Plain-text annual report
Contents
02
03
04
06
08
To Our Shareholders and
Research and Development /
Investors
Intellectual Property
Financial Highlights
Corporate Social Responsibility
Corporate Strategy
Corporate Governance
At a Glance
Fiscal 2017 Topics
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
22
23
24
25
75
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.
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.
Contents
02
03
04
06
08
To Our Shareholders and
Investors
Financial Highlights
Corporate Strategy
At a Glance
Fiscal 2017 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
22
23
24
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
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 01
Looking back on the economic situation during the fiscal year
Toward securing these fiscal 2021 growth targets and sus-
ending March 31, 2017 (hereinafter, ”fiscal 2017”), the U.S.
tained business expansion, the Mitsubishi Electric Group is accel-
economy experienced steady expansion and Japan and Europe
erating and strengthening its initiatives to create additional value
saw moderate recovery, while the slowdown in the Chinese econ-
through technology and business synergies.
omy eased somewhat. Turning to movements in foreign currency
Based on our Corporate Mission and Seven Guiding Principles,
exchange rates, although the yen strengthened compared to the
we of the Mitsubishi Electric Group position corporate social
previous fiscal year, there was depreciation of the yen following
responsibility (CSR) initiatives as our main pillar of corporate man-
the U.S. presidential election in November.
agement. Accordingly, the entire Group is committed to providing
Under these circumstances, the Mitsubishi Electric Group
products, systems and services on a worldwide basis while being
placed greater emphasis than ever before on promoting growth
mindful of the challenges that our society now faces — particularly
strategies rooted in its competitive advantages, as well as on ini-
environmental issues and resource and energy issues. In this way,
tiatives to boost its competitiveness and strengthen its manage-
we will become a global, leading green company capable of con-
ment structure.
tributing to the realization of a prosperous society.
As a result, the Mitsubishi Electric Group recorded consolidated
As we resolutely advance forward to achieve our goals, we ask
net sales of ¥4,238.6 billion in the fiscal year ending March 31,
for your continued support.
2017 — a decrease of 4% compared to the previous fiscal year.
Operating income decreased 10% year-on-year to ¥270.1 billion,
for a Group operating income ratio of 6.4%. 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 accor-
dance 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.
02 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
July 2017
President & CEO Masaki Sakuyama
Corporate MissionSeven Guiding Principles Performance for the Year Ended March 31, 2017
Years ended March 31
2017
2016
2015
Yen
(millions)
U.S. dollars
(thousands)
2017
Net sales
Operating income
Net income attributable to Mitsubishi Electric Corp.
Total assets
Interest-bearing debt
Mitsubishi Electric Corp. shareholders’ equity
Capital expenditure (Based on the recognized value of
property, plant and equipment)
R&D expenditures
¥4,238,666
¥4,394,353
¥4,323,041
$37,845,232
270,104
210,493
4,180,024
352,124
2,039,627
175,542
201,330
301,172
228,494
4,059,941
404,039
1,838,773
177,801
202,922
317,604
234,694
4,059,451
381,994
1,842,203
194,458
195,314
2,411,643
1,879,402
37,321,643
3,143,964
18,210,955
1,567,339
1,797,589
Yen
U.S. dollars
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
¥98.07
¥106.43
¥109.32
—
27
—
27
—
27
%
6.4%
6.9%
7.3%
10.9
8.4
12.4
10.0
13.9
9.4
$0.876
—
0.241
—
—
—
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 ¥112=U.S.$1, the approximate rate on the Tokyo Foreign Exchange Market on March 31, 2017.
Net Sales Breakdown by Business Segment
Others
Net sales
14.6%
¥713,603 million
Home Appliances 20.5%
Net sales ¥1,004,415 million
Electronic Devices 3.8%
¥186,554 million
Net sales
Energy and Electric
Systems
Net sales
25.1%
¥1,227,906 million
Industrial Automation
Systems
Net sales
26.8%
¥1,310,136 million
Information and
Communication Systems
Net sales
9.2%
¥447,754 million
Note: Inter-segment sales are included in the amounts of the diagram above.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 03
Management Philosophy and Policy
Embodiment of the Corporate Mission
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
Initiatives of Mitsubishi Electric Group
Global Development of Products, Systems, and Services
Make Strong Businesses Stronger
Technology Synergies/
Business Synergies
Realize a Sustainable Society
Provide Safety, Security,
and Comfort
Embodiment of the Corporate Mission in the
Context of the Current Environment
Growth Targets to be Achieved by FY2021
Net Sales 5 trillion yen or more
OPM 8% or more
“Global, Leading Green Company”
Contribute to the realization
of a prosperous society
Management Targets
Management Policy
V 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
continuously and stably to achieve the following management
targets: secure an ROE of 10% or more, and secure an interest-
bearing debt of 15% or less of total assets.
In fiscal 2017, the Mitsubishi Electric Group achieved consoli-
dated net sales of ¥4,238.6 billion, and an operating income of
¥270.1 billion. In addition, the Group continued to achieve its
management targets for ROE of 10% or more and an interest-
bearing debt of 15% or less of total assets, recording figures of
10.9% and 8.4% respectively.
Growth Targets to be Achieved by Fiscal 2021
Net sales
Operating income ratio
¥5.0 trillion or more 8% or more
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
V Realizing Growth through Value Creation with
Management Targets to be Continuously and Stably Achieved
Growth Drivers
ROE
Ratio of interest-bearing
debt to total assets
10% or more
15% or less
04 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
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
materials procurement, production, quality assurance, sales and
The Mitsubishi Electric Group has positioned Corporate Social Responsibility (CSR) as a pillar of its corporate management, based on its Corporate Mission and Seven Guiding Principles. Accordingly, the Group has made committed efforts to become a corporation whose efforts are appreciated through its initia-tive toward solving social issues. Or in other words, a corpora-tion that is trusted by its stakeholders, including its society, customers, shareholders, and employees as a whole, and that earns their satisfaction through its business practices. Since fiscal 2002, the Group has adhered to the management policy of maintaining balanced management initiatives based on three perspectives: growth, profitability and efficiency, and soundness. Through these perspectives it has pursued the establishment of a sound foundation to its management and sustainable growth. Based on this policy, the Group has taken on the challenge of resolving environmental issues, resource and energy issues, and other social issues we face today on a global scale through its products, systems and services. In doing so, it aims to become a ”global leading green company” contributing to the realization of a prosperous society that simultaneously achieves ”sustainability” and ”safety, security and comfort”, as it pursues sustain-able development of the entire Group and strives to further enhance its corporate value. As for corporate ethics and compliance, the Group will continue to ensure strict adherence to its compliance policy and strengthen 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 meet 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
Services
Open & Global Innovation Enhance technological development capabilities through joint R&D initiatives
Universities
Corporations
Research and Development Agency
Government
Standardization Organizations
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 into markets worldwide, ranging from Japan, North
America, Europe, and China to newly emerging markets, includ-
ing those elsewhere in Asia. By satisfying the needs of each mar-
ket, the Group will continue to provide and create value for its
customers, and thereby secure sustainable growth going forward.
V Additional Value Creation through Technology
Synergies and Business Synergies
With the goal of securing its fiscal 2021 growth targets and sus-
taining its business expansion thereafter, the Mitsubishi Electric
Group is accelerating and strengthening its initiatives to create
additional value by combining and coordinating a wide range of
technologies and businesses with each other, while enhancing
each product, system and service.
Specifically, the Group seeks to improve the performance and
reliability of every product and system it offers by creating tech-
nology synergies through novel combinations of its strong tech-
nology assets, and business synergies through the coordination
of its diverse business activities. At the same time, the Group will
improve its ability to respond to its customers' business challeng-
es and needs by further accelerating combination of its technolo-
gies, products, systems, and service. Through these efforts, the
Group intends to improve its profits by improving its reputation
with its customers in existing markets and developing new busi-
nesses and markets.
V Increasing the Allocation of Resources to Steps Aimed
at Strengthening Competitiveness
To achieve greater business competitiveness, the Mitsubishi
Electric Group will continue to allocate a high level of investment
resources, including research and development and capital, to
those businesses 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
volatility, with the aim of securing returns on its investments. At the
same time, the Group will review and refresh its business portfolio
to reallocate its management resources to areas that show growth.
Moreover, the Group will strengthen this portfolio by continuously
creating new strong businesses capable of driving future growth.
In addition, the Group is committed to securing a more robust
technological platform through forward-looking R&D that will, in
turn, ensure sustainable growth from fiscal 2021 onward.
Additionally, aiming to augment its growth, the Mitsubishi
Electric Group will actively pursue collaborative ties and M&As with
the following three perspectives in mind: expanding its business by
supplementing product groups and technology fields in which the
Group is lacking; securing sales and service networks when advanc-
ing into new regions and markets; and reaching new customer
demographics in order to bolster the Group's business platform.
Building Robust Management Foundation
To strengthen its management foundation, the Mitsubishi Electric
Group continuously strives to improve 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 with the aim
of 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 all Group operations.
Looking ahead, the Mitsubishi Electric Group will continue to focus
on generating stable cash flows, actively invest in growth fields,
maintain well-balanced shareholder returns commensurate with
profit growth, and diligently work 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 2017 05
Net sales
Yen (billions)
1,400
1,200
1,000
800
600
400
200
0
1,180
1,058
1,228
1,264
1,227
13
14
15
16
17
(Years ended March 31)
Net sales
Yen (billions)
1,400
1,200
1,000
800
600
400
200
0
1,282
1,321
1,310
1,098
927
13
14
15
16
17
(Years ended March 31)
Net sales
Yen (billions)
1,400
1,200
1,000
800
600
400
200
0
522
548
559
561
447
13
14
15
16
17
(Years ended March 31)
Operating income
Operating income
Operating income
Yen (billions)
160
140
120
100
80
60
40
20
0
-20
85
76
72
50
44
13
14
15
16
17
(Years ended March 31)
Yen (billions)
160
140
120
100
80
60
40
20
0
-20
159
145
140
98
60
13
14
15
16
17
(Years ended March 31)
Yen (billions)
160
140
120
100
80
60
40
20
0
-20
1
13
5
14
18
15
14
12
16
17
(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,
network camera systems, 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 2017 Topics
• Established Mitsubishi Electric Turkey Klima
Sistemleri Üretim Anonim ¸Sirketi (Mitsubishi
Electric Air Conditioning Systems Manufacturing
Turkey Joint Stock Company), a new subsidiary
charged with the development and manufacture
of room air conditioners, in the Republic of Turkey.
• Mitsubishi Electric Australia as part of the consor-
tium RailConnect NSW, has been awarded the
contract to deliver and maintain Transport for
NSW’s New Intercity Fleet (512 cars).
• KIRIGAMINE FL series room air conditioners and a
robot for replacing segment mirrors in the Next-
Generation Thirty Meter Telescope (TMT®) were
included in the
Good Design Best
100 list, which is
under the admin-
istration of the GOOD DESIGN
AWARD 2016 program spon-
sored by the Japan Institute of
Design Promotion.
2016
• The “D-SMiree” was identified as the overarching
brand name for marketing Mitsubishi Electric’s
smart power distribution network systems designed
for medium- and low-voltage direct current
(1,500V DC and below) to help promote energy-
saving initiatives undertaken at data centers,
buildings, factories, and railway stations, with the
D-SMiree Development and Demonstration Facility
initiating its operations at the
Company’s Power Distribution
Systems Center in Marugame,
Kagawa Prefecture.
• Launched the production of
• With world-leading
elevators in India by bringing a new factory on
line at Mitsubishi Elevator India Private Limited on
September 15, 2016.
observational capacity
attributable to cutting-
edge technologies,
the Himawari-9, a
geostationary meteo-
rological satellite
designed and manu-
factured by Mitsubishi
Electric, was success-
fully launched.
06 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
Energy and Electric SystemsIndustrial Automation SystemsInformation and Communication Systems Net sales
Yen (billions)
1,400
1,200
1,000
800
600
400
200
0
164
194
238
211
186
13
14
15
16
17
(Years ended March 31)
Net sales
Yen (billions)
1,400
1,200
1,000
800
600
400
200
0
944
944
982
1,004
821
13
14
15
16
17
(Years ended March 31)
Net sales
Yen (billions)
1,400
1,200
1,000
800
600
400
200
0
590
676
740
707
713
13
14
15
16
17
(Years ended March 31)
Operating income (loss)
Operating income
Operating income
Yen (billions)
160
140
120
100
80
60
40
20
0
-20
-5
13
10
14
30
15
16
8
16
17
(Years ended March 31)
Yen (billions)
160
140
120
100
80
60
40
20
0
-20
52
54
63
69
19
13
14
15
16
17
(Years ended March 31)
Yen (billions)
160
140
120
100
80
60
40
20
0
-20
18
19
23
23
23
13
14
15
16
17
(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
Room air conditioners, package air conditioners,
chillers, showcases, compressors, refrigeration
units, air-to-water heat pump boilers, ventilators,
photovoltaic systems, hot water supply systems,
IH cooking heaters, LED lamps, fluorescent lamps,
indoor lighting, LCD televisions, refrigerators,
electric fans, dehumidifiers, air purifiers, cleaners,
jar rice cookers, microwave ovens, and others
Procurement, logistics, real estate, advertising,
finance, and other services
• Delivered the world’s fastest elevator*, the world’s
tallest elevator*, and the world’s fastest double-
deck elevator* to Shanghai Tower, the tallest
building in China (632m high).
• Received an order from SOGO Hong Kong Co. Ltd.
for the installation of a large Diamond VisionTM
screen on the outer facade of SOGO Department
Store in Causeway Bay.
• Mitsubishi Electric Automation Manufacturing
(Changshu) Co., Ltd., a subsidiary that produces FA
equipment in Jiangsu Province, China, followed on
the completion of its second factory’s construction
on March 10, 2017 with the launch of factory
operations
in April.
* Among elevators
in operation as of
December 8, 2016
2016
2017
• Selected as an “A-List Company” in four
• Introduced a new FA-IT open platform aimed at
• The Mitsubishi Electric SOCIO-ROOTS Fund
categories—CDP Climate, CDP Water, CDP Supplier
Climate, and CDP Supplier Water—by the CDP, an
international
NGO, under a
program aimed
at evaluating
corporations’
environmental
initiatives.
helping users employ edge computing and realize
smarter manufacturing empowered by the IoT.
matching-gift program marked its 25th anniversary
in April 2017, with a total of more than ¥1,200
million being donated to approximately 1,900
beneficiaries all over Japan.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 07
Electronic DevicesHome AppliancesOthers 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
ZOZOMARINE STADIUM
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 ZOZOMARINE STADIUM, 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.
NEXIEZ Machine-room-less Elevators
Compact, lightweight, and energy-saving, NEXIEZ machine-room-
less elevators are the global flagship product. They are widely
used throughout the world, mainly in low- to mid-rise buildings.
Models designed with various functions and features for specific
regions are also available to meet the preferences and customer
needs of each region.
Series S Escalators
The S-Series escalators offer enhanced safety through several
features that ease stepping on/off and help prevent clothing
from getting caught, so that passengers of all ages, from small
children to the elderly, can use the escalators safely. They also
offer a higher level of energy conservation by providing
optional features such as VVVF inverters and LED lighting.
Environmentally friendly, people-friendly, and beautiful, the
S-Series show the future of escalators.
Net Sales Breakdown by Business Segment
25.1%
Net Sales
©CHIBA LOTTE MARINES
¥1,227.9billion
down 3% year on year
Operating Income
¥44.3billion
down ¥6.0 billion year on year
The social infrastructure systems business
saw an increase in orders compared to the
previous fiscal year due to increases in the
transportation systems and the public utility
systems businesses in Japan, while sales
decreased compared to the previous fiscal
year due to a decrease in the power systems
business inside and outside Japan. In addi-
tion, the stronger yen had the negative
influences.
The building systems business experi-
enced decreases in both orders and sales
compared to the previous fiscal year, due
primarily to negative influences caused by
the stronger yen, despite growth in the
renewal business in Japan, as well as the
installation business of new elevators and
escalators outside Japan.
As a result, total sales for this segment
decreased by 3% from the previous fiscal
year to ¥1,227.9 billion. Operating income
decreased by ¥6.0 billion from the previous
fiscal year to ¥44.3 billion due primarily to
the decrease in sales.
08 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
Energy and Electric Systems Net Sales Breakdown by Business Segment
26.8%
Net Sales
¥1,310.1billion
down 1% year on year
Operating Income
¥140.0billion
down ¥19.0 billion year on year
The factory automation systems business
saw an increase in orders compared to the
previous fiscal year due primarily to growth
in capital expenditures in the fields of
smartphones and electric cars in China and
organic light emitting diodes (OLED) mainly
in Korea, while sales remained unchanged
compared to the previous fiscal year due
primarily to negative influences caused by
the stronger yen.
The automotive equipment business saw
decreases in both orders and sales compared
to the previous fiscal year due primarily to
stagnation in light motor car sales in Japan
and the negative influences caused by the
stronger yen, despite a buoyancy in car sales
mainly in Europe.
As a result, total sales for this segment
decreased by 1% from the previous fiscal
year to ¥1,310.1 billion. Operating income
decreased by ¥19.0 billion from the previous
fiscal year to ¥140.0 billion due primarily to
the negative influence of the stronger yen.
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.
AC Servos
The MELSERVO Series enhance all aspects of production devices
and facilities. From rotary servo motors to linear servo motors
and direct drive motors, a wide range of products is available
to meet any number of applications and to significantly
improve the performance of all relevant devices.
Computerized Numerical Controllers—CNCs
A broad range of CNCs is available. Including, for example, the
M800/80 Series, which increases productivity and precision and
optimizes machine tool operation through an independently
developed dedicated CPU and abundant control functions.
It is also compatible with the various field networks that are
necessary for constructing automated systems.
