (“FHI”) Group is engaged inenvironment since the plan’s drafting, such as sales

production and sales activities across a wide range of

expansion beyond the plan’s target, centered on Northbusiness sectors. These activities are conducted under four

America, and the lagging implementation of local

business divisions: Automobiles (the Group’s core operatingproduction in China. Moreover, in May 2012 the Groupdomain, which accounts for over 90% of consolidated net

announced measures to uphold the plan’s earnings targets

sales), Aerospace, Industrial Products and Other.

while aiming to implement its growth strategies for Subaru.

On a consolidated settlement of accounts basis, FHI and 73

In the year under review, to much acclaim from customers,

subsidiaries (a year-on-year increase of three) as well as 6

FHI launched sales of the SUBARU XV and the all-new

equity-method affiliated companies (a year-on-year

Forester, both brand-strategy products. Moreover, amongdecrease of three) were included in the scope of the FHI

other successful results of diligent marketing efforts, models

Group’s consolidation as of March 31, 2013, the end of fiscalfeaturing the advanced driving assist system “EyeSight (ver.

2013 (“the fiscal year under review”).

Net Sales (Billions of yen)
2,000

1,913.0
1,580.6
1,445.8

1,500

1,428.7

1,517.1

1,000

500

2)” launched in May 2010 marked sales of 100 thousand
units in Japan as of the end of March 2013.

Overview

Furthermore, to resolve waiting times prior to delivery to

Business Environment

customers, steps were taken to increase capacity at theDuring fiscal 2013, the economic circumstances surrounding

Japan-based plant for completed automobiles as well as thethe FHI Group displayed signs of a gradual recovery, despiteengine and transmission plant.
Performance Review

2010

Operating Income (Loss)since the end of last year, as well as monetary policy

In light of the above factors, in fiscal 2013 the FHI Groupmeasures, brought a correction of the excessive strength ofrecorded historically high levels of net sales and in all income

the yen from historical levels with indications of an improving

categories. Operating performance was affected by suchexport environment.

factors as our introduction of characteristically “Subaru”

In the automotive industry, annual unit sales in Japanproducts; the expansion of unit sales, centered on the U.S.

recouped the 5-million-unit level, thanks in part to themarket; high levels of operation at manufacturing plants;

effects of the eco-car subsidy program. With regard to

progress on efforts to reduce cost of sales; and correction

overseas automobile units sales, overall automobile demandof the strong yen. Consolidated performance during thein the United States, the most important market of FHI,

fiscal year under review was as follows.

exhibited a recovery trend. Moderate growth also continued

Net sales amounted to ¥1,913.0 billion, up ¥395.9 billion year

in China, which remains the global No. 1 in terms of scale.

on year, or 26.1%, owing to such factors as higher

In this environment, the FHI Group added further measuresautomobile unit sales, centered on the United States.

to its five-year mid-term management plan “Motion-V

Operating income came to ¥120.4 billion, an increase of(Five)” (fiscal 2012–fiscal 2016), announced in July 2011.

¥76.5 billion, or 173.9%, compared with the previous fiscal
FUJI HEAVY INDUSTRIES LTD.

FY 2009

2011

2012

2013

Operating Income (Loss)/Net Income (Loss) (Billions of yen)remaining risks swayed by overseas economic trends.
Specifically, the government’s economic stimulus measures

0

38 ANNUAL REPORT 2013

Net Income (Loss)

150

120.4 119.6
100

84.1

50

50.3 44.0

27.4

0

-5.8

38.5

-16.5

-50

-69.9
-100

-150

FY

2009

2010

2011

2012

2013

year, reflecting an increase in new automobile unit sales and

Net income for the fiscal year under review was up ¥81.1

progress on reducing cost of sales. Net income was up

billion, or 211.0%, from the previous fiscal year, to ¥119.6¥81.1 billion, or 211.0%, from the previous fiscal year, tobillion, including ¥44.2 billion in deferred income taxes¥119.6 billion, including ¥44.2 billion in deferred income

recognized based on prospects that taxable income willtaxes recognized based on prospects that taxable income

continue to be generated, based on the results of a review

will continue to be generated, based on the results of aof the potential recoverability of deferred tax assets

review of the potential recoverability of deferred tax assets

conducted in the light of the latest favorable trends in

conducted in the light of the latest favorable trends inbusiness performance.

Analysis of Increases and Decreases in Operating Income(Consolidated, Three-Year YoY Comparison) (Billions of yen)
84.1

8.0

1.2

-42.0

-5.2

44.0
-2.2

or 13.2%, year on year and amounting to a record high. This

compared with the preceding fiscal year was primarily due

increase occurred as a result of a rise in unit sales of theto improvements in the sales mix, accounting for ¥81.7

Impreza across all markets and favorable sales of the SUBARU

billion, owing to the increase in automobile unit sales in the

BRZ, introduced at the end of the preceding fiscal year.

Japanese and North American markets; ¥31.5 billion in

In Japan, unit sales of Subaru passenger cars in Japan rose

progress on the cost reduction; and ¥29.3 billion in

33 thousand units, or 40.7%, compared with the previous

exchange rate differences stemming from correction fromfiscal year, to 113 thousand units, exceeding 100 thousandthe strong yen, despite a ¥65.0 increase in overhead costs

units for the first time since fiscal 2005. These results wereassociated with the rise in automobile unit sales and a ¥1.0

due to strong sales of the Impreza throughout the fiscal year

billion increase in experimentation and research expenses.

and contributions from sales of new models, specifically theConsequently, the operating margin increased from 2.9% in

SUBARU XV and the all-new Forester, as well as sales of thethe previous year to 6.3%.

Legacy and the SUBARU BRZ.

29.3
31.5
81.7

81.9

Income before income taxes and minority interests rosesales of mini vehicles for commercial use, although unit

¥40.2 billion, or 76.0%, compared with the previous fiscal

sales of mini-passenger cars were robust, helped by new

year, to ¥93.1 billion, due to the rise in operating income andmodel introductions.

despite the absence of ¥26.1 billion in extraordinary income

As a result, automobile unit sales in Japan decreased 9

recorded in the previous fiscal year from the sale of FHI’s

thousand units, or 5.3%, compared with the preceding fiscal

head office building.

term, to 163 thousand units.
FUJI HEAVY INDUSTRIES LTD.

39 ANNUAL REPORT 2013

12.0

3.7
-10.1

198.0
-9.9

120.4

co
me

to 50 thousand units. This situation was due to a drop inLo
ex ss och n c
an ur
ge re
n

Net Income

O
FY pera20 ting
13 I
n

42 thousand units, or 45.4%, from the previous fiscal year,

-1.0

44.0

On the other hand, unit sales of mini vehicles were down
Income before Income Taxes and Minority Interests, and

120.4
-65.0

cy

vehicles stood at 724 thousand units, up 85 thousand units,

year on year to ¥120.4 billion. This substantial increaseRein ducco tioIm st nof pro& m sale vem
ixt s vo ent
ure lum
an e
do
the
rs
Inc
of reaan SG& se
do A
the exp
rs en
ses
Inc
of rea
R& se
De
xp
en
ses
Op
FY era20 ting
14 I(Pl ncoan m)eOperating income, as mentioned above, rose ¥76.5 billion

co
me
Im
of pro& m sale vem
ixt s vo ent
ure lum
an e
do
the
rs
Re
in ducco tiost nLo
ex ss och n c
an ur
ge re
nc
y
Inc
of reaan SG& se
do A
the exp
rs en
ses
Inc
of rea
R& se
De
xp
en
ses
Op
FY era20 ting
13 I
nc
om
e

Automobiles Division
In the fiscal year under review, sales volume for completed

O
FY pera20 ting
11 I

Cost of Sales, Expenses and Operating Income
Operating Income

O
FY pera20 ting
12 I
nSegment Information

nc
om
e
De
of crean SG& ase
do A
the exp
rs en
ses
Im
of pro& m sale vem
ixt s vo ent
ure lum
an e
do
the
rs
Lo
ex ss och n c
an ur
ge re
nc
y
Inc
of rea
R& se
De
xp
en
ses
Re
in ducco tiost nO
FY pera20 ting
12 I
nc
om
e

business performance.

Overseas unit sales surpassed the previous year’s level on an

Aerospace Division

On the other hand, sales to the commercial sector increased

all-markets basis thanks to the sustained strong

Sales of products to the Ministry of Defense, despite higher

over the previous fiscal year thanks in part to the correction

performance of the Impreza, SUBARU BRZ and the SUBARU

sales after the commencement of mass production ofof the strong yen and higher sales of Boeing 777 and

XV, centered on North America. As a result, total overseas

transport aircraft C-2, declined from the previous fiscal year

Boeing 787.

unit sales increased 94 thousand units, or 20.1%, from thedue to reduced sales of the multi-purpose helicopter UH-1J.

preceding fiscal year, to 561 thousand units.
By region, units sold in North America increased 82
thousand units, or 26.4%, to 390 thousand units. This wasowing to strong sales of the Legacy and Impreza, as well as
to the market’s positive evaluation of the SUBARU XV andthe SUBARU BRZ, which were introduced during the year. In

Operating Income by Segment (Billions of yen)

Net Sales by Segment (Billions of yen)
Automobiles

AerospaceIndustrial Products

2,000

1,913.0

year, to 50 thousand units, despite the negative impact on

1,580.6
1,445.8

1,500

the year. In Europe and Russia, sales volume grew 6

Industrial Products

1,428.7

140

120.4

1,517.1

100

84.1
80
1,000

60

units, or 3.2%, to 38 thousand units, while sales volume in

44.0
40

other regions was up 3 thousand units, or 15.9%, to 22
thousand units.

Other

120

thousand units, or 11.2% year on year, to 61 thousand units.
Also, year-on-year unit sales in Australia rose 1 thousand

Aerospace

Corporate and Elimination

China, sales volume rose 2 thousand units, or 3.9% year onsales of anti-Japanese demonstrations in the second half ofAutomobiles

Other

5000

27.4

20

Consequently, net sales in the Automobiles division0

increased ¥389.9 billion, or 28.1%, year on year, to ¥1,779.0
billion. In addition to the rise in new automobile unit sales,-5.8
0factors contributing to this positive performance included

FY

2009

2010

2011

2012

-20

2013

FY

2009

2010

2011

2013

2012

an improved sales mix at Subaru of America, Inc., FHI’s U.S.
sales subsidiary, and dealerships in Japan, as well as theconsolidation of some overseas sales companies to

Net Sales by Segment (Billions of yen)reinforce our sales frameworks. Segment income in the fiscal
year ended March 31, 2013, surged ¥71.6 billion, or 181.7%
year on year, stemming from higher automobile unit sales,to ¥111.0 billion despite higher factory overheads and2009
Automobile
Aerospace2010

Operating Income by Segment (Billions of yen)

2011

2012

2013

¥1,316.3 ¥1,294.5 ¥1,452.2 ¥1,389.1 ¥1,779.0
80.9

93.2

82.8

80.3

89.1

selling, general and administrative expenses, owing to an

Industrial Products

34.9

23.9

30.1

33.6

30.1

improved sales mix, the foreign exchange effects of yen

Other

13.7

17.1

15.5

14.2

14.7

correction, and progress in lowering cost of sales.

Total¥1,445.8 ¥1,428.7 ¥1,580.6 ¥1,517.1 ¥1,913.0

FUJI HEAVY INDUSTRIES LTD.

40 ANNUAL REPORT 2013

2010

2011

2012

2013

¥ 9.2） ¥21.7
（

¥80.4

¥39.4

¥111.0

2.3

2.9

6.8

0.5

0.6

2009
Automobile
Aerospace

1.6

Industrial Products（1.6）
Other
Elimination
and Corporate
Total

4.8

（2.4） （0.1）

3.1

2.6

1.5

1.0

1.6

0.3

0.7

0.1

0.2

0.4

¥ 5.8） ¥27.4
（

¥84.1

¥44.0

¥120.4Based on these factors, net sales in the Aerospace division

primarily due to rises in inventories and cash and deposits inincreased ¥8.9 billion, or 11.1%, compared with the previous

step with higher unit output, and an increase in assets fromfiscal year to ¥89.1 billion. In addition, segment income

overseas sales subsidiaries newly included in the scope ofincreased ¥3.9 billion, or 136.6%, year on year to ¥6.8 billion.

consolidation.
Total property, plant and equipment rose ¥43.4 billion year

Industrial Products Divisionon year to ¥633.4 billion. This expansion was mainly

Net sales in the Industrial Products division were down ¥3.5

attributable to an increase in machinery, equipment andbillion, or 10.3%, from the previous fiscal year, to ¥30.1

vehicles in line with augmented production capacity, as wellbillion, despite gains in sales of agricultural machinery in

as a rise in investment securities and other items.

Japan and power generators in Middle East, due to lower

Total liabilities were up ¥79.7 billion year on year, to ¥980.6

sales of engines and electric power generators in Japanbillion. The main factor behind this increase was a rise inamid waning reconstruction demand following the Great

notes and accounts payable–trade, consistent with theEast Japan Earthquake as well as lower sales of engines andgrowth in unit production, despite a decrease in interest-

pumps for overseas markets. Segment income was up ¥0.1

bearing debt.

billion, or 27.2%, over the previous fiscal year, to ¥0.6 billion,

Interest-bearing debt amounted to ¥307.2 billion as ofowing to such factors as improvements in the sales mix.

March 31, 2013, down ¥33.8 billion compared with the endof the previous fiscal year. This reflected efforts to reduce

Other Division

Total Assets, Shareholders’ Equity & Ratio of
Shareholders’ Equity to Total Assets (Billions of yen)
Total Assets
Shareholders’ Equity
Ratio of Shareholders’ Equity to Total Assets

60.0

1,800

1,577.5
1,500

50.0

1,352.5
1,165.4

1,200

1,231.4

1,188.3

40.0

33.8%

37.7%
34.7%

900

30.9%

33.3%

30.0

596.8

600

394.7

381.9

414.0

451.6

10.0

300

0

20.0

FY

2009

2010

2011

2012

0

2013

this figure, including a ¥20.0 billion decrease in bonds due

Although the divestiture of the sanitation truck business toto redemption, despite a ¥10.0 billion bond issuance in June

ShinMaywa Industries, Ltd., caused unit sales of sanitation

2012. The debt/equity ratio improved 0.24 of a point fromtruck Fuji Mighty to fall below the previous year’s level, net

March 31, 2012, to 0.52, due to an increase in retained

sales in this division were up ¥0.5 billion, or 3.8%, from theearnings and efforts to reduce interest-bearing debt, among

previous fiscal year, to ¥14.7 billion, due to the divestiture ofother factors.

