A Global, Leading Green Company That
Enriches Society with Technology.
As the Mitsubishi Electric Group comes closer to celebrating in fiscal 2021
the 100th anniversary of our founding, we will contribute to
the enrichment of society as a global, leading green company.
By “enriching society,” we mean creating a “people-friendly” society where
everyone can live their lives in safety, peace of mind, health, and comfort—
and at the same time an “earth-friendly” society that reduces impact to the
environment by advancing the efficient use and reuse of resources and energy.
We of the Mitsubishi Electric Group have come to provide cutting-edge
technologies and diverse businesses globally,
and on a broad scale of applications ranging from homes, offices,
and factories to social infrastructure and outer space.
“To pave the way to a better and brighter tomorrow”— this will be
our mindset for future efforts as we increase collaboration within
the Group and continually challenge ourselves to innovate.
Contents
02
03
04
06
08
To Our Shareholders
Financial Highlights
Corporate Strategy
At a Glance
Fiscal 2016 Topics
Review of Operations
08
Energy and
Electric Systems
09
Industrial Automation
Systems
10
Information and
Communication Systems
11
12
Electronic Devices
Home Appliances
13
16
19
21
22
23
25
75
Research and Development /
Intellectual Property
Corporate Social Responsibility
Corporate Governance
Directors and Executive Officers
Organization
Major Subsidiaries and Affiliates
Financial Section
Corporate Data /
Shareholder Information
A Global, Leading Green Company That
Contributes to the Realization of a
Prosperous Society
As the Mitsubishi Electric Group comes closer to celebrating in fiscal 2021
the 100th anniversary of our founding, we will contribute to
the realization of a prosperous society as a global, leading green company.
By “realization of a prosperous society,” we mean creating a “people-friendly” society
where everyone can live their lives in safety, peace of mind, health, and comfort—
and at the same time an “earth-friendly” society that reduces impact to the
environment by advancing the efficient use and reuse of resources and energy.
We of the Mitsubishi Electric Group have come to provide cutting-edge
technologies and diverse businesses globally,
and on a broad scale of applications ranging from homes, offices,
and factories to social infrastructure and outer space.
“To pave the way to a better and brighter tomorrow”— this will be
our mindset for future efforts as we increase collaboration within
the Group and continually challenge ourselves to innovate.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 01
Contents
02
03
04
06
08
To Our Shareholders
Research and Development /
Intellectual Property
Financial Highlights
Corporate Social Responsibility
Corporate Strategy
Corporate Governance
At a Glance
Fiscal 2016 Overview
Directors and Executive Officers
Review of Operations
Organization
08
09
10
11
12
Energy and
Electric Systems
Industrial Automation
Systems
Information and
Communication Systems
Electronic Devices
Home Appliances
Major Subsidiaries and Affiliates
Financial Section
Corporate Data /
Shareholder Information
13
16
19
20
21
22
23
73
To Our Shareholders
Corporate Mission
Seven Guiding Principles
The Mitsubishi Electric Group will continually improve its technologies
and services by applying creativity to all aspects of its business. By doing
so, we enhance the quality of life in our society. To this end, all mem-
bers of the Group will pursue the following Seven Guiding Principles.
Looking back on the economic situation during the fiscal year
ended March 31, 2016 (hereinafter fiscal 2016), the economies
of China and elsewhere in East Asia experienced growth, yet at a
gradual and constantly slower pace. Meanwhile, personal con-
sumption remained weak in Japan. Globally, while the economies
of some newly emerging nations stagnated, the U.S. economy
was robust and some European economies saw modest but sus-
tained recovery. Turning to movements in foreign currency
exchange rates, although the yen remained weak against the
U.S. dollar compared to the previous fiscal year, there was a turn-
around in January 2016, leading to the appreciation of the yen
during the fourth quarter.
Under these circumstances, the Mitsubishi Electric Group placed
greater emphasis than ever before on promoting growth strategies
rooted in its competitive advantages, as well as on initiatives to
boost its competitiveness and strengthen its management structure.
As a result, the Mitsubishi Electric Group recorded consolidated
net sales of ¥4,394.3 billion in the fiscal year ended March 31,
2016, an increase of 2% compared to the previous fiscal year.
Operating income decreased 5% year-on-year to ¥301.1 billion,
for a Group operating income ratio of 6.9%. Moving forward,
the plan is to implement initiatives that will enable the Group to
maintain a return on equity (ROE) above 10%, while keeping
the ratio of interest-bearing debt to total assets below 15%, in
02 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Trust, Quality, Technology, Citizenship, Ethics and Compliance,
Environment, Growth
accordance with management targets. At the same time, the
goal is to achieve consolidated net sales of ¥5.0 trillion or more
and an operating income ratio of 8% or more by fiscal 2021.
Toward securing these fiscal 2021 growth targets and sustained
business expansion, the Mitsubishi Electric Group is accelerating
and strengthening its initiatives to create additional value by com-
bining and coordinating its technologies and technologies, and
businesses and businesses while enhancing each product, system,
and service.
Based on our Corporate Mission and Seven Guiding Principles,
we of the Mitsubishi Electric Group position corporate social
responsibility (CSR) initiatives as our main pillar of corporate man-
agement. Accordingly, we are committed to taking on the chal-
lenges that society is now confronting, such as environmental
issues, and resource and energy issues, on a worldwide basis. In
this way, we will become a global, leading green company capa-
ble of contributing to the realization of a prosperous society.
As we resolutely advance forward to achieve our goals, we ask
for your continued support.
July 2016
President & CEO Masaki Sakuyama
Financial Highlights
Performance for the Year Ended March 31, 2016
Years ended March 31
2016
2015
2014
Yen
(millions)
U.S. dollars
(thousands)
2016
Net sales
Operating income
Net income attributable to Mitsubishi Electric Corp.
Total assets
Interest-bearing debt
Mitsubishi Electric Corp. shareholders’ equity
Capital expenditures
R&D expenditures
Per-Share Amounts
Net income attributable to Mitsubishi Electric Corp.
Basic
Diluted
Cash dividends declared
Statistical Information
Operating income ratio
Return on equity (ROE)
Interest-bearing debt to total assets
¥4,394,353
¥4,323,041
¥4,054,359
$38,888,080
301,172
228,494
4,059,941
404,039
1,838,773
182,251
202,922
317,604
234,694
4,059,451
381,994
1,842,203
199,758
195,314
235,172
153,473
3,612,966
373,478
1,524,322
151,840
178,945
2,665,239
2,022,071
35,928,681
3,575,567
16,272,327
1,612,841
1,795,770
Yen
U.S. dollars
¥106.43
¥109.32
¥71.49
—
27
—
27
—
17
%
6.9%
7.3%
5.8%
12.4
10.0
13.9
9.4
10.9
10.3
$0.942
—
0.239
—
—
—
See accompanying Notes to Consolidated Financial Statements on page 41.
1 The Company prepares consolidated financial statements with procedures, accounting terms, forms, and preparation that are in conformity with accounting principles
generally accepted in the United States of America based on the rules and regulations applicable in Japan.
2 Operating income is presented as net sales less cost of sales, selling, general, administrative, and R&D expenses, and loss on impairment of long-lived assets.
3 Diluted net income per share attributable to Mitsubishi Electric Corp. is not included in the above figure as no dilutive securities existed.
4 U.S. dollar amounts are converted from yen at the rate of ¥113=U.S.$1, the approximate rate on the Tokyo Foreign Exchange Market on March 31, 2016.
Net Sales Breakdown by Business Segment
Others
14.0%
Net sales ¥707,746 million
Energy and Electric Systems 25.0%
Net sales
¥1,264,604 million
Home Appliances 19.5%
Net sales ¥982,064 million
Electronic Devices 4.2%
Net sales ¥211,580 million
Industrial Automation Systems 26.2%
¥1,321,937 million
Net sales
Information and
Communication Systems 11.1%
¥561,119 million
Net sales
Note: Inter-segment sales are included in the amounts of the diagram above.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 03
Corporate Strategy
Management Policy
Embodiment of the Corporate Mission
Aim to Become a “Global, Leading Green Company”
Corporate Mission
The Mitsubishi Electric Group will continually improve its technologies
and services by applying creativity to all aspects of its business.
By doing so, we enhance the quality of life in our society.
Contemporary Social Issues
Environmental issues
Resource/ Energy issues
Solving problems globally by producing energy-saving
products & systems and building social infrastructure
Contribution to Society
Realize
a sustainable society
Provide
safety, security, and comfort
Embodiment of the corporate mission in the
context of the current environment
“Global, Leading Green Company”
Contribute to the realization of a prosperous society
Management Targets
Toward “High-Quality” Growth
In line with its efforts to achieve a higher level of growth, the
Mitsubishi Electric Group has revised its growth targets for fiscal
2021 to consolidated net sales of ¥5.0 trillion or more and an
operating income ratio of 8% or more. The Group will also con-
tinue with efforts to achieve the following management targets:
secure an ROE of 10% or more and secure an interest-bearing
debt to total assets ratio of 15% or less.
In fiscal 2016, the Mitsubishi Electric Group achieved a second
consecutive year of record-high consolidated net sales, which
totaled ¥4,394.3 billion. Operating income stood at ¥301.1 billion.
In addition, the Group continued to achieve its management
targets for ROE of 10% or more and a ratio of interest-bearing
debt to total assets of 15% or less, recording figures of 12.4%
and 10.0%, respectively.
Moving forward, the Group will continue to focus on executing
balanced management initiatives, thereby pursuing “high-quality”
growth.
• Growth Targets to be Achieved by Fiscal 2021
Net sales ¥5.0 trillion or more
Operating income ratio 8% or more
• Management Targets to be Continuously and
Stably Achieved
ROE 10% or more
Ratio of interest-bearing debt to total assets 15% or less
04 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Management Policy
Maintain Balanced Corporate Management for Sustainable Growth
Growth
• Accelerate growth of
strong businesses
• Further global expansion
• Create new strong businesses
• Reinforce the solutions business
Greater
Corporate
Value
Profitability
Efficiency
• Enhance capital efficiency
• Create a stronger business
foundation
Soundness
• Constantly review and
refresh business portfolio
• Maintain sound financial
standing
• Promote thorough Ethics
and Compliance and
CSR initiatives
Bolstering Growth Strategies
Realizing Growth through Value Creation with
Growth Drivers
The Mitsubishi Electric Group’s strength lies in its abundant tech-
nological assets, which encompass a wide range of technologies
such as control technologies and power electronics. In addition,
the Group possesses a solid operating platform that encompasses
The Mitsubishi Electric Group, based on its Corporate Mission and Seven Guiding Principles, has positioned corporate social responsibility (CSR) initiatives as the pillar of its corporate management. Accordingly, the Group aspires to win the appreciation of its stakeholders for its initiatives aimed at resolving various challenges that society is now confronting. Furthermore, it seeks to become a corporation that is trusted by society, customers, shareholders, and employees, and that earns their satisfaction through its business activities. Taking on these challenges on a global basis, the Group is promoting energy-saving products and systems while helping to develop social infrastructure, with the aim of providing solutions for environmental issues, and resource and energy issues. In doing so, the Group embodies its corporate mission in the context of the current environment as a “global, leading green company” capable of contributing to the realization of a prosperous society that simultaneously achieves “sustainability” and “safety, security, and comfort.” Since fiscal 2002, the Mitsubishi Electric Group has continued to pursue sustainable growth by undertaking balanced man-agement initiatives that stem from the three perspectives of growth, profitability and efficiency, and soundness. Looking ahead, the Group will continue carrying out such initiatives and thereby increase its corporate value. As for corporate ethics and compliance, the entire Mitsubishi Electric Group will continue to strictly observe all statutory, regulatory, and ethical requirements while strengthening internal control.
Growth through Value Creation—Overview
Technological Assets
Value Creation
Mitsubishi Electric Group
Control (motion, heat, fluid, and electricity)
Power Electronics
Human Machine Interface
Encryption
Communication
Data Processing
Electromagnetic Analysis
Sensing
Design
Devices
etc.
Technological Platform
s
e
i
g
r
e
n
y
S
l
y
g
o
o
n
h
c
e
T
Energy & Electric
Industrial Automation
Information & Communication
Electronic Devices
Home Appliances
s
e
i
g
r
e
n
y
S
s
s
e
n
i
s
u
B
• Provide value which meets market needs
• Create additional value through
technology synergies and business synergies
Make Strong Businesses Stronger
Continuous Creation of New Strong Businesses
Reinforce the Solutions Business Centered
on Strong Businesses
Operating Platform
R&D and IP
Procurement
Productivity
Quality
Sales and Services
Open & Global Innovation Enhance technological development capabilities through joint R&D initiatives
Universities
Corporations
National Research and Development Agency
Government
Standardization Organizations
materials procurement, production, quality assurance, and sales
and services, in all of which a culture of improvement is firmly
entrenched. The Mitsubishi Electric Group is thus well-positioned
to freely leverage its competitive edge in a wide range of diverse
businesses.
With this in mind, the Group has positioned “making strong
businesses stronger” as the core of its growth strategies. Currently,
the Group has identified eight businesses—power systems, trans-
portation systems, building systems, factory automation (FA)
systems, automotive equipment, space systems, power devices,
and air-conditioning and refrigeration systems—as growth drivers.
Focusing on these businesses, the Group will expand its opera-
tions in markets worldwide, ranging from Japan, North America,
Europe, and China to newly emerging nations, including those
elsewhere in Asia. As it moves forward, the Group will continue
to create and provide new value to satisfy the needs of each mar-
ket and garner the appreciation of customers, thereby securing
sustainable growth.
Additional Value Creation through Technology
Synergies and Business Synergies
Toward securing its fiscal 2021 growth targets and sustained
business expansion, the Mitsubishi Electric Group is accelerating
and strengthening its initiatives to create additional value by
combining and coordinating its technologies and technologies,
and businesses and businesses while enhancing each product,
system, and service.
Specifically, the Group seeks to create technology synergies
and business synergies through the coordination of business
activities. In addition to improving the performance and reliability
of every product and service it offers, the Group will enhance its
responsiveness to customers’ business challenges and needs by
innovatively combining its technologies, products, systems, and
services. Through these efforts, the Group will garner even greater
customer recognition in existing business fields while developing
new businesses and markets and thus secure greater earnings.
Increasing the Allocation of Resources to Steps Aimed
at Strengthening Competitiveness
As it increases the allocation of development, capital, and other
investment resources, the Mitsubishi Electric Group targets busi-
ness fields where the Group is capable of quickly securing growth
while generating short-term investment benefits as well as those
exhibiting a high probability of expansion with little or no perfor-
mance volatility. At the same time, the Group constantly reviews
and refreshes its business portfolio to reallocate its management
resources to growth fields. Moreover, the Group works to
strengthen this portfolio by continuously creating new strong
businesses capable of driving future growth. In addition, the
Group is committed to forward-looking R&D aimed at securing a
more robust technological platform that will, in turn, ensure its
sustainable growth from fiscal 2021 onward.
Additionally, aiming to augment its growth, the Mitsubishi
Electric Group will actively pursue collaborative ties and M&As
from the three perspectives of: supplementing product groups
and technology fields in which the Group is lacking, to expand
business; securing sales and service networks when advancing
into new regions and markets; and acquiring new customer
segments in order to bolster the Group’s business platform.
Building a Robust Management Foundation
To strengthen its management foundation, the Mitsubishi Electric
Group continuously strives to enhance its capital efficiency. As a
part of initiatives to this end, the Group continues to expand net
sales and reduce costs while engaging in activities aimed at
improving inventory turnover, trade receivables turnover, and Just
in Time operations. In addition to implementing these efforts in
an exhaustive manner, in fiscal 2016 the Group began utilizing an
internal performance indicator, ROIC (calculated by Mitsubishi
Electric’s own standards), to monitor asset efficiency by business
segment, thereby improving the ROE of Group operations.
Looking ahead, the Mitsubishi Electric Group will continue to focus
on generating stable cash flows, actively investing in growth fields,
maintaining well-balanced shareholder returns commensurate with
profit growth, and diligently working to increase corporate value.
Continuous Innovation
The Mitsubishi Electric Group will steadfastly carry out its man-
agement policies guided by a commitment to balanced manage-
ment, while putting into practice its overarching corporate
statement, Changes for the Better. Each and every employee will
share the common goal of developing new frontiers through
continuous innovation, and the Mitsubishi Electric Group—by
continuing to undergo transformation itself—will mature into a
corporation that is always producing something better.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 05
At a Glance
Energy and Electric Systems
Industrial Automation Systems
Information and Communication Systems
Net sales
Yen (billions)
1,400
1,200
1,000
800
600
400
200
0
1,180
1,228
1,264
1,027
1,058
12
13
14
15
16
(Years ended March 31)
Net sales
Yen (billions)
1,400
1,200
1,000
800
600
400
200
0
1,282
1,321
978
927
1,098
12
13
14
15
16
(Years ended March 31)
Net sales
Yen (billions)
1,400
1,200
1,000
800
600
400
200
0
516
522
548
559
561
12
13
14
15
16
(Years ended March 31)
Operating income
Operating income
Operating income
Yen (billions)
160
140
120
100
80
60
40
20
0
-20
84
85
76
72
50
12
13
14
15
16
(Years ended March 31)
Yen (billions)
160
140
120
100
80
60
40
20
0
-20
159
145
101
98
60
12
13
14
15
16
(Years ended March 31)
Yen (billions)
160
140
120
100
80
60
40
20
0
-20
21
12
1
13
5
14
18
14
15
16
(Years ended March 31)
MAIN PRODUCTS AND BUSINESS LINES
MAIN PRODUCTS AND BUSINESS LINES
MAIN PRODUCTS AND BUSINESS LINES
Turbine generators, hydraulic turbine generators,
nuclear power plant equipment, motors,
transformers, power electronics equipment,
circuit breakers, gas insulated switchgears,
switch control devices, surveillance-system
control and security systems, large display devices,
electrical equipment for locomotives and rolling
stock, elevators, escalators, building security
systems, building management systems,
particle therapy systems, and others
Programmable logic controllers, inverters,
servomotors, human-machine interface, motors,
hoists, magnetic switches, no-fuse circuit
breakers, short-circuit breakers, transformers for
electricity distribution, time and power meters,
uninterruptible power supply, industrial fans,
computerized numerical controllers, electrical
discharge machines, laser processing machines,
industrial robots, clutches, automotive electrical
equipment, car electronics and car mechatronics,
car multimedia, and others
Wireless and wired communications systems,
surveillance cameras, satellite communications
equipment, satellites, radar equipment,
antennas, missile systems, fire control systems,
broadcasting equipment, data transmission
devices, network security systems, information
systems equipment, systems integration,
and others
Fiscal 2016 Topics
• Awarded a contract by Spanish train builder
• Established an elevator factory for Mitsubishi
• Developed the EMIRAI3 xAUTO, an automated
Construcciones y Auxiliar de Ferrocarriles, S.A.
(CAF) to supply high tech traction equipment for
118 New Generation Sprinter (SNG) EMUs for
Dutch Railways (NS).
Elevator India Private Limited in Bangalore, India.
concept car incorporating a full suite of Mitsubishi
Electric technologies for safe, accurate next-
generation automated driving, and the EMIRAI3
xDAS, a concept car featuring next-generation
driving-assistance tech-
nology that promises to
enhance the safety and
comfort of driving.
2015
• Expanded business in Africa with the launch of a
new Mitsubishi Electric Europe B.V. office in
Johannesburg, South Africa.
• Expanded manufacturing and logistics capabilities
with a new facility for Mitsubishi Electric Consumer
Products (Thailand) Co., Ltd. in Chonburi Province,
aiming to reinforce air-conditioning systems busi-
ness in Asia
and other
regions.
• Successfully launched
the TURKSAT-4B satellite
which was carried out
under a turnkey contract
awarded by Turksat
Satellite Communication,
Cable TV and Operation
Inc. Co. (Turksat A.S.) in
2011.
06 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Electronic Devices
Home Appliances
Others
Net sales
Yen (billions)
1,400
1,200
1,000
800
600
400
200
0
200
164
194
238
211
12
13
14
15
16
(Years ended March 31)
Net sales
Yen (billions)
1,400
1,200
1,000
800
600
400
200
0
849
821
944
944
982
12
13
14
15
16
(Years ended March 31)
Net sales
Yen (billions)
1,400
1,200
1,000
800
600
400
200
0
611
590
676
740
707
12
13
14
15
16
(Years ended March 31)
Operating income (loss)
Operating income
Operating income
Yen (billions)
160
140
120
100
80
60
40
20
0
-20
3
12
-5
13
10
14
30
16
15
16
(Years ended March 31)
Yen (billions)
160
140
120
100
80
60
40
20
0
-20
52
54
63
22
19
12
13
14
15
16
(Years ended March 31)
Yen (billions)
160
140
120
100
80
60
40
20
0
-20
20
18
19
23
23
12
13
14
15
16
(Years ended March 31)
MAIN PRODUCTS AND BUSINESS LINES
MAIN PRODUCTS AND BUSINESS LINES
MAIN PRODUCTS AND BUSINESS LINES
Power modules, high-frequency devices,
optical devices, LCD devices, and others
LCD televisions, room air conditioners, package air
conditioners, air-to-water heat pump boilers,
refrigerators, electric fans, ventilators, photovoltaic
systems, hot water supply systems, LED lamps,
fluorescent lamps, indoor lighting, compressors,
chillers, dehumidifiers, air purifiers, showcases,
cleaners, jar rice cookers, microwave ovens,
IH cooking heaters, and others
Procurement, logistics, real estate, advertising,
finance, and other services
• Established the Norwegian Branch of Mitsubishi
Electric Europe B.V. by acquiring Norwegian air
conditioning equipment distributor MIBA AS.
• Opened a factory for transportation-systems busi-
ness in Bidadi, near Bengaluru, India.
• Delivered the world’s largest energy-storage system
of 50 MW output and 300MWh rated capacity to
Kyushu Electric Power Co.
2016
• Began operating the fourth factory of elevator and
escalator manufacturing companies in China,
Mitsubishi Electric Shanghai Electric Elevator Co.,
Ltd. (MESE).
• Acquired DeLclima S.p.A. (“DeLclima”) as MELCO
Hyrdronics & IT Cooling S.p.A., to strengthen com-
mercial heating, ventilation and air conditioning
(HVAC) business globally.
• Awarded first contract with Siemens AG for railcar
air-conditioning systems, which will be used in
Desiro High Capacity railcars on the Rhine-Ruhr
express (RRX) train network that connects cities
and provinces
in Germany’s
North Rhine-
Westphalia
region.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 07
Review of Operations
Energy and Electric Systems
Net Sales Breakdown by Business Segment
25.0%
Net Sales
¥1,264.6billion
up 3% year on year
Operating Income
¥50.3billion
down ¥22.1 billion year on year
The social infrastructure systems business
saw increases in both orders and sales
compared to the previous fiscal year due to
increases in the power systems business and
the transportation systems business in
Japan, despite decreases in the public utility
systems business in Japan and the transpor-
tation systems business outside Japan.
The building systems business experi-
enced an increase in orders, while sales
remained unchanged compared to the pre-
vious fiscal year, owing to growth in the
new installation of elevators and escalators
outside Japan.
As a result, total sales for this segment
increased by 3% from the previous fiscal
year to 1,264.6 billion yen. Operating
income decreased by 22.1 billion yen from
the previous fiscal year to 50.3 billion yen
due primarily to a shift in project portfolios
and lower profit in the social infrastructure
systems business.
08 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Next-generation SiC Inverter for Railcars
Mitsubishi Electric has developed a traction inverter for railcars
that incorporates silicon carbide (SiC), a new type of semicon-
ductor. This new inverter, with its energy-efficient, compact,
lightweight, low-maintenance, and low-noise design,
is expected to play a major role in next-generation railcar
propulsion systems.
Large-scale Visual Information System for
QVC Marine Field
A total of five Diamond Vision displays—one main screen, two
sub-screens for outfield stands, and two sub-screens for the
area behind the backstop netting—have been delivered to
QVC Marine Field, the home field of the Chiba Lotte Marines
(Japanese professional baseball team). Various images and
videos can be shown in an interconnected display, further
contributing to excitement throughout the ballpark.
Particle Therapy System
Utilizing the characteristic features of protons, carbon, and
other heavy ions, particle therapy is a cutting edge technology
that allows for the pinpoint targeting of cancerous tumors
while minimizing side effects on surrounding normal tissues.
It is increasingly selected as an advanced solution in the treat-
ment of cancer.
Power Plants
Mitsubishi Electric power plant installations are used both
by power utility companies and by companies in various
industries as in-house power generators. Owing to its
accumulated expertise and leading technological capabilities,
Mitsubishi Electric is able to provide optimal power plants
in various power generation fields.
AXIEZ Machine-room-less Elevators
Along with enhanced energy-saving functions, including lighting
that is entirely LED, AXIEZ machine-room-less elevators offer
outstanding function and design. Furthermore, Mitsubishi
Electric has added a new large-capacity model to the AXIEZ
lineup, thereby extending the range of target buildings to
include large-scale office buildings, commercial facilities, and
hospitals.
Facima BA-System, an Open Integrated
Management System for Building Facilities
The Facima BA-system provides a variety of functions which help
save energy and make building management more efficient. In
order to target buildings of a wider range of sizes and purposes,
Mitsubishi Electric has launched a new wall-mounted model
with an LCD touch panel as part of its Facima lineup.
Industrial Automation Systems
Net Sales Breakdown by Business Segment
26.2%
Net Sales
¥1,321.9billion
up 3% year on year
Operating Income
¥159.1billion
up ¥13.1 billion year on year
The factory automation systems business
saw a decrease in orders from the previous
fiscal year mainly due to stagnant capital
expenditures in China and other emerging
markets, while sales remained unchanged
from the previous fiscal year due to growth
in capital expenditures relating to the auto-
motive industry and facility replacements by
manufacturers in Japan, and due additionally
to the weaker yen.
The automotive equipment business saw
increases in both orders and sales from the
previous fiscal year due primarily to growth
in the car sales market in North America
and Europe, as well as the positive influence
of the weaker yen.
As a result, total sales for this segment
increased by 3% from the previous fiscal
year to 1,321.9 billion yen. Operating
income increased by 13.1 billion yen from
the previous fiscal year to 159.1 billion yen
due primarily to the increase in sales.
Programmable Logic Controllers
Mitsubishi Electric’s MELSEC series of programmable logic
controllers supports a wide array of production and social
infrastructure applications; solutions range from control and
safety devices to information and instrumentation management.
As a leading global brand, the MELSEC series contributes to
the construction of cutting-edge control systems owing to its
capabilities, performance, product variety, and high reliability.
Industrial Robots
Featuring cutting-edge technologies, Mitsubishi Electric’s
robotic systems are key components in Factory Automation
(FA). They are ideal for cell-based production coupled with
intelligent sensors, thanks to their high-speed, high-precision
core performance characteristics. By providing complete FA
solutions that combine programmable logic controllers and
AC servomotors, Mitsubishi Electric can create automated
systems that encompass the assembly, inspection, and
conveyance processes.
Low-voltage Circuit Breakers
Low-voltage Circuit Breakers are used for wiring protection
and short-circuit protection in low-voltage circuits. Since 1933,
Mitsubishi Electric has been continuously designing and
developing such breakers, the latest of which is the new WS-V
“World” series. The lineup is ideal for both power distribution
and OEM markets.
Electrical Discharge Machines (EDMs)
Beginning with the newly launched MP series, a strategic
product on a global scale, Mitsubishi Electric provides a lineup
of EDMs that add value and improve the manufacturing pro-
ductivity of molds and precision components. Such equipment
is indispensable to the production of automobiles, home
electronics, and IT-related devices.
Electric Power Steering (Motors and Controllers)
Mitsubishi Electric was the first company in the world to mass
produce motors and controllers for electric power steering to
assist driver steering in line with driving conditions. Over the
years, Mitsubishi Electric has helped to improve steering feel,
response, and stability while delivering compact units and
high-output performance, and contributing to reduced
automobile CO2 emissions.
Car Navigation System
The DIATONE SOUND. NAVI NR-MZ100 Series car audio-
navigation system offers superior quality in terms of respon-
siveness, image resolution, and design. It enhances the driving
experience more than ever, with faster and more visually
appealing navigation.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 09
Review of Operations
Information and
Communication Systems
Net Sales Breakdown by Business Segment
11.1%
Net Sales
¥561.1billion
unchanged year on year
Operating Income
¥14.9billion
down ¥3.9 billion year on year
The telecommunications equipment business
remained unchanged in both orders and
sales compared to the previous fiscal year.
The information systems and service busi-
ness saw an increase in sales compared to
the previous fiscal year, mainly owing to an
increase in the system integrations business.
The electronic systems business saw an
increase in orders compared to the previous
fiscal year, due to an increase in orders for
large-scale projects in the space business,
while sales remained unchanged compared
to the previous fiscal year due to a shift in
the portfolios of large-scale projects in the
defense systems business.
As a result, total sales for this segment
amounted to 561.1 billion yen, virtually
unchanged from the previous fiscal year.