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-MZ200 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 2017 09
Industrial Automation Systems 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. It meets the need for high-quality, low-cost
satellites with shortened delivery times. It has already been
adopted for use by Japan and other countries; ten satellites
currently in orbit use it. It will eventually be incorporated into
JAXA’s Engineering Test Satellite 9, which is being launched in
response to the need for high-throughput communications
satellites.
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.
Net Sales Breakdown by Business Segment
9.2%
Net Sales
¥447.7billion
down 20% year on year
Operating Income
¥12.7billion
down ¥2.2 billion year on year
The telecommunications equipment business
saw decreases in both orders and sales com-
pared to the previous fiscal year due primarily
to the sellout of an affiliated company in the
beginning of the fiscal year and decreased
sales of communications infrastructure
equipment.
The information systems and service
business saw a decrease in sales compared
to the previous fiscal year, mainly owing to a
decrease in the system integrations business.
The electronic systems business saw no
change in orders, while sales decreased
compared to the previous fiscal year due to
a decrease in large-scale projects in the
space systems business.
As a result, total sales for this segment
decreased by 20% from the previous fiscal
year to ¥447.7 billion. Operating income
decreased by ¥2.2 billion from the previous
fiscal year to ¥12.7 billion due primarily to
the decrease in sales.
10 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
Review of OperationsInformation and Communication Systems IPM G1 Series with 7th-generation IGBT
With the latest IGBT1 chips, the IPM2 G1 Series reduces the
size and power consumption of industrial equipment such as
general-purpose inverters, servo amplifiers, and elevators while
also providing higher reliability. A lineup of 52 products across
6 categories makes the G1 Series the best choice for a wide
range of applications and industrial equipment needs.
1 IGBT: Insulated Gate Bipolar Transistor
2 IPM: Intelligent Power Module
Super-mini Full SiC DIPIPM
The newly developed SiC1-MOSFET2 reduces power consumption
by approximately 75% compared to previous models3, which
means the Super-mini Full SiC DIPIPM4 TM offers the industry’s
lowest power consumption5, contributing to the increasing
year-round energy efficiency of energy-saving air conditioners.
1 SiC: Silicon Carbide
2 MOSFET: Metal Oxide Semiconductor Field Effect Transistor
3 Super-mini DIPIPM Ver. 6 Series (Si product) PSS15S92F6 (15A /600V)
4 DIPIPM: Dual-In-Line Package Intelligent Power Module
5 As of August 17, 2016, based on internal research
Ku-band GaN HEMT for Satellite Earth Stations
An industry-leading1 output power of 100W GaN2 HEMT3 has
been achieved by optimizing the transistor structure, reducing
the number of power amplifier components and allowing for
smaller earth stations. It offers a range of products that utilize
an existing power amplifier as a high-output driver stage that
are configurable with Mitsubishi Electric products to meet the
diverse needs of Ku band4 satellite earth stations.
1 As of September 27, 2016, based on internal research of GaN HEMT for Ku
band satellite earth stations
2 GaN: Gallium nitride
3 HEMT: High Electron Mobility Transistor
4 Ku band: Microwaves at frequencies between 12 GHz and 18 GHz
High-power 639-nm Red Laser Diode for Projectors
Featuring an optimized epitaxial structure and emitter size, the
high-power 639-nm red laser diode produces an industry-
leading1 continuous wave output of 2.1W and a high power
conversion efficiency of 41%2, aiding the commercialization of
large projectors that require high brightness.
1 As of December 14, 2016, based on internal research
2 At a case temperature of 25°C, continuous wave output of 2.1W
Net Sales Breakdown by Business Segment
3.8%
Net Sales
¥186.5billion
down 12% year on year
70W
100W
Operating Income
¥8.3billion
down ¥8.4 billion year on year
The electronic devices business saw an
increase in orders compared to the previous
fiscal year due to an increase in demand for
optical communication devices, while sales
decreased by 12% from the previous fiscal
year to ¥186.5 billion, due to a decrease in
demand for power modules and TFT-LCD
modules, along with the negative influences
caused by the stronger yen.
Operating income decreased by ¥8.4
billion compared to the previous fiscal year
to ¥8.3 billion due primarily to the decrease
in sales.
6.5-inch
VGA
TFT LCD Modules with Touch Panels for Industrial Use
(6.5-inch VGA, 8.4-inch SVGA/XGA, 10.6-inch WXGA)
These projected capacitive touch panels feature protective
glass as thick as 5 mm, support up to 10 simultaneous touch
inputs, and can be used even with thick, heat-resisting gloves
or when the screen is wet. They are ideal for outdoor applica-
tions that require impact resistance and water resistance.
10.6-inch
WXGA
Tough Series Color TFT LCD Modules for Industrial
Use (7.0-inch/8.0-inch WVGA)
These Tough Series modules feature vibration resistance
approximately seven times greater than that of conventional
modules (6.8 G), a wide operating temperature range (-40°C
to 85°C), and an ultra-wide viewing angle (170° from all
angles), in response to the trend toward their use in rugged
environments, such as in construction machinery, agricultural
machinery and machine tools, which require multi-purpose
high-quality displays.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 11
Review of OperationsElectronic Devices Net Sales Breakdown by Business Segment
20.5%
Net Sales
¥1,004.4billion
up ¥2% year on year
Operating Income
¥69.6billion
up ¥5.8 billion year on year
Sales of the home appliances business stood
at ¥1,004.4 billion, an increase of 2% com-
pared to the previous fiscal year, due to
increases in sales of air conditioners in the
European, Chinese and North American
markets and in sales of residential and
industrial air conditioners in Japan, despite
the negative influence of the stronger yen.
Operating income increased by ¥5.8
billion compared to the previous fiscal year
to ¥69.6 billion largely due to the increase
in sales.
Air Conditioning Systems
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.
Home 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 2017
Home AppliancesReview of Operations Research and Development
R&D Initiatives
The Mitsubishi Electric Group’s R&D network consists of the
equipment manufacturer that boasts a wide range of businesses
Advanced Technology R&D Center, Information Technology R&D
and technologies. By doing so, the Group will realize technological
Center, and Industrial Design Center in Japan as well as laborato-
and business synergies aimed at creating new value.
ries in the United States, Europe, and China. These centers operate
Promoting future-focused R&D that takes a long-term perspective,
under the umbrella of the Corporate Research and Development
the Group incorporates the “backcasting” planning method, which
Group working in collaboration with the development depart-
starts with defining a desired future and then working backward
ments of individual Mitsubishi Electric business groups.
to identify the technologies necessary to realize said future.
The Mitsubishi Electric Group adheres to a balanced R&D
At the same time, the Group is actively engaged in research
approach that embraces short-, medium-, and long-term per-
into fundamental technologies that support all of its products.
spectives. In addition to making growth drivers and other key
Furthermore, the Group is committed to promoting open
businesses even stronger, the Group is striving to better leverage
innovation in collaboration with universities and other external
its accumulated strengths as an innovative, diversified electrical
R&D institutions, thereby reaching a next growth stage.
R&D Achievements in Fiscal 2017
V Development of High-Speed Training Algorithm for
Deep Learning
Conventional method
Embedded systems
Mitsubishi Electric Corporation has developed a high-speed train-
a A dedicated server
b Inference
ing algorithm for deep learning. This algorithm drastically reduces
for learning
pre-training time and memory requirements necessary for identi-
fication and prediction within embedded systems such as vehi-
cles, industrial robots, and other machinery.
Installing this algorithm into Mitsubishi Electric’s Compact AI*
enables embedded systems to learn by themselves and realizes
highly precise identification and prediction according to the oper-
ating environment. Since servers and network facilities will no
Inputs
to devices
Newly developed method
a Learning b Inference
longer be required for this system, it can reduce the cost for
Requires no server
installing AI, thereby enabling AI to be used in more diverse fields.
* Artificial intelligence that can be installed in embedded systems by using Mitsubishi
Electric’s proprietary technology to reduce computational volume.
Enables embedded systems to perform rapid learning
and precise identification and prediction
V Development of World's Smallest SiC Inverter for HEVs
Mitsubishi Electric Corporation has developed an ultra-compact sil-
icon carbide (SiC) inverter for hybrid electrical vehicles (HEVs) with
the world’s smallest volume* at just five liters, using full-SiC power
semiconductor modules and a superior heat dissipation structure.
Demand for EVs and HEVs has increased in recent years as fuel
efficiency regulations have grown increasingly stringent in the
automotive market. EVs and HEVs, however, require space for
installing electrical apparatus for the purpose of electric conver-
sion, thus inverters must be miniaturized in order to secure the
amount of on-board space.
This development will contribute to an expanded on-board
space and more freedom for inverter placement, as well as
improved fuel economy of EVs and HEVs.
* As of March 9, 2017. World’s smallest SiC inverter with a two-inverter and
one-converter unit configuration compatible with two-motor HEVs (survey conducted
by Mitsubishi Electric Corporation).
Helps EVs and HEVs secure more on-board space
and improve their fuel efficiency
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 13
V Success in the World’s First 3 Tesla Magnetic Resonance
Imaging with High-temperature Superconducting Coils*1
Mitsubishi Electric Corporation has succeeded in the world’s
first*2 3 tesla*3 Magnetic Resonance Imaging (MRI) with high-
temperature superconducting coils installed in a small model MRI.
The high-quality images made possible at this magnetic field
strength will contribute to earlier detection of illnesses.
High-temperature superconducting coils do not require cooling
with liquid helium, depletion of which has been a concern, and
are able to generate the same magnetic field with smaller coils
compared with conventional systems, which allows for the size of
electrical instruments to be reduced. Therefore, this technology is
expected to have applications in practice. Although advanced
design and manufacturing technology is required to make these
coils, Mitsubishi Electric Corporation has produced high-
temperature superconducting coils that can be installed in small
model MRIs by developing high-precision winding technology
necessary for coil production.
Mitsubishi Electric Corporation will proceed with research and
development aimed at practical application, with the goal of early
commercialization.
Intellectual Property
Inner diam-
eter of coil
320mm
Brain
Lung
Shaft length
of coil
450mm
Tongue
Heart
Digestive
tract
Greater magnetic field strength means higher resolution
and the improvement of diagnostic accuracy
*1 This new technology was the result of joint development with Kyoto University
and Tohoku University with the support of the Ministry of Economy, Trade and
Industry’s (METI) “Fundamental Technology Development for High Temperature
Superconducting Coils” and Japan Agency for Medical Research and
Development’s (AMED) “Project for Research and Development of Medical Devices
and Systems to Realize Future Medical Care: Research and Development of High
Stability Magnetic Field Coil System Foundation Technology.”
*2 As of May 24, 2016. World’s first for instruments equipped with high-temperature
superconducting coils (survey conducted by Mitsubishi Electric Corporation)
*3 Tesla: A unit representing magnetic field strength
Mitsubishi Electric Group’s Intellectual
Property Activities
and the IP divisions at the Works, R&D centers, and affiliated
companies. The activities of each IP division are carried out under
The Mitsubishi Electric Group recognizes that intellectual property
the executive officer in charge of IP at each location. The Head
(IP) rights represent a vital management resource essential to its
Office IP Division formulates strategies for the entire Group,
future and must be protected. Through integrating business,
promotes critical projects, coordinates interaction with external
R&D, and IP activities, the Group is proactively strengthening its
agencies including patent offices, and is in charge of IP public
global IP assets, which are closely linked to the Group’s business
relations activities. At the Works, R&D center, and affiliated com-
growth strategies and contribute to both business and society.
pany level, IP divisions promote individual strategies in line with
Structure of the Intellectual Property Division
the Group’s overall IP strategies. Through mutual collaboration,
these divisions work to link and fuse their activities in an effort to
The IP divisions of the Mitsubishi Electric Group include the Head
develop more effective initiatives.
Office IP Division, which is the direct responsibility of the president,
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
Business Strategy
IP Departments
Business Groups, Facilities, Affiliates
Development Strategy
R&D Centers
IP Departments
9,000
6,000
3,000
0
14 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
2014
2015
2016
2017
(FY)
(cid:31)(cid:31) USA (cid:31)(cid:31) Europe (cid:31)(cid:31) China (cid:31)(cid:31) Other
Research and Development / Intellectual Property Further Strengthening Global IP Capabilities
IP representative
Europe
Asia
Americas
Head Office
IP Division
Protecting products through IP rights
Acquiring international standard-related patents
Counterfeit product countermeasures
Global IP Strategy
The Mitsubishi Electric Group identifies critical IP-related themes
Activities Aimed at Preventing
Infringement of the Group’s IP Rights
based on its mainstay businesses and important R&D projects, and
The Mitsubishi Electric Group works diligently to prevent any
is accelerating the globalization of IP activities also by filing patents
infringement of its IP rights by other companies. In addition to
prior to undertaking business development in emerging countries
in-house activities, the Group places particular weight on collabo-
where an expansion of business opportunities is expected.
rating with industry organizations while approaching government
Furthermore, resident officers are assigned to Mitsubishi Electric
agencies and other entities in Japan and overseas as a part of a
sites in the United States, Europe, and China to take charge of IP
wide range of measures to prevent the counterfeiting of products.
activities and strengthen the IP capabilities of business offices,
R&D centers, and affiliated companies in each country. Through
Respecting the IP Rights of Others
these initiatives, we strive to create a robust global patent network.
The Mitsubishi Electric Group recognizes that the infringement of
IP Strategy for International Standardization
another company’s IP rights has the potential to significantly
impair its continued viability as a going concern. The resulting
In order to expand business in global markets, the Mitsubishi
potential impairments include being obliged to pay significant
Electric Group is actively promoting international standardization.
licensing fees, being forced to discontinue manufacturing of a
Activities to acquire patents that support international standards
certain product, or other related actions. To prevent the infringe-
(e.g., standard essential patents) are openly promoted. As the
ment of another company’s IP rights, the Group provides educa-
member of an organization in which patent pools for Digital
tion and training—centering on engineers and employees
Broadcasting, MPEG, HEVC and Blu-ray DiscTM* collectively control
responsible for IP affairs—to raise awareness and instill the
standard essential patents, the IP revenues obtained through the
utmost respect said rights. At the same time, the Group has put
organization are contributing to improvement and growth in
in place a set of rules to facilitate appropriate actions, such as
business earnings. The Group is also working to increase activities
surveying other companies’ patent rights at every stage from
for acquiring patents in competitive fields involving international
product development to sales, and ensuring strict adherence to
standards, and promoting IP activities that contribute to increasing
these rules.
product competitiveness and expanding market share.
*Blu-ray DiscTM is a trademark of the Blu-ray Disc Association.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 15
Research and Development / Intellectual Property The Mitsubishi Electric Group promotes its corporate social responsi-
bility (CSR) activities based on the conviction that all business activi-
ties 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 internal 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
products, systems, and services capable of resolving such prob-
lems on a global basis. In short, the Mitsubishi Electric Group
The Mitsubishi Electric Group’s commitment to CSR was first
intends to become a global, leading green company trusted by
articulated in the Keys to Management (in Japanese, Keiei no
the general public by helping to ensure the level of safety, securi-
Yotei), which was drawn up at the time of Mitsubishi Electric’s
ty, and comfort essential to the realization of a sustainable and
founding in 1921. The spirit of this document, which states the
prosperous society.
Group’s commitment to contribution in areas such as the pros-
perity of society, product quality, and customer satisfaction, lives
Philanthropic Activities
on today in its Corporate Mission and Seven Guiding Principles.
Philosophy and Policies on Philanthropic Activities
With these tenets as its core principles, the Group promotes vari-
The Mitsubishi Electric Group shares a common Philosophy and
ous initiatives in order to fulfill its corporate social responsibilities.
Policies based on its Corporate Mission and Seven Guiding
In recent years, the Group has adopted a more CSR-centric
Principles, and carries out a variety of activities accordingly.
management approach, redefining CSR as an integral component
Philosophy
of corporate management activities with a long-term arc of
As a corporate citizen committed to meeting societal needs and
execution. Putting this approach into practice, the Mitsubishi
expectations, the Mitsubishi Electric Group will make full use of
Electric Group has identified the challenges that society now faces
the resources it has at hand to contribute to creating an affluent
and, by referring to such resources as international standards, it
society in partnership with its employees.
has clarified what needs to be done by the Group as a global
Policies
company. Among items needing to be addressed, the Group has
• We shall carry out community-based activities in response to
prioritized the following CSR materialities, taking into account its
societal needs in the fields of social welfare and global environ-
corporate strategies and the expectations of its stakeholders.
mental conservation.
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
Based on a decision at the CSR Committee—chaired by an
executive officer in charge of general affairs—the Group started
to address these materialities in partnership with entities in the
supply chain, and it is now 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 com-
municate the environmental, social, and governance (ESG)
aspects of these initiatives to the general public.
Among the challenges society now faces, the Group focuses
on environmental, resource, and energy issues while delivering
16 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
• We shall contribute to developing the next generation through
activities that support the promotion of science and technology,
culture and arts, and sports.
A class aimed at helping children experience
the fun of science (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)
Corporate MissionSeven Guiding Principles
Foundations
activities in a systematic and definitive manner, the Group has
The Mitsubishi Electric America Foundation and Mitsubishi Electric
identified specific activity targets as a part of its latest medium-
Thai Foundation, both founded in 1991, also carry out various
term environmental plan, which has been renewed every three
activities in the spirit of the Mitsubishi Electric Group’s Philosophy
years since 1993. Currently, the Group is executing its 8th
and Policies. The Mitsubishi Electric America Foundation, with the
Environmental Plan, which covers fiscal 2016 through fiscal 2018.
cooperation of its branches in the United States, helps young
people with disabilities to become employed and participate
P Activity Items of the 8th Environmental Plan
more fully in society. The Mitsubishi Electric Thai Foundation, in
1. Initiatives aimed at realizing a low-carbon society
addition to providing scholarships to university students and sup-
Increase the level of contribution to society by reducing CO2.
porting a school lunch program for grade school students, has
Specifically, (1) reduce CO2 from production, and (2) reduce
been promoting employee-involved volunteer activities that sup-
CO2 from product usage.
port education and environmental protection.
