Fuji Heavy Industries Ltd.
Ebisu Subaru Bldg., 1-20-8, Ebisu, Shibuya-ku, Tokyo 150-8554
Phone: +81-3-6447-8000
Fax: +81-3-6447-8184
http://www.fhi.co.jp/english/ir/
Annual Report
2015
For the year ended March 31, 2015
Introduction
THE SUBARU “SAFETY” JOURNEY
Having roots in the aircraft industry, FHI considers safety to be the most important feature
underpinning automobiles. Since we launched the Subaru 360 over a half-century ago,
we have engaged in automotive manufacturing to this day with a philosophy of
“All-Around Safety” and maximum emphasis on safety performance.
SINCE 1917
Ensuring safety for pilots
Our DNA of safety is inherited from
aircraft development.
At the core of Subaru’s safety development exper-
tise lies traits acquired from developing aircrafts.
Given the lethal ramifications of a crash, aircraft
development requires designs that consider all
manner of possible emergency situations, hence
the implementation of ideas and countermeasures
within the aircraft’s basic structure to prevent
the onset of danger. In addition, one of the
indispensable safety features of smaller aircraft is
the ability for the pilot to be able to secure an
all-around unobstructed line of sight. This approach
to safety has not diminished after we moved into
automobile manufacturing. Since we released
the Subaru 360, all of our vehicles have been
developed with an emphasis on safety features,
starting with unobstructed visibility.
Developing a vehicle body for collision safety
based on All-Around Safety that is ahead of the times.
The Subaru 360, launched in 1958, fulfilled a key role in helping the
spread of automobiles during Japan’s high growth period. Since that
period, Subaru has dedicated itself to developing vehicle bodies for
collision safety following our principle of All-Around Safety—effectively
absorbing shock from collisions in all directions and protecting passen-
gers with a cabin structure of robust strength. Early on, safety was not
yet emphasized as part of the value of vehicles and there were no crash
test dummies in existence. Subaru’s development team, however,
pushed forward independent research on car body structure and how it
affects human passengers. Through trial and error, we pursued superior
collision safety technologies ahead of their time.
SI N C E 19 6 0
SI N C E 19 6 0
Ensuring safety for drivers
Horizontally-opposed SUBARU BOXER engine
SINCE 1970
SINCE 1970
Ensuring safe driving, turning, and braking
Developing proprietary technologies for enhanced driving safety,
such as the horizontally-opposed engine and AWD.
Fundamental automobile performance in terms of driving, turning, and braking differs
depending on the vehicle's structure. In particular, the location of the center of gravity
and the type of drive train have a significant effect. The lower the center of gravity,
the more stable the cornering, while a drive train that delivers power to all of the
wheels gives constant stability when driving. This is the perspective that led Subaru,
in 1966, to launch the Subaru 1000—a FWD vehicle with a horizontally-opposed
engine—and, in 1972, the 4WD Subaru Leone. Since that time, we have
further honed our proprietary technologies and continued to pursue safe and
stable driving performance.
Subaru 360
Leone 4WD
Subaru 1000
FUJI HEAVY INDUSTRIES LTD.
01
ANNUAL REPORT 2015
Introduction
THE SUBARU “SAFETY” JOURNEY
Having roots in the aircraft industry, FHI considers safety to be the most important feature
underpinning automobiles. Since we launched the Subaru 360 over a half-century ago,
we have engaged in automotive manufacturing to this day with a philosophy of
“All-Around Safety” and maximum emphasis on safety performance.
Ensuring safety for pilots
Our DNA of safety is inherited from
aircraft development.
At the core of Subaru’s safety development exper-
tise lies traits acquired from developing aircrafts.
Given the lethal ramifications of a crash, aircraft
development requires designs that consider all
manner of possible emergency situations, hence
the implementation of ideas and countermeasures
within the aircraft’s basic structure to prevent
the onset of danger. In addition, one of the
indispensable safety features of smaller aircraft is
the ability for the pilot to be able to secure an
all-around unobstructed line of sight. This approach
to safety has not diminished after we moved into
automobile manufacturing. Since we released
the Subaru 360, all of our vehicles have been
developed with an emphasis on safety features,
starting with unobstructed visibility.
Developing a vehicle body for collision safety
based on All-Around Safety that is ahead of the times.
The Subaru 360, launched in 1958, fulfilled a key role in helping the
spread of automobiles during Japan’s high growth period. Since that
period, Subaru has dedicated itself to developing vehicle bodies for
collision safety following our principle of All-Around Safety—effectively
absorbing shock from collisions in all directions and protecting passen-
gers with a cabin structure of robust strength. Early on, safety was not
yet emphasized as part of the value of vehicles and there were no crash
test dummies in existence. Subaru’s development team, however,
pushed forward independent research on car body structure and how it
affects human passengers. Through trial and error, we pursued superior
collision safety technologies ahead of their time.
Ensuring safety for drivers
Horizontally-opposed SUBARU BOXER engine
Launching our flagship Legacy.
Embarking on development of driving support systems.
Our flagship Legacy model, launched in 1989, demonstrated both reliable
driving performance and mechanical endurance when it set a world
speed record in January of that same year for 100,000 km of continu-
ous driving. Furthermore, around this period, we started development of
a driving support system using stereo cameras. In 1999, we commer-
cialized ADA, Active Driving Assist, which was the predecessor of our
current EyeSight technology.
IN THE 1980s & 1990s
Ensuring safety for drivers and
passengers
Ensuring safe driving, turning, and braking
Developing proprietary technologies for enhanced driving safety,
such as the horizontally-opposed engine and AWD.
Fundamental automobile performance in terms of driving, turning, and braking differs
depending on the vehicle's structure. In particular, the location of the center of gravity
and the type of drive train have a significant effect. The lower the center of gravity,
the more stable the cornering, while a drive train that delivers power to all of the
wheels gives constant stability when driving. This is the perspective that led Subaru,
in 1966, to launch the Subaru 1000—a FWD vehicle with a horizontally-opposed
engine—and, in 1972, the 4WD Subaru Leone. Since that time, we have
further honed our proprietary technologies and continued to pursue safe and
stable driving performance.
Commercializing EyeSight—Levorg with the latest
EyeSight (ver. 3) technology earns the highest ratings
in preventative safety tests.
In 2008, we commercialized our EyeSight technology with stereo cameras
constantly surveying the area forward of the vehicle, and warnings and
pre-crash braking functions for preventing accidents or mitigating damage
from accidents. Furthermore, in 2014, we achieved a new level of high
performance and function with the launch of EyeSight Ver. 3. The Levorg
with this latest EyeSight technology has garnered the highest ratings in a
host of preventative safety performance tests.
I N TH E 2 0 0 0 s & 20 1 0 s
Ensuring safety for everyone
INT O T HE F UT URE
Working toward achieving
a safer society
The future of safety according to Subaru.
Going forward, Subaru is working on development
themes, including heavy traffic autopilot and automat-
ed freeway driving, as we further evolve the EyeSight
technology. Under our philosophy of All-Around Safety,
we will continue to pursue safety from many diverse
perspectives and contribute to realizing a society with
automobiles that anyone can drive with peace of mind.