Operating income decreased by 3.9 billion
yen from the previous fiscal year to 14.9
billion yen due primarily to a shift in project
portfolios.
10 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Information System Integrated Control Center
Specialist engineers are available 24/7 to remotely operate
and monitor client information systems and to analyze and
determine any problem that might occur using automated
tools, enabling a rapid response to any system malfunction.
(Mitsubishi Electric Information Network Corporation)
Mission-critical Server
Employing virtualization technology in its complete fault-tolerant
system as an overarching concept, this server not only ensures
the succession of customers’ application assets, but also
integrates internal mission-critical tasks and systems for
situations where failure is not an option.
(Mitsubishi Electric Information Network Corporation)
DS2000 Standard Satellite Platform
The DS2000 is a standard satellite platform modeled after
JAXA’s ETS-VIII platform, which was designed to meet the
need for high-quality, low-cost satellites with shortened
delivery times. The DS2000 has maintained a competitive edge
internationally, having been selected for use in satellites
Himawari-7, 8, and 9, and commercial satellites for Turkey and
Qatar, and is employed in nine satellites currently circling the
earth.
Vehicle-mounted Stations for Satellite
Communications
Vehicle-mounted satellite communication equipment enables
transmission of video and audio for broadcast news (satellite
news gathering) and information for disaster management.
Mitsubishi Electric products are employed by Japanese broad-
casters, the public sector, and infrastructure companies such as
gas and electricity utilities.
Broadband Optical Access Systems
Mitsubishi Electric is progressively installing Gigabit Ethernet
Passive Optical Network (GE-PON) systems, which play a
central role in broadband services. The need for GE-PON
systems is steadily expanding due to high-capacity broadband
content, including the increased use of visual services.
Digital CCTV (Closed-circuit Television) System
This digital CCTV system meets the expanding range of needs
for video surveillance systems, which is achieved through new
digital technology incorporated into its high-resolution
megapixel camera and its high level of scalability, which can
accommodate even large-scale systems.
Electronic Devices
Net Sales Breakdown by Business Segment
4.2%
Net Sales
¥211.5billion
down 11% year on year
Operating Income
180W 90W 7W 5W
¥16.8billion
down ¥13.2 billion year on year
The electronic devices business saw decreas-
es in both orders and sales from the previ-
ous fiscal year due to a decrease in demand
mainly for power modules used in automo-
tive, railcar, consumer and industrial applica-
tions, despite an increase in optical
communication devices.
As a result, total sales for this segment
decreased by 11% compared with the
previous fiscal year to 211.5 billion yen.
Operating income decreased by 13.2 billion
yen compared with the previous fiscal year
to 16.8 billion yen due primarily to the
decrease in sales.
IGBT Modules T Series with 7th-generation IGBT
Installation of the latest 7th-generation IGBT chips realizes
industrial equipment such as general-purpose inverters, eleva-
tors, and uninterruptible power supply devices with lower
power consumption and higher reliability. Available in two
packages1 and two pin layouts2, a new lineup of 65 products
contributes to providing the best devices for wide-ranging
applications and diversified industrial equipment needs.
1 NX package and standard package
2 Choice of solder-pin or press-fit pin models
SLIMDIP Series of Power Semiconductor Modules
The size of the power semiconductor packages for driving the
inverters of home appliances such as residential-use air-
conditioners and refrigerators has been reduced by 30%
compared to conventional products1, realizing the world’s
smallest2 1.5kW-class motor. The compact packages contribute
to reducing the size and weight of the inverters used in home
appliances.
1 Super-mini Dual In-Line Package Intelligent Power Module (DIPIPMTM) Ver.6
2 As of April 23, 2015, based on internal research
3.5GHz-band GaN HEMT for Mobile
Communications Base Transceiver Stations
Mitsubishi Electric has developed GaN1 HEMTs2 for use in Base
Transceiver Stations (BTS) operating in the 3.5GHz-band of
fourth generation mobile communication systems. The four new
GaN-HEMTs offer output power and efficiency levels that are
among the highest3 currently available. High efficiency allows
use of a simple cooling system, which contributes to the smaller
size and lower power consumption of BTSs.
1 Gallium Nitride
2 High Electron Mobility Transistor
3 As of December 22, 2015, based on internal research
Compact Integrated 100Gbps EML-TOSA
A high-performance EML1 helps to realize the industry's longest-
distance2 (i.e., 40km) transmissions. With a size reduction to just 30
percent3 that of its predecessor, the new model will allow optical
transceivers to be made more compact. This is expected to help
reduce the size of 100Gbps communication facilities and expand
high-speed 100Gbps optical transmission networks.
1 Electro-absorption Modulated Laser diode
2 As of March 16, 2016, based on internal research. IEEE 100GBASE-ER4 stan-
dards (based on Ethernet basic standards for 100Gbps communication speed
of the American Institute of Electrical and Electronics Engineers)
3 Compared with FU-401REA, previous Mitsubishi Electric product.
Glove
7-inch WVGA TFT-LCD Modules with Touch Panels
for Industrial Use
The new TFT-LCD module with a projection-capacitive touch
panel is able to operate with 5-mm-thick cover glass, multi-
touch up to a maximum of 10 points, the use of thick heat-
resistant gloves, and a wet screen. It is optimized for outdoor
applications through pursuit of shock resistance and water
resistance.
Tough Series 10.4-inch SVGA Color TFT LCD
Modules for Industrial Use
In addition to the industry’s highest1 anti-vibration performance
(i.e., 6.8G acceleration) and a wide guaranteed temperature
operating range (-40°C to +85°C), ultrabright visual display
(1,500cd/m2) is realized. This contributes to improving the
visual quality of large-screen, high-brightness displays used in
harsh environments outside, such as panels for construction
machinery, agricultural machinery, and machining tools.
1 As of November 25, 2015, based on internal research
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 11
Review of Operations
Home Appliances
Net Sales Breakdown by Business Segment
19.5%
Net Sales
¥982.0billion
up ¥4% year on year
Operating Income
¥63.8billion
up ¥9.5 billion year on year
The home appliances business saw an
increase in sales of 4% compared with the
previous fiscal year to 982.0 billion yen, due
to an increase in sales of residential and
industrial air conditioners in Japan, as well
as air conditioners for Europe, Asia and
North America. The weaker yen also
brought about a positive influence.
Operating income increased by 9.5 billion
yen compared with the previous fiscal year
to 63.8 billion yen largely due to the increase
in sales.
Room Air Conditioners
In addition to KIRIGAMINE room air conditioners, Mitsubishi
Electric offers an extensive lineup of products with applications
extending from stores, offices, and buildings to factories and
industrial facilities while featuring environmentally compatible,
energy-saving technologies. These qualities allow Mitsubishi
Electric to meet air conditioning needs globally.
Housing Equipment
ENEDIA is a system that effectively uses renewable energy
through the ingenious application of a home energy manage-
ment system (HEMS) that stores electricity generated by solar
panels in the batteries of an electric vehicle. ENEDIA is based
on Mitsubishi Electric’s concept of a smart electric home that
conserves energy by using highly efficient air conditioners,
water heaters, and cooking equipment. It gives residents a
way to conserve energy without sacrificing comfort.
Home Appliances
Mitsubishi Electric develops home appliances by incorporating
its unique technologies and perspectives so that its products
can be used in various scenes of daily life, such as the kitchen,
living room, and bedroom. Efforts are made to develop products
that contribute to making life more comfortable for users,
meeting and even surpassing their expectations.
Lighting Fixtures and Light Bulbs
Mitsubishi Electric offers an extensive lineup of high-efficiency,
long-lasting LED products that meet diverse needs for energy-
saving light bulbs and equipment in households, stores, offices,
and factories. The company’s LED products make the future
brighter for families and society as a whole.
Visual Equipment for Public
and Business Applications
Mitsubishi Electric’s high-quality image processing technolo-
gies deliver exceptionally sharp images with superior color
reproduction and are incorporated in a wide range of products
developed to suit a variety of application needs. These systems
are being used in Japan and abroad for large-screen applica-
tions, such as digital signage used to display images, data, and
information at public facilities and other venues.
Customers
Consumer electronics
and home appliances
Used products
Mitsubishi Electric Corporation
Hyper Cycle Systems Corporation
Materials
manufacturers
Metals and glass
Original
recycling system
Simple
plastics
Plastic
PP, PS, ABS
Mixed plastics
Green Cycle Systems Corporation
Recycling Consumer Electronics
and Home Appliances
Mitsubishi Electric has developed technologies for automati-
cally sorting the three major types of plastic (polypropylene
(PP), polystyrene (PS), and acrylonitrile-butadiene-styrene
(ABS)) used in consumer electronics and home appliances. This
original recycling system is being utilized to promote the reuse
of plastics in the company’s products by improving the physical
properties of the sorted materials.
12 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Research and Development / Intellectual Property
Research and Development
R&D Initiatives
The Mitsubishi Electric Group’s R&D network consists of the
At the same time, the Group is committed to making strong
Advanced Technology R&D Center, Information Technology R&D
businesses stronger by expanding the possibilities of the existing
Center, and Industrial Design Center in Japan as well as laborato-
operations. The Group also seeks to create new strong businesses
ries in the United States, Europe, and China. These centers operate
by, for example, exploring business areas into which it has yet to
under the umbrella of the Corporate Research and Development
enter, coordinating operations that involve similar business func-
Group working in collaboration with the development depart-
tions or areas of activity, and bringing together contrasting but
ments of individual Mitsubishi Electric business groups.
complementary businesses.
The Mitsubishi Electric Group has positioned R&D as one of
In addition to pursuing breakthroughs along the lines of short-
the principal vehicles driving growth strategies forward. Aspiring
and medium-term R&D themes, the Group is stepping up long-
to deliver greater value to customers through R&D, the Group
term R&D projects. To ensure sustainable growth, the Mitsubishi
has identified four key areas—the Internet of Things, Smart
Electric Group will engage in ongoing R&D initiatives, thereby
Mobility, comfortable dwelling spaces, and a safe and secure
contributing to society with an eye toward not only 2020 but ten
infrastructure—as areas on which to focus its R&D efforts in
years and even twenty years beyond that.
order to help create a prosperous society.
R&D Achievements in Fiscal 2016
V Development of Air Conditioner with Personal Twin Flow
Mitsubishi Electric Corporation has developed the world’s first* air
conditioner with Personal Twin Flow, featuring two independent-
driven left and right fans.
Move Eye KIWAMI, with its new independently driven left and
right side fans and its improved sensing resolution, creates separate
temperature spaces tailored to the preferences of different people
in the same room, providing both a high level of comfort while
reducing energy consumption. It adopts a simple design that har-
monizes with room interiors, based on the concept of “changing
the atmosphere of living rooms with a single air conditioner.”
Mitsubishi Electric Corporation will continue to develop air
conditioners that create refined living spaces.
A simple rectangular design
Two separate outlets allow the air volume and
flow direction to be independently controlled
* As of October 30, 2015. World’s first for air conditioner indoor units for domestic
Creating separate temperature spaces in the same room
use (survey conducted by Mitsubishi Electric Corporation).
V Development of SeaAerial Seawater Antenna
Mitsubishi Electric Corporation has developed an innovative
antenna system, called SeaAerial, which shoots a column of sea-
water in to the air to create a conductive plume for the transmis-
sion and reception of radio-frequency waves.
The system can be easily implemented offshore or along shore-
lines. SeaAerial is thought to be the world’s first* seawater
antenna capable of receiving digital terrestrial broadcasts for nor-
mal viewing.
The company will develop new businesses leveraging its com-
pact size, such as using it as a substitute in the event of disasters
or other situations in which conventional large-scale antennas
cannot be used.
*As of January 27, 2016 (survey conducted by Mitsubishi Electric Corporation)
Illustration of application
A column of seawater transmits/receives radio-frequency waves
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 13
Research and Development / Intellectual Property
V Development of Air-Quality Sensor Capable of
High-Precision Detection of PM2.5*1 Density
Mitsubishi Electric Corporation has developed a small, high-
precision air-quality sensor that can detect the density of PM2.5
using laser beams.
This sensor uses a unique design that ensures stable air flow
volume and laser beam paths to achieve high sensor accuracy
and a compact design. It is the world’s first*2 sensor able to
distinguish PM2.5 particles as well as pollen and dust.
By accurately assessing the density of fine particles suspended in
the air, it will contribute to creating environments with cleaner air.
*1 All fine particles measuring no more than 2.5 micrometers in diameter.
(1 micrometer is 1/1000 millimeter)
*2 As of February 8, 2016 (survey conducted by Mitsubishi Electric Corporation)
Intellectual Property
Conventional
New technology
Illustration of application
Contributing to creating environments with cleaner air
Basic Policy
Office IP Division formulates strategies for the entire Group,
The Mitsubishi Electric Group recognizes that intellectual property
promotes critical projects, coordinates interaction with external
(IP) rights represent a vital management resource essential to its
agencies including patent offices, and is in charge of IP public
future and must be protected. Through integrating business,
relations activities. At the Works, R&D center, and affiliated com-
R&D, and IP activities, the Group is proactively strengthening its
pany level, IP divisions promote individual strategies in line with the
global IP assets, which are closely linked to the Group’s business
Group’s overall IP strategies. Through mutual collaboration, these
growth strategies and contribute to both business and society.
divisions work to link and fuse their activities in an effort to
Structure of the Intellectual Property
Division
develop more effective initiatives.
Global IP Strategy
The IP divisions of the Mitsubishi Electric Group include the Head
The Mitsubishi Electric Group identifies critical IP-related themes
Office IP Division, which is the direct responsibility of the president,
based on its mainstay businesses and important R&D projects, and
and the IP divisions at the Works, R&D centers, and affiliated
is accelerating the globalization of IP activities also by filing patents
companies. The activities of each IP division are carried out under
prior to undertaking business development in emerging countries
the executive officer in charge of IP at each location. The Head
where an expansion of business opportunities is expected.
Integrating Business, R&D, and IP Activities
Annual Trends in Overseas Patent Applications by
the Mitsubishi Electric Group
Integration
IP Network
(No. of Applications)
12,000
IP/Standardization
Strategy
IP Division at
Headquarters
President
Business Strategy
IP Departments at
Business Groups,
Facilities, Affiliates
Development
Strategy
R&D Centers
IP Departments
9,000
6,000
3,000
0
14 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
2013
2014
2015
2016
(FY)
(cid:31)(cid:31) USA (cid:31)(cid:31) Europe (cid:31)(cid:31) China (cid:31)(cid:31) Other
Further Strengthening Global IP Capabilities
IP representative
Europe
Asia
Americas
Head Office
IP Division
P Protecting products through IP rights
P Acquiring international standard-related patents
P Counterfeit product countermeasures
Furthermore, resident officers are assigned to Mitsubishi Electric
sites in the United States, Europe, and China to take charge of IP
Activities Aimed at Preventing Infringement
of the Group’s IP Rights
activities and strengthen the IP capabilities of business offices,
The Mitsubishi Electric Group works diligently to prevent any
R&D centers, and affiliated companies in each country. Through
infringement of its IP rights by other companies. In addition to
these initiatives, we strive to create a robust global patent network.
in-house activities, the Group places particular weight on collabo-
IP Strategy for International Standardization
agencies and other entities in Japan and overseas as a part of a wide
rating with industry organizations while approaching government
In order to expand business in global markets, the Mitsubishi
Electric Group is actively promoting international standardization.
Activities to acquire patents that support international standards
range of measures to prevent the counterfeiting of its products.
Respecting the IP Rights of Others
(e.g., essential standards patents) are openly promoted.
The Mitsubishi Electric Group recognizes that the infringement of
As the member of an organization in which patent pools for
items such as MPEG and Blu-ray DiscTM* collectively control
another company’s IP rights has the potential to significantly
impair its continued viability as a going concern. The resulting
essential standards patents, the IP revenues obtained through the
potential impairments include being obliged to pay significant
organization are contributing to improvement and growth in
licensing fees, being forced to discontinue manufacturing of a
business earnings. The Group is also working to increase activities
certain product, or other related actions. To prevent the infringe-
for acquiring patents in competitive fields involving international
ment of another company's IP rights, the Group provides educa-
standards, and promoting IP activities that contribute to increasing
tion and training—centering on engineers and employees
product competitiveness and expanding market share.
responsible for IP affairs—to raise awareness and instill the
*Blu-ray DiscTM is a trademark of the Blu-ray Disc Association.
utmost respect said rights. At the same time, the Group has put
in place a set of rules to facilitate appropriate actions, such as
surveying other companies’ patent rights at every stage from
product development to sales, and ensuring strict adherence to
these rules.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 15
Corporate Social Responsibility
The Mitsubishi Electric Group promotes its corporate social responsibility (CSR) activities based on the
conviction that all business activities must take CSR into consideration. The Group’s Corporate Mission
and Seven Guiding Principles form its basic CSR policies. It is vigilant in its enforcement of corporate
ethics and compliance and constantly works to improve educational programs and strengthen its inter-
nal control system. At the same time, it pursues initiatives related to quality management, global
environmental conservation, philanthropy, and improved communication with all stakeholders.
The Mitsubishi Electric Group’s Corporate Social
Responsibility
Group’s longstanding operations, this spirit is now encapsulated
by the corporate statement “Changes for the Better.” Remaining
The Mitsubishi Electric Group’s commitment to CSR was first
true to this spirit, the Group will steadfastly transform itself into
articulated in the Keys to Management (in Japanese, Keiei no
a global leading green company, rallying its overall strength and
Yotei), which was drawn up at the time of Mitsubishi Electric’s
employing its robust product lineup ranging from home applianc-
founding in 1921. The spirit of this document, which states the
es to spacecraft components. In these ways, the Group will help
Group’s contributions in areas such as the prosperity of society,
realize a sustainable and prosperous society.
product quality, and customer satisfaction, lives on today in its
Corporate Mission and Seven Guiding Principles. With these
Philanthropic Activities
tenets as its core principles, the Group promotes various initia-
Philosophy and Policies on Philanthropic Activities
tives in order to fulfill its corporate social responsibilities.
The Mitsubishi Electric Group shares a common Philosophy and
In recent years, the Group has adopted a more CSR-centric
Policies based on its Corporate Mission and Seven Guiding
management approach, redefining CSR as an integral component
Principles, and carries out a variety of activities accordingly.
of corporate management activities with a long-term arc of exe-
Philosophy
cution. Currently well into fiscal 2016, the Mitsubishi Electric
As a corporate citizen committed to meeting societal needs and
Group has identified the challenges that society now faces and,
expectations, the Mitsubishi Electric Group will make full use of
by referring to such resources as international standards, it has
the resources it has at hand to contribute to creating an affluent
clarified what needs to be done by the Group as a global compa-
society in partnership with its employees.
ny. Among items needing to be addressed, the Group has priori-
Policies
tized the following CSR materialities, taking into account its
• We shall carry out community-based activities in response to
corporate strategies and the expectations of its stakeholders.
societal needs in the fields of social welfare and global environ-
Mitsubishi Electric Group’s Four CSR Materialities
P Realize a sustainable society
P Provide safety, security, and comfort
P Respect human rights and promote the active participation of
diverse human resources
P Strengthen corporate governance and compliance on
a continuous basis
In fiscal 2017, the CSR Committee—chaired by an executive
officer in charge of general affairs—has confirmed that the
Group will address these materialities in partnership with entities
in the supply chain, and is implementing ongoing improvement
activities based on the PDCA (Plan-Do-Check-Action) approach.
In addition, to facilitate customers’ understanding of the
Group’s CSR initiatives, efforts are now under way to better
communicate the environmental, social, and governance (ESG)
aspects of these initiatives to the general public.
Since its founding, the Mitsubishi Electric Group has main-
tained a commitment to continuously adapting and evolving as
part of its unwavering pursuit of excellence. Having bolstered the
16 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
mental conservation.
• We shall contribute to developing the next generation through
activities that support the promotion of science and technology,
culture and arts, and sports.
Supporting Children Affected by the Great East
Japan Earthquake (Mitsubishi Electric Corporation)
“Mouth and Foot Painting Artists of the World Exhibition”
(Mitsubishi Electric Building Techno-Service Co., Ltd.)
Supporting the Special Olympics
(Mitsubishi Electric Europe B.V. Italian
Branch, Mitsubishi Electric Europe, B.V.
German Branch)
Foundations
identified specific activity targets as a part of its latest
The Mitsubishi Electric America Foundation and Mitsubishi Electric
medium-term environmental plan, which has been renewed every
Thai Foundation, both founded in 1991, also carry out various
three years since 1993. Having successfully completed each
activities in the spirit of the Mitsubishi Electric Group’s Philosophy
activity item identified in the Group’s 7th Environmental Plan,
and Policies. The Mitsubishi Electric America Foundation, with the
covering fiscal 2013 through fiscal 2015, it has embarked on the
cooperation of its branches in the United States, helps young
8th Environmental Plan, covering fiscal 2016 through fiscal 2018.
people with disabilities to become employed and participate
more fully in society. The Mitsubishi Electric Thai Foundation, in
P Activity Items of the 8th Environmental Plan
addition to providing scholarships to university students and sup-
1. Initiatives aimed at realizing a low-carbon society
porting a school lunch program for grade school students, has in
Increase the level of contribution to society by reducing CO2.
recent years been promoting employee-involved volunteer activi-
Specifically, (1) reduce CO2 from production, and (2) reduce
ties that support education and environmental protection.
CO2 from product usage.
2. Initiatives aimed at forming a low-carbon society
(1) Promote the effective use of resources utilizing the final
disposal ratio as a key indicator, (2) reduce resource inputs, and
(3) strengthen partnerships with resource recycling businesses.
3. Initiatives aimed at realizing a symbiotic society
(1) Hold various events, including the Mitsubishi Electric
Outdoor Classroom and the Satoyama Woodland Preservation
Project, and (2) foster environmental awareness by promoting
online environmental education on a global scale.
4. Efforts toward strengthening the environmental management platform
An employee volunteer working with a student
on Disability Mentoring Day (United States)
Local Mitsubishi Electric Companies in joint tree
planting activity (Thailand)
Environmental Activities
Transitioning from the 7th Environmental Plan to
(1) Improve the execution of quantitative assessment of environ-
the 8th Environmental Plan
mental risk and management at factories in Japan and overseas,
The Mitsubishi Electric Group defines a “global leading green
and (2) adhere strictly to environmental rules and regulations.
company” to be one that fully utilizes its advanced technologies
in business activities around the world—including environmental
• Major Activity Item 1:
issues—in order to contribute to the realization of a prosperous
Reducing CO2 Emissions from Production
society where both a “sustainable society” and “safe, secure, and
Under its 8th Environmental Plan, the Mitsubishi Electric Group
comfortable lifestyles” are simultaneously achieved. In 2007, the
will integrate and promote the reduction of CO2 from energy
Group established Environmental Vision 2021, a long-term vision
sources and the management of efforts aimed at reducing
for environmental management. To realize this vision, the Group
greenhouse gases other than CO2*1, activities that were previously
is striving to fulfill its responsibilities to society from an environ-
undertaken on an individual basis, in order to comprehensively
mental perspective by developing and promoting the widespread
evaluate and manage the impact of greenhouse gases on the
use of products and services that boast outstanding resource and
goal of realizing a low-carbon society. The plan, ending in fiscal
energy efficiency across all business fields, and advancing efforts
2018, calls for the total of CO2 from energy sources and
to reduce the environmental impact of all of its business activities
greenhouse gases other than CO2 to be kept below 1,370,000
from procurement through production to logistics.
tons on an annual CO2 equivalent emission basis, considerably
In order to incorporate a PDCA cycle into its environmental
activities in a systematic and definitive manner, the Group has
lower than the base fiscal year figure of 2,640,000 tons.
*1 Emissions of such substances as SF6, PFC, and HFC
Reduce CO2 emissions
from product usage by 30%
(Base year: fiscal 2001)
Reduce total emissions
from production by 30%
(Base year: fiscal 1991)
Aim to reduce CO2 emissions
from power generation
Environmental Vision 2021
Global Leading
Green Company
Promote product “3Rs”;
reduce, reuse, and recycle
Reduce resource inputs
Aim for zero emissions
from manufacturing
Contribute to the
Environment and Society
(through our products, services,
and business activities)
Reduce
environmental impact
(by further honing highly efficient
manufacturing techniques to
minimize our environmental impact)
Creating a
Low-Carbon
Society
Creating a
Recycling-Based
Society
Respecting Biodiversity
Ensuring harmony with nature and
fostering environmental awareness
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 17
Corporate Social Responsibility
Plan to Reduce CO2 Emissions from Production across the Mitsubishi Electric Group
Total Amount of CO2 Emissions (10,000 t-CO2)
300
250
200
150
100
50
0
264
146
118
7th Environmental Plan
90%
87%
96%
Reduction
120
119
124
28
92
26
93
29
95
86%
128
24
140
28
112
104
42% reduction
154
30
124
(Base fiscal year)*2
2013
2014
2015
2016 target
2016 result
2021
(FY)
0.422*3
Emission coefficient for
domestic operations (t-CO2/MWh)
0.487*4
Amount of CO2 emissions*5 Amount of greenhouse gas emissions other than CO2*6 Total greenhouse gases
Emissions per unit in comparison with the base fiscal year level
*2 CO2 from energy sources: Mitsubishi Electric (non-consolidated) 1991; affiliates in Japan 2001; overseas affiliates 2006
Greenhouse gases other than CO2: Mitsubishi Electric (non-consolidated) and affiliates in Japan 2001; overseas affiliates 2006
*3 “The Japan Electrical Manufacturers’ Association”(1997)
*4 “Federation of Electric Power Companies of Japan”(2013 During 8th Environmental Plan was preparing, 2 Nuclear Power Plants were running)
*5 Quoted overseas “CO2 emission factors” published by “The Japan Electrical Manufacturers’ Association”(2006).
*6 Quoted “global warming potentials” published by “IPCC Second Assessment Report: Climate Change 1995”.
In an effort to reduce CO2 from energy sources, the Mitsubishi
Therefore, the development and widespread use of highly energy-
Electric Group is introducing high-efficiency air conditioners and
efficient products can contribute significantly to the reduction of
other equipment while shifting to LED lighting. The Group is also
CO2 emissions. Under the 8th Environmental Plan, the Mitsubishi
striving to understand energy consumption at the point of produc-
Electric Group is aiming for an average CO2 reduction ratio of
tion. To eliminate waste, the Group is looking at improving heat
35% or more compared with fiscal 2001 for specific products
loss while reducing standby power. Working to reduce such green-
where the Group can take the initiative regarding design and
house gases as SF6, HFC, and PFC, the Group is shifting to the use
development and where the reduction of CO2 emissions during
of refrigerant gases with low global warming potential. Other
product use is deemed important from an environmental aspect.
ongoing initiatives include the building of a handling scheme that
The number of specified products in fiscal 2016 was 107. The
extends from gas recovery through recycling to eventual destruc-
average rate of CO2 emissions reduction among these products
tion; efforts to reinforce countermeasures aimed at preventing
was 34%. Based on this result, the Group is making steady prog-
leaking; and the early introduction of treatment systems.
ress toward achieving its target. Looking ahead, the Group will
In fiscal 2016, the Mitsubishi Electric Group reduced total
continue to promote improvements.
annual greenhouse gas emissions to 1.28 million tons, which is
12 thousand less than the target of 1.4 million tons. While the
scale of production is projected to rise during the period of the
8th Environmental Plan, the Mitsubishi Electric Group expects to
achieve the aforementioned target by steadfastly implementing
the previously identified measures.
• Major Activity Item 2:
Reducing CO2 Emissions from Product Usage through Improved Energy
Efficiency Performance
Regarding greenhouse gas emissions outside the scope of the
Mitsubishi Electric Group’s business activities, a principal source is
the CO2 derived from electric power consumption during the
period that products are used. When the amount of CO2 emitted
during product use is calculated, the levels during product use can
be several dozen times the amount emitted during production.