2. Initiatives aimed at forming a low-carbon society
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
(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
(1) Improve the execution of quantitative assessment of environ-
Promoting 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
P 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 is
greenhouse gases other than CO2*1, activities that were previously
striving to fulfill its responsibilities to society from an environmental
undertaken on an individual basis, in order to comprehensively
perspective by developing and promoting the widespread use of
evaluate and manage the impact of greenhouse gases on the
products and services that boast outstanding resource and energy
goal of realizing a low-carbon society. The plan, ending in fiscal
efficiency across all business fields, and advancing efforts to reduce
2018, calls for the total of CO2 from energy sources and
the environmental burdens deriving from its business activities,
greenhouse gases other than CO2 to be kept below 1,370,000
which range 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
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 2017 17
Plan to Reduce CO2 Emissions from Production across the Mitsubishi Electric Group
Total Amount of CO2 Emissions (10,000 t-CO2)
264
7th Environmental Plan
8th Environmental Plan
300
250
200
150
100
50
0
96%
Reduction
90%
87%
86%
89%
120
119
124
128
143
27
134
26
137
22
24
28
92
26
93
29
95
104
116
108
115
146
118
42% reduction
154
30
124
(Base fiscal year)*2
2013
2014
2015
2016
2017
target
2017
result
2018
target
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 (Relative to the fiscal 2010 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 the emission of CO2 from energy sources,
be several dozen times the amount emitted during production.
the Mitsubishi Electric Group is introducing high-efficiency air
Therefore, the development and widespread use of highly
conditioners and other equipment while shifting to LED lighting.
energy-efficient products can contribute significantly to the
The Group is also striving to understand energy consumption at
reduction of CO2 emissions. Under the 8th Environmental Plan, the
the point of production. To eliminate waste, the Group is looking
Mitsubishi Electric Group is aiming for an average CO2 reduction
at improving heat loss while reducing standby power. Working to
ratio of 35% or more compared with fiscal 2001 for specific
reduce such greenhouse gases as SF6, HFC, and PFC, the Group is
products where the Group can take the initiative regarding design
shifting to the use of refrigerant gases with low global warming
and development and where the reduction of CO2 emissions
potential. Other ongoing initiatives include the building of a han-
during product use is deemed important from an environmental
dling scheme that extends from gas recovery through recycling to
perspective. The number of specified products in fiscal 2017 was
eventual destruction; efforts to reinforce countermeasures aimed at
106. The average rate of CO2 emissions reduction among these
preventing leaking; and the early introduction of treatment systems.
products was 35%. Based on this result, the Group is making
In fiscal 2017, the Mitsubishi Electric Group reduced its total
steady progress toward achieving its target. Looking ahead, the
annual greenhouse gas emissions to 1.34 million tons, a 90 thou-
Group will continue to promote improvements.
sand ton improvement on the target of 1.43 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.
P 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
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%
35%
30%
or
more
100
2001
(Base fiscal year)
2008
106 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 2017
Corporate Social Responsibility
Basic Corporate Governance Policy
Internal Control System
To realize sustained growth and increase corporate value, the
(A) For proper execution of duties by the Audit Committee, the
Mitsubishi Electric Group works to maintain the flexibility of its
committee’s independence is ensured such as by assigning
operations while promoting management transparency. These
dedicated employees to assist in its duties, and the expenses
endeavors are supported by an efficient corporate governance
and responsibilities incurred by the committee in the course
structure that clearly defines and reinforces the supervisory
of executing its duties are appropriately processed according
functions of management while ensuring that the Company is
to internal regulations.
responsive to the expectations of customers, shareholders, and all
A framework is also in place for reporting to the Audit
of its stakeholders.
• IR Library
Committee. The Internal Control Department keeps the Audit
Committee informed of information about Mitsubishi Electric
http://www.MitsubishiElectric.com/company/ir/library/
and affiliate companies, and an internal reporting system is
Corporate Management and Governance Structure
used to report that information to audit committee members.
Audit committee members attend executive officers’ meet-
Corporate Management Structure
ings and other such important conferences, and conduct
In June 2003, Mitsubishi Electric became a company with a com-
hearings and surveys of executive officers and the executive
mittee system. Key to this structure is the separation of superviso-
staff of Mitsubishi Electric offices and affiliated companies.
ry and executive functions; the Board of Directors plays a
It also receives regular reports from the accounting auditor
supervisory decision-making role and executive officers handle
and executive officer in charge of auditing, and discusses
the day-to-day running of the Company.
auditing policies and methods and the implementation status
The present Board is comprised of twelve members (five of
and results of audits.
whom are Outside Directors, one of whom is a woman), who
(B) Internal regulations and system are in place to ensure proper
objectively supervise and advise the Company’s management.
operations by the Mitsubishi Electric Group. Within this sys-
The Board of Directors has three internal bodies: the Audit,
tem, executive officers undertake their duties on their own
Nomination and Compensation committees. Each body has five
responsibility and hold executive officers’ meetings to deliber-
members, the majority of whom are outside directors. The Audit
ate on important matters.
Committee is supported by dedicated independent staff.
Executive officers themselves make periodic inspections of
A salient characteristic of Mitsubishi Electric’s management
the operational status of the system, and the Internal Control
structure is that the roles of Chairman of the Board, who heads
Department inspects the design and operation of the internal
the supervisory function, and the President & CEO, who is head of
control framework and regulations, and the status of internal
all executive officers, are clearly separated. Additionally, neither is
reporting system and then report the result to audit commit-
included among the members of the Nomination and Compensation
tee members.
Committees. The clear division of supervisory and executive functions
allows the Company to ensure effective corporate governance.
Corporate Governance Framework
Decision Making and Execution
Report
Executive Officers
President & CEO
Executive Vice Presidents
Senior Vice Presidents
Executive Officers
Business/Administration Divisions
General Shareholders’ Meeting
Report
Appointment
Appointment/Dismissal Supervision
Reporting to
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 2017 19
Furthermore, an internal auditor audits the operational sta-
As a result of these reviews, the Company’s practices in dele-
tus of the framework, and through an executive officer in
gating authority from the Board of Directors to executive officers
charge of auditing, regularly reports the results of such audits
were basically evaluated as valid, and the Board of Directors was
to the Audit Committee.
evaluated as serving its function, from the perspective of ensuring
the separation of supervisory and executive functions and secur-
Corporate Auditing Division and Audit Committee
ing flexibility of management. Nevertheless, the Company is work-
Acting independently, Mitsubishi Electric’s Corporate Auditing
ing to further enhance the timely and appropriate provision of
Division conducts internal audits of the Company from a fair and
management-related information to the Board of Directors itself in
impartial standpoint. In addition, the division’s activities are sup-
order to further improve its capacity to supervise management.
ported by auditors with profound knowledge of their particular
fields, assigned from certain business units.
Policies regarding decisions on compensation, etc.
The Audit Committee is made up of five directors, three of
Compensation scheme for Directors and Executive Officers
whom are outside directors. In accordance with the policies and
Policies regarding decisions on compensation, etc. will be made
assignments agreed to by the committee, the performances of
through resolutions by the Compensation Committee, the majority
directors and executive officers as well as affiliated companies
of which consists of Outside Directors. A summary of the policies
are audited.
is as follows.
The Corporate Auditing Division, through the executive officer
in charge of auditing, submits reports to the Audit Committee,
Compensation scheme for Directors
which holds periodic meetings to exchange information and dis-
1. Directors give advice to and supervise the Company’s manage-
cuss auditing policies. In addition, the Audit Committee discusses
ment from an objective point of view, and therefore, the com-
policies and methods of auditing with accounting auditors, who
pensation scheme for Directors is the payment of fixed-amount
furnish it with reports on the status and results of the audits of
compensation and the retirement benefit upon resignation.
the Company that they themselves conduct.
2. Directors will receive their compensation as a fixed amount, and
Providing Directors with Appropriate Information
at the Appropriate Time, and Conducting Reviews
of the Board with Analyses and Evaluations
the compensation to be paid will be set at a level considered
reasonable, while taking into account the contents of the
Directors’ duties and the Company’s conditions, etc.
3. Directors will receive the retirement benefit upon their resigna-
To strengthen the Board’s capacity to supervise Company’s man-
tion, and the retirement benefit to be paid will be set at a level
agement, the bureaus of the Board of Directors and each com-
decided on the basis of the monthly amount of compensation
mittee provide the directors with the information necessary for
and the number of service years, etc.
supervising management, in a timely and appropriate manner.
And, to further improve the Board of Directors’ capacity to super-
Compensation scheme for Executive Officers
vise management, venues have been established for supplying
1. The compensation scheme for the Executive Officers focuses
information to and exchanging views with outside directors, and
on incentives for the realization of management policies and
the Company is working to further enhance the provision of
the improvement of business performance, and performance-
management-related information to the Board of Directors itself.
based compensation will be paid in addition to the payment of
Additionally, in order to further enhance the functioning of the
fixed-amount compensation and the retirement benefit upon
Board of Directors, the Board meetings are reviewed on an annu-
resignation.
al basis, and analyses and evaluations are conducted in the fol-
2. Fixed-amount compensation will be set at a level considered
lowing areas.
reasonable taking into account the contents of the Executive
• Frequency, scheduling, and time spent on the meetings
Officers duties and the Company's conditions.
• The information supplied in relation to discussions at the
3. The level of performance-based compensation will be decided
meetings (quality and quantity) and the method of its provision
while taking into account the consolidated business performance
• Materials, details and methods of explanation, question-and-
and the performance of the business to which the respective
answer guidelines, time apportioned for each proposal on the
Executive Officer is assigned, etc. With the purposes of meshing
meetings
the interest of shareholders with the Executive Officers and
• Other mechanisms for improving the functioning of the Board
further raising management awareness that places importance
of Directors, etc.
on the interest of shareholders, and increasing the incentives
• Best practices for delegating authority from the Board of
for the improvement of business performance from the mid-
Directors to executive officers
and long-term perspectives, 50% of performance-based
20 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
Corporate Governance
compensation will be paid in the form of shares. The Company
sets a rule that, when the Executive Officers acquire the Company
Mitsubishi Electric Corporation nominates persons with experience
shares as a part of compensation, they are required to continue the
in company management in the business world, attorneys and
shareholding until 1 year has passed from resignation.
academics, among other specialists, who are appropriate to over-
4. The amount of the retirement benefit will be decided on the
see the Company’s business operations and not falling under any
basis of the monthly amount of compensation and the number
of the following cases, as candidates for Outside Directors.
of service years, etc.
Note that each of the following 1), 2), 4) and 5) includes a case
* For the amount of compensation given to directors and executive officers, please
refer to our financial statements. (Japanese only)
in any fiscal year during the past three fiscal years.
http://www.MitsubishiElectric.co.jp/ir/data/negotiable_securities/
1. Persons who serve as Executive Directors, Executive Officers,
Outside Directors
managers or other employees (hereinafter ”business execut-
ers”) at a company whose amount of transactions with the
Effective Utilization of Outside Directors
Company accounts for more than 2% of the consolidated
The Board of Directors comprises twelve members, five of whom
sales of the Company or the counterparty
are Outside Directors (one of whom is a woman), who objectively
2. Persons who serve as business executers at a company to
supervise and advise the Company’s management (composition
which the Company has borrowings that exceed 2% of the
ratio of outside directors: 42%).
consolidated total assets
Outside Directors receive reports about the activity status of
3. Persons who are related parties of the Company’s independent
internal auditors, the audit committee, accounting auditors, and
auditor
internal control departments via the Board of Directors, and pro-
4. Persons who receive more than ¥10 million of compensation
vide their impartial views regarding Mitsubishi Electric’s manage-
from the Company as specialists or consultants
ment from an objective perspective. By doing so, they bring
5. Persons who serve as Executive Officers (Directors, etc.) of an
greater transparency to the management framework and
organization to which the Company offers contribution that
strengthen the Board's function of supervising management.
exceeds ¥10 million and 2% of the total revenue of the
Criteria for Judgment of the Independence of Independent
6. Persons who are the Company’s major shareholders (holding
Outside Directors
more than 10% of voting rights) or who serve as their busi-
Outside Directors are expected to supervise management from a
ness executers
high-level perspective based on their abundant experience. Those
7. Persons who are related parties of a person or company that
who are comprehensively judged to possess the character, acumen,
have material conflict of interest with the Company
organization
and business and professional experience suited to fulfill that
role, and who satisfy the requirements of independent executives
specified by the Tokyo Stock Exchange and the requirements
specified in Mitsubishi Electric’s Guidelines on the Independence
of Outside Directors (see note at right) and thus possess no risk of
giving rise to any conflict of interest with the general shareholders
of the company, are selected as outside director candidates by the
Nominating Committee.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 21
Corporate Governance Directors (As of June 29, 2017)
Executive Officers (As of April 1, 2017)
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
Yutaka Ohashi
Mitoji Yabunaka ................ Member of the Nomination Committee,
Yutaka Ohashi ................... In charge of Corporate Strategic Planning,
Operations of Associated Companies and
Export Control
Takeshi Sugiyama .............. In charge of Living Environment &
Digital Media Equipment
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,
Member of the Compensation Committee,
Certified Public Accountant,
Registered Tax Accountant
Katsunori Nagayasu .......... Member of the Nomination Committee,
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.
Representative Executive Officers (As of April 1, 2017)
Masaki Sakuyama
Yutaka Ohashi
Takeshi Sugiyama
Isao Iguchi .......................... In charge of Automotive Equipment
Nobuyuki Okuma .............. In charge of Auditing, General Affairs,
Human Resources and Legal Affairs &
Compliance
Akihiro Matsuyama ........... In charge of Accounting and Finance
Takashi Sakamoto ............. In charge of Purchasing
Nobuyuki Abe .................... In charge of Building Systems
Yasuyuki Ito ....................... In charge of Energy & Industrial Systems
Executive Officers:
Nobushi Morooka ............. In charge of Government & External Relations,
Public Relations and Export Control
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 Public Utility Systems
Hisashi Kato ....................... In charge of Intellectual Property
Minoru Hagiwara .............. In charge of Advertising and
Domestic Marketing
Masamitsu Okamura ......... In charge of Electronic Systems
Masahiro Fujita .................. In charge of IT and Research & Development
Satoshi Matsushita ............ In charge of Global Strategic Planning &
Marketing
Hiroshi Onishi .................... In charge of Total Productivity Management &
Environmental Programs
Yoshikazu Miyata .............. In charge of Factory Automation Systems
22 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
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
Purchasing Div.
(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) 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) Energy & Industrial
Systems Group
(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.
Domestic Marketing Div.
Overseas Marketing Div.
Building Systems Field Operation Div.
Branch Offices
Inazawa Works
Electronic Systems Compliance Dept.
Planning & Administration Dept.
High-precision Positioning Systems 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.
Solution Business Strategy Div.
Industrial Products Marketing Div.
Industrial Automation Marketing Div.
Overseas Marketing 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
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 23
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.
Setsuyo Astec Corporation
Mitsubishi Electric Automotive America, Inc.
Ryowa Corporation
Mitsubishi Electric Thai Auto-Parts Co., Ltd.
Mitsubishi Electric Automotive (China) Co., Ltd.
Mitsubishi Electric Mechatronics
Engineering Corporation
Mitsubishi Electric Automotive de Mexico, S.A. de C.V.
Mitsubishi Electric Automation Manufacturing
(Changshu) Co., Ltd.
Meldas System Engineering Corporation
Mitsubishi Electric Mechatronics Software Corporation
Mitsubishi Electric Automation (Hong Kong) Ltd.
Mitsubishi Electric Dalian Industrial Products Co., Ltd.
Mitsubishi Electric Automation Korea Co., Ltd.
Shizuki Electric Co., Inc.
Nippon Injector Corporation
Shihlin Electric & Engineering Corporation
SETSUYO ENTERPRISE CO., LTD.
Information and
Communication
Systems
Mitsubishi Electric TOKKI Systems Corporation
Mitsubishi Electric Information Systems Corporation
Mitsubishi Precision Co., Ltd.
SPC Electronics Corporation
Seiryo Electric Co., Ltd.
Miyoshi Electronics Corporation
Mitsubishi Electric Information Network Corporation
Mitsubishi Space Software Co., Ltd.
Mitsubishi Electric Business Systems Co., Ltd.
Mitsubishi Electric Micro-Computer Application
Software Co., Ltd.
Electronic
Devices
Home Appliances
Others
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.
Mitsubishi Electric Hydronics & IT Cooling
Systems S.p.A.
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
Chiyoda Mitsubishi Electric Co., Ltd. and
other regional comprehensive sales
companies (9 companies)
Mitsubishi Electric Europe B.V.
Mitsubishi Electric US, Inc.
Mitsubishi Electric & Electronics
(Shanghai) Co., Ltd.
Mitsubishi Electric (H.K.) Ltd.
Mitsubishi Electric Taiwan Co., Ltd.
Mitsubishi Electric Asia Pte. Ltd.
Mitsubishi Electric Australia Pty. Ltd.
Ryoden Trading Co., Ltd.
Kanaden Corporation
Mansei 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.
24 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
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 2017 25
Mitsubishi Electric Corporation and Subsidiaries
Years ended March 31
2017
2016
2015
2014
Yen (millions)
2013
U.S. dollars
(thousands)
2017
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
¥4,238,666
¥4,394,353
¥4,323,041
¥4,054,359
¥3,567,184
$37,845,232
2,950,729
3,071,435
3,032,161
2,914,589
2,604,360
26,345,795
1,014,389
1,013,264
970,191
900,807
806,412
9,057,044
3,444
8,482
3,085
3,791
4,317
3,968,562
270,104
296,249
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
30,750
35,433,589
2,411,643
2,645,080
to Mitsubishi Electric Corp.
