FY2015 Full-Year Consolidated Financial Results [Japan GAAP] (April 1, 2015 through March 31, 2016) · FY2015 Full-Year Consolidated Financial Results [Japan GAAP] (April 1, 2015

FY2015 Full-Year Consolidated Financial Results [Japan GAAP]

(April 1, 2015 through March 31, 2016) May 10, 2016

Company Name : ANEST IWATA Corporation

Stock Exchanges on which the shares are listed : Tokyo Stock Exchange in Japan

Code Number : 6381

URL : http://www.anest-iwata.co.jp/english

Representative : Takahiro Tsubota, President

Contact Person : Kouichi Takano, Executive Officer, General Manager of Corporate Planning Dept.

: Tel. +81-(0)45-591-9344

Date of the Ordinary General Shareholders' Meeting : June 28, 2016

Payment Date of Cash Dividends : June 29, 2016

Scheduled Date for Submission of Financial Statements : June 28, 2016

Supplementary Materials Prepared for Financial Results : Yes

Holding of the Financial Results Meeting : Yes, for analysts and institutional investors

(Amounts are rounded to the nearest million yen)

1. Consolidated Results for FY2015 (April 1, 2015 through March 31, 2016) (1) Consolidated Financial Results (% of change from FY2014)

Net Sales Operating Income Ordinary Income

Net Income Attributable to Parent

Company Shareholders

FY2015

FY2014

Million Yen

29,524

27,428

%

7.6

―

Million Yen

3,796

3,199

%

18.7

―

Million Yen

4,138

3,716

%

11.3

―

Million Yen

2,593

2,214

%

17.1

―

(Note) Comprehensive Income: FY2015 1,673 million yen (△57.7%), FY2014 3,957 million yen (―%)

Net Income per share -

Basic

Net Income per share -

Diluted Return of Equity Return of Asset

Operating Profit on

Sales

FY2015

FY2014

Yen

62.14

52.79

Yen

―

―

%

10.8

10.0

%

12.1

11.5

%

12.9

11.7

(Reference) Equity in income of affiliates FY2015 222 million yen, FY2014 157 million yen

(Note) The change in accounting policy has been applied retroactively, so for FY2014, the figures shown relate to the period after the retroactive

application. The amount of increase/decrease in FY2014 relative to the previous year is not shown because of this retroactive application.

(2) Consolidated Financial Position

Total Assets Net Assets Equity Ratio Net Assets per share

FY2015

FY2014

Million Yen

34,678

33,766

Million Yen

25,518

24,689

%

70.3

69.4

Yen

583.76

561.80

(Reference) Shareholders' Equity: FY2015 24,365 million yen, FY2014 23,449 million yen

(3) Consolidated Cash Flow

Cash flow from Operating

Activities

Cash Flow from Investing

Activities

Cash Flow from Financing

Activities

Cash and Cash Equivalents at

End of Period

FY2015

FY2014

Million Yen

3,749

2,342

Million Yen

△849

△1,801

Million Yen

△1,089

△873

Million Yen

6,220

4,589

(Note) The change in accounting policy has been applied retroactively, so for FY2014, the figures shown relate to the period after the retroactive

application.

2. Cash Dividends

Annual Cash Dividends per share Total Amount

of Cash

Dividends

Dividends

Payout Ratio

(Consolidated)

Dividends on

Equity

(Consolidated) End of 1st

Quarter

End of 2nd

Quarter

End of 3rd

Quarter Year-end Total

FY2014

FY2015

Yen

―

―

Yen

8.00

10.00

Yen

―

―

Yen

8.50

12.00

Yen

16.50

22.00

Million Yen

691

918

%

30.0

35.4

%

3.1

3.8

FY2016 (forecast) ― 9.00 ― 9.00 18.00 26.8

3. Forecast of Consolidated Results for FY2016 (April 1, 2016 through March 31, 2017) (% of change from FY2015)

Net Sales Operating Income Ordinary Income

Current Net Income

Attributable to Parent

Company Shareholders

Net Income per

share

Half-Year

Full-Year

Million Yen

14,800

30,000

%

1.9

1.6

Million Yen

1,800

3,600

%

△11.8

△5.2

Million Yen

1,950

3,900

%

△14.9

△5.8

Million Yen

1,600

2,800

%

8.9

7.9

Yen

38.33

67.08

* Note

(1) Changes in specified subsidiaries during FY2015: None

(Changes in specified subsidiaries that caused a change in scope of consolidation)

New: Company (company name)

Excluded: Company (company name)

(2) Change in accounting policy, change and restatement of accounting estimates

(i) Change in accounting policy due to the revision of accounting standards, etc.: Yes

(ii) Change in accounting policy for other reasons: Yes

(iii) Change in accounting estimates: None

(iv) Restatement: None

(3) Number of shares issued and outstanding (common share)

(i) Number of shares issued and outstanding at the end of each fiscal year (including treasury shares)

(ii) Number of treasury shares at the end of each fiscal year

(iii) Average number of shares outstanding in the period

(Reference) Non-consolidated financial results

Non-consolidated financial results in FY2015 (April 1, 2015 through March 31, 2016)

(1) Non-consolidated Financial Results (% of change from FY2014)

Net Sales Operating Income Ordinary Income Net Income

FY2015

FY2014

Million Yen

16,152

16,862

%

△4.2

2.0

Million Yen

1,816

1,539

%

18.0

△30.2

Million Yen

2,632

2,222

%

18.5

△22.8

Million Yen

1,875

1,394

%

34.5

△26.3

Net Income per share - Basic Net Income per share - Diluted

FY2015

FY2014

Yen

44.94

32.24

Yen

―

―

(2) Non-consolidated Financial Position

Total Assets Net Assets Equity Ratio Net Assets per share

FY2015

FY2014

Million Yen

26,789

25,793

Million Yen

20,995

20,096

%

78.4

77.9

Yen

503.01

481.48

(Reference) Shareholders' Equity: FY2015 20,995 million yen, FY2014 20,096 million yen

* Information regarding the implementation of audit procedures

• These financial results are not subject to audit procedures based on the Financial Instruments and Exchange Act. At the date of the

announcement, financial statements audit procedures based on the Financial Instruments and Exchange Act have not been completed.

* Explanation of the appropriate use of the expected results of operations, other special notes

• Forecasts for operations and other descriptions about the future that are contained in this document are based on the information acquired at the

time of publication, as well as certain premises that we judge reasonable. The actual results of operations and so on may change greatly as a

result of various factors. For information about the conditions acting as the premise for the expected results of operations and notes on the use

of the expected results of operations, see "Analysis of results of operations" on page 2 of Attachment.

• We will hold a financial results meeting for institutional investors and analysts on June 2, 2016. We will post the material distributed at this

meeting, the main Qs and As, etc. to our website immediately after the meeting.

FY2015

41,745,505 shares

FY2014

41,885,505 shares

FY2015

6,432 shares

FY2014

146,135 shares

FY2015

41,739,230 shares

FY2014

41,950,143 shares

1

Contents of Attachment

1. Analysis of results of operations and financial condition ............................................................... 2

(1) Analysis of results of operations .............................................................................................. 2

(2) Analysis of financial condition .................................................................................................. 3

(3) Basic policy for profit allocation and current and next-term dividends ..................................... 3

2. Conditions of the corporate group ................................................................................................. 4

3. Management policy ....................................................................................................................... 7

(1) Basic policy for corporate management .................................................................................. 7

(2) Targeted management index ................................................................................................... 7

(3) Mid- to long-term corporate management strategies ............................................................... 7

(4) Issues that the company should address ................................................................................ 7

4. Basic concept on choice of accounting standards ........................................................................ 8

5. Consolidated financial statements ................................................................................................ 9

(1) Consolidated balance sheets ................................................................................................. 9

(2) Consolidated profit and loss statements and consolidated statements of comprehensive income .......................................................................................................... 11

(3) Consolidated statements of changes in shareholders' equity ................................................ 14

(4) Consolidated cash flow statements ....................................................................................... 16

(5) Note on consolidated financial statements ............................................................................ 18

(Notes on the premise of a going concern) ............................................................................ 18

(Basic, important matters for preparing consolidated financial statements) ........................... 18

(Change of accounting policy, etc.) ........................................................................................ 18

(Accounting standard, etc. that are not applied) ................................................................... 19

(Changes in presentation method) ......................................................................................... 19

(Additional information) ........................................................................................................ 20

(Related to consolidated balance sheets) .............................................................................. 20

(Related to consolidated profit and loss statements) ............................................................. 21

(Related to consolidated statements of comprehensive income) ........................................... 21

(Related to consolidated statements of changes in shareholders' equity) ............................. 22

(Related to consolidated cash flow statements) ................................................................... 23

(Segment information, etc.) .................................................................................................... 23

(Information about items per share) ....................................................................................... 25

(Important subsequent events) ............................................................................................ 26

6. Non-consolidated financial statements ....................................................................................... 27

(1) Balance sheets ...................................................................................................................... 27

(2) Profit and loss statements .................................................................................................... 29

(3) Statements of changes in shareholders' equity ................................................................... 30

7. Other ........................................................................................................................................... 32

(1) Appointment and retirement of officers .................................................................................. 32

2

1. Analysis of results of operations and financial condition

(1) Analysis of results of operations

(i) Results of operations in the current consolidated fiscal year

In the current consolidated fiscal year, the overseas economic situations continued to be unstable due to the slowing of emerging

countries and the crude oil price trends, while the domestic economy showed underlying strength in the first half of the fiscal year,

with steady corporate earnings and equipment investment, partly because of the depreciation of the yen. After the new year,

however, the outlook is unclear again due to the sudden appreciation of the yen.

