Summary of Consolidated Financial Results for the Year Ended March 31, 2015 (Based on Japanese GAAP)

Transcription

1 Translation Notice: This document is an excerpt translation of the original Japanese document and is only for reference purposes. In the event of any discrepancy between this translated document and the original Japanese document, the latter shall prevail. Summary of Consolidated Financial Results for the Year Ended March 31, 2015 (Based on Japanese GAAP) Company name: TOTO Ltd. Stock exchange listing: Tokyo, Nagoya, Fukuoka Stock code: 5332 URL Representative: President & Representative Director Madoka Kitamura Inquiries: General Manager of Public & Investors Relations Dept. Masanori Akasaka TEL Scheduled date of ordinary general meeting of shareholders: June 26, 2015 Scheduled date to file Securities Report: June 30, 2015 Scheduled date to commence dividend payments: June 5, 2015 Preparation of supplementary material on financial results: Yes Holding of financial results meeting: Yes April 30, 2015 (Amounts less than one million yen are rounded down) 1. Consolidated financial results for the year ended March 31, 2015 (from April 1, 2014 to March 31, 2015) (1) Consolidated financial results Percentages indicate year-on-year changes Net sales Operating income Ordinary income Net income Millions of yen % Millions of yen % Millions of yen % Millions of yen % Year ended March 31, ,509 (1.6) 37,426 (20.7) 39,662 (21.3) 24,813 (43.8) Year ended March 31, , , , , (Note) Comprehensive income: Year ended March 31, 2015: 53,215 million yen [(19.5)%] Year ended March 31, 2014: 66,139 million yen [110.4%] Diluted net income Ordinary Operating Net income per share Net income/equity per share income/total assets income/net sales Yen Yen % % % Year ended March 31, Year ended March 31, (Reference) Investment gain or loss by equity method: Year ended March 31, 2015: 1,133 million yen Year ended March 31, 2014: 965 million yen (2) Consolidated financial position assets Net assets Equity ratio Net assets per share Millions of yen Millions of yen % Yen As of March 31, , , As of March 31, , , (Reference) Equity: As of March 31, 2015: 270,158 million yen As of March 31, 2014: 247,806 million yen (3) Consolidated cash flows Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at end of period Millions of yen Millions of yen Millions of yen Millions of yen Year ended March 31, ,713 (30,040) (11,393) 83,183 Year ended March 31, ,015 (4,033) (23,328) 83, Cash dividends Annual dividends per share 1st quarter-end 2nd quarter-end 3rd quarter-end Fiscal year-end cash dividends () Dividend payout ratio (Consolidated) Ratio of dividends to net assets (Consolidated) Yen Yen Yen Yen Yen Millions of yen % % Year ended March 31, , Year ended March 31, , Year ending March 31, 2016 (Forecast)

2 3. Forecast of consolidated financial results for the year ending March 31, 2016 (from April 1, 2015 to March 31, 2016) Net sales Operating income Ordinary income Percentages indicate year-on-year changes Profit attributable to owners of parent Net income per share Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen Six months ending September 30, , , , , Full year 584, , , , Notes (1) Changes in significant subsidiaries during the year ended March 31, 2015 (changes in specified subsidiaries resulting in the change in scope of consolidation): No (2) Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements Changes in accounting policies due to revisions to accounting standards and other regulations: Yes Changes in accounting policies due to other reasons: No Changes in accounting estimates: No Restatement of prior period financial statements after error corrections: No (Note) For details, please refer to the section of (5) Notes on consolidated financial statements (Changes in accounting policies) of 4. Consolidated Financial Statements on page 17 of the attached material. (3) Number of issued shares (common shares) number of issued shares at the end of the period (including treasury shares) As of March 31, ,962,595 shares As of March 31, ,962,595 shares Number of treasury shares at the end of the period As of March 31, ,469,620 shares As of March 31, ,060,872 shares Average number of shares during the period Year ended March 31, ,233,556 shares Year ended March 31, ,911,922 shares * Indication regarding execution of audit procedures This financial results report is out of the scope of the audit procedures under the Financial Instruments and Exchange Act. Therefore, at the time of disclosure of this financial results report, the audit procedures for consolidated financial statements pursuant to the Financial Instruments and Exchange Act have not been completed. * Explanation of proper use of earnings forecasts, and other special matters Caution concerning forward-looking statements The forward-looking statements, including the earnings forecasts shown in this document, are based on information currently available to the Company and on certain assumptions deemed to be reasonable by the Company. As such, they do not constitute guarantees by the Company of future performance. Actual performance and other results may differ materially due to various factors. For the suppositions that form the assumptions for earnings forecasts and cautions concerning the use thereof, please refer to the section of (1) Analysis of Business Results of 1. Analysis of Business Results and Financial Position on page 3 of the attached material. 2