0
10
20
30
)
%
(
n
o
i
t
c
u
d
e
r
f
o
e
t
a
r
e
g
a
r
e
v
A
Plan for Reducing CO2 from Product Usage through
Improved Energy Efficiency
17%
26% 29% 33%
33%
34%
35%
30%
or
more
100
2001
(Base fiscal year)
2008
107 specified products
2012 2013 2014 2015
2016 2017
2018
7th Environmental Plan
8th Environmental Plan
2021
(FY)
Environmental Vision
2021 Target
More information about the Mitsubishi Electric Group’s environmental and CSR initiatives is available on the following websites:
http://www.MitsubishiElectric.com/company/csr/
http://www.MitsubishiElectric.co.jp/corporate/environment/
18 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Corporate Governance
Basic Corporate Governance Policy
A framework is also in place for reporting to the Audit
To realize sustained growth and increase corporate value, the
Committee. The Internal Control Department keeps the Audit
Mitsubishi Electric Group works to maintain the flexibility of its oper-
Committee informed of information about Mitsubishi Electric
ations while promoting management transparency. These endeavors
and affiliate companies, and an internal reporting system is
are supported by an efficient corporate governance structure that
used to report that information to audit committee members.
clearly defines and reinforces the supervisory functions of manage-
Audit committee members attend executive officers’ meetings
ment while ensuring that the Company is responsive to the expec-
and other such important conferences, and conduct hearings
tations of customers, shareholders, and all of its stakeholders.
and surveys of executive officers and the executive staff of
Mitsubishi Electric offices and affiliated companies. It also
Corporate Management and Governance Structure
receives regular reports from the accounting auditor and execu-
Corporate Management Structure
tive officer in charge of auditing, and discusses auditing policies
In June 2003, Mitsubishi Electric became a company with a com-
and methods and the implementation status and results of audits.
mittee system. Key to this structure is the separation of supervisory
2. Internal regulations and system are in place to ensure proper
and executive functions; the Board of Directors plays a supervisory
operations by the Mitsubishi Electric Group. Within this system,
decision-making role and executive officers handle the day-to-day
executive officers undertake their duties on their own responsi-
running of the Company.
bility and hold executive officers' meetings to deliberate on
The present Board is comprised of twelve directors (five of whom
important matters.
are outside directors), who objectively supervise and advise the
Executive officers themselves make periodic inspections of the
Company’s management. The Board of Directors has three internal
operational status of the system, and the Internal Control
bodies: the Audit, Nomination and Compensation committees. Each
Department inspects the design and operation of the internal con-
body has five members, the majority of whom are outside directors.
trol framework and regulations, and the status of internal reporting
The Audit Committee is supported by dedicated independent staff.
system and then report the result to audit committee members.
A salient characteristic of Mitsubishi Electric’s management
Furthermore, an internal auditor audits the operational status
structure is that the roles of Chairman of the Board, who heads the
of the framework, and through an executive officer in charge
supervisory function, and the President, who is head of all executive
of auditing, regularly reports the results of such audits to the
officers, are clearly separated. Additionally, neither is included
Audit Committee.
among the members of the Nomination and Compensation
Committees. The clear division of supervisory and executive functions
Corporate Auditing Division and Audit Committee
allows the Company to ensure effective corporate governance.
Acting independently, Mitsubishi Electric’s Corporate Auditing
Internal Control System
Division conducts internal audits of the Company from a fair and
impartial standpoint. In addition, the division’s activities are sup-
1. For proper execution of duties by the Audit Committee, the
ported by auditors with profound knowledge of their particular
committee’s independence is ensured such as by assigning dedi-
fields, assigned from certain business units.
cated employees to assist in its duties, and the expenses and
The Audit Committee is made up of five directors, three of whom
responsibilities incurred by the committee in the course of exe-
are outside directors. In accordance with the policies and assignments
cuting its duties are appropriately processed according to inter-
agreed to by the committee, the performances of directors and
nal regulations.
executive officers as well as affiliated companies are audited.
Corporate Governance Framework
Report
General Shareholders’ Meeting
Report
Appointment
Appointment/Dismissal/Supervision
Reporting to
Decision Making and Execution
Executive Officers
President & CEO
Executive Vice Presidents
Senior Vice Presidents
Executive Officers
Business/Administration Divisions
Supervision
Board of Directors
Chairman
Nomination Committee
Outside Directors (majority)
s
r
o
t
c
e
r
i
D
Audit Committee
Outside Directors (majority)
Compensation Committee
Outside Directors (majority)
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 19
Corporate Governance
The Corporate Auditing Division, through the executive officer
Outside Directors
in charge of auditing, submits reports to the Audit Committee,
Effective Utilization of Outside Directors
which holds periodic meetings to exchange information and dis-
The Board of Directors comprises twelve members, including five
cuss auditing policies. In addition, the Audit Committee discusses
Outside Directors (42% composition ratio).
policies and methods of auditing with accounting auditors, who
Outside Directors receive reports about the activity status of
furnish it with reports on the status and results of the audits of
internal auditors, the audit committee, accounting auditors, and
the Company that they themselves conduct.
internal control departments via the Board of Directors, and pro-
vide their impartial views regarding Mitsubishi Electric’s manage-
Policies Regarding Decisions on Compensation, Etc.
Compensation Scheme for Directors and Executive Officers
ment from an objective perspective. By doing so, they bring
greater transparency to the management framework and
Policies regarding decisions on compensation, etc. will be made
strengthen the Board's function of supervising management.
through resolutions by the Compensation Committee, the majority
of which consists of Outside Directors. A summary of the policies
Criteria for Judgment of the Independence of Independent
is as follows.
Outside Directors
Outside Directors are expected to supervise management from a
Compensation Scheme for Directors
high-level perspective based on their abundant experience. Those
1. Directors give advice to and supervise the Company’s manage-
who are comprehensively judged to possess the character, acumen,
ment from an objective point of view, and therefore, the com-
and business and professional experience suited to fulfill that role,
pensation scheme for Directors is the payment of fixed-amount
and who satisfy the requirements of independent executives
compensation and the retirement benefit upon resignation.
specified by the Tokyo Stock Exchange and the requirements
2. Directors will receive their compensation as a fixed amount,
specified in Mitsubishi Electric’s Guidelines on the Independence
and the compensation to be paid will be set at a level consid-
of Outside Directors (see below) and thus possess no risk of giving
ered reasonable, while taking into account the contents of the
rise to any conflict of interest with the general shareholders of
Directors' duties and the Company’s conditions, etc.
the company, are selected as outside director candidates by the
3. Directors will receive the retirement benefit upon their resigna-
Nominating Committee.
tion, and the retirement benefit to be paid will be set at a level
decided on the basis of the monthly amount of compensation
< Independency Guideline for Outside Directors >
and the number of service years, etc.
Mitsubishi Electric Corporation nominates persons with experi-
ence in company management in the business world, attorneys
Compensation Scheme for Executive Officers
and academics, among other specialists, who are appropriate to
1. The compensation scheme for the Executive Officers focuses on
oversee the Company’s business operations and not falling under
incentives for the realization of management policies and the
any of the following cases, as candidates for Outside Directors.
improvement of business performance, and performance-based
Note that each of the following 1), 2), 4) and 5) includes a case
compensation will be paid in addition to the payment of fixed-
in any fiscal year during the past three fiscal years.
amount compensation and the retirement benefit upon resignation.
2. Fixed-amount compensation will be set at a level considered
1. Persons who serve as Executive Directors, Executive Officers,
reasonable taking into account the contents of the Executive
managers or other employees (hereinafter ”business executers”)
Officers duties and the Company’s conditions.
at a company whose amount of transactions with the Company
3. The level of performance-based compensation will be decided
accounts for more than 2% of the consolidated sales of the
while taking into account the consolidated business performance
Company or the counterparty
and the performance of the business to which the respective
2. Persons who serve as business executers at a company to which
Executive Officer is assigned, etc. With the purposes of meshing
the Company has borrowings that exceed 2% of the consoli-
the interest of shareholders with the Executive Officers and fur-
dated total assets
ther raising management awareness that places importance on
3. Persons who are related parties of the Company’s independent
the interest of shareholders, and increasing the incentives for
auditor
the improvement of business performance from the mid- and
4. Persons who receive more than ¥10 million of compensation
long-term perspectives, 50% of performance-based compensa-
from the Company as specialists or consultants
tion will be paid in the form of shares. The Company sets a rule
5. Persons who serve as Executive Officers (Directors, etc.) of an orga-
that, when the Executive Officers acquire the Company shares
nization to which the Company offers contribution that exceeds
as a part of compensation, they are required to continue the
¥10 million and 2% of the total revenue of the organization
shareholding until 1 year has passed from resignation.
6. Persons who are the Company’s major shareholders (holding more
4. The amount of the retirement benefit will be decided on the
than 10% of voting rights) or who serve as their business executers
basis of the monthly amount of compensation and the number
7. Persons who are related parties of a person or company that
of service years, etc.
have material conflict of interest with the Company
20 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Directors and Executive Officers
Directors (As of June 29, 2016)
Executive Officers (As of April 1, 2016)
Kenichiro Yamanishi ......... Chairman
Masaki Sakuyama
Hiroki Yoshimatsu ............. Chairman of the Audit Committee
President & CEO:
Masaki Sakuyama
Nobuyuki Okuma .............. Member of the Nomination Committee,
Executive Vice Presidents:
Chairman of the Compensation Committee
Akihiro Matsuyama ........... Member of the Compensation Committee
Masayuki Ichige ....................Member of the Audit Committee
Hideyuki Okubo ................... In charge of Export Control and
Total Productivity Management &
Environmental Programs
Yutaka Ohashi
Mitoji Yabunaka ................ Member of the Nomination Committee,
Yutaka Ohashi ....................... In charge of Corporate Strategic Planning and
Operations of Associated Companies
Member of the Compensation Committee,
Advisor, Nomura Research Institute, Ltd.
Senior Vice Presidents:
Hiroshi Obayashi ............... Chairman of the Nomination Committee,
Member of the Audit Committee,
Attorney-at-Law
Kazunori Watanabe .......... Member of the Audit Committee,
Isao Iguchi ..............................In charge of Automotive Equipment
Nobuyuki Okuma ................. In charge of Auditing, General Affairs,
Human Resources and Legal Affairs &
Compliance
Member of the Compensation Committee,
Certified Public Accountant,
Registered Tax Accountant
Akihiro Matsuyama .............In charge of Accounting and Finance
Kenji Kondo ...........................In charge of IT and Research & Development
Katsunori Nagayasu ............ Member of the Nomination Committee,
Takeshi Sugiyama ................. In charge of Living Environment &
Member of the Audit Committee,
Senior Advisor, The Bank of Tokyo-Mitsubishi
UFJ, Ltd.
Hiroko Koide ......................... Member of the Nomination Committee,
Member of the Compensation Committee,
Senior Vice President, Global Marketing,
Newell Brands Inc.
Digital Media Equipment
Executive Officers:
Takashi Sakamoto ............. In charge of Purchasing
Takahiro Kikuchi ................ In charge of Public Utility Systems
Nobuyuki Abe .................... In charge of Building Systems
Katsuya Takamiya .............. In charge of Global Strategic Planning &
Representative Executive Officers (As of April 1, 2016)
Marketing
Masaki Sakuyama
Hideyuki Okubo
Yutaka Ohashi
Nobushi Morooka ............. In charge of Government & External Relations,
Public Relations and Export Control
Yasuyuki Ito ....................... In charge of Energy & Industrial Systems
Hideaki Nagatomo ............ In charge of Living Environment &
Digital Media Equipment
Toru Sanada ....................... In charge of Semiconductor & Device
Takashi Nishimura ............. In charge of Communication Systems
Shinya Fushimi ................... In charge of Information Systems &
Network Service
Kei Uruma .......................... In charge of Factory Automation Systems
Hisashi Kato ...........................In charge of Intellectual Property
Minoru Hagiwara ................. In charge of Advertising and Domestic
Marketing
Masamitsu Okamura ...........In charge of Electronic Systems
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 21
Organization (As of April 1, 2016)
Board of Directors
Chairman
Nomination
Committee
Audit
Committee
Compensation
Committee
Audit Committee Office
Executive Officers’
Meeting
President & CEO
Senior Vice
Presidents
Executive
Officers
(cid:31) Corporate Auditing Div.
(cid:31) Corporate Marketing Group
(cid:31) Corporate Strategic
Planning Div.
(cid:31) Corporate IT Strategy Div.
(cid:31) Global Strategic Planning &
Marketing Group
(cid:31) Associated
Companies Div.
(cid:31) Government &
External Relations Div.
(cid:31) Corporate
Administration Div.
(cid:31) Corporate Human
Resources Div.
(cid:31) Corporate
Accounting Div.
(cid:31) Corporate Finance Div.
(cid:31) Corporate Total Productivity
Management & Environmental
Programs Group
(cid:31) Corporate Research and
Development Group
(cid:31) Information Systems &
Network Service Group
(cid:31) Public Utility Systems Group
(cid:31) Corporate
Purchasing Div.
(cid:31) Energy & Industrial
Systems Group
(cid:31) Public Relations Div.
(cid:31) Corporate
Advertising Div.
(cid:31) Corporate Legal &
Compliance Div.
(cid:31) Corporate Export
Control Div.
(cid:31) Corporate Licensing Div.
(cid:31) Building Systems Group
(cid:31) Electronic Systems Group
(cid:31) Corporate Intellectual
Property Div.
(cid:31) Communication Systems Group
(cid:31) Living Environment & Digital
Media Equipment Group
(cid:31) Factory Automation
Systems Group
(cid:31) Automotive Equipment Group
(cid:31) Semiconductor & Device Group
Business Planning Office
Market Planning & Administration Dept.
Compliance Dept.
Marketing Research & Business Development Dept.
Olympic and Paralympic Promotion Dept.
Branch Offices (Hokkaido, Tohoku, Kanetsu, Kanagawa,
Hokuriku, Chubu, Kansai, Chugoku, Shikoku, Kyushu)
Global Planning & Administration Div.
Compliance Dept.
Regional Marketing Div.
Regional Strategic Development Div.
Regional Corporate Offices
Americas (U.S.A.)
Europe (U.K.)
Asia (Singapore)
China
Taiwan
Corporate Productivity Engineering Dept.
Compliance Dept.
Corporate Quality Assurance Planning Dept.
Corporate Environmental Sustainability Group
Corporate Logistics Dept.
Design Systems Engineering Center
Manufacturing Engineering Center
Component Production Engineering Center
Planning & Administration Dept.
Compliance Dept.
Advanced Technology R&D Center
Information Technology R&D Center
Industrial Design Center
Planning & Administration Dept.
Compliance Dept.
Information Systems & Network Service Div.
Planning & Administration Dept.
Compliance Dept.
Engineering Planning Dept.
ITS Business Development Group
Public-Use Systems Marketing Div.
Transportation Systems Div.
Overseas Marketing Div.
Plant Engineering & Construction Div.
Branch Offices
Kobe Works, Itami Works, Nagasaki Works
Planning & Administration Dept.
Compliance Dept.
Engineering Planning Dept.
Nuclear Power Plant Technical Supervisory Office
Business Development & Strategic Planning Div.
Transmission & Distribution Systems Marketing Div.
Power & Energy Systems Marketing Div.
Nuclear Energy, Advanced Magnetic & Medical Systems Marketing Div.
Power Plant Engineering & Construction Center
Branch Offices
Energy Systems Center, Transmission & Distribution Systems Center,
Power Distribution Systems Center
Planning & Administration Dept.
Compliance Dept.
Engineering Planning Dept.
Total Security Systems Dept.
Domestic Marketing Div.
Overseas Marketing Div.
Building Systems Field Operation Div.
Branch Offices
Inazawa Works
Electronic Systems Compliance Dept.
Planning & Administration Dept.
Defense Systems Div.
Space Systems Div.
IT Space Solutions Div.
Branch Offices
Communication Systems Center, Kamakura Works
Planning & Administration Dept.
Compliance Dept.
Communication Systems Engineering Center
Telecommunication Systems Sales & Marketing Div.
Branch Offices
Communication Networks Center
Planning & Administration Dept.
Compliance Dept.
Engineering Dept.
Branding Strategy Dept.
External Relations Dept.
Customer Satisfaction Promotion Dept.
Marketing & Operations Strategic Planning Dept.
Eco-Facility Systems Marketing Dept.
Air-Conditioning & Refrigeration Systems Div.
Overseas Air-Conditioning & Refrigeration Systems Div.
Lighting, Ventilation, Home Equipment and Photovoltaic Systems Div.
Home Appliances & Digital Media Equipment Div.
Living Environment Systems Laboratory
Branch Offices
Nakatsugawa Works, Air-Conditioning & Refrigeration Systems Works,
Shizuoka Works, Kyoto Works, Gunma Works
Planning & Administration Dept.
Compliance Dept.
Industrial Products Marketing Div.
Industrial Automation Marketing Div.
Overseas Marketing Div.
Global Account Management Div.
Branch Offices
Nagoya Works, Fukuyama Works
Planning & Administration Dept.
Automotive Equipment Compliance Dept.
Automotive Equipment Marketing Div.
Automotive Electronics Development Center
Branch Offices
Himeji Works, Sanda Works
Planning & Administration Div.
Compliance Dept.
Semiconductor & Device Marketing Div. A
Semiconductor & Device Marketing Div. B
LCD Div.
Branch Offices
Power Device Works, High Frequency & Optical Device Works
22 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Major Subsidiaries and Affiliates (As of March 31, 2016)
Manufacturing
Sales/Installation/Services
Comprehensive Sales Companies
Energy and
Electric Systems
Toyo Electric Corporation
Mitsubishi Electric Building Techno-Service Co., Ltd.
Mitsubishi Electric Power Products, Inc.
Mitsubishi Electric Plant Engineering Corporation
Mitsubishi Electric Shanghai Electric Elevator Co., Ltd.
Mitsubishi Electric Control Software Corporation
Mitsubishi Elevator Asia Co., Ltd.
Mitsubishi Elevator Korea Co., Ltd.
Ryoden Elevator Construction, Ltd.
Ryoko Co., Ltd.
Taiwan Mitsubishi Elevator Co., Ltd.
RYO-SA BUILWARE Co., Ltd.
Toshiba Mitsubishi-Electric Industrial Systems Corporation
Mitsubishi Hitachi Home Elevator Corporation
Shanghai Mitsubishi Elevator Co., Ltd.
Zhuzhou Shiling Transportation Equipment
Company Limited
Mitsubishi Elevator Hong Kong Co., Ltd.
Mitsubishi Electric Saudi Ltd.
Hitachi Mitsubishi Hydro Corporation
ETA-Melco Elevator Co. L.L.C.
Industrial
Automation
Systems
DB Seiko Co., Ltd.
Ryowa Corporation
Mitsubishi Electric Automotive America, Inc.
Setsuyo Astec Corporation
Mitsubishi Electric Thai Auto-Parts Co., Ltd.
Ryoden Koki Engineering Co., Ltd.
Mitsubishi Electric Automotive (China) Co., Ltd.
Meldas System Engineering Corporation
Mitsubishi Electric Automation, Inc.
Mitsubishi Electric Mechatronics Software Corporation
Mitsubishi Electric Dalian Industrial Products Co., Ltd.
Mitsubishi Electric Automation (Hong Kong) Ltd.
Mitsubishi Electric Automotive Czech s.r.o.
Mitsubishi Electric Automation Korea Co., Ltd.
Chiyoda Mitsubishi Electric Co., Ltd. and
other regional comprehensive sales
companies (9 companies)
Mitsubishi Electric Europe B.V.
Mitsubishi Electric US, Inc.
Mitsubishi Electric Taiwan Co., Ltd.
Mitsubishi Electric & Electronics
(Shanghai) Co., Ltd.
Mitsubishi Electric Asia Pte. Ltd.
Mitsubishi Electric (H.K.) Ltd.
Mitsubishi Electric Australia Pty. Ltd.
Ryoden Trading Co., Ltd.
Kanaden Corporation
Mansei Corporation
Information and
Communication
Systems
Electronic
Devices
Home Appliances
Others
Shizuki Electric Co., Inc.
Nippon Injector Corporation
Shihlin Electric & Engineering Corporation
Mitsubishi Electric TOKKI Systems Corporation
Mitsubishi Electric Information Systems Corporation
Mitsubishi Precision Co., Ltd.
SPC Electronics Corporation
Seiryo Electric Co., Ltd.
Oi Electric Co., Ltd.
Miyoshi Electronics Corporation
Mitsubishi Electric Information Network Corporation
Mitsubishi Space Software Co., Ltd.
Mitsubishi Electric Micro-Computer Application
Software Co., Ltd.
Itec Hankyu Hanshin Co., Ltd.
Melco Power Device Corporation
Melco Semiconductor Engineering Corporation
Melco Display Technology Inc.
Vincotech Holdings S.à r.l.
Powerex, Inc.
Mitsubishi Electric Lighting Corporation
Mitsubishi Electric Home Appliance Co., Ltd.
Mitsubishi Electric Consumer Products (Thailand) Co., Ltd.
Shanghai Mitsubishi Electric & Shangling
Air-Conditioner and Electric Appliance Co., Ltd.
MELCO Hydronics & IT Cooling S. p. A.
Mitsubishi Electric (Guangzhou) Compressor Co., Ltd.
Siam Compressor Industry Co., Ltd.
Mitsubishi Electric Air Conditioning Systems Europe Ltd.
Kang Yong Electric Public Co., Ltd.
Mitsubishi Electric Living Environment
Systems Corporation
Mitsubishi Electric Life Network Co., Ltd.
Mitsubishi Electric Air Conditioning &
Refrigeration Equipment Sales Co., Ltd.
Mitsubishi Electric Air Conditioning &
Refrigeration Systems Co., Ltd.
Melco Facilities Corporation
Mitsubishi Electric Kang Yong Watana Co., Ltd.
Mitsubishi Electric Air-Conditioning &
Visual Information Systems (Shanghai) Ltd.
Mitsubishi Electric Trading Corporation
Mitsubishi Electric Engineering Co., Ltd.
Mitsubishi Electric Logistics Corporation
Mitsubishi Electric System & Service Co., Ltd.
Mitsubishi Electric Life Service Corporation
The Kodensha Co., Ltd.
iPLANET Inc.
Melco Trading (Thailand) Co.,Ltd.
Mitsubishi Electric Credit Corporation
KITA KOUDENSHA Corporation
Notes:
1. Comprehensive sales companies include several companies that are responsible for selling products from a number of businesses, and therefore these are placed into their own
separate category rather than grouped by business segment.
2. Companies shaded in gray are consolidated subsidiaries, while others are equity-method affiliate companies.
3. The name of Ryoden Koki Engineering Co., Ltd. was changed to Mitsubishi Electric Mechatronics Engineering Corporation on April 1, 2016.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 23
24 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Financial Section
Contents
26 Five-Year Summary
27 Financial Review
36 Consolidated Balance Sheets
38 Consolidated Statements of Income
38 Consolidated Statements of Comprehensive Income
39 Consolidated Statements of Equity
40 Consolidated Statements of Cash Flows
41 Notes to Consolidated Financial Statements
74
Independent Auditors’ Report
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 25
Five-Year Summary
Mitsubishi Electric Corporation and Subsidiaries
Years ended March 31
2016
2015
2014
2013
Yen (millions)
2012
U.S. dollars
(thousands)
2016
Summary of Operations
Net sales
Cost of sales
Selling, general, administrative
and R&D expenses
Loss on impairment of
long-lived assets
Operating costs
Operating income
Income before income taxes
Net income attributable
¥4,394,353
¥4,323,041
¥4,054,359
¥3,567,184
¥3,639,468
$38,888,080
3,071,435
3,032,161
2,914,589
2,604,360
2,628,964
27,180,842
1,013,264
970,191
900,807
806,412
781,278
8,966,938
8,482
3,085
3,791
4,317
3,782
4,093,181
301,172
318,476
4,005,437
317,604
322,968
3,819,187
235,172
248,990
3,415,089
152,095
65,141
3,414,024
225,444
224,080
75,062
36,222,841
2,665,239
2,818,372
to Mitsubishi Electric Corp.
¥ 228,494
¥ 234,694
¥ 153,473
¥ 69,517
¥ 112,063
$ 2,022,071
Financial Ratios
Return on sales (%)
Return on equity (%)
Return on assets (%)
Equity ratio (%)
Per-Share Amounts
Net income attributable
to Mitsubishi Electric Corp.
(yen/U.S. dollars)
Basic
Diluted
Cash dividends declared
(yen/U.S. dollars)
Statistical Information
Current assets
Current liabilities
Working capital
Mitsubishi Electric Corp.
shareholders’ equity
Cash dividends paid
Total assets
Capital expenditures
R&D expenditures
Depreciation
Employees
5.20
12.41
5.63
45.29
5.43
13.94
6.12
45.38
3.79
10.87
4.37
42.19
1.95
5.72
2.04
38.12
3.08
10.27
3.33
33.39
—
—
—
—
¥ 106.43
—
¥ 109.32
—
¥ 71.49
—
¥ 32.38
—
¥ 52.20
—
$ 0.942
—
¥ 27
¥ 27
¥ 17
¥ 11
¥ 12
$ 0.239
¥2,551,863
1,507,943
1,043,920
¥2,633,445
1,612,582
1,020,863
¥2,290,007
1,494,243
795,764
¥2,129,395
1,386,067
743,328
¥2,180,362
1,387,744
792,618
$22,582,858
13,344,628
9,238,230
1,838,773
1,842,203
1,524,322
1,300,070
1,132,465
16,272,327
57,963
4,059,941
182,251
202,922
¥ 145,249
42,936
4,059,451
199,758
195,314
¥ 156,205
25,762
3,612,966
151,840
178,945
¥ 132,956
23,616
3,410,410
150,425
172,222
¥ 127,942
27,910
3,391,651
159,346
169,686
¥ 127,244
512,947
35,928,681
1,612,841
1,795,770
$ 1,285,389
(at the end of the year)
135,160
129,249
124,305
120,958
117,314
—
Notes: 1. The Company prepares consolidated financial statements with procedures, accounting terms, forms, and preparation that are in conformity with accounting
principles generally accepted in the United States of America based on the rules and regulations applicable in Japan.
2. Operating income is presented as net sales less cost of sales, selling, general, administrative and R&D expenses, and loss on impairment of long-lived assets. Total
operating income for each segment conforms to above mentioned operating income. Business restructuring expenses are shown as non-operating expenses.
3. R&D expenditures include elements spent on quality improvements, which constitute manufacturing costs.
4. U.S. dollar amounts are translated from yen at the rate of ¥113=U.S.$1, the approximate rate on the Tokyo Foreign Exchange Market on March 31, 2016.
5. The Company has 218 consolidated subsidiaries and 38 equity-method companies as of March 31, 2016.
6. Diluted net income per share attributable to Mitsubishi Electric Corp. is not included in the above table as no dilutive securities existed.
26 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Financial Review
OVERVIEW
The business environment in the fiscal year ended March 31, 2016 (hereinafter, fiscal 2016) experienced buoyancy in the U.S.
economy, which showed expansion, and a gradual trend of economic recovery continuing in Europe, despite a gradual slow-
down continuing in China and other east Asian markets, weakness in personal consumption in Japan and stagnation in certain
emerging markets. In addition, the yen weakened against the U.S. dollar compared to the previous year, while becoming stron-
ger in the fourth quarter.
Under these circumstances, the Mitsubishi Electric Group has been working even harder than before to promote growth
strategies rooted in its advantages, while continuously implementing initiatives to strengthen its competitiveness and business
structure.
As a result, in fiscal 2016, the Mitsubishi Electric Group recorded net sales of 4,394.3 billion yen and operating income of
301.1 billion yen. Income before income taxes came to 318.4 billion yen. Net income attributable to Mitsubishi Electric
Corporation was 228.4 billion yen for the fiscal year.
Net Sales
The Mitsubishi Electric Group recorded increases in sales in the following segments: Energy and Electric Systems, Industrial
Automation Systems, Information and Communication Systems and Home Appliances. In the fiscal year, consolidated net sales
climbed by ¥71.3 billion year on year to ¥4,394.3 billion.
Cost of Sales, Expenses and Operating Income
The cost of sales increased by ¥39.2 billion compared with the previous fiscal year to ¥3,071.4 billion, representing 69.9% of
total net sales, an improvement of 0.2 of a percentage point. Selling, general and administrative (SG&A) expenses together with
research and development (R&D) expenses totaled ¥1,013.2 billion, up ¥43.0 billion year on year. As a result, the ratio of SG&A
and R&D expenses to net sales deteriorated by 0.5 of a percentage point year on year to 23.0%. Loss on impairment of long-
lived assets increased by ¥5.3 billion year on year to ¥8.4 billion.
Accounting for the aforementioned factors, operating income amounted to ¥301.1 billion, a decrease of ¥16.4 billion com-
pared with the previous fiscal year. This decrease was primarily attributable to decreases in income in Energy and Electric Systems,
Information and Communications Systems and Electronic Devices business segments.
Non-Operating Income and Expenses
Financial income, the sum of interest and dividend income less interest expenses, amounted to ¥5.0 billion, an improvement of
¥1.7 billion compared with the previous fiscal year. Equity in earnings of affiliated companies totaled ¥29.4 billion, an improve-
ment of ¥1.7 billion compared with the previous fiscal year.
Other income decreased by ¥20.7 billion to ¥22.5 billion year on year. Other expenses decreased by ¥29.2 billion year on
year to ¥39.7 billion.
Income before Income Taxes
Income before income taxes decreased by ¥4.4 billion compared with the previous fiscal year to ¥318.4 billion, for a ratio to net
sales of 7.2%.
This is largely attributable to the aforementioned decrease in operating income of ¥16.4 billion, which offset upswing in the
balance of non-operating income totaling ¥11.9 billion.
Net Income Attributable to Mitsubishi Electric Corp.
Net income attributable to Mitsubishi Electric Corp. decreased by ¥6.2 billion year on year to ¥228.4 billion (a ratio to net sales of
5.2%) largely on the back of the decrease in income before income taxes.
Net sales / Operating income
Net income attributable to Mitsubishi Electric Corp. /
Basic net income per share attributable to Mitsubishi
Electric Corp.