In these circumstances, our group has promoted business activities, with an aim to become a true global company that has

optimum marketing, development, procurement/production, sale, quality assurance, and business management systems for each

market as a challenge to a new stage toward a 100-year company in accordance with the midterm business plan, which started in

2013. As part of our efforts, we expanded and improved development and production sites overseas, reconstructed our domestic

sales and service systems, and made equipment investment in preparation for increased global supply, installing an automatic

assembly system for spray guns at Akita Factory and increasing the air compressor production capacity at Fukushima Factory.

In terms of product development, we expanded overseas the oil-free type scroll compressor F Series (which incorporates the

newly developed 5.5/7.5 kW air compressors) and introduced new models of the oil-lubricated 3.0 MPa booster compressors in

the air compressor field, and in the vacuum equipment field, we upgraded the oil-free type scroll vacuum pump GVS Series to

incorporate the IE3 (high-efficiency) motor. In the coating equipment field, to create new demand in the existing market, we

brought to the market the automotive refinishing spray gun, 'Kiwami Vision, a limited model (model of the former F1 racer Jean

Alesi) of the WS400 Series, which matches the third-generation waterborne paint widespread mainly in Europe, and spray guns

for spraying mold-releasing oil for bakery and confectionery machinery, focusing on food manufacturing processes. In the coating

system field, we brought to the market the rotary coating robot system, "SWAN", which has achieved both high-grade coating

finish and low running cost.

In terms of sales, ANEST IWATA SERVICE Corporation was renamed ANEST IWATA COMPRESSOR Corporation, integrating

functions for the purpose of providing all products and services related to air compressors as a one-stop company and further

improving customer satisfaction.

As a result, our business performance for the current consolidated fiscal year grew from that of the previous consolidated fiscal

year both in terms of revenue and income, with sales standing at 29,524 million yen (up 7.6% from the previous consolidated

fiscal year), operating income at 3,796 million yen (up 18.7%), ordinary income at 4,138 million yen (up 11.3%), and net income

attributable to parent company shareholders at 2,593 million yen (up 17.1%), reaching record highs in all of the operating income,

ordinary income, and net income attributable to parent company shareholders.

(ii) Results of operations by segment

In Japan, the results of our operations grew both in terms of revenue and income, with external sales standing at 18,261 million

yen (up 7.1% from the previous consolidated fiscal year) and segment income at 4,003 million yen (up 24.8%). In Europe, the

results of our operations grew both in terms of revenue and income, with external sales standing at 3,122 million yen (up 11.7%)

and segment income at 238 million yen (up 21.4%). In Asia, due to the sluggish economy of China, the results of our operations

grew in revenue but declined in income, with external sales standing at 5,061 million yen (up 0.7%) and segment income at 384

million yen (down 23.6%).

The details are as given in "(Segment information, etc.)" in "(5) Notes on consolidated financial statements" of "5. Consolidated

financial statements".

(iii) Sales by product category (Amount: thousand yen)

Product Category

Previous consolidated fiscal year Current consolidated fiscal year Increase/decrease from the

corresponding period of the

previous fiscal year April 1, 2014 - March 31, 2015 April 1, 2015 - March 31, 2016

Sales Composition rate

(%) Sales

Composition rate

(%)

Amount of

increase/

decrease

Increase/

decrease rate

(%)

Air Compressors 12,640,183 46.1 13,778,611 46.7 1,138,427 9.0

Vacuum Equipment 1,724,785 6.3 1,819,180 6.2 94,394 5.5

Coating Equipment 10,774,068 39.3 11,671,789 39.5 897,720 8.3

Coating Systems 2,289,597 8.3 2,255,250 7.6 △34,346 △1.5

Total 27,428,635 100.0 29,524,831 100.0 2,096,196 7.6

(iv) Prospects for the upcoming year

The prospects for the upcoming consolidated fiscal year are further clouded due to the stagnation of the Japanese economy

since the latter half of the current consolidated fiscal year, the slowdown of the U.S. economy, continuous stagnation of emerging

countries, abrupt exchange rate fluctuations, among others. Against this background, our group continues to be committed to

increasing income and ensuring growth as a top-priority policy for our management strategies and management actions, while

working on improving our business performance.

At present, the expected results of our operations for the full-year fiscal period ending in March 2017 are such that sales will

stand at 30,000 million yen (up 1.6% from the current consolidated fiscal year), operating income will be 3,600 million yen (down

5.2%), ordinary income will be 3,900 million yen (down 5.8%), and net income attributable to parent company shareholders will

be 2,800 million yen (up 7.8%). Note that the net income attributable to parent company shareholders includes the extraordinary

income due to the acquisition of subsidiaries (mainly the assessed value of land, etc., which is currently under close investigation

and is expected to be about 350 million yen). The assumed exchange rates are 105 yen to the dollar and 120 yen to the euro.

3

(2) Analysis of financial condition

(i) Conditions of assets, liabilities and net assets

(a) Assets

Our current assets stood at 19,251 million yen (up 14.5% from the previous consolidated fiscal year), mainly due to an

increase of 2,520 million yen in the "cash and deposits".

Our noncurrent assets stood at 15,427 million yen (down 9.0%), mainly due to a decrease of 918 million yen in the "long-term

deposits". As a result, our total assets stood at 34,678 million yen (up 2.7%).

(b) Liabilities

Our current liabilities stood at 6,454 million yen (up 4.5%), mainly due to an increase of 264 million yen in the "notes and

accounts payable-trade".

Our noncurrent liabilities stood at 2,705 million yen (down 6.6%), mainly due to a decrease of 119 million yen in the "net

defined benefit liability". As a result, our total liabilities stood at 9,159 million yen (up 0.9%).

(c) Net assets

Our net assets stood at 25,518 million yen (up 3.4%), mainly due to an increase of 1,709 million yen in the "retained earnings"

because of an increase in net income attributable to parent company shareholders. Our equity capital, which is calculated by

subtracting the non-controlling shareholders' equity from the net assets, stood at 24,365 million yen, increasing our equity

ratio by 0.9 percentage points to 70.3%, from 69.4% at the end of the previous consolidated fiscal year.

(ii) Cash flow

Cash and cash equivalents (referred to as "funds" in the remainder of this document) for the current consolidated fiscal year were

up by 1,631 million yen from the end of the previous consolidated fiscal year, at 6,220 million yen (up 35.5%) at the end of the

current consolidated fiscal year. Each cash flow in the current consolidated fiscal year, as well as the causes, is as described

below.

(a) Cash flow from operating activities

As a result of operating activities, the fund balance shows earnings of 3,749 million yen (up 60.1%), with an increase of 1,407

million yen in earnings from the end of the previous consolidated fiscal year, mainly due to an increase of 470 million yen in

the "net income before income taxes".

(b) Cash flow from investing activities

As a result of investing activities, the fund balance shows expenses of 849 million yen (down 52.9%), with a decrease of 952

million yen in expenses from the end of the previous consolidated fiscal year, mainly due to an increase of 300 million yen in

the "proceeds from redemption of investment securities".

(c) Cash flow from financing activities

As a result of financing activities, the fund balance shows expenses of 1,089 million yen (up 24.7%), with a decrease of 215

million yen in expenses from the end of the previous consolidated fiscal year, mainly due to an decrease of 232 million yen in

the "net increase (decrease) in short-term loans payable".

Trends in the cash flow indexes for corporate groups are as described below.

(Reference) Changes in cash flow related indexes

March 2014 March 2015 March 2016

Equity ratio (%) 67.4 69.4 70.3

Market-base equity ratio (%) 88.5 95.3 129.7

Cash flow-to-interest-bearing liabilities ratio (%) 21.4 31.8 13.9

Interest coverage ratio 282.9 151.1 223.2

(Note) 1. To calculate each index, the following formula is used. • Equity ratio: Self-owned capital/Total assets • Market-base equity ratio: Market capitalization/Total assets • Cash flow-to-interest-bearing liabilities ratio: Interest-bearing liabilities/Operating cash flow • Interest coverage ratio: Operating cash flow/Interest payments

2. Each index is calculated with financial values on a consolidated basis. 3. Market capitalization is calculated as follows: Closing share price at year end x Number of shares outstanding at year end. 4. As the operating cash flow, the cash flow from operating activities in the consolidated statements of cash flow is used.

Interest-bearing liabilities are all interest-bearing liabilities that are posted to the consolidated balance sheets. For

interest payments, those in the consolidated statement of cash flow are used.

(3) Basic policy for profit allocation and current and next-term dividends

(i) Basic policy

Given that it is of utmost importance to endeavor to return stable profits to our shareholders, our group's basic policy is to

maintain stable dividends that are backed up by our business performance. More specifically, we will continue to pay an annual

dividend of at least three yen per share, based on a dividend payout ratio of 30%. We will also acquire and cancel treasury shares

appropriately and return the profits to our shareholders. We will use our internal reserves for development investment from a

long-term perspective, production rationalization investment, and investment for the rationalization and streamlining of our

management structure, among others, thereby striving to ensure sustained growth and increase our mid- to long-term corporate

value.