3 1. Analysis of Business Results and Financial Position (1) Analysis of business results (Review of operations) During the fiscal year ended March 31, 2015 (April 1, 2014 to March 31, 2015) (hereinafter fiscal 2014), the Japanese economy continued its modest recovery trend despite the effects of negative factors such as the rebound drop in demand following the surge in demand ahead of the consumption tax rate increase. In the domestic housing market, the rebound decline following the rush in demand had an impact on the market, including a decline in new housing starts and a drop in demand for home remodeling. Under this business environment, the TOTO Group continued to promote its activities in the domestic/overseas housing equipment and new domain business segments based on TOTO V Plan 2017 ( V Plan 2017 ), our long-term management plan for 2017 (the year when we will celebrate our 100th anniversary), as well as on the four-year medium-term management plan initiated in fiscal As a result, consolidated net sales for fiscal 2014 amounted to 544,509 million yen, a decrease of 1.6% year on year. Meanwhile, consolidated operating income totaled 37,426 million yen, a decrease of 20.7% year on year, and consolidated ordinary income stood at 39,662 million yen, a decrease of 21.3% year on year. Consolidated net income amounted to 24,813 million yen, a decrease of 43.8% year on year, due to the recording of extraordinary losses that included business restructuring expenses and expenses related to environmental preservation. (Segment information) (i) Domestic Housing Equipment Business Consolidated net sales for fiscal 2014 totaled 411,797 million yen (a year-on-year decline of 7.6%) and consolidated operating income totaled 19,028 million yen (a 47.4% drop). These results reflected the longer-than-expected impacts on both the remodeling and new construction segments due to the recoil decline following the surge in demand. Also, the three companies TOTO, DAIKEN and YKK AP ( TDY ) will continue to promote environmentally friendly Green Remodeling by using Green Remodel Evaluations (objective evaluations of houses based on environmental assessment standards for housing) to propose design remodeling of living spaces, including toilets, bathrooms, kitchens, and washrooms. In June 2014, we opened the TDY Fukuoka Collaboration Showroom, while in September 2014 we opened the TY Yokohama Collaboration Showroom. Moreover, in spring 2016 we will open the eighth collaboration showroom in Japan in Nagoya, as we roll out collaboration showrooms in key cities across the country. (ii) Overseas Housing Equipment Business Consolidated net sales for fiscal 2014 stood at 161,795 million yen (a year-on-year increase of 20.1%) and consolidated operating income totaled 22,064 million yen (an increase of 42.8%). The increase in operating income was due to the growth in net sales, higher productivity, the impact of exchange rate fluctuations, and other factors. The global economy maintained gradual recovery overall, albeit with signs of weakness in some regions. Amid this kind of business environment, in the Overseas Housing Equipment Business we are steadily pursuing our growth strategies while also focusing our attention on economic developments and social trends in different countries and areas. 3