Interest-Bearing Debt Balance & D/E Ratio (Billions of yen, Times)
Interest-Bearing Debt Balance

D/E Ratio

0.97

500

1.00

0.97

wind power generation system operations to Hitachi, Ltd.,Net assets totaled ¥596.8 billion, up ¥145.2 billion comparedamong other factors, Segment income was up ¥0.6 billion,

with the end of the previous fiscal year. This was primarily

or 57.2%, from the previous fiscal year, to ¥1.6 billion.

due to an increase in retained earnings of ¥112.8 billion,
reflecting the recording of net income in fiscal 2012. As a

Liquidity and Financing

result, net assets per share as of the end of the fiscal year

Financial Position

under review totaled ¥762.87, up ¥185.90 from ¥576.97 as of

Total assets as of March 31, 2013 stood at ¥1,577.5 billion, an

the year prior.

381.7

400

0.80

367.6
330.6

0.80

0.76

341.0
307.2

300

0.60

0.52

200

0.40

100

0.20

increase of ¥224.9 billion compared with the previous fiscal
year-end.
Of this total, current assets stood at ¥944.0 billion, up ¥181.5
billion compared with March 31, 2012. This result was

0

FUJI HEAVY INDUSTRIES LTD.

41 ANNUAL REPORT 2013

FY

2009

2010

2011

2012

2013

0

Cash Flowsvehicles. In addition, R&D expenses went toward theIn the fiscal year under review, net cash provided bydevelopment of a hybrid system for the SUBARU XV Hybrid,

operating activities was ¥166.7 billion compared with ¥54.9

which launched in 2013, and other environment-friendly

billion in the previous fiscal year. This result was mainly due

technologies. Mainly as a result of these factors, R&D

to higher sales, production and levels of operation.

expenses increased ¥1.0 billion, or 2.1%, year on year, toNet cash used in investing activities was ¥71.4 billion in fiscal¥49.1 billion.

150

year. This figure primarily reflects production capacity

Capital Expenditures and Depreciation

100

increases at the Main Plant and Oizumi Plant, and theCapital expenditures increased ¥15.9 billion, or 29.3%,

previous year’s gain on the sale of the Subaru Building. As acompared with the previous fiscal year, to ¥70.2 billion due

Cash Flows from Operating Activities& Cash Flows from Investing Activities (Billions of yen)
Cash Flows from Operating Activities

200

Cash Flows from Investing Activities

176.7

166.7
138.2

2013 compared with ¥26.6 billion used in the previous fiscal

result, free cash flow amounted to ¥95.3 billion, an increase

to such factors as augmenting production capacity at theof ¥67.1 billion from ¥28.3 billion provided in the previous

Gunma Main Plant, in line with the start of bridge production

fiscal year.

with the Yajima Plant. Depreciation increased ¥2.2 billion, orNet cash used in financing activities totaled ¥60.8 billion in

4.0%, year on year, to ¥55.9 billion.

54.9

50

0

the fiscal year ended March 31, 2013, compared with ¥2.6

-72.4

billion provided by these activities in the preceding fiscal

Basic Policy Regarding the Distribution of Profits

year. The reason for this change is that although the GroupFHI views the return of profits to shareholders as a criticalincreased borrowings in the preceding fiscal year to respondtask for management. With a view to improving ROE andin the aftermath of the Great East Japan Earthquake, webased on maintaining continual dividend payments, we

worked to reduce interest-bearing debt during the fiscal

apply a results-linked approach that takes into consideration

year under review. Accounting for the aforementioned

such factors as earnings, investment plans, operating

activities and the effect of translation adjustments, cash andconditions and dividend payout ratio of each fiscal year.

cash equivalents as of the end of the fiscal year under

Taking into account business results for the fiscal year underreview stood at ¥328.9 billion, up ¥70.9 billion year on year.

review as well as future business developments, operating
environments and other factors, FHI distributed an interim

Securing Liquidity

dividend of ¥5.00 per share and a year-end dividend of

FHI believes that it has secured liquidity at a level sufficient¥10.00 per share, for an annual dividend of ¥15.00 per share.

to satisfy its current needs through the use of commitment

We plan to increase this level for the upcoming fiscal year,

lines contracted with major banks, combined with cash andto an annual dividend of ¥20.00 per share (comprising

cash equivalents.

interim and year-end dividends of ¥10.00 per share).

-100

-26.6

-26.9

-50

FY

2009

-62.7
2010

-51.1
-71.4
2011

2012

2013

Free Cash Flow (Billions of yen)
114.1

120

95.3

87.1

80

40
28.3

0

-40

-80

Research and Development Expenses
During the year, FHI invested in R&D related to the Forester,-120

which was redesigned, and the introduction of other new
FUJI HEAVY INDUSTRIES LTD.

42 ANNUAL REPORT 2013

-99.3

FY

2009

2010

2011

2012

2013

Forecast for Consolidated Results (Billions of yen)

OutlookResearch and Development Expenses (Billions of yen)

Regarding the consolidated results forecast for the fiscal
60

year ending March 31, 2014, in the Japanese market we
48.1
42.9

42.8

45

49.1

37.2

expect unit sales to decrease over time due to aging ofredesigned a year ago. In overseas markets, however, we
anticipate an increase in sales centering on North America.

Income before income
taxes and minority interest

93.1

186.0

92.9

Net income

119.6

121.0

1.4

82
106

92
122

10
16

Exchange rate (in yen)

thousand units, up 27 thousand units, or 3.7%, from fiscal

¥/$

2013.

¥/€

As a result, consolidated net sales for fiscal 2014 arefrom the fiscal year under review, to ¥2,080.0 billion. Turning
FY

2009

2010

2011

2012

2013

Capital Expenditures, Depreciation Expenses (Billions of yen)
Capital Expenditures

Depreciation Expenses

70.2
65.1
58.0

60

56.1 57.1
49.8

54.3 53.7

55.9

43.1
40

2009

2010

2011

2012

2014

Change

112.8
50.4
163.1

101.6
53.9
155.5

(11.1)
3.5
(7.6)

357.6
32.6
14.7
46.4
38.1
50.2
21.7
561.3
724.5

384.9
35.5
12.6
41.8
42.5
51.2
27.6
596.0
751.5

27.3
2.9
(2.1)
(4.6)
4.4
1.0
5.9
34.7
27.0

Passenger cars

improved sales mix resulting from an increase in automobile

Minicars

unit sales. We forecast net income of ¥121.0 billion, up ¥1.4

Subtotal
Overseas:

assets in the preceding fiscal year.

United States

These forecasts are based on average annual exchange

Canadarates of ¥92 to U.S. $1 (previously ¥82 to U.S. $1) and ¥122

Russiato €1 (previously ¥106 to €1).
Note: Performance forecasts and medium- to long-term management
strategies are based on information available to management
as of the date of this report. Accordingly, actual results may
differ materially due to a variety of factors.

20

FY

2013(Results)
Japan:

of a yen correction, the impact of lower cost of sales and an

billion, or 1.2%, owing to the reallocation of deferred tax

80

Forecast for Global Automobile Sales (Thousand units)

to profits, operating income is expected to rise ¥77.6 billion,
or 64.4%, to ¥198.0 billion, owing the exchange rate effects

0

167.0
(63.8)
230.8
77.6

Japan
Overseas

projected (as of July 2013) to rise ¥167.0 billion, or 8.7%,
0Change2,080.0
608.1
1,471.9
198.0

Operating income

another record-high figure for automobile unit sales of 752

15

2014

1,913.0
671.8
1,241.1
120.4

the Legacy, as well as for the Impreza, which wasConsequently, during the upcoming fiscal year we forecast30

2013(Results)
Net sales

2013

FUJI HEAVY INDUSTRIES LTD.

43 ANNUAL REPORT 2013

EuropeAustralia
China
Other
Subtotal
Total

Business Risks(5) Dependence on Suppliers for Raw Materials

depreciates.

Operational and other risks that could significantly influence

The Company uses forward exchange rate contracts andthe decisions of investors and impact the Company’sother risk hedges to minimize the Group’s sensitivity to

and Components
The FHI Group procures raw materials, components andfinancial status are set out below. Based on informationsuch currency exchange risks. However, the effect ofother items from numerous suppliers. However, there areavailable to the FHI Group as of June 24, 2013, thesevere fluctuations in currency exchange rates at the end

cases in which the Group relies on certain items and/or aenumerated risks include forward-looking statements, butof the fiscal year could result in a loss (gain) on valuation

limited number of suppliers. Due to tightening supply anddo not encompass every possible risk posed to the FHI

of derivatives and have a major impact on non-operating

demand or other factors, the inability to procure supplies inGroup. As such, there are other risk factors which could

expenses.

a manner that ensures stable costs, delivery dates andquality could seriously impact the Group’s businessinfluence investors and their decisions.
(3) Dependence on Certain Businesses

performance and financial position.

(1) Economic Trends

The FHI Group is mainly comprised of the Automobiles,

Economic trends in countries and regions that comprise

Aerospace and Industrial Products business segments.

(6) Protection of Intellectual Property

important markets for the FHI Group could potentially

However, the Automobiles business segment accounts for

The FHI Group works to protect its intellectual property

impact the Group’s business performance. In Japan andthe overwhelming majority of the Group’s businessthrough the use of patents and trademarks in such areas asNorth America, key markets for the Group, economic

operations. Accordingly, in the event that automobile-

technologies and expertise that ensure productrecession, decreasing demand or increasing pricerelated demand, market conditions, price competition withdifferentiation. However, the Group could experience acompetition could undermine the sales and profitability ofother automakers, or other factors exceed projected levels,

decrease in sales or an increase in litigation costs in cases

the Group’s products and services.

the entire Group’s overall business performance andwhere a third party makes unauthorized use of the Group’s

financial position could be significantly affected.

intellectual property to manufacture similar products, as(2) Currency Exchange Rate Fluctuations

well as in specific regions where intellectual property

The FHI Group’s ratio of overseas net sales stood at 64.9%(4) Changes in Market Appraisal

protection is limited. Such factors could impact the Group’s

in the fiscal year ended March 31, 2013. The Group’s

The FHI Group develops, manufactures and releases new

profitability.

consolidated financial statements, which are presented in

products based on appropriate timing and pricing in line withJapanese yen, are affected by translation of overseas net

product planning that reflects market demand and customer(7) Product Defects

sales, operating income and assets from local currencies,

needs. Such actions are the most important factors in

The FHI Group places the highest priority on the safety ofparticularly U.S. dollars, into yen. Accordingly, in the event

maintaining stable increases in Group business performance.

the products it develops, manufactures and sells. However,that discrepancies arise between projected exchange rates

In the event that market appraisals of new model vehicles

completely avoiding defects and recalls regarding all

in full-year forecasts and actual rates at the time of accountand other products do not meet sales plan expectations or

products and services is impossible.

settlement, the Group’s business performance and financial

that the obsolescence rate of current products exceeds

The substantial costs associated with a major recall could

position may be adversely affected when the yen

forecasts, the Group’s business performance and financial

significantly affect the Group’s business performance andappreciates or positively affected when the yen

position could be significantly affected.

financial position. In addition, although the Group purchases

FUJI HEAVY INDUSTRIES LTD.

44 ANNUAL REPORT 2013

product liability insurance, the risk of incomplete coverageand financial position could be affected in the event thatexists.

such delays or suspensions are prolonged.

(8) Retirement Benefit Obligations
The FHI Group’s employee retirement benefit costs andobligations are calculated based on the following
assumptions: retirement benefit obligation discount rates
and the expected rate of return on pension assets, both ofwhich are established based on mathematical calculations.
However, in the event that actual performance differs fromthe assumptions, the Group’s business performance andfinancial position could be affected over the long term.
(9) Environmental and Other Legal Regulations
The FHI Group is subject to various domestic and overseas
legal regulations in relation to such areas as exhaustemissions, energy conservation, noise, recycling, the level ofpollutants emitted from manufacturing facilities andautomobile safety. The Group’s business performance andfinancial position could be affected by an increase in costs
due to future regulatory changes.
(10) The Impact of Natural Disasters, War, Terror, Strikes
and Other Events
The occurrence of major earthquakes, typhoons or othernatural disasters, diseases, wars, terrorist attacks or otherevents could impede the FHI Group’s business activities aswell as delay or suspend raw material/component
purchases, production, product sales/transport, and theprovision of services. The Group’s business performance

FUJI HEAVY INDUSTRIES LTD.

45 ANNUAL REPORT 2013

Corporate Data (As of March 31, 2013)

Stock Information (As of March 31, 2013)

Company Name

Head Office

Common Stock AuthorizedFuji Heavy Industries Ltd.

Subaru Building, 7-2, Nishi-Shinjuku 1-chome,
Shinjuku-ku, Tokyo 160-8316, Japan
Phone: +81-3-3347-2111
Fax:+81-3-3347-2338

1,500,000,000 shares

Established
July 15, 1953

Paid-in Capital

Investor Relations Office¥153,795 million

Subaru Building, 7-2, Nishi-Shinjuku 1-chome,
Shinjuku-ku, Tokyo 160-8316, Japan
Phone: +81-3-3347-2655
Fax:+81-3-3347-2295

Number of Employees
12,717(consolidated: 27,509)

Website Address

Domestic Manufacturing Divisions

http://www.fhi.co.jp/english/ir/

Gunma Manufacturing Division (Automobiles Division)
Utsunomiya Manufacturing Division(Aerospace Division)
Saitama Manufacturing Division(Industrial Products Division)

Major Shareholders

782,865,873 shares

Toyota Motor Corporation

129,000

16.48

The Master Trust Bank ofJapan, Ltd. (Trust account)

39,541

5.05

Tokyo Stock Exchange

Japan Trustee Services
Bank, Ltd. (Trust account)

33,527

4.28

Transfer Agent

Suzuki Motor Corporation

Mizuho Trust & Banking Co., Ltd.
2-1, Yaesu 1-chome, Chuo-ku, Tokyo
103-0028, Japan

13,6901.75

SSBT OD05 OMNIBUS
ACCOUNT - TREATY CLIENTS

13,386

1.71

FHI's Client Stock Ownership

12,5281.60

Mizuho Corporate Bank, Ltd.

