4 Feb 2019 07:00
FOR IMMEDIATE RELEASE | No. 3248 |
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Mitsubishi Electric Corporation | Mitsubishi Electric Corporation |
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Mitsubishi Electric Announces Consolidated Financial Resultsfor the First 9 Months and Third Quarter of Fiscal 2019
TOKYO, February 4, 2019 - Mitsubishi Electric Corporation (TOKYO: 6503) announced today its consolidated financial results for the first 9 months and third quarter, ended December 31, 2018, of the current fiscal year ending March 31, 2019 (fiscal 2019).
1. Consolidated First 9 Months Results (April 1, 2018 - December 31, 2018)
Net sales: | 3,264.1 | billion yen | (2% increase from the same period last year) |
Operating income: | 201.4 | billion yen | (15% decrease from the same period last year) |
Income before income taxes: | 221.7 | billion yen | (14% decrease from the same period last year) |
Net income attributable to Mitsubishi Electric Corp. stockholders: | 158.8 | billion yen | (14% decrease from the same period last year) |
In the first 9 months of fiscal 2019, from April through December 2018, the global economy saw a buoyant expansion in the U.S. and gradual trends of recovery in Japan and Europe, while the Chinese economy experienced a slight slowdown. In addition, compared to the same period of the previous fiscal year, the yen appreciated against the U.S. dollar, especially due to the currency fluctuation at the end of December, and remained strong against the euro in and after August.
Under these circumstances, consolidated net sales for the first 9 months of fiscal 2019 increased by 2% compared to the same period of the previous fiscal year to 3,264.1 billion yen due primarily to increased sales in the Energy and Electric Systems, Industrial Automation Systems and Home Appliances segments.
Consolidated operating income decreased by 15% compared to the same period of the previous fiscal year to 201.4 billion yen, due to decreased profits in the Industrial Automation Systems, Information and Communication Systems and Electronic Devices segments.
Income before income taxes decreased by 14% compared to the same period of the previous fiscal year to 221.7 billion yen.
Net income attributable to Mitsubishi Electric Corporation stockholders decreased by 14% compared to the same period of the previous fiscal year to 158.8 billion yen.
Consolidated Financial Results by Business Segment (First 9 months, Fiscal 2019)
Energy and Electric Systems
Total sales: | 885.8 | billion yen | (3% increase from the same period last year which recorded 859.6 billion yen) |
Operating income: | 39.2 | billion yen | (11.1 billion yen increase from the same period last year which recorded 28.1 billion yen) |
The social infrastructure systems business saw an increase in orders from the same period of the previous fiscal year due primarily to an increase in orders of the transportation systems business inside and outside Japan. Total sales for this business also increased from the same period of the previous fiscal year, due to increased sales in the power systems business in Japan and the transportation systems business worldwide.
The building systems business remained substantially unchanged in both orders and sales from the same period of the previous fiscal year, experiencing a decrease in the new installation of elevators and escalators in Japan and China and buoyant growth in the renewal business in Japan and other factors.
As a result, total sales for this segment increased by 3% from the same period of the previous fiscal year to 885.8 billion yen. Operating income increased by 11.1 billion yen from the same period of the previous fiscal year to 39.2 billion yen, due primarily to an increase in sales.
Industrial Automation Systems
Total sales: | 1,094.2 | billion yen | (2% increase from the same period last year which recorded 1,070.5 billion yen) |
Operating income: | 114.0 | billion yen | (35.3 billion yen decrease from the same period last year which recorded 149.4 billion yen) |
The factory automation systems business saw decreases in both orders and sales from the same period of the previous fiscal year due primarily to a decrease in capital expenditures in the fields of organic light emitting diodes (OLED) and smartphones outside Japan, despite buoyant demand in Japan.
The automotive equipment business saw increases in both orders and sales from the same period of the previous fiscal year due primarily to increases in Japan, other markets in Asia and Europe, as well as increased sales in electric-vehicle related equipment in response to market growth worldwide.
As a result, total sales for this segment increased by 2% from the same period of the previous fiscal year to 1,094.2 billion yen. Operating income decreased by 35.3 billion yen from the same period of the previous fiscal year to 114.0 billion yen due primarily to a shift in product mix, increases in material prices and upfront investment for growth drivers.
Information and Communication Systems
Total sales: | 287.5 | billion yen | (2% decrease from the same period last year which recorded 292.2 billion yen) |
Operating income: | 6.6 | billion yen | (0.2 billion yen decrease from the same period last year which recorded 6.9 billion yen) |
The telecommunications systems business saw decreases in both orders and sales from the same period of the previous fiscal year due primarily to decreased demand in communications infrastructure equipment.
The information systems and service business saw a decrease in orders from the same period of the previous fiscal year and sales remained substantially unchanged, experiencing a shift in projects for the IT infrastructure services business, etc.
The electronic systems business saw a decrease in orders from the same period of the previous fiscal year and sales remained substantially unchanged, experiencing a shift in the portfolio of large-scale projects in the space systems business, etc.
As a result, total sales for this segment decreased by 2% from the same period of the previous fiscal year to 287.5 billion yen. Operating income decreased by 0.2 billion yen from the same period of the previous fiscal year to 6.6 billion yen due primarily to a decrease in sales.
Electronic Devices
Total sales: | 148.5 | billion yen | (1% decrease from the same period last year which recorded 149.8 billion yen) |
Operating income: | 0.7 | billion yen | (11.2 billion yen decrease from the same period last year which recorded 12.0 billion yen) |
The electronic devices business saw a decrease in orders and sales fell by 1% from the same period of the previous fiscal year to 148.5 billion yen mainly due to decreased demand for optical communication devices.
Operating income decreased by 11.2 billion yen from the same period of the previous fiscal year to 0.7 billion yen due primarily to a decrease in sales and a shift in product mix.
Home Appliances
Total sales: | 806.0 | billion yen | (3% increase from the same period last year which recorded 779.1 billion yen) |
Operating income: | 50.7 | billion yen | (0.3 billion yen increase from the same period last year which recorded 50.3 billion yen) |
The home appliances business saw an increase in sales of 3% from the same period of the previous fiscal year to 806.0 billion yen due to an increase in sales of air conditioners for Japan, Europe and North America.
Operating income increased by 0.3 billion yen from the same period of the previous fiscal year to 50.7 billion yen due primarily to an increase in sales, despite rises in material prices and sales expenses.
Others
Total sales: | 500.2 | billion yen | (5% increase from the same period last year which recorded 477.4 billion yen) |
Operating income: | 16.1 | billion yen | (0.9 billion yen increase from the same period last year which recorded 15.2 billion yen) |
Sales increased by 5% from the same period of the previous fiscal year to 500.2 billion yen mainly due to an increase in sales at affiliated companies involved in logistics.
Operating income increased by 0.9 billion yen from the same period of the previous fiscal year to 16.1 billion yen due primarily to an increase in sales.
2. Consolidated Third-quarter Results (October 1, 2018 - December 31, 2018)
Net sales: | 1,094.0 | billion yen | (2% increase from the same period last year) |
Operating income: | 75.5 | billion yen | (11% decrease from the same period last year) |
Income before income taxes: | 80.4 | billion yen | (13% decrease from the same period last year) |
Net income attributable to Mitsubishi Electric Corp. stockholders: | 56.4 | billion yen | (10% decrease from the same period last year) |
Consolidated net sales for this quarter, from October through December 2018, was 1,094.0 billion yen, a 2% increase from the same period of the previous fiscal year, due to increased sales in the Energy and Electric Systems and Home Appliances segments.
Consolidated operating income was 75.5 billion yen, an 11% decrease from the same period of the previous fiscal year, with decreased profits mainly in the Industrial Automation Systems and Electronic Devices segments.
Income before income taxes decreased by 13% compared to the same period of the previous fiscal year to 80.4 billion yen.
Net income attributable to Mitsubishi Electric Corporation stockholders decreased by 10% compared to the same period of the previous fiscal year to 56.4 billion yen.
Consolidated Financial Results by Business Segment (Third Quarter, Fiscal 2019)
Energy and Electric Systems
Total sales: | 317.2 | billion yen | (5% increase from the same period last year which recorded 302.4 billion yen) |
Operating income: | 23.6 | billion yen | (6.1 billion yen increase from the same period last year which recorded 17.5 billion yen) |
The social infrastructure systems business saw an increase in orders from the same period of the previous fiscal year due primarily to increases in the transportation systems business in Japan and the power systems business outside Japan. Total sales also increased from the same period of the previous fiscal year, due to increases in the power systems and transportation systems businesses in Japan.
Orders in the building systems business remained substantially unchanged, while sales for this business increased from the same period of the previous fiscal year due primarily to buoyant growth in the renewal business in Japan.
As a result, total sales for this segment increased by 5% from the same period of the previous fiscal year to 317.2 billion yen. Operating income increased by 6.1 billion yen from the same period of the previous fiscal year to 23.6 billion yen mainly due to an increase in sales.
Industrial Automation Systems
Total sales: | 363.9 | billion yen | (1% decrease from the same period last year which recorded 366.8 billion yen) |
Operating income: | 36.1 | billion yen | (17.0 billion yen decrease from the same period last year which recorded 53.1 billion yen) |
The factory automation systems business saw decreases in both orders and sales from the same period of the previous fiscal year due primarily to a decrease in capital expenditures in the fields of organic light emitting diodes (OLED) and smartphones outside Japan, despite buoyant demand in Japan.