4

(ii) Current dividend

The dividend paid at the end of the current term will be 12 yen per share, which is the sum of the common dividend of 9 yen

based on a dividend payout ratio of 30% and the commemorative dividend of 3 yen for our 90th anniversary. Combined with the

dividend of 10 yen per share at the end of the second quarter, this will translate into an annual dividend per share of 22 yen,

which is an increase of 5.50 yen per share from the annual dividend of 16.50 yen per share in the previous year. The dividend at

the end of the current term will be decided at the ordinary general meeting of shareholders of our company, scheduled for June

28.

(iii) Dividend for next term

At this point, the dividend to be paid at the end of the second quarter will be 9 yen per share and the year-end dividend will be 9

yen per share, giving an annual dividend per share of 18 yen.

2. Condition of the corporate group

Our group, consisting of our company, 36 subsidiaries, and 6 affiliates, manufactures and sells air compressors,

vacuum equipment, and coating equipment/systems exclusively, and is in a single business configuration because of

similarities in product market, product use, and so on. The positioning of our company, subsidiaries, and affiliates in the

business configuration is as shown in the systematic diagram below.

Name Companies with an * are specified subsidiaries. Description of the main business

Our company [Japan]

ANEST IWATA Corporation

Manufacture and sale of air compressors, vacuum equipment, coating

equipment, and coating systems

Consolidated subsidiaries

[Japan]

ANEST IWATA COMPRESSOR Corporation*

ANEST IWATA COATING SOLUTIONS Corporation*

ANEST IWATA CAMPBELL K.K.

ANEST IWATA VACUUM ENGINEERING & SERVICE

Corporation

AIR ENGINEERING Corporation

[Europe]

ANEST IWATA Europe s.r.l.

AIRGUNSA s.r.l.

ANEST IWATA Deutschland GmbH

ANEST IWATA Babatz GmbH

ANEST IWATA AIR TECH s.r.l.

ANEST IWATA France S.A.

ANEST IWATA (U.K.) Ltd.

Anest IWATA Scandinavia AB

ANEST IWATA Iberica S.L.

ANEST IWATA Polska Sp. z o. o.

[Asia]

ANEST IWATA (SHANGHAI) Corporation

ANEST IWATA INDUSTRIAL MACHINERY (JIAXING) Co.,Ltd

ANEST IWATA (DONGGUAN) Corporation

ANEST IWATA Shanghai Trading Corporation

SHANGHAI ANEST IWATA COATING MACHINERY Co.

ANEST IWATA MOTHERSON Pvt. Ltd.*

ANEST IWATA MOTHERSON COATING EQUIPMENT

Pvt .Ltd.

AIRFACTORYENERGY Ltd.

ANEST IWATA SOUTHEAST ASIA Co., Ltd.

ANEST IWATA Korea Corp.

ANEST IWATA VIETNAM COMPANY LIMITED

PT.ANEST IWATA INDONESIA

[Other areas]

ANEST IWATA USA, Inc.

ANEST IWATA -Medea, Inc.

ANEST IWATA AIRENGINEERING, INC.

ANEST IWATA DOBRASILCOMERCIALLTDA.

AIRZAP-ANEST IWATA INDUSTRIA E COMERCIO LTDA.

ANEST IWATA Australia Pty. Ltd.

ANEST IWATA RUS LLC

ANEST IWATA South Africa (Pty) Ltd.

ANEST IWATA MIDDLE EAST FZE

Sale and repair of air compressors

Sale and repair of coating equipment; and manufacture, sale, and repair of

coating systems

Sale of air compressors, coating equipment, and tools

Repair of vacuum equipment and vacuum systems and sale of parts

Repair of air compressors and incidental work

Sale of coating equipment and coating systems

Manufacture and sale of coating equipment

Sale of coating equipment

Manufacture and sale of air compressors and vacuum equipment

Manufacture and sale of air compressors







Manufacture and sale of air compressors and coating systems

Manufacture and sale of coating systems

Sale of air compressors and vacuum equipment

Manufacture and sale of coating equipment


Manufacture and sale of coating equipment and coating systems

Sale of air compressors

Manufacture and sale of air compressors, vacuum equipment, coating

equipment, and coating systems


Sale of air compressors and coating equipment

Sale of air compressors, vacuum equipment, coating equipment, and coating

systems






Sale of air compressors and coating equipment

Sale of vacuum equipment and coating equipment



5

Affiliates (equity method applied)

ADVANCE RIKEN Inc.

Anest Iwata Italia s.r.l.

ANEST IWATA FEELER Corporation

ANEST IWATA Taiwan Corporation

Powerex-Iwata Air Technology, Inc.

Manufacture and sale of oxygen, nitrogen, and ozone gas generators



Manufacture and sale of coating equipment; and sale of air compressors and

vacuum equipment


Affiliates (equity method not applied)

KAINAN CO., LTD.

Sale of air compressors, vacuum equipment, coating equipment, and coating

systems

(Notes) (Changes in subsidiaries and affiliates)

• ANEST IWATA SERVICE Corporation has been renamed ANEST IWATA COMPRESSOR Corporation.

This company is a specified subsidiary.

• AIR ENGINEERING Corporation has been established, and is a consolidated subsidiary in the current consolidated fiscal

year and after.

• ANEST IWATA MOTHERSON Ltd. has been renamed ANEST IWATA MOTHERSON Pvt. Ltd.

• ANEST IWATA MOTHERSON COATING EQUIPMENT Ltd. has been renamed ANEST IWATA MOTHERSON COATING

EQUIPMENT Pvt. Ltd.

6

Diagram of the corporate group

7

3. Management policy

(1) Basic policy for corporate management

To continue to be a development-type corporate group contributing to monozukuri throughout the world, our group is committed

to contributing to society by constantly reinforcing our technical and selling power, cultivated since our foundation, and by offering

value consistently satisfying to customers with appropriate quality and price.

Our group aims to become a "True World-Class Company" that has optimum marketing, development, procurement/production,

sale, quality assurance, and business management systems for each market.

(2) Targeted management index

In the midterm business plan from 2016 to 2018, we aim for "net sales of 35,000 million yen, operating income ratio of 12.0%, and

ROE of 12.0%" or greater.

(3) Mid- to long-term corporate management strategies

(i) Our group is committed to increasing income and ensuring business growth as the most important and top-priority policy for our

management strategies and management actions, and will work on expanding our business scale toward further growth with

definite execution time limit and speed.

(ii) We will value individuals who can be independent and can exercise self-control, place emphasis on strengthening corporate

social responsibility (CSR), legal compliance, and corporate governance, actively work on quality improvement and

environmental improvement, and establish an open decision-making organization that can provide job satisfaction.

(iii) New midterm business plan to start in 2016

This year, our group celebrates the 90th anniversary of its founding, and has formulated a "new midterm business plan" to start in

2016 toward a 100-year company.

<Basic policy>

• Become a development-type company full of energy and novelty that can offer high-performance and high-quality products

sincerely from the standpoint of customers.

• Become a flexible company that captures market needs accurately and collaborates with a variety of companies, rather than

merely developing improved products focusing on cost reduction and internal core technology.

• Aim to become a "True World-Class Company", where all employees of our group endeavor together to maximize customer

satisfaction and constantly produce innovative technologies and products, with an aim to become the world's No. 1.

To that end, we have adopted a two-division system of the Air Energy Div. (air compressors, expanders, and vacuum

equipment) and the Coating Div. (coating equipment, coating systems, and liquid application equipment) in the pursuit of

expertise, response improvement, and product development synergy.

(4) Issues that the company should address

Our group has made a transformation to such a corporate structure and quality that we will not be affected by economic ups and

downs. We recognize that to further promote the transformation and strengthen our competitiveness, we need to address the

issues below.

• Ensuring growth

To ensure corporate growth, we will increase sales by developing the best products and bringing them to markets through

market-by-market marketing activities. Concurrently, we will aim to increase the efficiency of production factories by continuing

to expand overseas procurement and actively introduce the most advanced automated equipment.

• Spreading the management philosophy

We will spread the group management philosophy and the group action guideline and change the corporate culture, so that all

employees of our group can work together toward further growth.

• Creating an optimum group organizational structure

In an attempt to optimally organize each of the marketing, development, procurement/production, sale, quality assurance, and

other functions for each local market from a global viewpoint, we will implement the expansion and restructuring of the group

company organization. More specifically, we will consider expansion in the North American area and restructuring in the Asian

and European areas.

• Creating information management systems

We will integrate and improve the information management systems of our group, and promote the improvement of operational

efficiency.

• Securing and fostering human resources

We will seek human resources to support our group throughout the world, and establish a system for hiring, fostering, and

optimally appointing human resources that can think and act from a global perspective and exercise self-control.

• Enhancing the business continuity plan (BCP)

Based on the BCP intended for prompt restoration of business and business continuity, we will reinforce practical education and

training, and enhance the system so that we can cope with emergencies in the event of disasters.

8

• Enhancing governance

We will shift to a company with audit and other committees, create a system for making transparent, fair, quick, and decisive

decisions for all our stakeholders, and continuously enhance governance.

4. Basic concept on choice of accounting standards

Considering the comparability of periods of consolidated financial statements and the comparability of statements among

companies, our group has a policy to prepare consolidated financial statements in accordance with the Japanese standards for the

time being.