(Yen in billions)
4,500
3,639 3,567
4,323
4,394
4,054
317
301
(Yen in billions)
(Yen in billions)
400
300
200
100
0
234
228
109.32
106.43
153
71.49
250
200
150
100
50
0
112
52.20
69
32.38
(Yen)
200
150
100
50
0
225
235
152
3,000
1,500
0
12
13
14
15
16
12
13
14
15
16
(Years ended March 31)
(Years ended March 31)
Net sales (left)
Operating income (right)
Net income attributable to Mitsubishi Electric Corp. (left)
Basic net income per share attributable to Mitsubishi Electric Corp. (right)
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 27
Business Risks
The Mitsubishi Electric Group (hereinafter “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 Company trusts and
considers to be reasonable under the circumstances on the date of announcement, actual 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 announce-
ment. 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 mate-
rials that are denominated in U.S. dollars or euros, as well as its Asian production bases’ sales of exported products and pur-
chases of imported materials that are denominated in foreign currencies.
(3) Stock markets
A fall in stock market prices may cause Mitsubishi Electric to record devaluation losses on marketable securities, or cause an
increase in retirement benefit obligations in accordance with a decline in the fair value of 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 corpo-
rate 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 intro-
duction 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.
28 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
RESULTS BY BUSINESS SEGMENT
Net Sales by Business Segment
Years ended March 31
2016
2015
2014
2013
Yen (millions)
2012
U.S. dollars
(thousands)
2016
Energy and Electric Systems
Industrial Automation Systems
Information and
Communication Systems
Electronic Devices
Home Appliances
Others
Subtotal
Eliminations
Consolidated total
¥1,264,604
1,321,937
¥1,228,958
1,282,749
¥1,180,093
1,098,796
¥1,058,177
927,857
¥1,027,115
978,380
$11,191,186
11,698,558
561,119
211,580
982,064
707,746
5,049,050
(654,697)
¥4,394,353
559,521
238,402
944,830
740,517
4,994,977
(671,936)
¥4,323,041
548,282
194,658
944,351
676,034
4,642,214
(587,855)
¥4,054,359
522,422
164,065
821,298
590,366
4,084,185
(517,001)
¥3,567,184
516,354
200,799
849,274
611,619
4,183,541
(544,073)
¥3,639,468
4,965,655
1,872,389
8,690,832
6,263,239
44,681,859
(5,793,779)
$38,888,080
Operating Income (Loss) by Business Segment
Years ended March 31
2016
2015
2014
2013
Energy and Electric Systems
Industrial Automation Systems
Information and
Communication Systems
Electronic Devices
Home Appliances
Others
Subtotal
Eliminations and other
Consolidated total
¥ 50,342
159,160
¥ 72,448
145,982
¥ 76,324
98,079
¥ 85,140
60,592
14,999
16,870
63,856
23,620
328,847
(27,675)
¥301,172
18,934
30,163
54,296
23,742
345,565
(27,961)
¥317,604
5,529
10,050
52,878
19,801
262,661
(27,489)
¥235,172
1,591
(5,580)
19,300
18,790
179,833
(27,738)
¥152,095
Yen (millions)
2012
¥ 84,920
101,192
21,312
3,585
22,358
20,348
253,715
(28,271)
¥225,444
U.S. dollars
(thousands)
2016
$ 445,504
1,408,496
132,735
149,292
565,097
209,027
2,910,151
(244,912)
$2,665,239
Energy and Electric Systems
The social infrastructure systems business saw increases in both orders and sales
Net sales and Operating income of Energy
and Electric Systems
compared to the previous fiscal year due to increases in the power systems busi-
ness and the transportation systems business in Japan, despite decreases in the
public utility systems business in Japan and the transportation systems business
(Yen in billions)
1,500
outside Japan.
The building systems business experienced an increase in orders, while sales
1,027 1,058
1,000
remained unchanged compared to the previous fiscal year, owing to growth in
84
85
the new installation of elevators and escalators outside Japan.
As a result, total sales for this segment increased by 3% from the previous
fiscal year to 1,264.6 billion yen. Operating income decreased by 22.1 billion yen
from the previous fiscal year to 50.3 billion yen due primarily to a shift in project
portfolios and lower profit in the social infrastructure systems business.
500
0
(Yen in billions)
1,180 1,228
1,264
76
72
50
12
13
14
15
16
(Years ended March 31)
Net sales (left)
Operating income (right)
Industrial Automation Systems
The factory automation systems business saw a decrease in orders from the pre-
Net sales and Operating income of
Industrial Automation Systems
vious fiscal year mainly due to stagnant capital expenditures in China and other
(Yen in billions)
(Yen in billions)
emerging markets, while sales remained unchanged from the previous fiscal year
1,500
due to growth in capital expenditures relating to the automotive industry and
facility replacements by manufacturers in Japan, and due additionally to the
weaker yen.
The automotive equipment business saw increases in both orders and sales
from the previous fiscal year due primarily to growth in the car sales market in
North America and Europe, as well as the positive influence of the weaker yen.
As a result, total sales for this segment increased by 3% from the previous
fiscal year to 1,321.9 billion yen. Operating income increased by 13.1 billion yen
500
0
1,282
1,321
159
1,000
978
927
1,098
145
101
98
60
from the previous fiscal year to 159.1 billion yen due primarily to the increase in
Net sales (left)
Operating income (right)
sales.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 29
12
13
14
15
16
(Years ended March 31)
200
150
100
50
0
200
150
100
50
0
Information and Communication Systems
The telecommunications equipment business remained unchanged in both
Net sales and Operating income of
Information and Communication Systems
orders and sales compared to the previous fiscal year.
(Yen in billions)
(Yen in billions)
The information systems and service business saw an increase in sales com-
pared to the previous fiscal year, mainly owing to an increase in the system inte-
grations business.
The electronic systems business saw an increase in orders compared to the
previous fiscal year, due to an increase in orders for large-scale projects in the
space business, while sales remained unchanged compared to the previous fiscal
year due to a shift in the portfolios of large-scale projects in the defense systems
business.
As a result, total sales for this segment amounted to 561.1 billion yen, virtu-
ally unchanged from the previous fiscal year. Operating income decreased by 3.9
billion yen from the previous fiscal year to 14.9 billion yen due primarily to a shift
in project portfolios.
Electronic Devices
The electronic devices business saw decreases in both orders and sales from the
previous fiscal year due to a decrease in demand mainly for power modules used
in automotive, railcar, consumer and industrial applications, despite an increase
in optical communication devices.
As a result, total sales for this segment decreased by 11% compared with
the previous fiscal year to 211.5 billion yen. Operating income decreased by 13.2
billion yen compared with the previous fiscal year to 16.8 billion yen due primari-
ly to the decrease in sales.
Home Appliances
The home appliances business saw an increase in sales of 4% compared with the
previous fiscal year to 982.0 billion yen, due to an increase in sales of residential
and industrial air conditioners in Japan, as well as air conditioners for Europe,
Asia and North America. The weaker yen also brought about a positive influence.
Operating income increased by 9.5 billion yen compared with the previous
fiscal year to 63.8 billion yen largely due to the increase in sales.
600
400
200
0
516
522
548
559
561
21
18
14
5
1
50
40
30
20
10
0
12
13
14
15
16
(Years ended March 31)
Net sales (left)
Operating income (right)
Net sales and Operating income (loss) of
Electronic Devices
(Yen in billions)
(Yen in billions)
250
200
150
100
50
0
-50
200
194
164
238
211
30
16
10
3
-5
50
40
30
20
10
0
-10
12
13
14
15
16
(Years ended March 31)
Net sales (left)
Operating income (loss) (right)
Net sales and Operating income of Home Appliances
(Yen in billions)
1,000
944
944
(Yen in billions)
982
100
849
821
63
52
54
750
500
250
0
22
19
75
50
25
0
12
13
14
15
16
(Years ended March 31)
Net sales (left)
Operating income (right)
Others
Sales decreased by 4% compared with the previous fiscal year to 707.7 billion
Net sales and Operating income of Others
(Yen in billions)
(Yen in billions)
yen due to decreases mainly at affiliated companies involved in materials
900
procurement.
Operating income decreased by 0.1 billion yen from the previous fiscal year
611
590
600
740
707
676
to 23.6 billion yen due primarily to the decrease in sales.
20
18
19
23
23
300
0
50
40
30
20
10
0
12
13
14
15
16
(Years ended March 31)
Net sales (left)
Operating income (right)
30 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
RESULTS BY GEOGRAPHIC SEGMENT
Net Sales by Geographic Segment
Years ended March 31
2016
2015
2014
2013
Yen (millions)
2012
U.S. dollars
(thousands)
2016
Japan
North America
Asia (excluding Japan)
Europe
Others
Eliminations
Consolidated total
¥3,563,530 ¥ 3,578,960
388,021
446,935
1,047,758
1,054,563
383,965
387,628
49,495
50,260
(1,125,158)
(1,108,563)
¥4,394,353 ¥ 4,323,041
¥3,362,854
¥3,064,014
¥3,186,719
$31,535,664
325,224
887,022
352,950
47,824
(921,515)
¥4,054,359
248,105
624,724
289,933
40,255
(699,847)
¥3,567,184
222,543
582,888
309,997
40,184
(702,863)
¥3,639,468
3,955,177
9,332,416
3,430,336
444,779
(9,810,292)
$38,888,080
Operating Income (Loss) by Geographic Segment
Years ended March 31
2016
2015
2014
2013
Yen (millions)
2012
U.S. dollars
(thousands)
2016
Japan
North America
Asia (excluding Japan)
Europe
Others
Eliminations
Consolidated total
¥173,383
9,421
91,006
14,806
904
11,652
¥301,172
¥226,199
¥177,315
¥116,923
¥179,452
5,178
82,419
11,803
402
(8,397)
¥317,604
1,679
59,023
4,768
1,735
(9,348)
¥235,172
(1,744)
36,172
4,527
2,209
(5,992)
¥152,095
3,339
34,220
6,319
3,905
(1,791)
¥225,444
$1,534,363
83,372
805,363
131,026
8,000
103,115
$2,665,239
Japan
Sales totaled 3,563.5 billion yen, virtually unchanged from the previous fiscal year. Operating income decreased by 52.8 billion
yen to 173.3 billion yen. This largely reflected a shift in project portfolios and lower profit in the social infrastructure systems
business.
North America
Sales increased by 15% year on year to 446.9 billion yen primarily due to higher sales in the power systems and automotive
equipment businesses. Operating income increased by 4.2 billion yen to 9.4 billion yen.
Asia (excluding Japan)
Sales totaled 1,054.5 billion yen, up 1% compared with the previous fiscal year mainly because of higher sales in the automotive
equipment and air conditioner businesses. Operating income increased by 8.5 billion yen to 91.0 billion yen.
Europe
Sales increased by 1% year on year to 387.6 billion yen mainly because of higher sales in the automotive equipment and air con-
ditioner businesses. Operating income increased by 3.0 billion yen to 14.8 billion yen.
Others
Sales in other regions, including figures for Mitsubishi Electric’s Australian subsidiary, amounted to 50.2 billion yen, while operat-
ing income was 0.9 billion yen.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 31
RESEARCH AND DEVELOPMENT
R&D Expenditures
Years ended March 31
2016
2015
2014
2013
Yen (billions)
2012
U.S. dollars
(millions)
2016
Energy and Electric Systems
¥ 33.7
¥ 31.4
¥ 28.8
¥ 29.8
¥ 30.5
$ 298.2
Industrial Automation Systems
Information and Communication Systems
Electronic Devices
Home Appliances
Others
Consolidated total
70.8
18.9
10.6
39.8
28.7
70.5
16.3
10.9
37.3
28.6
63.4
15.6
9.3
34.1
27.5
58.9
16.4
8.2
30.8
27.7
54.9
16.1
9.3
30.4
28.2
626.5
167.3
93.8
352.2
254.0
¥202.9
¥195.3
¥178.9
¥172.2
¥169.6
$1,795.8
The Mitsubishi Electric Group actively promotes R&D initiatives that cover fundamental and advanced applications as well as
product commercialization and manufacturing technologies. Carrying out these initiatives are various Group facilities, including
corporate laboratories in Japan and laboratories in the United States and Europe as well as the R&D departments of factories and
consolidated subsidiaries. Moreover, we pursue advanced and wide-ranging R&D activities in partnership with universities and
research institutions both in Japan and overseas.
In fiscal 2016, total R&D expenditures, including quality improvement expenses constituting manufacturing costs, amounted
to ¥202.9 billion. Mitsubishi Electric reports R&D activities by business segment according to purpose, type, result and
expenditure.
In the Energy and Electric Systems segment, our research is directed at boosting the competitiveness of such core products
as rotating machines for generators, electric motors and other machinery; switches and transformers; other power transmission/
distribution/reception equipment and systems; transportation systems; and elevators and escalators. Other R&D areas include
IT-application systems for supervision and control, power information systems, building management systems and visual informa-
tion systems. Notable among Mitsubishi Electric’s recent R&D achievements are the Mitsubishi Infrastructure Monitoring System
for Diagnosis (MMSD) designed to maintain social infrastructure; a compact and upgraded version of the Station Energy Saving
Inverter (S-EIV); a water-cooling propulsion and control system for high-speed train; reduction in size and weight of gas-insulated
switchgear for overseas markets; high-capacity energy-storage system; upgrading of the MELSAFETY-Pχ access control system
for use in small to medium-sized buildings; and enhancing competitiveness of the NEXIEZ-MR, standard passenger elevator for
overseas customers. R&D expenditures in this segment totaled ¥33.7 billion.
In the Industrial Automation Systems segment, R&D activities are aimed at enhancing the competitiveness of our lineup,
which includes FA control equipment and systems; drive products such as AC servo motor systems; power distribution and con-
trol equipment; mechatronics equipment; industrial robots; automotive electric and electronic components, including electric
power steering (EPS) and related products; car multimedia systems; and automated driving and driving assistance systems.
Mitsubishi Electric’s important R&D successes encompass the ML3015eX-F40 2-Dimensional fiber laser processing systems, the
ML3015SR-32XP CO2 2-Dimensional laser processing systems; MELSEC iQ-R series programmable controllers (safety); GTW4-
UVF20 series laser drilling systems; the EA12PS die sinking electrical discharge
machine; the DIATONE SOUND. NAVI NR-MZ100 Series car audio-navigation sys-
R&D expenditures / R&D expenditures ratio
tem; EP-E216SBG/SB in-vehicle DSRC unit (ETC 2.0); and the EMIRAI3 xAUTO
and EMIRAI3 xDAS concept cars exhibited at the Tokyo Motor Show 2015. R&D
expenditures in this segment totaled ¥70.8 billion.
In the Information and Communication Systems segment, Mitsubishi Electric
pursues research related to the development of information and communications
infrastructure, network solutions equipment, and space systems. Notable R&D
successes for Mitsubishi Electric include road inspection vehicle utilizing Mobile
Mapping System (MMS) with high density laser and line cameras, real time visu-
alization of laser point clouds obtained by MMS; new products of versatile, high-
quality video surveillance system; video content analysis; 100Gbps, 88-channel,
8-degree optical cross connect systems; an active phased array antenna for 5G;
an optical network unit with a built-in Wi-Fi; a 150MHz band digital train radio
(Yen in billions)
169
4.7
195
202
172
178
4.4
4.5
4.6
4.8
250
200
150
100
50
0
(%)
10.0
7.5
5.0
2.5
0
12
13
14
15
16
(Years ended March 31)
R&D expenditures (left)
R&D expenditures / Net sales (right)
32 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
system; the DIAPLANET TOWNEMS cloud services for town energy management systems; the CloudMinder hybrid cloud service;
an advanced persistent threat detection service; and the Package Plus Transporter service for the secure transmission of confiden-
tial data files. R&D expenditures in this segment totaled ¥18.9 billion.
In the Electronic Devices segment, our R&D focuses on semiconductor and other electronic devices that are themselves vital
components used in all our business segments. Major R&D achievements include power semiconductor modules with 7th gener-
ation IGBT; a high-speed transmission laser diode modules for optical-fiber communication in 100Gbps Systems; a silicon RF
MOSFET-RD70HUP2; and a color TFT-LCD module, which boasts super-wide viewing angles for industrial use. R&D expenditures
in this segment totaled ¥10.6 billion.
In the Home Appliances segment, Mitsubishi Electric is engaged in the development of products in such wide-ranging fields
as air conditioning equipment, kitchen appliances, vacuum cleaners, lighting, visual information systems, electronic housing
products and photovoltaic systems. Major R&D achievements include the KIRIGAMINE FZ series room air conditioners incorporat-
ing two independent-driven fans; the SLIM series package air conditioners for store and office use; the WX and JX series refrig-
erators with Supercool chilling compartment; the Hon-Sumigama KAMADO IH jar rice cooker; and the COMPACT CUBE DT-R
air-cooling heat pump chiller for building and factory use. R&D expenditures in this segment totaled ¥39.8 billion.
In the area of cutting-edge R&D, Mitsubishi Electric is developing cutting-edge technologies aimed at enriching society well
into the future, and to this end, has identified four target categories: the Internet of Things, Smart Mobility, Comfortable Space,
and Infrastructure for Safety and Relief. Major R&D achievements include machine-learning technology to detect cognitive dis-
tractions in drivers; string-searchable encryption software to support partial-match searching of encrypted data; collision-avoid-
ance technology for advanced driver-assistance system; road-illuminating directional indicators to help avoid accidents; a
high-precision air-quality sensor for PM2.5; an Aerial Display that projects large images midair; cyber attack detection technology;
and the SeaAerial antenna using seawater plume. With regard to fundamental R&D that benefits the entire Group, our achieve-
ments included manufacturing technology for virtual validation; a high-efficiency DC fan motor for package air conditioners; and
an automated painting technology for designed model of room air conditioners. R&D expenditures in this area totaled ¥28.7
billion.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 33
FINANCIAL POSITION
Total assets amounted to ¥4,059.9 billion as of March 31, 2016, an increase of
Interest-bearing debt / Debt ratio
(Yen in billions)
542
540
16.0
15.9
381
9.4
404
10.0
373
10.3
600
450
300
150
0
(%)
20
15
10
5
0
12
13
14
15
16
(Years ended March 31)
Interest-bearing debt (left)
Interest-bearing debt/Total assets (right)
Total assets / Mitsubishi Electric Corp. shareholders’
equity / Shareholders’ equity ratio
(Yen in billions)
4,059
4,059
3,612
42.2
45.4
45.3
3,391 3,410
38.1
33.4
1,842 1,838
1,300
1,132
1,524
4,000
3,200
2,400
1,600
800
0
(%)
50
40
30
20
10
0
12
13
14
15
16
(Years ended March 31)
Total assets (left)
Mitsubishi Electric Corp. shareholders’ equity (left)
Shareholders’ equity ratio (right)
¥0.4 billion compared with the end of the previous fiscal year. Negative factors
contributing to this result included decreases of ¥65.0 billion in investments in
securities and other due to lower share prices and ¥61.2 billion in inventories
while positive factors included an increase of ¥135.0 billion in other assets due
to the acquisition of MELCO Hydronics & IT Cooling S.p.A.
Under liabilities, the outstanding balance of debt and corporate bonds grew
by ¥22.0 billion compared with the end of the previous fiscal year to ¥404.0 bil-
lion. As a result, the ratio of interest-bearing debt to total assets was 10.0%, an
increase of 0.6 of a percentage point year on year. While retirement and sever-
ance benefits rose by ¥47.4 billion largely because of a decrease in pension plan
assets caused by lower share prices, trade payables, other non-current liabilities
and other current liabilities decreased by ¥33.5 billion, ¥19.5 billion, and ¥17.5
billion, respectively. As a result of these and other factors, total liabilities
decreased by ¥6.8 billion to ¥2,122.4 billion.
Mitsubishi Electric Corp. shareholders’ equity fell by ¥3.4 billion compared
with the end of the previous fiscal year to ¥1,838.7 billion and the ratio of
Mitsubishi Electric Corp. shareholders’ equity to total assets was 45.3%, down
0.1 of a percentage point year on year. Despite the posting of net income attrib-
utable to Mitsubishi Electric Corp. amounting ¥228.4 billion for the fiscal year, a
decrease attributable to the payment of cash dividends totaling ¥57.9 billion and
a decrease in accumulated other comprehensive income of ¥174.7 billion due to
lower share prices from the end of the previous fiscal year until March 31, 2016,
as well as the appreciation of the yen, led to the overall fall in shareholders’
equity.
34 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
CAPITAL EXPENDITURES
In line with its policy of improving performance by implementing the Balanced
Corporate Management Policy and pursuing sustainable growth, the Mitsubishi
Capital expenditures / Depreciation
Electric Group aims to realize its growth strategies as it increases profitability. To
(Yen in billions)
199
177
156
145
159
150
151
127
127
132
200
150
100
50
0
12
13
14
15
16
(Years ended March 31)
Capital expenditures
Depreciation
that end, the Group directed its capital investment mainly toward the areas of
energy and electric systems, factory automation equipment, automotive equip-
ment, power devices, and air conditioning equipment. At the same time the
Group continued to reinforce its solid business platform through the careful
selection and concentration of investments.
On an individual business segment basis, investments were made in Energy
and Electric Systems (including power systems, electric equipment for rolling
stock, and elevators/escalators) aimed at increasing production capacity, stream-
lining operations, and enhancing quality. In Industrial Automation, capital expen-
ditures were used primarily for boosting production capacity for factory
automation systems and automotive equipment operations. In Information and
Communication Systems, funds were appropriated for bolstering research and
development capabilities, while in Electronic Devices, Mitsubishi Electric directed
investment mainly toward augmenting production in the power device business.
In Home Appliances, expenditures focused largely on increasing the air condi-
tioners production capacity, streamlining operations, and enhancing quality. In
Common and Others, investments mainly went toward boosting research and
development capabilities.
Capital expenditures are derived from cash on hand and funds from opera-
tions. For this fiscal year, production capacity was not materially affected by the
sale, disposal, damage, or loss due to natural disaster of property, plant and
equipment.
CASH FLOWS
In the year ended March 31, 2016, net cash provided by operating activities
amounted to ¥366.6 billion, while net cash used in investing activities was
¥255.4 billion. As a result, free cash flow was an inflow of ¥111.2 billion, down
¥68.9 billion compared with the previous fiscal year. Taking this into account
along with other factors, including net cash used in financing activities of ¥82.1
billion, the end of fiscal year cash and cash equivalents amounted to ¥574.1 bil-
Cash flows
(Yen in billions)
500
250
440
310
378
366
lion, an increase of ¥5.6 billion year on year.
Net cash provided by operating activities decreased by ¥11.6 billion com-
pared with the previous fiscal year. Despite a decrease in inventories, this down-
turn was largely attributable to decreases in trade payables, accrued expenses
and retirement and severance benefits.
Net cash used in investing activities increased by ¥57.2 billion year on year,
due mainly to the acquisition of shares of MELCO Hydronics & IT Cooling S.p.A.
(net of cash acquired).
Net cash used in financing activities increased by ¥32.5 billion year on year,
due mainly to the acquisition of non-controlling equity in MELCO Hydronics & IT
Cooling S.p.A. and an increase in the payment of cash dividends.
75
82
180
111
0
-80
-250
-70
-156
-153
-130
-198
12
13
14
15
Net cash provided by operating activities
Net cash used in investing activities
Free cash flows
-255
16
(Years ended March 31)
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 35
Consolidated Balance Sheets
Mitsubishi Electric Corporation and Subsidiaries
March 31, 2016 and 2015
Assets
Current assets:
Cash and cash equivalents
Trade receivables (notes 4, 6 and 16)
Inventories (note 5)
Prepaid expenses and other current assets (notes 10, 15 and 19)
2016
Yen (millions)
2015
U.S. dollars
(thousands)
(note 2)
2016
¥ 574,170
¥ 568,517
$ 5,081,150
1,035,168
1,048,542
644,127
298,398
705,420
310,966
9,160,779
5,700,239
2,640,690
Total current assets
2,551,863
2,633,445
22,582,858
Long-term receivables and investments:
Long-term trade receivables (note 18)
Investments in securities and other (notes 3, 11, 15, 18 and 19)
Investments in affiliated companies (note 6)
Total long-term receivables and investments
4,661
336,328
201,378
542,367
5,633
401,367
194,461
601,461
41,248
2,976,354
1,782,106
4,799,708
Property, plant and equipment (notes 19, 20 and 21):
Land
Buildings
Machinery and equipment
Construction in progress
Less accumulated depreciation
Net property, plant and equipment
113,564
777,792
109,708
749,926
1,004,991
6,883,116
1,843,309
1,844,255
16,312,469
47,772
48,328
2,782,437
2,752,217
2,069,838
2,045,742
712,599
706,475
422,760
24,623,336
18,317,150
6,306,186
Other assets (notes 8, 10, 19, 20 and 22)
253,112
118,070
2,239,929
Total assets
¥4,059,941
¥4,059,451
$35,928,681
See accompanying notes to consolidated financial statements.
36 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Liabilities and Equity
Current liabilities:
Bank loans (note 7)
Current portion of long-term debt (notes 7, 18 and 21)
Trade payables (notes 6 and 9)
Accrued expenses (note 17)
Accrued income taxes (note 10)
Other current liabilities (notes 11, 15 and 19)
2016
Yen (millions)
2015
U.S. dollars
(thousands)
(note 2)
2016
¥ 61,873
¥ 72,385
$ 547,549
54,659
773,714
359,089
22,962
235,646
92,017
807,289
358,082
29,624
253,185
483,708
6,847,027
3,177,778
203,204
2,085,362
Total current liabilities
1,507,943
1,612,582
13,344,628
Long-term debt (notes 7, 18 and 21)
Retirement and severance benefits (note 11)
Other liabilities (notes 10 and 17)
287,507
229,750
97,238
217,592
182,282
116,828
2,544,310
2,033,186
860,513
Total liabilities
2,122,438
2,129,284
18,782,637
Mitsubishi Electric Corp. shareholders' equity
Common stock (note 12):
Authorized 8,000,000,000 shares;
issued 2,147,201,551 shares in 2016 and in 2015
Capital surplus (note 12)
Legal reserve
Retained earnings
Accumulated other comprehensive income (loss)
(notes 3, 10, 11, 13 and 15)
Treasury stock, at cost
415,396 shares in 2016 and
385,990 shares in 2015
175,820
211,999
65,652
175,820
211,155
64,058
1,555,929
1,876,097
580,991
1,436,375
1,267,438
12,711,284
(50,699)
124,064
(448,664)
(374)
(332)
(3,310)
Total Mitsubishi Electric Corp. shareholders' equity
1,838,773
1,842,203
16,272,327
Noncontrolling interests (note 22)
98,730
87,964
873,717
Total equity
1,937,503
1,930,167
17,146,044
Commitments and contingent liabilities (note 17)
Total liabilities and equity
¥4,059,941
¥4,059,451
$35,928,681
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 37
Consolidated Statements of Income
Mitsubishi Electric Corporation and Subsidiaries
Years ended March 31, 2016, 2015 and 2014
Revenues:
Net sales (note 6)
Interest and dividends (note 6)
Equity in earnings of affiliated companies (note 6)
Other (notes 3, 13, 15 and 20)
Total revenues
Costs and expenses:
2016
2015
Yen (millions)
2014
¥4,394,353
8,573
29,433
22,570
4,454,929
¥4,323,041
7,365
27,725
43,304
4,401,435
¥4,054,359
7,799
23,153
24,554
4,109,865
Cost of sales (notes 11 and 21)
Selling, general and administrative (notes 11, 20 and 21)
Research and development
Loss on impairment of long-lived assets (notes 19 and 20)
Interest
Other (notes 3, 13, 15, 16, 17 and 20)
Total costs and expenses
3,071,435
826,232
187,032
8,482
3,495
39,777
4,136,453
3,032,161
790,563
179,628
3,085
4,023
69,007
4,078,467
2,914,589
737,042
163,765
3,791
4,539
37,149
3,860,875
U.S. dollars
(thousands)
(note 2)
2016
$38,888,080
75,867
260,469
199,735
39,424,151
27,180,842
7,311,788
1,655,150
75,062
30,929
352,008
36,605,779
Income before income taxes
318,476
322,968
248,990
2,818,372
Income taxes (note 10):
Current
Deferred
Net income
52,691
24,355
77,046
60,183
14,730
74,913
34,241
51,957
86,198
466,292
215,531
681,823
241,430
248,055
162,792
2,136,549
Net income attributable to noncontrolling interests
12,936
13,361
9,319
114,478
Net income attributable to Mitsubishi Electric Corp.
¥ 228,494
¥ 234,694
¥ 153,473
$ 2,022,071
Net income per share attributable to Mitsubishi Electric Corp. (note 14):
Basic
Diluted
See accompanying notes to consolidated financial statements.