The automotive equipment business saw increases in both orders and sales from the same period of the previous fiscal year due primarily to an increase in the Japanese market, as well as increased sales in electric-vehicle related equipment in response to market growth worldwide.
As a result, total sales for this segment decreased by 1% from the same period of the previous fiscal year to 363.9 billion yen. Operating income decreased by 17.0 billion yen from the same period of the previous fiscal year to 36.1 billion yen due primarily to a decrease in sales, a shift in product mix and upfront investment for growth drivers.
Information and Communication Systems
Total sales: | 100.7 | billion yen | (Substantially unchanged from the same period last year which recorded 101.0 billion yen) |
Operating income: | 4.1 | billion yen | (0.4 billion yen increase from the same period last year which recorded 3.6 billion yen) |
The telecommunications systems business saw an increase in orders from the same period of the previous fiscal year, while sales decreased from the same period of the previous fiscal year mainly due to a decrease in sales of communications infrastructure equipment.
The information systems and service business saw increases in both orders and sales from the same period of the previous fiscal year, mainly due to an increase in the system integrations business.
The electronic systems business saw decreases in both orders and sales from the same period of the previous fiscal year mainly due to a decrease in large-scale projects in the defense systems business.
As a result, total sales for this segment remained substantially unchanged from the same period of the previous fiscal year to 100.7 billion yen. Operating income increased by 0.4 billion yen from the same period of the previous fiscal year to 4.1 billion yen due primarily to a shift in project portfolios.
Electronic Devices
Total sales: | 46.6 | billion yen | (7% decrease from the same period last year which recorded 50.3 billion yen) |
Operating income (loss): | (0.5 | billion yen) | (5.3 billion yen decline from the same period last year which recorded 4.7 billion yen) |
The electronic devices business saw a decrease in orders and sales fell by 7% from the same period of the previous fiscal year to 46.6 billion yen mainly due to decreased demand for optical communication devices and power modules used in industrial applications.
Operating income declined by 5.3 billion yen from the same period of the previous fiscal year to a loss of 0.5 billion yen due primarily to a decrease in sales and a shift in product mix.
Home Appliances
Total sales: | 248.9 | billion yen | (4% increase from the same period last year which recorded 239.9 billion yen) |
Operating income: | 17.0 | billion yen | (6.1 billion yen increase from the same period last year which recorded 10.9 billion yen) |
The home appliances business saw an increase in sales of 4% from the same period of the previous fiscal year to 248.9 billion yen due to an increase in sales of air conditioners for Japan, North America and Europe.
Operating income increased by 6.1 billion yen from the same period of the previous fiscal year to 17.0 billion yen due primarily to an increase in sales.
Others
Total sales: | 172.4 | billion yen | (3% increase from the same period last year which recorded 166.6 billion yen) |
Operating income: | 5.8 | billion yen | (0.2 billion yen increase from the same period last year which recorded 5.5 billion yen) |
Sales increased by 3% from the same period of the previous fiscal year to 172.4 billion yen mainly due to an increase in sales at affiliated companies involved in logistics.
Operating income increased by 0.2 billion yen from the same period of the previous fiscal year to 5.8 billion yen due primarily to an increase in sales.
Financial Standing
An analysis on the status of assets, liabilities and equity on a consolidated basis
Total assets as of the end of this fiscal quarter decreased from the end of the previous fiscal year by 162.5 billion yen to 4,143.0 billion yen. The change in balance of total assets is mainly attributable to increases in inventories by 129.2 billion yen, while cash and cash equivalents decreased by 155.7 billion yen, and trade receivables and contract assets decreased by 108.7 billion yen.
Total liabilities decreased from the end of the previous fiscal year by 184.5 billion yen to 1,723.8 billion yen. The outstanding balances of debt decreased by 19.2 billion yen from the end of the previous fiscal year to 292.6 billion yen, resulting in a decline in the ratio of interest bearing debt to total assets to 7.1%, representing a 0.1 point decrease compared to the end of the previous fiscal year. Meanwhile, trade payables decreased by 56.3 billion yen, and other current liabilities decreased by 112.3 billion yen.
Mitsubishi Electric Corporation stockholders' equity increased by 16.3 billion yen compared to the end of the previous fiscal year to 2,310.5 billion yen. The stockholders' equity ratio was recorded at 55.8%, representing a 2.5 point increase compared to the end of the previous fiscal year. These changes referred to above primarily result from recording a net income attributable to Mitsubishi Electric Corporation stockholders of 158.8 billion yen, despite a decrease due to dividend payment of 85.8 billion yen and a decrease in other comprehensive income of 55.8 billion yen reflecting a fall in stock prices and the stronger yen.
An analysis on the status of cash flow on a consolidated basis
Cash flows from operating activities decreased by 24.2 billion yen compared to the same period of the previous fiscal year to 110.1 billion yen (cash in), mainly due to an increase in inventories. Cash flows from investing activities increased by 29.5 billion yen compared to the same period of the previous fiscal year to 151.5 billion yen (cash out), due primarily to a decrease in proceeds from sale of short-term investments and investment securities. As a result, free cash flow was 41.3 billion yen (cash out). Cash flows from financing activities were 111.8 billion yen (cash out) mainly due to dividend payments.
Forecast for Fiscal 2019 (year ending March 31, 2019)
Considering the financial results for the third quarter of fiscal 2019, lower demand in the Industrial Automation Systems and Electronic Devices segments in the Chinese market and other factors, Mitsubishi Electric's business performance for fiscal 2019 is expected to fall below the company's previous forecast. As a result, the company's consolidated earnings forecast for fiscal 2019, ending March 31, 2019, has been revised from the announcement on October 29, 2018 as stated below.
Consolidated Earnings Forecast for Fiscal 2019
Consolidated | Previous forecast (announced Oct. 29) | Current forecast | |
Net sales: | 4,510.0 billion yen | 4,500.0 billion yen | (1% increase from fiscal 2018) |
Operating income: | 305.0 billion yen | 285.0 billion yen | (13% decrease from fiscal 2018) |
Income before income taxes: | 335.0 billion yen | 310.0 billion yen | (12% decrease from fiscal 2018) |
Net income attributable to Mitsubishi Electric Corp. stockholders: | 240.0 billion yen | 225.0 billion yen | (12% decrease from fiscal 2018) |
Exchange rates in the fourth quarter of fiscal 2019 is unchanged from the previous announcement, which are 105 yen to the U.S. dollar, 125 yen to the euro and 16.0 yen to the Chinese yuan.
Note: The results forecast above is based on assumptions deemed reasonable by the company at the present time, and actual results may differ significantly from forecasts. Please refer to the cautionary statement at the end. |
Consolidated Financial Results Summary
1. Consolidated First 9 Months Results
(In billions of yen except where noted)
FY '18 9 months (A)(Apr. 1, 2017 - Dec. 31, 2017) | FY '19 9 months (B)(Apr. 1, 2018 - Dec. 31, 2018) | |||
B - A | B/A (%) | |||
Net sales | 3,186.7 | 3,264.1 | 77.3 | 102 |
Operating income | 237.9 | 201.4 | (36.5) | 85 |
Income before income taxes | 259.1 | 221.7 | (37.4) | 86 |
Net income attributable to Mitsubishi Electric Corp. stockholders | 184.0 | 158.8 | (25.2) | 86 |
Basic net income per share attributable to Mitsubishi Electric Corp. stockholders | 85.78 yen | 74.03 yen | (11.75 yen) | 86 |
2. Consolidated Third-quarter Results
(In billions of yen except where noted)
FY '18 Q3 (A)(Oct. 1, 2017 -Dec. 31, 2017) | FY '19 Q3 (B)(Oct. 1, 2018 - Dec. 31, 2018) | |||
B - A | B/A (%) | |||
Net sales | 1,074.9 | 1,094.0 | 19.0 | 102 |
Operating income | 85.1 | 75.5 | (9.6) | 89 |
Income before income taxes | 93.0 | 80.4 | (12.5) | 87 |
Net income attributable to Mitsubishi Electric Corp. stockholders | 63.0 | 56.4 | (6.6) | 90 |
Basic net income per share attributable to Mitsubishi Electric Corp. stockholders | 29.41 yen | 26.34 yen | (3.07 yen) | 90 |
Notes:
1) Consolidated financial statements are made in accordance with International Financial Reporting Standards (IFRS).
2) The company has 207 consolidated subsidiaries.