Regarding the application of IFRS, we have a policy to appropriately cope with this while considering the situations in and outside of

Japan.

9

5. Consolidated financial statements

(1) Consolidated balance sheets

(Amount: thousand yen)

FY2014

(As of March 31, 2015)

FY2015


Assets

Current assets

Cash and deposits 5,022,181 7,542,472

Notes and accounts receivable-trade 5,537,884 5,258,377

Securities 300,000 -

Merchandise and finished goods 2,912,250 3,408,111

Work in process 501,549 493,245

Raw materials and supplies 1,269,577 1,239,415

Deferred tax assets 635,868 609,106

Other 655,327 771,069

Allowance for doubtful account △28,214 △70,520

Total current assets 16,806,425 19,251,277

Noncurrent assets

Property, plant and equipment

Buildings and structures *3 7,356,958 *3 7,351,177

Accumulated depreciation △4,401,241 △4,396,720

Buildings and structures, net 2,955,716 2,954,456

Machinery, equipment and vehicles 5,991,018 6,102,040


Machinery, equipment and vehicles, net 2,122,872 2,166,615

Land *3 1,788,997 *3 1,762,779

Lease assets 830,627 874,223

Accumulated depreciation △524,845 △646,462

Lease assets, net 305,782 227,760

Construction in progress 24,342 98,197

Other 1,835,266 1,820,492


Other, net 208,459 220,373

Total property, plant and equipment 7,406,171 7,430,182

Intangible assets

Goodwill 205,820 121,345

Software 930,299 749,802

Other 215,570 171,882

Total intangible assets 1,351,690 1,043,030

Investment and other assets

Investment securities *1 5,785,922 *1 5,660,670

Long-term loans receivable 155,573 144,598


Net defined benefit assets 622,545 324,046

Long-term deposits 937,080 18,513

Other *2 415,878 *2 388,851

Allowance for doubtful accounts △10,725 △10,727

Total investments and other assets 8,201,846 6,953,925

Total noncurrent assets 16,959,708 15,427,137

Total assets 33,766,133 34,678,415

10


FY2014


FY2015


Liabilities

Current liabilities

Notes and accounts payable-trade 3,033,399 3,298,277

Short-term loans payable *3, *5 260,076 *3, *5 106,117

Current portion of long-term debt 41,175 66,331

Lease obligations 127,799 107,326

Income taxes payable 458,305 653,502

Provision for bonuses 502,150 503,720

Provision for directors' bonuses 71,495 75,747

Provision for product warranties 144,593 205,951

Other 1,540,087 1,437,087

Total current liabilities 6,179,082 6,454,063

Noncurrent liabilities

Long-term loans payable *3 79,192 *3 62,454


Deferred tax liabilities 34,701 30,466

Net defined benefit liability 2,472,056 2,352,280

Other 74,236 82,449

Total noncurrent liabilities 2,897,523 2,705,616

Total liabilities 9,076,605 9,159,679

Net Assets

Shareholders' equity

Capital stock 3,354,353 3,354,353

Capital surplus 1,380,380 1,348,016

Retained earnings 17,128,540 18,838,013

Treasury shares △117,094 △5,159

Total shareholders' equity 21,746,179 23,535,222

Accumulated other comprehensive income

Valuation difference on available-for-sale securities 610,942 406,256

Foreign currency translation adjustments 1,020,961 651,137

Remeasurements of defined benefit plans 71,224 △226,852

Total accumulated other comprehensive income 1,703,128 830,540

Non-controlling shareholders' equity 1,240,220 1,152,971

Total net assets 24,689,528 25,518,735

Total liabilities and net assets 33,766,133 34,678,415

11

(2) Consolidated profit and loss statements and consolidated statements of comprehensive income

Consolidated profit and loss statements


FY2014

(April 1, 2014 through

March 31, 2015)

FY2015


March 31, 2016)

Net sales 27,428,635 29,524,831

Cost of sales 15,601,021 16,486,508

Gross profit 11,827,614 13,038,323

Selling, general & administrative expenses

Sales commission 321,561 347,448

Packing and transportation expenses 742,113 764,826

Directors' compensations, salaries and allowances 3,025,808 3,172,087



Retirement benefit expenses 96,426 △91,140

Welfare expenses 675,437 779,412

Rent expenses 319,641 342,155

Provision of reserve for product warranties 143,404 207,095

Provision of allowance for doubtful accounts 4,695 54,046

Other 2,923,514 3,291,743

Total selling, general & administrative expenses 8,628,220 9,241,692

Operating income 3,199,393 3,796,630

Non-operating income

Interest income 34,820 41,048

Dividend income 42,179 56,783

Foreign exchange gain 73,845 -

Technical support fee 57,199 53,162

Share of profit of entities accounted for using equity method 157,857 222,849

Other 190,977 166,716

Total non-operating income 556,880 540,559

Non-operating expenses

Interest expenses 15,502 16,800

Foreign exchange loss - 160,790

Other 24,397 21,519

Total non-operating expenses 39,900 199,111

Ordinary income 3,716,374 4,138,079

12


FY2014


March 31, 2015)

FY2015


March 31, 2016)

Extraordinary income

Gain on sales of noncurrent assets *2 2,395 *2 4,444

Gain on sales of investment securities 15,207 19,374

Compensation for transfer 45,334 -

Total extraordinary income 62,936 23,818

Extraordinary losses

Loss on sales of noncurrent assets *3 7,888 *3 72

Loss on retirement of noncurrent assets *3 16,220 *3 19,384

Demolition and demobilization cost 126,636 29,562

Other - *4 13,431

Total extraordinary losses 150,745 62,451

Net income before income taxes 3,628,565 4,099,447

Income taxes - current 1,140,496 1,313,584

Income taxes - deferred 146,163 126,250

Total income taxes 1,286,659 1,439,834

Net income 2,341,905 2,659,612

Net income attributable to non-controlling shareholders 127,320 65,765

Net income attributable to parent company shareholders 2,214,585 2,593,847

13

Consolidated statements of comprehensive income


FY2014


March 31, 2015)

FY2015


March 31, 2016)

Net Income 2,341,905 2,659,612

Other comprehensive income

Valuation difference on available-for-sale securities 400,102 △204,686

Foreign currency translation adjustments 617,200 △450,454

Remeasurements of defined benefit plans 395,737 △298,076

Share of other comprehensive income of associates accounted for using

equity method 202,615 △32,632

Total comprehensive income * 1,615,656 * △985,850

Comprehensive income 3,957,562 1,673,762

(Comprehensive income attributable to)

Parent company shareholders 3,716,255 1,721,260

Non-controlling shareholders 241,307 △47,497

14

(3) Consolidated statements of changes in shareholders' equity

FY2014 (April 1, 2014 through March 31, 2015)



Capital stock Capital surplus Retained

earnings Treasury shares

Total

shareholders'

equity

Balance at the beginning of

current period 3,354,353 1,380,431 15,898,115 △3,254 20,629,645

Cumulative effect of changes in

accounting policies △194,031 △194,031


current period, changes in

accounting policies applied

3,354,353 1,380,431 15,704,084 △3,254 20,435,614

Changes of items during the

period

Dividends from surplus △672,470 △672,470

Net income attributable to

parent company shareholders 2,214,585 2,214,585

Purchase of treasury shares △231,550 △231,550

Cancellation of treasury shares △51 △117,658 117,710 ―

Parent company's equity

fluctuations relating to

transactions with

non-controlling shareholders

Net changes of items during the

period other than shareholders'

equity

Total changes of items during the

period △51 1,424,456 △113,840 1,310,565

Balance at the end of current

period 3,354,353 1,380,380 17,128,540 △117,094 21,746,179


Non-controlling

shareholders'

equity

Total net assets

Valuation

difference on

available-for-sale

securities

Foreign currency

translation

adjustments

Remeasurements

of defined benefit

plans

Total accumulated

other

comprehensive

income


current period 210,840 270,423 △324,513 156,750 996,895 21,783,291


accounting policies 44,708 44,708 △149,323




210,840 315,131 △324,513 201,458 996,895 21,633,968


period

Dividends from surplus △672,470


parent company shareholders 2,214,585

Purchase of treasury shares △231,550

Cancellation of treasury shares ―



transactions with




equity

400,102 705,829 395,737 1,501,669 243,325 1,744,994


period 400,102 705,829 395,737 1,501,669 243,325 3,055,559


period 610,942 1,020,961 71,224 1,703,128 1,240,220 24,689,528

15




Capital stock Capital surplus Retained

earnings Treasury shares

Total

shareholders'

equity


current period 3,354,353 1,380,380 17,128,540 △117,094 21,746,179


accounting policies




3,354,353 1,380,380 17,128,540 △117,094 21,746,179


period



parent company shareholders 2,593,847 2,593,847

Purchase of treasury shares △262 △262

Cancellation of treasury shares △112,197 112,197 ―



transactions with


△32,364 △32,364

Net changes of items during

the period other than

shareholders' equity


period △32,364 1,709,472 111,934 1,789,043


period 3,354,353 1,348,016 18,838,013 △5,159 23,535,222


Non-controlling

shareholders'

equity

Total net assets

Valuation

difference on

available-for-sale

securities

Foreign currency

translation

adjustments

Remeasurements

of defined benefit

plans

Total accumulated

other

comprehensive

income


current period 610,942 1,020,961 71,224 1,703,128 1,240,220 24,689,528


accounting policies




610,942 1,020,961 71,224 1,703,128 1,240,220 24,689,528


period

Dividends from surplus △772,176


parent company shareholders 2,593,847

Purchase of treasury shares △262

Cancellation of treasury shares ―



transactions with


△32,364



equity

△204,686 △369,824 △298,076 △872,587 △87,248 △959,836


period △204,686 △369,824 △298,076 △872,587 △87,248 829,207


period 406,256 651,137 △226,852 830,540 1,152,971 25,518,735

16

(4) Consolidated cash flow statements


FY2014


March 31, 2015)