¥106.43
—
¥109.32
—
Yen
¥71.49
—
U.S. dollars
(note 2)
$0.942
—
Consolidated Statements of Comprehensive Income
Mitsubishi Electric Corporation and Subsidiaries
Years ended March 31, 2016, 2015 and 2014
Net income
2016
¥241,430
2015
¥248,055
Yen (millions)
2014
¥162,792
Other comprehensive income (loss), net of tax (note 13):
Foreign currency translation adjustments
Pension liability adjustments (note 11)
Unrealized gains (losses) on securities (note 3)
Unrealized gains (losses) on derivative instruments (note 15)
Total
Comprehensive income
(70,881)
(86,516)
(25,498)
(8)
(182,903)
58,527
72,583
21,171
36,710
7
130,471
378,526
51,769
(6,756)
55,556
(80)
100,489
263,281
U.S. dollars
(thousands)
(note 2)
2016
$2,136,549
(627,266)
(765,628)
(225,646)
(71)
(1,618,611)
517,938
Comprehensive income attributable to
noncontrolling interests
Comprehensive income attributable to
Mitsubishi Electric Corp.
See accompanying notes to consolidated financial statements.
4,796
21,725
14,364
42,442
¥ 53,731
¥356,801
¥248,917
$ 475,496
38 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Consolidated Statements of Equity
Mitsubishi Electric Corporation and Subsidiaries
Years ended March 31, 2016, 2015 and 2014
Balance at March 31, 2013
Comprehensive income (loss):
Net income attributable to Mitsubishi Electric Corp.
Net income attributable to noncontrolling interests
Other comprehensive income (loss), net of tax (note 13):
Foreign currency translation adjustments
Pension liability adjustments (note 11)
Unrealized gains (losses) on securities (note 3)
Unrealized gains (losses) on derivative instruments
(note 15)
Transfer to legal reserve
Equity transactions with noncontrolling interests and other
Dividends paid to Mitsubishi Electric Corp. shareholders'
equity
Purchase of treasury stock
Reissuance of treasury stock
Balance at March 31, 2014
Comprehensive income (loss):
Net income attributable to Mitsubishi Electric Corp.
Net income attributable to noncontrolling interests
Other comprehensive income (loss), net of tax (note 13):
Foreign currency translation adjustments
Pension liability adjustments (note 11)
Unrealized gains (losses) on securities (note 3)
Unrealized gains (losses) on derivative instruments
(note 15)
Transfer to legal reserve
Equity transactions with noncontrolling interests and other
Dividends paid to Mitsubishi Electric Corp. shareholders'
equity
Purchase of treasury stock
Reissuance of treasury stock
Balance at March 31, 2015
Comprehensive income (loss):
Net income attributable to Mitsubishi Electric Corp.
Net income attributable to noncontrolling interests
Other comprehensive income (loss), net of tax (note 13):
Foreign currency translation adjustments
Pension liability adjustments (note 11)
Unrealized gains (losses) on securities (note 3)
Unrealized gains (losses) on derivative instruments
(note 15)
Transfer to legal reserve
Acquisition of subsidiary
Equity transactions with noncontrolling interests and other
Dividends paid to Mitsubishi Electric Corp. shareholders'
equity
Purchase of treasury stock
Reissuance of treasury stock
Balance at March 31, 2016
Balance at March 31, 2015
Comprehensive income (loss):
Net income attributable to Mitsubishi Electric Corp.
Net income attributable to noncontrolling interests
Other comprehensive income (loss), net of tax (note 13):
Foreign currency translation adjustments
Pension liability adjustments (note 11)
Unrealized gains (losses) on securities (note 3)
Unrealized gains (losses) on derivative instruments
(note 15)
Transfer to legal reserve
Acquisition of subsidiary
Equity transactions with noncontrolling interests and other
Dividends paid to Mitsubishi Electric Corp. shareholders'
equity
Purchase of treasury stock
Reissuance of treasury stock
Balance at March 31, 2016
Common
stock
¥175,820
Capital
surplus
¥205,945
Legal
reserve
¥61,406
Retained
earnings
¥950,621
Accumulated
other
comprehensive
income (loss)
¥(93,487)
Total Mitsubishi
Electric Corp.
shareholders’
equity
¥(235) ¥1,300,070
Treasury
stock
Non-
controlling
interests
¥66,921
153,473
46,675
(6,756)
55,591
(66)
1,333
(1,333)
1,144
(25,762)
¥175,820
0
¥207,089
¥62,739 ¥1,076,999
¥1,957
234,694
64,307
21,171
36,616
13
1,319
(1,319)
4,066
(42,936)
¥175,820
0
¥211,155
¥64,058 ¥1,267,438
¥124,064
153,473
46,675
(6,756)
55,591
(66)
248,917
-
1,144
(25,762)
(48)
1
¥(282) ¥1,524,322
(48)
1
234,694
64,307
21,171
36,616
13
356,801
-
4,066
(42,936)
(50)
0
¥(332) ¥1,842,203
(50)
0
228,494
228,494
(63,112)
(86,123)
(25,510)
(18)
(63,112)
(86,123)
(25,510)
(18)
53,731
-
-
844
1,594
(1,594)
844
(57,963)
Yen (millions)
Total
equity
¥1,366,991
153,473
9,319
51,769
(6,756)
55,556
(80)
263,281
-
(4,112)
(25,762)
(48)
1
¥1,600,351
234,694
13,361
72,583
21,171
36,710
7
378,526
-
(5,724)
(42,936)
(50)
0
¥1,930,167
228,494
12,936
(70,881)
(86,516)
(25,498)
(8)
58,527
-
33,439
(26,625)
9,319
5,094
(35)
(14)
14,364
(5,256)
¥76,029
13,361
8,276
94
(6)
21,725
(9,790)
¥87,964
12,936
(7,769)
(393)
12
10
4,796
33,439
(27,469)
¥175,820
0
¥211,999
¥65,652 ¥1,436,375
¥(50,699)
Accumulated
other
comprehensive
Legal
income (loss)
reserve
$1,555,929 $1,868,628 $566,885 $11,216,266 $1,097,911
Common
stock
Retained
earnings
Capital
surplus
(57,963)
(43)
1
¥(374) ¥1,838,773
(43)
1
¥98,730
(57,963)
(43)
1
¥1,937,503
U.S. dollars (thousands) (note 2)
Total Mitsubishi
Electric Corp.
shareholders’
equity
Non-
controlling
interests
Treasury
stock
Total
equity
$(2,938) $16,302,681 $778,442 $17,081,123
2,022,071
(558,514)
(762,150)
(225,752)
(159)
14,106
(14,106)
7,469
(512,947)
0
$1,555,929 $1,876,097 $580,991 $12,711,284
$(448,664)
2,022,071
114,478
2,022,071
114,478
(558,514)
(762,150)
(225,752)
(68,752)
(3,478)
106
(159)
475,496
-
-
7,469
88
42,442
295,920
(243,087)
(627,266)
(765,628)
(225,646)
(71)
517,938
-
295,920
(235,618)
(512,947)
(381)
9
$(3,310) $16,272,327 $873,717 $17,146,044
(512,947)
(381)
9
(381)
9
See accompanying notes to consolidated financial statements.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 39
Consolidated Statements of Cash Flows
Mitsubishi Electric Corporation and Subsidiaries
Years ended March 31, 2016, 2015 and 2014
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation
Impairment losses of property, plant and
equipment
Loss (gain) from sales and disposal of property,
plant and equipment, net
Deferred income taxes
Loss (gain) from sales of securities and other, net
Devaluation losses of securities and other, net
Equity in earnings of affiliated companies
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Decrease (increase) in other assets
Increase (decrease) in trade payables
Increase (decrease) in accrued expenses and
retirement and severance benefits
Increase (decrease) in other liabilities
Other, net
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditure
Proceeds from sale of property, plant and equipment
Purchase of short-term investments and investment
securities (net of cash acquired)
Purchase of shares of MELCO Hydronics & IT
Cooling S.p.A. (net of cash acquired)
Proceeds from sale of short-term investments and
investment securities
Decrease (increase) in loans receivable
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from long-term debt
Repayment of long-term debt
Increase (decrease) in short-term debt, net
Dividends paid
Purchase of treasury stock
Reissuance of treasury stock
Purchase of MELCO Hydronics & IT Cooling S.p.A.'s
noncontrolling interests
Other, net
Net cash provided by (used in) financing
activities
Effect of exchange rate changes on cash and cash
equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
See accompanying notes to consolidated financial statements.
40 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
2016
2015
Yen (millions)
2014
U.S. dollars
(thousands)
(note 2)
2016
¥241,430
¥248,055
¥162,792
$2,136,549
145,249
156,205
132,956
1,285,389
5,766
2,751
3,627
51,026
2,159
24,355
(1,511)
1,110
(29,433)
1,583
39,220
7,612
(21,754)
(53,706)
(39,104)
43,701
366,677
(1,950)
14,730
(383)
1,148
(27,725)
(42,044)
(75,829)
(6,966)
47,948
(18,772)
60,595
20,550
378,313
67
51,957
1,108
607
(23,153)
14,812
18,141
(12,580)
83,179
(10,756)
21,494
(3,764)
440,487
19,106
215,531
(13,372)
9,823
(260,469)
14,009
347,080
67,363
(192,513)
(475,274)
(346,053)
386,734
3,244,929
(182,251)
2,400
(199,758)
6,768
(151,840)
4,930
(1,612,841)
21,239
(13,285)
(5,608)
(21,312)
(117,566)
(50,587)
—
—
(447,673)
8,511
(854)
(19,377)
(255,443)
110,108
(93,163)
(13,912)
(57,963)
(43)
1
(21,825)
(5,347)
10,722
24
(10,311)
(198,163)
90,598
(103,497)
11,392
(42,936)
(50)
0
—
(5,130)
44,134
1,882
(8,015)
(130,221)
193
(105,445)
(73,266)
(25,762)
(48)
1
—
(4,694)
75,319
(7,558)
(171,478)
(2,260,558)
974,408
(824,451)
(123,115)
(512,947)
(381)
9
(193,142)
(47,319)
(82,144)
(49,623)
(209,021)
(726,938)
(23,437)
5,653
568,517
¥574,170
19,941
150,468
418,049
¥568,517
17,923
119,168
298,881
¥418,049
(207,407)
50,026
5,031,124
$5,081,150
Notes to Consolidated Financial Statements
Mitsubishi Electric Corporation and Subsidiaries
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Description of Business
Mitsubishi Electric Corporation (the “Company”) is a multina-
through means other than voting rights and whether it should
consolidate the entity as the primary beneficiary when the
tional organization which develops, manufactures, sells and
Company has a controlling financial interest.
distributes a broad range of electrical and electronic equip-
ments in the fields as diverse as home appliances and space
electronics.
The Company and its subsidiaries’ principal lines of busi-
ness are: (1) Energy and Electric Systems, (2) Industrial
Automation Systems, (3) Information and Communication
Systems, (4) Electronic Devices, (5) Home Appliances and (6)
Others.
Each line’s sales as a percentage of total consolidated
sales, before elimination of internal sales, for the year ended
March 31, 2016 are as follows: Energy and Electric Systems –
25%, Industrial Automation Systems – 26%, Information and
Communication Systems – 11%, Electronic Devices – 4%,
Home Appliances – 20% and Others – 14%.
Majority of the operations of the Company and its sub-
sidiaries is mainly conducted in Japan. Net sales for the year
ended March 31, 2016 comprises of the following geographi-
cal locations: Japan – 57%, North America – 10%, Asia
(excluding Japan) – 22%, Europe – 9% and Others – 2%.
Our manufacturing operations are conducted principally
(d) Use of Estimates
The Company makes estimates and assumptions to prepare
the consolidated financial statements in conformity with gen-
erally accepted accounting principles, and those estimates and
assumptions affect the reported amounts of assets and liabili-
ties as well as the disclosed amounts of contingent assets and
liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during
the reporting period. Significant items subject to such esti-
mates and assumptions include valuation allowances for
receivables, inventories and deferred tax assets; the carrying
amount of property, plant and equipment; goodwill and other
intangible assets; and assets and obligations related to
employee benefits. Actual results could differ from those
estimates.
(e) Cash and Cash Equivalents
The Company considers all highly liquid debt instruments with
original maturities of three months or less to be cash equiva-
lents for the consolidated cash flow statements.
at the Parent company with 23 manufacturing sites located in
Japan as well as overseas manufacturing sites located in the
(f) Short-Term Investments and Investment Securities
The Company classifies investments in debt and equity securi-
United States, United Kingdom, Thailand, Malaysia, China and
ties into trading, available-for-sale, or held-to-maturity
other countries.
securities.
(b) Basis of Presentation
The Company and its subsidiaries maintain their books of
account in conformity with financial accounting standards in
the countries of their domicile.
The Company prepares the consolidated financial state-
ments with reflecting the adjustments which are considered
necessary to conform with accounting principles generally
accepted in the United States of America.
(c) Consolidation
The Company prepares the consolidated financial statements
including the accounts of the parent company and those of its
majority-owned subsidiaries, whether directly or indirectly
controlled. All significant intercompany transactions,
accounts, and unrealized gains or losses have been
eliminated.
Investments in corporate joint ventures and affiliated
companies with the ownership interest of 20% to 50%, in
which the Company does not have control, but has the ability
to exercise significant influence, are accounted for by the
equity method of accounting. Investments of less than 20%
or on which the Company does not have significant influence
are accounted for by the cost method.
The Company evaluates Variable Interest Entities (VIEs)
whether it has a controlling financial interest in an entity
Trading securities are bought and held principally for the
purpose of selling them in the near term. Held-to-maturity
securities are those securities which the Company has the
ability and intent to hold until maturity. All securities not
included in trading or held-to-maturity are classified as
available-for-sale.
Marketable trading and available-for-sale securities are
recorded at fair value. Held-to-maturity securities are recorded
at amortized cost, adjusted for the amortization or accretion
of premiums or discounts. Unrealized holding gains and losses
on trading securities are included in earnings. Unrealized hold-
ing gains and losses, net of the related tax effect, on avail-
able-for-sale securities are excluded from earnings and are
reported as a separate component of other comprehensive
income (loss) until realized. Realized gains or losses from the
sale of securities are determined on the average cost of the
particular security held at the time of sale.
A decline in the fair value of any available-for-sale security
below costs that is other-than-temporary results in a reduction
in carrying amount to the fair value, which becomes the new
acquisition cost for the security.
To determine whether an impairment of equity security is
other-than-temporary, the Company considers whether it has
the ability and intent to hold the security until a market price
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 41
recovery and considers whether evidence indicating the mar-
assets and liabilities and their respective tax basis, operating
ket price of the security is recoverable to the carrying amount
loss and tax credit carryforwards. Deferred tax assets and lia-
outweighs the counter evidence. Evidence considered in this
bilities are measured using enacted tax rates expected to
assessment includes the reasons for the impairment, the
apply to taxable income in the years in which the temporary
severity and duration of the impairment, changes in value
differences are expected to be recovered or settled. The effect
subsequent to year-end, and forecasted performance of the
on deferred tax assets and liabilities of a change in tax rates is
investee.
recognized in income in the period that includes the enact-
To determine whether an impairment of debt security is
ment date.
other-than-temporary, the Company considers whether it has
Valuation allowances are established to reduce deferred
the intent to sell the debt security and it is more likely than
tax assets to their net realizable value if it is more likely than
not that the Company is required to sell until a market price
not that some portion or all of the deferred tax asset will not
of the investment is recoverable to the amortized cost.
be realized.
Other investments are stated at cost. The Company rec-
The Company recognizes the financial statement effects
ognizes a loss when there is other-than-temporary decline in
of unrecognized tax benefits only if those positions are more
value of other investments, using the same policy as described
likely than not of being sustained.
above for available-for-sale security impairments.
(g) Allowance for Doubtful Receivables
The Company records an allowance for doubtful receivables
(l) Product Warranties
The Company generally offers warranties on its products
against certain manufacturing and other defects for the spe-
based on credit loss history and evaluation of specific doubtful
cific periods of time and/or usage of the product depending
receivables.
(h) Inventories
In work-in-process, the Company records the ordered prod-
ucts at the acquisition cost and the regular purchased prod-
on the nature of the product, the geographic location of its
sale and other factors. The Company recognizes accrued war-
ranty costs based primarily on historical experience of actual
warranty claims as well as current information on repair costs.
ucts at the average production costs. Those products are
recorded at the lower of cost or market. Net costs in excess of
(m) Retirement and Severance Benefits
The Company recognizes the funded status (i.e., the differ-
billings on long-term contracts are included in inventories.
ence between the fair value of plan assets and the projected
Raw material and finished product inventories are generally
benefit obligations) of its pension plans in the consolidated
recorded using the average-cost method, and evaluated at the
balance sheet at the end of the year, and records the corre-
lower of cost or market. In accordance with the general prac-
sponding amount to accumulated other comprehensive
tice in the heavy electrical industry, inventories related to
income (loss), net of tax. The adjustment items for accumulat-
Energy and Electric Systems include items with long manufac-
ed other comprehensive income (loss) are unrecognized prior
turing periods which are not realizable within one year.
service cost and unrecognized net gain or loss. The amounts
(i) Property, Plant and Equipment
The Company records property, plant and equipment at cost.
Depreciation of property, plant and equipment is generally cal-
culated by the declining-balance method, except for certain
assets which are depreciated by the straight-line method, over
of these adjustments are recognized as net periodic pension
cost in future years.
(n) Revenue Recognition
The Company recognizes revenue when persuasive evidence
of an arrangement including title transfer exists, delivery has
the estimated useful life of the assets according to general
occurred, the sales price is fixed or determinable, and collect-
class, type of construction, and use of these assets.
ability is probable. These criteria are met for mass-merchandis-
The estimated useful life of buildings is 3 to 50 years,
ing products such as consumer products and semiconductors
while machinery and equipment is 2 to 20 years.
at the time when the product is received by the customer, and
(j) Leases
The Company records capital leases at the inception of the
lease at the lower of the discounted present value of future
minimum lease payments or the fair value of the leased
assets. The depreciation of the leased assets is calculated in
accordance with the Company’s normal depreciation policy.
(k) Income Taxes
The Company recognizes deferred tax assets and liabilities for
the future tax consequences attributable to differences
between the financial statement carrying amounts of existing
42 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
for products with acceptance provisions such as heavy
machinery and industrial products at the time when the prod-
uct is received by the customer and the specific criteria of the
product are demonstrated by the Company with only certain
inconsequential or perfunctory work left to be performed by
the customer. Revenue from maintenance agreements is rec-
ognized over the contract term when the maintenance is pro-
vided and the cost is incurred. Also, the Company applies the
percentage of completion method for long-term construction
contracts. The Company measures the percentage of comple-
tion by comparing expenses recognized through the current
year to the aggregate amount of estimated cost. Any antici-
a component of other comprehensive income (loss) until the
pated losses on fixed price contracts are charged to opera-
hedged item is recognized in earnings. The ineffective portion
tions when such losses can be estimated. Provisions are made
of all hedges is recognized in earnings immediately.
for contingencies in the period when they become known
The Company discloses the use and purpose of derivative
pursuant to specific contract terms and conditions and are
instruments, accounting for derivative instruments and related
estimable.
hedged items. The Company also discloses the effects on the
For the contract which may consist of any combination of
entity’s financial position, results of operations, and cash flows
products, equipment, installation and maintenance, revenue is
by the derivative instruments and hedging activities.
allocated to each accounting unit based on its relative fair
value, when each deliverable is accounted for by each sepa-
rate accounting unit.
(o) Research and Development and Advertising
The Company accounts for the costs of research and develop-
(t) Securitizations
The Company accounts for the securitization of the accounts
receivables as a sale, if it is determined based on the
Company’s evaluation that it has surrendered control over the
transferred receivables.
ment and advertising as expense when those costs are
Accordingly, the receivables sold under these facilities are
incurred.
(p) Shipping and Handling Costs
The Company records shipping and handling costs mainly as
selling, general and administrative expenses.
(q) Net Income per Share
The Company calculates basic net income per share attribut-
able to Mitsubishi Electric Corp. by dividing net income attrib-
utable to Mitsubishi Electric Corp. by the weighted-average
number of common shares outstanding during each year.
Diluted net income per share attributable to Mitsubishi Electric
Corp. reflects the potential dilution and is calculated on the
basis that dilutive securities were converted at the beginning
of the year or at time of issuance (if later), and that dilutive
stock option were exercised (less the number of treasury stock
assumed to be purchased from the proceeds using the aver-
age market price of the Company’s common stock).
(r) Foreign Currency Translation
The Company translates receivables and payables in foreign
currency at the prevailing rates of exchange at the balance
sheet date. Gains and losses resulting from translation of
receivables and payables are recognized in current earnings.
Assets and liabilities of the Company’s overseas consolidated
subsidiaries are translated into Japanese yen at the prevailing
rates of exchange at the balance sheet date. Income and
expense items are translated at the average exchange rate
prevailing during the year. Gains and losses resulting from
translation of financial statements are recognized as foreign
currency translation adjustments in other comprehensive
income (loss).
(s) Derivatives
The Company recognizes all derivatives as either assets or lia-
bilities in the consolidated financial statements and measures
them at fair value. For derivatives designated as fair value
hedges, changes in fair value of the hedged item and the
derivative are recognized in current earnings. For derivatives
designated as cash flow hedges, fair value changes of the
effective portion of the hedging instruments are recognized as
excluded from Trade receivables in the accompanying consoli-
dated balance sheets. Gain or loss on sale of receivables is cal-
culated based on the allocated carrying amount of the
receivables sold. When a portion of accounts receivables is
transferred, the participating interest that continues to be
held is recorded at the allocated carrying amount of the assets
based on their relative fair values at the date of the transfer.
The Company estimates fair value based on the present value
of future expected cash flows less credit losses.
(u) Impairment of Long-Lived Assets
The Company reviews for impairment of long-lived assets
such as property, plant, and equipment and purchased intan-
gibles subject to amortization, to be held and used whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of
the carrying amount of an asset to estimated undiscounted
future cash flows expected to be generated by the asset. If
the carrying amount of an asset exceeds its estimated future
cash flows, an impairment loss is recognized by the amount
by which the carrying amount of the asset exceeds the fair
value of the asset. Long-lived assets to be disposed of other
than sale continue to be classified as held and used until they
are disposed.
Long-lived assets classified as held-for-sale are separately
presented in the balance sheet and reported at the lower of
the carrying amount or fair value less costs to sell, and are no
longer depreciated. The assets and liabilities of a disposed
group classified as held-for-sale are presented separately in
the appropriate asset and liability sections of the consolidated
balance sheets.
(v) Goodwill and Other Intangible Assets
The Company accounts for business combinations using the
acquisition method. The Company recognizes at fair value the
assets acquired, the liabilities assumed, any noncontrolling
interests in the acquiree, and acquired goodwill at the acquisi-
tion date. The Company discloses the nature of business com-
bination to enable the readers to evaluate the effects of such
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 43
transaction on the consolidated financial statements.
exchange for those goods or services.
The Company does not amortize goodwill and other intangi-
In August 2015, the FASB issued ASU2015-14 “Revenue
ble assets with indefinite useful life but tests it for impairment
from Contracts with Customers-Deferral of the Effective
at least annually. Also other intangible assets determined to
Date”. ASU2015-14 defers the effective date of ASU2014-09
have useful life are amortized over their respective estimated
for one year. The Company is required to adopt ASU2014-09
useful life and tested for impairment.
and ASU2015-14 on April 1, 2018 retrospectively to each
(w) Cost Associated with Exit or Disposal Activities
The Company recognizes the costs associated with exit or dis-
posal activities as liability only when it meets the definition of
a liability in the Statements of Financial Accounting Concepts
No. 6, “Elements of Financial Statements”. The Company
uses fair value for initial measurement of liabilities related to
exit or disposal activities.
(x) Guarantees
The Company recognizes the guarantees and indemnification
arrangements as liability measured at fair value as they are
issued or modified by the Company, and discloses the guaran-
tees that the Company has undertaken, including a rollfor-
ward of the Company’s product warranty liabilities. The
Company continually monitors the conditions of the guaran-
tees and indemnifications to identify occurrence of probable
losses, and when such losses are identified and if estimable,
they are recognized in current earnings.
prior reporting period presented or retrospectively with the
cumulative effect of initially adopting this update recognized
at the date of the initial adoption. The Company has not yet
determined which method it will apply and is currently evalu-
ating the effects on the Company’s consolidated financial
position and results of operations upon adoption of ASU
2014-09 and ASU2015-14.
In September 2015, the FASB issued ASU 2015-16
“Simplifying the Accounting for Measurement-Period
Adjustments” (an amendment of ASC Topic 805 ”Business
Combinations”). ASU2015-16 eliminates the requirement to
retrospectively adjust the financial statements for measure-
ment-period adjustments that occur in periods after a busi-
ness combination is consummated. The Company is required
to adopt ASU 2015-16 on April 1, 2016. The adoption of ASU
2015-16 will not have a material effect on the Company's
consolidated financial position and results of operations.
In November 2015, the FASB issued ASU 2015-17
(y) Asset Retirement Obligations
The Company recognizes legal obligations associated with the
"Balance Sheet Classification of Deferred Taxes" (an amend-
ment of ASC Topic 740 ”Income Taxes”). ASU 2015-17
retirement of long-lived assets that result from an acquisition,
requires deferred tax assets and liabilities to be classified as
construction and development, and (or) from a normal opera-
noncurrent in a classified balance sheet. The Company is
tion of a long-lived asset, except for certain lease obligations.
required to adopt ASU 2015-17 on April 1, 2017 either pro-
The Company recognizes a liability for an asset retirement
spectively or retrospectively. The application of ASU2015-17
obligation at fair value in the period which it is incurred if a
affects the Company's consolidated balance sheet, and as of
reasonable estimate of fair value can be made. The associated
March 31, 2016, deferred tax assets classified as current
asset retirement costs are capitalized as part of the carrying
assets are ¥130,569 million ($1,155,478 thousand). The
amount of the long-lived asset and subsequently allocated to
Company has not yet determined which method it will apply
expense over the asset’s useful life. Subsequent to the initial
upon adoption of ASU 2015-17.
measurement of the asset retirement obligation, the obliga-
In January 2016, the FASB issued ASU 2016-01
tion is adjusted at the end of each period to reflect the pas-
sage of time and changes in the estimated future cash flows
"Recognition and Measurement of Financial Assets and
Financial Liabilities" (an amendment of ASC Topic 825-10
underlying the obligation.
(z) Reclassifications
The Company has made certain reclassifications of the previ-
ous fiscal years’ consolidated financial statements to conform
to the presentation used for the year ended March 31, 2016.
(aa) Future Application of New Accounting Standards
In May 2014, the Financial Accounting Standards Board
(FASB) issued Accounting Standards Updates (ASU) 2014-09
“Revenue from Contracts with Customers” (A Creation of
Accounting Standards Codification (ASC) Topic 606 “Revenue
from Contracts with Customers”). ASU 2014-09 requires an
entity to recognize revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in
”Financial Instruments-Overall”). ASU 2016-01 is an amend-
ment of recognition, measurement, presentation and disclo-
sure of financial instruments and requires equity investments
to be measured at fair value with changes in the fair value
recognized in net income. The Company is required to adopt
ASU 2016-01 on April 1, 2018 retrospectively with the cumu-
lative effect of initially adopting this update recognized at the
date of the initial adoption. The Company is currently evaluat-
ing the effects on the Company's consolidated financial posi-
tion and results of operations upon adoption of ASU 2016-01.
In February 2016, the FASB issued ASU 2016-02 "Leases"
(an amendment of ASC Topic 842 ”Leases”). ASU 2016-02
requires the recognition of lease assets and lease liabilities on
balance sheet by lessees for most leases including operating
leases. The Company is required to adopt ASU 2016-02 on
44 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
April 1, 2019 retrospectively with the cumulative effect of ini-
the Company's consolidated financial position and results of
tially adopting this update recognized at the date of the initial
operations upon adoption of ASU 2016-02.
adoption. The Company is currently evaluating the effects on
(2) U.S. DOLLAR AMOUNTS
The Company has presented the consolidated financial state-
exchange rate prevailing on the Tokyo Foreign Exchange
ments in Japanese yen, and solely for the convenience of the
Market at the end of March 2016. This translation should not
reader, has provided translated amounts in United States dol-
be construed as a representation that the amounts shown
lars at the rate of ¥113=U.S.$1, which was the approximate
could be converted into United States dollars at such rate.
(3) SECURITIES
Marketable securities included in investments in securities and
fair value for such securities by equity securities and debt
other consists of available-for-sale securities. The cost, gross
securities at March 31, 2016 and 2015 were as follows:
unrealized holding gains, gross unrealized holding losses and
2016:
Available-for-sale:
Equity securities
Debt securities
2015:
Available-for-sale:
Equity securities
Debt securities
2016:
Available-for-sale:
Equity securities
Debt securities
Gross
unrealized
holding
gains
Gross
unrealized
holding
losses
Cost
Yen (millions)
Fair value
¥92,736
¥142,998
¥763
¥234,971
200
—
1
199
¥92,936
¥142,998
¥764
¥235,170
Gross
unrealized
holding
gains
Gross
unrealized
holding
losses
Cost
Yen (millions)
Fair value
¥96,210
¥176,013
¥780
¥271,443
500
21
2
519
¥96,710
¥176,034
¥782
¥271,962
Gross
unrealized
holding
gains
Gross
unrealized
holding
losses
Cost
Fair value
U.S. dollars (thousands)
$820,673
$1,265,469
$6,752
$2,079,390
1,770
—
9
1,761
$822,443
$1,265,469
$6,761
$2,081,151
Debt securities consist of investment trusts.