4 <The Americas> Consolidated net sales for fiscal 2014 stood at 30,294 million yen (a year-on-year increase of 23.6%) and consolidated operating income totaled 1,633 million yen (an increase of 30.9%). In the United States, although the pace of the market recovery has remained only moderate, as the leading manufacturer in the middle and high-end market we are working to enhance our brand value and differentiate ourselves even further from our competitors by demonstrating the superiority and value of our products. Moreover, in our business in the Americas, production in Mexico has stabilized and is proceeding strongly. <China> Consolidated net sales for fiscal 2014 stood at 84,721 million yen (a year-on-year increase of 16.8%) and consolidated operating income totaled 16,801 million yen (an increase of 38.0%). In China, despite signs of a moderate economic recovery, the markets continue to be affected by the government s real-estate control policies. Against this background, the TOTO Group has been pursuing business operations that are supported by local customers by taking advantage of TOTO s luxury brand image, at the same time as monitoring and addressing the country s changing market conditions. Included in such efforts are the Group s initiatives to expand into China s inland-area markets and to shift its business focus from the country s metropolitan areas to the growing markets in neighboring cities. In order to meet the growing demand resulting from long-term market growth in China, we are continuing to push ahead with the building of efficient production and optimal supply systems for this market. As part of this, in July 2014, TOTO (Fujian) Co., Ltd. began operations for manufacturing sanitary wares. <Asia-Oceania> Consolidated net sales for fiscal 2014 stood at 42,598 million yen (a year-on-year increase of 25.7%) and consolidated operating income totaled 4,536 million yen (an increase of 66.1%). In the Asia-Oceania region, at TOTO we are working to bolster our marketing capabilities in countries and regions with emerging economies, while we are also enhancing our production systems in Thailand, Indonesia, and Vietnam from where products are supplied to a diverse range of markets worldwide. In Indonesia, Taiwan, and Vietnam, we are striving to cement our position as a manufacturer of luxury-brand products. In India, the TOTO Group has established a sales network after setting up a local subsidiary in Also, in order to meet the growing demand, the sanitary ware plant we had been constructing in Gujarat began operating in July <Europe> Consolidated net sales for fiscal 2014 stood at 4,181 million yen (a year-on-year increase of 10.6%) and consolidated operating loss totaled 906 million yen (compared with an operating loss of 699 million yen in fiscal 2013). In Europe, we are developing our marketing channels, with a focus on Germany, France, and the United Kingdom, while TOTO s products are also being displayed at our dealers showrooms. In addition, we are striving to differentiate ourselves from our competitors by market launching products with high water-saving performance and superior designs, such as the Neorest. In these ways, we are increasing the presence of the TOTO brand not only in Europe, but also all over the world. (iii) New Domain Businesses Consolidated net sales for fiscal 2014 stood at 20,586 million yen (a year-on-year increase of 4.7%), and 4

5 consolidated operating loss totaled 317 million yen (compared with an operating loss of 1,563 million yen in fiscal 2013). In our New Domain Businesses, we are focusing on our Ceramics Business, which develops products using TOTO s Only One technologies, and also focusing on our Environmental Building Materials Business, which supplies construction materials, coating materials, and other products based on our Hydrotect environmental purification technology. <Ceramics Business> Consolidated net sales for fiscal 2014 stood at 10,499 million yen (a year-on-year increase of 15.8%) and consolidated operating income totaled 452 million yen (compared with an operating loss of 645 million yen in fiscal 2013). In our Ceramics Business, we are continuing to develop a system to optimize production system through promoting our company-wide Production Innovation activities, while also focusing our efforts into developing high-precision and accurate ceramic parts, such as structural parts and electrostatic chucks, and optical components, which leverage TOTO s Only One technologies. In fiscal 2014, sales grew strongly across the product range, supported by factors such as a recovery in the semiconductor market and increased activity in the optical communications market. In addition, the effects of our efforts to reinforce the structure of our ceramics business manufacturing division, as well as new product sales growth, pushed operating income into positive territory. <Environmental Building Materials Business> Consolidated net sales for fiscal 2014 amounted to 10,086 million yen (a year-on-year decrease of 4.8%) and consolidated operating loss stood at 769 million yen (compared with an operating loss of 917 million yen in fiscal 2013). Hydrotect is the brand name of TOTO s environmental purification technology that creates a clean environment for the Earth and for our lives by using photocatalysts and the power of light and water. Hydrotect technology is already being used by many of our customers in a wide range of products, including exterior walls, interior walls, and floors. The focus of our business strategy in this area is to shift from the Japanese market to the global market; therefore, we are working to promote our Hydrotect technology by expanding our cross-industrial partnership network, called the Hydrotect Network, throughout the world and thereby contribute to environmental protection. In fiscal 2014, strong sales of new products including Hydrocera Floor J Whole Surface Ceramic mitigated the impact of the recoil decline in sales of some exterior wall products following the earlier surge in demand. As a result, consolidated net sales were roughly flat versus the previous fiscal year. In addition, productivity improved as a result of the innovation activities we had been promoting since previous periods, and operating loss narrowed in continuation from the previous fiscal year. (iv) Other <Fuel Cell Business> TOTO is aiming for early commercialization of power generation modules, which are the core component of fuel cells, by promoting the manufacture and development of ceramic power generation cells (SOFC), which use TOTO s Only One technologies, and power generation modules. *The Fuel Cell Business was formerly reported on as a part of New Domain Businesses, but is now included in Other due to the fact that research and development targeting the future widespread use of fuel cells for homes is ongoing. 5