Condensed Quarterly Consolidated Financial Statements
Condensed Quarterly Consolidated Statements of Profit or Loss and Condensed Quarterly Consolidated Statements of Comprehensive Income (First 9 Months, Fiscal 2019)
(Condensed Quarterly Consolidated Statements of Profit or Loss)
(In millions of yen)
FY '18 9 months (Apr. 1, 2017 - Dec. 31, 2017) | FY '19 9 months (Apr. 1, 2018 - Dec. 31, 2018) | |||||
(A) | % of total | (B) | % of total | B - A | B/A (%) | |
Net sales | 3,186,755 | 100.0 | 3,264,125 | 100.0 | 77,370 | 102 |
Cost of sales | 2,207,353 | 69.3 | 2,300,249 | 70.5 | 92,896 | 104 |
Selling, general and administrative expenses | 742,195 | 23.2 | 763,053 | 23.3 | 20,858 | 103 |
Other profit (loss) | 739 | 0.0 | 617 | 0.0 | (122) | 83 |
Operating income | 237,946 | 7.5 | 201,440 | 6.2 | (36,506) | 85 |
Financial income | 7,546 | 0.2 | 8,460 | 0.2 | 914 | 112 |
Financial expenses | 2,044 | 0.1 | 3,347 | 0.1 | 1,303 | 164 |
Share of profit of investments accounted for using theequity method | 15,726 | 0.5 | 15,193 | 0.5 | (533) | 97 |
Income before income taxes | 259,174 | 8.1 | 221,746 | 6.8 | (37,428) | 86 |
Income tax expenses | 66,565 | 2.1 | 54,354 | 1.7 | (12,211) | 82 |
Net income | 192,609 | 6.0 | 167,392 | 5.1 | (25,217) | 87 |
Net income attributable to: | ||||||
Mitsubishi Electric Corp.stockholders | 184,070 | 5.8 | 158,819 | 4.9 | (25,251) | 86 |
Non-controlling interests | 8,539 | 0.2 | 8,573 | 0.2 | 34 | 100 |
(Condensed Quarterly Consolidated Statements of Comprehensive Income)
(In millions of yen)
FY '18 9 months (A) (Apr. 1, 2017 -Dec. 31, 2017) | FY '19 9 months (B) (Apr. 1, 2018 - Dec. 31, 2018) | B - A | |
Net income | 192,609 | 167,392 | (25,217) |
(Other comprehensive income (loss),net of tax) | |||
Items that will not be reclassified tonet income | |||
Financial assets measured at fair valuethrough other comprehensive income | 23,345 | (44,418) | (67,763) |
Share of other comprehensive income of investments accounted for using the equity method | 829 | (464) | (1,293) |
Subtotal | 24,174 | (44,882) | (69,056) |
Items that may be reclassified to net income | |||
Exchange differences on translating foreign operations | 45,981 | (13,215) | (59,196) |
Net changes in the fair value of cash flow hedges | 3 | (36) | (39) |
Share of other comprehensive income of investments accounted for using the equity method | 1,080 | (1,651) | (2,731) |
Subtotal | 47,064 | (14,902) | (61,966) |
Total other comprehensive income (loss) | 71,238 | (59,784) | (131,022) |
Comprehensive income | 263,847 | 107,608 | (156,239) |
Comprehensive income attributable to: | |||
Mitsubishi Electric Corp. stockholders | 251,574 | 100,261 | (151,313) |
Non-controlling interests | 12,273 | 7,347 | (4,926) |
Condensed Quarterly Consolidated Statements of Profit or Loss and Condensed Quarterly Consolidated Statements of Comprehensive Income (Third Quarter, Fiscal 2019)
(Condensed Quarterly Consolidated Statements of Profit or Loss)
(In millions of yen)
FY '18 Q3 (Oct. 1, 2017 - Dec. 31, 2017) | FY '19 Q3 (Oct. 1, 2018 - Dec. 31, 2018) | |||||
(A) | % of total | (B) | % of total | B - A | B/A (%) | |
Net sales | 1,074,988 | 100.0 | 1,094,019 | 100.0 | 19,031 | 102 |
Cost of sales | 744,794 | 69.3 | 770,080 | 70.4 | 25,286 | 103 |
Selling, general and administrative expenses | 246,182 | 22.8 | 248,688 | 22.7 | 2,506 | 101 |
Other profit (loss) | 1,109 | 0.0 | 249 | 0.0 | (860) | 22 |
Operating income | 85,121 | 7.9 | 75,500 | 6.9 | (9,621) | 89 |
Financial income | 2,747 | 0.3 | 2,778 | 0.3 | 31 | 101 |
Financial expenses | 605 | 0.1 | 3,009 | 0.3 | 2,404 | 497 |
Share of profit of investments accounted for using theequity method | 5,739 | 0.6 | 5,186 | 0.5 | (553) | 90 |
Income before income taxes | 93,002 | 8.7 | 80,455 | 7.4 | (12,547) | 87 |
Income tax expenses | 27,179 | 2.6 | 21,095 | 2.0 | (6,084) | 78 |
Net income | 65,823 | 6.1 | 59,360 | 5.4 | (6,463) | 90 |
Net income attributable to: | ||||||
Mitsubishi Electric Corp.stockholders | 63,098 | 5.9 | 56,491 | 5.2 | (6,607) | 90 |
Non-controlling interests | 2,725 | 0.2 | 2,869 | 0.2 | 144 | 105 |
(Condensed Quarterly Consolidated Statements of Comprehensive Income)
(In millions of yen)
FY '18 Q3 (A) (Oct. 1, 2017 - Dec. 31, 2017) | FY '19 Q3 (B) (Oct. 1, 2018 - Dec. 31, 2018) | B - A | |
Net income | 65,823 | 59,360 | (6,463) |
(Other comprehensive income (loss),net of tax) | |||
Items that will not be reclassified tonet income | |||
Financial assets measured at fair valuethrough other comprehensive income | 13,624 | (35,989) | (49,613) |
Share of other comprehensive income of investments accounted for using the equity method | 232 | (702) | (934) |
Subtotal | 13,856 | (36,691) | (50,547) |
Items that may be reclassified to net income | |||
Exchange differences on translating foreign operations | 14,422 | (22,601) | (37,023) |
Net changes in the fair value of cash flow hedges | (2) | (128) | (126) |
Share of other comprehensive income of investments accounted for using the equity method | 1,265 | 112 | (1,153) |
Subtotal | 15,685 | (22,617) | (38,302) |
Total other comprehensive income (loss) | 29,541 | (59,308) | (88,849) |
Comprehensive income | 95,364 | 52 | (95,312) |
Comprehensive income attributable to: | |||
Mitsubishi Electric Corp. stockholders | 90,879 | (673) | (91,552) |
Non-controlling interests | 4,485 | 725 | (3,760) |
Condensed Quarterly Consolidated Statements of Financial Position
(In millions of yen)
FY '18 (A) (ended Mar. 31, 2018) | FY ' 19 9 months (B) (ended Dec. 31, 2018) | B - A | |
(Assets) | |||
Current assets | 2,582,735 | 2,455,870 | (126,865) |
Cash and cash equivalents | 599,199 | 443,485 | (155,714) |
Trade receivables and Contract Assets | 1,191,529 | 1,082,734 | (108,795) |
Inventories | 646,262 | 775,475 | 129,213 |
Other current assets | 145,745 | 154,176 | 8,431 |
Non-current assets | 1,722,845 | 1,687,175 | (35,670) |
Investments accounted for using the equity method | 194,308 | 194,199 | (109) |
Other financial assets | 363,171 | 301,608 | (61,563) |
Net property, plant and equipment | 724,257 | 747,654 | 23,397 |
Other non-current assets | 441,109 | 443,714 | 2,605 |
Total assets | 4,305,580 | 4,143,045 | (162,535) |
(Liabilities) | |||
Current liabilities | 1,488,249 | 1,340,965 | (147,284) |
Bonds and borrowings | 122,895 | 144,338 | 21,443 |
Trade payables | 579,566 | 523,228 | (56,338) |
Other current liabilities | 785,788 | 673,399 | (112,389) |
Non-current liabilities | 420,112 | 382,863 | (37,249) |
Bonds and borrowings | 189,055 | 148,342 | (40,713) |
Net defined benefit liabilities | 171,520 | 178,020 | 6,500 |
Other non-current liabilities | 59,537 | 56,501 | (3,036) |
Total liabilities | 1,908,361 | 1,723,828 | (184,533) |
(Equity) | |||
Mitsubishi Electric Corp. stockholders' equity | 2,294,174 | 2,310,562 | 16,388 |
Common stock | 175,820 | 175,820 | - |
Capital surplus | 199,442 | 202,494 | 3,052 |
Retained earnings | 1,811,348 | 1,881,564 | 70,216 |
Accumulated other comprehensive income (loss) | 109,492 | 53,666 | (55,826) |
Treasury stock at cost | (1,928) | (2,982) | (1,054) |
Non-controlling interests | 103,045 | 108,655 | 5,610 |
Total equity | 2,397,219 | 2,419,217 | 21,998 |
Total liabilities and equity | 4,305,580 | 4,143,045 | (162,535) |
Balance of Debt | 311,950 | 292,680 | (19,270) |
Accumulated other comprehensive income (loss): | |||
Exchange differences on translating foreign operations | 17,549 | 3,915 | (13,634) |
Remeasurements of defined benefit pension plans | - | - | - |
Financial assets measured at fair value through other comprehensive income | 91,952 | 49,811 | (42,141) |
Net changes in the fair value of cash flow hedges | (9) | (60) | (51) |