¥ 210,493
¥ 228,494
¥ 234,694
¥ 153,473
¥ 69,517
$ 1,879,402
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 expenditure
(Based on the recognized value of
property, plant and equipment)
R&D expenditures
Depreciation
Employees
4.97
10.85
5.11
48.79
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
—
—
—
—
¥ 98.07
—
¥ 106.43
—
¥ 109.32
—
¥ 71.49
—
¥ 32.38
—
$ 0.876
—
¥ 27
¥ 27
¥ 27
¥ 17
¥ 11
$ 0.241
¥2,623,596
1,525,761
1,097,835
¥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
$23,424,964
13,622,866
9,802,098
2,039,627
1,838,773
1,842,203
1,524,322
1,300,070
57,963
4,180,024
57,963
4,059,941
42,936
4,059,451
25,762
3,612,966
23,616
3,410,410
18,210,955
517,528
37,321,643
175,542
201,330
¥ 141,584
177,801
202,922
¥ 145,249
194,458
195,314
¥ 156,205
173,968
178,945
¥ 132,956
164,626
172,222
¥ 127,942
1,567,339
1,797,589
$ 1,264,143
(at the end of the year)
138,700
135,160
129,249
124,305
120,958
—
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 ¥112=U.S.$1, the approximate rate on the Tokyo Foreign Exchange Market on March 31, 2017.
5. The Company has 213 consolidated subsidiaries and 37 equity-method companies as of March 31, 2017.
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 2017
OVERVIEW
The business environment in the fiscal year ended March 31, 2017 (hereinafter, fiscal 2017) was buoyed by the expanding U.S.
economy and gradual recoveries in Japan and Europe, as well as modest improvement in China’s economic slowdown. In addi-
tion, the yen became stronger against foreign currencies compared to the previous year, but weakened after the U.S. presidential
election in November.
Under these circumstances, the Mitsubishi Electric Group has been working even harder than before to promote growth strate-
gies rooted in its advantages, while continuously implementing initiatives to strengthen its competitiveness and business structure.
As a result, in fiscal 2017, the Mitsubishi Electric Group recorded net sales of ¥4,238.6 billion and operating income of
¥270.1 billion. Income before income taxes came to ¥296.2 billion. Net income attributable to Mitsubishi Electric Corporation
was ¥210.4 billion for the fiscal year.
Net Sales
The Mitsubishi Electric Group recorded decreases in sales in the following segments: Energy and Electric Systems, Industrial
Automation Systems, Information and Communication Systems and Electronic Devices. Consolidated net sales decreased by
¥155.6 billion year on year to ¥4,238.6 billion.
Cost of Sales, Expenses and Operating Income
The cost of sales decreased by ¥120.7 billion compared to the previous fiscal year to ¥2,950.7 billion, representing 69.6% of
total net sales, an improvement of 0.3 of a percentage point. Selling, general and administrative (SG&A) expenses together with
research and development (R&D) expenses totaled ¥1,014.3 billion, up ¥1.1 billion year on year. As a result, the ratio of SG&A
and R&D expenses to net sales deteriorated by 0.9 of a percentage point year on year to 23.9%. Loss on impairment of long-
lived assets decreased by ¥5.0 billion year on year to ¥3.4 billion.
Accounting for the aforementioned factors, operating income amounted to ¥270.1 billion, a decrease of ¥31.0 billion com-
pared to the previous fiscal year. This decrease was primarily attributable to decreases in income in Energy and Electric Systems,
Industrial Automation 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 ¥4.4 billion, a deterioration of
¥0.6 billion compared to the previous fiscal year. Equity in earnings of affiliated companies totaled ¥21.5 billion, a decrease of
¥7.9 billion compared to the previous fiscal year.
Other income increased by ¥9.2 billion to ¥31.8 billion year on year. Other expenses decreased by ¥8.1 billion year on year
to ¥31.6 billion.
Income before Income Taxes
Income before income taxes decreased by ¥22.2 billion compared to the previous fiscal year to ¥296.2 billion, for a ratio to net
sales of 7.0%.
This is largely attributable to the aforementioned decrease in operating income of ¥31.0 billion.
Net Income Attributable to Mitsubishi Electric Corp.
Net income attributable to Mitsubishi Electric Corp. decreased by ¥18.0 billion year on year to ¥210.4 billion (a ratio to net sales
of 5.0%) 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
3,567
4,323
4,394
4,238
4,054
317
301
270
(Yen in billions)
(Yen in billions)
234
228
210
109.32
106.43
98.07
153
71.49
400
300
200
100
0
250
200
150
100
50
0
69
32.38
(Yen)
200
150
100
50
0
235
152
3,000
1,500
0
13
14
15
16
17
13
14
15
16
17
(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 2017 27
Business Risks
The Mitsubishi Electric Group (hereinafter “the Group”) is involved in development, manufacturing and sales in a wide range of
fields including Energy and Electric Systems, Industrial Automation Systems, Information and Communication Systems, Electronic
Devices and Home Appliances, and these operations extend globally, not only inside Japan, but also in North America, Europe,
Asia and other regions. While the statements herein are based on certain assumptions and premises that the Group trusts and
considers to be reasonable under the circumstances on the date of announcement, actual financial standings and operating
results are subject to change due to any of the factors as contemplated hereunder and/or any additional factor unforeseeable as
of the date of this announcement. Such factors materially affecting the expectations expressed herein shall include but are not
limited to the following:
(1) Important trends
The Group’s operations may be affected by trends in the global economy, social conditions, laws, tax codes and regulations.
(2) Foreign currency exchange rates
Fluctuations in foreign currency markets may affect the Group’s sales of exported products and purchases of imported 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 the Group 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 2017
RESULTS BY BUSINESS SEGMENT
Net Sales by Business Segment
Years ended March 31
2017
2016
2015
2014
Yen (millions)
2013
U.S. dollars
(thousands)
2017
Energy and Electric Systems
Industrial Automation Systems
Information and
Communication Systems
Electronic Devices
Home Appliances
Others
Subtotal
Eliminations
Consolidated total
¥1,227,906
1,310,136
¥1,264,604
1,321,937
¥1,228,958
1,282,749
¥1,180,093
1,098,796
¥1,058,177
927,857
$10,963,446
11,697,643
447,754
186,554
1,004,415
713,603
4,890,368
(651,702)
¥4,238,666
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
3,997,804
1,665,661
8,967,991
6,371,455
43,664,000
(5,818,768)
$37,845,232
Operating Income (Loss) by Business Segment
Years ended March 31
2017
2016
2015
2014
Energy and Electric Systems
Industrial Automation Systems
Information and
Communication Systems
Electronic Devices
Home Appliances
Others
Subtotal
Eliminations and other
Consolidated total
¥ 44,319
140,073
¥ 50,342
159,160
¥ 72,448
145,982
¥ 76,324
98,079
12,700
8,382
69,696
23,214
298,384
(28,280)
¥270,104
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
Yen (millions)
2013
¥ 85,140
60,592
1,591
(5,580)
19,300
18,790
179,833
(27,738)
¥152,095
U.S. dollars
(thousands)
2017
$ 395,705
1,250,652
113,393
74,839
622,286
207,268
2,664,143
(252,500)
$2,411,643
Energy and Electric Systems
The social infrastructure systems business saw an increase in orders compared to
Net sales and Operating income of Energy
and Electric Systems
the previous fiscal year due to increases in the transportation systems and the
public utility systems businesses in Japan, while sales decreased compared to the
previous fiscal year due to a decrease in the power systems business inside and
outside Japan. In addition, the stronger yen had the negative influences.
The building systems business experienced decreases in both orders and
sales compared to the previous fiscal year, due primarily to negative influences
caused by the stronger yen, despite growth in the renewal business in Japan, as
well as the installation business of new elevators and escalators outside Japan.
As a result, total sales for this segment decreased by 3% from the previous
fiscal year to ¥1,227.9 billion. Operating income decreased by ¥6.0 billion from
the previous fiscal year to ¥44.3 billion due primarily to the decrease in sales.
(Yen in billions)
1,500
1,058
1,000
(Yen in billions)
1,180 1,228
1,264
1,227
85
76
72
50
44
500
0
13
14
15
16
17
(Years ended March 31)
Net sales (left)
Operating income (right)
200
150
100
50
0
Industrial Automation Systems
The factory automation systems business saw an increase in orders compared to
Net sales and Operating income of
Industrial Automation Systems
the previous fiscal year due primarily to growth in capital expenditures in the
(Yen in billions)
fields of smartphones and electric cars in China and organic light emitting diodes
1,500
(OLED) mainly in Korea, while sales remained unchanged compared to the previ-
ous fiscal year due primarily to negative influences caused by the stronger yen.
The automotive equipment business saw decreases in both orders and sales
compared to the previous fiscal year due primarily to stagnation in light motor
car sales in Japan and the negative influences caused by the stronger yen,
despite a buoyancy in car sales mainly in Europe.
1,282
1,321
1,310
159
1,098
145
1,000
927
98
500
60
As a result, total sales for this segment decreased by 1% from the previous
0
fiscal year to ¥1,310.1 billion. Operating income decreased by ¥19.0 billion from
13
14
15
16
17
(Years ended March 31)
the previous fiscal year to ¥140.0 billion due primarily to the negative influence
Net sales (left)
Operating income (right)
of the stronger yen.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 29
(Yen in billions)
200
140
150
100
50
0
Information and Communication Systems
The telecommunications equipment business saw decreases in both orders and
Net sales and Operating income of
Information and Communication Systems
sales compared to the previous fiscal year due primarily to the sellout of an affili-
(Yen in billions)
(Yen in billions)
ated company in the beginning of the fiscal year and decreased sales of commu-
nications infrastructure equipment.
The information systems and service business saw a decrease in sales com-
pared to the previous fiscal year, mainly owing to a decrease in the system inte-
grations business.
The electronic systems business saw no change in orders, while sales
decreased compared to the previous fiscal year due to a decrease in large-scale
projects in the space systems business.
As a result, total sales for this segment decreased by 20% from the previous
fiscal year to ¥447.7 billion. Operating income decreased by ¥2.2 billion from the
previous fiscal year to ¥12.7 billion due primarily to the decrease in sales.
600
400
200
0
548
559
561
522
447
18
14
12
5
1
50
40
30
20
10
0
13
14
15
16
17
(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)
Electronic Devices
The electronic devices business saw an increase in orders compared to the previ-
ous fiscal year due to an increase in demand for optical communication devices,
while sales decreased by 12% from the previous fiscal year to ¥186.5 billion, due
to a decrease in demand for power modules and TFT-LCD modules, along with
the negative influences caused by the stronger yen.
Operating income decreased by ¥8.4 billion compared to the previous fiscal
year to ¥8.3 billion due primarily to the decrease in sales.
250
200
150
100
50
0
-50
194
164
238
30
211
186
10
16
8
-5
50
40
30
20
10
0
-10
Home Appliances
Sales of the home appliances business stood at ¥1,004.4 billion, an increase of
2% compared to the previous fiscal year, due to increases in sales of air condi-
tioners in the European, Chinese and North American markets and in sales of
residential and industrial air conditioners in Japan, despite the negative influence
of the stronger yen.
Operating income increased by ¥5.8 billion compared to the previous fiscal
year to ¥69.6 billion largely due to the increase in sales.
13
14
15
16
17
(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
982
821
(Yen in billions)
1,004
69
63
52
54
750
500
250
0
19
100
75
50
25
0
Others
Sales increased by 1% compared to the previous fiscal year to ¥713.6 billion due
to increases mainly at affiliated companies involved in materials procurement.
13
14
15
16
17
(Years ended March 31)
Net sales (left)
Operating income (right)
Net sales and Operating income of Others
(Yen in billions)
(Yen in billions)
Operating income decreased by ¥0.4 billion to ¥23.2 billion from the previ-
900
ous fiscal year due primarily to the negative influence of the stronger yen.
600
590
300
0
740
707
713
676
23
23
23
18
19
50
40
30
20
10
0
30 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
13
14
15
16
17
(Years ended March 31)
Net sales (left)
Operating income (right)
RESULTS BY GEOGRAPHIC SEGMENT
Net Sales by Geographic Segment
Years ended March 31
2017
2016
2015
2014
Yen (millions)
2013
U.S. dollars
(thousands)
2017
Japan
North America
Asia (excluding Japan)
Europe
Others
Eliminations
Consolidated total
¥ 3,402,132 ¥ 3,563,530 ¥ 3,578,960
388,021
446,935
421,553
1,047,758
1,054,563
1,040,098
383,965
387,628
421,073
49,495
50,260
46,854
(1,125,158)
(1,108,563)
(1,093,044)
¥ 4,238,666 ¥ 4,394,353 ¥ 4,323,041
¥3,362,854
¥3,064,014
$30,376,179
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
3,763,866
9,286,589
3,759,580
418,339
(9,759,321)
$37,845,232
Operating Income (Loss) by Geographic Segment
Years ended March 31
2017
2016
2015
2014
Yen (millions)
2013
U.S. dollars
(thousands)
2017
Japan
North America
Asia (excluding Japan)
Europe
Others
Eliminations
Consolidated total
¥152,027
9,002
93,318
12,828
2,458
471
¥270,104
¥173,383
9,421
91,006
14,806
904
11,652
¥301,172
¥226,199
¥177,315
¥116,923
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
$1,357,385
80,375
833,196
114,536
21,946
4,205
$2,411,643
Japan
Sales decreased by 5% year on year to ¥3,402.1 billion primarily due to decreases in sales in the automotive equipment, tele-
communications equipment and electronic devices businesses. Operating income decreased by ¥21.3 billion to ¥152.0 billion.
North America
Sales decreased by 6% year on year to ¥421.5 billion primarily due to decreases in sales in the transportation systems, power sys-
tems and automotive equipment businesses. Operating income decreased by ¥0.4 billion to ¥9.0 billion.
Asia (excluding Japan)
Sales decreased by 1% year on year to ¥1,040.0 billion mainly because of a sales decline in the building systems business.
Operating income increased by ¥2.3 billion to ¥93.3 billion, reflecting such factors as a shift in project portfolios.
Europe
Sales increased by 9% year on year to ¥421.0 billion mainly because of higher sales in the automotive equipment and air condi-
tioner businesses. Operating income decreased by ¥1.9 billion to ¥12.8 billion due mainly to a shift in project portfolios.
Others
Sales in other regions, including figures for Mitsubishi Electric’s Australian subsidiary, amounted to ¥46.8 billion, while operating
income was ¥2.4 billion.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 31
RESEARCH AND DEVELOPMENT
R&D Expenditures
Years ended March 31
2017
2016
2015
2014
Yen (billions)
2013
U.S. dollars
(millions)
2017
Energy and Electric Systems
¥ 35.5
¥ 33.7
¥ 31.4
¥ 28.8
¥ 29.8
$ 317.0
Industrial Automation Systems
Information and Communication Systems
Electronic Devices
Home Appliances
Others
Consolidated total
66.4
18.2
10.0
41.1
29.7
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
592.9
162.5
89.3
367.0
265.2
¥201.3
¥202.9
¥195.3
¥178.9
¥172.2
$1,797.6
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 2017, total R&D expenditures, including quality improvement expenses constituting manufacturing costs, amounted
to ¥201.3 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 core products,
including such rotating machinery as generators and electric motors; such power transmission/distribution equipment and sys-
tems as switchgears and transformers; 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 infor-
mation systems. Notable among Mitsubishi Electric’s recent R&D achievements are an All-SiC power module based auxiliary
power supply for AC electrified lines; Station Energy Saving Inverter(S-EIV) with energy-storage functions; the Mitsubishi Low
Voltage Motor Control Center Type-D, the Ultra-thin Robot for Power Generator Inspection; high-speed direct-current (DC) cir-
cuit-interruption technology for railway power-supply systems; the world’s fastest elevator, which has a speed of 1,230 meters
per minute*; the overseas standard compact elevator “NEXIEZ-S” for low- to mid-rise offices and residential buildings; a hybrid
elevator control panel that allows elevators to be used even when facility upgrades are under way; and the “Hands-Free IC Tag
Reader” for access control systems. R&D expenditures in this segment totaled ¥35.5 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, accident avoidance, and driving assis-
tance systems. Mitsubishi Electric’s important R&D successes encompass a Redundant CPU version of the MELSEC iQ-R series
control system; “MC Works64” SCADA software; a C-Language Controller with
edge-computing functions; the MV D-CUBES series wire-cut electrical discharge
R&D expenditures / R&D expenditures ratio
machines; the MELSENSOR range of laser displacement sensors; MELFA FR series
industrial robots; the DS-SA1000 in-vehicle DIATONE speaker; 2nd generation
vehicle-mounted chargers incorporating a DCDC converter unit; 5th generation
transmission control units (5G-TCUs); and an automated lane keeping assist sys-
tem. R&D expenditures in this segment totaled ¥66.4 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 mobile mapping system (MMS-G220);
technologies for automated mapping and extraction of transitions in mapping-
(Yen in billions)
195
202
201
172
178
4.4
4.5
4.6
4.7
4.8
250
200
150
100
50
0
(%)
10.0
7.5
5.0
2.5
0
13
14
15
16
17
(Years ended March 31)
landscape for high-precision 3D maps; an optical transceiver for use in access
networks built using XG-PON networking standards; a 100Gbps digital coherent
R&D expenditures (left)
R&D expenditures / Net sales (right)
32 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
transceiver in conformity with CFP MSA; Home Gateway for dual-band (2.4GHz/5GHz) wireless LAN; an intelligent HUB; the
HM-7000 HD IP camera; the Value Platform on Demand private cloud service; and Package Plus Giraffee, an SaaS solution sup-
porting application for e-Gov. R&D expenditures in this segment totaled ¥18.2 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 the IPM G1 series with 7th generation IGBT; a
super-mini full SiC DIPIPM; the 220W-output power GaN HEMT for 2.6GHz-band 4G mobile communication base transceiver sta-
tions; compact integrated 100Gbps APD-ROSA for high-speed optical fiber communications networks; and high-performance
TFT-LCD modules for automotive and industrial use. R&D expenditures in this segment totaled ¥10.0 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 new features for the KIRIGAMINE FZ and Z series room air
conditioners, which distinguish children from adults and optimize room temperatures based on difference in their thermal sensi-
tivities; the function “ASADORE YASAI SHITSU” which is newly equipped in WX, JX, and B series, increases Vitamin C in
Vegetables and keeps them fresh; and the Accessory “ALLELE PUNCH FUTON CLEAN ATTACHMENT” of iNSTICK, the cordless
stick cleaner, enables users to clean bed mattress much easier without feeling tired. R&D expenditures in this segment totaled
¥41.1 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 an automated design deep learning algorithm, and a
high-speed training algorithm for deep learning; and an ultra-compact SiC inverter for HEVs; 3D-model augmented reality (AR)
Technology for Inspections; 3 tesla magnetic resonance imaging (MRI) with high-temperature superconducting coils; a Real-time
Crowd-congestion Estimation System; and an ultra-wideband GaN Doherty power amplifier for next generation base stations.