12,361

1.58

Mizuho Bank, Ltd.

12,017

1.54

Nippon Life Insurance Company

11,191

1.43

BBH/BLACKROCK GLOBALALL OCATION FUND, INC.

10,511

1.34

Number of Shareholders
38,638Stock Exchange Listing

Principal Consolidated Subsidiaries and Affiliates
Company Name

Percentage of
Voting Rights

Number of Shares Percentage ofHeld (in thousands) Total Shares

Name

Common Stock Issued

Main Business Activities

Japan
Manufacture and sales of automobile parts andFuji Machinery Co., Ltd.

100.0% industrial product parts

Ichitan Co., Ltd.

100.0% industrial product parts

Kiryu Industrial Co., Ltd.

97.7% distribution of Subaru automobile parts

Subaru Tecnica International Inc.

100.0% Development and manufacture of competition parts,

Subaru Kohsan Co., Ltd.

100.0% travel agency operations

Subaru Finance Co., Ltd.

100.0% for FHI subsidized companies, lease for various facility equipment,

Yusoki Kogyo K.K.

100.0% Manufacture and sales for aircraft parts

TOKYO SUBARU INC.

100.0% Subaru automobiles (including 32 other dealerships)

Manufacture and sales of forged automobile/
Manufacture of Subaru specially equipped automobiles andQuarterly Common Stock Price Range (Tokyo Stock Exchange)

Management of SUBARU Motorsport Activities,

2,000

(yen)

tuning parts and accessories for SUBARU cars

Leasing of real estate, shopping mall management andLease & credit facilities provider for Subaru automobiles, financing

1,500

rolling stock & FHI made garbage trucks and sales of insurance
Distribution, sales and services of

1,000

Overseas
Subaru of America, Inc.

100.0% Distribution and sales of Subaru automobiles and parts

Fuji Heavy Industries U.S.A., Inc.

100.0% North America Market

Subaru Research & Development, Inc.

Engineering research of Subaru automobiles in
Research and development of automobiles
Manufacture of Subaru automobiles andSubaru of Indiana Automative, Inc.

100.0% contracted manufacture of Toyota automobiles

Subaru Canada, Inc.

100.0% Distribution and sales of Subaru automobiles and parts
100.0% Distribution, sales and marketing of Subaru automobiles and parts
100.0% Distribution, sales and marketing of Subaru automobiles and parts

Subaru Europe N.V./S.A.
Subaru of China, Ltd.

500

FUJI HEAVY INDUSTRIES LTD.

0

High
Low

1Q

2Q

3Q

4Q

FY2009493
311

46 ANNUAL REPORT 2013

1Q

2Q

3Q

FY2010
758
435

4Q

1Q

2Q

3Q

FY2011
697
402

4Q

1Q

2Q

3Q

FY2012
635
223

4Q

1Q

2Q

3Q

FY2013
1,609
545

4Q

Fuji Heavy Industries Ltd.
Subaru Building, 7-2, Nishi-Shinjuku 1-chome,
Shinjuku-ku, Tokyo 160-8316, Japan
Phone: +81-3-3347-2111
Fax:+81-3-3347-2338
http://www.fhi.co.jp/english/ir/

Consolidated Balance Sheets

93.99

FUJI HEAVY INDUSTRIES LTD. AND CONSOLIDATED SUBSIDIARIESAs of March 31, 2013 and 2012
Millions of yen

Thousands of
U.S. dollars(Note 1)ASSETS
Current assets:
Cash and deposits (Note 4 and 5)
Notes and accounts receivable-trade (Note 5)
Lease investment assets (Note 5 and 19)
Short-term investment securities (Notes 4, 5 and 6)
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets (Note 12)
Short-term loans receivable (Note 5)
Other current assets
Allowance for doubtful accounts
Total current assets

2013

2012

2013

¥285,152
124,234
22,14566,370163,852
50,49835,217
52,94796,99047,579(951)
944,033¥237,614
117,062
21,86531,635
121,686
56,14333,715
17,39978,78848,019(1,395)762,531$3,033,855
1,321,779
235,610706,139
1,743,292
537,270
374,689
563,326
1,031,918
506,212(10,118)
10,043,972

Property, plant and equipment (Notes 7 and 9)
Accumulated depreciation
Accumulated impairment loss
Total property, plant and equipment

1,260,592(786,734)(28,903)444,955

1,225,559(769,274)(30,194)
426,091

13,411,980(8,370,401)(307,511)
4,734,068

Investments and other assets:
Intangible assets
Investment securities (Note 5 and 6)
Investments in non-consolidated subsidiaries and affiliated companies
Deferred tax assets (Note 12)
Other assets (Note 28)
Allowance for doubtful accounts
Total investments and other assets
Total assets

12,751
91,271
4,552
6,227
77,656(3,991)
188,466¥1,577,454

11,81872,794
12,8301,873
68,179(3,584)
163,910¥1,352,532

135,663
971,071
48,431
66,252826,216(42,462)2,005,171$16,783,211

Millions of yen

Thousands of
U.S. dollars(Note 1)

2013

2012

2013

¥242,743¥61,595
60,86745,20783,032
17,86534,740
7,828
103,154
657,031¥251,043
71,04043,79669,437
16,47828,861
4,600
76,380561,635$2,582,647$655,336
647,590
480,977
883,413
190,073369,614
83,285
1,097,501
6,990,436

201,083
34,917
19,13968,471
323,610226,144
33,95022,74056,456339,290

2,139,408
371,497
203,628
728,492
3,443,025

153,795
160,071
301,357(1,292)

153,795
160,071
188,538(1,259)1,636,291
1,703,064
3,206,267(13,746)

613,931501,145

6,531,876

27,882(46,448)(18,566)
1,448

18,966(69,809)(50,843)
1,305

296,649(494,180)(197,532)
15,406596,813451,6076,349,750¥1,577,454¥1,352,532$16,783,211

LIABILITIES AND NET ASSETS
Current liabilities:
Notes and accounts payable-trade (Note 5)
Electronically recorded obligations-operating (Note 5)
Short-term loans payable (Note 5 and 7)
Current portion of long-term debts (Note 5 and 7)
Accrued expenses (Note 5)
Provision for bonuses
Provision for product warranties
Accrued income taxes (Note 5 and 12)
Other current liabilities (Note 5, 7 and 12)
Total current liabilities
Long-term liabilities:
Long-term debts (Note 5 and 7)
Accrued pension and severance liability (Note 11)
Deferred tax liabilities (Note 12)
Other long-term liabilities (Note 7)
Total long-term liabilities
Contingent liabilities (Note 21)
Net assets: (Note 13)
Shareholders' equity:
Capital stock
Authorized— 1,500,000,000 shares
Issued —782,865,873 shares
Capital surplus
Retained earnings
Less－treasury stock, at cost,
2013—
2,435,448 shares
2012—
2,406,736 shares
Total shareholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
The accompanying notes are an integral part of these balance sheets.

-

Consolidated Statements of Income

93.99

FUJI HEAVY INDUSTRIES LTD. AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2013 and 2012

Millions of yen

Net sales (Note 2)
Cost of sales (Note 14)
Gross profit
Selling, general and administrative expenses (Note 2 and 15)
Operating income (loss)
Other income (expenses):
Interest and dividend income
Interest expenses
Equity in earnings of affiliates
Real estate rent
Foreign exchange gains (losses)
Gain (loss) on valuation of derivatives
Gain (loss) on sales and retirement of noncurrent assets
Gain (loss) on sales of investment securities (Note 6)
Loss on valuation of investment securities (Note 6)
Depreciation
Impairment loss (Note 9)
Gain on sales of loans receivable
Loss on disaster (Note 16)
Provision for loss on transfer of business (Note 17)
Other, net (Note 18)
Income (loss) before income taxes and minority interests
Income taxes (Note 12):Current
DeferredIncome (loss) before minority interests
Minority interests in income (loss)
Net income (loss)

Thousands of
U.S. dollars(Note 1)

2013

2012

2013

¥1,912,968
1,501,809
411,159
290,748
120,411¥1,517,105
1,222,419
294,686
250,727
43,959$20,352,889
15,978,392
4,374,497
3,093,393
1,281,104

2,669(3,336)43592(15,527)(1,714)(1,911)
409
(61)
(977)
(145)
325
(967)
(6,729)(27,329)93,082

2,092(3,780)
817
530
2,290
(5,116)26,807687(403)(1,171)(63)(7,257)(4,177)(2,336)8,920
52,87928,397(35,493)
457
6,299(165,198)(18,236)(20,332)
4,352
(649)
(10,395)(1,543)
3,458(10,288)(71,594)(290,765)
990,339

17,566(44,216)(26,650)
119,732
144¥119,588

12,0782,251
14,32938,55097¥38,453

186,892(470,433)(283,541)
1,273,880
1,532$1,272,348

U.S. dollars
Per share data (Note 2) :Net income (loss)—Basic—Diluted *Net assets
Cash dividends (Note 13)
The accompanying notes are an integral part of these statements.

¥153.23762.8715.00¥49.27576.97
9.00

$1.63
8.12
0.16

*For the year ended March 31, 2013 and 2012 diluted information is not presented because potentially dilutive securities do not exist.

Consolidated Statements of Comprehensive Income

93.99

FUJI HEAVY INDUSTRIES LTD. AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2013 and 2012

Millions of yen

Thousands of
U.S. dollars(Note 1)

2013

2012

2013

Income (loss) before minority interests
Other comprehensive income (Note 3)
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Share of other comprehensive income of associates accounted for using equity method
Total other comprehensive income¥119,732¥38,550$1,273,880

8,916
23,28477
32,277

7,399(1,464)(11)
5,924

94,861
247,729
819
343,409

Comprehensive income(Comprehensive income attributable to)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests

152,00944,474

1,617,289

151,865¥144

44,382¥92

1,615,757$1,532

Consolidated Statements of Changes in Net Assets

93.99

FUJI HEAVY INDUSTRIES LTD. AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2013 and 2012

Shareholders' equity
Capital stock
Balance at the beginning of current period
Balance at the end of current period
Capital surplus
Balance at the beginning of current period
Balance at the end of current period
Retained earnings
Balance at the beginning of current period
Changes of items during the period
Dividends from surplus
Net income (loss)
Disposal of treasury stock
Change of scope of consolidation
Other
Total changes of items during the period
Balance at the end of current period
Treasury stock
Balance at the beginning of current period
Changes of items during the period
Purchase of treasury stock
Disposal of treasury stock
Total changes of items during the period
Balance at the end of current period
Total shareholders' equity
Balance at the beginning of current period
Changes of items during the period
Dividends from surplus
Net income (loss)
Purchase of treasury stock
Disposal of treasury stock
Change of scope of consolidation
Other
Total changes of items during the period
Balance at the end of current period

Millions of yen

Thousands of
U.S. dollars(Note 1)

2013

2012

2013

¥153,795
153,795¥153,795
153,795$1,636,291
1,636,291

160,071160,071160,071160,071

1,703,064
1,703,064

188,538

156,948

2,005,937(7,418)
119,5881
648
112,819
301,357(7,027)38,453(4)171(3)
31,590188,538(78,923)
1,272,348
11
6,894
1,200,330
3,206,267(1,259)(1,381)(13,395)

(35)
2
(33)
(1,292)

(7)
129
122
(1,259)

(372)
21
(351)
(13,746)

501,145

469,433

5,331,897(7,418)
119,588(35)
3
648
112,786¥613,931(7,027)38,453
(7)
125
171
(3)
31,712¥501,145(78,923)
1,272,348
(372)
32
6,894
1,199,979$6,531,876

Consolidated Statements of Changes in Net Assets
FUJI HEAVY INDUSTRIES LTD. AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2013 and 2012

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Foreign currency translation adjustment
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Total accumulated other comprehensive income
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Minority interests
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Total net assets
Balance at the beginning of current period
Changes of items during the period
Dividends from surplus
Net income (loss)
Purchase of treasury stock
Disposal of treasury stock
Change of scope of consolidation
Other
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period

Millions of yen

Thousands of
U.S. dollars(Note 1)

2013

2012

2013

¥18,966¥11,567$201,788

8,916
8,916
27,882

7,399
7,399
18,966

94,861
94,861
296,649(69,809)(68,339)(742,728)

23,361
23,361(46,448)(1,470)(1,470)(69,809)248,548248,548(494,180)(50,843)(56,772)(540,941)

32,27732,277(18,566)

5,929
5,929
(50,843)

343,408
343,408(197,533)

1,305

1,302

13,885

143
143
1,448

3
3
1,305

1,521
1,521
15,406451,607413,9634,804,841(7,418)
119,588(35)
3648
32,420145,206¥596,813(7,027)38,453
(7)
125
171
(3)
5,932
37,644¥451,607(78,923)
1,272,348
(372)
32
6,894
344,930
1,544,909$6,349,750

Consolidated Statements of Cash Flows

93.99

FUJI HEAVY INDUSTRIES LTD. AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2013 and 2012

Millions of yen

Thousands of
U.S. dollars(Note 1)

2013

2012

2013

Net cash provided by (used in) operating activities
Income (loss) before income taxes and minority interests
Depreciation and amortization
Impairment loss
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for product warranties
Increase (decrease) in provision for loss on construction contracts
Increase (decrease) in provision for retirement benefits
Increase (decrease) in provision for loss on litigation
Interest and dividends income
Interest expenses
Loss (gain) on valuation of derivatives
Equity in (earnings) losses of affiliates
Loss (gain) on sales and retirement of noncurrent assets
Loss (gain) on sales and valuation of investment securities
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Decrease (increase) in lease investment assets
Decrease (increase) in operating loans receivable
Decrease (increase) in vehicles and equipment on operating leases
Increase (decrease) in deposits received
Other
Sub total¥93,082
61,544
145
(55)
1,344
2,765
(1,923)910
369(2,669)
3,336
1,714
(43)
1,911
(348)
1,264
(21,194)
48,679(280)(14,701)(2,528)299
8,728
182,349¥52,879
58,611
63
(883)
150
1,658
(1,840)147(2,092)
3,780
5,116
(817)
(26,807)(284)(40,602)(49,033)
74,1971,185(16,077)(1,842)
4,258
5,685
67,452$990,339
654,793
1,543(585)
14,29929,418(20,460)
9,682
3,926
(28,397)
35,493
18,236(457)
20,332(3,703)
13,448(225,492)
517,917(2,979)(156,410)(26,896)
3,181
92,861
1,940,089

Interest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities

2,694(3,417)(14,911)
166,715

2,277(3,671)(11,193)
54,86528,663(36,355)(158,645)
1,773,752

Net cash provided by (used in) investing activities
Purchase of short-term investment securities
Proceeds from sales of short-term investment securities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Payments of loans receivableCollection of loans receivable
Other, net
Net cash provided by (used in) investing activities(9,760)5,166(60,852)
1,965(4,377)(14,503)
11,954(94,273)
93,376(66)(71,370)(5,202)
3,315(49,059)
36,370(3,204)(16,370)
13,854(92,710)88,361(1,957)(26,602)(103,841)
54,963(647,431)
20,906(46,569)(154,304)
127,184(1,003,011)
993,467(702)(759,338)

Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Cash dividends paid
Repayment of lease obligations
Other,net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents(28,655)
10,218(23,937)
10,000(20,010)(7,392)(955)(35)(60,766)
14,96449,543(28,033)
79,585(21,268)(20,010)(7,027)
(774)
113
2,586
(332)
30,517(304,873)
108,714(254,676)
106,394(212,895)(78,647)(10,161)(372)(646,516)
159,208
527,109

258,084

227,704

2,745,867

21,320¥328,947(137)¥258,084

226,833$3,499,809

Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents resulting
from change of scope of consolidation
Cash and cash equivalents at end of period (Note 4)
The accompanying notes are an integral part of these statements.