Condensed Quarterly Consolidated Statements of Changes in Equity
(In millions of yen)
Mitsubishi Electric Corp. stockholders' equity | Non-controlling interests | Total equity | ||||||
Common stock | Capital surplus | Retained earnings | Accumulated other comprehensive income (loss) | Treasury stock at cost | Total | |||
Balance at April 1, 2017 | 175,820 | 198,745 | 1,593,660 | 101,166 | (1,228) | 2,068,163 | 98,800 | 2,166,963 |
Comprehensive income | ||||||||
Net income | 184,070 | 184,070 | 8,539 | 192,609 | ||||
Other comprehensive income (loss) | 67,504 | 67,504 | 3,734 | 71,238 | ||||
Comprehensive income | - | - | 184,070 | 67,504 | - | 251,574 | 12,273 | 263,847 |
Transfer to retained earnings | 7,941 | (7,941) | - | - | ||||
Dividends paid | (68,696) | (68,696) | (5,791) | (74,487) | ||||
Purchase of treasury stock | (699) | (699) | (699) | |||||
Reissuance of treasury stock | 0 | 0 | 0 | 0 | ||||
Transactions with non-controlling interests, etc. | 13 | 13 | (311) | (298) | ||||
Balance at Dec. 31, 2017 | 175,820 | 198,758 | 1,716,975 | 160,729 | (1,927) | 2,250,355 | 104,971 | 2,355,326 |
Mitsubishi Electric Corp. stockholders' equity | Non-controlling interests | Total equity | ||||||
Common stock | Capital surplus | Retained earnings | Accumulated other comprehensive income (loss) | Treasury stock at cost | Total | |||
Balance at April 1, 2018 | 175,820 | 199,442 | 1,811,348 | 109,492 | (1,928) | 2,294,174 | 103,045 | 2,397,219 |
Comprehensive income | ||||||||
Net income | 158,819 | 158,819 | 8,573 | 167,392 | ||||
Other comprehensive income (loss) | (58,558) | (58,558) | (1,226) | (59,784) | ||||
Comprehensive income | - | - | 158,819 | (58,558) | - | 100,261 | 7,347 | 107,608 |
Transfer to retained earnings | (2,732) | 2,732 | - | - | ||||
Dividends paid | (85,871) | (85,871) | (5,443) | (91,314) | ||||
Purchase of treasury stock | (1,054) | (1,054) | (1,054) | |||||
Reissuance of treasury stock | 0 | 0 | 0 | 0 | ||||
Transactions with non-controlling interests, etc. | 3,052 | 3,052 | 3,706 | 6,758 | ||||
Balance at Dec. 31, 2018 | 175,820 | 202,494 | 1,881,564 | 53,666 | (2,982) | 2,310,562 | 108,655 | 2,419,217 |
Condensed Quarterly Consolidated Statements of Cash Flows
(In millions of yen)
FY '18 9 months (Apr. 1, 2017 - Dec. 31, 2017) (A) | FY '19 9 months (Apr. 1, 2018 - Dec. 31, 2018) (B) | B - A | ||
I | Cash flows from operating activities | |||
1 | Net income | 192,609 | 167,392 | (25,217) |
2 | Adjustments to reconcile net income to net cash provided by operating activities | |||
(1) Depreciation, amortization and other | 127,685 | 126,739 | (946) | |
(2) Decrease in trade receivables and contract assets | 111,009 | 111,438 | 429 | |
(3) Decrease (increase) in inventories | (114,945) | (128,291) | (13,346) | |
(4) Increase (decrease) in trade payables | (100,923) | (57,421) | 43,502 | |
(5) Other, net | (80,986) | (109,690) | (28,704) | |
Cash flows from operating activities | 134,449 | 110,167 | (24,282) | |
II | Cash flows from investing activities | |||
1 | Purchase of property, plant and equipment | (135,221) | (138,513) | (3,292) |
2 | Proceeds from sale of property, plant and equipment | 2,204 | 3,689 | 1,485 |
3 | Purchase of short-term investments and investment securities (net of cash acquired) | (6,701) | (10,315) | (3,614) |
4 | Proceeds from sale of short-term investments and investment securities (net of cash disposed) | 29,729 | 4,747 | (24,982) |
5 | Other, net | (11,956) | (11,139) | 817 |
Cash flows from investing activities | (121,945) | (151,531) | (29,586) | |
I + II | Free cash flow | 12,504 | (41,364) | (53,868) |
III | Cash flows from financing activities | |||
1 | Proceeds from long-term debt and repayment of long-term debt | (36,530) | (25,401) | 11,129 |
2 | Increase (decrease) in bank loans, net | (24,471) | (950) | 23,521 |
3 | Dividends paid | (68,696) | (85,871) | (17,175) |
4 | Purchase of treasury stock | (699) | (1,054) | (355) |
5 | Reissuance of treasury stock | 0 | 0 | 0 |
6 | Other, net | (7,419) | 1,412 | 8,831 |
Cash flows from financing activities | (137,815) | (111,864) | 25,951 | |
IV | Effect of exchange rate changes on cash and cash equivalents | 14,512 | (2,486) | (16,998) |
V | Net increase (decrease) in cash and cash equivalents | (110,799) | (155,714) | (44,915) |
VI | Cash and cash equivalents at beginning of period | 662,469 | 599,199 | (63,270) |
VII | Cash and cash equivalents at end of period | 551,670 | 443,485 | (108,185) |
Consolidated Segment Information (First 9 Months, Fiscal 2019)
1. Sales and Operating Income by Business Segment
(In millions of yen)
Business Segment | FY '18 9 months (Apr. 1, 2017 - Dec. 31, 2017) | FY '19 9 months (Apr. 1, 2018 - Dec. 31, 2018) | C - A | D - B | C/A (%) | ||
Sales (A) | Operating income (B) | Sales(C) | Operating income (D) | ||||
Energy and Electric Systems | 859,605 | 28,162 | 885,852 | 39,262 | 26,247 | 11,100 | 103 |
Industrial Automation Systems | 1,070,518 | 149,474 | 1,094,255 | 114,096 | 23,737 | (35,378) | 102 |
Information and Communication Systems | 292,274 | 6,902 | 287,598 | 6,623 | (4,676) | (279) | 98 |
Electronic Devices | 149,860 | 12,012 | 148,526 | 729 | (1,334) | (11,283) | 99 |
Home Appliances | 779,163 | 50,370 | 806,071 | 50,711 | 26,908 | 341 | 103 |
Others | 477,464 | 15,228 | 500,239 | 16,198 | 22,775 | 970 | 105 |
Subtotal | 3,628,884 | 262,148 | 3,722,541 | 227,619 | 93,657 | (34,529) | 103 |
Eliminations and other | (442,129) | (24,202) | (458,416) | (26,179) | (16,287) | (1,977) | - |
Consolidated Total | 3,186,755 | 237,946 | 3,264,125 | 201,440 | 77,370 | (36,506) | 102 |
*Notes: Inter-segment sales are included in the above chart.
2. Sales by Location of Customers
(In millions of yen)
Location of Customers | FY '18 9 months (Apr. 1, 2017 - Dec. 31, 2017) | FY '19 9 months (Apr. 1, 2018 - Dec. 31, 2018) | B - A | B/A (%) | |||||
Sales (A) | % of total net sales | Sales (B) | % of total net sales | ||||||
Japan | 1,694,423 | 53.2 | 1,802,248 | 55.2 | 107,825 | 106 | |||
North America | 308,438 | 9.7 | 313,960 | 9.6 | 5,522 | 102 | |||
Asia (excluding Japan) | 816,232 | 25.6 | 761,257 | 23.3 | (54,975) | 93 | |||
China | 412,889 | 13.0 | 373,921 | 11.5 | (38,968) | 91 | |||
Europe | 319,113 | 10.0 | 339,744 | 10.4 | 20,631 | 106 | |||
Others | 48,549 | 1.5 | 46,916 | 1.5 | (1,633) | 97 | |||
Total overseas sales | 1,492,332 | 46.8 | 1,461,877 | 44.8 | (30,455) | 98 | |||
Consolidated total | 3,186,755 | 100.0 | 3,264,125 | 100.0 | 77,370 | 102 | |||
Consolidated Segment Information (Third Quarter, Fiscal 2019)
1. Sales and Operating Income by Business Segment
(In millions of yen)
Business Segment | FY '18 Q3 (Oct. 1, 2017 - Dec. 31, 2017) | FY '19 Q3 (Oct. 1, 2018 - Dec. 31, 2018) | C - A | D - B | C/A (%) | ||
Sales (A) | Operating income (B) | Sales(C) | Operating income (loss) (D) | ||||
Energy and Electric Systems | 302,471 | 17,502 | 317,210 | 23,698 | 14,739 | 6,196 | 105 |
Industrial Automation Systems | 366,802 | 53,159 | 363,905 | 36,117 | (2,897) | (17,042) | 99 |
Information and Communication Systems | 101,058 | 3,652 | 100,731 | 4,121 | (327) | 469 | 100 |
Electronic Devices | 50,328 | 4,778 | 46,630 | (540) | (3,698) | (5,318) | 93 |
Home Appliances | 239,913 | 10,924 | 248,951 | 17,046 | 9,038 | 6,122 | 104 |
Others | 166,683 | 5,568 | 172,408 | 5,855 | 5,725 | 287 | 103 |
Subtotal | 1,227,255 | 95,583 | 1,249,835 | 86,297 | 22,580 | (9,286) | 102 |
Eliminations and other | (152,267) | (10,462) | (155,816) | (10,797) | (3,549) | (335) | - |
Consolidated Total | 1,074,988 | 85,121 | 1,094,019 | 75,500 | 19,031 | (9,621) | 102 |
*Notes: Inter-segment sales are included in the above chart.