Subaru 360
Leone 4WD
Subaru 1000
FUJI HEAVY INDUSTRIES LTD.
02
ANNUAL REPORT 2015
Contents
01
04
05
06
07
14
17
27
29
31
THE SUBARU “SAFETY” JOURNEY
At a Glance
Business Highlights
Consolidated Financial and
Non-Financial Highlights
A Message to Our Shareholders
A Message from CFO
Special Feature:
PROMINENCE BY LEGACY
18 Introduction
19 Project General Manager (PGM)
Interview
23 Leveraging Production to Stand
Above the Crowd
25 Leveraging Marketing to Stand
Above the Crowd
Corporate Governance
Board Directors / Executive Officers
Financial Information
31 Consolidated Ten-Year Financial
Summary
32 Five-Year Automobile Sales
34 Management’s Discussion and
Analysis of Results of Operations
and Financial Position
42
Corporate Data / Stock Information
Disclaimer Regarding Forward-Looking Statements
Statements herein concerning plans and strategies,
expectations or projections about the future, FHI’s efforts
with regard to various management issues, and other
statements, except for historical facts, are forward-looking
statements. These forward-looking statements are subject
to uncertainties that could cause actual results to differ
materially from those anticipated. These uncertainties include,
but are not limited to, general economic conditions, demand
for and prices of FHI’s products, FHI’s ability to continue to
develop and market advanced products, raw material prices,
and currency exchange rates. FHI disclaims any obligation
to update any forward-looking statements, whether as a
result of new information, future events, or otherwise.
Confidence in Motion
Confidence in Motion is a unified global brand statement that encapsulates the aim of the Subaru brand.
Confidence reflects our approach towards reliable automobile manufacturing dating back to the Subaru 360
and the relationship of trust that we have built with customers by providing enjoyment and peace of mind.
In Motion expresses Subaru’s resolve to enhance customer trust by proactively staying abreast of changing trends.
Through Confidence in Motion, Subaru aims to meet customer expectations for the freedom and
fulfillment enabled by Subaru’s uniquely satisfying driving experience.
FUJI HEAVY INDUSTRIES LTD.
03
ANNUAL REPORT 2015
Confidence in Motion
Confidence in Motion is a unified global brand statement that encapsulates the aim of the Subaru brand.
Confidence reflects our approach towards reliable automobile manufacturing dating back to the Subaru 360
and the relationship of trust that we have built with customers by providing enjoyment and peace of mind.
In Motion expresses Subaru’s resolve to enhance customer trust by proactively staying abreast of changing trends.
Through Confidence in Motion, Subaru aims to meet customer expectations for the freedom and
fulfillment enabled by Subaru’s uniquely satisfying driving experience.
01
04
05
06
07
14
17
27
29
31
THE SUBARU “SAFETY” JOURNEY
At a Glance
Business Highlights
Consolidated Financial and
Non-Financial Highlights
A Message to Our Shareholders
A Message from CFO
Special Feature:
PROMINENCE BY LEGACY
18 Introduction
19 Project General Manager (PGM)
Interview
23 Leveraging Production to Stand
Above the Crowd
25 Leveraging Marketing to Stand
Above the Crowd
Corporate Governance
Board Directors / Executive Officers
Financial Information
31 Consolidated Ten-Year Financial
Summary
32 Five-Year Automobile Sales
34 Management’s Discussion and
Analysis of Results of Operations
and Financial Position
42
Corporate Data / Stock Information
Disclaimer Regarding Forward-Looking Statements
Statements herein concerning plans and strategies,
expectations or projections about the future, FHI’s efforts
with regard to various management issues, and other
statements, except for historical facts, are forward-looking
statements. These forward-looking statements are subject
to uncertainties that could cause actual results to differ
materially from those anticipated. These uncertainties include,
but are not limited to, general economic conditions, demand
for and prices of FHI’s products, FHI’s ability to continue to
develop and market advanced products, raw material prices,
and currency exchange rates. FHI disclaims any obligation
to update any forward-looking statements, whether as a
result of new information, future events, or otherwise.
Contents
At a Glance
Years ended March 31
SUBARU Automotive
Business
Aerospace Company
Industrial Products
Company
Percentage
by business
FYE March 2015
Net Sales
2,877.9
billion yen
SUBARU Automotive Business
93.8%
5.0%
Aerospace Company
Industrial Products Company
1.0%
0.2%
Other
Net sales for this division stood at ¥2,699.0
billion, an increase of ¥452.4 billion, or
20.1%, year on year. Segment income also
increased ¥91.9 billion, or 29.7%, year on
year to ¥400.9 billion.
The number of units sold worldwide
increased by 86 thousand units, or 10.4%,
year on year to 911 thousand units, owing to
the strength in the North American market.
Vehicle unit sales posted a record for the third
consecutive year both globally and outside
Japan, and for the sixth consecutive year in
the North American market.
Net sales in this division increased ¥18.4 billion,
or 14.8%, compared to the previous fiscal
year, to ¥142.8 billion. Segment income also
rose ¥4.8 billion, or 33.7%, year on year to
¥18.9 billion. Sales of the C-2 transport aircraft
to the Ministry of Defense exceeded that of
the previous fiscal year, while sales to the
commercial sector increased over the previous
fiscal year thanks to net sales-boosting factors
such as the exchange rate and a surge in
production of the Boeing 787, among others.
Net sales in the Industrial Products division
were down ¥0.7 billion, or 2.5%, from the
previous fiscal year, to ¥29.0 billion. Segment
income increased ¥0.1 billion, or 23.3%, year
on year to ¥0.8 billion.
Sales were higher for leisure-related engines
in North America, and sales were markedly
higher for pressure washer engines for North
American big box hardware stores. Sales for
general purpose engines for Japan and other
products, however, were lower.
Net Sales
(Billions of yen)
2,246.6
2,699.0
Operating Income
(Billions of yen)
400.9
309.0
Net Sales
(Billions of yen)
124.4
142.8
Operating Income
(Billions of yen)
18.9
Net Sales (Billions of yen)
29.8
29.0
Operating Income
(Billions of yen)
0.8
14.1
0.6
+
20.1%
+
29.7%
2014
2015
2014
2015
+
14.8%
2014
2015
+
33.7%
2014
2015
Points
• Sales were strong outside Japan for Legacy/Outback,
and WRX, and following on from last year, for
Forester as well.
• Increase in costs, such as R&D expenses, was offset
by increase in units sold, improvement in exchange
rates, and progress in reducing prime costs.
Point
• Products for the commercial sector saw increased
sales as the exchange rate improved, and production
units of the Being 787 increased.
FUJI HEAVY INDUSTRIES LTD.
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ANNUAL REPORT 2015
–
2.5%
2014
2015
+
23.3%
2014
2015
Point
• Sales grew for leisure-related engines and general
purpose engines in North America.