With regard to fundamental R&D that benefits the entire Group, our achievements included high-precision and high-speed align-
ment technologies; integrated design of airflow, heat transfer and refrigerant circuits; and automatization of insulation film form-
ing and insertion into compressor motor. R&D expenditures in this area totaled ¥29.7 billion.
*Among elevators in operation as of November 1, 2016 (Based on a Mitsubishi Electric research)
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 33
FINANCIAL POSITION
Total assets amounted to ¥4,180.0 billion as of March 31, 2017, an increase of
Interest-bearing debt / Debt ratio
(Yen in billions)
540
15.9
600
450
300
150
0
381
9.4
404
10.0
352
8.4
373
10.3
(%)
20
15
10
5
0
13
14
15
16
17
(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
4,180
3,410
3,612
45.4
42.2
38.1
48.8
45.3
1,842 1,838
2,039
1,524
1,300
4,000
3,200
2,400
1,600
800
0
(%)
50
40
30
20
10
0
13
14
15
16
17
(Years ended March 31)
Total assets (left)
Mitsubishi Electric Corp. shareholders’ equity (left)
Shareholders’ equity ratio (right)
¥120.0 billion compared to the end of the previous fiscal year. Positive factors
contributing to this result included increases of ¥88.2 billion in cash and cash
equivalents and ¥85.1 billion in investments in securities and other due to higher
share prices.
Under liabilities, the outstanding balance of debt and corporate bonds fell
by ¥51.9 billion compared to the end of the previous fiscal year to ¥352.1 billion.
As a result, the ratio of interest-bearing debt to total assets was 8.4%, a
decrease of 1.6 percentage points year on year. While trade payables grew by
¥6.4 billion, retirement and severance benefits declined by ¥34.7 billion largely
because of an increase in pension plan assets caused by higher share prices. As a
result of these and other factors, total liabilities decreased by ¥83.1 billion to
¥2,039.3 billion.
Mitsubishi Electric Corp. shareholders’ equity grew by ¥200.8 billion com-
pared to the end of the previous fiscal year to ¥2,039.6 billion and the ratio of
Mitsubishi Electric Corp. shareholders’ equity to total assets was 48.8%, up 3.5
of a percentage point year on year. Despite a decrease attributable to the pay-
ment of cash dividends totaling ¥57.9 billion, an increase due to the posting of
net income attributable to Mitsubishi Electric Corp. amounting ¥210.4 billion for
the fiscal year and a rise in accumulated other comprehensive income of ¥48.6
billion reflecting higher share prices, led to the overall growth in shareholders’
equity.
34 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
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)
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
194
156
177
175
145
141
173
164
127
132
200
150
100
50
0
13
14
15
16
17
(Years ended March 31)
Capital expenditure
（Based on the recognized value of property, plant and equipment）
automation systems and automotive equipment operations. In Information and
Depreciation
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, 2017, net cash provided by operating activities
amounted to ¥365.9 billion, while net cash used in investing activities was
¥148.6 billion. As a result, free cash flow was an inflow of ¥217.3 billion, up
¥106.0 billion compared to the previous fiscal year. Taking this into account
along with other factors, including net cash used in financing activities of ¥123.4
billion, fiscal year-end cash and cash equivalents amounted to ¥662.4 billion, an
increase of ¥88.2 billion year on year.
Net cash provided by operating activities decreased by ¥0.7 billion compared
to the previous fiscal year. Despite a decrease in trade payables, this downturn
was largely attributable to an increase in inventories.
Net cash used in investing activities decreased by ¥106.8 billion year on year,
due mainly to the absence of cash outflows resulting from the acquisition of
shares of MELCO Hydronics & IT Cooling S.p.A. (net of cash acquired) in the pre-
vious fiscal year.
Net cash used in financing activities increased by ¥41.3 billion year on year,
due mainly to cash outflows attributable to repayments of debt in excess of pro-
ceeds from debt.
Note: The name of MELCO Hydronics & IT Cooling S.p.A. was changed and is MEHIT Holding S.r.l. as of
March 31, 2017.
Cash flows
(Yen in billions)
500
250
0
-250
440
310
378
366
365
217
82
180
111
-70
-153
-130
-198
13
14
15
-148
-255
16
17
(Years ended March 31)
Net cash provided by operating activities
Net cash used in investing activities
Free cash flows
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 35
Mitsubishi Electric Corporation and Subsidiaries
March 31, 2017 and 2016
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)
2017
Yen (millions)
2016
U.S. dollars
(thousands)
(note 2)
2017
¥ 662,469
¥ 574,170
$ 5,914,902
1,037,201
1,035,168
643,040
280,886
644,127
298,398
9,260,723
5,741,429
2,507,910
Total current assets
2,623,596
2,551,863
23,424,964
Long-term receivables and investments:
Long-term trade receivables (note 18)
Investments in securities and other (notes 3, 11, 18 and 19)
Investments in affiliated companies (note 6)
Total long-term receivables and investments
2,815
421,455
197,480
621,750
4,661
336,328
201,378
542,367
25,134
3,762,991
1,763,214
5,551,339
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
113,241
807,201
113,564
777,792
1,011,080
7,207,152
1,891,377
1,843,309
16,887,295
56,160
47,772
2,867,979
2,782,437
2,135,368
2,069,838
732,611
712,599
501,428
25,606,955
19,065,785
6,541,170
Other assets (notes 8, 10, 19 and 20)
202,067
253,112
1,804,170
Total assets
¥4,180,024
¥4,059,941
$37,321,643
See accompanying notes to consolidated financial statements.
36 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
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)
2017
Yen (millions)
2016
U.S. dollars
(thousands)
(note 2)
2017
¥ 60,868
¥ 61,873
$ 543,464
63,500
780,202
363,849
26,295
231,047
54,659
773,714
359,089
22,962
235,646
566,964
6,966,089
3,248,652
234,777
2,062,920
Total current liabilities
1,525,761
1,507,943
13,622,866
Long-term debt (notes 7, 18 and 21)
Retirement and severance benefits (note 11)
Other liabilities (notes 10 and 17)
227,756
194,990
90,809
287,507
229,750
97,238
2,033,536
1,740,982
810,795
Total liabilities
2,039,316
2,122,438
18,208,179
Mitsubishi Electric Corp. shareholders' equity
Common stock (note 12):
Authorized 8,000,000,000 shares;
issued 2,147,201,551 shares in 2017 and in 2016
Capital surplus (note 12)
Legal reserve
Retained earnings
Accumulated other comprehensive
income (loss) (notes 3, 10, 11, 13 and 15)
Treasury stock, at cost
1,059,870 shares in 2017 and
415,396 shares in 2016
175,820
212,530
68,482
175,820
211,999
65,652
1,569,821
1,897,589
611,446
1,586,075
1,436,375
14,161,384
(2,052)
(50,699)
(18,321)
(1,228)
(374)
(10,964)
Total Mitsubishi Electric Corp. shareholders' equity
2,039,627
1,838,773
18,210,955
Noncontrolling interests
Total equity
101,081
98,730
902,509
2,140,708
1,937,503
19,113,464
Commitments and contingent liabilities (note 17)
Total liabilities and equity
¥4,180,024
¥4,059,941
$37,321,643
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 37
Mitsubishi Electric Corporation and Subsidiaries
Years ended March 31, 2017, 2016 and 2015
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:
2017
2016
Yen (millions)
2015
¥4,238,666
7,653
21,508
31,824
4,299,651
¥4,394,353
8,573
29,433
22,570
4,454,929
¥4,323,041
7,365
27,725
43,304
4,401,435
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 13, 15, 16, 17 and 20)
Total costs and expenses
2,950,729
829,425
184,964
3,444
3,225
31,615
4,003,402
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
U.S. dollars
(thousands)
(note 2)
2017
$37,845,232
68,330
192,036
284,143
38,389,741
26,345,795
7,405,580
1,651,464
30,750
28,795
282,277
35,744,661
Income before income taxes
296,249
318,476
322,968
2,645,080
Income taxes (note 10):
Current
Deferred
Net income
55,518
17,966
73,484
52,691
24,355
77,046
60,183
14,730
74,913
495,696
160,411
656,107
222,765
241,430
248,055
1,988,973
Net income attributable to noncontrolling interests
12,272
12,936
13,361
109,571
Net income attributable to Mitsubishi Electric Corp.
¥ 210,493
¥ 228,494
¥ 234,694
$ 1,879,402
Net income per share attributable to Mitsubishi Electric Corp. (note 14):
Basic
Diluted
See accompanying notes to consolidated financial statements.
¥98.07
—
¥106.43
—
Yen
¥109.32
—
U.S. dollars
(note 2)
$0.876
—
Mitsubishi Electric Corporation and Subsidiaries
Years ended March 31, 2017, 2016 and 2015
Net income
2017
¥222,765
2016
¥ 241,430
Yen (millions)
2015
¥248,055
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
(22,968)
26,096
42,684
136
45,948
268,713
(70,881)
(86,516)
(25,498)
(8)
(182,903)
58,527
72,583
21,171
36,710
7
130,471
378,526
U.S. dollars
(thousands)
(note 2)
2017
$1,988,973
(205,070)
233,001
381,107
1,213
410,251
2,399,224
Comprehensive income attributable to
noncontrolling interests
Comprehensive income attributable
to Mitsubishi Electric Corp.
See accompanying notes to consolidated financial statements.
9,573
4,796
21,725
85,473
¥259,140
¥ 53,731
¥356,801
$2,313,751
38 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
Mitsubishi Electric Corporation and Subsidiaries
Years ended March 31, 2017, 2016 and 2015
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
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, 2017
Balance at March 31, 2016
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, 2017
Common
stock
¥175,820
Capital
surplus
¥207,089
Legal
reserve
Retained
earnings
¥62,739 ¥1,076,999
Accumulated
other
comprehensive
income (loss)
¥ 1,957
Total Mitsubishi
Electric Corp.
shareholders’
equity
¥ (282) ¥1,524,322
Treasury
stock
Non-
controlling
interests
¥ 76,029
234,694
64,307
21,171
36,616
13
1,319
(1,319)
234,694
64,307
21,171
36,616
13
356,801
—
13,361
8,276
94
(6)
21,725
Yen (millions)
Total
equity
¥1,600,351
234,694
13,361
72,583
21,171
36,710
7
378,526
—
4,066
4,066
(9,790)
(5,724)
(42,936)
¥175,820
0
¥211,155
¥64,058 ¥1,267,438
¥124,064
(42,936)
(50)
0
¥ (332) ¥1,842,203
(50)
0
¥ 87,964
(42,936)
(50)
0
¥1,930,167
228,494
228,494
(63,112)
(86,123)
(25,510)
(18)
1,594
(1,594)
12,936
(7,769)
(393)
12
10
4,796
33,439
(63,112)
(86,123)
(25,510)
(18)
53,731
—
—
228,494
12,936
(70,881)
(86,516)
(25,498)
(8)
58,527
—
33,439
844
844
(27,469)
(26,625)
(57,963)
¥175,820
0
¥211,999
¥65,652 ¥1,436,375
¥ (50,699)
210,493
(21,312)
27,238
42,610
111
2,830
(2,830)
(57,963)
(43)
1
¥ (374) ¥1,838,773
(43)
1
¥ 98,730
(57,963)
(43)
1
¥1,937,503
210,493
(21,312)
27,238
42,610
111
259,140
—
12,272
(1,656)
(1,142)
74
25
9,573
210,493
12,272
(22,968)
26,096
42,684
136
268,713
—
531
531
(7,222)
(6,691)
(57,963)
¥175,820
0
¥212,530
¥68,482 ¥1,586,075
¥ (2,052)
(57,963)
(854)
0
¥(1,228) ¥2,039,627
(854)
0
¥101,081
(57,963)
(854)
0
¥2,140,708
U.S. dollars (thousands) (note 2)
Common
stock
Retained
earnings
$1,569,821 $1,892,848 $586,179 $12,824,777
Capital
surplus
Legal
reserve
Accumulated
other
Total
comprehensive
equity
income (loss)
$(452,670) $ (3,339) $16,417,616 $881,518 $17,299,134
Total Mitsubishi
Electric Corp.
shareholders’
equity
Non-
controlling
interests
Treasury
stock
1,879,402
(190,284)
243,197
380,446
990
1,879,402
109,571
1,879,402
109,571
(190,284)
243,197
380,446
(14,786)
(10,196)
661
(205,070)
233,001
381,107
990
2,313,751
—
223
85,473
1,213
2,399,224
—
4,741
(64,482)
(59,741)
25,267
(25,267)
4,741
(517,528)
0
$1,569,821 $1,897,589 $611,446 $14,161,384
(517,528)
(7,625)
0
$ (18,321) $(10,964) $18,210,955 $902,509 $19,113,464
(517,528)
(7,625)
0
(7,625)
0
See accompanying notes to consolidated financial statements.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 39
Mitsubishi Electric Corporation and Subsidiaries
Years ended March 31, 2017, 2016 and 2015
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
Gain from sale of subsidiary
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
Proceed from sale of subsidiary (net of cash
disposed)
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
2017
2016
Yen (millions)
2015
U.S. dollars
(thousands)
(note 2)
2017
¥222,765
¥241,430
¥248,055
$1,988,973
141,584
145,249
156,205
1,264,143
3,344
5,766
2,751
29,857
(542)
17,966
(2,243)
(14,569)
1,216
(21,508)
(21,580)
(7,576)
19,239
20,853
(31,590)
(6,253)
44,844
365,950
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
(167,165)
9,049
(182,251)
2,400
(199,758)
6,768
(4,839)
160,411
(20,027)
(130,080)
10,857
(192,036)
(192,679)
(67,643)
171,777
186,188
(282,054)
(55,830)
400,393
3,267,411
(1,492,545)
80,795
(6,007)
(13,285)
(5,608)
(53,634)
—
(50,587)
—
10,774
8,511
10,722
12,786
13,878
(21,947)
(148,632)
145
(58,489)
350
(57,963)
(854)
0
—
(6,684)
—
(854)
(19,377)
(255,443)
110,108
(93,163)
(13,912)
(57,963)
(43)
1
(21,825)
(5,347)
—
24
(10,311)
(198,163)
90,598
(103,497)
11,392
(42,936)
(50)
0
—
(5,130)
—
96,196
114,161
123,911
(195,955)
(1,327,071)
1,295
(522,223)
3,125
(517,528)
(7,625)
0
—
(59,678)
(123,495)
(82,144)
(49,623)
(1,102,634)
(5,524)
88,299
574,170
¥662,469
(23,437)
5,653
568,517
¥574,170
19,941
150,468
418,049
¥568,517
(49,322)
788,384
5,126,518
$5,914,902
Note: The name of MELCO Hydronics & IT Cooling S.p.A. was changed and is MEHIT Holding S.r.l. as of March 31, 2017.
See accompanying notes to consolidated financial statements.
40 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
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, 2017 are as follows: Energy and Electric Systems –
25%, Industrial Automation Systems – 27%, Information and
Communication Systems – 9%, Electronic Devices – 4%,
Home Appliances – 20% and Others – 15%.
The operations of the Company and its subsidiaries is
mainly conducted in Japan. Net sales for the year ended
March 31, 2017 comprises of the following geographical loca-
tions: Japan – 57%, North America – 10%, Asia (excluding
Japan) – 22%, Europe – 9% and Others – 2%.
(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-
Our manufacturing operations are conducted principally
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 2017 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 2017
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 2017 43
transaction on the consolidated financial statements.
The Company does not amortize goodwill and other
(z) Reclassifications
The Company has made certain reclassifications of the previ-
intangible assets with indefinite useful life but tests it for
ous fiscal years’ consolidated financial statements to conform
impairment at least annually. In the impairment test, the fair
to the presentation used for the year ended March 31, 2017.
value of the reporting unit is compared to its carrying amount
(including goodwill). Impairment loss is recognized for the
amount by which the carrying amount exceeds the fair value,
up to the carrying amount of goodwill allocated to the report-
ing unit. Also other intangible assets determined to have use-
ful life are amortized over their respective estimated useful
life, and tested for impairment by the same process as impair-
ment of long-lived assets.
(w) Cost Associated with Exit or Disposal Activities
The Company recognizes the costs associated with exit or dis-
(aa) Future Application of New Accounting Standards
In May 2015, the FASB issued Accounting Standards Update
(ASU) 2015-07 “Disclosures for Investments in Certain Entities
That Calculate Net Asset Value per Share (or Its Equivalent)”
( a n a m e n d m e n t o f A S C To p i c 8 2 0 “ F a i r Va l u e
Measurement”). ASU 2015-07 removes the requirement to
categorize within the fair value hierarchy all investments for
which fair value is measured using the net asset value per
share practical expedient. The company has adopted ASU
2015-07 from the year ended March 31, 2017. The adoption
posal activities as liability only when it meets the definition of
of ASU 2015-07 does not have a material effect on the
a liability in the Statements of Financial Accounting Concepts
Company’s consolidated financial position and results of
No. 6, “Elements of Financial Statements”. The Company
operations.
uses fair value for initial measurement of liabilities related to
In November 2015, the FASB issued ASU 2015-17
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.