Notes to Consolidated Financial Statements
FUJI HEAVY INDUSTRIES LTD. AND CONSOLIDATED SUBSIDIARIES
1. Basis of Presentation of the Financial Statements
The accompanying consolidated financial statements of Fuji Heavy Industries Ltd. (the "Company") havebeen prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Law
and its related accounting regulations, and in conformity with accounting principles generally accepted inJapan ("Japanese GAAP"), which are different in certain respects as to application and disclosure
requirements of International Financial Reporting Standards.
The accounts of the Company’s overseas subsidiaries are based on their accounting records maintained inconformity with generally accepted accounting principles prevailing in the respective countries of their
domicile. The accompanying consolidated financial statements have been restructured and translated into
English from the consolidated financial statements of the Company prepared in accordance with Japanese
GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance, as required by the
Financial Instruments and Exchange Law. Certain supplementary information included in the statutory
Japanese-language consolidated financial statements, but not considered necessary for fair presentation, is
not presented in the accompanying consolidated financial statements.
The translations of the Japanese yen amounts into U.S. dollars in the accompanying consolidated financial
statements are included solely for the convenience of readers outside Japan, using the prevailing exchange
rate at March 31, 2013, which was ¥93.99 to U.S.$1. The convenience translation should not be construed asa representation that the Japanese yen amounts have been, could have been, or could in the future beconverted into U.S. dollars at this or any other rate of exchange.
2. Summary of Significant Accounting Policies[1] The Scope of Consolidation and Application of the Equity Method
The accompanying consolidated financial statements include the accounts of the Company and its significant
subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.
The fiscal year-end of consolidated domestic subsidiaries and main foreign subsidiaries is the same as that ofthe parent company, while the fiscal year-end of the eight consolidated foreign subsidiaries is December 31.
The operating results of those subsidiaries that have fiscal year-ends different from that of the parent
company are consolidated by using the financial statements as of each subsidiary’s respective fiscal
year-end, the necessary adjustments being made in consolidation if there are any significant
transactions between January 1 and March 31.
The consolidated financial statements include the accounts of the Company and 73 subsidiaries in fiscal
2013 (70 subsidiaries in fiscal 2012).
In addition, five non-consolidated subsidiaries and one affiliated company were accounted for by the equity
method in fiscal 2013; eight non-consolidated subsidiaries and one affiliated company were accounted for by
the equity method in fiscal 2012.
Investments in insignificant non-consolidated subsidiaries and affiliated companies not accounted for by theequity method are carried at cost. The difference between the cost and the underlying net equity ofinvestments in subsidiaries and affiliated companies is allocated to identifiable assets based on their fair value
at the date of acquisition. The unallocated residual value of the excess of the cost over the fair value of theunderlying net assets is recognized as goodwill and amortized over a period of five years on a straight-line
basis.
All assets and liabilities of subsidiaries, which include not only the Company’s interest in the subsidiaries but
also the minority interest portion, are valued based on their fair value at the time the Company first
consolidates the subsidiary in question.
1[2] Short-Term Investment Securities and Investment Securities
Under the Japanese accounting standards for financial instruments, available-for-sale securities for which fairvalues are available are stated at their fair value as of the balance sheet dates with unrealized holding gains
and losses included as a separate component of net assets until realized, while securities for which fair values
are not readily available are stated at cost, as determined by the moving-average method, after taking into
consideration devaluation, if any, for permanent impairment. Held-to-maturity debt securities are stated using
the amortized cost method.
[3] Inventories
Inventories for regular sales are stated at cost, determined mainly by the moving-average cost method. (Bookvalue on the consolidated balance sheet is measured based on the lower of cost or market value.)[4] Property, Plant and Equipment (Excluding Leased Assets)
Property, plant and equipment are stated at cost. Significant renewals and additions are capitalized; ordinary
maintenance, ordinary repairs, minor renewals and minor improvements are charged to the consolidated
statements of income as incurred.
Depreciation of the property, plant and equipment of the Company and its consolidated domestic
subsidiaries is principally computed by the declining-balance method, except for those buildings (excluding
building improvements) acquired on or after April 1, 1998, for which the straight-line method is applied.
Depreciation of the property, plant and equipment of consolidated foreign subsidiaries is computed by thestraight-line method at rates based on the estimated useful lives of the assets according to their general class,type of construction, and use.
Estimated useful lives for depreciable assets are as follows:
Buildings and structures: 7–50 years
Machinery, equipment and vehicles: 2–12years[5] Intangible Assets (Excluding Leased Assets)
Computer software used internally by the Company and its consolidated subsidiaries is amortized by thestraight-line method over the relevant economic useful lives of three or five years.
[6] Leased Assets
For leased assets under finance lease transactions in which the ownership is transferred to the lessee:
The leased assets are depreciated by the same method as used for other property, plant and equipment.
For leased assets under finance lease transactions in which the ownership is not transferred to the lessee:
The leased assets are depreciated by the straight-line method over the leased period and the residual value iszero.
In addition, finance lease transactions in which the ownership is not transferred to the lessee on or before
March 31, 2008 are recorded as regular rental transactions.
[7] Allowance for Doubtful Accounts
Allowance for doubtful accounts is provided based on the amount calculated from the historical ratio of bad
debt for ordinary receivables, and estimated amounts of uncollectible accounts for specific overdue
receivables.
[8] Provision for Bonuses
Employee's bonuses are recognized as expenses for the period in which those are incurred.
2[9] Provision for Product Warranties
The Company and its consolidated subsidiaries provide for accrued warranty claims on products sold basedon their past experiences of warranty services and estimated future warranty costs, which are included in"Accrued expenses" in the accompanying consolidated balance sheets.
[10] Provision for Loss on Construction Contracts
The provision for losses on uncompleted construction of contracts in the Aerospace segment is made whensubstantial losses on the contracts are anticipated at the fiscal year-end for the next fiscal year and beyond
and such losses can be reasonably estimated.
[11] Provision for Loss on Transfer of Business
The Company provides for losses on transfer of an important business and these losses are reasonably
estimated at the end of the fiscal year.
[12] Accrued Pension and Severance Liability
Upon termination of employment, employees of the Company and its consolidated subsidiaries in Japan areentitled, under most circumstances, to lump-sum indemnities or pensions as described below, based on
current rates of pay, length of service, and conditions under which the termination occurs. The minimum
payment is an amount based on voluntary retirement. In addition to the minimum payment based on voluntary
retirement, employees receive additional benefits for retirement due to age limit, death or other definedreasons.
Certain consolidated subsidiaries in Japan have contributory funded defined benefit employees’ welfare
pension funds, which are pursuant to the Japanese Welfare Pension Insurance Law. The contributory
pension funds consist of a portion of the governmental welfare pension program, under which thecontributions are made by the companies and their employees, and an additional portion representing thecorporate noncontributory pension plans.
Under the Japanese accounting standards for pension and severance benefits, accrued pension andseverance liability for employees is provided based on the estimated amounts of projected pension andseverance obligation and the fair value of plan assets at the end of the fiscal year. Prior service cost is being
amortized by the straight-line method over a period (10-18 years) that is shorter than the average remaining
service period of the eligible employees. Actuarial gains and losses are amortized from the following fiscal
year by the straight-line method over a period (primarily 16 years for fiscal years 2013 and 2012) that isshorter than the average remaining service period of the eligible employees.
Accrued pension contribution for defined benefit pension plans is included in accrued pension andseverance liability.
Directors and statutory auditors of the Company and its consolidated domestic subsidiaries are entitled toreceive a lump-sum payment at the time of severance or retirement, subject to shareholder approval. The
liabilities for such benefits, which are determined based on the Company’s and its consolidated subsidiaries’internal rules, are included in "Other long-term liabilities" in the accompanying consolidated balance sheets.
[13] Translation of Foreign Currency-Denominated Accounts
Under the Japanese accounting standards for foreign currency translation, monetary assets and liabilities
denominated in foreign currencies are translated into Japanese yen at the exchange rates prevailing at eachbalance sheet date with the resulting gain or loss included currently in the statement of income.
The assets and liabilities of foreign subsidiaries and affiliated companies are translated into Japanese yen at
the exchange rates in effect at the balance sheet dates of the foreign subsidiaries and affiliated companies,
except for common stock and capital surplus, which are translated at historical rates. Revenue and expense
accounts are translated at the average exchange rates during the respective years. The resulting foreign3

currency translation adjustments are included in "Foreign currency translation adjustments" and "Minority
interest" in the net assets section of the accompanying consolidated balance sheets.
[14] Revenue Recognition
The percentage-of-completion method of revenue from Aerospace division production is applied toconstruction contracts for which certain elements are determinable with certainty at the end of fiscal year.
(The percentage of completion is estimated with the proportion-of-cost method). The completed-contract
method is applied to other works.
[15] Accounting for Lease Transactions
A part of domestic consolidated subsidiaries recognizes revenue for financial lease transactions on theeffective date of each lease contract.
[16] Derivative Financial Instruments and Hedge Accounting
The Japanese accounting standards for financial instruments require that the Company and its consolidated
domestic subsidiaries state derivative financial instruments at their fair value and recognize changes in the fairvalue as a gain or loss, unless such derivative financial instruments are used for hedging purposes.
For interest rate swap contracts used as a hedge that meet certain hedging criteria, the net amount to be
paid or received under the interest rate swap contract is added to or deducted from the interest on the assets
or liabilities for which the swap contract is executed.
Derivative financial instruments qualifying as a hedge, along with the underlying transactions, assets andliabilities are as follows:
Financial Instrument
Interest swaps

Transactions, assets and liabilities
Borrowings

The risk exposures to movements in interest rates are hedged according to the Company’s andconsolidated subsidiaries’ risk management policy. An evaluation of hedge effectiveness is not considerednecessary as the terms and notional amounts of these hedging instruments are the same as those of theunderlying transactions, assets and liabilities, and therefore they are presumed to be highly effective inoffsetting the effect of movements in interest rates at their inception as well as during their terms.
[17] Goodwill
Goodwill is principally amortized by the straight-line method over five years in accordance with accounting
principles generally accepted in the countries where such goodwill is recorded.
[18] Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investments—generally with original maturities of threemonths or less—that are readily convertible to known amounts of cash and have negligible risk of changes invalue due to their short maturities.
[19] Income Taxes
The provision for income taxes is computed based on the pretax income for financial reporting purposes.
Deferred tax assets and liabilities are recognized for expected future tax consequences of temporary
differences between the financial statement carrying amounts and the tax bases of assets and liabilities. A
valuation allowance is recorded to reduce deferred tax assets when it is more likely than not that a tax benefit
will not be realized.

4[20] Research and Development Expenses
Research and development costs are expensed as incurred and amounted to ¥49,141 million (US$ 522,832
thousand) and ¥48,115 million for fiscal years 2013 and 2012, respectively.
[21] Net Income per Share
Basic net income per share (EPS) is computed based on the average number of shares of common stock
outstanding during each year. Diluted EPS assumes the potential dilution that occurs if all the convertible
securities are converted or other contracts to issue common stock are exercised to the extent that they are
not anti-dilutive.
[22] Reclassification and Restatement
Financial statements in fiscal 2012 have been reclassified to conform to the current year presentation.
These reclassifications had no impact on previously reported results of operations or retained earnings.
[23] Other Changes in Accounting Policy(Changes in accounting policies for items that are difficult to distinguish from changes in accounting
estimates)
Since the fiscal year 2013, the Company and domestic consolidated subsidiaries have changed theirdepreciation method for fixed assets acquired on or after April 1, 2012 in accordance with the enacted
revisions to the Corporate Tax Law and related tax regulations.
Due to this change, operating income increased by 1,835 million yen (US$ 19,523 thousand) and ordinary
income and income before income tax and minority interests increased by 1,839 million yen (US$ 19,566
thousand) comparing to the previous method, respectively.
(Unapplied accounting standards)"Accounting Standard for Retirement Benefits" (Accounting Standard Board of Japan ("ASBJ") Statement No.
26, May 17, 2012)"Guidance on Accounting Standard for Retirement Benefits" (ASBJ Statement No. 25, May 17, 2012)(a) Outline
These accounting standard and guidance have been revised in light of improving financial reporting and trend
toward international convergence, mainly on (i) changes in accounting methods for unrecognized net actuarial
gains or losses and unrecognized prior service cost, as well as enhancement of disclosure items; and (ii)changes of calculation methods for projected benefit obligation and service cost.
(b) Scheduled Date of Application
The Company intends to apply (i) to consolidated financial statements as of the end of the fiscal year
beginning on April 1, 2013, and to apply (ii) from the fiscal year beginning on April 1, 2014.
(c) Effects of application of this accounting standard
Effects of application of these accounting standard and guidance are currently under consideration.