6 (Outlook for the next term) For the fiscal year ending March 2016, we are forecasting year-on-year increases in both sales and profits. Specifically, we are projecting consolidated net sales of 584,500 million yen (a year-on-year increase of 7.3%), consolidated operating income of 42,800 million yen (an increase of 14.4%), consolidated ordinary income of 44,700 million yen (an increase of 12.7%) and profit attributable to owners of parent of 31,800 million yen (an increase of 28.2%). *Note: Forecasts based on our projections and plans for the future contain unpredictable elements that may cause fluctuations. Accordingly, actual results may differ materially from forecasts. (2) Analysis of financial position Consolidated cash and cash equivalents (hereinafter referred to as funds ) for fiscal 2014 decreased by 690 million yen to 83,183 million yen, down from 83,874 million yen at the end of the previous fiscal year. (Cash flows from operating activities) Funds provided by operating activities during fiscal 2014 totaled 34,713 million yen. This was because an increase in funds resulting from factors including the 39,489 million yen in income before income taxes and minority interests and the 17,227 million yen in depreciation, exceeded the decrease in funds resulting from factors including the 11,419 million yen in income taxes paid and the 10,053 million yen increase in inventories. (Cash flows from investing activities) Funds used in investing activities during fiscal 2014 totaled 30,040 million yen. There was a decrease in funds resulting from the 25,534 million yen spent on the purchase of property, plant and equipment, the 4,872 million yen spent on the purchase of intangible assets, and other factors. (Cash flows from financing activities) Funds used in financing activities during fiscal 2014 totaled 11,393 million yen. This was because an increase in funds resulting from factors including the 36,000 million yen in proceeds from issuance of commercial papers was not sufficient to offset a decrease in funds resulting from factors including the 36,000 million yen spent on the redemption of commercial papers, the 8,737 million yen spent on cash dividends paid, and the 2,802 million yen spent on repayments of long-term loans payable. Trends in cash flow indexes (financial figures on a consolidated basis) are as follows: Fiscal Year Ended March 31, 2013 Fiscal Year Ended March 31, 2014 Fiscal Year Ended March 31, 2015 Equity ratio (%) (*1) Equity ratio based on market value (%) (*2) Debt redemption period (year) (*3) Interest coverage ratio (times) (*4) (*1) Equity ratio: Equity / assets (*2) Equity ratio based on market value: Market capitalization / assets Market capitalization was calculated by multiplying the closing stock price at the end of the period by the total number of 6

7 issued and outstanding shares at the end of the period (excluding treasury shares). (*3) Debt redemption period: Interest-bearing debt / Operating cash flow Interest-bearing debt includes all liabilities recorded on the consolidated balance sheet on which interest is paid. The figure used for operating cash flow is net cash provided by operating activities on the consolidated statement of cash flows. (*4) Interest coverage ratio: Operating cash flow / Interest payments Regarding the interest payments, we use Interest expenses paid recorded on the consolidated statement of cash flows. 7

8 2. Management Policies (1) TOTO s basic management policy At the TOTO Group, we engage in a broad range of corporate activities aimed at making the Company a valued and permanent member of society and the global environment. These activities are based on our motto of Take pride in your work and strive to do your best; Quality and Uniformity; Service and Trust; Cooperation and Prosperity, together with the TOTO Group philosophy of We, the TOTO Group, contribute to society s development by creating a rich and comfortable living culture with a focus on plumbing and by continuing to pursue customer satisfaction that exceeds expectations. (2) Management indicators as targets and the Company s medium- and long-term management strategies In July 2009, the TOTO Group formulated V Plan 2017, our long-term management plan aimed at turning us into a truly global company by 2017, our 100th anniversary. Based on V Plan 2017, we spent fiscal 2010 and fiscal 2011 enhancing our business platform with optimization of the entire company in mind. From fiscal 2012 we continued under a new medium-term management plan spanning the three years through fiscal However the targets under this plan were met a year ahead of schedule, prompting the April 2014 formulation of our latest medium-term management plan, running from fiscal 2014 through fiscal In doing so, we revised the final-year targets for V Plan In order to grow our business and improve profitability, we strive to achieve stable and sustainable growth by consistently providing appealing products and services that exceed expectations to ensure customer satisfaction and by constantly seeking to save costs and improve productivity. We aim to maximize corporate value by creating a leaner balance sheet, such as through asset liquidation and debt reduction, as a way of managing our assets more efficiently. Our management plan targets for 2017 include consolidated net sales of 650,000 million yen, consolidated operating income of 61,000 million yen, Return (operating income) on Assets (ROA) of 10% or more, and Return on Equity (ROE) of 10% or more. (3) Challenges to be addressed The strategic framework for V Plan 2017 calls for reinforcing corporate governance, the basis of our business activities, and further expanding the Domestic Housing Equipment Business, Overseas Housing Equipment Business, and New Domain Businesses segments, at the same time continuing our four cross-organizational innovation activities (Marketing Innovation, Supply Chain Innovation, Production Innovation, and Management Resource Innovation), with optimization of the entire company in mind. The TOTO Global Environmental Vision will be the driving force behind these initiatives undertaken throughout the TOTO Group. From fiscal 2015, we will pursue Demand Chain Innovation in order to further evolve Supply Chain Innovation and Production Innovation from the customer s viewpoint. 3. Basic Rationale for Selecting the Accounting Standards The TOTO Group uses Japanese accounting standards. With respect to the adoption of IFRS, we will keep an eye on future trends and study the issue. 8