In the year ended March 31, 2016, net unrealized gains
by ¥36,616 million and ¥55,591 million, respectively.
on available-for-sale securities, net of taxes and noncontrolling
As of March 31, 2016 and 2015, the cost of non-market-
interests, decreased by ¥25,510 million ($225,752 thousand),
able equity securities were ¥15,738 million ($139,274 thou-
and in the years ended March 31, 2015 and 2014, increased
sand) and ¥14,545 million, respectively.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 45
Maturities of marketable securities classified as available-for-sale at March 31, 2016 were as follows:
Due after one year through five years
Marketable equity securities
Cost
¥ 200
92,736
¥96,710
Yen (millions)
Fair value
¥ 199
234,971
¥271,962
U.S. dollars
(thousands)
Fair value
$ 1,761
2,079,390
$2,266,350
Cost
$ 1,770
820,673
$805,917
Gross unrealized losses on available-for-sale securities and the fair value of the related securities, aggregated by length of
time that individual securities has been in continuous unrealized loss positions, at March 31, 2016 were as follows:
Available-for-sale:
Equity securities
Debt securities
Available-for-sale:
Equity securities
Debt securities
Less than 12 months
Unrealized
losses
Fair
value
12 months or more
Unrealized
Fair
losses
value
Yen (millions)
Total
Unrealized
losses
Fair
value
¥5,362
—
¥5,362
¥698
—
¥698
¥133
199
¥332
¥65
1
¥66
¥5,495
199
¥5,694
¥763
1
¥764
Less than 12 months
Unrealized
losses
Fair
value
12 months or more
Unrealized
Fair
losses
value
U.S. dollars (thousands)
Total
Unrealized
losses
Fair
value
$47,451
—
$47,451
$6,177
—
$6,177
$1,177
1,761
$2,938
$575
9
$584
$48,628
1,761
$50,389
$6,752
9
$6,761
The Company did not recognize any impairment losses from the decline in the fair value of the marketable securities. Based on
that evaluation and the Company’s ability and intention to hold those securities for a reasonable period of time sufficient for
recovery of fair value, the Company does not consider those securities to be other-than-temporarily impaired.
Proceeds from the sale of available-for-sale securities and gross realized gains and losses on those sales in the years ended
March 31, 2016, 2015 and 2014 were as follows:
Proceeds
Gross realized gains
Gross realized losses
2016
¥3,834
1,488
3
2015
¥3,034
111
74
Yen (millions)
2014
¥26,964
161
1,327
U.S. dollars
(thousands)
2016
$33,929
13,168
27
For the years ended March 31, 2016, 2015 and 2014, the Company did not recognize any material losses on impairment of
marketable securities due to other-than-temporary declines in fair value.
(4) TRADE RECEIVABLES
Trade receivables are summarized as follows:
Notes receivable
Accounts receivable
Allowance for doubtful receivables
2016
¥ 78,124
967,631
(10,587)
Yen (millions)
2015
¥ 81,995
977,044
(10,497)
¥1,035,168
¥1,048,542
U.S. dollars
(thousands)
2016
$ 691,363
8,563,106
(93,690)
$9,160,779
46 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
(5) INVENTORIES
Inventories are comprised of the following:
Work in process
Less accumulated billings on long-term contracts
Raw materials
Finished products
2016
¥265,779
19,082
246,697
110,889
286,541
¥644,127
Yen (millions)
2015
¥297,976
19,182
278,794
116,027
310,599
¥705,420
U.S. dollars
(thousands)
2016
$2,352,027
168,868
2,183,159
981,319
2,535,761
$5,700,239
(6) INVESTMENTS IN AFFILIATED COMPANIES
A summary of the combined financial information relating to affiliated companies accounted for by the equity method of
accounting (Toshiba Mitsubishi-Electric Industrial Systems Corporation, Shanghai Mitsubishi Elevator Co., Ltd, etc.) as of March
31, 2016 and 2015, and for the years ended March 31, 2016, 2015 and 2014 is as follows:
Results of Operations for the year ended March 31, 2014 include the financial information of Renesas Electric Corporation
(Renesas) which was excluded from affiliated companies accounted for by the equity method of accounting on September 30,
2013.
Financial Position
Current assets
Property, plant and equipment
Other assets
Total assets
Current liabilities
Long-term debt
Total liabilities
Shareholders’ equity
2016
Yen (millions)
2015
U.S. dollars
(thousands)
2016
¥1,320,753
¥1,363,332
$11,688,079
121,211
117,243
114,754
115,663
1,072,664
1,037,549
¥1,559,207
¥1,593,749
$13,798,292
¥ 890,608
¥ 933,014
$ 7,881,487
124,689
1,015,297
543,910
139,057
1,072,071
521,678
1,103,442
8,984,929
4,813,363
Total liabilities and shareholders’ equity
¥1,559,207
¥1,593,749
$13,798,292
Results of Operations
Sales
2016
2015
Yen (millions)
2014
¥1,363,861
¥1,255,026
¥1,648,617
Net income attributable to affiliated companies
76,158
70,429
54,383
U.S. dollars
(thousands)
2016
$12,069,566
673,965
The balances and transactions with affiliated companies accounted for by the equity method of accounting as of March 31, 2016
and 2015, and for the years ended March 31, 2016, 2015 and 2014 are as follows:
The transactions for the year ended March 31, 2014 include those with Renesas.
Trade receivables
Trade payables
Sales
Purchases
Dividends
2016
¥62,119
51,366
2016
¥300,524
139,666
18,084
2015
¥307,841
143,904
16,886
Yen (millions)
2015
¥ 69,997
154,915
Yen (millions)
2014
¥313,119
173,897
12,418
U.S. dollars
(thousands)
2016
$549,726
454,566
U.S. dollars
(thousands)
2016
$2,659,504
1,235,982
160,035
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 47
Investments in affiliated companies accounted for by the equity method of accounting include the shares of 9 publicly quoted
affiliates, which are summarized as follows:
Investments at equity
Quoted market value
(7) BANK LOANS AND LONG-TERM DEBT
Bank loans consisted of the following:
Borrowings from banks and others
2016
¥40,646
48,761
Yen (millions)
2015
¥41,121
55,640
2016
¥61,873
Yen (millions)
2015
¥72,385
U.S. dollars
(thousands)
2016
$359,699
431,513
U.S. dollars
(thousands)
2016
$547,549
The weighted average interest rates on borrowings from banks and others outstanding as of March 31, 2016 and 2015 were
0.81% and 0.83%, respectively.
At March 31, 2016, the Company and its subsidiaries had unused committed lines of credit that can provide short-term
funds from subscribing financial institutions amounting to ¥81,500 million ($721,239 thousand).
Long-term debt consisted of the following:
Borrowings from banks and other companies,
due2016 to 2025 with bearing interest rate
ranging from 0.15% to 5.42% at March 31, 2016:
due2015 to 2022 with bearing interest rate
ranging from 0.15% to 5.42% at March 31, 2015:
Unsecured
0.27% Japanese yen bonds due 2019
0.43% Japanese yen bonds due 2021
Capital lease obligations
Less amount due within one year
2016
Yen (millions)
2015
U.S. dollars
(thousands)
2016
¥278,504
¥245,765
$2,464,637
20,000
20,000
23,662
342,166
54,659
20,000
20,000
23,844
309,609
92,017
176,991
176,991
209,399
3,028,018
483,708
¥287,507
¥217,592
$2,544,310
The aggregate annual maturities of long-term debt outstanding at March 31, 2016 were as follows:
Year ending March 31:
2017
2018
2019
2020
2021
Thereafter
Total
Yen (millions)
¥ 54,659
64,748
64,628
43,665
37,688
76,778
¥342,166
U.S. dollars
(thousands)
$ 483,708
572,991
571,929
386,417
333,522
679,451
$3,028,018
Substantially all of the loans with banks and others have basic written agreements. With respect to all present or future loans,
these agreements state that the Company would need to provide collateral or guarantors immediately upon the banks’ requests
and that any collateral furnished pursuant to such agreements will be used against repayment of debts in case of default.
48 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
(8) GOODWILL AND OTHER INTANGIBLE ASSETS
The gross carrying amount, accumulated amortization and net carrying amount of intangible assets other than goodwill as of
March 31, 2016 and 2015 were as follows:
2016:
Finite-lived intangible assets
Software
Customer relationship
Others
Sub total
Indefinite-lived intangible assets
Total
2015:
Finite-lived intangible assets
Software
Customer relationship
Others
Sub total
Indefinite-lived intangible assets
Total
2016:
Finite-lived intangible assets
Software
Customer relationship
Others
Sub total
Indefinite-lived intangible assets
Total
Gross carrying
amount
Accumulated
amortization
Yen (millions)
Net carrying
amount
¥ 99,472
¥63,356
¥36,116
29,500
35,800
164,772
2,983
1,156
13,609
78,121
—
28,344
22,191
86,651
2,983
¥167,755
¥78,121
¥89,634
Gross carrying
amount
Accumulated
amortization
Yen (millions)
Net carrying
amount
¥ 86,899
¥52,826
¥34,073
2,310
15,865
105,074
3,876
411
7,290
60,527
—
1,899
8,575
44,547
3,876
¥108,950
¥60,527
¥48,423
Gross carrying
amount
Accumulated
amortization
Net carrying
amount
U.S. dollars (thousands)
$ 880,283
$560,673
$319,610
261,062
316,814
1,458,159
26,398
10,230
120,434
691,337
—
250,832
196,380
766,822
26,398
$1,484,557
$691,337
$793,220
Finite-lived intangible assets acquired during the year ended March 31, 2016 were ¥64,745 million ($572,965 thousand), mainly
related to assets acquired as part of the acquisition of MELCO Hydronics & IT Cooling S.p.A.
Amortization expense of intangible assets for the years ended March 31, 2016, 2015 and 2014 was ¥19,006 million
($168,195 thousand), ¥15,998 million and ¥14,484 million, respectively.
Estimated amortization expense for the next five years is as follows:
Year ending March 31:
2017
2018
2019
2020
2021
Yen (millions)
¥18,575
13,969
9,543
6,322
4,768
U.S. dollars
(thousands)
$164,381
123,619
84,451
55,947
42,195
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 49
Changes in the carrying amount of goodwill for the years ended March 31, 2016 and 2015 are as follows:
Balance at beginning of year
Acquisition
Foreign currency translation adjustments, etc
Balance at end of year
2016
¥ 8,017
58,034
(2,072)
¥63,979
Yen (millions)
2015
¥6,315
1,702
—
¥8,017
U.S. dollars
(thousands)
2016
$ 70,947
513,575
(18,336)
$566,186
Goodwill is mainly allocated to the Home Appliances segment by ¥59,929 million ($530,345 thousand) as of March 31, 2016.
2016
¥117,629
656,085
¥773,714
Yen (millions)
2015
¥ 14,141
793,148
¥807,289
U.S. dollars
(thousands)
2016
$1,040,965
5,806,062
$6,847,027
(9) TRADE PAYABLES
Trade payables are summarized as follows:
Notes payable
Accounts payable
(10) INCOME TAXES
Total income taxes were allocated as follows:
Income before income taxes
Shareholders’ equity - accumulated other
comprehensive income (loss):
Foreign currency translation adjustments
Pension liability adjustments
Unrealized gains (losses) on securities
Unrealized gains (losses) on derivative instruments
2016
¥ 77,046
2015
¥ 74,913
Yen (millions)
2014
¥ 86,198
(5,551)
(40,390)
(8,558)
(20)
¥ 22,527
9,096
12,595
14,316
7
4,280
(2,151)
30,818
(24)
¥110,927
¥119,121
U.S. dollars
(thousands)
2016
$ 681,823
(49,124)
(357,434)
(75,734)
(177)
$ 199,354
U.S. dollars
(thousands)
2016
$ (45,398)
260,929
$215,531
The significant components of deferred tax expense attributable to income taxes are as follows:
Change in valuation allowance related
to deferred tax assets
Other
2016
2015
¥ (5,130)
29,485
¥24,355
¥(14,531)
29,261
¥ 14,730
Yen (millions)
2014
¥ (4,129)
56,086
¥51,957
The Company is subjected to a number of income taxes. The
rary differences expected to be recovered or settled on or
statutory tax rate is approximately 33.0% for the year ended
after April 1, 2016. Before the adjustment, the statutory tax
March 31, 2016, approximately 35.5% for the year ended
rate applied was approximately 32.0% for temporary differ-
March 31, 2015, approximately 38.0% for the year ended
ences expected to be recovered or settled on or after April 1,
March 31, 2014.
2016. After the adjustment, the statutory tax rates applied are
The “Act to Partially Revise the Local Tax Act” (Act No. 13
approximately 31.0% for temporary differences expected to
of 2016) and the “Act to Partially Revise the Income Tax Act”
(Act No. 15 of 2016) were enacted and promulgated in March
be recovered or settled between April 1, 2016 and March 31,
2018 and approximately 30.5% for temporary differences
2016 in Japan, resulting in a reduction of the corporation tax
expected to be recovered or settled on or after April 1, 2018.
rate effective for fiscal years beginning on or after April 1,
For the year ended March 31, 2016, ¥7,586 million
2016. As a result, the Company and domestic subsidiaries
($67,133 thousand) of income tax expense is included in
adjusted the statutory tax rates to be applied in the calcula-
“Income taxes – Deferred” in the Consolidated Statements of
tion of deferred tax assets and liabilities arising from tempo-
Income, as a result of the aforementioned adjustment of
50 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
deferred tax assets and liabilities balances.
The effective tax rate for the years ended March 31, 2016, 2015 and 2014 is reconciled with the Japanese statutory tax rate in
the following table:
Japanese statutory tax rate
Change in valuation allowance
Adjustment for unrealized profit on intercompany transactions
Expenses permanently not deductible for tax purposes
International tax rate difference
Tax credits
Tax effect attributable to investments at equity
Effect of income tax rate change
Other
Effective tax rate
2016
33.0%
(4.3)
(0.5)
1.1
(6.6)
(2.5)
(2.4)
4.4
2.0
24.2%
2015
35.5%
(1.6)
(4.3)
0.5
(7.3)
(4.1)
(0.6)
4.6
0.5
23.2%
2014
38.0%
(1.9)
2.4
4.2
(8.4)
(0.1)
(2.1)
3.2
(0.7)
34.6%
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities
at March 31, 2016 and 2015 are as follows:
Deferred tax assets:
Retirement and severance benefits
¥ 23,008
¥ 41,966
$ 203,611
2016
Yen (millions)
2015
U.S. dollars
(thousands)
2016
Accrued expenses
Property, plant and equipment
Inventories
Pension liability adjustments
Tax loss carryforwards
Other
Total gross deferred tax assets
Valuation allowance
Deferred tax assets, less valuation allowance
Deferred tax liabilities:
Securities contributed to employee retirement benefit trust
Property, plant and equipment
Net unrealized gains on securities
Other
Total gross deferred tax liabilities
Net deferred tax assets
85,356
32,975
37,317
98,470
18,293
80,540
375,959
(44,886)
331,073
26,122
5,239
23,145
72,769
127,275
82,973
30,699
39,260
62,436
12,738
89,508
359,580
(50,016)
309,564
27,407
5,900
32,315
61,873
127,495
755,363
291,814
330,239
871,416
161,885
712,743
3,327,071
(397,221)
2,929,850
231,168
46,363
204,823
643,973
1,126,327
¥203,798
¥182,069
$1,803,523
The valuation allowance for deferred tax assets as of April 1,
uled reversal of deferred tax liabilities, projected future taxable
2014 was ¥64,547 million. The net change in the total valua-
income, and tax planning strategies in making this
tion allowance for the years ended March 31, 2016 and 2015
assessment.
was a decrease of ¥5,130 million ($45,398 thousand) and
At March 31, 2016, the Company and certain subsidiaries
¥14,531 million, respectively. In assessing the realizability of
had net operating loss carryforwards of ¥53,316 million
deferred tax assets, management considers whether it is more
($471,823 thousand) and ¥85,529 million ($756,894 thou-
likely than not that some portion or all of the deferred tax
assets will be realized. The ultimate realization of deferred tax
sand) for corporate and local income tax purposes, respective-
ly, which were available to offset future taxable income, if any.
assets is dependent upon the generation of future taxable
A part of the net operating loss carryforwards will never
income during the periods in which those temporary differ-
expire. The rest of the net operating loss carryforwards will
ences become deductible. Management considers the sched-
expire mainly in the years ending March 31, 2019 and 2023.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 51
Net deferred tax assets and liabilities at March 31, 2016 and 2015 are reflected in the accompanying consolidated balance sheets
under the following captions:
Prepaid expenses and other current assets
Other assets
Other liabilities
2016
¥130,569
89,701
(16,472)
¥203,798
Yen (millions)
2015
¥135,994
51,593
(5,518)
¥182,069
U.S. dollars
(thousands)
2016
$1,155,478
793,815
(145,770)
$1,803,523
Deferred tax liabilities have been recognized for the undistrib-
ties accrued as of March 31, 2016 and 2015, and interest and
uted earnings of subsidiaries and affiliated companies.
penalties for the years ended March 31, 2016, 2015 and
Deferred tax liabilities have not been recognized for undistrib-
2014 are not material.
uted earnings of some domestic subsidiaries as such earnings,
The Company and its subsidiaries file income tax returns
if distributed in the form of dividends, is not taxable under
in Japan and various foreign tax jurisdictions. The tax years
present circumstances.
that remain subject to examination by major tax jurisdictions
Although the Company believes that there are no signifi-
are as follows:
cant unrecognized tax benefits as of March 31, 2016 and
2015, future determination by tax authorities could affect the
effective tax rate in the future periods.
The Company records interest and penalties related to
additional income tax, etc. in Income taxes in the
Consolidated Statements of Income. Both interest and penal-
Location
Japan
United States
Thailand
Europe
Open tax years
2009-2016
2011-2016
2011-2016
2011-2016
(11) RETIREMENT AND SEVERANCE BENEFITS
The Company has non-contributory and contributory defined
2005, and established a defined contribution plan on April 1,
benefit plans covering substantially all of its employees who
2005. In addition, the Company amended its contributory
meet eligibility requirements.
defined benefit plan and introduced a cash balance pension
Under the non-contributory plans, employees with less
plan. Under the cash balance pension plan, each participant
than twenty years of service are entitled to lump-sum sever-
has a notional account which is credited yearly based on the
ance indemnities at date of severance, and employees with
current rate of contribution and market-related interest rate.
twenty or more years of service are entitled to annuity pay-
The domestic consolidated subsidiaries sponsor various
ments subsequent to retirement, determined by the current
pension plans, which are partially or entirely employees’ pen-
basic rate of pay, length of service and termination conditions.
sion fund plan, and/or corporate pension fund plan, based on
In addition, certain employees who meet the eligibility
each subsidiary’s respective pension policies.
requirements are entitled to additional lump-sum payments at
In addition, the foreign consolidated subsidiaries that
the date of retirement based on the retirement age. Under the
have adopted pension policy mainly sponsor defined contribu-
contributory plans, employees are entitled to annuity pay-
tion pension plan.
ments at a certain age. The assets of certain of the non-con-
The Company measures the fair value of plan assets and
tributory plans and the contributory plans are combined in
the projected benefit obligations at the end of the year, and
accordance with the regulations and administered by a board
recognizes the funded status (i.e., the difference between the
of trustees comprised equally of employer and employee rep-
fair value of plan assets and the projected benefit obligations)
resentatives. An employee retirement benefit trust is estab-
of pension in consolidated balance sheets with the amount of
lished for certain of the non-contributory plans.
corresponding adjustment to Accumulated other comprehen-
The Company amended its benefit plan under labor and
sive income (loss), net of tax.
management agreement during the year ended March 31,
52 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Obligations and funded status
Reconciliations of beginning and ending balances of the projected benefit obligations and the fair value of the plan assets are as
follows:
Change in projected benefit obligations:
Projected benefit obligations at beginning of year
¥1,119,133
¥1,067,140
$ 9,903,832
2016
Yen (millions)
2015
U.S. dollars
(thousands)
2016
Service cost
Interest cost
Plan participants’ contributions
Actuarial loss
Benefits paid
Acquisitions and divestitures, etc.
Projected benefit obligations at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Plan participants’ contributions
Benefits paid
Acquisitions and divestitures, etc.
Fair value of plan assets at end of year
32,947
11,403
1,033
75,541
(70,866)
(1,723)
1,167,468
986,514
(34,166)
47,920
929
(35,113)
(1,595)
964,489
30,284
15,205
1,047
73,625
(68,263)
95
1,119,133
857,933
113,876
47,513
1,047
(34,029)
174
986,514
291,566
100,912
9,141
668,504
(627,133)
(15,247)
10,331,575
8,730,212
(302,354)
424,071
8,221
(310,734)
(14,115)
8,535,301
Funded status at end of year
¥ (202,979)
¥ (132,619)
$(1,796,274)
Amounts recognized in the consolidated balance sheets at March 31, 2016 and 2015 consist of:
Investments in securities and other
Other current liabilities
Retirement and severance benefits
2016
¥ 32,153
(5,382)
(229,750)
¥(202,979)
Yen (millions)
2015
¥ 53,691
(4,028)
(182,282)
¥(132,619)
Amounts recognized in accumulated other comprehensive income (loss) at March 31, 2016 and 2015 consist of:
Actuarial loss
Prior service cost
2016
¥355,092
(30,793)
¥324,299
Yen (millions)
2015
¥240,293
(42,837)
¥197,456
U.S. dollars
(thousands)
2016
$ 284,540
(47,628)
(2,033,186)
$(1,796,274)
U.S. dollars
(thousands)
2016
$3,142,407
(272,504)
$2,869,903
The accumulated benefit obligations for all defined benefit plans were as follows:
Accumulated benefit obligations
2016
¥1,160,546
Yen (millions)
2015
¥1,093,819
U.S. dollars
(thousands)
2016
$10,270,319
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 53
Components of net periodic retirement and severance costs and other amounts recognized in other comprehensive
income (loss)
Net periodic retirement and severance costs for the years ended March 31, 2016, 2015 and 2014 consisted of the following
components:
Service cost
Interest cost on projected benefit obligations
Expected return on plan assets
Amortization of prior service cost
Amortization of actuarial loss
Plan participants’ contributions
Net periodic retirement and severance costs
2016
¥ 33,980
11,403
(16,482)
(12,044)
12,077
28,934
(1,033)
¥ 27,901
2015
¥ 31,331
15,205
(15,123)
(12,122)
20,721
40,012
(1,047)
¥ 38,965
Yen (millions)
2014
¥ 30,549
19,123
(13,911)
(22,216)
21,544
35,089
(1,063)
¥ 34,026
U.S. dollars
(thousands)
2016
$ 300,707
100,912
(145,858)
(106,584)
106,876
256,053
(9,141)
$ 246,912
Other changes in plan assets and projected benefit obligations recognized in other comprehensive income (loss) for the years
ended March 31, 2016, 2015 and 2014 were summarized as follows:
Actuarial loss (gain)
Amortization of actuarial loss
Prior service cost
Amortization of prior service cost
2016
¥126,876
(12,077)
—
12,044
¥126,843
2015
¥(25,207)
(20,721)
—
12,122
¥(33,806)
Yen (millions)
2014
¥ 7,674
(21,544)
339
22,216
¥ 8,685
U.S. dollars
(thousands)
2016
$1,122,796
(106,876)
—
106,584
$1,122,504
The estimated actuarial loss and prior service cost for the defined benefit pension plans that will be amortized from accumulated
other comprehensive income (loss) into net periodic benefit cost over the next year are summarized as follows:
Actuarial loss
Prior service cost
Yen (millions)
¥ 18,203
(10,084)
U.S. dollars
(thousands)
$161,089
(89,239)
Actuarial assumptions
Actuarial assumptions used to determine benefit obligations at March 31, 2016 and 2015 were as follows:
Discount rate
Assumed rate of increase in future compensation levels
2016
0.5%
1.7%
2015
1.0%
1.7%
Actuarial assumptions used to determine net periodic retirement and severance costs for the years ended March 31, 2016, 2015
and 2014 were as follows:
Discount rate
Assumed rate of increase in future compensation levels
Expected long-term rate of return on plan assets
2016
1.0%
1.7%
2.5%
2015
1.5%
1.7%
2.5%
2014
2.0%
1.7%
2.5%
The expected long-term rate of return is based on actual historical returns and the expectations for future returns of each plan
asset category in which the Company invests.
54 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Plan Assets
The fair values of the Company’s pension plan assets at March 31, 2016 and 2015 were as follows:
2016
Yen (millions)
Level 1
Level 2
Level 3
Total
Equity securities
Marketable equity securities
Pooled funds
Debt securities
¥194,023
—
¥ —
170,658
Government, municipal and corporate debt securities
4,193
14,920
358,670
99,067
78,326
¥198,216
¥721,641
¥ —
—
—
—
—
44,632
¥44,632
¥194,023
170,658
19,113
358,670
99,067
122,958
¥964,489
Pooled funds
Other assets
Life insurance company general accounts
Other
Total plan assets
Notes: 1 Marketable equity securities include mainly domestic stocks.
2 Pooled funds of equity securities include approximately 20% domestic stocks and 80% foreign stocks.
3 Pooled funds of debt securities include approximately 70% domestic bonds and 30% foreign bonds.
4 Government, municipal and corporate debt securities of level 1 include government debt securities.
2015
Yen (millions)
Level 1
Level 2
Level 3
Total
Equity securities
Marketable equity securities
Pooled funds
Debt securities
¥228,741
—
¥ —
188,634
Government, municipal and corporate debt securities
4,864
18,862
354,320
95,127
60,525
¥233,605
¥717,468
¥ —
—
—
—
—
35,441
¥35,441
¥228,741
188,634
23,726
354,320
95,127
95,966
¥986,514
Pooled funds
Other assets
Life insurance company general accounts
Other
Total plan assets
—
—
—
—
—
—
Notes: 1 Marketable equity securities include mainly domestic stocks.
2 Pooled funds of equity securities include approximately 20% domestic stocks and 80% foreign stocks.
3 Pooled funds of debt securities include approximately 70% domestic bonds and 30% foreign bonds.
4 Government, municipal and corporate debt securities of level 1 include government debt securities.
Government, municipal and corporate debt securities
37,106
Equity securities
Marketable equity securities
Pooled funds
Debt securities
Pooled funds
Other assets
Life insurance company general accounts
Other
Total plan assets
2016
U.S. dollars (thousands)
Level 1
Level 2
Level 3
Total
$1,717,018
$ —
$ — $1,717,018
—
1,510,248
132,036
3,174,071
876,699
693,150
—
—
—
—
—
—
—
1,510,248
169,142
3,174,071
876,699
394,973
1,088,123
$1,754,124
$6,386,204
$394,973
$8,535,301
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 55
The Company’s investment policies are designed to ensure
tents of investment, and appropriately diversified investments.
adequate plan assets are available to provide future payments
See note 19 which shows categorized input for fair value
of pension benefits to eligible participants. Taking into
measurements by the valuation technique into a three-level
account the expected long-term rate of return on plan assets,
hierarchy.
the Company formulates an investment portfolio comprised
Each level into which assets are categorized is based on
of the optimal combination of equity and debt securities. Plan
inputs used to measure the fair value of the assets.
assets are invested in individual equity and debt securities
Level 1 assets are comprised principally of equity securi-
using the guidelines of the investment portfolio in order to
ties and government bonds, which are valued using unadjust-
produce a total return that will match the expected return on
ed quoted market prices in active markets with sufficient
a mid-term to long-term basis. The Company evaluates the
volume and frequency of transactions. Level 2 assets are com-
gap between expected return and actual return of invested
prised principally of pooled funds that invest in equity and
plan assets on an annual basis. In addition, taking into the
debt securities, corporate bonds and investments in life insur-
consideration the management environment and the revision
ance company general accounts. Pooled funds are valued at
of regulations, the Company revises the investment portfolio
their net asset values that are calculated by the sponsor of the
when and to the extent considered necessary to achieve the
fund. Corporate bonds are valued using quoted prices for
expected long-term rate of return on plan assets based on the
identical assets in markets that are not active. Investments in
pension asset and liability management method.
life insurance company general accounts are valued at the
The Company’s investment portfolio consists of three
amounts that are the conventional interest adding to the prin-
major components. The Company’s target asset allocation
percentage is that approximately 25% is invested in equity
ciple amounts calculated by a life insurance company. Level 3
assets comprise hedge funds, which are valued based on
securities, approximately 65% is invested in debt securities
unobservable inputs.
and investments in life insurance company general accounts,
An analysis of the changes in Level 3 assets which com-
and approximately 10% is invested in hedge funds. As for
prise hedge funds measured at fair value for the years ended
selection of plan assets, the Company has examined the con-
March 31, 2016 and 2015 is as follows:
Balance at beginning of year
Actual return:
Relating to assets sold
Relating to assets still held
Purchases, sales and settlements
Balance at end of year
2016
¥35,441
494
(1,545)
10,242
Yen (millions)
2015
¥15,562
—
379
19,500
¥44,632
¥35,441
U.S. dollars
(thousands)
2016
$313,637
4,372
(13,673)
90,637
$394,973
Cash Flows
The Company expects to contribute ¥49,451 million ($437,619 thousand) to its pension plan in the year ending March 31, 2017.