Business Highlights
Subaru Levorg Wins
“Good Design Award 2014”
The Subaru Levorg has won the “Good Design
Award 2014” from the Japan Institute of Design
Promotion (JDP). Following the 2013 award for the
Forester and 2012 award for the Impreza and Subaru
XV, this marks the 3rd consecutive year that Subaru
has been honored with the Good Design Award,
which reflects JDP’s high praise for the Subaru
design that fuses together style and functionality.
Subaru Posts Record Sales in the U.S.,
Canada, and Australia in 2014
Subaru’s 2014 calendar year retail sales have posted
all-time records in its key markets of the U.S.,
Canada, and Australia. Subaru’s U.S. sales in partic-
ular have exceeded a 500,000 unit milestone for
the first time in its history, while also achieving six
consecutive years of record sales and becoming the
only manufacturer in the U.S. to post seven consec-
utive years of sales growth.
Subaru Debuts “EyeSight”
Driving Support System in Europe
The all-new Outback launched in Europe during 2014
was the first Subaru model built to European specifi-
cations that featured our proprietary EyeSight driving
support system. EyeSight’s launch on the European
market, following on from its introduction to the Jap-
anese, Australian, and North American markets, en-
ables FHI to extend EyeSight’s deployment across
markets globally.
The New Subaru WRX’s Horizontally-
Opposed “DIT” Engine Named to
2015 Ward’s “10 Best Engines”
The U.S. automotive industry trade journal Ward’s
has named Subaru’s “FA20” 2.0-liter 4-cylinder hori-
zontally-opposed direct injection turbo “DIT” engine
in the U.S.-specification 2015 Subaru WRX a winner
of its 2015 Ward’s “10 Best Engines” award. This is
the fourth time, coming after a two-year hiatus, that
Subaru has won a prestigious Ward's “10 Best En-
gines” accolade.
FUJI HEAVY INDUSTRIES LTD.
05
ANNUAL REPORT 2015
Cumulative Production of Horizontally-
Opposed SUBARU BOXER Engine Reaches
15 Million Units
The cumulative total of horizontally-opposed
SUBARU BOXER engines produced has reached 15
million units. The achievement has come in the 49th
year since our water-cooled 4-cylinder horizontal-
ly-opposed aluminum engine was developed in 1966
and installed for the first time in the compact passen-
ger car Subaru 1000 in May of the same year.
Plant Constructed for Assembly of
Center Wing Boxes for Boeing’s 777X
FHI has begun construction of its third assembly
facility for aircraft parts on the premises of its Handa
Plant located in Handa City, Aichi Prefecture, Japan.
At the new facility, FHI plans to assemble center
wing boxes for the U.S.’s Boeing Co.’s next-genera-
tion passenger jet, the Boeing 777X. The new facili-
ty is scheduled to be completed in 2016.
FHI Subaru Visitor Center Sees
One Million Visitors
Visitors to the Subaru Visitor Center, located within the
Yajima Plant of the Gunma Manufacturing Division,
reached a cumulative total of 1 million people on
September 8, 2014. The Center was opened on July
15, 2003 to commemorate FHI's 50th anniversary
and hosts factory tours, mainly for elementary school
students visiting as part of their social studies classes.
During tours, visitors are given the opportunity to view
automobile manufacturing processes.
5 Subaru Models Awarded 2015 TOP
SAFETY PICK+ (TSP+) by IIHS in the U.S.
The Insurance Institute for Highway Safety (IIHS) in the
U.S. has awarded the best possible ranking of TSP+ in
2015 safety assessments of EyeSight-equipped 2015
models of Legacy, Outback, Forester, Impreza, and
Subaru XV currently sold in the North American region.
Business Highlights
Consolidated Financial and Non-Financial Highlights
FUJI HEAVY INDUSTRIES LTD. AND CONSOLIDATED SUBSIDIARIES
Years ended March 31
2011
2012
2013
2014
(Billions of yen)
2015
Net Sales
3,000
(Billions of yen)
For the Year:
Net sales
Operating income
Net income (loss)
Capital expenditures
Depreciation expenses
R&D expenses
Automobiles sales volume (thousand units)
Exchange rate (¥/$, non-consolidated)
At Year-End:
Total assets
Net assets
Interest-bearing debt
Number of employees
Financial Ratios:
ROE (%)
ROA1 (%)
¥
1,580.6
¥
1,517.1
¥
1,913.0
¥
2,408.1
¥ 2,877.9
84.1
50.3
43.1
49.8
42.9
657
86
1,188.3
414.0
330.6
27,296
12.7
7.0
44.0
38.5
54.3
53.7
48.1
640
79
1,352.5
451.6
341.0
27,123
8.9
3.5
120.4
119.6
70.2
55.9
49.1
724
82
1,577.5
596.8
307.2
27,509
22.9
8.2
326.5
206.6
68.5
54.9
60.1
825
100
1,888.4
770.1
269.7
28,545
30.4
18.8
423.0
261.9
110.7
64.8
83.5
911
108
2,199.7
1,030.7
211.2
29,774
29.3
20.7
1. ROA was calculated as “operating income / (average of assets at the beginning and end of the term)”
FUJI HEAVY INDUSTRIES LTD.
06
ANNUAL REPORT 2015
2,877.9
2,408.1
2,500
2,000
1,500
1,000
500
0
1,913.0
1,580.6 1,517.1
2011
2012
2013
2014
2015
Operating Income & Net Income (Loss)
(Billions of yen)
Operating Income
Net Income (Loss)
500
400
300
200
423.0
326.5
261.9
206.6
120.4
119.6
100
84.1
50.3
44.0 38.5
0
2011
2012
2013
2014
2015
Subaru Levorg Wins
“Good Design Award 2014”
The Subaru Levorg has won the “Good Design
Award 2014” from the Japan Institute of Design
Promotion (JDP). Following the 2013 award for the
Forester and 2012 award for the Impreza and Subaru
XV, this marks the 3rd consecutive year that Subaru
has been honored with the Good Design Award,
which reflects JDP’s high praise for the Subaru
design that fuses together style and functionality.
Subaru Posts Record Sales in the U.S.,
Canada, and Australia in 2014
Subaru’s 2014 calendar year retail sales have posted
all-time records in its key markets of the U.S.,
Canada, and Australia. Subaru’s U.S. sales in partic-
ular have exceeded a 500,000 unit milestone for
the first time in its history, while also achieving six
consecutive years of record sales and becoming the
only manufacturer in the U.S. to post seven consec-
utive years of sales growth.
Subaru Debuts “EyeSight”
Driving Support System in Europe
The all-new Outback launched in Europe during 2014
was the first Subaru model built to European specifi-
cations that featured our proprietary EyeSight driving
support system. EyeSight’s launch on the European
market, following on from its introduction to the Jap-
FHI Subaru Visitor Center Sees
One Million Visitors
Visitors to the Subaru Visitor Center, located within the
anese, Australian, and North American markets, en-
Yajima Plant of the Gunma Manufacturing Division,
ables FHI to extend EyeSight’s deployment across
reached a cumulative total of 1 million people on
markets globally.