9 4. Consolidated Financial Statements (1) Consolidated balance sheets As of March 31, 2014 As of March 31, 2015 Assets Current assets Cash and deposits 61,156 68,004 Notes and accounts receivable - trade 102,213 94,482 Securities 25,020 19,010 Merchandise and finished goods 32,070 42,244 Work in process 8,986 9,884 Raw materials and supplies 11,911 13,314 Deferred tax assets 7,484 6,967 Other 10,253 13,041 Allowance for doubtful accounts (295) (310) current assets 258, ,637 Non-current assets Property, plant and equipment Buildings and structures, net 50,035 62,813 Machinery, equipment and vehicles, net 31,163 42,750 Land 29,990 29,955 Construction in progress 16,753 9,194 Other, net 9,845 11,259 property, plant and equipment 137, ,974 Intangible assets Goodwill Software 10,031 9,901 Other 2,992 4,645 intangible assets 13,383 14,896 Investments and other assets Investment securities 46,153 59,278 Long-term loans receivable Guarantee deposits 6,341 6,396 Net defined benefit asset 1, Deferred tax assets 10,084 11,006 Other 2,689 2,275 Allowance for doubtful accounts (275) (310) investments and other assets 66,413 79,486 non-current assets 217, ,357 assets 476, ,995 9

10 As of March 31, 2014 As of March 31, 2015 Liabilities Current liabilities Notes and accounts payable - trade 73,041 73,153 Short-term loans payable 5,925 7,749 Commercial papers 15,000 15,000 Accounts payable - other 11,691 13,620 Accrued expenses 27,019 26,485 Income taxes payable 4,750 2,474 Accrued consumption taxes 2,378 3,112 Provision for directors' bonuses Accrual for loss on inspection and repair of products Provision for loss on business restructuring 1,055 1,337 Provision for environmental measures Notes payable - facilities Other 10,788 12,110 current liabilities 152, ,238 Non-current liabilities Long-term loans payable 26,858 23,150 Net defined benefit liability 37,131 54,275 Other 2,845 2,747 non-current liabilities 66,835 80,174 liabilities 219, ,412 Net assets Shareholders' equity Capital stock 35,579 35,579 Capital surplus 29,216 29,216 Retained earnings 190, ,231 Treasury shares (15,858) (15,505) shareholders' equity 239, ,521 Accumulated other comprehensive income Valuation difference on available-for-sale securities 7,774 16,578 Foreign currency translation adjustment 7,321 18,929 Remeasurements of defined benefit plans (6,635) (870) accumulated other comprehensive income 8,459 34,636 Subscription rights to shares Minority interests 8,206 9,845 net assets 256, ,582 liabilities and net assets 476, ,995 10