(y) Asset Retirement Obligations
The Company recognizes legal obligations associated with the
retirement of long-lived assets that result from an acquisition,
construction and development, and (or) from a normal opera-
tion of a long-lived asset, except for certain lease obligations.
The Company recognizes a liability for an asset retirement
obligation at fair value in the period which it is incurred if a
reasonable estimate of fair value can be made. The associated
asset retirement costs are capitalized as part of the carrying
amount of the long-lived asset and subsequently allocated to
expense over the asset’s useful life. Subsequent to the initial
measurement of the asset retirement obligation, the obliga-
tion is adjusted at the end of each period to reflect the pas-
sage of time and changes in the estimated future cash flows
underlying the obligation.
“Balance Sheet Classification of Deferred Taxes” (an amend-
ment of ASC Topic 740 “Income Taxes”). ASU 2015-17
requires deferred tax assets and liabilities to be classified as
noncurrent in a classified balance sheet. The Company will
adopt ASU 2015-17 on April 1, 2017 retrospectively. As of
March 31, 2017, deferred tax assets classified as current
assets are ¥139,871 million ($1,248,848 thousand).
In January 2017, the FASB issued ASU 2017-04
“Simplifying the Test for Goodwill Impairment” (an amend-
ment of ASC Topic 350 “Intangibles-Goodwill and Other”).
ASU 2017-04 simplifies the goodwill impairment test by elimi-
nating Step 2, and requires to recognize impairment loss by
comparing the fair value of a reporting unit with its carrying
amount, up to the carrying amount of goodwill allocated to
the reporting unit. The Company has early adopted ASU
2017-04 from the year ended March 31, 2017. The adoption
of ASU2017-04 does not have a material effect on the
Company’s consolidated financial position and results of
operations.
The Company is planning to voluntarily adopt
International Financial Reporting Standards (IFRS) for its con-
solidated financial statements from the year ending March 31,
2019, in place of U.S. generally accepted accounting princi-
ples (U.S. GAAP). Therefore, we will not present the U.S.
GAAP accounting pronouncements that will be effective after
April 1, 2018.
44 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
(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 2017. 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 ¥112=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, 2017 and 2016 were as follows:
unrealized holding gains, gross unrealized holding losses and
2017:
Available-for-sale:
Equity securities
Debt securities
2016:
Available-for-sale:
Equity securities
Debt securities
2017:
Available-for-sale:
Equity securities
Debt securities
Gross
unrealized
holding
gains
Gross
unrealized
holding
losses
Cost
Yen (millions)
Fair value
¥91,546
¥199,654
¥903
¥290,297
200
—
2
198
¥91,746
¥199,654
¥905
¥290,495
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
Fair value
U.S. dollars (thousands)
$817,375
$1,782,625
$8,063
$2,591,937
1,786
—
18
1,768
$819,161
$1,782,625
$8,081
$2,593,705
Debt securities consist of investment trusts.
In the years ended March 31, 2017 and 2015, net unrealized gains on available-for-sale securities, net of taxes and noncon-
trolling interests, increased by ¥42,610 million ($380,446 thousand), and ¥36,616 million, respectively, and in the year ended
March 31, 2016, decreased by ¥25,510 million.
As of March 31, 2017 and 2016, the cost of non-marketable equity securities were ¥15,162 million ($135,375 thousand)
and ¥15,738 million, respectively.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 45
Maturities of marketable securities classified as available-for-sale at March 31, 2017 were as follows:
Due after one year through five years
Marketable equity securities
Cost
¥ 200
91,546
¥91,746
Yen (millions)
Fair value
¥ 198
290,297
¥290,495
Cost
$ 1,786
817,375
$819,161
U.S. dollars
(thousands)
Fair value
$ 1,768
2,591,937
$2,593,705
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, 2017 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
¥3,230
—
¥3,230
¥280
—
¥280
¥1,696
198
¥1,894
¥623
2
¥625
¥4,926
198
¥5,124
¥903
2
¥905
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
$28,839
—
$28,839
$2,500
—
$2,500
$15,143
1,768
$16,911
$5,563
18
$5,581
$43,982
1,768
$45,750
$8,063
18
$8,081
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, 2017, 2016 and 2015 were as follows:
Proceeds
Gross realized gains
Gross realized losses
2017
¥5,037
2,681
593
2016
¥3,834
1,488
3
Yen (millions)
2015
¥3,034
111
74
U.S. dollars
(thousands)
2017
$44,973
23,938
5,294
For the years ended March 31, 2017, 2016 and 2015, the Company did not recognize any material losses on impairment of mar-
ketable 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
2017
¥ 93,612
951,962
(8,373)
Yen (millions)
2016
¥ 78,124
967,631
(10,587)
¥1,037,201
¥1,035,168
U.S. dollars
(thousands)
2017
$ 835,821
8,499,661
(74,759)
$9,260,723
46 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
(5) INVENTORIES
Inventories are comprised of the following:
Work in process
Less accumulated billings on long-term contracts
Raw materials
Finished products
2017
¥278,237
24,708
253,529
111,641
277,870
¥643,040
Yen (millions)
2016
¥265,779
19,082
246,697
110,889
286,541
¥644,127
U.S. dollars
(thousands)
2017
$2,484,259
220,607
2,263,652
996,795
2,480,982
$5,741,429
(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, 2017 and 2016, and for the years ended March 31, 2017, 2016 and 2015 is as follows:
Financial Position
Current assets
Property, plant and equipment
Other assets
Total assets
Current liabilities
Long-term debt
Total liabilities
Shareholders’ equity
Total liabilities and shareholders’ equity
2017
Yen (millions)
2016
U.S. dollars
(thousands)
2017
¥1,315,785
¥1,320,753
$11,748,081
119,389
122,806
121,211
117,243
1,065,973
1,096,482
¥1,557,980
¥1,559,207
$13,910,536
¥885,086
127,017
1,012,103
545,877
¥1,557,980
¥ 890,608
124,689
1,015,297
543,910
¥1,559,207
2017
2016
Yen (millions)
2015
$7,902,554
1,134,080
9,036,634
4,873,902
$13,910,536
U.S. dollars
(thousands)
2017
Results of Operations
Sales
¥1,290,406
¥1,363,861
¥1,255,026
$11,521,482
Net income attributable to affiliated companies
58,124
76,158
70,429
518,964
The balances and transactions with affiliated companies accounted for by the equity method of accounting as of March 31, 2017
and 2016, and for the years ended March 31, 2017, 2016 and 2015 are as follows:
Trade receivables
Trade payables
Sales
Purchases
Dividends
2017
¥58,497
47,648
2017
¥294,027
141,545
18,538
2016
¥300,524
139,666
18,084
Yen (millions)
2016
¥62,119
51,366
Yen (millions)
2015
¥307,841
143,904
16,886
U.S. dollars
(thousands)
2017
$522,295
425,429
U.S. dollars
(thousands)
2017
$2,625,241
1,263,795
165,518
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 47
Investments in affiliated companies accounted for by the equity method of accounting include the shares of 8 publicly quoted
affiliates (9 publicly quoted affiliates existed for the year ended March 31, 2016), 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
2017
¥39,379
57,923
Yen (millions)
2016
¥40,646
48,761
2017
¥60,868
Yen (millions)
2016
¥61,873
U.S. dollars
(thousands)
2017
$351,598
517,170
U.S. dollars
(thousands)
2017
$543,464
The weighted average interest rates on borrowings from banks and others outstanding as of March 31, 2017 and 2016 were
0.82% and 0.81%, respectively.
At March 31, 2017, the Company and its subsidiaries had unused committed lines of credit that can provide short-term
funds from subscribing financial institutions amounting to ¥81,400 million ($726,786 thousand).
Long-term debt consisted of the following:
Borrowings from banks and other companies,
due2017 to 2025 with bearing interest rate
ranging from 0.15% to 5.42% at March 31, 2017:
due2016 to 2025 with bearing interest rate
ranging from 0.15% to 5.42% at March 31, 2016:
Unsecured
0.27% Japanese yen bonds due 2019
0.43% Japanese yen bonds due 2021
Capital lease obligations
Less amount due within one year
2017
Yen (millions)
2016
U.S. dollars
(thousands)
2017
¥228,910
¥278,504
$2,043,839
20,000
20,000
22,346
291,256
63,500
20,000
20,000
23,662
342,166
54,659
178,571
178,571
199,519
2,600,500
566,964
¥227,756
¥287,507
$2,033,536
The aggregate annual maturities of long-term debt outstanding at March 31, 2017 were as follows:
Year ending March 31:
2018
2019
2020
2021
2022
Thereafter
Total
Yen (millions)
¥ 63,500
65,534
45,450
39,349
35,369
42,054
¥291,256
U.S. dollars
(thousands)
$ 566,964
585,125
405,804
351,330
315,795
375,482
$2,600,500
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 2017
(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, 2017 and 2016 were as follows:
2017:
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
2017:
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
¥108,287
¥70,359
¥37,928
27,628
33,867
169,782
2,791
3,180
16,093
89,632
—
24,448
17,774
80,150
2,791
¥172,573
¥89,632
¥82,941
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
Net carrying
amount
U.S. dollars (thousands)
$ 966,848
$628,205
$338,643
246,679
302,384
1,515,911
24,920
28,393
143,688
800,286
—
218,286
158,696
715,625
24,920
$1,540,831
$800,286
$740,545
Finite-lived intangible assets acquired during the year ended March 31, 2017 were ¥19,250 million ($171,875 thousand), mainly
acquisition of softwares. Finite-lived intangible assets acquired during the year ended March 31, 2016 were ¥64,745 million,
mainly related to assets acquired as part of the acquisition of MELCO Hydronics & IT Cooling S.p.A. (currently MEHIT Holding
S.r.l.).
Amortization expenses of intangible assets for the years ended March 31, 2017, 2016 and 2015 were ¥22,663 million
($202,348 thousand), ¥19,006 million and ¥15,998 million, respectively.
Estimated amortization expenses for the next five years are as follows:
Year ending March 31:
2018
2019
2020
2021
2022
Yen (millions)
¥19,493
14,919
10,139
6,428
4,940
U.S. dollars
(thousands)
$174,045
133,205
90,527
57,393
44,107
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 49
Changes in the carrying amount of goodwill for the years ended March 31, 2017 and 2016 are as follows:
Balance at beginning of year
Acquisition
Foreign currency translation adjustments, etc
Balance at end of year
2017
¥63,979
—
(4,089)
¥59,890
Yen (millions)
2016
¥ 8,017
58,034
(2,072)
¥63,979
U.S. dollars
(thousands)
2017
$571,241
—
(36,509)
$534,732
Goodwill is mainly allocated to the Home Appliances segment by ¥55,840 million ($498,571 thousand) as of March 31, 2017
2017
¥127,585
652,617
¥780,202
Yen (millions)
2016
¥117,629
656,085
¥773,714
U.S. dollars
(thousands)
2017
$1,139,152
5,826,937
$6,966,089
and ¥59,929 million as of March 31, 2016.
(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
2017
¥73,484
2016
¥77,046
Yen (millions)
2015
¥ 74,913
(3,690)
12,542
15,229
38
(5,551)
(40,390)
(8,558)
(20)
9,096
12,595
14,316
7
¥97,603
¥22,527
¥110,927
U.S. dollars
(thousands)
2017
$656,107
(32,946)
111,982
135,973
340
$871,456
U.S. dollars
(thousands)
2017
$ (52,902)
213,313
$160,411
The significant components of deferred tax expense attributable to income taxes are as follows:
Change in valuation allowance related
to deferred tax assets
Other
2017
2016
¥ (5,925)
23,891
¥17,966
¥ (5,130)
29,485
¥24,355
Yen (millions)
2015
¥(14,531)
29,261
¥ 14,730
The Company is subjected to a number of income taxes. The statutory tax rate is approximately 31.0% for the year ended March
31, 2017, approximately 33.0% for the year ended March 31, 2016, approximately 35.5% for the year ended March 31, 2015.
50 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
The effective tax rate for the years ended March 31, 2017, 2016 and 2015 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 undistributed earnings
Effect of income tax rate change
Other
Effective tax rate
2017
31.0%
(2.0)
(1.1)
0.6
(6.2)
(2.4)
2.8
0.0
2.1
24.8%
2016
33.0%
(4.3)
(0.5)
1.1
(6.6)
(2.5)
1.6
4.4
(2.0)
24.2%
2015
35.5%
(1.6)
(4.3)
0.5
(7.3)
(4.1)
2.9
4.6
(3.0)
23.2%
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities
at March 31, 2017 and 2016 are as follows:
2017
Yen (millions)
2016
U.S. dollars
(thousands)
2017
Deferred tax assets:
Retirement and severance benefits
¥ 9,610
¥ 23,008
$ 85,804
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
90,683
39,510
38,236
85,928
18,480
59,693
342,140
(38,961)
303,179
26,122
5,556
38,122
68,733
138,533
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
809,670
352,768
341,393
767,214
165,000
532,973
3,054,822
(347,866)
2,706,956
233,232
49,607
340,375
613,688
1,236,902
¥164,646
¥203,798
$1,470,054
The valuation allowance for deferred tax assets as of April 1,
uled reversal of deferred tax liabilities, projected future taxable
2015 was ¥50,016 million. The net change in the total valua-
income, and tax planning strategies in making this
tion allowance for the years ended March 31, 2017 and 2016
assessment.
was a decrease of ¥5,925 million ($52,902 thousand) and
At March 31, 2017, the Company and certain subsidiaries
¥5,130 million, respectively. In assessing the realizability of
had net operating loss carryforwards of ¥70,058 million
deferred tax assets, management considers whether it is more
($625,518 thousand) and ¥92,598 million ($826,768 thou-
likely than not that some portion or all of the deferred tax
sand) for corporate and local income tax purposes, respective-
assets will be realized. The ultimate realization of deferred tax
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-
ences become deductible. Management considers the sched-
expire. The rest of the net operating loss carryforwards will
expire mainly in the years ending March 31, 2020 and 2024.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 51
Net deferred tax assets and liabilities at March 31, 2017 and 2016 are reflected in the accompanying consolidated balance sheets
under the following captions:
Prepaid expenses and other current assets
Other assets
Other liabilities
2017
¥139,871
47,012
(22,237)
¥164,646
Yen (millions)
2016
¥130,569
89,701
(16,472)
¥203,798
U.S. dollars
(thousands)
2017
$1,248,848
419,750
(198,544)
$1,470,054
Deferred tax liabilities have been recognized for the undistrib-
ties accrued as of March 31, 2017 and 2016, and interest and
uted earnings of subsidiaries and affiliated companies.
penalties for the years ended March 31, 2017, 2016 and
Deferred tax liabilities have not been recognized for undistrib-
2015 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, 2017 and
2016, 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
2010–2017
2014–2017
2012–2017
2012–2017
(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 2017
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
¥1,167,468
¥1,119,133
$10,423,821
2017
Yen (millions)
2016
U.S. dollars
(thousands)
2017
Service cost
Interest cost
Plan participants’ contributions
Actuarial loss (gain)
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
35,939
5,835
1,019
(5,969)
(66,616)
2,237
1,139,913
964,489
44,942
49,504
825
(45,948)
1,361
1,015,173
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
320,884
52,098
9,098
(53,295)
(594,785)
19,974
10,177,795
8,611,509
401,268
442,000
7,366
(410,250)
12,152
9,064,045
Funded status at end of year
¥ (124,740)
¥ (202,979)
$ (1,113,750)
Amounts recognized in the consolidated balance sheets at March 31, 2017 and 2016 consist of:
Investments in securities and other
Other current liabilities
Retirement and severance benefits
2017
¥ 73,705
(3,455)
(194,990)
¥(124,740)
Yen (millions)
2016
¥ 32,153
(5,382)
(229,750)
¥(202,979)
Amounts recognized in accumulated other comprehensive income (loss) at March 31, 2017 and 2016 consist of:
Actuarial loss
Prior service cost
2017
¥305,590
(20,197)
¥285,393
Yen (millions)
2016
¥355,092
(30,793)
¥324,299
U.S. dollars
(thousands)
2017
$ 658,080
(30,848)
(1,740,982)
$(1,113,750)
U.S. dollars
(thousands)
2017
$2,728,482
(180,330)
$2,548,152
The accumulated benefit obligations for all defined benefit plans were as follows:
Accumulated benefit obligations
2017
¥1,132,807
Yen (millions)
2016
¥1,160,546
U.S. dollars
(thousands)
2017
$10,114,348
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 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, 2017, 2016 and 2015 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
2017
¥ 36,958
5,835
(16,593)
(10,596)
17,551
33,155
(1,019)
¥ 32,136
2016
¥ 33,980
11,403
(16,482)
(12,044)
12,077
28,934
(1,033)
¥ 27,901
Yen (millions)
2015
¥ 31,331
15,205
(15,123)
(12,122)
20,721
40,012
(1,047)
¥ 38,965
U.S. dollars
(thousands)
2017
$ 329,982
52,098
(148,152)
(94,607)
156,706
296,027
(9,098)
$ 286,929
Other changes in plan assets and projected benefit obligations recognized in other comprehensive income (loss) for the years
ended March 31, 2017, 2016 and 2015 were summarized as follows:
Actuarial loss (gain)
Amortization of actuarial loss
Amortization of prior service cost
2017
¥(31,951)
(17,551)
10,596
¥(38,906)
2016
¥126,876
(12,077)
12,044
¥126,843
Yen (millions)
2015
¥(25,207)
(20,721)
12,122
¥(33,806)
U.S. dollars
(thousands)
2017
$(285,276)
(156,706)
94,607
$(347,375)
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)
¥ 13,704
(10,117)
U.S. dollars
(thousands)
$122,357
(90,330)
Actuarial assumptions
Actuarial assumptions used to determine benefit obligations at March 31, 2017 and 2016 were as follows:
Discount rate
Assumed rate of increase in future compensation levels
2017
0.7%
1.7%
2016
0.5%
1.7%
Actuarial assumptions used to determine net periodic retirement and severance costs for the years ended March 31, 2017, 2016
and 2015 were as follows:
Discount rate
Assumed rate of increase in future compensation levels
Expected long-term rate of return on plan assets
2017
0.5%
1.7%
2.5%
2016
1.0%
1.7%
2.5%
2015
1.5%
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 2017
Plan Assets:
The fair values of the Company’s pension plan assets at March 31, 2017 and 2016 were as follows:
Assets measured by other than net asset value
Equity securities
Marketable equity securities
Debt securities
2017
Yen (millions)
Level 1
Level 2
Level 3
Total
¥211,657
¥ —
¥ — ¥ 211,657
Government , municipal and corporate debt securities
5,414
14,804
Other assets
Life insurance company general accounts
Other
Assets measured by net asset value
Equity securities
Pooled funds
Debt securities
Pooled funds
Other assets
Other
Total plan assets
—
—
—
—
—
101,100
47,585
—
—
—
—
—
—
—
—
—
20,218
101,100
47,585
179,368
373,851
81,394
¥217,071
¥163,489
¥ — ¥1,015,173
Notes: 1 Assets that measure fair value by the net asset value are not categorized in the fair value hierarchy.