Estimated future benefit payments are as follows:
Year ending March 31:
2017
2018
2019
2020
2021
2022-2026
Yen (millions)
¥ 64,807
59,487
60,307
58,259
57,882
270,677
U.S. dollars
(thousands)
$ 573,513
526,434
533,690
515,566
512,230
2,395,372
The amount of cost recognized for the Company and certain subsidiaries’ defined contribution plans for the years ended March
31, 2016, 2015 and 2014 were ¥10,265 million ($90,841 thousand), ¥9,469 million and ¥8,423 million, respectively.
56 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
(12) SHAREHOLDERS’ EQUITY
Changes in common stock for the years ended March 31, 2016 and 2015 were as follows:
Number of common shares issued:
Balance at beginning of year
Balance at end of year
2016
2015
Shares
2,147,201,551
2,147,201,551
2,147,201,551
2,147,201,551
Conversions into common stock of convertible debenture
Corporate Law is based on the amount recorded in the
issued subsequent to October 1, 1982 and exercise of war-
Company’s books of account in accordance with accounting
rants were accounted for in accordance with the provisions of
standards of Japan. The adjustments included in the accompa-
the Japanese Commercial Code by crediting one-half of the
nying consolidated financial statements to have them conform
conversion price and exercise price to each of the common
with accounting principles generally accepted in the United
stock account and the capital surplus account.
States of America, but not recorded in the books of account,
The Japanese Corporate Law enforced on May 1, 2006
have no effect on the determination of retained earnings
requires that an amount equal to 10% of dividends and other
available for dividends under the Japanese Corporate Law.
distributions paid in cash by the Company and its domestic
Retained earnings available for dividends shown in the
subsidiaries be appropriated as a legal reserve until the aggre-
Company’s books of account amounted to ¥489,751 million
gated amount of additional paid-in capital and the legal
reserve equal to 25% of the common stocks. The additional
($4,334,080 thousand) at March 31, 2016.
Cash dividends and appropriations to the legal reserve
paid-in capital and the legal reserve may be used to reduce a
charged to retained earnings during the years ended March
deficit or transferred to common stock with a resolution of
31, 2016, 2015 and 2014 represent dividends paid out during
the shareholders’ meeting.
the years and the related appropriations to the legal reserve.
The amount available for dividends under the Japanese
(13) OTHER COMPREHENSIVE INCOME (LOSS)
Changes in accumulated other comprehensive income (loss) for the years ended March 31, 2016, 2015 and 2014 are as follows:
Foreign currency
translation
adjustments
¥102,959
Pension liability
adjustments
¥ (98,108)
2016
Unrealized gains
(losses) on
securities
¥119,252
Unrealized gains
(losses) on
derivative
instruments
¥(39)
Yen (millions)
Total
¥124,064
(63,112)
(86,145)
(24,547)
(8)
(173,812)
Balance at beginning of year
Other comprehensive income before
reclassifications
Amounts reclassified from
accumulated other comprehensive
income
Net change during the year
—
(63,112)
22
(86,123)
(963)
(25,510)
Balance at end of year
¥ 39,847
¥(184,231)
¥ 93,742
Balance at beginning of year
Other comprehensive income before
reclassifications
Amounts reclassified from
accumulated other comprehensive
income
Net change during the year
Foreign currency
translation
adjustments
¥ 38,652
Pension liability
adjustments
¥(119,279)
2015
Unrealized gains
(losses) on
securities
¥ 82,636
65,788
15,625
36,452
(1,481)
64,307
5,546
21,171
164
36,616
(10)
(18)
¥(57)
(951)
(174,763)
¥ (50,699)
Unrealized gains
(losses) on
derivative
instruments
Yen (millions)
Total
¥(52)
¥ 1,957
22
(9)
13
117,887
4,220
122,107
Balance at end of year
¥102,959
¥ (98,108)
¥119,252
¥(39)
¥124,064
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 57
Balance at beginning of year
Other comprehensive income before
reclassifications
Amounts reclassified from
accumulated other comprehensive
income
Net change during the year
Balance at end of year
Foreign currency
translation
adjustments
Pension liability
adjustments
Unrealized gains
(losses) on
securities
Unrealized gains
(losses) on
derivative
instruments
2014
Yen (millions)
Total
¥ (8,023)
¥(112,523)
¥27,045
¥ 14
¥(93,487)
46,675
(6,323)
54,831
(98)
95,085
—
46,675
¥38,652
(433)
(6,756)
¥(119,279)
760
55,591
¥82,636
32
(66)
¥(52)
359
95,444
¥ 1,957
Foreign currency
translation
adjustments
Pension liability
adjustments
U.S. dollars (thousands)
2016
Unrealized gains
(losses) on
securities
Unrealized gains
(losses) on
derivative
instruments
Total
Balance at beginning of year
$ 911,142
$ (868,213)
$1,055,327
$(345)
$ 1,097,911
Other comprehensive income before
reclassifications
Amounts reclassified from
accumulated other comprehensive
income
Net change during the year
Balance at end of year
(558,514)
(762,345)
(217,230)
(71)
(1,538,160)
—
(558,514)
$ 352,628
195
(762,150)
$(1,630,363)
(8,522)
(225,752)
$ 829,575
(88)
(159)
$(504)
(8,415)
(1,546,575)
$ (448,664)
Reclassifications out of accumulated other comprehensive income (loss) for the years ended March 31, 2016, 2015 and 2014 are
as follows:
Details about Accumulated other
comprehensive income components
Pension liability adjustments
Amortization of prior service cost
Amortization of actuarial loss
Unrealized gains (losses) on securities
Realized losses on sales
Unrealized gains (losses) on derivative
instruments
2016
Amounts reclassified from accumulated other
comprehensive income
Yen
(millions)
U.S. dollars
(thousands)
Affected line items in consolidated
statements of income
¥(12,044)
12,077
33
(11)
22
(1,485)
(1,485)
522
(963)
(18)
(18)
8
(10)
$(106,584)
106,876
292
(97)
195
(13,141)
(13,141)
4,619
(8,522)
(159)
(159)
71
(88)
See Note
See Note
Total before tax
Income tax
Net of tax
Other revenues
Total before tax
Income tax
Net of tax
Other revenues
Total before tax
Income tax
Net of tax
Total amounts reclassified
¥ (951)
$ (8,415)
Net of tax
Note: These accumulated other comprehensive income components are included in the computation of net periodic retirement and severance costs. See Note 11 “Re-
tirement and Severance Benefits”.
58 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Details about Accumulated other
comprehensive income components
Foreign currency translation adjustments
Pension liability adjustments
Amortization of prior service cost
Amortization of actuarial loss
Unrealized gains (losses) on securities
Realized losses on sales
Other
Unrealized gains (losses) on derivative
instruments
2015
Amounts reclassified
from accumulated
other comprehensive
income
Yen
(millions)
Affected line items in consolidated
statements of income
¥ (1,481)
(1,481)
—
(1,481)
¥(12,122)
20,721
8,599
(3,053)
5,546
(37)
189
152
12
164
(15)
(15)
6
(9)
Other revenues
Total before tax
Income tax
Net of tax
See Note
See Note
Total before tax
Income tax
Net of tax
Other revenues
Other costs and expenses
Total before tax
Income tax
Net of tax
Other revenues
Total before tax
Income tax
Net of tax
Total amounts reclassified
¥ 4,220
Net of tax
Note: These accumulated other comprehensive income components are included in the computation of net periodic retirement and severance costs. See Note 11 “Re-
tirement and Severance Benefits”.
Details about Accumulated other
comprehensive income components
Pension liability adjustments
Amortization of prior service cost
Amortization of actuarial loss
Unrealized gains (losses) on securities
Realized losses on sales
Other
Unrealized gains (losses) on derivative
instruments
2014
Amounts reclassified
from accumulated
other comprehensive
income
Yen
(millions)
Affected line items in consolidated
statements of income
¥(22,216)
21,544
(672)
239
(433)
1,166
13
1,179
(419)
760
42
42
(10)
32
See Note
See Note
Total before tax
Income tax
Net of tax
Other costs and expenses
Other costs and expenses
Total before tax
Income tax
Net of tax
Other costs and expenses
Total before tax
Income tax
Net of tax
Total amounts reclassified
¥ 359
Net of tax
Note: These accumulated other comprehensive income components are included in the computation of net periodic retirement and severance costs. See Note 11 “Re-
tirement and Severance Benefits”.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 59
Tax effects allocated to each component of other comprehensive income (loss) and reclassification adjustments for the years
ended March 31, 2016, 2015 and 2014 are as follows:
Before-tax amount
Tax (expense)
or benefit
Yen (millions)
Net-of-tax amount
2016:
Foreign currency translation adjustments:
Amount arising during the year on investments in
foreign entities held at end of year
¥ (68,663)
¥ 5,551
¥ (63,112)
Less reclassification adjustments for gains (losses)
realized in net income
Net change in foreign currency translation
adjustments during the year
—
—
—
(68,663)
5,551
(63,112)
Pension liability adjustments:
Amount arising during the year on pension liability adjustments
(126,546)
40,401
(86,145)
Less reclassification adjustments for gains (losses)
realized in net income
Net change in pension liability adjustment
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the year
Less reclassification adjustments for gains (losses)
realized in net income
Net change in unrealized gains (losses) on securities
Unrealized gains (losses) on derivative instruments:
Unrealized holding gains (losses) arising during the year
Less reclassification adjustments for gains (losses)
realized in net income
Net change in unrealized gains (losses) on derivative instruments
33
(126,513)
(32,583)
(1,485)
(34,068)
(20)
(18)
(38)
(11)
40,390
8,036
522
8,558
12
8
20
22
(86,123)
(24,547)
(963)
(25,510)
(8)
(10)
(18)
Other comprehensive income (loss)
¥(229,282)
¥54,519
¥(174,763)
Before-tax amount
Tax (expense)
or benefit
Yen (millions)
Net-of-tax amount
2015:
Foreign currency translation adjustments:
Amount arising during the year on investments in
foreign entities held at end of year
¥ 74,884
¥ (9,096)
¥ 65,788
Less reclassification adjustments for gains (losses)
realized in net income
Net change in foreign currency translation
adjustments during the year
Pension liability adjustments:
Amount arising during the year on pension liability adjustments
Less reclassification adjustments for gains (losses)
realized in net income
Net change in pension liability adjustment
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the year
Less reclassification adjustments for gains (losses)
realized in net income
Net change in unrealized gains (losses) on securities
Unrealized gains (losses) on derivative instruments:
Unrealized holding gains (losses) arising during the year
Less reclassification adjustments for gains (losses)
realized in net income
Net change in unrealized gains (losses) on derivative instruments
(1,481)
—
(1,481)
73,403
25,167
8,599
33,766
50,780
152
50,932
35
(15)
20
(9,096)
(9,542)
(3,053)
(12,595)
(14,328)
12
(14,316)
(13)
6
(7)
64,307
15,625
5,546
21,171
36,452
164
36,616
22
(9)
13
Other comprehensive income (loss)
¥158,121
¥(36,014)
¥122,107
60 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
2014:
Foreign currency translation adjustments:
Amount arising during the year on investments in
foreign entities held at end of year
¥ 50,955
¥ (4,280)
¥46,675
Before-tax amount
Tax (expense)
or benefit
Yen (millions)
Net-of-tax amount
Less reclassification adjustments for gains (losses)
realized in net income
Net change in foreign currency translation
adjustments during the year
Pension liability adjustments:
Amount arising during the year on pension liability adjustments
Less reclassification adjustments for gains (losses)
realized in net income
Net change in pension liability adjustment
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the year
Less reclassification adjustments for gains (losses)
realized in net income
Net change in unrealized gains (losses) on securities
Unrealized gains (losses) on derivative instruments:
Unrealized holding gains (losses) arising during the year
Less reclassification adjustments for gains (losses)
realized in net income
Net change in unrealized gains (losses) on derivative instruments
—
—
—
50,955
(4,280)
46,675
(8,235)
(672)
(8,907)
85,230
1,179
86,409
(132)
42
(90)
1,912
239
2,151
(30,399)
(419)
(30,818)
34
(10)
24
(6,323)
(433)
(6,756)
54,831
760
55,591
(98)
32
(66)
Other comprehensive income (loss)
¥128,367
¥(32,923)
¥95,444
Before-tax amount
U.S. dollars (thousands)
Tax (expense)
or benefit
Net-of-tax amount
2016:
Foreign currency translation adjustments:
Amount arising during the year on investments in
foreign entities held at end of year
$ (607,638)
$ 49,124
$ (558,514)
Less reclassification adjustments for gains (losses)
realized in net income
Net change in foreign currency translation
adjustments during the year
—
—
—
(607,638)
49,124
(558,514)
Pension liability adjustments:
Amount arising during the year on pension liability adjustments
(1,119,876)
357,531
(762,345)
Less reclassification adjustments for gains (losses)
realized in net income
Net change in pension liability adjustment
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the year
Less reclassification adjustments for gains (losses)
realized in net income
Net change in unrealized gains (losses) on securities
Unrealized gains (losses) on derivative instruments:
Unrealized holding gains (losses) arising during the year
Less reclassification adjustments for gains (losses)
realized in net income
Net change in unrealized gains (losses) on derivative instruments
292
(1,119,584)
(97)
357,434
195
(762,150)
(288,345)
71,115
(217,230)
(13,141)
(301,486)
4,619
75,734
(8,522)
(225,752)
(177)
(159)
(336)
106
71
177
(71)
(88)
(159)
Other comprehensive income (loss)
$(2,029,044)
$482,469
$(1,546,575)
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 61
(14) NET INCOME PER SHARE ATTRIBUTABLE TO MITSUBISHI ELECTRIC CORP.
A reconciliation of the numerators and denominators of the basic and diluted net income per share attributable to Mitsubishi
Electric Corp. calculations is as follows:
Net income attributable to
Mitsubishi Electric Corp.
Effect of dilutive securities
Diluted net income attributable to
Mitsubishi Electric Corp.
Average common shares outstanding
Effect of dilutive securities
Diluted common shares outstanding
Net income per share attributable to
Mitsubishi Electric Corp.:
Basic
Diluted
2016
2015
Yen (millions)
2014
¥228,494
—
¥234,694
—
¥153,473
—
¥228,494
¥234,694
¥153,473
2016
2,146,799,336
—
2,146,799,336
2015
2,146,835,581
—
2,146,835,581
U.S. dollars
(thousands)
2016
$2,022,071
—
$2,022,071
Shares
2014
2,146,871,671
—
2,146,871,671
2016
2015
2014
2016
Yen
U.S. dollars
¥106.43
—
¥109.32
—
¥71.49
—
$0.942
—
Diluted net income per share attributable to Mitsubishi Electric Corp. is not presented as no dilutive securities existed as of and
for the years ended March 31, 2016, 2015 and 2014.
(15) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Foreign Exchange Risk Management and Interest Rate Risk
Management
The Company and its subsidiaries operate internationally, giv-
Information with Respect to Cash Flow Hedges
The Company and certain of its subsidiaries have entered into
forward foreign exchange contracts mainly with forecasted
ing rise to significant exposure to market risks from changes
transactions to hedge against market risks from changes in
in foreign currencies and interest rates. Derivative financial
foreign currencies and interest rate swap agreements to modi-
instruments are comprised principally of foreign exchange
fy the interest rate characteristics of a portion of its long-term
contracts, foreign currency swaps and interest rate swaps uti-
debt from a variable to a fixed rate. The Company and certain
lized by the Company and certain of its subsidiaries to reduce
of its subsidiaries designate them as cash flow hedges. The
these risks. The Company and its subsidiaries do not hold or
maximum period for cash flow hedges is 18 months. The
issue financial instruments for trading purposes.
Company expects that the amounts of net loss of ¥105 mil-
Contract Amounts, Notional Principal Amounts and Credit
Risk
The Company and its subsidiaries are exposed to risk of credit-
related losses in the event of nonperformance by counterpar-
ties to foreign exchange contracts, foreign currency swaps
and interest rate swaps. The Company believes such risk is
minimal due to the high credit ratings of these counterparties.
Information with Respect to Fair Value Hedges
Certain subsidiaries have entered into foreign currency swaps
to hedge currency exposure and designate them as fair value
hedges.
lion ($929 thousand) in accumulated other comprehensive
income (loss) will be reclassified into earnings over the next 12
months with transactions such as collection of foreign curren-
cy receivables and payment of foreign currency payables and
interests on long-term debt.
Derivatives not designated as hedging Instruments
The Company and certain of its subsidiaries enter into foreign
exchange contracts and certain of foreign currency swaps and
interest rate swaps that are not designated as hedging instru-
ments to hedge against certain foreign currency and interest
rate exposures. The Company and certain of its subsidiaries
recognize the changes in unrealized gains and losses on such
instruments in earnings.
62 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Contract amounts of foreign exchange contracts and foreign currency swaps and notional principal amounts of interest rate
swaps at March 31, 2016 and 2015 are as follows:
Foreign exchange contracts:
Forwards to sell foreign currencies
Forwards to buy foreign currencies
Foreign currency swaps
Interest rate swaps
2016
¥214,525
131,564
41,891
1,606
Yen (millions)
2015
¥240,279
97,441
31,400
2,000
U.S. dollars
(thousands)
2016
$1,898,451
1,164,283
370,717
14,212
The estimated fair values of foreign exchange contracts, foreign currency swaps and interest rate swaps at March 31, 2016 and
2015 are as follows:
Derivatives designated as hedging instruments
Consolidated balance sheet line item
2016
Yen (millions)
2015
Asset derivatives
Estimated fair value
U.S. dollars
(thousands)
2016
Foreign exchange contracts
Prepaid expenses and
other current assets
¥63
¥95
$558
Derivatives designated as hedging instruments
Consolidated balance sheet line item
Foreign exchange contracts
Other current liabilities
Derivatives not designated as hedging instruments
Consolidated balance sheet line item
Foreign exchange contracts
Foreign currency swaps
Interest rate swaps
Total
Prepaid expenses and
other current assets
Prepaid expenses and
other current assets
Investments in securities
and other
Derivatives not designated as hedging instruments
Consolidated balance sheet line item
Foreign exchange contracts
Foreign currency swaps
Total
Other current liabilities
Other current liabilities
2016
¥120
Yen (millions)
2015
¥61
2016
Yen (millions)
2015
Liability derivatives
Estimated fair value
U.S. dollars
(thousands)
2016
$1,062
Asset derivatives
Estimated fair value
U.S. dollars
(thousands)
2016
¥6,457
¥5,499
$57,142
242
—
¥6,699
2016
¥2,330
20
¥2,350
126
21
¥5,646
Yen (millions)
2015
¥2,673
381
¥3,054
2,141
—
$59,283
Liability derivatives
Estimated fair value
U.S. dollars
(thousands)
2016
$20,619
177
$20,796
The effect of foreign exchange contracts designated as cash flow hedges on the consolidated statements of income for the years
ended March 31, 2016 and 2015 are as follows:
Derivatives designated as cash flow hedging instruments
Foreign exchange contracts
Derivatives designated as cash flow hedging
instruments
Line item of gain or (loss) recognized
from accumulated OCI into income
Foreign exchange contracts
Other revenues
2016
¥18
Amount of gain or (loss) recognized in OCI on derivative
(effective portion)
U.S. dollars
(thousands)
2016
¥(38)
Amount of gain or (loss) recognized from accumulated OCI into income
(effective portion)
U.S. dollars
(thousands)
Yen (millions)
2015
¥20
Yen (millions)
2015
¥15
2016
$(336)
2016
$159
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 63
The effect of foreign exchange contracts, foreign currency swaps and interest rate swaps not designated as hedging instruments
on the consolidated statements of income for the years ended March 31, 2016 and 2015 are set forth below:
Derivatives not designated as hedging instruments
Line item of gain or (loss) recognized
in income on derivative
Amount of gain or (loss) recognized in income on derivative
U.S. dollars
(thousands)
Yen (millions)
2015
2016
2016
Foreign exchange contracts
Foreign currency swaps
Interest rate swaps
Total
Other revenues
(cost and expenses)
Other revenues
(cost and expenses)
Other revenues
(cost and expenses)
¥(2,090)
¥(12,324)
$(18,496)
278
(1,779)
2,460
(32)
¥(1,844)
(39)
¥(14,142)
(283)
$(16,319)
(16) SECURITIZATIONS
The Company sells its accounts receivable under several secu-
these receivables.
ritization programs.
The Company recognized losses of ¥389 million ($3,442
When the Company retains subordinated interests in the
certain accounts receivables after the sale of these receivables,
thousand), ¥541 million and ¥485 million on the securitiza-
tions of receivables for the years ended March 31, 2016, 2015
a portion of these, where the Company retains subordinated
and 2014, respectively.
interests, is not taken off from the balance sheet and is
Subsequent to securitization, the Company retains collec-
recorded at their fair value. Such carrying value is adjusted to
tion and administrative responsibilities for the receivables. The
reflect the portion that is not expected to be collectible. As of
Company has not recorded a servicing asset or liability since
March 31, 2016, the Company did not retain subordinated
the cost of collection effort is approximate to the amount of
interests in the certain accounts receivables after the sale of
commission income.
Certain cash flows received from special purpose entities (SPEs) and banks on the above transactions for the years ended March
31, 2016, 2015 and 2014 are as follows:
Proceeds from new securitizations
2016
¥381,429
2015
¥441,395
Yen (millions)
2014
¥424,556
U.S. dollars
(thousands)
2016
$3,375,478
Quantitative information about trade receivables including securitized receivables as of March 31, 2016 and 2015 are as
follows:
Trade receivables
Less: Securitized receivables
Total receivables
2016
¥1,143,536
108,368
¥1,035,168
Yen (millions)
2015
¥1,182,431
133,889
¥1,048,542
U.S. dollars
(thousands)
2016
$10,119,788
959,009
$ 9,160,779
As of March 31, 2016 and 2015, delinquencies and credit losses of trade receivables including securitized receivables are
immaterial.
(17) COMMITMENTS AND CONTINGENT LIABILITIES
At March 31, 2016, commitments outstanding for the pur-
chase of property, plant and equipment were ¥29,961 million
were contingently liable to trade notes discounted in the
amount of ¥375 million ($3,319 thousand). Certain subsidiar-
($265,142 thousand).
ies account for the discounted notes as sale of receivables.
It is common practice in Japan for companies, in the ordi-
As of March 31, 2016, the Company has no significant
nary course of business, to receive promissory notes in settle-
concentrations of credit risk.
ment of accounts receivable and to subsequently discount
While the Company and certain of its subsidiaries are
such notes at banks. At March 31, 2016, certain subsidiaries
defendants and co-defendants in various lawsuits and legal
64 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
actions, based upon the advice of legal counsel, the
the pertinent calculation method. In September 2012, the
Company’s management is of the opinion that damages, if
Company took another legal action with the European
any, would not have a material effect on the Company’s con-
General Court seeking a revision of the current calculation
solidated financial position and results of operations, except
method presented by the European Commission, which
for the following cases.
would result in a downward modification of the fines. In
In January 2007, the Company received a decision ren-
December 2013, the Company received a judgment from the
dered by the European Commission imposing fines for an
European Court of Justice upholding the European
infringement of EU Competition Law in connection with its
Commission’s underlying facts. In January 2016, the Company
sales of certain gas-insulated switchgears in Europe. However,
received a judgment from the European General Court
there was a significant inconsistency in the understanding of
upholding the fine calculation method applied in the
material underlying facts between the European Commission
European Commission’s revised decision.
and the Company. Therefore, the Company appealed to the
Since July 2011, the Company has been cooperating with
European General Court and challenged the decision. In July
investigations and inquiries conducted by the European
2011, the Company received a judgment from the European
Commission under EU Competition Law regarding the sales of
General Court upholding the European Commission’s decision
certain automotive parts in Europe. In January 2016, the
on the underlying facts while annulling the fine imposed on
the Company on the basis that the European Commission
applied inconsistent methods of calculation to different
Company received a decision rendered by the European
Commission imposing a fine of €110,929 thousand (¥14,617
million) for the infringement of the said law. In addition, civil
companies.
In September 2011, since there was still a significant
lawsuits were filed against the Company in the United States
related to violations of the Antitrust Laws regarding the sale
inconsistency in the understanding of material underlying
of certain automotive parts. The Company has already agreed
facts between the European Commission and the Company,
to settle with some of the purchasers of the automotive parts
the Company appealed to the European Court of Justice.
and has made settlement payments.
In June 2012, the Company received a revised decision
from the European Commission imposing a fine of €74,817
thousand (¥7,472 million) on the Company and another fine
of €4,650 thousand (¥464 million) to be borne jointly by
TOSHIBA CORPORATION and the Company after revision of
As of March 31, 2016, the Company recorded an esti-
mated amount of ¥11,491 million ($101,690 thousand) as a
reserve for possible losses of competition-law-related expens-
es in “Other liabilities” relating to certain automotive parts
cases mainly in the United States of America.
The following table provides the undiscounted maximum amount of potential future payments for each major group of guaran-
tees at March 31, 2016:
Guarantees of bank loan:
Employees
Affiliated and other companies
Other
Total
Yen (millions)
¥ 2,487
510
7,930
¥10,927
U.S. dollars
(thousands)
$22,009
4,513
70,177
$96,699
The guarantees for the employees are principally made for their housing loans, and the term of guarantees is 1 year to 13 years.
The guarantees for the affiliated and other companies are made to enhance their credit, and the term of guarantees is 1 year to
3 years.
Change in accrued product warranty for the years ended March 31, 2016 and 2015 is summarized as follows:
Balance at beginning of year
Addition
Utilization
Foreign currency translation adjustments
Balance at end of year
2016
¥55,483
48,378
47,609
(418)
¥55,834
Yen (millions)
2015
¥58,268
47,922
51,160
453
¥55,483
U.S. dollars
(thousands)
2016
$491,000
428,124
421,319
(3,699)
$494,106
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 65
(18) FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company uses the following methods and assumptions
calculated under income approach using market interest rates,
to estimate the fair value of each class of financial instrument
therefore, it is classified in level 2.
for which it is practical to estimate its value:
(a) Cash and cash equivalents, Trade receivables, Bank
(d) Long-term debt
The fair value of the Company’s corporate bonds is calculated
loans, Trade payables and Other current liabilities
under market approach using quoted published price, there-
The carrying amount approximates fair value because of the
fore, it is classified in level 2. The fair value of the Company’s
short term nature of these instruments.
long-term debt is calculated under income approach using
(b) Investments in securities and other
The fair values of most investments in securities and other are
estimated based on quoted market prices for these instru-
market interest rates, therefore, it is classified in level 2. The
Company excludes the financial instruments relating to lease
activities because its carrying amount approximates fair value.
ments. For other investments for which there are no quoted
market prices, a reasonable estimate of fair value could not be
(e) Derivative financial instruments
The fair values of derivative financial instruments, consisting
made without incurring excessive costs.
principally of foreign exchange contracts, foreign currency
(c) Long-term trade receivables
The fair value of the Company’s long-term trade receivables is
swaps and interest rate swaps are estimated by obtaining
quotes from brokers. (See note 15 about estimated fair value.)
The estimated fair values of the Company’s financial instruments at March 31, 2016 and 2015 are summarized as follows:
2016
Yen (millions)
2015
U.S. dollars
(thousands)
2016
Carrying
amount
Estimated
fair value
Carrying
amount
Estimated
fair value
Carrying
amount
Estimated
fair value
Nonderivatives:
Assets:
Marketable securities and other
Long-term trade receivables
¥235,170
4,661
¥235,170
4,627
¥271,962
5,633
¥271,962
5,615
$2,081,151
41,248
$2,081,151
40,947
Liabilities:
Long-term debt, including
current portion
318,504
316,570
285,765
285,407
2,818,619
2,801,504
Limitations
Fair value estimates are made at a specific point in time based on relevant market information and information about the finan-
cial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and there-
fore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
(19) FAIR VALUE MEASUREMENTS
The Company defines fair value as “the price that would be
Level 1: Quoted prices in active markets for identical assets or
received to sell an asset or paid to transfer a liability in an
liabilities.
orderly transaction between market participants at the mea-
surement date”. On that basis, the Company has categorized
Level 2: Inputs other than quoted prices included within Level
1 that are directly or indirectly observable for the
the inputs for fair value measurement by the valuation tech-
asset or liability.
nique into a three-level hierarchy, and placed the order of
Level 3: Unobservable inputs for the asset or liability.
priority.
66 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as
of March 31, 2016 and 2015. The Company measures the fair value of those assets and liabilities in accordance with the require-
ments of FASB ASC for those assets and liabilities.