11 (2) Consolidated statements of income and consolidated statements of comprehensive income Consolidated statements of income Fiscal year ended March 31, 2014 Fiscal year ended March 31, 2015 Net sales 553, ,509 Cost of sales 341, ,285 Gross profit 211, ,223 Selling, general and administrative expenses 164, ,796 Operating income 47,181 37,426 Non-operating income Interest income 1,568 1,914 Dividend income Share of profit of entities accounted for using equity method 965 1,133 Foreign exchange gains 519 1,081 Other 1,893 1,596 non-operating income 5,770 6,667 Non-operating expenses Interest expenses Sales discounts 1,201 1,214 Loss on retirement of non-current assets 526 1,992 Other 647 1,092 non-operating expenses 2,541 4,431 Ordinary income 50,411 39,662 Extraordinary income Gain on sales of land and others 4, Gain on sales of investment securities Gain on sales of shares of subsidiaries and associates 4,808 Gain on sales of memberships 0 Compensation income Gain on change in equity 172 extraordinary income 10,110 1,023 Extraordinary losses Loss on sales of land and others Loss on sales of investment securities 0 Loss on sales of membership 0 Loss on valuation of securities 1 38 Loss on valuation of membership 4 13 Impairment loss Restructuring expenses 1, Environmental expenses extraordinary losses 3,550 1,196 Income before income taxes and minority interests 56,971 39,489 Income taxes - current 11,191 9,138 Income taxes - deferred 515 4,269 income taxes 11,706 13,407 Income before minority interests 45,264 26,081 Minority interests in income 1,142 1,267 Net income 44,122 24,813 11

12 Consolidated statements of comprehensive income Fiscal year ended March 31, 2014 Fiscal year ended March 31, 2015 Income before minority interests 45,264 26,081 Other comprehensive income Valuation difference on available-for-sale securities 4,463 8,803 Foreign currency translation adjustment 15,946 12,025 Remeasurements of defined benefit plans, net of tax 5,764 Share of other comprehensive income of entities accounted for using equity method other comprehensive income 20,874 27,134 Comprehensive income 66,139 53,215 Comprehensive income attributable to Comprehensive income attributable to owners of parent 63,595 50,990 Comprehensive income attributable to minority interests 2,543 2,224 12

13 (3) Consolidated statements of changes in net assets Fiscal year ended March 31, 2014 Shareholders' equity Capital stock Capital surplus Retained earnings Treasury shares shareholders' equity Balance at beginning of current period 35,579 29, ,356 (16,254) 211,116 Cumulative effects of changes in accounting policies Restated balance 35,579 29, ,356 (16,254) 211,116 Changes of items during period Dividends of surplus (6,116) (6,116) Net income 44,122 44,122 Purchase of treasury shares (10,087) (10,087) Disposal of treasury shares 1 (6) Retirement of treasury shares (221) (9,945) 10,166 Net changes of items other than shareholders' equity changes of items during period (219) 28, ,230 Balance at end of current period 35,579 29, ,410 (15,858) 239,347 Balance at beginning of current period Cumulative effects of changes in accounting policies Accumulated other comprehensive income Valuation Foreign Subscription Remeasurements accumulated Minority net difference on currency rights to of defined benefit other interests assets available-forsale securities adjustment translation shares plans comprehensive income 3,310 (7,689) (4,378) 523 6, ,410 Restated balance 3,310 (7,689) (4,378) 523 6, ,410 Changes of items during period Dividends of surplus (6,116) Net income 44,122 Purchase of treasury shares (10,087) Disposal of treasury shares 311 Retirement of treasury shares Net changes of items other than shareholders' equity 4,463 15,010 (6,635) 12, ,056 14,954 changes of items during period 4,463 15,010 (6,635) 12, ,056 43,185 Balance at end of current period 7,774 7,321 (6,635) 8, , ,596 13

14 Fiscal year ended March 31, 2015 Shareholders' equity Capital stock Capital surplus Retained earnings Treasury shares shareholders' equity Balance at beginning of current period 35,579 29, ,410 (15,858) 239,347 Cumulative effects of changes in accounting policies (20,209) (20,209) Restated balance 35,579 29, ,200 (15,858) 219,137 Changes of items during period Dividends of surplus (8,737) (8,737) Net income 24,813 24,813 Purchase of treasury shares (45) (45) Disposal of treasury shares (45) Retirement of treasury shares Net changes of items other than shareholders' equity changes of items during period 16, ,383 Balance at end of current period 35,579 29, ,231 (15,505) 235,521 Balance at beginning of current period Cumulative effects of changes in accounting policies Accumulated other comprehensive income Valuation Foreign Subscription Remeasurements accumulated Minority net difference on currency rights to of defined benefit other interests assets available-forsale securities adjustment translation shares plans comprehensive income 7,774 7,321 (6,635) 8, , ,596 (20,209) Restated balance 7,774 7,321 (6,635) 8, , ,386 Changes of items during period Dividends of surplus (8,737) Net income 24,813 Purchase of treasury shares (45) Disposal of treasury shares 352 Retirement of treasury shares Net changes of items other than shareholders' equity 8,803 11,608 5,764 26,177 (4) 1,639 27,811 changes of items during period 8,803 11,608 5,764 26,177 (4) 1,639 44,195 Balance at end of current period 16,578 18,929 (870) 34, , ,582 14