September 8, 2014. The Center was opened on July
15, 2003 to commemorate FHI's 50th anniversary
and hosts factory tours, mainly for elementary school
students visiting as part of their social studies classes.
During tours, visitors are given the opportunity to view
automobile manufacturing processes.
5 Subaru Models Awarded 2015 TOP
SAFETY PICK+ (TSP+) by IIHS in the U.S.
The Insurance Institute for Highway Safety (IIHS) in the
U.S. has awarded the best possible ranking of TSP+ in
2015 safety assessments of EyeSight-equipped 2015
models of Legacy, Outback, Forester, Impreza, and
Subaru XV currently sold in the North American region.
Cumulative Production of Horizontally-
Opposed SUBARU BOXER Engine Reaches
15 Million Units
The cumulative total of horizontally-opposed
SUBARU BOXER engines produced has reached 15
million units. The achievement has come in the 49th
year since our water-cooled 4-cylinder horizontal-
ly-opposed aluminum engine was developed in 1966
and installed for the first time in the compact passen-
ger car Subaru 1000 in May of the same year.
Plant Constructed for Assembly of
Center Wing Boxes for Boeing’s 777X
The New Subaru WRX’s Horizontally-
Opposed “DIT” Engine Named to
2015 Ward’s “10 Best Engines”
The U.S. automotive industry trade journal Ward’s
has named Subaru’s “FA20” 2.0-liter 4-cylinder hori-
FHI has begun construction of its third assembly
zontally-opposed direct injection turbo “DIT” engine
facility for aircraft parts on the premises of its Handa
in the U.S.-specification 2015 Subaru WRX a winner
Plant located in Handa City, Aichi Prefecture, Japan.
of its 2015 Ward’s “10 Best Engines” award. This is
At the new facility, FHI plans to assemble center
the fourth time, coming after a two-year hiatus, that
wing boxes for the U.S.’s Boeing Co.’s next-genera-
Subaru has won a prestigious Ward's “10 Best En-
tion passenger jet, the Boeing 777X. The new facili-
gines” accolade.
ty is scheduled to be completed in 2016.
A Message to Our Shareholders
We pursue sustainable growth as a compelling company
with strong market presence and continued focus
on our differentiation strategy.
Yasuyuki Yoshinaga
Representative Director of the Board,
President and CEO
07
FUJI HEAVY INDUSTRIES LTD.ANNUAL REPORT 2015 A Message to Our Shareholders
A Message to Our Shareholders
We pursue sustainable growth as a compelling company
with strong market presence and continued focus
on our differentiation strategy.
Yasuyuki Yoshinaga
Representative Director of the Board,
President and CEO
What is your evaluation of results for FYE March 2015?
Q1
A1 We posted record high results for a third straight year thanks to
tireless effort by all divisions and subsidiaries in our Group.
Consolidated results for FYE March 2015 were 910,700 vehicles sold
(an increase of 10.4 percent compared with the previous fiscal year),
net sales of 2,877.9 billion yen (up 19.5 percent), operating income of
423.0 billion yen (up 29.6 percent), and net income of 261.9 billion yen
(up 26.7 percent), all of which were record numbers for the third year
in a row. Our operating margin also increased to 14.7% from
13.6% last year.
It is clear that continued weakness in the yen’s exchange rate
was a substantial factor in these improved results. However, I think
that behind this three-year achievement of record performance are
compounded efforts by all subsidiaries, affiliated companies, and
divisions in our Group who seized this tail wind and did not rest on
their laurels. Our Development units delivered new, extremely
competitive models, such as Legacy/Outback, to market this fiscal
year. In addition, all manufacturing departments continuously
operated at near-maximum capacity in order to respond to robust
demand. Not only our Automotive Business, but also our Aerospace
Company and Industrial Products Company each steadily grew
their results.
Q2
What do you see as the reason for strong sales in the U.S.?
A2 Rapid growth continues as we garner high evaluations
for our safety performance.
Last year, in 2014, the approximately 510,000 new vehicles sold in
the U.S. market represented nearly a three-fold increase over the
180,000 or so recorded in 2008. This growth cannot be solely
explained by the strength of the U.S. business environment and the
expanding demand for new vehicles. During this period, there has
been increased demand in the U.S. market for SUVs, where Subaru
is strong. However, I believe that the greatest factor leading to our
increased sales has been many Subaru models receiving top marks
in safety tests by U.S. rating agencies, solidifying an image in
American consumers' minds that Subaru is committed to safety.
Normally, this level of rapid growth would start to show signs of
tapering off, but we have been seeing increasing momentum since
launching our new Legacy/Outback models last year. Minimal
weakness in sales of models that have not been recently revamped,
as well as our ability to hold sales incentives to the lowest level in the
industry, is proof that the Subaru brand is extensively supported in
the U.S. market.
We have set a target of 540,000 units in the U.S. market in 2015,
yet our local dealers have requested supply increases, reporting that
they can aim for a higher target.
FUJI HEAVY INDUSTRIES LTD.
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ANNUAL REPORT 2015
A Message to Our Shareholders
Q3
How do you plan to grow your business in the U.S. in the future?
A3 We will aim to build a solid customer base in the U.S. market
by expanding production capacity, introducing PHEV that meet
environmental regulations, and strengthening our after-sales service.
Under Subaru of America, Inc. (SOA), our local subsidiary in the U.S.
market, we are continuing to enhance the quality of our sales
network, with a total of 625 dealers at present. Our growth strategy
is not to increase the number of dealers, but rather to increase the
number of units sold at each dealer. The result has led to an estab-
lished understanding that “becoming a Subaru franchise will
increase sales,” which fuels a positive cycle of competent dealers
gathering around us.
In order to further accelerate our business in the U.S., three
policy measures are built into our mid-term management
vision, “Prominence 2020,” announced in May 2014. The first is
introducing a new multi passenger three-row model, which we
currently have under development and is strongly requested
by local dealers. The second is expanding production capacity
at our subsidiary Subaru of Indiana Automotive, Inc. (SIA) to take our
current 200,000-unit production to nearly 400,000 units by the end
of 2016. And the third is support for the environment. In response
to the ZEV regulations in the U.S. that will be applied to new models
starting in the 2018MY, we have announced plans for a plug-in
hybrid electric vehicle (PHEV) featuring the compelling driving expe-
rience that is Subaru’s hallmark.
This year, SOA announced these policy measures at the gath-
ering for our U.S. dealers held in Indianapolis and received a spirited
reaction from those in attendance. These measures are a message
to our U.S. dealers that “Subaru will pour its full support into the U.S.
market, so please feel no anxiety about investing in your dealer-
ship.” Of particular importance is strengthening our after-sales
service. Even in the continually robust U.S. market, there will be an
economic pullback at some point. Until that time, it is all the more
important to build a solid customer base, for which enhancing
after-sales service is indispensable. Therefore we plan to offer, along-
side SOA, our full investment support for dealers’ service facilities
going forward.
FUJI HEAVY INDUSTRIES LTD.