2. Sales by Location of Customers
(In millions of yen)
Location of Customers | FY '18 Q3 (Oct. 1, 2017 - Dec. 31, 2017) | FY '19 Q3 (Oct. 1, 2018 - Dec. 31, 2018) | B - A | B/A (%) | |||||
Sales (A) | % of total net sales | Sales (B) | % of total net sales | ||||||
Japan | 583,919 | 54.3 | 633,446 | 57.9 | 49,527 | 108 | |||
North America | 98,627 | 9.2 | 104,106 | 9.5 | 5,479 | 106 | |||
Asia (excluding Japan) | 268,192 | 25.0 | 232,936 | 21.3 | (35,256) | 87 | |||
China | 139,054 | 12.9 | 108,634 | 9.9 | (30,420) | 78 | |||
Europe | 104,790 | 9.7 | 106,619 | 9.7 | 1,829 | 102 | |||
Others | 19,460 | 1.8 | 16,912 | 1.6 | (2,548) | 87 | |||
Total overseas sales | 491,069 | 45.7 | 460,573 | 42.1 | (30,496) | 94 | |||
Consolidated total | 1,074,988 | 100.0 | 1,094,019 | 100.0 | 19,031 | 102 | |||
Notes to the Condensed Consolidated Financial Statements
(Notes regarding the going concern assumption)
Not applicable
(Notes if there is any significant change in Mitsubishi Electric Corp. stockholders' equity)
Not applicable
Disclosures of Transition to IFRS
The Mitsubishi Electric Group has applied IFRS beginning with the consolidated financial statements for the first quarter of the current fiscal year. The most recent consolidated financial statements prepared in accordance with US GAAP are for the one-year period ended on March 31, 2018. The date of transition to IFRS was April 1, 2017.
(1) Exemptions and exceptions in IFRS 1
IFRS 1 requires entities adopting IFRS for the first time to retrospectively apply IFRS in principle; however, with regard to certain items, it allows exemption from, or prohibits, retrospective application of IFRS.
The Company and its consolidated subsidiaries use the following exemptions on retrospective application permitted by IFRS 1:
- Business combinations
The Company and its consolidated subsidiaries elected not to apply IFRS 3 Business Combinations retrospectively to past business combinations that occurred on or before December 22, 2015. Consequently, the amount of goodwill that arose from business combinations occurred on or before December 22, 2015 is recorded at the carrying value in accordance with US GAAP. This goodwill was tested for impairment at the transition date irrespective of whether there was any indication of impairment.
- Exchange differences on translating foreign operations
The Company and its consolidated subsidiaries elected to deem the cumulative translation differences for foreign operations at the transition date to be zero. Consequently, the cumulative translation differences for foreign operations at the transition date were transferred from accumulated other comprehensive income (loss) to retained earnings.
- Designation of financial instruments recognized before the date of transition to IFRS
The Company and its consolidated subsidiaries elected to determine the classification of financial instruments on the basis of the facts and circumstances that exist at the date of transition to IFRS.
(2) Reconciliations
Reconciliations for which disclosures are required on first time adoption of IFRS are as follows:
Items that do not affect retained earnings and comprehensive income are presented in "Reclassification," and items that affect retained earnings and comprehensive income are presented in "Recognition and measurement differences."
Reconciliation of Equity as at the Date of Transition to IFRS (April 1, 2017)
(Consolidated Statements of Financial Position) (In millions of yen)
Presentation under US GAAP | US GAAP | Re-classification | Recognition and measurement differences | IFRS | Presentation under IFRS |
(Assets) | (Assets) | ||||
Current assets | 2,500,685 | 3,062 | 4,810 | 2,508,557 | Current assets |
Cash and cash equivalents | 662,469 | - | - | 662,469 | Cash and cash equivalents |
Trade receivables | 1,037,201 | 15,261 | 103,004 | 1,155,466 | Trade receivables and contract assets |
Inventories | 643,040 | - | (83,138) | 559,902 | Inventories |
Prepaid expenses and other current assets | 157,975 | (12,199) | (15,056) | 130,720 | Other current assets |
- | (3,062) | 60,950 | 1,729,473 | Non-current assets | |
Long-term trade receivables | 2,815 | (2,815) | - | - | |
Investments | 618,935 | (618,935) | - | - | |
- | 181,724 | 5,634 | 187,358 | Investments accounted for using the equity method | |
- | 362,869 | 27,710 | 390,579 | Other financial assets | |
Net property, plant and equipment | 732,611 | - | (33,133) | 699,478 | Net property, plant and equipment |
Other assets | 317,224 | 74,095 | 60,739 | 452,058 | Other non-current assets |
Total assets | 4,172,270 | - | 65,760 | 4,238,030 | Total assets |
(In millions of yen)
Presentation under US GAAP | US GAAP | Re-classification | Recognition and measurement differences | IFRS | Presentation under IFRS |
(Liabilities) | (Liabilities) | ||||
Current liabilities | 1,525,761 | 7,456 | 33,082 | 1,566,299 | Current liabilities |
Bank loans and current portion of long-term debt | 124,368 | - | 21,987 | 146,355 |
Bonds and borrowings |
Trade payables | 780,202 | (145,119) | - | 635,083 | Trade payables |
Other current liabilities | 621,191 | 152,575 | 11,095 | 784,861 | Other current liabilities |
- | (7,456) | 6,423 | 504,768 | Non-current liabilities | |
Long-term debt | 227,756 | - | - | 227,756 | Bonds and borrowings |
Retirement and severance benefits | 194,990 | - | 8,044 | 203,034 | Net defined benefit liabilities |
Other fixed liabilities | 83,055 | (7,456) | (1,621) | 73,978 | Other non-current liabilities |
Total liabilities | 2,031,562 | - | 39,505 | 2,071,067 | Total liabilities |
(Equity) | (Equity) | ||||
Mitsubishi Electric Corp. shareholders' equity | 2,039,627 | - | 28,536 | 2,068,163 | Mitsubishi Electric Corp. stockholders' equity |
Common stock | 175,820 | - | - | 175,820 | Common stock |
Capital surplus | 212,530 | - | (13,785) | 198,745 | Capital surplus |
Retained earnings | 1,654,557 | - | (60,897) | 1,593,660 | Retained earnings |
Accumulated other comprehensive income (loss) | (2,052) | - | 103,218 | 101,166 | Accumulated other comprehensive income (loss) |
Treasury stock at cost | (1,228) | - | - | (1,228) | Treasury stock at cost |
Noncontrolling interests | 101,081 | - | (2,281) | 98,800 | Non-controlling interests |
Total equity | 2,140,708 | - | 26,255 | 2,166,963 | Total equity |
Total liabilities and equity | 4,172,270 | - | 65,760 | 4,238,030 | Total liabilities and equity |
Balance of Debt | 352,124 | - | 21,987 | 374,111 | Balance of Debt |
Accumulated other comprehensive income (loss): | Accumulated other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 18,535 | - | (18,535) | - | Exchange differences on translating foreign operations |
Pension liability adjustments | (156,993) | - | 156,993 | - | Remeasurements of defined benefit pension plans |
Unrealized gains on securities | 136,352 | - | (35,223) | 101,129 | Financial assets measured at fair value through other comprehensive income |
Unrealized gains on derivative instruments | 54 | - | (17) | 37 | Net changes in the fair value of cash flow hedges |
Reconciliation of Equity as at the End of the Third Quarter of the Previous Fiscal Year(December 31, 2017)
(Condensed Quarterly Consolidated Statements of Financial Position) (In millions of yen)
Presentation under US GAAP | US GAAP | Re-classification | Recognition and measurement differences | IFRS | Presentation under IFRS |
(Assets) | (Assets) | ||||
Current assets | 2,490,034 | 1,017 | (22,019) | 2,469,032 | Current assets |
Cash and cash equivalents | 551,670 | - | - | 551,670 | Cash and cash equivalents |
Trade receivables | 902,389 | 16,168 | 142,456 | 1,061,013 | Trade receivables and contract assets |
Inventories | 842,281 | - | (149,865) | 692,416 | Inventories |
Prepaid expenses and other current assets | 193,694 | (15,151) | (14,610) | 163,933 | Other current assets |
- | (1,017) | 45,536 | 1,738,485 | Non-current assets | |
Long-term trade receivables | 1,798 | (1,798) | - | - | |
Investments | 671,641 | (671,641) | - | - | |
- | 182,265 | 5,192 | 187,457 | Investments accounted for using the equity method | |
- | 372,218 | 27,666 | 399,884 | Other financial assets | |
Net property, plant and equipment | 757,869 | - | (32,062) | 725,807 | Net property, plant and equipment |
Other assets | 262,658 | 117,939 | 44,740 | 425,337 | Other non-current assets |
Total assets | 4,184,000 | - | 23,517 | 4,207,517 | Total assets |
(In millions of yen)
Presentation under US GAAP | US GAAP | Re-classification | Recognition and measurement differences | IFRS | Presentation under IFRS |
(Liabilities) | (Liabilities) | ||||
Current liabilities | 1,368,433 | 8,293 | (1,075) | 1,375,651 | Current liabilities |
Bank loans and current portion of long-term debt | 110,782 | - | 514 | 111,296 | Bonds and borrowings |
Trade payables | 652,998 | (113,978) | - | 539,020 | Trade payables |
Other current liabilities | 604,653 | 122,271 | (1,589) | 725,335 | Other current liabilities |
- | (8,293) | 30,163 | 476,540 | Non-current liabilities | |
Long-term debt | 207,935 | - | - | 207,935 | Bonds and borrowings |
Retirement and severance benefits | 173,911 | - | 32,422 | 206,333 | Net defined benefit liabilities |
Other fixed liabilities | 72,824 | (8,293) | (2,259) | 62,272 | Other non-current liabilities |
Total liabilities | 1,823,103 | - | 29,088 | 1,852,191 | Total liabilities |
(Equity) | (Equity) | ||||
Mitsubishi Electric Corp. shareholders' equity | 2,254,351 | - | (3,996) | 2,250,355 | Mitsubishi Electric Corp. stockholders' equity |
Common stock | 175,820 | - | - | 175,820 | Common stock |
Capital surplus | 212,543 | - | (13,785) | 198,758 | Capital surplus |
Retained earnings | 1,778,978 | - | (62,003) | 1,716,975 | Retained earnings |
Accumulated other comprehensive income (loss) | 88,937 | - | 71,792 | 160,729 | Accumulated other comprehensive income (loss) |
Treasury stock at cost | (1,927) | - | - | (1,927) | Treasury stock at cost |
Noncontrolling interests | 106,546 | - | (1,575) | 104,971 | Non-controlling interests |