5

3. Reclassification adjustments and income tax in other comprehensive income
Amounts reclassified to net income (loss) in fiscal 2013 and 2012, which were recognized in othercomprehensive income in the current or previous periods and tax effects for each component of othercomprehensive income were as follows:
Millions of yen
Thousands of
U.S. dollars
2012
2013
2013
Valuation difference on available-for-salesecurities
Increase during the year
¥9,580¥13,203$140,472
Reclassification adjustments
321
392
4,171
Sub-total, before tax
9,901
13,595
144,643
Tax (expense) or benefit(2,502)(4,679)(49,782)
Sub-total, net of tax
7,399
8,916
94,861
Foreign currency translation adjustment
Increase(decrease) during the year
(1,381)
23,284
247,729
Reclassification adjustments(83)
Sub-total, before tax(1,464)
23,384
247,729
Tax (expense) or benefit
Sub-total, net of tax(1,464)23,284
247,729
Share of other comprehensive income ofassociates accounted for using equity
methodIncrease(decrease) during the year
(11)
77
819
Total other comprehensive income¥5,924¥32,277$343,409
4. Additional Cash Flow Information
Cash and cash equivalents as of March 31, 2013 and 2012, consisted of the following:
Millions of yen
2013¥285,152
66,370351,522(22,575)¥328,947

Cash and deposits
Short-term investment securities
Less maturity over three months
Cash and cash equivalents

6

2012¥237,614
31,635269,249(11,165)¥258,084

Thousands of
U.S. dollars
2013$3,033,855
706,139
3,739,994(240,185)$3,499,809

5. Financial Instruments(1) Summary of Financial Instruments Status[1] Action Policy with Regard to Financial Instruments
With regard to planned capital expenditure to support Fuji Heavy Industries Ltd., its consolidated subsidiaries
and affiliated companies (the "FHI Group") in their main operations of automobile manufacturing and sales,
the FHI Group finances mainly from bank loans and the issue of corporate bonds. Temporary surpluses areinvested in highly secure financial assets, and bank loans and liquidation of accounts receivable provide
short-term working capital. It is the FHI Group's policy to use derivatives as a way to avoid the below-statedrisks and to not conduct speculative transactions.
[2] Details of Financial Instruments and Respective Risks
Operating receivables such as notes and accounts receivable-trade and lease investment assets are subject
to customer credit risks. Moreover, because the FHI Group works to expand its business globally, operatingreceivables denominated in foreign currencies are subject to the risk of changes in foreign exchange rates. As
a general rule, however, forward foreign exchange contracts are used to hedge the foreign exchange raterisk, considering the net amount of operating receivables denominated in foreign currencies that exceed
foreign currency denominated operating liabilities. Available-for-sale securities and investment securities aremainly stocks associated with business and capital alliances with principal business partners, and are subject
to risk of market price fluctuation.
Notes and accounts payable-trade that are included in operating liabilities usually have a payment date ofwithin one year. Furthermore, a certain portion of such liabilities involves foreign currency denominatedtransactions associated with the import of raw materials and is thus subject to exchange rate fluctuation risk,
although it is consistently less than accounts receivable balance of the same foreign currency. The FHIGroup’s liabilities associated with debt and bonds are set specifically for the acquisition of essential funds,
mainly for capital expenditure, whose redemption dates come within 11 years after March 31, 2013 at thelatest. A certain portion of said liabilities may have valuable rates and are therefore subject to the risk ofchanges in interest rates, although in such cases derivative transactions (interest rate swap transactions) areused.
Derivative transactions are foreign exchange forward contracts to hedge against exchange rate fluctuations
associated with accounts receivables and liabilities denominated in foreign currencies, and interest rate swap
contracts with the objective of hedging against the risk of change in interest rates to be paid on loans. With
regard to hedging instruments and hedged items, hedge policy, the method of evaluation of hedge
effectiveness and other related items, please refer to "2-[16] Derivative Financial Instruments and Hedge
Accounting".
[3] Risk Management System with Regard to Financial Instruments(a) Management of Credit Risk (Risk Associated with Business Partner’s Breach of Contract)
Credit control departments at each FHI division and its consolidated subsidiaries regularly monitor thefinancial status of key customers with regard to accounts receivables and lease investment assets.
Together with keeping an eye on deadlines and balances of each customer, these departments identify
and mitigate the risk of potential problem in collection due to deterioration in financial status or otherfactors.
(b) Management of Market Risk (Risk Associated with Fluctuations in Exchange or Interest Rates)
With regard to operating assets and liabilities denominated in foreign currencies, as a general rule, theCompany uses foreign exchange forward contracts to hedge against risks of exchange rate fluctuation
on a monthly basis by each currency. Depending on the status of exchange rates, foreign exchange
forward contracts, that is no longer than six months, are used to hedge against the risk of exchange rate
fluctuation to which net position of accounts receivable and accounts payable dominated in foreign
currency is exposed. Moreover, the Company and certain consolidated subsidiaries use interest rate
7

swap transactions to limit exposure to the risk of fluctuation in interest rates payable on loans or corporate
bonds. The Company also regularly check the market values of securities and investment securities aswell as the financial conditions of issuers (business partner companies), and constantly reviews its
investment position taking into consideration its relationships with respective business partnercompanies. Basic policies with regard to derivative transactions are approved by the Executive
Management Board. Derivative transactions are handled in line with regulations and are conducted by
the Finance & Accounting Department. The results of these transactions are without exception reported
to officers concerned.
(c) Management of Liquidity Risk (Risk of Becoming Unable to Make Payments by the Due Date)
Associated with Funds Procurement
The Company secures liquidity at a level sufficient to satisfy its current needs through the use ofcommitment lines contracted with major banks in combination with cash and cash equivalents.
[4] Supplemental Explanation of Items with Regard to Fair Value of Financial Instruments
Fair value includes the fair market value of financial instruments and, in the event market-based prices are notavailable, prices that are calculated based on the underlying assumptions under the appropriate valuation
model. Because the factors incorporated into the calculation of these prices are subject to change, differing
assumptions may result in differing fair values. In addition, the values of contracts with regard to derivativetransactions as stated in "(2) Items with Regard to Fair Value of Financial Instruments" do not by themselvesindicate the market risk associated with the respective derivative transaction.

8

(2) Items with Regard to Fair Value of Financial Instruments
The consolidated balance sheet amounts, the fair value and difference as of March 31, 2013 and 2012 wereas follows:
The items whose fair values were extremely difficult to measure were not included in the table below (refer
to Note 2).
As of March 31, 2013
Millions of yen
Consolidatedbalance sheet
Fair Value
Difference
amounts
Cash and deposits¥285,152¥285,152¥Notes and accounts receivable-trade124,234
Allowance for doubtful accounts (*1)(165)
124,069
124,069
Lease investment assets
22,145
Allowance for doubtful accounts (*1)(26)
22,11925,340
3,221
Short-term loans receivable
96,990Allowance for doubtful accounts (*1)(586)
96,404
97,614
1,210
Short-term investment securities, Investment securities
and Other securities
102,796
102,796
Total Assets
630,540
634,971
4,431
Notes and accounts payable-trade242,743
242,743
Electronically recorded obligations-operating
61,59561,595
Short-term loans payable
60,86760,867
Current portion of long-term loans payable
45,19745,424(227)
Current portion of bonds
10
10
Accrued income taxes
7,828
7,828
Accrued expenses
83,032
83,032
Bonds payable
14,06014,165(105)
Long-term loans payable
187,023
188,393(1,370)Total Liabilities
702,355
704,057(1,702)Derivative transactions (*2)
hedge accounting is not applied(8,136)(8,136)
hedge accounting is applied¥¥¥-9As of March 31, 2013
Thousands of U.S. dollars
Consolidatedbalance sheet
amounts$3,033,855
1,321,779(1,756)
1,320,023
235,610(277)
235,334
1,031,917(6,235)
1,025,683

Cash and deposits
Notes and accounts receivable-trade
Allowance for doubtful accounts (*1)
Lease investment assets
Allowance for doubtful accounts (*1)
Short-term loans receivable
Allowance for doubtful accounts (*1)
Short-term investment securities, Investment securities
and Other securities
Total Assets
Notes and accounts payable-trade
Electronically recorded obligations-operating
Short-term loans payable
Current portion of long-term loans payable
Current portion of bonds
Accrued income taxes
Accrued expenses
Bonds payable
Long-term loans payable
Total Liabilities
Derivative transactions (*2)
hedge accounting is not applied
hedge accounting is applied

1,093,691
6,708,586
2,582,647
655,336
647,590
480,871106
83,285
883,413
149,590
1,989,818
7,472,656

Fair Value

Difference$3,033,855$-

1,320,023-

269,603

34,2691,038,557

12,874

1,093,691
6,755,729
2,582,647
655,336
647,590483,285106
83,285
883,413150,708
2,004,394
7,490,764

47,143(2,414)(1,118)(14,576)(18,108)(86,562)(86,562)$$$*1. Allowance for doubtful accounts corresponding to Notes and accounts receivable-trade, Lease
investment assets and Short-term loans receivable is deducted.
*2. Indicated are the net amounts of assets and liabilities results from derivative transactions, with thetotal net liabilities indicated in ( ).

10As of March 31, 2012
Millions of yen
Consolidatedbalance sheet
amounts¥237,614
117,062(417)
116,645
21,865(34)
21,83178,788(733)
78,055

Cash and deposits
Notes and accounts receivable-trade
Allowance for doubtful accounts (*1)
Lease investment assets
Allowance for doubtful accounts (*1)
Short-term loans receivable
Allowance for doubtful accounts (*1)
Short-term investment securities, Investment securities
and Other securities
Total Assets
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term loans payable
Current portion of bonds
Accrued income taxes
Accrued expenses
Bonds payable
Long-term loans payable
Total Liabilities
Derivative transactions (*2)
hedge accounting is not applied
hedge accounting is applied

Fair Value

Difference¥237,614¥-

116,645-

23,103

1,272

79,295

1,240

76,730530,875
251,043
71,04023,78620,0104,600
69,437
4,070
222,074
666,060

76,730533,387
251,043
71,04024,04320,0694,600
69,437
4,153
223,009667,394

2,512
(257)
(59)
(83)
(935)
(1,334)(6,422)¥-(6,422)¥-¥-*1. Allowance for doubtful accounts corresponding to Notes and accounts receivable-trade, Lease
investment assets and Short-term loans receivable is deducted.
*2. Indicated are the net amounts of assets and liabilities results from derivative transactions, with thetotal net liabilities indicated in ( ).
[1] The calculation methods of financial instrument fair value together with securities and derivativetransactions
AssetsCash and deposits and Notes and accounts receivable-trade
Because these are settled in the short-term, the fair value is mostly the same as the book value andas such the book value is deemed as fair value.
Lease investment assets and Short-term loans receivable
Fair value is the present value calculated by discounting relevant cash flows by each category of theassets and timing of cash flow, where discount rates were adopted taking into consideration the
period until maturity and credit risks. In addition, the estimated residual value is included in thebalance of Lease investment assets.
11

Short-term investment securities and investment securities
Fair value is determined by the stock exchange price, while bonds are determined by the stock
exchange price or by quotations received from financial institutions. Please refer to the note entitled"5.Short-term investment securities and investment securities" regarding to respective objectives forholding securities.
Liabilities
Notes and accounts payable-trade, Short-term loans payable, Accrued income taxes and Accrued
expenses
Because these are settled in the short-term, the fair value is mostly the same as the book value andas such the book value is deemed as fair value.
Current portion of long-term loans payable and Long-term loans payable
Fair value is measured based on the present value that is calculated as discounted cash flow of thetotal amount of principal and interest, where the interest would be set, if the Company concluded abrand new loan agreement with the same condition at the date of measurement.
Current portion of bonds and Bonds payable
The fair value of bonds issued by the Company is based on market prices if available. For bonds
with no available market price, fair value is calculated using the present value that is calculated as
discounted cash flow of the total amount of principal and interest by, where discount rates are
adopted taking into consideration the remaining redemption period and credit risks.
Derivative transactions
Fair value of interest rate swap that meets certain hedging criteria is included in the fair value of
long-term debt as a hedged item.
[2] Financial instruments which fair value is extremely difficult to measure
Consolidated balance sheet amount as of March 31, 2013 and 2012:
Millions of yen
Other securities (available-for-sale securities)

Thousands of
U.S. dollars
2012
2013
2013
Commercial paper¥¥34,995$372,327
Money management fund23,94015,432
164,188
Unlisted stocks (excluding over-the-counter stocks)
3,759
4,088
43,494Other¥¥329$3,500
These have no available market prices and are expected to entail excessive costs in the estimation of
future cash flows. Consequently, estimating their fair value is recognized as extremely difficult and they
are not included in "Short-term investment securities, Investment securities and Other securities".