09
ANNUAL REPORT 2015
Q3
How do you plan to grow your business in the U.S. in the future?
A3 We will aim to build a solid customer base in the U.S. market
by expanding production capacity, introducing PHEV that meet
environmental regulations, and strengthening our after-sales service.
Under Subaru of America, Inc. (SOA), our local subsidiary in the U.S.
to the ZEV regulations in the U.S. that will be applied to new models
market, we are continuing to enhance the quality of our sales
starting in the 2018MY, we have announced plans for a plug-in
network, with a total of 625 dealers at present. Our growth strategy
hybrid electric vehicle (PHEV) featuring the compelling driving expe-
is not to increase the number of dealers, but rather to increase the
rience that is Subaru’s hallmark.
number of units sold at each dealer. The result has led to an estab-
This year, SOA announced these policy measures at the gath-
lished understanding that “becoming a Subaru franchise will
ering for our U.S. dealers held in Indianapolis and received a spirited
increase sales,” which fuels a positive cycle of competent dealers
reaction from those in attendance. These measures are a message
gathering around us.
to our U.S. dealers that “Subaru will pour its full support into the U.S.
In order to further accelerate our business in the U.S., three
market, so please feel no anxiety about investing in your dealer-
policy measures are built into our mid-term management
ship.” Of particular importance is strengthening our after-sales
vision, “Prominence 2020,” announced in May 2014. The first is
service. Even in the continually robust U.S. market, there will be an
introducing a new multi passenger three-row model, which we
economic pullback at some point. Until that time, it is all the more
currently have under development and is strongly requested
important to build a solid customer base, for which enhancing
by local dealers. The second is expanding production capacity
after-sales service is indispensable. Therefore we plan to offer, along-
at our subsidiary Subaru of Indiana Automotive, Inc. (SIA) to take our
side SOA, our full investment support for dealers’ service facilities
current 200,000-unit production to nearly 400,000 units by the end
going forward.
of 2016. And the third is support for the environment. In response
A Message to Our Shareholders
A Message to Our Shareholders
Please share your outlook for FYE March 2016.
Q4
A4 We forecast consolidated net sales of 3,030 billion yen
and consolidated operating income of 503.0 billion yen
on the back of increasing sales in a consistently strong U.S. market.
In terms of consolidated results for FYE March 2016, we are planning
for 928,300 units for the number of vehicles sold, net sales of 3,030
billion yen, and operating income of 503.0 billion yen. These figures
were not created a priori, but rather were calculated from budgets
based on diligent analysis of conditions by each division. Our initial
decisions were made with calculations assuming an exchange rate
of 115 yen/US$. Afterwards, however, as the yen moved further
downward relative to the dollar, we announced final forecast numbers
assuming 118 yen/US$.
Reassessing conditions in each region, we see stronger sales
in the U.S. than expected, and we may even be able to post results
exceeding forecasts. At the same time, conditions in Russia and
other regions are more severe than they were when we set our
plans. In the Japan market, our plan was for decreased sales with
the prospect that the “new model effect” has run its course and the
outlook shows demand settling down, but April and May of this year
have continued to bring higher sales than expected, which may lead
to results exceeding forecasts. Although there are these regional
differences, our largest market, the U.S., remains strong and I am
confident that we will be able to achieve our targets overall.
How are you putting effort into initiatives to maintain sustainable growth going forward?
Q5
A5 We are working on thorough differentiation of our products and businesses,
aiming for a “prominent” presence in the minds of our customers.
In order for FHI, which is a small automaker, to survive in this
market, it is indispensable for us to focus our business resources
on specific markets and products, while clearly standing apart from
competitors. This strategy of ”differentiation” forms the core of our
business strategy and is the principle behind our concept of “promi-
nence,” which is the key word in the title of our mid-term manage-
ment vision guiding us to stand above the crowd. The concept is not
simply prominence with respect to other companies; the simple
word encapsulates our aim for “Subaru to have a prominent
presence in the minds of our customers,” which makes it a very high
hurdle indeed. This objective does not stop where the slogan ends.
Each and every member of all divisions is called upon to thoroughly
consider what it means to be “prominent in the minds of our
customers” and how to implement that in their work.
A specific approach to this is embodied in our efforts to focus on
the two key activities of “Enhancing the Subaru brand” and “Building
a strong business structure.” In order for the Subaru brand to be
prominent in the hearts and minds of our customers, we must
continue to stay one step ahead of competitors with respect to our
greatest strengths: safety features and drivability. Also, in order to
improve our market competitiveness and continue to meet the
expectations of our shareholders, it is absolutely necessary to take
cost reductions to a new level, push operating efficiencies forward,
and strengthen our business platform.
Even though business results are as favorable as they are, now is
the very time for all FHI employees to redouble our efforts and continue
to have a positive sense of urgency and even anxiety as we work to
further strengthen our brand and our business competitiveness.
FUJI HEAVY INDUSTRIES LTD.
10
ANNUAL REPORT 2015
A Message to Our Shareholders
What increased amounts are you targeting for your R&D expenses and capital expenditures?
Q6
A6 We will continue to pursue stronger R&D, increased production capacity,
and improved workplace environments to respond to safety and
environmental requirements.
In our consolidated three-year investment plan from FYE March
2015 to 2017, we initially allocated 250.0 billion yen to our R&D
expenses and 330.0 billion yen to capital expenditures. Subsequent
upward revisions, however, have taken into account the trend of
positive results since announcing the plan. Our new allocations are
for 280.0 billion yen and 400.0 billion yen in R&D expenses and
capital expenditures respectively.
In recent years, as each company launches vehicles with
automatic brake assist and other features, development competition
for safety technologies has reached a new, more challenging level.
Against this backdrop, Subaru’s EyeSight has garnered the highest
safety test approval ratings in the industry and we will continue to
actively push our R&D forward so that we can maintain this superiority
in safety features into the future. In addition, as environmental
regulations strengthen in regions across the globe, we will dedicate
effort toward ever greater fuel efficiency for internal combustion
systems, as well as toward developing PHEV. And furthermore, we
are actively hiring new and experienced engineers in order to further
strengthen our R&D programs.
At the same time, with regard to investing in facilities, our focus
has centered on building out production facilities so that we can
relieve our backlog of undelivered vehicles, though we would also
like to invest in the as yet unaddressed need to gradually renovate
aged facilities and enhance the workplace environment at our
business sites.
FUJI HEAVY INDUSTRIES LTD.
11
ANNUAL REPORT 2015
A Message to Our Shareholders
A Message to Our Shareholders
Q6
What increased amounts are you targeting for your R&D expenses and capital expenditures?
A6 We will continue to pursue stronger R&D, increased production capacity,
and improved workplace environments to respond to safety and
environmental requirements.