Total equity | 2,360,897 | - | (5,571) | 2,355,326 | Total equity |
Total liabilities and equity | 4,184,000 | - | 23,517 | 4,207,517 | Total liabilities and equity |
Balance of Debt | 318,717 | - | 514 | 319,231 | Balance of Debt |
Accumulated other comprehensive income (loss): | Accumulated other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 58,591 | - | (15,153) | 43,438 | Exchange differences on translating foreign operations |
Pension liability adjustments | (116,271) | - | 116,271 | - | Remeasurements of defined benefit pension plans |
Unrealized gains on securities | 146,615 | - | (29,374) | 117,241 | Financial assets measured at fair value through other comprehensive income |
Unrealized gains on derivative instruments | 2 | - | 48 | 50 | Net changes in the fair value of cash flow hedges |
Reconciliation of Equity as at the End of the Previous Fiscal Year (March 31, 2018)
(Consolidated Statements of Financial Position) (In millions of yen)
Presentation under US GAAP | US GAAP | Re-classification | Recognition and measurement differences | IFRS | Presentation under IFRS |
(Assets) | (Assets) | ||||
Current assets | 2,606,493 | (1,434) | (22,324) | 2,582,735 | Current assets |
Cash and cash equivalents | 599,199 | - | - | 599,199 | Cash and cash equivalents |
Trade receivables | 1,087,593 | 14,225 | 89,711 | 1,191,529 | Trade receivables and contract assets |
Inventories | 741,782 | - | (95,520) | 646,262 | Inventories |
Prepaid expenses and other current assets | 177,919 | (15,659) | (16,515) | 145,745 | Other current assets |
- | 1,434 | 63,345 | 1,722,845 | Non-current assets | |
Long-term trade receivables | 1,965 | (1,965) | - | - | |
Investments | 614,295 | (614,295) | - | - | |
- | 187,828 | 6,480 | 194,308 | Investments accounted for using the equity method | |
- | 335,474 | 27,697 | 363,171 | Other financial assets | |
Net property, plant and equipment | 740,448 | - | (16,191) | 724,257 | Net property, plant and equipment |
Other assets | 301,358 | 94,392 | 45,359 | 441,109 | Other non-current assets |
Total assets | 4,264,559 | - | 41,021 | 4,305,580 | Total assets |
(In millions of yen)
Presentation under US GAAP | US GAAP | Re-classification | Recognition and measurement differences | IFRS | Presentation under IFRS |
(Liabilities) | (Liabilities) | ||||
Current liabilities | 1,471,367 | 8,586 | 8,296 | 1,488,249 | Current liabilities |
Bank loans and current portion of long-term debt | 122,430 | - | 465 | 122,895 | Bonds and borrowings |
Trade payables | 719,404 | (139,838) | - | 579,566 | Trade payables |
Other current liabilities | 629,533 | 148,424 | 7,831 | 785,788 | Other current liabilities |
- | (8,586) | (349) | 420,112 | Non-current liabilities | |
Long-term debt | 189,055 | - | - | 189,055 | Bonds and borrowings |
Retirement and severance benefits | 171,017 | - | 503 | 171,520 | Net defined benefit liabilities |
Other fixed liabilities | 68,975 | (8,586) | (852) | 59,537 | Other non-current liabilities |
Total liabilities | 1,900,414 | - | 7,947 | 1,908,361 | Total liabilities |
(Equity) | (Equity) | ||||
Mitsubishi Electric Corp. shareholders' equity | 2,259,355 | - | 34,819 | 2,294,174 | Mitsubishi Electric Corp. stockholders' equity |
Common stock | 175,820 | - | - | 175,820 | Common stock |
Capital surplus | 213,250 | - | (13,808) | 199,442 | Capital surplus |
Retained earnings | 1,857,741 | - | (46,393) | 1,811,348 | Retained earnings |
Accumulated other comprehensive income (loss) | 14,472 | - | 95,020 | 109,492 | Accumulated other comprehensive income (loss) |
Treasury stock at cost | (1,928) | - | - | (1,928) | Treasury stock at cost |
Noncontrolling interests | 104,790 | - | (1,745) | 103,045 | Non-controlling interests |
Total equity | 2,364,145 | - | 33,074 | 2,397,219 | Total equity |
Total liabilities and equity | 4,264,559 | - | 41,021 | 4,305,580 | Total liabilities and equity |
Balance of Debt | 311,485 | - | 465 | 311,950 | Balance of Debt |
Accumulated other comprehensive income (loss): | Accumulated other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 34,149 | - | (16,600) | 17,549 | Exchange differences on translating foreign operations |
Pension liability adjustments | (141,075) | - | 141,075 | - | Remeasurements of defined benefit pension plans |
Unrealized gains on securities | 121,413 | - | (29,461) | 91,952 | Financial assets measured at fair value through other comprehensive income |
Unrealized gains (losses) on derivative instruments | (15) | - | 6 | (9) | Net changes in the fair value of cash flow hedges |
Notes to reconciliation of equity
The principal effects of transition to IFRS in the reconciliation of equity above are as follows:
(1) Reclassification
The main elements of reclassification are as follows:
(a) In accordance with the presentation provisions under IFRS, other financial assets are presented separately.
(b) Part of trade receivables, prepaid expenses and other current assets and other assets, etc. are reclassified based on the definition and recognition criteria of IFRS.
(c) Part of trade payables, other current liabilities and other fixed liabilities are reclassified based on the definition and recognition criteria of IFRS.
(2) Recognition and measurement differences
The main elements of recognition and measurement differences are as follows:
(a) Employee benefits
Under US GAAP, actuarial gains and losses and past service costs are deferred in accumulated other comprehensive income, subsequently amortized for a specified future period and recognized in profit or loss. Current service costs, interest costs and expected return on plan assets are recognized in profit or loss for the fiscal year.
Under IFRS, on the other hand, changes resulting from remeasurement of defined benefit obligation and plan assets relating to defined-benefit corporate pension plans and lump-sum payment plans required by IFRS are recognized in other comprehensive income, and reclassified from accumulated other comprehensive income directly to retained earnings, not through profit or loss. Past service costs arising from plan amendments are fully recognized immediately in profit or loss. Current service costs are recognized in profit or loss. Interest costs are recognized in profit or loss at the amount determined by multiplying the net amount of the defined benefit obligation and plan assets by the discount rate used to determine the present value of the obligation.
(b) Equity instruments
Under US GAAP, non-marketable equity instruments are recognized at their cost. If fair value of equity instruments has decreased and the decrease is considered not to be temporary, impairment loss is recognized for the amount of the cost of the equity instruments in excess of fair value. Gains or losses on the sale of these equity instruments are recognized in profit or loss.
Under IFRS, on the other hand, all equity instruments are recognized at fair value irrespective of whether there is an active market. Since it is permitted to recognize changes in fair value in other comprehensive income, the Company and its consolidated subsidiaries have elected to recognize changes in fair value of equity instruments in other comprehensive income. Accordingly, loss on impairment and gains or losses on the sale of equity instruments recognized in profit or loss under US GAAP are recognized in other comprehensive income as well.
(c) Income taxes
Under US GAAP, tax expenses incurred by sellers are deferred using the deferral method for differences arising from unrealized profits and losses from intercompany transactions.
Under IFRS, on the other hand, a difference between the carrying amount and the sale price of an asset sold is recognized as a future deductible temporary difference based on the asset-and-liability approach. A deferred tax asset is recognized for the future deductible temporary difference using purchaser's effective tax rate while taking its recoverability into consideration.
Under US GAAP, deferred tax liabilities for temporary differences associated with investments in equity investees are recognized using tax rates applicable on the premise that the temporary difference will be reversed at the time of sale of the equity investees even if a company intends to continue to hold the investments. In principle, deferred tax liabilities are recognized for the undistributed earnings of subsidiaries, etc.
Under IFRS, deferred tax liabilities are in principle recognized for all the taxable temporary differences using tax rates applied when the taxable temporary differences reverse, such as when receiving dividends or selling the investments. Deferred tax liabilities are recognized for the taxable temporary differences associated with investments in subsidiaries etc. which are probable to reverse in the foreseeable future.
(d) Exchange differences on translating foreign operations
Cumulative exchange differences on translating foreign operations are all deemed to be zero at the date of transition to IFRS. Consequently, exchange differences on translating foreign operations included in accumulated other comprehensive income as at the transition date were fully reclassified to retained earnings.
(e) Exclusion of equity investees
Under US GAAP, when an investee no longer qualifies as an equity investee, the difference between the sale price and the carrying amount of the interest sold is recognized in profit or loss. If an investor retains a residual interest, gains or losses recognized in prior periods remain included in the carrying amount of the residual interest.
Under IFRS, on the other hand, when an investee no longer qualifies as an equity investee, the residual interest is measured at fair value if an investor retains a residual interest. The sale price and the difference between the fair value and the carrying amount of the residual interest at the point when an investee no longer qualifies as an equity investee is recognized in profit or loss.