12[3] Scheduled redemption of monetary assets and securities with maturity
As of March 31, 2013:

Cash and deposits
Notes and accounts receivable-trade
Lease investment assets
Short-term investment securities, Investment
securities and Other securities
Government and municipal bonds
Corporate bonds
Other
Short-term loans receivable

Within 1Year

1 to 5
Years¥285,152
118,173
7,052¥6,061
14,959Millions of yen
5 to 10
Over 10
Years
years
¥¥134
-

12,6882,692
35,559¥35,605

5,585
7,127
37
¥59,510

1,138
1,675
179
¥1,875

3,204
187
2,260
¥-

As of March 31, 2013:
Within 1
Year

Cash and deposits
Notes and accounts receivable-trade
Lease investment assets
Short-term investment securities, Investment
securities and Other securities
Government and municipal bonds
Corporate bonds
Other
Short-term loans receivable$3,033,855
1,257,293
75,029134,993
28,641
378,327$378,817

Thousands of U.S. dollars
5 to 10
Over 10Years
years$$$64,486
159,155
1,426
1 to 5
Years

59,42175,827394$633,152

12,10817,821
1,904$19,949

34,0891,990
24,045$-

As of March 31, 2012:

Cash and deposits
Notes and accounts receivable-trade
Lease investment assets
Short-term investment securities, Investment
securities and Other securities
Government and municipal bonds
Corporate bonds
Other
Short-term loans receivable

13

Within 1
Year¥237,614
115,797
6,524

1 to 5Years¥1,265
15,287

Millions of yen
5 to 10
Over 10
Years
years
¥¥54
-

5,535
2,154
253
¥29,984

4,572
5,198
25
¥47,557

1,303
988
187
¥1,247

2,753
372
2,456
¥-

[4] Amount of repayment for long-term debt and other interest-bearing debt
As of March 31, 2013:

Short-term loans payable
Bonds payable
Long-term loans payable

Within 1Year

1 to 5
Years¥60,867
10
45,197¥14,060
158,656

Millions of yen
5 to 10
Over 10Years
years¥¥28,123244

As of March 31, 2013:
Within 1
Year

Short-term loans payable
Bonds payable
Long-term loans payable$647,590
106$480,870

Thousands of U.S. dollars
1 to 55 to 10
Over 10
Years
Years
years
$$$149,590$1,688,010$299,213$2,596

As of March 31, 2012:
Within 1
Year¥71,040
20,010¥23,786

Short-term loans payable
Bonds payable
Long-term loans payable

Millions of yen
5 to 10
Over 10Years
years¥¥¥67,149¥547

1 to 5
Years¥4,070¥154,378

6. Short-Term Investment Securities and Investment Securities
Information on the value of short-term investment securities and investment securities as of March 31, 2013
and 2012 was as follows:(1) Other securities (available-for-sale securities):
As of March 31, 2013:
Acquisition cost

Millions of yen
Difference¥64,760¥22,206¥42,554

17,478
9,886
1,992
94,116

17,1319,565
1,918
50,820347
321
74
43,296

607

669

(62)

4,812
2,210
1,051
8,680
¥102,796

4,864
2,226
1,054
8,813
¥59,633

(52)
(16)
(3)
(133)
¥43,163

Book value
Book value exceeding acquisition cost:
Equity securities
Debt securities
Government and municipal bonds
Corporate bonds
Other
Sub-total
Book value not exceeding acquisition cost:
Equity securities
Debt securities
Government and municipal bonds
Corporate bonds
Other
Sub-total
Total

14

As of March 31, 2013:
Book value
Book value exceeding acquisition cost:
Equity securities
Debt securities
Government and municipal bonds
Corporate bonds
Other
Sub-total
Book value not exceeding acquisition cost:
Equity securities
Debt securities
Government and municipal bonds
Corporate bonds
Other
Sub-total
Total

Thousands of U.S. dollars
Acquisition cost
Difference$689,009$236,259$452,750

185,956
105,181
21,1941,001,340

182,264
101,766
20,406
540,695

3,692
3,415
788
460,645

6,458

7,118

(660)

51,19723,513
11,182
92,350$1,093,690

51,75023,683
11,21593,766$634,461

(553)
(170)
(33)
(1,416)$459,229

Acquisition cost

Millions of yen
Difference¥47,315¥18,181¥29,134

11,1498,043
2,602
69,10910,8587,751
2,519
39,309291
292
83
29,800

3,613

4,021

(408)

3,014
669
325
7,621
¥76,730

3,031
674
326
8,052
¥47,361

(17)
(5)
(1)
(431)
¥29,369

As of March 31, 2012:
Book value
Book value exceeding acquisition cost:
Equity securities
Debt securities
Government and municipal bonds
Corporate bonds
Other
Sub-total
Book value not exceeding acquisition cost:
Equity securities
Debt securities
Government and municipal bonds
Corporate bonds
Other
Sub-total
Total

15

(2) Other securities (available-for-sale securities) sold during fiscal years 2013 and 2012:
For the year ended March 31, 2013:

Equity securities
Debt securities
Government and municipal bonds
Corporate bonds
Other
Other
Total

Sales amount¥3,615

Total gains¥363

Millions of yen
Total losses
¥100

8,998
3,251
1,249
7
¥17,120

123
58
2
8
¥554

22
6
13
1
¥142

For the year ended March 31, 2013:

Equity securities
Debt securities
Government and municipal bonds
Corporate bonds
Other
Other
Total

Sales amount$38,462
95,734
34,58913,28974$182,148

Thousands of U.S. dollars
Total gains
Total losses$3,862$1,064
1,309
617
21
85
$5,894

234
64
138
11
$1,511

Sales amount¥3,686

Total gains¥591

Millions of yen
Total losses
¥180

8,278
3,790
1,416
21,293¥38,463

232
61
11
¥895

17
11
¥208

For the year ended March 31, 2012:

Equity securities
Debt securities
Government and municipal bonds
Corporate bonds
Other
Other
Total

(3)The Company and its consolidated subsidiaries recognized ¥61 million (US$649 thousand) and ¥403
million in loss on devaluation of securities for fiscal years 2013 and 2012, respectively.
For the purpose of recording a loss on devaluation of securities, the Company and its consolidated
subsidiaries consider all the securities whose fair market values have fallen below 50% of the acquisition costto be permanently impaired, and record relevant losses on devaluation. For securities whose fair market
values have declined by between 30% and 50% in relation to their acquisition costs, the Company and its
consolidated subsidiaries specifically consider the probability of recovery of fair market values and record
losses on devaluation to the amount deemed permanently impaired.

16

7. Short-Term Loans Payable and Long-Term Debts
Short-term loans payable as of March 31, 2013 and 2012, consisted of the following:Thousands ofMillions of yen
U.S. dollars
2012
2013
2013
Bank loans with average interest rate of 0.47% and 0.55%
per annum as of March 31, 2013 and 2012, respectively¥60,867¥71,040$647,590

Long-term debts as of March 31, 2013 and 2012 consisted of the following:Thousands ofMillions of yen
U.S. dollars
2012
2013
2013
Loans principally from banks and insurance companies due
through 2024 with average interest rate of 1.05% and 1.08%
per annum as of March 31, 2013 and 2012, respectively
Unsecured 2.01% bonds due May 31, 2012
Unsecured 0.93% bonds due March 29, 2013
Unsecured 0.93% bonds due March 31, 2014
Unsecured 1.62% bonds due July 10, 2014
Unsecured 0.93% bonds due March 31, 2015
Unsecured 0.71% bonds due June 13, 2016
SubtotalLess-Portion due within one year
Total

¥232,220
10
4,000
60
10,000246,290(45,207)¥201,083¥245,860
20,000
10
10
4,000
60
269,940(43,796)¥226,144$2,470,689
106
42,558638
106,3942,620,385(480,977)$2,139,408

Annual maturities of long-term debts as of March 31, 2013 were as follows:
Millions of yen¥45,20746,11244,154
41,48840,96228,367¥246,290

2014
2015
2016
2017
2018
2019 and thereafter
Total

17

Thousands of
U.S. dollars$480,977
490,605
469,773441,409435,812301,809$2,620,385

Lease obligations as of March 31, 2013 and 2012 consisted of the following:

Lease obligations due within one year as of March 31, 2013
and 2012
Lease obligations due after one year as of March 31, 2013
and 2012
Total

Thousands ofMillions of yen
U.S. dollars
2012
2013
2013
¥751
¥905
$9,6291,019

962

10,842¥1,924¥1,713$20,471

Annual maturities of lease obligations as of March 31, 2013 were as follows:
Millions of yen
¥905
520
265
167
59
8
¥1,924

2014
2015
2016
2017
2018
2019 and thereafter
Total

Thousands of
U.S. dollars$9,629
5,533
2,819
1,777
628
85
$20,471

The following assets as of March 31, 2013 and 2012 were pledged as collateral for certain loans:Thousands ofMillions of yen
U.S. dollars
2012
2013
2013
Property, plant and equipment¥60,025¥55,185$587,137
Total¥60,025¥55,185$587,137
To raise working capital efficiently, the FHI Group has entered into the commitment-line contracts. The
maximum amount that can be made available under these contracts is ¥108,899 million (US$1,158,623
thousand) as of March 31, 2013. At the end of the fiscal year under review, there were no borrowings under
the commitment line.

18

8. Derivative transactions
In the normal course of business, the Company and its consolidated subsidiaries employ derivative financial
instruments, including foreign exchange forward contracts, foreign currency options and interest rate swaps,
to manage their exposures to fluctuations in foreign currency exchange rates and interest rates. The
Company and its consolidated subsidiaries do not use derivatives for speculative or trading purposes.
The fair value information of derivative financial instruments as of March 31, 2013 and 2012 was as follows:
Derivative transactions to which hedge accounting is not applied(1) Foreign currency contracts:
As of March 31, 2013
Millions of yen
Thousands of U.S. dollars
Notional
Valuation
Notional
Valuation
AmountFair value gain (loss)
AmountFair value gain (loss)
Foreign exchange
forward contracts:
SellU.S. dollar¥166,010(¥7,083)(¥7,083) $1,766,252($75,359)($75,359)Euro
15,480(448)(448)
164,698(4,766)(4,766)
Canadian dollar
17,977(605)(605)
191,265(6,437)(6,437)
As of March 31, 2012

Foreign exchange forward contracts:
SellU.S. dollar
Euro
Canadian dollar

Notional
AmountMillions of yen
Valuation
Fair value
gain (loss)¥146,534
7,809
15,651(¥5,400)
(382)
(640)

(¥5,400)
(382)
(640)

Note: The method to determine the fair value is based on quotations obtained from financial institutions.
Derivative transactions to which hedge accounting is applied(1) Interest rate contracts:
Accounting treatment: Exception processing of interest rate swap
Hedge item: Long-term loans payable
As of March 31, 2013

Interest rate swap
contracts:
Receive floating rate
pay fixed rate

Notional
AmountMillions of yen
Over
1 yearFair value

Thousands of U.S. dollars
Notional
Over
Amount1 yearFair value¥26,610¥22,395$283,115

19(*)$238,270(*)

As of March 31, 2012
Millions of yen
Notional
AmountOver
1 yearFair value

Interest rate swap contracts:
Receive floating rate pay fixed rate
¥34,735¥24,610(*)
Note *Fair value of interest rate swap that meets certain hedging criteria is included in the fair value of
long-term debt as a hedged item.
9. Property, Plant and Equipment
Property, plant and equipment as of March 31, 2013 and 2012 are summarized as follows:

2013¥320,042
479,312
17,140244,580
1,061,074(786,734)(28,903)
185,286
14,232¥444,955

Buildings and structures
Machinery, equipment and vehicles
Vehicles and equipment on operating leases, net
Other
Subtotal
Accumulated depreciation
Accumulated impairment loss
Land
Construction in progress
Total

Millions of yen
2012¥315,725
468,70218,209226,624
1,029,260(769,274)(30,194)
184,276
12,023¥426,091

Thousands of
U.S. dollars
2013$3,405,064
5,099,606
182,360
2,602,192
11,289,222(8,370,401)(307,511)
1,971,338
151,420$4,734,068

10. Unexecuted Balance of Overdraft Facilities and Lending Commitments
The unexecuted balance of overdraft facilities and lending commitments at a consolidated subsidiary (Subaru
Finance Co., Ltd.) as of March 31, 2013 and 2012 was as follows:
Thousands ofMillions of yen
U.S. dollars
2012
2013
2013
Total overdraft facilities and lending commitments¥4,430¥4,730$50,325
Less amounts currently executed
512
694
7,384
Unexecuted balance¥3,918¥4,036$42,941
A portion of the overdraft facilities and lending commitments above is subject to credit considerations as
documented in the customer contracts. Therefore, the total balance above is not always available.

2011. Pension and Severance Plans
The Company and its consolidated domestic subsidiaries have lump-sum retirement payment plans, qualified
retirement pension plans, contributory defined benefit employees’ welfare pension funds, defined benefit
pension plan, and certain domestic subsidiaries have defined contribution pension plans. In addition, in
certain occasions, additional retirement payments are made to employees for their retirement. Consolidated
foreign subsidiaries primarily have defined contribution plans.
As of March 31, 2013, the Company and 50 of its consolidated domestic subsidiaries, which add up to a
total of 51 companies, have lump-sum retirement payment plans. Within the FHI Group, there are also 20
defined contribution plans, and five defined benefits pension plans. In addition, there are sevensingle-employer employees’ welfare pension funds subject to the provisions of Article 33 of "Practice
Guidelines of Accounting for Retirement Benefits."
Certain insignificant consolidated subsidiaries calculated their pension liability using the simplified method.
Under the simplified method, an accrued pension and severance liability is provided at the amount that would
have been payable had all the employees voluntarily retired at the end of the fiscal year, less an amount to becovered from the plan assets, while the Company and significant subsidiaries provide an accrued pension
and severance liability based on the estimated amount of pension and severance obligation (projected benefit
obligations), less the fair value of plan assets at the end of the fiscal year under the actuarial method.
Certain information concerning the multi-employer pension plan, which requires contributions that are
expensed as they become due as pension and severance costs, is as follows:(1) Overall funded status of the multi-employer pension plan (mainly as of March 31, 2013)
Thousands ofMillions of yen
U.S. dollars
2013
2013
Plan assets¥154,421$1,642,951
Projected benefit obligation
182,882
1,945,760
Funded status(¥28,461)($302,809)(2) Contributions by the Company and its consolidated domestic subsidiaries as a percentage of total
contributions to the multi-employer pension plan (mainly from April 1, 2012 to March 31, 2013): 17%
A reconciliation between the projected pension and severance obligation and accrued pension andseverance liability as of March 31, 2013 and 2012, was as follows:
Thousands ofMillions of yen
U.S. dollars
2012
2013
2013
a. Projected pension and severance obligation¥102,523¥107,266$1,141,249
b. Plan assets(57,166)(66,879)(711,554)
c. Unfunded pension and severance obligations
45,35740,387
429,695
d. Unamortized actuarial loss
(23,213)(22,867)(243,292)
e. Unamortized prior service cost
(302)
(445)
(4,735)f. Net amount recorded in balance sheet
21,842
17,075
181,668
g. Prepaid pension cost
(12,108)(17,842)(189,829)
h. Accrued pension and severance liability¥33,950¥34,917$371,497
Notes: 1. The above amounts include the substitutional portion of the government pension plan funded bysocial security taxes paid by employees and employers.
2. Certain insignificant consolidated subsidiaries calculated the liability using the simplified method.