15 (4) Consolidated statements of cash flows Fiscal year ended March 31, 2014 Fiscal year ended March 31, 2015 Cash flows from operating activities Income before income taxes and minority interests 56,971 39,489 Depreciation 14,922 17,227 Impairment loss Loss (gain) on valuation of securities 1 38 Loss on valuation of membership 4 13 Increase (decrease) in allowance for doubtful accounts (607) 33 Increase (decrease) in provision for directors' bonuses 147 (118) Increase (decrease) in accrual for loss on inspection and repair of products (26) (18) Increase (decrease) in provision for loss on business restructuring Increase (decrease) in provision for environmental measures Increase (decrease) in provision for retirement benefits (32,182) Increase (decrease) in net defined benefit liability 26,407 (4,144) Interest and dividend income (2,391) (2,856) Interest expenses Loss (gain) on sales of investment securities (41) (94) Loss (gain) on sales of shares of subsidiaries and associates (4,808) Loss (gain) on sales of membership 0 Loss (gain) on sales of land (4,728) (745) Loss on retirement of non-current assets 526 1,992 Compensation income (150) (175) Loss (gain) on change in equity (172) Decrease (increase) in notes and accounts receivable - trade (16,126) 8,972 Decrease (increase) in inventories 1,880 (10,053) Increase (decrease) in notes and accounts payable - trade 10,518 (643) Increase (decrease) in accounts payable - other 729 (1,527) Increase (decrease) in accrued expenses 4,027 (1,086) Other, net (3,501) (4,034) Subtotal 53,722 42,759 Interest and dividend income received 2,970 3,322 Interest expenses paid (167) (123) Proceeds from compensation Income taxes paid (8,660) (11,419) Net cash provided by (used in) operating activities 48,015 34,713 15

16 Fiscal year ended March 31, 2014 Fiscal year ended March 31, 2015 Cash flows from investing activities Payments into time deposits (3,175) (4,651) Proceeds from withdrawal of time deposits 2,844 3,328 Decrease (increase) in short-term loans receivable 16 0 Purchase of property, plant and equipment (19,217) (25,534) Proceeds from sales of property, plant and equipment 11,481 1,163 Purchase of intangible assets (3,905) (4,872) Proceeds from sales of intangible assets 0 Purchase of short-term and long-term investment securities (29) (75) Proceeds from sales and redemption of short-term and long-term investment securities Purchase of shares of subsidiaries and associates (1,187) Proceeds from sales of shares of subsidiaries and associates 8,166 Payments of long-term loans receivable (3) (10) Collection of long-term loans receivable Other, net Net cash provided by (used in) investing activities (4,033) (30,040) Cash flows from financing activities Net increase (decrease) in short-term loans payable (6,923) Proceeds from issuance of commercial papers 40,000 36,000 Redemption of commercial papers (40,000) (36,000) Proceeds from long-term loans payable 17, Repayments of long-term loans payable (17,973) (2,802) Cash dividends paid (6,116) (8,737) Purchase of treasury shares (10,087) (45) Proceeds from share issuance to minority shareholders 1, Other, net (1,002) (627) Net cash provided by (used in) financing activities (23,328) (11,393) Effect of exchange rate change on cash and cash equivalents 7,500 6,029 Net increase (decrease) in cash and cash equivalents 28,153 (690) Cash and cash equivalents at beginning of period 55,720 83,874 Cash and cash equivalents at end of period 83,874 83,183 16