Level 1
Level 2
Level 3
Total
2016
Yen (millions)
Assets:
Equity securities
Marketable equity securities
¥234,971
¥ —
¥ —
¥234,971
Debt securities
Investment trusts
Derivatives
Liabilities:
Derivatives
Assets:
Equity securities
—
—
—
199
6,762
2,470
2015
—
—
—
199
6,762
2,470
Yen (millions)
Level 1
Level 2
Level 3
Total
Marketable equity securities
¥271,443
¥ —
¥ —
¥271,443
Debt securities
Investment trusts
Derivatives
Liabilities:
Derivatives
Assets:
Equity securities
—
—
—
519
5,741
3,115
—
—
—
519
5,741
3,115
U.S. dollars (thousands)
Level 1
Level 2
Level 3
Total
2016
Marketable equity securities
$2,079,390
$ —
$ — $2,079,390
Debt securities
Investment trusts
Derivatives
Liabilities:
Derivatives
—
—
—
1,761
59,841
21,858
—
—
—
1,761
59,841
21,858
Level 1 equity securities are marketable equity securities, which are valued using unadjusted quoted market prices in active mar-
kets with sufficient volume and frequency of transactions. Level 2 Debt securities are comprised of investment trusts. Level 2 debt
securities are valued based on market approach, using quoted prices for identical assets in markets that are not active. Level 2
derivatives are comprised principally of foreign exchange contracts, which are valued based on market approach, using quotes
obtained from counterparties or third parties.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
At March 31, 2016, a portion of long-lived assets was written
an impairment charge of ¥3,085 million, which was included
down to their fair value of ¥8,037 million ($71,124 thou-
in loss on impairment of long-lived assets for the year ended
sand), resulting in an impairment charge of ¥8,482 million
March 31, 2015. The impaired long-lived assets are classified
($75,062 thousand), which was included in loss on impair-
as Level 3 assets, because they are measured based on the
ment of long-lived assets for the year ended March 31, 2016.
unobservable inputs such as estimated future cash flows
The impaired long-lived assets are classified as Level 3 assets,
under income approach or net sale price under market
because they are measured based on the unobservable inputs
approach.
such as estimated future cash flows under income approach
or net sale price under market approach.
The valuation process of long-lived assets is documented
in “Notes to Consolidated Financial Statements (1)BASIS OF
At March 31, 2015, a portion of long-lived assets was
P R E S E N TAT I O N A N D S U M M A RY O F S I G N I F I C A N T
written down to their fair value of ¥4,197 million, resulting in
ACCOUNTING POLICIES (u) Impairment of Long-Lived Assets”.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 67
(20) SUPPLEMENTARY INCOME AND EXPENSE INFORMATION
Advertising expenses
Shipping and handling costs
Exchange gains (losses)
Business restructuring costs
Competition-law-related expenses (for the United States
Department of Justice)
Loss on impairment of long-lived assets
2016
¥(30,498)
(86,963)
(14,269)
—
—
(8,482)
2015
¥(28,101)
(87,610)
7,749
(4,804)
—
(3,085)
Yen (millions)
2014
¥(23,847)
(79,634)
9,709
—
(7,738)
(3,791)
U.S. dollars
(thousands)
2016
$(269,894)
(769,584)
(126,274)
—
—
(75,062)
Advertising expenses are included in “Costs and expenses -
Loss on impairment of long-lived assets is included in
Selling, general and administrative”.
“Costs and expenses - Loss on impairment of long-lived
Shipping and handling costs represents the costs included
assets”.
in “Costs and expenses - Selling, general and administrative”.
For the year ended March 31, 2016, the Company and
Exchange gains (losses) are included in “Revenues -
certain of its subsidiaries recognized impairment losses of
Other” and “Costs and expenses – Other”.
¥5,766 million ($51,026 thousand) on tangible assets such as
Business restructuring costs are included in “Costs and
expenses - Other”.
buildings and machineries, and ¥2,716 million ($24,036 thou-
sand) on intangible assets and others. The impairment losses
For the year ended March 31, 2015, the Company recog-
included ¥2,428 million ($21,487 thousand) for Energy and
nized business restructuring costs of ¥4,804 million related to
Electric Systems business related assets and ¥2,418 million
the loss associated with inventories under sales contracts, the
($21,398 thousand) for the Information and Communication
removal and disposal of facilities and the retirement benefits
Systems business related assets due to a decline in profitabili-
resulting from the Company’s decision to discontinue the cop-
ty. The impairment losses were mainly measured based on the
per alloy business.
fair value less cost to sell.
Competition-law-related expenses (for the United States
For the year ended March 31, 2015, the Company and
Department of Justice) are included in “Costs and
certain of its subsidiaries recognized impairment losses of
expenses - Other”.
¥2,751 million on tangible assets such as buildings and tools,
Since July 2011, the Company and certain of its subsidiar-
and ¥334 million on intangible assets. The impairment losses
ies had been subject to investigations and inquiries conducted
included ¥562 million for Energy and Electric Systems business
by the United States Department of Justice in relation to
related assets and ¥1,740 million for Home Appliances busi-
United States Antitrust Laws regarding the sale of certain
ness related assets due to a decline in profitability. The impair-
automotive parts in the United States of America.
ment losses were mainly measured based on the fair value less
Consequently, in September 2013, the Company entered into
costs to sell.
a plea agreement with the United States Department of
For the year ended March 31, 2014, the Company and
Justice in which the Company agreed to pay US$190,000
certain of its subsidiaries recognized impairment losses of
thousand (¥18,573 million based on the rate of exchange in
¥3,627 million on tangible assets such as land, buildings and
effect at the date of the transaction) in fines for the infringe-
tools, and ¥164 million on intangible assets. The impairment
ment of United States Antitrust Laws. For the year ended
losses included ¥1,217 million for Home Appliances business
March 31, 2014, the Company recorded ¥7,738 million,
related assets due to a decline in profitability and ¥2,260 mil-
which was equivalent to the difference between the fines and
lion for welfare related assets which are scheduled to be sold.
its reserves as of March 31, 2013 as various competition-law-
The impairment losses were mainly measured based on the
related expenses.
fair value less costs to sell.
(21) LEASES
The Company and certain of its subsidiaries enter into capital
ings, machineries and equipments. At March 31, 2016, the
lease and operating lease agreements with Mitsubishi Electric
Credit Corporation, an equity method investee. The leased
aggregated cost and accumulated depreciation of leased
assets under capital leases amounted to ¥34,753 million
assets, which are committed under capital lease agreements,
($307,549 thousand) and ¥17,822 million ($157,717 thou-
are capitalized.
sand), respectively.
The Company and certain of its subsidiaries lease build-
68 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Future minimum lease payments under capital and non-cancelable operating leases as of March 31, 2016 are as follows:
Year ending March 31:
2017
2018
2019
2020
2021
Thereafter
Total minimum lease payments
Less: Estimated executory costs
Net minimum lease payments
Less: Amount representing interest
Present value of net minimum capital lease payments
Less: Current portion of obligations under capital leases
Obligations under capital leases, excluding current portion
Yen (millions)
Capital leases Operating leases
U.S. dollars
(thousands)
Capital leases Operating leases
¥12,439
11,015
9,616
8,004
6,856
13,303
¥61,233
¥ 9,223
8,249
5,081
2,508
746
60
25,867
1,408
24,459
797
23,662
8,469
¥15,193
$110,080
97,478
85,097
70,832
60,672
117,726
$541,885
$ 81,619
73,000
44,965
22,195
6,602
531
228,912
12,460
216,452
7,053
209,399
74,947
$134,452
Rental expenses related to operating leases for the years ended March 31, 2016, 2015 and 2014 amounted to ¥48,786 million
($431,735 thousand), ¥47,670 million and ¥45,246 million, respectively. These operating leases are for office space, warehouses,
employee facilities and computer equipment, and are customarily renewed.
(22) BUSINESS COMBINATIONS
On December 23, 2015, the Company acquired approximately
solidated subsidiary of the Company. In addition, the
74.97% of the share capital of MELCO Hydronics & IT Cooling
Company conducted a tender offer in order to acquire the
S.p.A. (hereinafter “MEHIT”, previously “DeLclima S.p.A.”),
remaining shares representing approximately 25.03% of the
an Italian company that designs, manufactures and sells com-
share capital of MEHIT. As a result, MEHIT is a wholly owned
mercial heating, ventilation and air conditioning (HVAC)
equipment, for €508 million (¥67,141 million) from De’Longhi
Industrial S.A. for the purpose of expanding its HVAC business
subsidiary as of March 31, 2016.
The purchase price and the fair values of the noncontrol-
ling interests, the assets acquired and liabilities assumed as of
in the European market. Consequently, MEHIT became a con-
the acquisition date are summarized as follows;
Purchase price
Noncontrolling interests
Total
Current assets
Goodwill
Intangible assets
Other assets
Total assets acquired
Total liabilities assumed
Net assets acquired
Yen (millions)
¥ 67,141
33,439
¥100,580
¥ 35,537
58,034
41,823
6,533
141,927
41,347
¥100,580
U.S. dollars
(thousands)
$ 594,168
295,920
$ 890,088
$ 314,487
513,575
370,115
57,814
1,255,991
365,903
$ 890,088
The fair value of the noncontrolling interests is measured
The operating results of MEHIT included in the consolidat-
based on the valuation performed by a third party specialist
ed statement of income were immaterial for the year ended
considering MEHIT’s financial condition. Intangible assets
March 31, 2016.
acquired consist of finite-lived assets primarily including
Pro forma results of operations were not disclosed
“Customer relationship” of ¥27,290 million ($241,504 thou-
because the effect on the consolidated financial statement
sand). Goodwill is allocated to the Home Appliances segment.
was immaterial.
Goodwill is not expected to be deductible for tax purposes.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 69
(23) SUPPLEMENTARY CASH FLOW INFORMATION
Cash paid during the year for:
Interest
Income taxes
2016
2015
Yen (millions)
2014
¥ 3,038
69,981
¥ 3,816
53,712
¥ 4,795
37,434
U.S. dollars
(thousands)
2016
$ 26,885
619,301
(24) SEGMENT INFORMATION
Operating segment presented below is identified based on the segments for which separate financial information is available,
and is periodically used for decision of business resources allocation and evaluation of business operation by the Company’s
management.
The Company conducts business through 6 reportable business segments, Energy and Electric Systems, Industrial
Automation Systems, Information and Communication Systems, Electronic Devices, Home Appliances, and Others, based on
types and characteristics of products, production method, and similarity in market.
Principal businesses of each segment are as follows:
Energy and
Electric Systems
Turbine generators, hydraulic turbine generators, nuclear power plant equipment, motors, transformers, power
electronics equipment, circuit breakers, gas insulated switches, switch control devices, surveillance-system control
and security systems, large display devices, electrical equipment for locomotives and rolling stock, elevators,
escalators, building security systems, building management systems, particle beam treatment systems, and others
Industrial
Automation
Systems
Programmable logic controllers, inverters, servomotors, human-machine interface, motors, hoists, magnetic
switches, no-fuse circuit breakers, short-circuit breakers, transformers for electricity distribution, time and power
meters, uninterruptible power supply, industrial fans, computerized numerical controllers, electrical-discharge
machines, laser processing machines, industrial robots, clutches, automotive electrical equipment, car electronics
and car mechatronics, car multimedia, and others
Information and
Communication
Systems
Wireless and wired communications systems, surveillance cameras, satellite communications equipment, satellites,
radar equipment, antennas, missile systems, fire control systems, broadcasting equipment, data transmission
devices, network security systems, information systems equipment, systems integration, and others
Electronic Devices Power modules, high-frequency devices, optical devices, LCD devices, and others
Home Appliances LCD televisions, room air conditioners, package air conditioners, air-to-water heat pump boilers, refrigerators, electric
fans, ventilators, photovoltaic power generation systems, hot water supply systems, LED lamps, fluorescent lamps,
indoor lighting, compressors, chillers, dehumidifiers, air purifiers, showcases, cleaners, rice cookers, microwave ovens,
IH cooking heaters, and others
Others
Procurement, logistics, real estate, advertising, finance and other services
Intersegment transactions are conducted generally at the price that the Company’s management recognizes as approximate
arm’s length price. Operating income (loss) in Segment Information is measured in a manner consistent with consolidated operat-
ing income.
70 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Segment Information
Segment information for the years ended March 31, 2016, 2015 and 2014 are as follows:
As of and for the year ended March 31, 2016
Yen (millions)
Energy and
Electric Systems
Industrial
Automation
Systems
Information and
Communication
Systems
Electronic
Devices
Home
Appliances
Others
Subtotal
Eliminations
and other
Total
As of and for the year ended March 31, 2015
I Net sales and
operating income
Sales:
(1) External customers
(2) Intersegment
Net sales
Operating costs
Operating income
II Assets, depreciation
and amortization,
loss on impairment of
long-lived assets, and
capital expenditures
Assets
Depreciation and
amortization
Loss on impairment of
long-lived assets
Capital expenditures
I Net sales and
operating income
Sales:
(1) External customers
(2) Intersegment
Net sales
Operating costs
Operating income
II Assets, depreciation
and amortization,
loss on impairment of
long-lived assets, and
capital expenditures
Assets
Depreciation and
amortization
Loss on impairment of
long-lived assets
Capital expenditures
¥1,255,062
9,542
1,264,604
1,214,262
¥ 50,342
¥1,308,776
13,161
1,321,937
1,162,777
¥ 159,160
¥512,156
48,963
561,119
546,120
¥ 14,999
¥180,618
30,962
211,580
194,710
¥ 16,870
¥964,172
17,892
982,064
918,208
¥ 63,856
¥173,569
534,177
707,746
684,126
¥ 23,620
¥4,394,353
654,697
5,049,050
4,720,203
¥ 328,847
¥ — ¥4,394,353
—
(654,697)
4,394,353
(654,697)
4,093,181
(627,022)
¥ 301,172
¥ (27,675)
¥1,314,185
¥1,051,511
¥391,323
¥162,772
¥855,241
¥245,065
¥4,020,097
¥ 39,844
¥4,059,941
29,559
59,276
18,922
17,469
32,745
6,612
164,583
2,428
42,037
—
70,677
2,418
22,954
1,719
17,792
1,514
40,379
403
5,126
8,482
198,965
—
—
—
164,583
8,482
198,965
Yen (millions)
Energy and
Electric Systems
Industrial
Automation
Systems
Information and
Communication
Systems
Electronic
Devices
Home
Appliances
Others
Subtotal
Eliminations
and other
Total
¥1,219,983
8,975
1,228,958
1,156,510
¥ 72,448
¥1,268,858
13,891
1,282,749
1,136,767
¥ 145,982
¥520,853
38,668
559,521
540,587
¥ 18,934
¥209,235
29,167
238,402
208,239
¥ 30,163
¥925,004
19,826
944,830
890,534
¥ 54,296
¥179,108
561,409
740,517
716,775
¥ 23,742
¥4,323,041
671,936
4,994,977
4,649,412
¥ 345,565
¥ — ¥4,323,041
—
(671,936)
4,323,041
(671,936)
4,005,437
(643,975)
¥ 317,604
¥ (27,961)
¥1,300,581
¥1,064,560
¥383,692
¥206,981
¥769,899
¥246,136
¥3,971,849
¥ 87,602
¥4,059,451
29,056
56,842
23,814
26,055
30,605
6,241
172,613
562
35,500
26
67,943
2
18,383
203
38,406
1,740
46,598
552
8,382
3,085
215,212
—
—
—
172,613
3,085
215,212
Yen (millions)
As of and for the year ended March 31, 2014
I Net sales and
operating income
Sales:
(1) External customers
(2) Intersegment
Net sales
Operating costs
Operating income
II Assets, depreciation
and amortization,
loss on impairment of
long-lived assets, and
capital expenditures
Assets
Depreciation and
amortization
Loss on impairment of
long-lived assets
Capital expenditures
Energy and
Electric Systems
Industrial
Automation
Systems
Information and
Communication
Systems
Electronic
Devices
Home
Appliances
Others
Subtotal
Eliminations
and other
Total
¥1,171,292
8,801
1,180,093
1,103,769
¥ 76,324
¥1,089,109
9,687
1,098,796
1,000,717
¥ 98,079
¥513,712
34,570
548,282
542,753
¥ 5,529
¥174,082
20,576
194,658
184,608
¥ 10,050
¥927,868
16,483
944,351
891,473
¥ 52,878
¥178,296
497,738
676,034
656,233
¥ 19,801
¥4,054,359
587,855
4,642,214
4,379,553
¥ 262,661
¥ — ¥4,054,359
—
4,054,359
3,819,187
¥ 235,172
(587,855)
(587,855)
(560,366)
¥ (27,489)
¥1,161,790
¥932,857
¥399,215
¥172,925
¥706,833
¥242,496
¥3,616,116
¥ (3,150)
¥3,612,966
27,852
52,381
21,289
11,638
28,748
6,000
147,908
—
32,639
—
63,660
—
22,172
115
10,405
1,217
30,334
2,459
8,490
3,791
167,700
—
—
—
147,908
3,791
167,700
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 71
As of and for the year ended March 31, 2016
U.S. dollars (thousands)
Energy and
Electric Systems
Industrial
Automation
Systems
Information and
Communication
Systems
Electronic
Devices
Home
Appliances
Others
Subtotal
Eliminations
and other
Total
I Net sales and
operating income
Sales:
(1) External customers
(2) Intersegment
Net sales
Operating costs
Operating income
II Assets, depreciation
and amortization,
loss on impairment of
long-lived assets, and
capital expenditures
Assets
Depreciation and
amortization
Loss on impairment of
long-lived assets
Capital expenditures
$11,106,743 $11,582,089
116,469
11,698,558
10,290,062
$ 445,504 $ 1,408,496
84,443
11,191,186
10,745,682
$4,532,354 $1,598,389
274,000
1,872,389
1,723,097
$ 132,735 $ 149,292
433,301
4,965,655
4,832,920
$8,532,496 $1,536,009 $38,888,080 $ — $38,888,080
5,793,779
—
38,888,080
44,681,859
36,222,841
41,771,708
$ 565,097 $ 209,027 $ 2,910,151 $ (244,912) $ 2,665,239
(5,793,779)
(5,793,779)
(5,548,867)
4,727,230
6,263,239
6,054,212
158,336
8,690,832
8,125,735
$11,629,956 $ 9,305,407
$3,463,035 $1,440,460
$7,568,505 $2,168,717 $35,576,080 $ 352,601
$35,928,681
261,584
524,566
167,451
154,593
289,779
58,514
1,456,487
21,487
372,009
—
625,460
21,398
203,133
15,213
157,451
13,398
357,336
3,566
45,363
75,062
1,760,752
—
—
—
1,456,487
75,062
1,760,752
Notes: 1 The amount of unallocatable R&D expenditure included in “Eliminations and other” on “Operating costs” for the years ended March 31, 2016, 2015 and 2014
are ¥27,675 million ($244,912 thousand), ¥27,961 million and ¥27,489 million, respectively.
2 The amount of company-wide shared assets included in «Eliminations and other» on «Assets» for the years ended March 31, 2016, 2015 and 2014 are
¥266,378 million ($2,357,327 thousand), ¥309,521 million and ¥197,227 million, respectively, and those amounts are mainly the Company’s deposit in bank.
Geographical Information
Sales to external customers by the location of customers, and long-lived assets by the location of the Company and its subsidiar-
ies as of and for the years ended March 31, 2016, 2015 and 2014 are as follows:
As of and for the year ended March 31, 2016
Sales to external customers
% of total net sales
Long-lived assets
Japan
¥2,521,194
57.4%
546,879
North
America
¥447,578
10.2%
54,326
Asia
(excluding
Japan)
¥963,684
21.9%
137,704
Europe
¥369,978
8.4%
68,623
Others
¥91,919
2.1%
2,416
Overseas total
¥1,873,159
42.6%
263,069
Overseas
As of and for the year ended March 31, 2015
Sales to external customers
% of total net sales
Long-lived assets
Japan
¥2,512,357
58.1%
542,524
North
America
¥398,501
Asia
(excluding
Japan)
¥959,540
9.2%
22.2%
55,757
144,669
Europe
¥360,668
8.4%
24,391
Others
¥91,975
2.1%
3,611
Overseas total
¥1,810,684
41.9%
228,428
Overseas
As of and for the year ended March 31, 2014
Sales to external customers
% of total net sales
Long-lived assets
Japan
¥2,480,369
61.2%
534,521
North
America
¥330,861
Asia
(excluding
Japan)
¥811,081
8.2%
20.0%
39,831
109,774
Europe
¥340,611
8.4%
17,426
Others
¥91,437
2.2%
3,742
Overseas total
¥1,573,990
38.8%
170,773
Overseas
Yen (millions)
Consolidated
total
¥4,394,353
100.0%
809,948
Yen (millions)
Consolidated
total
¥4,323,041
100.0%
770,952
Yen (millions)
Consolidated
total
¥4,054,359
100.0%
705,294
As of and for the year ended March 31, 2016
U.S. dollars (thousands)
Overseas
Sales to external customers
% of total net sales
Long-lived assets
Japan
$22,311,451
North
America
$3,960,867
Asia
(excluding
Japan)
$8,528,177
Europe
$3,274,142
Others
$813,443
Overseas total
$16,576,629
Consolidated
total
$38,888,080
57.4%
10.2%
21.9%
8.4%
2.1%
42.6%
100.0%
4,839,637
480,761
1,218,619
607,283
21,381
2,328,044
7,167,681
Notes: 1 The major countries and regions included in each segments are as follows:
(1) North America : United States, Canada, and Mexico
(2) Asia (excluding Japan) : China, South Korea, Thailand, Malaysia, Singapore, Indonesia, and India
(3) Europe : United Kingdom, France, Germany, the Netherlands, Spain, Italy, and Czech
2 Long-lived assets consist of property, plant and equipment, intangible assets, and others.
72 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
In addition to the disclosure requirement of FASB ASC Topic 280 “Segment Reporting”, the Company discloses the following
information as supplement.
Geographical Information Based on the Location of the Company and Its Subsidiaries
As of and for the year ended March 31, 2016
Yen (millions)
Japan
North
America
Asia
(excluding
Japan)
Europe
Others
Subtotal
Eliminations
and other
Total
I Net sales and
operating income
Sales:
(1) External customers
(2) Intersegment
Net sales
Operating costs
Operating income
II Assets
¥2,786,357
777,173
3,563,530
3,390,147
¥ 173,383
¥2,743,024
¥423,958
22,977
446,935
437,514
¥ 9,421
¥296,077
¥ 759,765
294,798
1,054,563
963,557
¥ 91,006
¥ 835,934
¥374,184
13,444
387,628
372,822
¥ 14,806
¥311,829
¥50,089
171
50,260
49,356
¥ 904
¥36,924
¥4,394,353
1,108,563
5,502,916
5,213,396
¥ 289,520
¥4,223,788
¥ —
(1,108,563)
(1,108,563)
(1,120,215)
¥ 11,652
¥ (163,847)
As of and for the year ended March 31, 2015
¥4,394,353
—
4,394,353
4,093,181
¥ 301,172
¥4,059,941
Yen (millions)
Japan
North
America
Asia
(excluding
Japan)
Europe
Others
Subtotal
Eliminations
and other
Total
I Net sales and
operating income
Sales:
(1) External customers
(2) Intersegment
Net sales
Operating costs
Operating income
II Assets
¥2,782,686
796,274
3,578,960
3,352,761
¥ 226,199
¥2,809,868
¥364,686
23,335
388,021
382,843
¥ 5,178
¥304,311
¥ 755,081
292,677
1,047,758
965,339
¥ 82,419
¥ 872,163
¥371,235
12,730
383,965
372,162
¥ 11,803
¥248,599
¥49,353
142
49,495
49,093
¥ 402
¥45,607
¥4,323,041
1,125,158
5,448,199
5,122,198
¥ 326,001
¥4,280,548
¥ —
(1,125,158)
(1,125,158)
(1,116,761)
¥ (8,397)
¥ (221,097)
As of and for the year ended March 31, 2014
¥4,323,041
—
4,323,041
4,005,437
¥ 317,604
¥4,059,451
Yen (millions)
I Net sales and
operating income
Sales:
(1) External customers
(2) Intersegment
Net sales
Operating costs
Operating income
II Assets
Japan
North
America
Asia
(excluding
Japan)
Europe
Others
Subtotal
Eliminations
and other
Total
¥2,719,567
643,287
3,362,854
3,185,539
¥ 177,315
¥2,637,710
¥306,537
18,687
325,224
323,545
¥ 1,679
¥254,978
¥638,518
248,504
887,022
827,999
¥ 59,023
¥673,309
¥342,072
10,878
352,950
348,182
¥ 4,768
¥233,252
¥47,665
159
47,824
46,089
¥ 1,735
¥39,884
¥4,054,359
921,515
4,975,874
4,731,354
¥ 244,520
¥3,839,133
¥ — ¥4,054,359
—
4,054,359
3,819,187
¥ 235,172
¥3,612,966
(921,515)
(921,515)
(912,167)
¥ (9,348)
¥(226,167)
As of and for the year ended March 31, 2016
Japan
North
America
Asia
(excluding
Japan)
Europe
Others
Subtotal
U.S. dollars (thousands)
Eliminations
and other
Total
I Net sales and
operating income
Sales:
(1) External customers
(2) Intersegment
Net sales
Operating costs
Operating income
II Assets
6,877,637
31,535,664
30,001,301
$24,658,027 $3,751,841 $6,723,584 $3,311,363 $443,265 $38,888,080 $ — $38,888,080
(9,810,292)
118,973
—
(9,810,292)
3,430,336
38,888,080
(9,913,407)
3,299,310
36,222,841
$ 2,665,239
$ 1,534,363 $ 83,372 $ 805,363 $ 131,026 $ 8,000 $ 2,562,124 $ 103,115
$24,274,549 $2,620,150 $7,397,646 $2,759,548 $326,761 $37,378,654 $(1,449,973) $35,928,681
9,810,292
48,698,372
46,136,248
2,608,832
9,332,416
8,527,053
203,336
3,955,177
3,871,805
1,514
444,779
436,779
Notes: 1 The Company has identified 5 location segments based on geographical proximity, similarity in market, and interconnectedness within business activities.
2 The major countries and regions included in each segments are as follows:
(1) North America : United States, Canada, and Mexico
(2) Asia (excluding Japan) : China, South Korea, Thailand, Malaysia, Singapore, Indonesia, and India
(3) Europe : United Kingdom, France, Germany, the Netherlands, Spain, Italy, and Czech
3 The amount of company-wide shared assets included in “Eliminations and other” on “Assets” for the years ended March 31, 2016, 2015 and 2014 are
¥330,357 million ($2,923,513 thousand), ¥309,521 million and ¥197,227 million, respectively, and those amounts are mainly the Company’s deposit in bank
and goodwill.
(25) SUBSEQUENT EVENT
On June 29, 2016, the date the consolidated financial statements were issued, there are no incidence of subsequent events that
would have material effects on the Company’s consolidated financial position and results of operations.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 73
Independent Auditors’ Report
74 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016
Corporate Data / Shareholder Information (As of March 31, 2016)
Corporate Data
Mitsubishi Electric Corporation
Tokyo Building, 2-7-3, Marunouchi,
Chiyoda-ku, Tokyo 100-8310, Japan
Tel: +81(3)3218-2111
Established: January 15, 1921
Paid-in Capital: ¥175,820 million
Shares issued: 2,147,201,551 shares
Employees: 135,160
Major Shareholders
The Master Trust Bank of Japan, Ltd. (Trust Account)
State Street Bank and Trust Company
Japan Trustee Services Bank, Ltd. (Trust Account)
Meiji Yasuda Life Insurance Company
Nippon Life Insurance Company
Mitsubishi Electric Group Employees Shareholding Union
JP Morgan Chase Bank 385632
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Japan Trustee Services Bank, Ltd. (Trust Account 4)
The Bank of New York Mellon SA/NV 10
Distribution of Shareholders
Individuals and Others 13.7%
Annual Meeting
The annual meeting of shareholders of the Corporation is regularly
held in June each year. Additionally, special shareholders meetings
may be held as necessary.
Stock Exchange Listings
Japan: Tokyo
Europe: London
Number of Shares
(thousands)
Percentage of
Ownership
138,061
108,266
106,124
81,862
61,639
43,602
41,759
36,822
35,595
32,515
6.4%
5.0%
4.9%
3.8%
2.9%
2.0%
1.9%
1.7%
1.7%
1.5%
Foreign Corporations
36.2%
Financial Institutions 41.7%
Other Corporations
6.3%
Traders of
Financial Instruments
2.1%
Stock Price (Yen)
2,000
1,600
1,200
800
400
0
’13/4
Mitsubishi Electric’s Stock Price
Nikkei Stock Average
’14/4
’15/4
The Nikkei Stock Average is based on information copyrighted by Nihon Keizai Shimbun, Inc.
20,000
15,000
10,000
5,000
’16/4
Nikkei Stock Average
(Yen)
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2016 75
Please address inquiries for further information to:
Mitsubishi Electric Corporation, Corporate Finance Div.
Tokyo Building, 2-7-3, Marunouchi, Chiyoda-ku, Tokyo 100-8310, Japan
Phone: 81-3-3218-2391
X-X01-6-C9834-A HQ 1607〈IP〉