21

Periodic pension and severance costs for fiscal years 2013, and 2012, consisted of the following:Thousands ofMillions of yen
U.S. dollars
2012
2013
2013
a. Service cost
¥9,166¥9,592$102,054
b. Interest cost
1,577
1,504
16,002c. Expected return on plan assets(1,718)(1,446)(15,385)
d. Amortization of actuarial gain/loss
2,115
2,291
24,375e. Amortization of prior service cost
60
43
457
f. Pension and severance cost
11,15011,984
127,503
g. Gain/loss on transfer of the substitutional portionof the employee’s pension fund
(327)
81
862
h. Total¥10,823¥12,065$128,365
Notes:1. The above amounts do not include the welfare pension funds paid by employees.
2. The service cost of consolidated subsidiaries using the simplified method is included in the service
cost above.
3. The service cost above includes required funding for the multi-employer pension plan amounting to¥573 million (US$6,096 thousand) and ¥506 million for fiscal years 2013 and 2012, respectively, forwhich plan assets could not be allocated to each participating employer.
4. The service cost above includes contributions for the defined contribution plans of the Company andcertain consolidated subsidiaries amounting to ¥3,086 million (US$32,883 thousand) and ¥2,604
million for fiscal years 2013 and 2012, respectively.
5. In addition to the pension and severance cost above, additional retirement payments amounting to¥156 million (US$1,660 thousand) and ¥189 million were made for fiscal years 2013 and 2012,
respectively. For fiscal years 2013 and 2012, the entire ¥156 million (US$1,660 thousand) ofadditional retirement payments and ¥189 million of additional retirement payments are included incost of sales and selling, general and administrative expenses, respectively. Also, other loss includes¥366 million (US$ 3,894 thousand), which is paid as additional contribution when some consolidated
domestic subsidiaries withdraw from the multi-employer pension plan.
Actuarial assumptions used in computation of pension and severance liability were as follows:
2013
2012
a. Attribution of expected benefit obligation The straight-line method
The straight-line method
b. Discount rate
0.5%–1.3%
1.0%–1.8%
c. Expected rate of return on plan assets
1.4%–3.5%
1.4%–3.5%
d. Amortization of actuarial gain/loss
Primarily 16 years (amortized Primarily 16 years (amortizedby the straight-line methodby the straight-line method
starting from the following
starting from the following
fiscal year, over a period
fiscal year, over a period
shorter than the average
shorter than the averageremaining service periods of remaining service periods ofthe eligible employees)
the eligible employees)e. Amortization of prior service cost
10 to 18 years
11 to 18 years

2212. Income Taxes
The Company and its consolidated subsidiaries were subject to a number of taxes based on income, which in
the aggregate resulted in a normal statutory income tax rate of approximately 37.8% and 40.5% for fiscal
years 2013 and 2012, respectively.
A reconciliation of the statutory income tax rates in Japan to the Company’s effective income tax rates forfiscal years 2013 and 2012 are as follows:
2012
2013
Statutory income tax rate in Japan
37.8% 40.5%
Increase (reduction) in taxes resulting from:
Deduction of research and development expense(2.1)
Entertainment expenses not qualifying for deduction
0.4
1.3
Changes in valuation allowance and tax benefits realized from loss carry forwards(62.6) (11.0)
Adjustment to past corporate income taxes payable and corporate income taxes refundable
(0.2)
(0.2)
Equity in earnings of affiliates
(0.6)
(0.0)
Difference of applicable tax rate in subsidiaries
(1.1)
(0.2)
Adjustment of deferred tax assets in the end of fiscal year 2012 by change of the tax amount
(1.4)
Other
0.5
(2.6)
Effective income tax rate
(28.6%) 27.1%
Significant components of the deferred tax assets and liabilities as of March 31, 2013 and 2012, were as
follows:
Thousands ofMillions of yen
U.S. dollars
2012
2013
2013
Deferred tax assets:
Accrued expenses
Provision for product warranties
Accrued pension and severance liabilities
Depreciation and amortization expenses
Long-term accounts payable-other
Provision for bonuses
Unrealized profit on inventories
Loss on valuation of inventories
Net operating loss carryforwards
Other
Total deferred tax assets
Valuation allowance
Total deferred tax assets, net of valuation allowance
Deferred tax liabilities:
Valuation difference on available-for-sale securities
Depreciation and amortization expenses
Reserve for reduction entry
Prepaid pension cost
Other
Total deferred tax liabilities
Net deferred tax assets

23¥15,734
12,47012,222
10,557
6,908
6,797
5,915
3,669
4,943
14,03993,254(15,654)
77,600¥12,452
10,341
11,942
11,143
5,681
6,281
350
4,750
26,906
10,589100,415(73,539)
26,876$167,401
132,674
130,035
112,320
73,49772,31662,93239,03652,591
149,367
992,169(166,549)
825,620(14,779)(6,274)(2,382)(6,289)(7,841)(37,565)(¥40,035)(10,472)(7,317)(2,396)(4,260)(5,981)(30,426)(¥3,550)(157,240)(66,752)(25,343)(66,911)(83,424)(399,670)($425,950)

The net deferred tax assets are included in the following line items in the accompanying consolidated balance
sheets.
Thousands ofMillions of yen
U.S. dollars
2012
2013
2013
Current assets—Deferred tax assets¥17,399¥52,947$563,326
Investments and other assets—Deferred tax assets
1,873
6,227
66,252Current liabilities—Deferred tax liabilities(Other current liabilities)(82)
Long-term liabilities—Deferred tax liabilities(22,740)(19,139)(203,628)
Total net deferred tax assets(¥3,550)(¥40,035)($425,950)
13. Net Assets
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated ascommon stock. However, a company may, by a resolution of its Board of Directors, designate an amount notexceeding one half of the price of the new shares as additional paid-in capital, which is included in capitalsurplus.
Under the Law, in cases where a dividend distribution of surplus is made, the smaller of an amount equal to
10% of the dividend or the excess, if any, of 25% of common stock over the total of additional paid-in capitaland legal earnings reserve must be set aside as additional paid-in capital or legal earnings reserve. Legalearnings reserve is included in retained earnings in the accompanying consolidated balance sheets.
Under the Code, companies were required to set aside an amount equal to at least 10% of the aggregate
amount of cash dividends and other cash appropriations as legal earnings reserve until the total of legal
earnings reserve and additional paid-in capital equaled 25% of common stock.
Under the Code, legal earnings reserve and additional paid-in capital could be used to eliminate or reducea deficit by a resolution of the shareholders’ meeting or could be capitalized by a resolution of the Board of
Directors. Under the Law, both of these appropriations generally require a resolution of the shareholders’meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Code,however, on condition that the total amount of legal earnings reserve and additional paid-in capital remained
equal to or exceeded 25% of common stock, they were available for distribution by resolution of theshareholders’ meeting. Under the Law, all additional paid-in capital and all legal earnings reserve may betransferred to other capital surplus and retained earnings, respectively, which are potentially available fordividends.
The maximum amount that the Company can distribute as dividends is calculated based on the
non-consolidated financial statements of the Company in accordance with Japanese laws and regulations.
At the annual shareholders’ meeting held on June 21, 2013, the shareholders approved cash dividends
amounting to ¥7,808 million (US$83,073 thousand). Such appropriations have not been accrued in the
consolidated financial statements as of March 31, 2013. Such appropriations are recognized in the period inwhich they are approved by the shareholders.
14. Ending Inventories
Book value of ending inventories is measured based on the lower of cost or market value.
¥570 million (US$6,064 thousand) and minus ¥459 million as "Loss on valuation of inventories" is included in"Cost of sales" for fiscal years 2013 and 2012, respectively. And minus ¥478 million (US$5,086 thousand)and minus ¥1,840 million as "Provision for loss on construction contracts" is included in "Cost of sales" forfiscal years 2013 and 2012, respectively.

2415. Selling, General and Administrative Expenses
Selling, general and administrative expenses for fiscal years 2013 and 2012 consisted of the following:Thousands ofMillions of yen
U.S. dollars
2012
2013
2013
Freightage and packing expenses¥20,302¥22,033$234,419
Advertising expenses
36,452
48,862519,864
Sales incentives
30,88244,147
469,699
Salaries and bonuses
42,851
44,719475,785
Research and development expenses
48,01449,018521,524
Other
72,226
81,969872,102
Total¥250,727¥290,748$3,093,393
16. Loss on Disaster(Fiscal 2012)
The loss was caused by Great East Japan Earthquake. The main content was the fixed overhead costs
corresponding to lower production.
17. Provision for Loss on Transfer of Business(Fiscal 2012)
The Company is going to assign the businesses of Eco Technologies division and records the estimatedamount of loss related to these assignments.
18. Other Income and Loss
(Fiscal 2013)
Other income includes ¥775 million(US$8,246 thousand) that is mainly the reversal of extraordinary loss (losson valuation of inventories) recorded in the prior period relating to the sale of inventories in the Aerospace
division. In addition, ¥436 million(US$4,639 thousand) is mainly the exemption from debts relating to thedevelopment resulting from the dissolution of contract about a specific project in the Aerospace division.
Other loss includes ¥2,463 million(US$26,205 thousand) that is miscellaneous expenses related to therestructuring of Chinese sales network in the Automobile business, ¥2,099 million(US$22,332 thousand) for
disposal expenses of inventories related to the discontinuance of a specific project in Aerospace division and¥1,054 million(US$11,214 thousand) for the return of funds received for commissioned research andsubsidies to the clean robot business in the prior period.
(Fiscal 2012)
Other income includes ¥1,611 million which is the forgiveness of debt relating to the development resulting
from the dissolution of contract about a specific project in the Aerospace division.
Other loss includes ¥3,028 million which consists of the provision of allowance for doubtful accounts about thereceivables from a customer whose credit risk had increased, loss on valuation of work in process and others.

2519. Finance Leases
As allowed under the Japanese accounting standards, the Company and its consolidated subsidiaries inJapan account for finance leases.
Information as Lessee(1) Transfer of title through finance lease transaction[1] Leased assets
Mainly implements of production in the automotive business[2] Depreciation method for leased assets
Leased assets are depreciated by the same method as used for other property, plant and equipment.
(2) Finance leases which do not transfer ownership title[1] Leased assets
Mainly network equipment and terminal units (Other tangible assets) in the automotive business[2] Depreciation method for leased assets
Leased assets are depreciated by the straight-line method over the leased period and the residual value iszero.
(3) Those finance lease transactions that had not had their ownership transferred on or before March 31,
2008, are recorded based on the same method as used for regular rental transactions.
[1] Pro forma information of such leases as of March 31, 2013 and 2012, was as follows:
Millions of yen
2012
2013
¥231
¥231
306
136
9
6
546
373
(443)
(336)
¥103
¥37

Machinery, equipment and vehicles
Other tangible assets
Intangible assets
Total
Accumulated depreciation/amortization
Net

26

Thousands of
U.S. dollars
2013$2,458
1,447
64
3,969
(3,575)$394

[2] The future minimum lease/rent payments, excluding the portion of interest thereon, as of March 31, 2013
and 2012, were as follows:
Thousands ofMillions of yen
U.S. dollars
2012
2013
2013
Finance leases:
Due within one year
¥74
¥28
$298
Due after one year
42
17
181
Total
¥116
¥45
$479
[3] Pro forma information related to finance leases for fiscal years 2013 and 2012 was as follows:
Thousands ofMillions of yen
U.S. dollars
2012
2013
2013
Lease payment
¥171
¥79
$841
Depreciation and amortization expenses
159
71
755
Interest expense portion
¥4
¥1
$11
Information as Lessor(1) The details of lease investment assets as of March 31, 2013 and 2012 were as follows:
Millions of yen
2012
2013
¥26,374¥26,712272
290(4,781)(4,857)¥21,865¥22,145

Obligation of lease fee receivable
Estimated residual value
Interest expense portion
Lease investment assets

Thousands of
U.S. dollars
2013$284,201
3,085(51,676)$235,610(2) Lease revenue related to lease investment assets
Amounts of collections on lease receivable after the fiscal year ended March 31, 2013 and 2012, were as
follows;
Thousands ofMillions of yen
U.S. dollars
2012
2013
2013
Within 1 year
¥8,786¥8,461$90,020
1 to 2 years
7,004
6,801
72,3592 to 3 years
5,226
5,127
54,5483 to 4 years
3,267
3,576
38,0474 to 5 years
2,013
2,570
27,343
Over 5 years¥78¥177$1,88327

20. Operating Lease
Information as Lessee
The future minimum lease/rent payments, excluding the portion of interest thereon, as of March 31, 2013 and2012, were as follows:
Thousands ofMillions of yen
U.S. dollars
2012
2013
2013
Operating leases:
Due within one year
¥1,179¥1,267$13,480
Due after one year
4,813
5,409
57,549Total¥5,992¥6,676$71,029
Information as Lessor
The future minimum lease/rent payments receivable, excluding the portion of interest thereon, as of March 31,
2013 and 2012, were as follows:
Thousands ofMillions of yen
U.S. dollars
2012
2013
2013
Operating leases:
Due within one year
¥545
¥285
$3,032
Due after one year
206
136
1,447
Total
¥751
¥421
$4,47921. Contingent Liabilities
Contingent liabilities as of March 31, 2013 and 2012, were as follows:
Thousands ofMillions of yen U.S. dollars
2012
2013
2013
As guarantor of third-party indebtedness from financial
institutions¥44,543¥38,600$473,912

22. The Amount of Discount of Export Bill
The amount of discount of export bill as of March 31, 2013 and 2012, were as follows:
Thousands ofMillions of yen U.S. dollars
2012
2013
2013
The amount of discount of export bill
¥1,714¥905$18,236

23. Property for Transfer Balance to Special Purpose Company
Property for transfer balance to special purpose company as of March 31, 2013 and 2012, were as follows:
Thousands ofMillions of yen U.S. dollars
2012
2013
2013
Property for transfer balance to special purpose company(loan claims of Automobiles and account receivable-trade¥23,416¥13,344$141,973
of Aerospace)28

24. Business Combinations(1)Assignment of wind turbine generator system business
The Company assigned wind turbine generator system business to Hitachi, Ltd. on July 1, 2012.
[1] Outline of the business assignment(a) Name of assignee
Hitachi, Ltd.
(b) Assigned businessWind turbine generator system business(c) Reason for the assignment
The Company will concentrate on its management resources to other divisions including the Subaru
automotive business.
(d) Date of the assignment
July 1, 2012(e) Other matter concerning the assignment
With regard to the business assignment, value received is limited for property including cash, etc.
[2] Overview of accounting method used for the assignment(a) The amount of loss on transfer of business
The loss on this business assignment was ¥1,889 million(US$20,098 thousand), which is consisted of ¥1,421
million(US$15,119 thousand) and ¥468 million(US$4,979 thousand), included in the "Provision for loss ontransfer of business" in fiscal years 2013 and 2012, respectively.
(b) The book value of assets and debts related with the assigned business
The total asset was ¥2,217 million(US$23,588 thousand), which is consisted of ¥2,122 million(US$22,577
thousand) and ¥95 million(US$1,011 thousand) in Current and Non-current assets, respectively.
[3] Business segment reported in which the assigned business was categorized
The assigned business was not categorized in "Business segment reported" and included in "Other".
[4] Estimated amount of sales on assigned business recorded in the consolidated statements of operations infiscal 2013
Net sales is ¥3,252 million(US$34,599 thousand).