2 Marketable equity securities include mainly domestic stocks.
3 Pooled funds of equity securities include approximately 30% domestic stocks and 70% foreign stocks.
4 Pooled funds of debt securities include approximately 60% domestic bonds and 40% foreign bonds.
5 Government, municipal and corporate debt securities of level 1 include government debt securities.
Assets measured by other than net asset value
Equity securities
Marketable equity securities
Debt securities
2016
Yen (millions)
Level 1
Level 2
Level 3
Total
¥194,023
¥ —
¥ —
¥194,023
Government , municipal and corporate debt securities
4,193
14,920
Other assets
Life insurance company general accounts
Other
Assets measured by net asset value
Equity securities
Pooled funds
Debt securities
Pooled funds
Other assets
Other
Total plan assets
—
—
—
—
—
99,067
50,183
—
—
—
¥198,216
¥164,170
Notes: 1 Assets that measure fair value by the net asset value are not categorized in the fair value hierarchy.
2 Marketable equity securities include mainly domestic stocks.
3 Pooled funds of equity securities include approximately 20% domestic stocks and 80% foreign stocks.
4 Pooled funds of debt securities include approximately 70% domestic bonds and 30% foreign bonds.
5 Government, municipal and corporate debt securities of level1 include government debt securities.
—
—
—
—
—
19,113
99,067
50,183
170,658
358,670
—
¥ —
72,775
¥964,489
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 55
Assets measured by other than net asset value
Equity securities
Marketable equity securities
Debt securities
2017
U.S. dollars (thousands)
Level 1
Level 2
Level 3
Total
$1,889,795
$ —
$ — $1,889,795
Government , municipal and corporate debt securities
48,339
132,179
Other assets
Life insurance company general accounts
Other
Assets measured by net asset value
Equity securities
Pooled funds
Debt securities
Pooled funds
Other assets
Other
Total plan assets
—
—
—
—
—
902,679
424,866
—
—
—
—
—
—
—
—
—
180,518
902,679
424,866
1,601,500
3,337,955
726,732
$1,938,134
$1,459,724
$ — $9,064,045
The Company’s investment policies are designed to ensure
and investments in life insurance company general accounts,
adequate plan assets are available to provide future payments
approximately 10% is invested in hedge funds. As for selec-
of pension benefits to eligible participants. Taking into
tion of plan assets, the Company has examined the contents
account the expected long-term rate of return on plan assets,
of investment, and appropriately diversified investments.
the Company formulates an investment portfolio comprised
See note 19 which shows categorized input for fair value mea-
of the optimal combination of equity and debt securities. Plan
surements by the valuation technique into a three-level hierarchy.
assets are invested in individual equity and debt securities
Each level into which assets are categorized is based on
using the guidelines of the investment portfolio in order to
inputs used to measure the fair value of the assets.
produce a total return that will match the expected return on
Level 1 assets are comprised principally of equity securities
a mid-term to long-term basis. The Company evaluates the
and government bonds, which are valued using unadjusted
gap between expected return and actual return of invested
quoted market prices in active markets with sufficient volume
plan assets on an annual basis. In addition, taking into the
and frequency of transactions. Level 2 assets are comprised
consideration the management environment and the revision
principally of corporate bonds and investments in life insurance
of regulations, the Company revises the investment portfolio
company general accounts. Corporate bonds are valued using
when and to the extent considered necessary to achieve the
quoted prices for identical assets in markets that are not active.
expected long-term rate of return on plan assets based on the
Investments in life insurance company general accounts are val-
pension asset and liability management method.
ued at the amounts that are the conventional interest adding to
The Company’s investment portfolio consists of three
the principle amounts calculated by a life insurance company.
major components. The Company’s target asset allocation
Assets measured by net asset value are comprised of
percentage is that approximately 25% is invested in equity
pooled funds and hedge funds, which are valued at their net
securities, approximately 65% is invested in debt securities
asset values that are calculated by the sponsor of the fund.
Cash Flows
The Company expects to contribute ¥27,022 million ($241,268 thousand) to its pension plan in the year ending March 31, 2018.
Estimated future benefit payments are as follows:
Year ending March 31:
2018
2019
2020
2021
2022
2023-2027
Yen (millions)
¥ 60,395
60,570
59,136
58,962
58,252
271,783
U.S. dollars
(thousands)
$ 539,241
540,804
528,000
526,446
520,107
2,426,634
The amount of cost recognized for the Company and certain subsidiaries’ defined contribution plans for the years ended
56 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
March 31, 2017, 2016 and 2015 were ¥10,155 million ($90,670 thousand), ¥10,265 million and ¥9,469 million, respectively.
(12) SHAREHOLDERS’ EQUITY
Changes in common stock for the years ended March 31, 2017 and 2016 were as follows:
Number of common shares issued:
Balance at beginning of year
Balance at end of year
2017
2016
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 ¥564,326 million
gated amount of additional paid-in capital and the legal
($5,038,625 thousand) at March 31, 2017.
reserve equal to 25% of the common stocks. The additional
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, 2017, 2016 and 2015 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, 2017, 2016 and 2015 are as follows:
Foreign currency
translation
adjustments
¥ 39,847
Pension liability
adjustments
¥(184,231)
2017
Unrealized gains
(losses) on
securities
¥ 93,742
Unrealized gains
(losses) on
derivative
instruments
¥ (57)
Yen (millions)
Total
¥(50,699)
(21,312)
22,439
44,061
258
45,446
Balance at end of year
¥ 18,535
¥(156,993)
¥136,352
—
(21,312)
4,799
27,238
(1,451)
42,610
(147)
111
¥ 54
3,201
48,647
¥ (2,052)
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
Yen (millions)
Total
¥(39)
¥ 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
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
¥ 39,847
¥(184,231)
¥ 93,742
—
(63,112)
22
(86,123)
(963)
(25,510)
(10)
(18)
¥(57)
(951)
(174,763)
¥ (50,699)
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 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
¥ 38,652
Pension liability
adjustments
¥(119,279)
2015
Unrealized gains
(losses) on
securities
¥ 82,636
Unrealized gains
(losses) on
derivative
instruments
Yen (millions)
Total
¥(52)
¥ 1,957
65,788
15,625
36,452
22
117,887
(1,481)
64,307
¥102,959
5,546
21,171
¥ (98,108)
164
36,616
¥119,252
(9)
13
¥(39)
4,220
122,107
¥124,064
2017
U.S. dollars (thousands)
Foreign currency
translation
adjustments
Pension liability
adjustments
Unrealized gains
(losses) on
securities
Unrealized gains
(losses) on
derivative
instruments
Total
Balance at beginning of year
$ 355,777
$(1,644,920)
$ 836,982
$ (509)
$(452,670)
Other comprehensive income before
reclassifications
Amounts reclassified from
accumulated other comprehensive
income
Net change during the year
Balance at end of year
(190,284)
200,348
393,402
2,303
405,769
—
(190,284)
$ 165,493
42,849
243,197
$(1,401,723)
(12,956)
380,446
$1,217,428
(1,313)
990
$ 481
28,580
434,349
$ (18,321)
Reclassifications out of accumulated other comprehensive income (loss) for the years ended March 31, 2017, 2016 and 2015 are
as follows:
2017
Details about Accumulated other
comprehensive income components
Amounts reclassified from accumulated other
comprehensive income
Affected line items in consolidated
statements of income
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
Yen
(millions)
¥(10,596)
17,551
6,955
(2,156)
4,799
(2,088)
(2,088)
637
(1,451)
(200)
(200)
53
(147)
U.S. dollars
(thousands)
$ (94,607)
156,706
62,099
(19,250)
42,849
(18,644)
(18,644)
5,688
(12,956)
(1,786)
(1,786)
473
(1,313)
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
¥ 3,201
$ 28,580
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 2017
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)
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)
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)
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
Foreign currency translation adjustments
2015
Amounts reclassified
from accumulated
other comprehensive
income
Yen
(millions)
Affected line items in consolidated
statements of income
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
¥ (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”.
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 59
Tax effects allocated to each component of other comprehensive income (loss) and reclassification adjustments for the years
ended March 31, 2017, 2016 and 2015 are as follows:
Before-tax amount
Tax (expense)
or benefit
Yen (millions)
Net-of-tax amount
2017:
Foreign currency translation adjustments:
Amount arising during the year on investments in
foreign entities held at end of year
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
¥(25,002)
¥ 3,690
¥(21,312)
—
—
—
(25,002)
3,690
(21,312)
32,825
6,955
39,780
(10,386)
(2,156)
(12,542)
22,439
4,799
27,238
59,927
(15,866)
44,061
(2,088)
57,839
349
(200)
149
637
(15,229)
(91)
53
(38)
(1,451)
42,610
258
(147)
111
Other comprehensive income (loss)
¥ 72,766
¥(24,119)
¥ 48,647
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)
60 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
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)
73,403
25,167
8,599
33,766
—
(9,096)
(9,542)
(3,053)
(12,595)
(1,481)
64,307
15,625
5,546
21,171
50,780
(14,328)
36,452
152
50,932
12
(14,316)
164
36,616
35
(15)
20
(13)
6
(7)
22
(9)
13
Other comprehensive income (loss)
¥158,121
¥(36,014)
¥122,107
Before-tax amount
U.S. dollars (thousands)
Tax (expense)
or benefit
Net-of-tax amount
2017:
Foreign currency translation adjustments:
Amount arising during the year on investments in
foreign entities held at end of year
$(223,230)
$ 32,946
$(190,284)
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
—
—
—
(223,230)
32,946
(190,284)
293,080
(92,732)
200,348
62,099
355,179
(19,250)
(111,982)
42,849
243,197
535,063
(141,661)
393,402
(18,644)
516,419
5,688
(135,973)
3,116
(1,786)
1,330
(813)
473
(340)
(12,956)
380,446
2,303
(1,313)
990
Other comprehensive income (loss)
$ 649,698
$(215,349)
$ 434,349
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 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
2017
2016
Yen (millions)
2015
¥210,493
—
¥228,494
—
¥234,694
—
¥210,493
¥228,494
¥234,694
2017
2,146,291,296
—
2,146,291,296
2016
2,146,799,336
—
2,146,799,336
U.S. dollars
(thousands)
2017
$1,879,402
—
$1,879,402
Shares
2015
2,146,835,581
—
2,146,835,581
2017
2016
2015
2017
Yen
U.S. dollars
¥98.07
—
¥106.43
—
¥109.32
—
$0.876
—
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, 2017, 2016 and 2015.
Note: The average number of the Company’s shares held through the Board Incentive Plan Trust were 490,000 shares for the year ended March 31, 2017. These shares
are included in the average number of shares outstanding as treasury stock shares that are deducted from the basis of the calculation of Net income per share
attributable to Mitsubishi Electric Corp. .
(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 19 months. The
issue financial instruments for trading purposes.
Company expects that the amounts of net gain of ¥73 million
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.
62 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
($652 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.
Contract amounts of foreign exchange contracts and foreign currency swaps and notional principal amounts of interest rate
swaps at March 31, 2017 and 2016 are as follows:
Foreign exchange contracts:
Forwards to sell foreign currencies
Forwards to buy foreign currencies
Foreign currency swaps
Interest rate swaps
2017
¥311,630
123,655
127,763
—
Yen (millions)
2016
¥214,525
131,564
41,891
1,606
U.S. dollars
(thousands)
2017
$2,782,410
1,104,063
1,140,741
—
The estimated fair values of foreign exchange contracts and foreign currency swaps at March 31, 2017 and 2016 are as follows:
Derivatives designated as hedging instruments
Consolidated balance sheet line item
2017
Yen (millions)
2016
Asset derivatives
Estimated fair value
U.S. dollars
(thousands)
2017
Foreign exchange contracts
Prepaid expenses and
other current assets
¥103
¥63
$920
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
Total
Prepaid expenses and
other current assets
Prepaid expenses and
other current assets
Derivatives not designated as hedging instruments
Consolidated balance sheet line item
Foreign exchange contracts
Foreign currency swaps
Total
Other current liabilities
Other current liabilities
2017
¥49
Yen (millions)
2016
¥120
2017
¥1,485
14
¥1,499
2017
¥2,920
1,414
¥4,334
Yen (millions)
2016
¥6,457
242
¥6,699
Yen (millions)
2016
¥2,330
20
¥2,350
Liability derivatives
Estimated fair value
U.S. dollars
(thousands)
2017
$438
Asset derivatives
Estimated fair value
U.S. dollars
(thousands)
2017
$13,259
125
$13,384
Liability derivatives
Estimated fair value
U.S. dollars
(thousands)
2017
$26,071
12,625
$38,696
The effect of foreign exchange contracts designated as cash flow hedges on the consolidated statements of income for the years
ended March 31, 2017, 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
Amount of gain or (loss) recognized in OCI on derivative
(effective portion)
U.S. dollars
(thousands)
2017
¥349
2016
¥(38)
Yen (millions)
2015
¥20
2017
$3,116
Amount of gain or (loss) recognized from accumulated OCI into income
(effective portion)
U.S. dollars
(thousands)
2017
2016
Yen (millions)
2015
2017
$1,786
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 63
Foreign exchange contracts Other revenues
¥200
¥18
¥15
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, 2017, 2016 and 2015 are set forth below:
Derivatives not designated as
hedging instruments
Line item of gain or (loss)
recognized in income on
derivative
2017
2016
Foreign exchange contracts Other revenues
Amount of gain or (loss) recognized in income on derivative
U.S. dollars
(thousands)
Yen (millions)
2015
Foreign currency swaps
Interest rate swaps
Total
(costs and expenses)
Other revenues
(costs and expenses)
Other revenues
(costs and expenses)
¥ 2,451
¥(2,090)
¥(12,324)
(2,422)
—
278
(32)
(1,779)
(39)
¥ 29
¥(1,844)
¥(14,142)
$ 259
2017
$ 21,884
(21,625)
—
(16) SECURITIZATIONS
The Company sells its accounts receivable under several secu-
these receivables.
ritization programs.
The Company recognized losses of ¥237 million ($2,116
When the Company retains subordinated interests in the
thousand), ¥389 million and ¥541 million on the securitiza-
certain accounts receivables after the sale of these receivables,
tions of receivables for the years ended March 31, 2017, 2016
a portion of these, where the Company retains subordinated
and 2015, 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, 2017, 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, 2017, 2016 and 2015 are as follows:
Proceeds from new securitizations
2017
¥336,092
2016
¥381,429
Yen (millions)
2015
¥441,395
U.S. dollars
(thousands)
2017
$3,000,821
Quantitative information about trade receivables including securitized receivables as of March 31, 2017 and 2016 are as follows:
Trade receivables
Less: Securitized receivables
Total receivables
2017
¥1,131,407
94,206
¥1,037,201
Yen (millions)
2016
¥1,143,536
108,368
¥1,035,168
U.S. dollars
(thousands)
2017
$10,101,848
841,125
$ 9,260,723
As of March 31, 2017 and 2016, delinquencies and credit losses of trade receivables including securitized receivables are
immaterial.
(17) COMMITMENTS AND CONTINGENT LIABILITIES
At March 31, 2017, commitments outstanding for the pur-
ies account for the discounted notes as sale of receivables.
chase of property, plant and equipment were ¥27,915 million
As of March 31, 2017, the Company has no significant
($249,241 thousand).
concentrations of credit risk.
It is common practice in Japan for companies, in the ordi-
While the Company and certain of its subsidiaries are
nary course of business, to receive promissory notes in settle-
defendants and co-defendants in various lawsuits and legal
ment of accounts receivable and to subsequently discount
actions, based upon the advice of legal counsel, the
such notes at banks. At March 31, 2017, certain subsidiaries
Company’s management is of the opinion that damages, if
were contingently liable to trade notes discounted in the
any, would not have a material effect on the Company’s con-
amount of ¥485 million ($4,330 thousand). Certain subsidiar-
solidated financial position and results of operations, except
64 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
for the following cases.
payments.