In our consolidated three-year investment plan from FYE March
in safety features into the future. In addition, as environmental
2015 to 2017, we initially allocated 250.0 billion yen to our R&D
regulations strengthen in regions across the globe, we will dedicate
expenses and 330.0 billion yen to capital expenditures. Subsequent
effort toward ever greater fuel efficiency for internal combustion
upward revisions, however, have taken into account the trend of
systems, as well as toward developing PHEV. And furthermore, we
positive results since announcing the plan. Our new allocations are
are actively hiring new and experienced engineers in order to further
for 280.0 billion yen and 400.0 billion yen in R&D expenses and
strengthen our R&D programs.
capital expenditures respectively.
At the same time, with regard to investing in facilities, our focus
In recent years, as each company launches vehicles with
has centered on building out production facilities so that we can
automatic brake assist and other features, development competition
relieve our backlog of undelivered vehicles, though we would also
for safety technologies has reached a new, more challenging level.
like to invest in the as yet unaddressed need to gradually renovate
Against this backdrop, Subaru’s EyeSight has garnered the highest
aged facilities and enhance the workplace environment at our
safety test approval ratings in the industry and we will continue to
business sites.
actively push our R&D forward so that we can maintain this superiority
Please tell us about your initiatives for diversity and fostering leaders of the next generation.
Q7
A7 While working to cultivate human capital with diverse skills and
business acumen, we are also dedicating effort to creating workplace
environments that support the active contribution of female employees.
Needless to say, it is important to continually train employees who
will be potential candidates for next-generation leaders, and to also
ensure smooth transitions from one leadership generation to the next,
so that our business can realize sustainable growth. Consequently,
FHI will foster not just one or two employees, but a sizeable group,
whose members are candidates for next-generation leaders, while
we select exceptional employees from the ranks of middle managers
to assume executive roles so that the management can stay fresh
and nimble. One link in this approach is to actively implement job
rotation across divisions for mid-career employees and middle
managers, where they are moved from domestic positions to
overseas positions, or from technical positions to sales positions,
and so on. We are striving to train a team of employees with a broad
range of work skills and business instincts.
Moreover, in order for our Company to maintain a robust level
of business going forward, diversity promotion, in addition to our
training of next-generation leaders, is indispensable. FHI established
a Diversity Promotion Office in 2014 and is chiefly devoting effort to
establishing an environment supportive of female employees'
contribution to the company, while also providing training support for
female managers. Also, since April 2015, a career-long FHI female
executive has served as director of the Human Resources Depart-
ment, which is in charge of the Diversity Promotion Office. As we
continue into the future, we hope to actively promote excellent
human capital regardless of age, gender, or nationality, so that we will
be able to grow as an organization with an even higher level of active
employee involvement.
Please explain a bit about the Subaru Next Story Project started in April 2015.
Q8
A8 We are utilizing the Internet, social networking services, etc.
to roll out a diverse array of projects to support the active lifestyles
of Subaru drivers.
In our mid-term management vision, “Prominence 2020,” we
indicated our goal to “elevate the brand-customer relationship to a
new level” as one of our initiatives toward focusing on “enhancing
the Subaru brand.” We started the Subaru Next Story Project, led by
young and mid-career employees, in order to put this sentiment into
action. The project takes advantage of the Internet and social
networking services to encourage customers to enjoy their Subaru
even more and to have a fulfilling lifestyle thanks in part to their
Subaru vehicle. At the same time, the project is also an initiative to
deepen our connection to customers and to introduce activities that
we can enjoy together with them.
In this project, we develop and implement a variety of ideas to
encourage the active lifestyles of our customers. To be specific, we
use a website to provide information on driving lessons, sports and
outdoor events, and other activities organized by Subaru; and we use
social networking services to facilitate exchange between users.
FUJI HEAVY INDUSTRIES LTD.
12
ANNUAL REPORT 2015
A Message to Our Shareholders
Q9
Please provide some information on your initiatives to strengthen corporate governance.
A9 While incorporating outside counsel and listening to feedback from society,
we strive for suitable information disclosure practices and
increased business transparency.
FHI has followed a practice of appointing professionals and experts
with business experience as outside directors and auditors,
and accepting valuable advice and instruction from external
perspectives. Going forward, we will implement measures,
including increasing our number of outside directors and auditors, to
strive to more conscientiously reflect outside opinions and
community input in our business decisions. Additionally, we will
devote effort to prompt and appropriate information disclosure and
further business transparency following the content of each
provision of the Tokyo Stock Exchange’s Corporate Governance
Code taking effect from June 1, 2015.
At present, we are putting particular effort into more extreme
quality control as one of our thematic focuses regarding governance
and CSR management. Amid continuing robust sales, each of our
production sites has been operating at near-maximum capacity in
recent years. However, it is absolutely inexcusable for quality
control to suffer as production excels. Our Production units are
being made thoroughly aware of their responsibility to stop the line
if they are not absolutely confident in the quality of products.
In FYE March 2015, FHI posted an operating income of 423.0 billion
Although this fiscal year, excluding the boost from exchange
had to be shipped by air on short notice in order to work around the
yen, a 96.6 billion yen increase year on year, and a record high profit
rates, showed a drop in profit of 7.1 billion yen, this result, in
cargo delays in U.S. ports. Furthermore, as weakness in the yen
level for the third straight year. In addition, our operating margin of
comparison to the previous fiscal year's 35.9 billion yen increase in
exceeded expectations this fiscal year, we intentionally chose not
14.7% maintained its place among the highest in our industry. The
profit, also excluding the benefit from exchange rates, does not at
to book the increase as additional profit and instead funneled
main driver of our profit increase was 103.7 billion yen from foreign
all indicate a decrease in profit generating capability year on year.
exchange gain, in addition to 70.3 billion yen from an improved sales
The special temporary factor this fiscal year was 10.5 billion yen
volume and mixture and 12.4 billion yen from cost reduction.
in logistics expenses for local production vehicle components that
Do you have a closing message for shareholders?
Q10
A10 FHI is committed to thorough and reliable automobile development and
manufacturing, while striving for sustainable growth and
preservation of the highest profit margins in the industry.
Aiming to be “A Compelling Company with Strong Market
Presence”—that is the management philosophy of FHI. In order
to realize this goal, we will continue to follow our principle that
“Customers Come First,” while demonstrating thorough
and reliable automobile development and manufacturing, and
delivering enjoyment and peace of mind to customers. At the
same time, we will continue to earn the trust of our shareholders
by bringing about sustainable growth while securing our
industry-leading high operating margin. Thank you for your support
and feedback going forward.
FUJI HEAVY INDUSTRIES LTD.
13
ANNUAL REPORT 2015
free cash flows within a range of 150.0 billion to 200.0 billion
yen going forward.
it toward R&D expenses and capital expenditures as a way to
realize sustainable growth through proactive investments for
the future.