29

(2) Assignment of garbage collection vehicle business
The Company assigned garbage collection vehicle business to ShinMaywa Industries, Ltd. on January 1,
2013.
[1] Outline of the business assignment(a) Name of assignee
ShinMaywa Industries, Ltd.
(b) Assigned business
Garbage collection vehicle business(c)Reason for the assignment
The Company will concentrate on its management resources to other divisions including Subaru automotive
business.
(d) Date of the assignment
January 1, 2013(e) Other matter concerning the assignment
With regard to the business assignment, value received is limited for property including cash, etc.
[2] Overview of accounting method used for the assignment(a) The amount of loss on transfer of business
The loss on this business assignment was ¥3,036 million(US$32,301 thousand), which is consisted of ¥2,756
million(US$29,322 thousand) and ¥280 million(US$2,979 thousand), included in the "Provision for loss ontransfer of business" in fiscal years 2013 and 2012, respectively.
(b) The book value of assets and debts related with the assigned business
The total asset was ¥2,626 million(US$27,939 thousand), which is consisted of ¥736 million(US$7,831
thousand) and ¥1,890 million(US$20,108 thousand) in Current and Non-current assets, respectively.
[3] Business segment reported in which the assigned business was categorized
The assigned business was not categorized in "Business segment reported" and included in "Other".
[4] Estimated amount of sales on the assigned business recorded in the consolidated statements ofoperations in fiscal 2013
Net sales is ¥3,544 million(US$37,706 thousand).

30

25. Segment Information(1)General information about reportable segments
The reportable segments the Company reports are the business units for which the Company is able
to obtain respective financial information separately in order for the Board of Directors to conductperiodic investigation to determine distribution of management resources and evaluate their businessresult.
The Company has placed Automobile at the center of the whole businesses, and has implemented
internal company system into Aerospace, Industrial products and Eco technology divisions. This framework
makes clearer the responsibility of each division and accelerates business execution. The Company
manages the subsidiaries on the basis of this classification. Therefore the reportable segments consist ofAutomobile, Aerospace, Industrial products, Eco technology, and Other which does not belong to any
division.
As for Eco technology division, the Company includes it into "Other" because it does not satisfy thequantitative criteria for the reportable segments. As a result, reportable segments are Automobile, Aerospace,and Industrial products.
Automobile segment manufactures and sells vehicles and related products. Aerospace segment
manufactures aircrafts, parts of space-related devices. Industrial products segment manufactures and sells
Robin engines and related products.
Eco technology division was closed on March 31, 2013 because its main businesses, the windturbine generator system business and the garbage collection vehicle business were assigned on
July 1, 2012 and on January 1, 2013, respectively.
(2)Calculation method of sales, profit or loss, assets, liabilities and other items by reportable segments
Accounting method for reportable segments is almost the same as "2. Summary of Significant
Accounting Policies".
Segment income are calculated based on operating income.
Net sales - Inter-segment are calculated based on current market prices.
As described in "Changes in accounting policies for items that are difficult to categorize as changes
in accounting estimates", since the depreciation method for fixed assets acquired on or after April 1,2012 has been changed in accordance with the enacted revisions to the Corporate Tax Law andrelated tax regulations, the depreciation method of business segment reported has been changed toconform to the revised Corporate Tax Law and related tax regulations.
Due to this change, segment income of Automobile increased by ¥1,754 million(US$18,662
thousand) comparing to the previous method. The impact is insignificant in other segments.

31

(3)Information on sales, income, assets and other items by reportable segments for the fiscal years ended
March 31, 2013 and 2012 was summarized as follows
Thousands ofMillions of yen
U.S. dollars
2012
Net Sales:
2013
2013
Automobiles
Outside customers¥1,389,070¥1,778,966$18,927,183
Inter-segment
2,947
3,168
33,706Sub-total
1,392,017
1,782,134
18,960,889
Aerospace
Outside customers
80,25189,148948,484
Inter-segment
Sub-total
80,25189,148948,484
Industrial products
Outside customers
33,61730,148
320,758
Inter-segment
111
22
234
Sub-total
33,72830,170320,992
Other (*1)
Outside customers
14,167
14,706
156,464
Inter-segment
13,208
13,941
148,324
Sub-total
27,37528,647
304,788
Total
1,533,371
1,930,099
20,535,153
Adjustment (*2)
(16,266)(17,131)(182,264)
Consolidated total (*3)
¥1,517,105¥1,912,968$20,352,889

Segment income:Automobiles
AerospaceIndustrial products
Other (*1)
Total
Adjustment (*2)
Consolidated total (*3)

32

2013

Millions of yen
2012

Thousands of
U.S. dollars
2013¥110,974
6,819
640
1,618
120,051360¥120,411¥39,389
2,882
503
1,029
43,803
156¥43,959$1,180,700
72,5506,809
17,215
1,277,274
3,830$1,281,104

Segment assets:
Automobiles
AerospaceIndustrial products
Other (*1)
Total
Adjustment (*2)
Consolidated total (*3)

2013Millions of yen
2012

Thousands of
U.S. dollars
2013¥1,292,856
179,755
67,951
56,7281,597,290(19,836)¥1,577,454¥1,097,729
153,960
53,86375,916
1,381,468(28,936)¥1,352,532$13,755,251
1,912,491
722,960
603,553
16,994,255(211,043)$16,783,212
Thousands of
U.S. dollars
2013

Other Items:
Depreciation and amortization:
Automobiles
AerospaceIndustrial products
Other (*1)
Total
Adjustment (*2)
Consolidated total (*3)

2013Millions of yen
2012¥56,430
3,398
415
1,301
61,544¥61,544¥53,043
3,534
522
1,512
58,611¥58,611$600,383
36,153
4,415
13,842654,793$654,793

Investment to equity-method affiliates:
Automobiles
AerospaceIndustrial products
Other (*1)
Total
Adjustment (*2)
Consolidated total (*3)

¥242
361
912
1,515
¥1,515¥5,285
270
886
266
6,707
¥6,707$2,575
3,841
9,703
16,119$16,119

Increase of property, plant and equipment andintangible fixed assets:
Automobiles
AerospaceIndustrial products
Other (*1)
Total
Adjustment (*2)
Consolidated total (*3)

¥63,544¥88,517$941,770
2,772
3,897
41,462
262
377
4,011
457
2,195
23,354
67,03594,986
1,010,597¥67,035¥94,986$1,010,597
Note: *1. "Other" means the category which is not included into any reportable segments. It consists ofgarbage collection vehicles, specialized vehicles, real estate lease, etc.
*2. Adjustment of segment income refers to elimination of intersegment transaction.
*3 Segment income is adjusted on operating income on the consolidated statements of income.

33

Related Information(1)Products and services information
Products and services information is not shown since the same information is in the segment information.
(2)Information about geographic areas[1]Sales for the fiscal years ended March 31, 2013 and 2012 was summarized as follows:

2013

Millions of yen
2012

Sales: (*1)
Japan
¥498,472¥671,819
North America
710,432
895,986[United States] (*2)[620,675][815,801]
Europe112,826
127,188
Asia
96,729113,235
Other
98,646
104,740
Consolidated total¥1,517,105¥1,912,968
Note: *1 Sales is categorized by country or area which is based on customer location.
*2 Sales of the United States is included in North America area.

Thousands of
U.S. dollars
2013$7,147,771
9,532,780[8,679,657]
1,353,208
1,204,756
1,114,374$20,352,889[2]Property, plant and equipment for the fiscal years ended March 31, 2013 and 2012 was summarized asfollows:
Thousands ofMillions of yen
U.S. dollars
2012
2013
2013
Property, plant and equipment: (*1)
Japan
¥376,569¥390,135$4,150,815
North America
49,41754,216
576,827[United States] (*2)[48,732][53,479][568,986]
Europe
98
476
5,064
Asia
Other
7
128
1,362
Consolidated total¥426,091¥444,955$4,734,068
Note: *1 Property, plant and equipment is categorized by country or area according to geographic adjacentlevel.
*2 Property, plant and equipment of the United States is included in North America area.
[3]Major customers Information
Information about major customers is not shown because outside sales for major customers accounted forless 10% of operating revenue on the consolidated statements of income for the fiscal years ended March 31,
2013 and 2012.

34

Information on Impairment Loss in Fixed Assets by Reportable segments
Impairment loss in fixed assets by reportable segments for the fiscal years ended March 31, 2013 and 2012
was summarized as follows:
Thousands ofMillions of yen
U.S. dollars
2012
2012
2012
Impairment loss in fixed assets:
Automobiles¥63¥145$1,543AerospaceIndustrial products
Other
Total
63
145
1,543
Adjustment
Total
¥63
¥145
$1,543
Information on Amortization of Goodwill and Unamortized Balance by Reportable segments
Information on amortization of goodwill and unamortized balance by reportable segments for the fiscal years
ended March 31, 2013 and 2012 was summarized as follows:
GoodwillThousands ofMillions of yen
U.S. dollars
2012
2013
2013
Amount written off of current period:
Automobiles
¥318
¥294
$3,128AerospaceIndustrial products
Other (*1)
1
Total
319
294
3,128
Corporate and elimination
Total
¥319
¥294
$3,128
Balance at the end of current period:
Automobiles¥2,420¥2,415$25,694
AerospaceIndustrial products
Other (*1)
Total
2,420
2,415
25,694
Corporate and elimination
Total¥2,420¥2,415$25,694
Note: *1 "Other" is related to Eco technology division.
Information on Negative Goodwill by Reportable segments
No items to be reported.

35

26. Fair Value of Investment and Rental Property
The Company and certain consolidated subsidiaries own rental office buildings and rental commercial
facilities with the objective of generating rental income in Saitama prefecture and other locations. Certain
domestic rental office buildings in Japan are classified as properties that include portions used as investment
and rental property, because part of them are used by the Company and certain consolidated subsidiaries.
The consolidated balance sheet amounts, principal changes during fiscal 2013 and 2012, fair value at theend of fiscal 2013 and 2012 were as follows:
As of March 31, 2013
Millions of yen
Consolidated balance sheet amounts
Fair value as
beginning
Increase(dec ending
the end of thebalancerease) during balancefiscal year
the yearInvestment and rental property¥31,884(¥1,474)¥30,410¥38,923
Properties that include portions used as
investment and rental property¥6,573¥257¥6,830¥10,074
As of March 31, 2013

Investment and rental property
Properties that include portions used as
investment and rental property

Thousands of U.S. dollars
Consolidated balance sheet amounts
Fair value as
beginning
Increase(dec ending
the end of thebalancerease) during balancefiscal year
the year$339,228($15,683)$323,545$414,119$69,933$2,734$72,667$107,182

As of March 31, 2012
Millions of yen

Investment and rental property
Properties that include portions used as
investment and rental property

Consolidated balance sheet amounts
Fair value as
beginning
Increase(dec ending
the end of thebalancerease) during balancefiscal year
the year¥34,148(¥2,264)¥31,884¥40,854¥14,711(¥8,138)¥6,573¥9,555Note 1. The amounts of consolidated balance sheet excludes accumulated depreciation and accumulated
impairment loss from acquisition costs.
2. Among changes in the amount of investment, rental property and properties that include portions
used as investment and rental property during the fiscal 2013, principal increases were properties
acquisitions etc, which amounted to ¥64 million (US$681 thousand), and principal decreases were loss
on sales and retirement, which amounted to ¥1,667 million (US$17,736 thousand).
Among changes in the amount of investment, rental property and properties that include portions
used as investment and rental property during the fiscal 2012, principal increases were properties
acquisitions etc, which amounted to ¥1,628 million, and principal decreases were loss on sales andretirement, which amounted to ¥8,968 million.
3. Fair value of a part of main investment and rental property is the amount estimated by based value of36

real-estate appraiser, and fair value of a part of other investment and rental property is the amountestimated by the Company based principally on land assessment value.
Profit and loss in fiscal 2013 and 2012 concerning investment and rental property and properties that include
portions used as investment and rental property were as follows:
As of March 31, 2013
Millions of yen
RentalRentalChangeOther profit
incomeexpensesand loss
Investment and rental property¥3,401¥1,989¥1,412¥399
Properties that include portions used as
investment and rental property
¥517
¥241
¥276
¥As of March 31, 2013

Investment and rental property
Properties that include portions used as
investment and rental property

Thousands of U.S. dollars
RentalRentalChangeOther profit
incomeexpensesand loss$36,185$21,162$15,023$4,245$5,501$2,564$2,937$-

As of March 31, 2012

Investment and rental property
Properties that include portions used as
investment and rental property

Millions of yen
RentalRentalChangeOther profit
incomeexpensesand loss¥3,309¥2,062¥1,247¥111¥1,144¥537¥607¥26,134

Note:1. Rental income (from the properties that include portions used as investment and rental property) does
not include the portion that the Company or certain subsidiaries use as the provision of services andbusiness administration purposes. Rental expenses, however, include all portions of the expenses(costs related to depreciation, repairs, insurance and taxes).
2. Other profit and loss include in gain on sale and impairment loss.
27.Subsequent Event
None identified.
28.Other
On January 15, 2010, the Company filed a lawsuit with the Tokyo District Court against the Government ofJapan for the payment [totaling ¥35,124 million (US$ 373,699 thousand)] of uncollected initial investment fees(amount paid for customization to the Japanese specifications) for the manufacture of the AH-64D combat
helicopters for the Japan Ministry of Defense.
The payment [totaling ¥23,954 million (US$ 254,857 thousand)] of uncollected initial investment fees theCompany paid was included in "Other assets" of "Investments and other assets".
In addition, the amount of lawsuit includes the uncollected initial investment fees, consumption tax andother paid by subcontractors.

37