FY2015


March 31, 2016)

Cash flow from operating activities

Net income before income taxes 3,628,565 4,099,447

Depreciation 990,716 1,076,028

Amortization of goodwill 22,669 42,365

Change in allowance for doubtful accounts (△ for decrease) △30,171 47,883

Change in provision for bonuses (△ for decrease) △65,645 2,375

Change in provision for product warranties (△ for decrease) 6,021 61,565

Change in net defined benefit liability (△ for decrease) △40,330 10,248

Change in net defined benefit asset (△ for increase) △106,206 △250,355

Change in provision for directors' bonuses (△ for decrease) 3,941 4,251

Interest and dividend income △77,000 △97,831


Share of profit or loss of entities accounted for using equity method (△ for

profit) △73,953 △91,434

Loss or gain on sales and retirement of noncurrent assets (△ for gain) 21,823 15,012

Loss or gain on sales and valuation of investment securities (△ for gain) △15,207 △19,374

Change in notes and accounts receivables - trade (△ for increase) △288,382 31,853

Change in inventories (△ for increase) △330,582 △702,622

Change in notes and accounts payable - trade (△ for decrease) 149,138 471,396

Other △86,773 64,261

Subtotal 3,724,124 4,781,872

Interest and dividend income received 78,732 106,025

Interest expenses paid △15,502 △16,800

Income taxes paid △1,445,308 △1,121,156

Cash flow from operating activities 2,342,045 3,749,940

Cash flow from investing activities

Payments into time deposits △432,482 △380,764

Proceeds from withdrawal of time deposits 299,277 373,537

Purchase of property, plant and equipment △1,046,630 △1,000,197

Proceeds from sales of property, plant and equipment 14,886 11,172

Purchase of intangible assets △88,262 △61,056

Purchase of investment securities △260,017 △122,720

Proceeds from sales of investment securities 21,557 45,180

Proceeds from redemption of investment securities - 300,000

Purchase of shares of subsidiaries resulting in change in scope of

consolidation △267,839 -

Payments for investments in capital △53,660 -

Other 11,175 △14,554

Cash flow from investing activities △1,801,997 △849,403

17


FY2014


March 31, 2015)

FY2015


March 31, 2016)

Cash flow from financing activities

Net increase or decrease in short-term loans payable (△ for decrease) 100,223 △132,558

Repayments of lease obligations △123,235 △138,012

Proceeds from long-term loans payable 101,150 80,653

Repayments of long-term loans payable - △55,521

Purchase of treasury shares △231,550 △262

Purchase of shares of subsidiaries not resulting in change in scope of

consolidation - △22,691

Cash dividends paid △672,160 △771,899

Cash dividends paid to non-controlling shareholders △47,680 △48,854

Cash flow from financing activities △873,252 △1,089,147

Effect of exchange rate change on cash and cash equivalents 178,350 △180,057

Changes in cash and cash equivalents (△ for decrease) △154,853 1,631,332

Beginning cash and cash equivalents 4,743,881 4,589,027

Cash and cash equivalents at year end * 4,589,027 * 6,220,359

18

(5) Notes on consolidated financial statements

(Notes on the premise of a going concern)

There are no relevant matters.

(Basic, important matters for preparing consolidated financial statements)

1 Matters concerning the scope of consolidation

(a) Number of consolidated subsidiaries: 36

The names of the consolidated subsidiaries are omitted as they are shown in "2. Conditions of the corporate group".

AIR ENGINEERING Corporation (Japan) has been established, and is included in the scope of consolidation in the current

consolidated fiscal year and after.

(b) Number of main non-consolidated subsidiaries: 0

2 Matters concerning the application of the equity method

(a) Number of non-consolidated subsidiaries to which the equity method is applied: 0

(b) Number of affiliates to which the equity method is applied: 5

The names of the affiliates to which the equity method is applied are omitted as they are shown in "2. Conditions of the

corporate group".

(c) Number of non-consolidated subsidiaries to which the equity method is not applied: 0

(d) Number of affiliates to which the equity method is not applied: 1

KAINAN CO., LTD.

(Reason why the affiliate is excluded from the scope of the equity method)

Excluding the affiliate from the scope of the equity method will have only a minor effect on the consolidated financial

statements, judging from the current period net profit or loss (amount comparable to the equity), the retained earnings

(amount comparable to the equity), and so on, and will have no significance on the whole. This is the reason why it is

excluded from the scope of the equity method.

(e) The accounting dates of the equity method-applied companies differ from the consolidated accounting date, and the financial

statements of the individual companies for the most recent fiscal year are used.

3 Matters concerning the fiscal years of consolidated subsidiaries, etc.

Of the consolidated subsidiaries, ANEST IWATA COMPRESSOR Corporation, ANEST IWATA COATING SOLUTIONS

Corporation, ANEST IWATA CAMPBELL K.K., ANEST IWATA VACUUM ENGINEERING & SERVICE Corporation, AIR

ENGINEERING Corporation, ANEST IWATA MOTHERSON Pvt. Ltd., ANEST IWATA MOTHERSON COATING EQUIPMENT Pvt.

Ltd., and AIR FACTORY ENERGY Ltd. have the same accounting date as the consolidated accounting date. For other

consolidated subsidiaries, the accounting date is December 31. In preparing consolidated financial statements, the financial

statements of the individual consolidated subsidiaries as of their accounting dates are used, and any important transactions

made between the accounting dates and consolidated accounting date undergo the necessary adjustments for consolidation.

(Change of accounting policy, etc.)

(Change in method for converting incomes and expenses of overseas subsidiaries, etc.)

The incomes and expenses of overseas subsidiaries, etc. were previously converted into yen at the spot exchange rate

effective on the accounting date, but starting from the current consolidated fiscal year, the conversion shall be performed using

the average exchange rate during the period. The reason for this change is to compensate for the impacts of temporary

exchange rate fluctuations on periodic profit and loss, in view of the importance of overseas subsidiaries, etc. and the recent

significant fluctuations in exchange rates, and to reflect the profit and loss occurring throughout the consolidated accounting

period more appropriately in consolidated financial statements.

This change in accounting policy has been applied retroactively, such that for the previous consolidated fiscal year, the

consolidated financial statements have been created after the retroactive application.

As a result, sales, operating income, and ordinary income in the previous consolidated fiscal year decreased by 947,950

thousand yen, 86,298 thousand yen, and 124,311 thousand yen, respectively, relative to the figures prior to the retroactive

application, and the net income per share decreased by 2.12 yen.

Because the amount of cumulative influence is reflected in the net assets existing at the beginning of the previous consolidated

fiscal year, the balance of the retained earnings at the beginning of the previous period decreases by 44,708 thousand yen, and

the balance of the foreign currency conversion adjustment at the beginning of the previous period increases by the same amount.

(Application of the Accounting Standard for Business Combination, etc.)

The "Accounting Standard for Business Combination" (corporate accounting standard No. 21, September 13, 2013, referred to

as the ASBC in the reminder of this document), the "Accounting Standard for Consolidated Financial Statements" (corporate

accounting standard No. 22, September 13, 2013, referred to as the ASCFS), the "Accounting Standard for Business

Divestitures" (corporate accounting standard No. 7, September 13, 2013, referred to as the ASBD), and so on are applied in and

19

after the current consolidated fiscal year, and the method is changed to such that the difference due to changes in equity of

subsidiaries over which the control of our group continues is recorded as a capital surplus and, at the same time, is recorded as

an expense in the consolidated fiscal year in which the acquisition-related expenses are incurred. The method for any business

combination made at and after the beginning of the current consolidated fiscal year is changed to such that a review of the

amount of the allocation of the acquisition cost with the settlement of provisional accounting is reflected in the consolidated

financial statements for the consolidated fiscal year that contains the business combination date. In addition, changes are made

to the indication of the current period net income, etc. and the indication using minority shareholders' equity is changed to that

using non-controlling shareholders' equity. To reflect the changes in indication, we revised the consolidated financial statements

for the previous consolidated fiscal year.

The application of the ASBC, etc. complies with the transitional handling defined in 58-2 (4) of the ASBC, 44-5 (4) of the

ASCFS, and 57-4 (4) of the ASBD. They are applied, starting at the beginning of the current consolidated fiscal year, and will be

applied in the future.

This application has no impact on the profit and loss statements for the current consolidated fiscal year. The capital surplus at

the end of the current consolidated fiscal year decreases by 32,364 thousand yen.