Next, I will explain our finances. FHI’s free cash flows in FYE
At present, FHI is enjoying favorable sales centered on the
March 2015 amounted to 138.8 billion yen. Since we posted cash
U.S. market. Going forward, however, we expect environmental
flows of 279.1 billion yen in FYE March 2014, this appears to be
regulations in markets around the world to strengthen, including
a reduction by half, unless special temporary factors are taken
ZEV regulations in California and other states, and we predict
into account. As I also noted last year, the first special factor was
more intense competition in the development of advanced
an almost 50 billion yen cash inflow in FYE March 2014 due to
safety technology with the prospect of automated driving in the
the sale of Polaris stock, a U.S. company of which FHI was the
future. At FHI, we plan to continue boosting R&D expenses and
largest shareholder. Another factor was due to the timing of tax
capital expenditures, taking advantage of the current tail wind
payments. In FYE March 2014, we had an unrecorded expense of
from favorable financial results in order to survive this highly
approximately 90 billion yen cash-out for corporate tax, due to net
competitive environment.
operating loss carryforwards from past terms. This affected FYE
Under our new mid-term management vision, “Prominence
March 2015 with an inflated 190.0 billion yen cash-out, equivalent
2020,” announced in May 2014, we outlined a consolidated profit
to a year and half of corporate taxes, due to the previous fiscal
plan (see table on this page) targeting total net sales, total operating
year’s corporate and other taxes on top of the interim payment of
income, total R&D expenses, and total capital expenditures over the
half our annual corporate and other taxes, as required by the
three years from FYE March 2015 to 2017. When preparing the plan,
taxation system that bases payments on previous fiscal year
we assumed an exchange rate of 95 yen/US$, targeting three-year
performance.
total net sales of 8,000 billion yen and total operating income of
Excluding these special factors, our actual free cash flows
1,000 billion yen. Current exchange rate expectations, however,
were approximately 140.0 billion yen in FYE March 2014 and
show a large shift in the direction of a weaker yen and prospects
approximately 200.0 billion yen in FYE March 2015, reflecting
for significantly exceeding those targets. We have decided on
steady improvement in cash flow generation accompanying
a policy for taking surplus profits from favorable exchange rates
expansion in business. From FYE March 2016 and beyond,
and proactively channeling them to R&D expenses and capital
we plan to increase the previously mentioned R&D expenses
expenditures, raising the three-year total of R&D expenses from the
and boost capital expenditures as proactive investment for
initial 250.0 billion yen to 280.0 billion yen, and likewise the total of
the future. Since we also forecast increased levels of sales, I
capital expenditures from 330.0 billion yen to 400.0 billion yen.
believe that even with this investment policy we can maintain
A Message to Our Shareholders
A Message from the CFO
Q9
Please provide some information on your initiatives to strengthen corporate governance.
A9 While incorporating outside counsel and listening to feedback from society,
we strive for suitable information disclosure practices and
increased business transparency.
FHI has followed a practice of appointing professionals and experts
At present, we are putting particular effort into more extreme
with business experience as outside directors and auditors,
quality control as one of our thematic focuses regarding governance
and accepting valuable advice and instruction from external
and CSR management. Amid continuing robust sales, each of our
perspectives. Going forward, we will implement measures,
production sites has been operating at near-maximum capacity in
including increasing our number of outside directors and auditors, to
recent years. However, it is absolutely inexcusable for quality
strive to more conscientiously reflect outside opinions and
control to suffer as production excels. Our Production units are
community input in our business decisions. Additionally, we will
being made thoroughly aware of their responsibility to stop the line
devote effort to prompt and appropriate information disclosure and
if they are not absolutely confident in the quality of products.
further business transparency following the content of each
provision of the Tokyo Stock Exchange’s Corporate Governance
Code taking effect from June 1, 2015.
Q10
Do you have a closing message for shareholders?
A10 FHI is committed to thorough and reliable automobile development and
manufacturing, while striving for sustainable growth and
preservation of the highest profit margins in the industry.
Aiming to be “A Compelling Company with Strong Market
delivering enjoyment and peace of mind to customers. At the
Presence”—that is the management philosophy of FHI. In order
same time, we will continue to earn the trust of our shareholders
to realize this goal, we will continue to follow our principle that
by bringing about sustainable growth while securing our
“Customers Come First,” while demonstrating thorough
industry-leading high operating margin. Thank you for your support
and reliable automobile development and manufacturing, and
and feedback going forward.
We will keep high profit levels while making aggressive and proactive
investments for the future in order to realize sustainable growth
as well as stable and continuous return of profit to shareholders.
Mitsuru Takahashi
Director of the Board
Corporate Executive Vice President and CFO
Boosting R&D expenses and capital expenditures
to further improve our market competitiveness
In FYE March 2015, FHI posted an operating income of 423.0 billion
In FYE March 2015, FHI posted an operating income of 423.0 billion
yen, a 96.6 billion yen increase year on year, and a record high profit
yen, a 96.6 billion yen increase year on year, and a record high profit
level for the third straight year. In addition, our operating margin of
level for the third straight year. In addition, our operating margin of
14.7% maintained its place among the highest in our industry. The
14.7% maintained its place among the highest in our industry. The
main driver of our profit increase was 103.7 billion yen from foreign
main driver of our profit increase was 103.7 billion yen from foreign
exchange gain, in addition to 70.3 billion yen from an improved sales
exchange gain, in addition to 70.3 billion yen from an improved sales
volume and mixture and 12.4 billion yen from cost reduction.
volume and mixture and 12.4 billion yen from cost reduction.
Although this fiscal year, excluding the boost from exchange
Although this fiscal year, excluding the boost from exchange
rates, showed a drop in profit of 7.1 billion yen, this result, in
rates, showed a drop in profit of 7.1 billion yen, this result, in
comparison to the previous fiscal year's 35.9 billion yen increase in
comparison to the previous fiscal year's 35.9 billion yen increase in
profit, also excluding the benefit from exchange rates, does not at
profit, also excluding the benefit from exchange rates, does not at
all indicate a decrease in profit generating capability year on year.
all indicate a decrease in profit generating capability year on year.
The special temporary factor this fiscal year was 10.5 billion yen
The special temporary factor this fiscal year was 10.5 billion yen
in logistics expenses for local production vehicle components that
in logistics expenses for local production vehicle components that
had to be shipped by air on short notice in order to work around the
had to be shipped by air on short notice in order to work around the
cargo delays in U.S. ports. Furthermore, as weakness in the yen
cargo delays in U.S. ports. Furthermore, as weakness in the yen
exceeded expectations this fiscal year, we intentionally chose not
exceeded expectations this fiscal year, we intentionally chose not
to book the increase as additional profit and instead funneled
to book the increase as additional profit and instead funneled
Three-Year Changes in Operating Income
+70.3
+12.4
-66.6
+103.7
-23.2
423.0
+19.7
-24.0
+51.1
-10.9
326.5
+170.2
+29.3
-65.0
+31.5
+81.7
-1.0
120.4
44.0
Operating income
FYE March 2012
Improvement of
sales volume &
mixture and others
Cost
reduction
Gain on
currency
exchange
SG&A expenses
and others
R&D
expenses
Operating income
FYE March 2013
Gain on
currency
exchange
Improvement of
sales volume &
mixture and others
Cost
reduction
SG&A expenses
and others
R&D
expenses
Operating income
FYE March 2014
Gain on
currency
exchange
Improvement of
sales volume &
mixture and others
Cost
reduction
SG&A expenses
and others
R&D
expenses
Operating income
FYE March 2015
+76.4 billion yen
+206.1 billion yen
+96.6 billion yen
FUJI HEAVY INDUSTRIES LTD.