(f) Government grants
Under US GAAP, government grants related to acquisition of assets are not reflected in the carrying amounts of assets because there are no accounting standards for such government grants.
Under IFRS, on the other hand, government grants related to assets are recognized as reducing the carrying amount of the asset by the government grants received.
(g) Impairment of non-financial assets
Under US GAAP, if there is an indication that a fixed asset may be impaired, the carrying amount and the undiscounted estimated future cash flows of the asset is compared. If the carrying amount exceeds the estimated future cash flows, any excess of the carrying amount over the fair value is recognized as an impairment loss.
Under IFRS, on the other hand, if there is an indication that a fixed asset may be impaired, any excess of the carrying amount over the recoverable amount of the fixed asset (the higher of value in use or fair value less costs of disposal) is recognized as an impairment loss of the fixed asset.
(h) Business combinations
Under US GAAP, in business combinations, the acquirer measures the acquiree as a whole (including non-controlling interests) at fair value and goodwill is recognized including the portion of goodwill attributable to the non-controlling interests.
Under IFRS, on the other hand, in business combinations it is permitted to elect to apply either method: the acquirer measures the acquiree as a whole (including non-controlling interests) at fair value and goodwill is recognized including the portion of goodwill attributable to the non-controlling interests; or non-controlling interest is measured as a proportional interest in the fair value of the acquiree's net identifiable assets and goodwill is recognized only for the acquirer's share. The Company elected the method of measuring non-controlling interest as a proportional interest in the fair value of the acquiree's net identifiable assets and recognizing goodwill only for the acquirer's share. Capital surplus is recognized when non-controlling interests are additionally acquired after the date when control was obtained.
Reconciliation of Profit or Loss and Comprehensive Income for the First 9 Months of the Previous Fiscal Year (from April 1, 2017 to December 31, 2017)
(Condensed Quarterly Consolidated Statements of Profit or Loss) (In millions of yen)
Presentation under US GAAP | US GAAP | Re-classification | Recognition and measurement differences | IFRS | Presentation under IFRS |
Net sales | 3,115,012 | - | 71,743 | 3,186,755 | Net sales |
Cost of sales | 2,112,607 | (4) | 94,750 | 2,207,353 | Cost of sales |
Selling, general and administrative expenses | 768,464 | 723 | (26,992) | 742,195 | Selling, general and administrative expenses |
Loss on impairment of long-lived assets | 1,532 | (1,532) | - | - | |
- | 290 | 449 | 739 | Other profit | |
Operating income | 232,409 | 1,103 | 4,434 | 237,946 | Operating income |
Other income | 51,587 | - | - | - | |
Interest and Dividends | 7,247 | 22,124 | (21,825) | 7,546 | Financial income |
Equity in earnings of affiliated companies | 15,696 | (15,696) | - | - | |
Other | 28,644 | (28,644) | - | - | |
Other expenses | 6,769 | - | - | - | |
Interest | 2,044 | 6 | (6) | 2,044 | Financial expenses |
Other | 4,725 | (4,725) | - | - | |
- | 15,696 | 30 | 15,726 | Share of profit of investments accounted for using the equity method | |
Income before income taxes | 277,227 | (698) | (17,355) | 259,174 | Income before income taxes |
Income taxes | 75,883 | (698) | (8,620) | 66,565 | Income tax expenses |
Net income | 201,344 | - | (8,735) | 192,609 | Net income |
Net income attributable to: | |||||
Net income attributable to the noncontrolling interests | 8,226 | - | 313 | 8,539 | Non-controlling interests |
Net income attributable to Mitsubishi Electric Corp. | 193,118 | - | (9,048) | 184,070 | Mitsubishi Electric Corp. stockholders |
(Condensed Quarterly Consolidated Statements of Comprehensive Income) (In millions of yen)
Presentation under US GAAP | US GAAP | Re-classification | Recognition and measurement differences | IFRS | Presentation under IFRS |
Net income | 201,344 | - | (8,735) | 192,609 | Net income |
Other comprehensive income (loss), net of tax | (Other comprehensive income (loss), net of tax) | ||||
Items that will not be reclassified to net income | |||||
Unrealized gains on securities | 10,379 | (829) | 13,795 | 23,345 | Financial assets measured at fair value through other comprehensive income |
Pension liability adjustments | 40,693 | (352) | (40,341) | - | Remeasurements of defined benefit pension plans |
- | 1,181 | (352) | 829 | Share of other comprehensive income of investments accounted for using the equity method | |
- | - | (26,898) | 24,174 | Subtotal | |
Items that may be reclassified to net income | |||||
Foreign currency translation adjustments | 43,830 | (1,127) | 3,278 | 45,981 | Exchange differences on translating foreign operations |
Unrealized gains (losses) on derivative instruments | (65) | 3 | 65 | 3 | Net changes in the fair value of cash flow hedges |
- | 1,124 | (44) | 1,080 | Share of other comprehensive income of investments accounted for using the equity method | |
- | - | 3,299 | 47,064 | Subtotal | |
Total | 94,837 | - | (23,599) | 71,238 | Total other comprehensive income |
Comprehensive income | 296,181 | - | (32,334) | 263,847 | Comprehensive income |
Comprehensive income attributable to: | |||||
Comprehensive income attributable tothe noncontrolling interests | 12,074 | - | 199 | 12,273 | Non-controlling interests |
Comprehensive income attributable toMitsubishi Electric Corp. | 284,107 | - | (32,533) | 251,574 | Mitsubishi Electric Corp. stockholders |
Reconciliation of Profit or Loss and Comprehensive Income for the Third Quarter of the Previous Fiscal Year (from October 1, 2017 to December 31, 2017)
(Condensed Quarterly Consolidated Statements of Profit or Loss) (In millions of yen)
Presentation under US GAAP | US GAAP | Re-classification | Recognition and measurement differences | IFRS | Presentation under IFRS |
Net sales | 1,038,670 | - | 36,318 | 1,074,988 | Net sales |
Cost of sales | 700,366 | 120 | 44,308 | 744,794 | Cost of sales |
Selling, general and administrative expenses | 255,191 | 241 | (9,250) | 246,182 | Selling, general and administrative expenses |
- | 677 | 432 | 1,109 | Other profit (loss) | |
Operating income | 83,113 | 316 | 1,692 | 85,121 | Operating income |
Other income | 9,899 | - | - | - | |
Interest and Dividends | 2,362 | 921 | (536) | 2,747 | Financial income |
Equity in earnings of affiliated companies | 5,729 | (5,729) | - | - | |
Other | 1,808 | (1,808) | - | - | |
Other expenses | 1,028 | - | - | - | |
Interest | 605 | 73 | (73) | 605 | Financial expenses |
Other | 423 | (423) | - | - | |
- | 5,729 | 10 | 5,739 | Share of profit of investments accounted for using the equity method | |
Income before income taxes | 91,984 | (221) | 1,239 | 93,002 | Income before income taxes |
Income taxes | 27,354 | (221) | 46 | 27,179 | Income tax expenses |
Net income | 64,630 | - | 1,193 | 65,823 | Net income |
Net income attributable to: | |||||
Net income attributable to the noncontrolling interests | 2,636 | - | 89 | 2,725 | Non-controlling interests |
Net income attributable to Mitsubishi Electric Corp. | 61,994 | - | 1,104 | 63,098 | Mitsubishi Electric Corp. stockholders |
(Condensed Quarterly Consolidated Statements of Comprehensive Income) (In millions of yen)
Presentation under US GAAP | US GAAP | Re-classification | Recognition and measurement differences | IFRS | Presentation under IFRS |
Net income | 64,630 | - | 1,193 | 65,823 | Net income |
Other comprehensive income (loss), net of tax | (Other comprehensive income (loss), net of tax) | ||||
Items that will not be reclassified to net income | |||||
Unrealized gains on securities | 13,675 | (232) | 181 | 13,624 | Financial assets measured at fair value through other comprehensive income |
Pension liability adjustments | 22,824 | (10) | (22,814) | - | Remeasurements of defined benefit pension plans |
- | 242 | (10) | 232 | Share of other comprehensive income of investments accounted for using the equity method | |
- | - | (22,643) | 13,856 | Subtotal | |
Items that may be reclassified to net income | |||||
Foreign currency translation adjustments | 17,165 | (1,255) | (1,488) | 14,422 | Exchange differences on translating foreign operations |
Unrealized gains on derivative instruments | 17 | (11) | (8) | (2) | Net changes in the fair value of cash flow hedges |
- | 1,266 | (1) | 1,265 | Share of other comprehensive income of investments accounted for using the equity method | |
- | - | (1,497) | 15,685 | Subtotal | |
Total | 53,681 | - | (24,140) | 29,541 | Total other comprehensive income |
Comprehensive income | 118,311 | - | (22,947) | 95,364 | Comprehensive income |
Comprehensive income attributable to: | |||||
Comprehensive income attributable tothe noncontrolling interests | 4,449 | - | 36 | 4,485 | Non-controlling interests |
Comprehensive income attributable toMitsubishi Electric Corp. | 113,862 | - | (22,983) | 90,879 | Mitsubishi Electric Corp. stockholders |
Reconciliation of Profit or Loss and Comprehensive Income for the Previous Fiscal Year (from April 1, 2017 to March 31, 2018)
(Consolidated Statements of Profit or Loss) (In millions of yen)
Presentation under US GAAP | US GAAP | Re-classification | Recognition and measurement differences | IFRS | Presentation under IFRS |
Net sales | 4,431,198 | - | 13,226 | 4,444,424 | Net sales |
Cost of sales | 3,030,902 | - | 53,024 | 3,083,926 | Cost of sales |
Selling, general and administrative expenses | 1,061,778 | 729 | (34,623) | 1,027,884 | Selling, general and administrative expenses |
Loss on impairment oflong-lived assets | 19,881 | (19,881) | - | - | |
- | (20,990) | 15,820 | (5,170) | Other profit (loss) | |
Operating income | 318,637 | (1,838) | 10,645 | 327,444 | Operating income |
Other income | 60,414 | - | - | - | |
Interest and Dividends | 8,611 | 23,637 | (23,637) | 8,611 | Financial income |
Equity in earnings of affiliated companies | 22,261 | (22,261) | - | - | |
Other | 29,542 | (29,542) | - | - | |
Other expenses | 14,473 | - | - | - | |