In the consolidated cash flow statements for the current consolidated fiscal year, changes have been made to the method so

that the cash flows relating to the purchase or sales of shares of subsidiaries not resulting in change in scope of consolidation are

recorded in the "Cash flow from financing activities" category, and the cash flows relating to the expenses for the purchase of

shares of subsidiaries resulting in change in scope of consolidation or the expenses incurred in relation to the purchase or sales

of shares of subsidiaries not resulting in change in scope of consolidation are recorded in the "Cash flow from operating

activities".

In the consolidated statements of changes in shareholders' equity for the current consolidated fiscal year, the balance of the

capital surplus at year end decreases by 32,364 million yen.

(Accounting standard, etc. that are not applied)

"Application Guideline for the Realizability of Deferred Tax Assets" (Corporate Accounting Standard Application Guideline No.

26 March 28, 2016)

(1) Overview

For the handling for the realizability of deferred tax assets, we have adhered fundamentally to the framework for "audit-related

handling for judgment on the realizability of deferred tax assets" in the Audit Committee Report No. 66, that is, the framework

in which companies are classified into five categories, and the amounts of deferred tax assets reported are estimated

according to the categories, and the necessary review is under way about the handling of the following:

(i) Handling of companies that do not meet any of the requirements for categories relating to (Category 1) to (Category 5)

(ii) Requirements for categories relating to (Category 2) and (Category 3)

(iii) Handling for any deductible temporary differences that cannot be scheduled at companies that fall under (Category 2)

(iv) Handling for the period during which a reasonable estimate can be made of the taxable incomes before addition or

subtraction such as future temporary differences at companies that fall under (Category 3)

(v) Handling if a company meeting the requirements for the category relating to (Category 4) falls under (Category 2) or

(Category 3)

(2) Scheduled date of application

The application will start on April 1, 2016

(3) Influence of the application of the accounting standard, etc.

The amount of influence is under evaluation during the preparation of the consolidated financial statements.

(Changes in presentation method)

(Related to consolidated balance sheets)

In the consolidated balance sheets for the previous consolidated fiscal year, "Software in progress" was set down

independently under "Intangible assets", but in the consolidated balance sheets for the current consolidated fiscal year and after,

it is included in "Other" because its amount now has little significance. To reflect this change in presentation method, we revised

the consolidated financial statements for the previous consolidated fiscal year.

As a result, 27,076 thousand yen as "Software in progress" and 188,493 thousand yen as "Other", presented under "Intangible

assets" in the consolidated balance sheets for the previous consolidated fiscal year are revised to 215,570 thousand yen as

"Other".

20

(Additional information)

Revision of the amounts of deferred tax assets and deferred tax liabilities due to changes in rate of corporate tax, etc.

Because the "Law Revising a Portion of the Income Tax Law" (Law No. 15, 2016) and the "Law Revising a Portion of the Local

Tax Law" (Law No. 13, 2016) passed the Diet on March 29, 2016, the normal effective statutory tax rate used to calculate the

deferred tax assets and the deferred tax liabilities for the current consolidated fiscal year (limited to those that were eliminated on

or after April 1, 2016) is changed from 32.2% for the previous consolidated fiscal year to 30.8% for those that are expected to be

collected or paid in the period from April 1, 2016 to March 31, 2018 and 30.5% for those that are expected to be collected or paid

on or after April 1, 2018.

As a result, the amount of deferred tax assets (amount remaining after deducting the deferred tax liabilities) decreases by

38,257 thousand yen; the income taxes - deferred and the valuation difference on available-for-sale securities reported for the

current consolidated fiscal year increases by 42,645 thousand yen and by 9,937 thousand yen, respectively; and the

remeasurements of defined benefit plans decreases by 5,548 thousand yen.

(Relate to consolidated balance sheets)

*1 Shares of subsidiaries and affiliates in Investment securities

FY2014


FY2015


1,703,511 thousand yen 1,799,719 thousand yen

*2 Investments in capital of subsidiaries and affiliates in Other under Investment and other assets

FY2014


FY2015


258,858 thousand yen 215,022 thousand yen

*3 Pledged assets and secured debts

Assets offered as collateral and secured debts are as below.

FY2014


FY2015


Land and building 117,266 thousand yen 86,772 thousand yen

Short-term loans payable 97,722 thousand yen 20,660 thousand yen

Long-term loans payable ― 51,650 thousand yen

Total 97,722 thousand yen 72,310 thousand yen

*4 Guarantee obligation

We guarantee the loan, etc. of a company other than the consolidated subsidiaries (maximum amount), as below.

FY2014


FY2015


ANEST IWATA FEELER Corporation 120,170 thousand yen 225,360 thousand yen

*5 Short-term loans payable

To procure operating funds efficiently, our company and some consolidated subsidiaries have concluded an overdraft facility

agreement and a loan commitment agreement with our bank. The balance of unexecuted loans at the end of the current

consolidated fiscal year under these agreements is as below.

FY2014


FY2015


Maximum limit of overdraft and loan commitment agreement

price 7,809,434 thousand yen 7,839,112 thousand yen

Balance of executed loans ― 12,197 thousand yen

Balance of unexecuted loans 7,809,434 thousand yen 7,826,914 thousand yen

21

(Related to consolidated profit and loss statements)

*1 Research and development expenses included in general & administrative expenses

FY2014


March 31, 2015)

FY2015


March 31, 2016)

477,331 thousand yen 518,412 thousand yen

*2 Gain on sales of noncurrent assets


Mainly due to the sales of motor vehicles and transport equipment.


Mainly due to the sales of motor vehicles and transport equipment.

*3 Loss on sales of noncurrent assets, loss on retirement of noncurrent assets


Mainly due to the sales of machinery and equipment and the retirement of buildings and structures.


Mainly due to the retirement of buildings and structures.

*4 Other under Extraordinary losses

FY2014


March 31, 2015)

FY2015


March 31, 2016)

Facilities relocation expense cost ― 6,440 thousand yen

Legal specially-controlled industrial waste disposal cost ― 6,991 thousand yen

(Related to consolidated statements of comprehensive income)

* Recycling and amount of tax effect relating to other comprehensive income

FY2014


March 31, 2015)

FY2015


March 31, 2016)

Valuation difference on available-for-sale securities

Amount incurred in current period 589,418 thousand yen △297,179 thousand yen

Recycling △15,207 thousand yen △19,374 thousand yen

Before tax effect adjustment 574,211 thousand yen △316,554 thousand yen

Amount of tax effect △174,108 thousand yen 111,867 thousand yen

Valuation difference on available-for-sale securities 400,102 thousand yen △204,686 thousand yen

Foreign currency translation adjustments


Recycling ― ―

Foreign currency translation adjustments 617,200 thousand yen △450,454 thousand yen

Remeasurements of defined benefit plans


Recycling 109,316 thousand yen △62,309 thousand yen

Before tax effect adjustment 608,172 thousand yen △431,456 thousand yen

Amount of tax effect △212,434 thousand yen 133,380 thousand yen

Remeasurements of defined benefit plans 395,737 thousand yen △298,076 thousand yen

Share of other comprehensive income of associates

accounted for using equity method


Total comprehensive income 1,615,656 thousand yen △985,850 thousand yen

22

(Related to consolidated statements of changes in shareholders' equity)


1 Matters concerning issued shares

Class of shares Beginning of FY2014 Increase Decrease End of FY2014

Common (shares) 42,035,505 ― 150,000 41,885,505

(Overview of the cause of changes)

The breakdown of the decrease is as below.

Cancellation of treasury shares 150,000

2 Matters concerning treasury shares


Common (shares) 6,101 290,034 150,000 146,135


The breakdown of the increase is as below.

At the board of directors' meetings held on November 19, 2014 and on February 18, 2015, our company resolved to

acquire treasury shares under the provisions of Article 156 of the Companies Act as applied with relevant changes in

interpretation pursuant to the provisions of paragraph (3) of Article 165 of that Act, and acquired treasury shares as

described below. This increased the treasury shares by 231,530 thousand yen.

(1) Class of acquired shares Our common shares

(2) Total number of acquired shares 290,000

(3) Acquisition date November 20, 2014 and February 19, 2015

In addition, the treasury shares increased by 34 due to the purchase of fractional shares.


At the board of directors' meeting held on December 6, 2014, our company resolved to cancel treasury shares under the

provisions of Article 178 of the Companies Act, and canceled treasury shares as described below. This decreased the

capital surplus, retained earnings, and treasury shares by 51 thousand yen, 117,658 thousand yen, and 117,710 thousand

yen, respectively.

(1) Class of canceled shares Our common shares

(2) Total number of canceled shares 150,000

(3) Cancellation date December 25, 2014

3 Matters concerning dividends

(1) Dividends paid

Resolution Class of

shares

Total amount of

dividends

(thousand yen)

Dividend per

share (yen) Record date Effective day

June 25, 2014

ordinary shareholders' meeting Common 336,235 8.0 March 31, 2014 June 26, 2014

November 6, 2014

board of directors' meeting Common 336,234 8.0 September 30, 2014 December 4, 2014

(2) Of the dividends whose record dates are contained in the current consolidated fiscal year, those whose effective days are

in the following consolidated fiscal year

Resolution Class of

shares

Dividend

resource

Total amount of

dividends

(thousand yen)

Dividend per


June 25, 2015

ordinary shareholders' meeting Common

Retained

earnings 354,784 8.5 March 31, 2015 June 26, 2015

23


1 Matters concerning issued shares


Common (shares) 41,885,505 ― 140,000 41,745,505



Cancellation of treasury shares 140,000 shares

2 Matters concerning treasury shares


Common (shares) 146,135 297 140,000 6,432


The breakdown of the increase is as below.