Civil lawsuits were filed against the Company in the
As of March 31, 2017, the Company recorded an esti-
United States related to violations of the Antitrust Laws
mated amount of ¥8,010 million ($71,518 thousand) as a
regarding the sales of certain automotive parts. In this respect,
reserve for possible losses of competition-law-related expens-
the Company has already agreed to settle with some of the
es in “Other liabilities” relating to certain automotive parts
purchasers of the automotive parts and has made settlement
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, 2017:
Guarantees of bank loan:
Employees
Affiliated and other companies
Other
Total
Yen (millions)
¥1,886
549
5,187
¥7,622
U.S. dollars
(thousands)
$16,839
4,902
46,313
$68,054
The guarantees for the employees are principally made for their housing loans, and the term of guarantees is 1 year to 12 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, 2017 and 2016 is summarized as follows:
Balance at beginning of year
Addition
Utilization
Foreign currency translation adjustments
Balance at end of year
2017
¥55,834
49,956
47,627
(173)
¥57,990
Yen (millions)
2016
¥55,483
48,378
47,609
(418)
¥55,834
U.S. dollars
(thousands)
2017
$498,518
446,036
425,241
(1,545)
$517,768
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 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
loans, Trade payables and Other current liabilities
The carrying amount approximates fair value because of the
(d) Long-term debt
The fair value of the Company’s corporate bonds is calculated
under market approach using quoted published price, there-
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, 2017 and 2016 are summarized as follows:
2017
Yen (millions)
2016
U.S. dollars
(thousands)
2017
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
¥290,495
2,815
¥290,495
2,784
¥235,170
4,661
¥235,170
4,627
$2,593,705
25,134
$2,593,705
24,857
Liabilities:
Long-term debt, including
current portion
268,910
266,961
318,504
316,570
2,400,982
2,383,580
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.
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, 2017 and 2016. 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.
66 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
Assets and liabilities measured by other than net asset value
Assets:
Equity securities
Marketable equity securities
Derivatives
Liabilities:
Derivatives
Assets measured by net asset value
Assets:
Debt securities
Investment trusts
Assets and liabilities measured by other than net asset value
Assets:
Equity securities
Marketable equity securities
Derivatives
Liabilities:
Derivatives
Assets measured by net asset value
Assets:
Debt securities
Investment trusts
Assets and liabilities measured by other than net asset value
Assets:
Equity securities
Marketable equity securities
Derivatives
Liabilities:
Derivatives
Assets measured by net asset value
Assets:
Debt securities
Investment trusts
Level 1
Level 2
Level 3
Total
2017
Yen (millions)
¥290,297
—
—
—
¥ —
1,602
4,383
¥ —
—
—
¥290,297
1,602
4,383
—
—
198
Yen (millions)
2016
Level 1
Level 2
Level 3
Total
¥234,971
—
—
—
¥ —
6,762
2,470
¥ —
—
—
¥234,971
6,762
2,470
—
—
199
2017
U.S. dollars (thousands)
Level 1
Level 2
Level 3
Total
$2,591,937
—
$ —
14,304
$ — $2,591,937
14,304
—
—
39,134
—
39,134
—
—
—
1,768
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 derivatives are comprised principally of foreign exchange con-
tracts, which are valued based on market approach, using quotes obtained from counterparties or third parties. Assets measured
by net asset value are comprised of pooled funds, which are valued at their net asset values that are calculated by the sponsor of
the fund.
Assets that measure fair value by the net asset value are not categorized in the fair value hierarchy.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
At March 31, 2017, a portion of long-lived assets was written
or net sale price under market approach.
down to their fair value of ¥6,475 million ($57,813 thou-
At March 31, 2016, a portion of long-lived assets was
sand), resulting in an impairment charge of ¥3,444 million
written down to their fair value of ¥8,037 million, resulting in
($30,750 thousand), which was included in loss on impair-
an impairment charge of ¥8,482 million, which was included
ment of long-lived assets for the year ended March 31, 2017.
in loss on impairment of long-lived assets for the year ended
The impaired long-lived assets are classified as Level 3 assets,
March 31, 2016. The impaired long-lived assets are classified
because they are measured based on the unobservable inputs
as Level 3 assets, because they are measured based on the
such as estimated future cash flows under income approach
unobservable inputs such as estimated future cash flows
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 67
under income approach or net sale price under market
in “Notes to Consolidated Financial Statements (1)BASIS OF
approach.
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
The valuation process of long-lived assets is documented
ACCOUNTING POLICIES (u) Impairment of Long-Lived Assets”.
(20) SUPPLEMENTARY INCOME AND EXPENSE INFORMATION
Advertising expenses
Shipping and handling costs
Exchange gains (losses)
Gain from sale of subsidiary
Loss on disaster
Business restructuring costs
Loss on impairment of long-lived assets
2017
¥(32,544)
(86,990)
(9,932)
14,569
(8,326)
—
(3,444)
2016
¥(30,498)
(86,963)
(14,269)
—
—
—
(8,482)
Yen (millions)
2015
¥(28,101)
(87,610)
7,749
—
—
(4,804)
(3,085)
U.S. dollars
(thousands)
2017
$(290,571)
(776,696)
(88,679)
130,080
(74,339)
—
(30,750)
Advertising expenses are included in “Costs and expenses –
For the year ended March 31, 2017, the Company and
Selling, general and administrative”.
certain of its subsidiaries recognized impairment losses of
Shipping and handling costs represents the costs included
in “Costs and expenses – Selling, general and administrative”.
¥3,344 million ($29,857 thousand) on tangible assets such as
buildings and tools, and ¥100 million ($893 thousand) on
Exchange gains (losses) are included in “Revenues –
intangible assets and others. The impairment losses included
Other” and “Costs and expenses – Other”.
¥1,214 million ($10,839 thousand) for Information and
Gain from sale of subsidiary is included in “Revenues – Other”.
Communication Systems business related assets and ¥1,338
For the year ended March 31, 2017, the Company recog-
million ($11,946 thousand) for Home Appliances business
nized a gain of ¥14,569 million ($130,080 thousand) which is
related assets due to a decline in profitability. The impairment
attributable to the sellout of a domestic subsidiary with
losses were mainly measured based on the fair value less cost
mobile phone sales as its main business at ¥17,400 million
to sell.
($155,357 thousand).
For the year ended March 31, 2016, the Company and
Loss on disaster is included in “Costs and expenses – Other”.
certain of its subsidiaries recognized impairment losses of
For the year ended March 31, 2017, the Company recog-
¥5,766 million on tangible assets such as buildings and
nized loss on disaster of ¥8,326 million ($74,339 thousand)
machineries, and ¥2,716 million on intangible assets and oth-
for the repair and removal of facilities, the disposal and
ers. The impairment losses included ¥2,428 million for Energy
inspection of inventories and fixed costs during the low oper-
and Electric Systems business related assets and ¥2,418 mil-
ating period which are associated with the recovery from
lion for Information and Communication Systems business
damage suffered from the 2016 Kumamoto earthquake.
related assets due to a decline in profitability. The impairment
Business restructuring costs are included in “Costs and
losses were mainly measured based on the fair value less cost
expenses – Other”.
to sell.
For the year ended March 31, 2015, the Company recog-
For the year ended March 31, 2015, the Company and
nized business restructuring costs of ¥4,804 million related to
certain of its subsidiaries recognized impairment losses of
the loss associated with inventories under sales contracts, the
¥2,751 million on tangible assets such as buildings and tools,
removal and disposal of facilities and the retirement benefits
and ¥334 million on intangible assets. The impairment losses
resulting from the Company’s decision to discontinue the cop-
included ¥562 million for Energy and Electric Systems business
per alloy business.
related assets and ¥1,740 million for Home Appliances busi-
Loss on impairment of long-lived assets is included in
ness related assets due to a decline in profitability. The impair-
“Costs and expenses – Loss on impairment of long-lived
ment losses were mainly measured based on the fair value less
assets”.
costs to sell.
68 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
(21) LEASES
The Company and certain of its subsidiaries enter into capital
ings, machineries and equipments. At March 31, 2017, the
lease and operating lease agreements with Mitsubishi Electric
aggregated cost and accumulated depreciation of leased
Credit Corporation, an equity method investee. The leased
assets under capital leases amounted to ¥30,728 million
assets, which are committed under capital lease agreements,
($274,357 thousand) and ¥15,785 million ($140,938 thou-
are capitalized.
sand), respectively.
The Company and certain of its subsidiaries lease build-
Future minimum lease payments under capital and non-cancelable operating leases as of March 31, 2017 are as follows:
Year ending March 31:
2018
2019
2020
2021
2022
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
¥13,094
11,803
9,816
8,268
7,001
8,595
¥58,577
¥ 8,539
7,729
4,890
2,576
731
47
24,512
1,436
23,076
730
22,346
7,822
¥14,524
$116,911
105,384
87,643
73,821
62,509
76,741
$523,009
$ 76,241
69,009
43,661
23,000
6,527
420
218,858
12,821
206,037
6,518
199,519
69,839
$129,680
Rental expenses related to operating leases for the years ended March 31, 2017, 2016 and 2015 amounted to ¥50,435 million
($450,313 thousand), ¥48,786 million and ¥47,670 million, respectively. These operating leases are for office space, warehouses,
employee facilities and computer equipment, and are customarily renewed.
(22) SUPPLEMENTARY CASH FLOW INFORMATION
Cash paid during the year for:
Interest
Income taxes
2017
2016
Yen (millions)
2015
¥ 2,552
56,686
¥ 3,038
69,981
¥ 3,816
53,712
U.S. dollars
(thousands)
2017
$ 22,786
506,125
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 69
(23) 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 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
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, network camera systems, 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 Room air conditioners, package air conditioners, chillers, showcases, compressors, refrigeration units, air-to-water
heat pump boilers, ventilators, photovoltaic systems, hot water supply systems, IH cooking heaters, LED lamps,
fluorescent lamps, indoor lighting, LCD televisions, refrigerators, electric fans, dehumidifiers, air purifiers, cleaners,
jar rice cookers, microwave ovens, 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 presented as net sales less cost of sales, selling, general,
administrative and R&D expenses, and loss on impairment of long-lived assets.
70 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
Segment Information
Segment information for the years ended March 31, 2017, 2016 and 2015 are as follows:
As of and for the year ended March 31, 2017
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, 2016
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
¥1,219,087
8,819
1,227,906
1,183,587
¥ 44,319
¥1,297,646
12,490
1,310,136
1,170,063
¥ 140,073
¥410,599
37,155
447,754
435,054
¥ 12,700
¥151,256
35,298
186,554
178,172
¥ 8,382
¥ 986,693
17,722
1,004,415
934,719
¥ 69,696
¥173,385
540,218
713,603
690,389
¥ 23,214
¥4,238,666
651,702
4,890,368
4,591,984
¥ 298,384
¥ — ¥4,238,666
—
(651,702)
4,238,666
(651,702)
3,968,562
(623,422)
¥ 270,104
¥ (28,280)
¥1,327,904
¥1,148,370
¥354,224
¥165,285
¥ 873,945
¥256,625
¥4,126,353
¥ 53,671
¥4,180,024
28,476
62,880
18,252
14,371
34,640
6,432
165,051
63
35,948
—
64,931
1,214
17,412
643
9,493
1,338
43,266
186
15,481
3,444
186,531
—
—
—
165,051
3,444
186,531
Yen (millions)
Energy and
Electric Systems
Industrial
Automation
Systems
Information and
Communication
Systems
Electronic
Devices
Home
Appliances
Others
Subtotal
Eliminations
and other
Total
¥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)
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
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
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 71
As of and for the year ended March 31, 2017
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
$10,884,705 $11,586,125
111,518
78,741
11,697,643
10,963,446
10,567,741
10,446,991
$ 395,705 $ 1,250,652
$3,666,063 $1,350,500
315,161
331,741
1,665,661
3,997,804
3,884,411
1,590,822
$ 113,393 $ 74,839
$8,809,759 $1,548,080 $37,845,232 $ — $37,845,232
5,818,768
—
158,232
37,845,232
43,664,000
8,967,991
8,345,705
35,433,589
40,999,857
$ 622,286 $ 207,268 $ 2,664,143 $ (252,500) $ 2,411,643
(5,818,768)
(5,818,768)
(5,566,268)
4,823,375
6,371,455
6,164,187
$11,856,286 $10,253,304
$3,162,714 $1,475,759
$7,803,080 $2,291,295 $36,842,438 $ 479,205
$37,321,643
254,250
561,429
162,964
128,313
309,286
57,428
1,473,670
563
320,964
—
579,741
10,839
155,464
5,741
84,759
11,946
386,304
1,661
138,223
30,750
1,665,455
—
—
—
1,473,670
30,750
1,665,455
Notes: 1 The amount of unallocatable R&D expenditure included in “Eliminations and other” on “Operating costs” for the years ended March 31, 2017, 2016 and 2015
are ¥28,280 million ($252,500 thousand), ¥27,675 million and¥27,961 million, respectively.
2 The amount of company-wide shared assets included in “Eliminations and other” on “Assets” for the years ended March 31, 2017, 2016 and 2015 are
¥301,522 million ($2,692,161 thousand), ¥266,378 million and ¥309,521 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, 2017, 2016 and 2015 are as follows:
As of and for the year ended March 31, 2017
Sales to external customers
% of total net sales
Long-lived assets
Japan
¥2,405,552
56.8%
569,594
North
America
¥422,259
10.0%
50,771
Asia
(excluding
Japan)
¥940,150
22.2%
142,312
Europe
¥384,075
9.0%
60,407
Others
¥86,630
2.0%
2,601
Overseas total
¥1,833,114
43.2%
256,091
Overseas
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
Yen (millions)
Consolidated
total
¥4,238,666
100.0%
825,685
Yen (millions)
Consolidated
total
¥4,394,353
100.0%
809,948
Yen (millions)
Consolidated
total
¥4,323,041
100.0%
770,952
As of and for the year ended March 31, 2017
U.S. dollars (thousands)
Overseas
Sales to external customers
% of total net sales
Long-lived assets
Japan
$21,478,143
North
America
$3,770,170
Asia
(excluding
Japan)
$8,394,196
Europe
$3,429,241
Others
$773,482
Overseas total
$16,367,089
Consolidated
total
$37,845,232
56.8%
10.0%
22.2%
9.0%
2.0%
43.2%
100.0%
5,085,661
453,313
1,270,643
539,348
23,223
2,286,527
7,372,188
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 2017
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, 2017
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
¥2,617,074
785,058
3,402,132
3,250,105
¥ 152,027
¥2,797,229
¥401,578
19,975
421,553
412,551
¥ 9,002
¥300,493
¥ 765,696
274,402
1,040,098
946,780
¥ 93,318
¥ 903,290
¥407,502
13,571
421,073
408,245
¥ 12,828
¥374,081
¥46,816
38
46,854
44,396
¥ 2,458
¥39,498
¥4,238,666
1,093,044
5,331,710
5,062,077
¥ 269,633
¥4,414,591
¥ —
(1,093,044)
(1,093,044)
(1,093,515)
¥ 471
¥ (234,567)
As of and for the year ended March 31, 2016
¥4,238,666
—
4,238,666
3,968,562
¥ 270,104
¥4,180,024
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)
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
¥2,782,686
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)
¥4,323,041
—
4,323,041
4,005,437
¥ 317,604
¥4,059,451
As of and for the year ended March 31, 2017
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
7,009,447
30,376,179
29,018,794
$23,366,732 $3,585,518 $6,836,571 $3,638,411 $418,000 $37,845,232 $ — $37,845,232
(9,759,321)
121,169
—
(9,759,321)
3,759,580
37,845,232
(9,763,526)
3,645,044
35,433,589
$ 2,411,643
$ 1,357,385 $ 80,375 $ 833,196 $ 114,536 $ 21,946 $ 2,407,438 $ 4,205
$24,975,259 $2,682,973 $8,065,089 $3,340,009 $352,661 $39,415,991 $(2,094,348) $37,321,643
9,759,321
47,604,553
45,197,115
178,348
3,763,866
3,683,491
2,450,018
9,286,589
8,453,393
339
418,339
396,393
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, 2017, 2016 and 2015 are
¥361,412 million ($3,226,893 thousand), ¥330,357 million and ¥309,521 million, respectively, and those amounts are mainly the Company’s deposit in bank
and goodwill.
(24) SUBSEQUENT EVENT
On June 29, 2017, 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 2017 73
74 MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017
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.
Contents
Annual Meeting
To Our Shareholders and
Investors
The annual meeting of shareholders of the Corporation is regularly
Research and Development /
Intellectual Property
held in June each year. Additionally, special shareholders meetings
Financial Highlights
may be held as necessary.
Corporate Strategy
Stock Exchange Listings
Japan: Tokyo
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: 138,700
Major Shareholders
02
03
04
06
08
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
State Street Bank and Trust Company
Meiji Yasuda Life Insurance Company
Nippon Life Insurance Company
JP Morgan Chase Bank 380055
Mitsubishi Electric Group Employees Shareholding Union
Japan Trustee Services Bank, Ltd. (Trust Account 5)
JP Morgan Chase Bank 385632
Japan Trustee Services Bank, Ltd. (Trust Account 4)
At a Glance
Fiscal 2017 Topics
Europe: London
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
22
23
24
25
75
Corporate Social Responsibility
Corporate Governance
Directors and Executive Officers
Organization
Number of Shares
(thousands)
Percentage of
Ownership
Major Subsidiaries and Affiliates
151,129
7.0%
117,726
Financial Section
88,345
81,862
5.5%
4.1%
3.8%
61,639
Corporate Data /
2.9%
Shareholder Information
2.1%
44,552
42,709
39,189
37,429
35,486
2.0%
1.8%
1.7%
1.7%
Note: Shareholder ratio calculations deduct 422,870 company-owned shares.
Distribution of Shareholders
Individuals and Others 12.6%
Foreign Corporations
37.0%
Financial Institutions 42.4%
Other Corporations
6.1%
Traders of
Financial Instruments
1.9%
Stock Price (Yen)
2,000
1,600
1,200
800
400
0
’14/4
Mitsubishi Electric’s Stock Price
Nikkei Stock Average
’15/4
’16/4
The Nikkei Stock Average is based on information copyrighted by Nihon Keizai Shimbun, Inc.
20,000
15,000
10,000
5,000
’17/4
Nikkei Stock Average
(Yen)
MITSUBISHI ELECTRIC CORPORATION ANNUAL REPORT 2017 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-X01-7-CA024-A HQ 1707〈IP〉
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