17 (5) Notes on consolidated financial statements (Notes on the going-concern assumption) Not applicable (Changes in accounting policies) Application of the Accounting Standard for Retirement Benefits and its Guidance Effective fiscal 2014, the Company has applied the provisions specified in the main clause of Section 35 of the Accounting Standard for Retirement Benefits (ASBJ Statement No. 26, March 26, 2015) and the main clause of Section 67 of the Guidance on the Accounting Standard for Retirement Benefits (ASBJ Guidance No. 25, May 17, 2012), reviewed its calculation method for retirement benefit obligations and current service costs, and changed its method of attributing expected benefits to periods from the straight-line basis to the benefit formula basis. In addition, the Company has changed the method for determining the discount rate from one that uses a discount rate based on the remaining service period of an employee to one that uses a single weighted average discount rate. The application of the Accounting Standard for Retirement Benefits and its Guidance by the Company is subject to the tentative treatment provided for in Section 37 of the Accounting Standard for Retirement Benefits, and the effect of the revision on the calculation method for retirement benefit obligations and current service costs has been added to or deducted from retained earnings as of April 1, As a result, as of April 1, 2014, net defined benefit liability increased by 29,970 million yen, net defined benefit asset decreased by 1,042 million yen, and retained earnings decreased by 20,209 million yen. In addition, operating income, ordinary income and income before income taxes and minority interests for fiscal 2014, each increased by 471 million yen. Net assets per share decreased by yen. The impact on net income per share and diluted net income per share are negligible. Application of Practical Solution on Transactions of Delivering the Company s Own Stock to Employees etc. through Trusts The Practical Solution on Transactions of Delivering the Company s Own Stock to Employees etc. through Trusts (ASBJ PITF No. 30, March 26, 2015) was applied effective fiscal 2014, however, trust agreements concluded prior to April 1, 2014 have been accounted for using the same method as before. 17

18 (Segment information) Fiscal year ended March 31, 2014 (From April 1, 2013 to March 31, 2014) Domestic Housing Equipment Business Americas Reportable Segment Overseas Housing Equipment Business China Asia, Oceania Europe Consolidated Sales For external customers 433,985 24,496 54,433 18,483 3, ,193 Intersegment net sales or transfers 11, ,129 15, , ,574 24,507 72,563 33,878 3, ,728 Operating income (loss) 36,192 1,247 12,172 2,730 (699) 15,450 Reportable Segment New Domain Businesses Environmental Ceramics Building Business Materials Business Others Elimination or Corporate Sales For external customers 9,064 8,991 18, , , ,448 Intersegment net sales or 1,608 1,608 46, ,904 (46,904) transfers 9,064 10,600 19, , ,353 (46,904) 553,448 Operating income (loss) (645) (917) (1,563) 50, ,123 (2,941) 47,181 Fiscal year ended March 31, 2015 (From April 1, 2014 to March 31, 2015) Domestic Housing Equipment Business Americas Reportable Segment Overseas Housing Equipment Business China Asia, Oceania Europe Consolidated Sales For external customers 400,002 30,261 64,723 25,692 4, ,842 Intersegment net sales or transfers 11, ,997 16, , ,797 30,294 84,721 42,598 4, ,795 Operating income (loss) 19,028 1,633 16,801 4,536 (906) 22,064 Reportable Segment New Domain Businesses Environmental Ceramics Building Business Materials Business Others Elimination or Corporate Sales For external customers 10,499 8,910 19, , , ,509 Intersegment net sales or 1,176 1,176 49, ,974 (49,974) transfers 10,499 10,086 20, , ,483 (49,974) 544,509 Operating income (loss) 452 (769) (317) 40, ,889 (3,462) 37,426 18

19 (Per-share data) Fiscal year ended March 31, 2014 (From April 1, 2013 to March 31, 2014) Fiscal year ended March 31, 2015 (From April 1, 2014 to March 31, 2015) Net assets per share yen yen Net income per share yen yen Diluted net income per share yen yen (Note) 1. Number of shares at the end of the period in the calculation of net assets per share excludes shares of the Company held by the ESOP Trust Utilizing Employee Shareholding Association. 2. Net income per share and diluted net income per share have been calculated based on the following data. Fiscal year ended March 31, 2014 (From April 1, 2013 to March 31, 2014) Fiscal year ended March 31, 2015 (From April 1, 2014 to March 31, 2015) Net income per share Net income (million yen) 44,122 24,813 Amount not attributable to common shareholders (million yen) Net income related to common shares (million yen) Average number of common shares during the period (thousand shares) 44,122 24, , ,233 Diluted net income per share Net income adjustment (million yen) Increase in the number of common shares (thousand shares) 1,029 1,009 (Stock options granted by subscription rights to shares) (1,029) (1,009) Outline of diluted shares not included in the calculation of diluted net income per share because there are no dilutive effects. (Note) Average number of common shares during the period excludes shares of the Company held by the ESOP Trust Utilizing Employee Shareholding Association. (Significant subsequent events) Not applicable. 19