Increase due to the purchase of fractional shares 297 shares


At the board of directors' meeting held on December 4, 2015, our company resolved to cancel treasury shares under the

provisions of Article 178 of the Companies Act, and canceled treasury shares as described below. This decreased the

retained earnings and treasury shares by 112,197 thousand yen.

(1) Class of canceled shares Our common shares

(2) Total number of canceled shares 140,000

(3) Cancellation date December 25, 2015

3 Matters concerning dividends

(1) Dividends paid

Resolution Class of

shares

Total amount of

dividends

(thousand yen)

Dividend per


June 25, 2015

ordinary shareholders' meeting Common 354,784 8.5 March 31, 2015 June 26, 2015

November 6, 2015

board of directors' meeting Common 417,392 10.0 September 30, 2015 December 4, 2015

(2) Of the dividends whose record dates are contained in the current consolidated fiscal year, those whose effective days are

in the following consolidated fiscal year

Resolution Class of

shares

Dividend

resource

Total amount

of dividends

(thousand yen)

Dividend per


June 28, 2016

ordinary shareholders' meeting Common

Retained

earnings 500,868 12.0 March 31, 2016 June 29, 2016

(Note) The dividend per share includes the commemorative dividend of 3 yen for our 90th anniversary.

(Related to consolidated cash flow statements)

* Relations between the cash and cash equivalents at year-end and the amounts contained account titles in the consolidated

balance sheets

FY2014


FY2015


Cash and deposits 5,022,181 thousand yen 7,542,472 thousand yen

Time deposit exceeding 3 months in deposit term △433,154 thousand yen △1,322,112 thousand yen

Cash and cash equivalents 4,589,027 thousand yen 6,220,359 thousand yen

(Segment information, etc.)

[Segment information]

1 Overview of report segments

(1) Overview of report segments

The report segments of our group are those of the constituent units for which separate financial information is obtainable

and for which the board of directors is to periodically consider to decide on the allocation of management resources and

evaluate business performance.

24

(2) Product and service types belonging to each report segment

Our group manufactures and sells air compressors, vacuum equipment, coating equipment, and coating systems

exclusively. Japan is in the charge of our company and the domestic consolidated subsidiaries. Overseas, Europe (mainly

Italy, France, and Germany), Asia (mainly China, India, and Thailand), and other areas are in the charge of their

respective local corporations. The local corporations are management units independent of one another. They create

comprehensive strategies for the products they handle in their areas, and carry out business activities. Thus, our group consists of segments according to location, based on the production and sale system, and regards the

three areas, "Japan", "Europe", and "Asia", as report segments.

2 Method of calculating the amounts of the net sales, income, assets, and other items for each report segment

In general, the accounting method for the reported business segments is the same as that described in "Basic, important

matters for preparing consolidated financial statements".

3 Information about the amounts of net sales, assets, and other items for report segment



Report segment Other (Note) Total

Japan Europe Asia Total

Net Sales

Sales to external

customers 17,055,086 2,796,939 5,028,308 24,880,334 2,548,300 27,428,635

Internal sales or transfers

between segments 3,196,237 217,545 310,804 3,724,587 125,849 3,850,437

Total 20,251,324 3,014,484 5,339,113 28,604,922 2,674,150 31,279,072

segment income 3,208,075 196,190 503,549 3,907,815 137,939 4,045,754

Segment assets 18,399,855 2,488,360 5,171,208 26,059,424 1,872,295 27,931,720

Other items

Depreciation 805,630 41,591 117,563 964,784 24,144 988,929

Increase in property, plant

and equipment, and

intangible assets

831,391 207,212 245,020 1,283,623 37,983 1,321,607

(Note) The "Other" category addresses those business segments not covered by the report segments; business activities of local

corporations in the United States, Brazil, Australia, Russia, South Africa, and the United Arab Emirates.



Report segment Other (Note) Total

Japan Europe Asia Total

Sales

Sales to external

customers 18,261,717 3,122,933 5,061,652 26,446,303 3,078,528 29,524,831

Internal sales or transfers

between segments 3,520,784 258,288 353,314

4,132,386 332,994 4,465,381

Total 21,782,501 3,381,221 5,414,967 30,578,690 3,411,523 33,990,213

Segment income 4,003,940 238,239 384,854 4,627,035 218,611 4,845,646

Segment assets 19,823,128 2,344,183 4,797,257 26,964,569 2,380,642 29,345,212

Other items

Depreciation 865,887 53,069 124,226 1,043,183 30,231 1,073,414


and equipment, and

intangible assets

893,936 46,615 82,827 1,023,379 25,038 1,048,418

(Note) The "Other" category addresses those business segments not covered by the report segments; business activities of local

corporations in the United States, Brazil, Australia, Russia, South Africa, and the United Arab Emirates.

25

4 Difference between the total amounts of the report segments and the amounts reported in the consolidated financial

statements, as well as the main items of the difference (matters related to difference adjustment)


Sales FY2014 FY2015

Report segment total

Sales from the "Other" category

Inter-segment transactions erased

28,604,922

2,674,150

△3,850,437

30,578,690

3,411,523

△4,465,381

Sales in the consolidated financial statements 27,428,635 29,524,831


Income FY2014 FY2015


Income from the "Other" category

Company-wide expenses (Note)


3,907,815

137,939

△891,770

45,409

4,627,035

218,611

△1,122,245

73,229

Operating income in the consolidated financial statements 3,199,393 3,796,630

(Note) Company-wide expenses are mainly sales expenses and general administrative expenses that cannot

be attributed to the report segments.


Assets

FY2014

FY2015


Assets from the "Other" category

Company-wide assets (Note)


26,059,424

1,872,295

7,687,162

△1,852,748

26,964,569

2,380,642

7,454,014

△2,120,811

Total assets in the consolidated financial statements 33,766,133 34,678,415

(Note) Company-wide assets are mainly the surplus funds and long-term investment funds that cannot be

attributed to the report segments.


Other items Report segment total Other Adjustment

Amount reported in

consolidated financial

statements

FY2014 FY2015 FY2014 FY2015 FY2014 FY2015 FY2014 FY2015

Depreciation 964,784 1,043,183 24,144 30,231 1,787 2,614 990,716 1,076,028


and equipment, and

intangible assets

1,283,623 1,023,379 37,983 25,038 ― ― 1,321,607 1,048,418

(Information about items per share)

FY2014

(April 1, 2014 through March 31, 2015)

FY2015


Net assets per share 561.80 583.76

Net income per share 52.79 62.14

(Notes) 1. The amount of Net Income per share - Diluted is not included because there are no dilutive shares such as bonds with

subscription rights to shares.

2. As described in "(Change of accounting policy, etc.)", the incomes and expenses of overseas subsidiaries were previously

converted into yen at the spot exchange rates effective on the accounting dates of the overseas subsidiaries, but starting

from the current consolidated fiscal year, the method is changed so that the conversion into yen is performed using the

average exchange rate during the period.

As a result, the net income per share in the previous consolidated fiscal year decreased by 2.12 yen from that before the

retroactive application.

3. The basis for the calculating the net income per share is as below.

26

FY2014


FY2015


Net income attributable to parent company

shareholders (thousand yen) 2,214,585 2,593,847

Amount not attributable to common shareholders

(thousand yen) ― ―

Net income attributable to parent company

shareholders related to common shares

(thousand yen)

2,214,585 2,593,847

Average number of common shares outstanding

in the period (No. of shares) 41,950,143 41,739,230

(Important subsequent events)

Business combination due to acquisition

At the board of directors' meeting held on May 9, 2016, our company resolved to acquire additional shares of ANEST IWATA

Taiwan Corporation, an affiliate of our company to which the equity method is applied, pursuant to a basic agreement with the

share owner and to make the company and ANEST IWATA FEELER Corporation into consolidated subsidiaries.

1. Overview of business combination

(1) Name of the acquired company and the description of the business

(i) Name of the acquired company ANEST IWATA Taiwan Corporation

Description of the main business Manufacture and sale of coating equipment; and sale of air compressors and

vacuum equipment

(ii) Name of the acquired company ANEST IWATA FEELER Corporation

Description of the main business Manufacture and sale of air compressors

(2) Main reason for the business combination

To speed up decision-making in group management.

(3) Business combination date

Within the FY2016 first quarter consolidated accounting period (scheduled)

(4) Legal form of the business combination

Acquisition of shares in consideration for cash

(5) Name of the company after the combination

After the combination, the name of the company will remain unchanged.

(6) Ratio of voting rights to acquire

(i) ANEST IWATA Taiwan Corporation

Percentage of voting rights held before the business combination 50.0%

Percentage of voting rights to additionally acquire on the business combination date 0.1%

Percentage of voting rights after acquisition 50.1%

(ii) ANEST IWATA FEELER Corporation Percentage of voting rights held before the business combination 35.0%

Percentage of voting rights to additionally acquire on the business combination date 30.0%

(30.0% of which are indirectly held)

Percentage of voting rights after acquisition 65.0%

(30.0% of which are indirectly held)

(7) Main reason for deciding on the companies to acquire

Because of the acquisition of shares by our company in consideration for cash.