Interest | 2,727 | 4,726 | (657) | 6,796 | Financial expenses |
Other | 11,746 | (11,746) | - | - | |
- | 22,261 | 1,686 | 23,947 | Share of profit of investments accounted for using the equity method | |
Income before income taxes | 364,578 | (723) | (10,649) | 353,206 | Income before income taxes |
Income taxes | 82,239 | (723) | 5,291 | 86,807 | Income tax expenses |
Net income | 282,339 | - | (15,940) | 266,399 | Net income |
Net income attributable to: | |||||
Net income attributable to the noncontrolling interests | 10,459 | - | 185 | 10,644 | Non-controlling interests |
Net income attributable to Mitsubishi Electric Corp. | 271,880 | - | (16,125) | 255,755 | Mitsubishi Electric Corp. stockholders |
(Consolidated Statements of Comprehensive Income) (In millions of yen)
Presentation under US GAAP | US GAAP | Re-classification | Recognition and measurement differences | IFRS | Presentation under IFRS |
Net income | 282,339 | - | (15,940) | 266,399 | Net income |
Other comprehensive income (loss), net of tax | (Other comprehensive income (loss), net of tax) | ||||
Items that will not be reclassified to net income | |||||
Unrealized gains (losses) on securities | (14,875) | 392 | 14,431 | (52) | Financial assets measured at fair value through other comprehensive income |
Pension liability adjustments | 15,857 | (596) | 6,062 | 21,323 | Remeasurements of defined benefit pension plans |
- | 204 | (34) | 170 | Share of other comprehensive income of investments accounted for using the equity method | |
- | - | 20,459 | 21,441 | Subtotal | |
Items that may be reclassified to net income | |||||
Foreign currency translation adjustments | 17,023 | (1,908) | 1,877 | 16,992 | Exchange differences on translating foreign operations |
Unrealized gains (losses) on derivative instruments | (88) | (6) | 23 | (71) | Net changes in the fair value of cash flow hedges |
- | 1,914 | (45) | 1,869 | Share of other comprehensive income of investments accounted for using the equity method | |
- | - | 1,855 | 18,790 | Subtotal | |
Total | 17,917 | - | 22,314 | 40,231 | Total Other comprehensive income |
Comprehensive income | 300,256 | - | 6,374 | 306,630 | Comprehensive income |
Comprehensive income attributable to: | |||||
Comprehensive income attributable tothe noncontrolling interests | 11,852 | - | 68 | 11,920 | Non-controlling interests |
Comprehensive income attributable toMitsubishi Electric Corp. | 288,404 | - | 6,306 | 294,710 | Mitsubishi Electric Corp. stockholders |
Notes to Reconciliation of Profit or Loss and Comprehensive Income
The principal effects of transition to IFRS in the reconciliation of profit or loss and comprehensive income above are as follows:
(1) Reclassification
The main elements of reclassification are as follows:
(a) In accordance with the presentation provisions under IFRS, financial income and financial expenses are presented separately.
(b) In accordance with the presentation provisions under IFRS, part of other income and other expenses, etc. is included and presented in operating profit.
(c) Unrealized gains (losses) on securities, pension liability adjustments, foreign currency translation adjustments and unrealized gains (losses) on derivative instruments in other comprehensive income that are attributable to equity investees are reclassified in accordance with the presentation provisions under IFRS.
(2) Recognition and measurement differences
The main elements of recognition and measurement differences are as follows:
(a) Reconciliation of sales and cost of sales
Under US GAAP, if amounts of construction contracts cannot be reliably estimated, all construction costs and construction revenue are recognized when the construction is complete.
Under IFRS, on the other hand, revenue from a performance obligation satisfied over time is recognized using the cost recovery method if the outcome cannot be reliably estimated. Revenues using the cost recovery method are only recognized for costs incurred to the extent that it is probable that the cost will be recovered and costs are recognized as expenses in the period in which they are incurred.
(b) Equity instruments
Non-marketable equity instruments are recognized at their cost under US GAAP. If fair value of equity instruments has decreased and the decrease is considered not to be temporary, impairment loss is recognized for the amount of the cost of the equity instruments in excess of fair value. Gains or losses on the sale of these equity instruments are recognized in profit or loss.
Under IFRS, on the other hand, equity instruments are recognized at fair value irrespective of whether there is an active market. Because it is permitted to recognize changes in fair value in other comprehensive income, the Company and its consolidated subsidiaries have elected to recognize changes in fair value of equity instruments in other comprehensive income. Accordingly, loss on impairment and gains or losses on the sale of equity instruments recognized in profit or loss under US GAAP are recognized in other comprehensive income as well.
Notes to Reconciliation of Cash Flows
There are no significant differences in the statement of cash flows resulting from transition from US GAAP to IFRS.
Cautionary Statement
The Mitsubishi Electric Group (hereafter "the Group") is involved in development, manufacture and sales in a wide range of fields including Energy and Electric Systems, Industrial Automation Systems, Information and Communication Systems, Electronic Devices and Home Appliances, and these operations extend globally, not only inside Japan, but also in North America, Europe, Asia and other regions. While the statements herein are based on certain assumptions and premises that the Group trusts and considers to be reasonable under the circumstances on the date of announcement, actual financial standings and operating results are subject to change due to any of the factors as contemplated hereunder and/or any additional factor unforeseeable as of the date of this announcement. Such factors materially affecting the expectations expressed herein shall include but are not limited to the following:
(1) Important trends
The Group's operations may be affected by trends in the global economy, social conditions, laws, tax codes and regulations.
(2) Foreign currency exchange rates
Fluctuations in foreign currency markets may affect the Group's sales of exported products and purchases of imported materials that are denominated in U.S. dollars or euros, as well as its Asian production bases' sales of exported products and purchases of imported materials that are denominated in foreign currencies.
(3) Stock markets
A fall in stock market prices may cause a decline in value of the Group's marketable securities and pension assets.
(4) Supply/demand balance for products and procurement conditions for materials and components
A decline in prices and shipments due to changes in the supply/demand balance, as well as an increase in material prices due to a worsening of material and component procurement conditions, may adversely affect the Group's performance.
(5) Fund raising
An increase in interest rates, the yen interest rate in particular, would increase the Group's interest expenses.
(6) Significant patent matters
Important patent filings, licensing, copyrights and patent-related disputes may adversely affect related businesses.
(7) Environmental legislation or relevant issues
The Group may incur losses or expenses owing to changes in environmental legislation or the occurrence of environmental issues. Such changes in legislation or the occurrence of environmental issues may also impact manufacturing and all corporate activities of the Group.
(8) Flaws or defects in products or services
The Group may incur losses or expenses resulting out of flaws or defects in products or services, and the lowered reputation of the quality of all its products and services may affect the entire Group.
(9) Litigation and other legal proceedings
The Group's operations may be affected by lawsuits or other legal proceedings against Mitsubishi Electric, its subsidiaries and/or equity-method affiliated companies.
(10) Disruptive changes
Disruptive changes in technology, development of products using new technology, timing of production and market introduction may adversely affect the Group's performance.
(11) Business restructuring
The Group may record losses due to restructuring measures.
(12) Information security
The performance of the Group may be affected by computer virus infections, unauthorized access and other unpredictable incidents that lead to the loss or leakage of personal information held by the Group or confidential information regarding the Group's business such as its technology, sales and other operations.
(13) Natural disasters
The Group's operations, particularly manufacturing activities, may be affected by the occurrence of earthquakes, typhoons, tsunami, fires and other large-scale disasters.
(14) Other significant factors
The Group's operations may be affected by the outbreak of social or political upheaval due to terrorism, war, pandemic by new strains of influenza and other diseases, or other factors.
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About Mitsubishi Electric Corporation
With nearly 100 years of experience in providing reliable, high-quality products, Mitsubishi Electric Corporation (TOKYO: 6503) is a recognized world leader in the manufacture, marketing and sales of electrical and electronic equipment used in information processing and communications, space development and satellite communications, consumer electronics, industrial technology, energy, transportation and building equipment. Embracing the spirit of its corporate statement, Changes for the Better, and its environmental statement, Eco Changes, Mitsubishi Electric endeavors to be a global, leading green company, enriching society with technology. The company recorded consolidated group sales of 4,444.4 billion yen (in accordance with IFRS; US$ 41.9 billion*) in the fiscal year ended March 31, 2018. For more information visit:
www.MitsubishiElectric.com
*At an exchange rate of 106 yen to the US dollar, the rate given by the Tokyo Foreign Exchange Market on March 31, 2018