2. Consideration for the acquisition of the companies

Cash 422,800 Taiwan dollars

3. Profit or loss due to step-by-step acquisitions

Not settled at this point.

4. Amount of goodwill incurred, cause of incurrence


5. Amounts of assets to receive and liabilities to assume on the business combination date, and main breakdown


27

6. Non-consolidated financial statements

(1) Balance sheets


FY2014


FY2015


Assets

Current assets

Cash and deposits 1,772,474 4,218,051

Accounts receivable-trade 3,762,563 3,138,009

Securities 300,000 -

Merchandise and finished goods 1,054,530 1,217,472

Work in process 429,349 431,653

Raw materials and supplies 791,348 821,846


Other 310,905 402,122

Total current assets 8,737,536 10,525,583

Noncurrent assets

Property, plant and equipment

Buildings 2,038,894 2,112,980

Structures 194,428 221,179

Machinery and equipment 1,649,570 1,753,858

Motor vehicles and transport equipment 751 21

Tools, apparatus and equipment 83,699 93,156

Land 1,422,347 1,422,347

Lease assets 305,782 227,760

Construction in progress 19,870 97,336

Total property, plant and equipment 5,715,343 5,928,640

Intangible assets

Lease assets 34,949 35,326

Leasehold 790 790

Software 910,810 732,694

Other 31,183 8,282

Total intangible assets 977,734 777,092

Investment and other assets

Investment securities 4,079,440 3,858,037

Shares of subsidiaries and affiliates 2,460,443 2,447,229

Investments in capital 1,200 1,200

Investments in capital of subsidiaries and affiliates 1,449,962 1,449,962

Long-term loans receivable from subsidiaries and affiliates 1,089,492 1,335,671

Long-term prepaid expenses 970 406

Long-term deposits 900,000 -

Prepaid pension cost - 161,293


Other 164,244 159,700

Allowance for doubtful accounts △100,725 △170,725

Total investments and other assets 10,362,491 9,558,330

Total noncurrent assets 17,055,569 16,264,063

Total assets 25,793,105 26,789,646

28


FY2014


FY2015


Liabilities

Current liabilities

Accounts payable-trade 1,747,825 1,965,783


Accounts payable-other 940,941 772,037

Income taxes payable 31,522 242,184

Deposits received 24,885 23,958



Provision for product warranties 143,404 204,027

Other 51,577 32,879

Total current liabilities 3,571,696 3,826,837

Noncurrent liabilities


Provision for retirement benefits 1,836,754 1,738,894

Other 50,813 50,813

Total noncurrent liabilities 2,124,904 1,967,672

Total liabilities 5,696,601 5,794,509

Net Assets


Capital stock 3,354,353 3,354,353

Capital surplus

Capital reserve 1,380,380 1,380,380

Total capital surplus 1,380,380 1,380,380

Retained earnings

Retained earnings reserve 838,588 838,588

Other retained earnings

Other reserve 9,700,000 9,700,000

Retained earnings carried forward 4,329,334 5,320,718

Total retained earnings 14,867,922 15,859,307

Treasury shares △117,094 △5,159

Total shareholders' equity 19,485,561 20,588,881

Valuation and translation adjustments

Valuation difference on available-for-sale securities 610,942 406,256

Total valuation and translation adjustments 610,942 406,256

Total net assets 20,096,504 20,995,137

Total liabilities and net assets 25,793,105 26,789,646

29

(2) Profit and loss statements


FY2014


March 31, 2015)

FY2015


March 31, 2016)

Net sales 16,862,267 16,152,880

Cost of sales 10,674,804 10,568,889

Gross profit 6,187,463 5,583,990

Selling, general & administrative expenses 4,647,801 3,767,261

Operating income 1,539,661 1,816,729

Non-operating income

Interest income 19,493 20,487

Dividend income 503,258 827,465

Technical support fee 92,113 89,555

Other 135,631 72,940

Total non-operating income 750,497 1,010,449

Non-operating expenses


Foreign exchange loss - 78,356

Provision for allowance for doubtful accounts 50,000 70,000

Foreign withholding tax 9,846 18,158

Other 669 22,563

Total non-operating expenses 67,997 194,328

Ordinary income 2,222,161 2,632,849

Extraordinary income

Gain on sales of noncurrent assets 375 44

Gain on sales of investment securities 15,207 19,374

Total extraordinary income 15,583 19,418

Extraordinary losses

Loss on sales of noncurrent assets 7,593 -

Loss on retirement of noncurrent assets 15,981 16,826

Loss on valuation of shares of subsidiaries and affiliates 29,047 29,452

Loss on valuation of investments in capital of subsidiaries and affiliates - 26,400

Demolition and demobilization cost 126,636 29,562

Other - 13,431

Total extraordinary losses 179,259 115,673

Net Income before tax 2,058,485 2,536,595

Income taxes - current 513,345 527,124

Income taxes - deferred 150,896 133,712

Total income taxes 664,241 660,836

Net income 1,394,243 1,875,759

30

(3) Statements of changes in shareholders' equity




Capital stock

Capital surplus Retained earnings

Capital

reserve

Other capital

surplus

Total capital

surplus

Retained

earnings

reserve


Total retained

earnings Other reserve

Retained

earnings

carried

forward


current period 3,354,353 1,380,380 51 1,380,431 838,588 9,700,000 3,874,543 14,413,131

Cumulative effect of changes

in accounting policies △149,323 △149,323




3,354,353 1,380,380 51 1,380,431 838,588 9,700,000 3,725,220 14,263,808


period


Net income 1,394,243 1,394,243

Purchase of treasury shares Cancellation of treasury

shares △51 △51 △117,658 △117,658





period △51 △51 604,114 604,114


period 3,354,353 1,380,380 ― 1,380,380 838,588 9,700,000 4,329,334 14,867,922

Shareholders' equity Valuation and translation

adjustments

Total net

assets Treasury

shares

Total

shareholders'

equity

Valuation

difference on

available-for-

sale

securities

Total

valuation and

translation

adjustments


current period △3,254 19,144,661 210,840 210,840 19,355,502

Cumulative effect of changes

in accounting policies △149,323 △149,323




△3,254 18,995,338 210,840 210,840 19,206,178


period


Net income 1,394,243 1,394,243

Purchase of treasury shares △231,550 △231,550 △231,550

Cancellation of treasury

shares 117,710 ― ―




400,102 400,102 400,102


period △113,840 490,223 400,102 400,102 890,325


period △117,094 19,485,561 610,942 610,942 20,096,504

31




Capital stock

Capital surplus Retained earnings

Capital

reserve

Other capital

surplus

Total capital

surplus

Retained

earnings

reserve


Total retained

earnings Other reserve

Retained

earnings

carried

forward


current period 3,354,353 1,380,380 ― 1,380,380 838,588 9,700,000 4,329,334 14,867,922

Cumulative effect of

changes in accounting

policies




3,354,353 1,380,380 ― 1,380,380 838,588 9,700,000 4,329,334 14,867,922


period


Net income 1,875,759 1,875,759

Purchase of treasury

shares


shares △112,197 △112,197

Net changes of items

during the period other

than shareholders' equity

Total changes of items

during the period 991,384 991,384

Balance at the end of

current period 3,354,353 1,380,380 ― 1,380,380 838,588 9,700,000 5,320,718 15,859,307

Shareholders' equity Valuation and translation

adjustments

Total net

assets Treasury

shares

Total

shareholders'

equity

Valuation

difference on

available-for-

sale

securities

Total

valuation and

translation

adjustments


current period △117,094 19,485,561 610,942 610,942 20,096,504

Cumulative effect of

changes in accounting

policies




△117,094 19,485,561 610,942 610,942 20,096,504


period


Net income 1,875,759 1,875,759

Purchase of treasury

shares △262 △262 △262


shares 112,197 ― ―

Net changes of items

during the period other

than shareholders' equity

△204,686 △204,686 △204,686

Total changes of items

during the period 111,934 1,103,319 △204,686 △204,686 898,632

Balance at the end of

current period △5,159 20,588,881 406,256 406,256 20,995,137

32

7. Other

(1) Appointment and retirement of officers

At the board of directors' meeting held on May 9, 2016, our company informally decided on the appointment and retirement of

officers as below on the assumption that our company will shift to a company with audit and other committees at the 70th ordinary

shareholders' meeting of our company, to be held on June 28, 2016.

The appointment and retirement of our company's directors will be formally decided at the 70th ordinary shareholders' meeting of

our company, to be held on June 28, 2016.

1. Candidates for new directors (dated June 28, 2016)

Name New position Current position

Hajime Iwata Director and a member of the audit

and other committees Auditor

Kyosuke Oshima Outside director and a member of the

audit and other committees Outside director

Masashige Takayama Outside director and a member of the

audit and other committees Outside auditor

Toshifumi Mori Outside director and a member of the

audit and other committees Outside auditor

2. Directors and auditor scheduled to retire (dated June 28, 2016)

Name New position Current position

Kiyoshi Morimoto － Director

Noriyuki Iida － Director

Tsutomu Koshigoe － Outside auditor

Documents

FY2015 Full-Year Consolidated Financial Results [Japan GAAP] (April 1, 2015 through March 31, 2016) · FY2015 Full-Year Consolidated Financial Results [Japan GAAP] (April 1, 2015