14
ANNUAL REPORT 2015
free cash flows within a range of 150.0 billion to 200.0 billion
free cash flows within a range of 150.0 billion to 200.0 billion
yen going forward.
yen going forward.
it toward R&D expenses and capital expenditures as a way to
it toward R&D expenses and capital expenditures as a way to
realize sustainable growth through proactive investments for
realize sustainable growth through proactive investments for
the future.
the future.
Next, I will explain our finances. FHI’s free cash flows in FYE
Next, I will explain our finances. FHI’s free cash flows in FYE
At present, FHI is enjoying favorable sales centered on the
At present, FHI is enjoying favorable sales centered on the
March 2015 amounted to 138.8 billion yen. Since we posted cash
March 2015 amounted to 138.8 billion yen. Since we posted cash
U.S. market. Going forward, however, we expect environmental
U.S. market. Going forward, however, we expect environmental
flows of 279.1 billion yen in FYE March 2014, this appears to be
flows of 279.1 billion yen in FYE March 2014, this appears to be
regulations in markets around the world to strengthen, including
regulations in markets around the world to strengthen, including
a reduction by half, unless special temporary factors are taken
a reduction by half, unless special temporary factors are taken
ZEV regulations in California and other states, and we predict
ZEV regulations in California and other states, and we predict
into account. As I also noted last year, the first special factor was
into account. As I also noted last year, the first special factor was
more intense competition in the development of advanced
more intense competition in the development of advanced
an almost 50 billion yen cash inflow in FYE March 2014 due to
an almost 50 billion yen cash inflow in FYE March 2014 due to
safety technology with the prospect of automated driving in the
safety technology with the prospect of automated driving in the
the sale of Polaris stock, a U.S. company of which FHI was the
the sale of Polaris stock, a U.S. company of which FHI was the
future. At FHI, we plan to continue boosting R&D expenses and
future. At FHI, we plan to continue boosting R&D expenses and
largest shareholder. Another factor was due to the timing of tax
largest shareholder. Another factor was due to the timing of tax
capital expenditures, taking advantage of the current tail wind
capital expenditures, taking advantage of the current tail wind
payments. In FYE March 2014, we had an unrecorded expense of
payments. In FYE March 2014, we had an unrecorded expense of
from favorable financial results in order to survive this highly
from favorable financial results in order to survive this highly
approximately 90 billion yen cash-out for corporate tax, due to net
approximately 90 billion yen cash-out for corporate tax, due to net
competitive environment.
competitive environment.
operating loss carryforwards from past terms. This affected FYE
operating loss carryforwards from past terms. This affected FYE
Under our new mid-term management vision, “Prominence
Under our new mid-term management vision, “Prominence
March 2015 with an inflated 190.0 billion yen cash-out, equivalent
March 2015 with an inflated 190.0 billion yen cash-out, equivalent
2020,” announced in May 2014, we outlined a consolidated profit
2020,” announced in May 2014, we outlined a consolidated profit
to a year and half of corporate taxes, due to the previous fiscal
to a year and half of corporate taxes, due to the previous fiscal
plan (see table on this page) targeting total net sales, total operating
plan (see table on this page) targeting total net sales, total operating
year’s corporate and other taxes on top of the interim payment of
year’s corporate and other taxes on top of the interim payment of
income, total R&D expenses, and total capital expenditures over the
income, total R&D expenses, and total capital expenditures over the
half our annual corporate and other taxes, as required by the
half our annual corporate and other taxes, as required by the
three years from FYE March 2015 to 2017. When preparing the plan,
three years from FYE March 2015 to 2017. When preparing the plan,
taxation system that bases payments on previous fiscal year
taxation system that bases payments on previous fiscal year
we assumed an exchange rate of 95 yen/US$, targeting three-year
we assumed an exchange rate of 95 yen/US$, targeting three-year
performance.
performance.
total net sales of 8,000 billion yen and total operating income of
total net sales of 8,000 billion yen and total operating income of
Excluding these special factors, our actual free cash flows
Excluding these special factors, our actual free cash flows
1,000 billion yen. Current exchange rate expectations, however,
1,000 billion yen. Current exchange rate expectations, however,
were approximately 140.0 billion yen in FYE March 2014 and
were approximately 140.0 billion yen in FYE March 2014 and
show a large shift in the direction of a weaker yen and prospects
show a large shift in the direction of a weaker yen and prospects
approximately 200.0 billion yen in FYE March 2015, reflecting
approximately 200.0 billion yen in FYE March 2015, reflecting
for significantly exceeding those targets. We have decided on
for significantly exceeding those targets. We have decided on
steady improvement in cash flow generation accompanying
steady improvement in cash flow generation accompanying
a policy for taking surplus profits from favorable exchange rates
a policy for taking surplus profits from favorable exchange rates
expansion in business. From FYE March 2016 and beyond,
expansion in business. From FYE March 2016 and beyond,
and proactively channeling them to R&D expenses and capital
and proactively channeling them to R&D expenses and capital
we plan to increase the previously mentioned R&D expenses
we plan to increase the previously mentioned R&D expenses
expenditures, raising the three-year total of R&D expenses from the
expenditures, raising the three-year total of R&D expenses from the
and boost capital expenditures as proactive investment for
and boost capital expenditures as proactive investment for
initial 250.0 billion yen to 280.0 billion yen, and likewise the total of
initial 250.0 billion yen to 280.0 billion yen, and likewise the total of
the future. Since we also forecast increased levels of sales, I
the future. Since we also forecast increased levels of sales, I
capital expenditures from 330.0 billion yen to 400.0 billion yen.
capital expenditures from 330.0 billion yen to 400.0 billion yen.
believe that even with this investment policy we can maintain
believe that even with this investment policy we can maintain
In FYE March 2015, FHI posted an operating income of 423.0 billion
Although this fiscal year, excluding the boost from exchange
had to be shipped by air on short notice in order to work around the
yen, a 96.6 billion yen increase year on year, and a record high profit
rates, showed a drop in profit of 7.1 billion yen, this result, in
cargo delays in U.S. ports. Furthermore, as weakness in the yen
level for the third straight year. In addition, our operating margin of
comparison to the previous fiscal year's 35.9 billion yen increase in
exceeded expectations this fiscal year, we intentionally chose not
14.7% maintained its place among the highest in our industry. The
profit, also excluding the benefit from exchange rates, does not at
to book the increase as additional profit and instead funneled
main driver of our profit increase was 103.7 billion yen from foreign
all indicate a decrease in profit generating capability year on year.
exchange gain, in addition to 70.3 billion yen from an improved sales
The special temporary factor this fiscal year was 10.5 billion yen
volume and mixture and 12.4 billion yen from cost reduction.
in logistics expenses for local production vehicle components that
A Message from the CFO
Three-Year Business Operation / Profit Plan
(Total of FYE2015–2017)
Net sales
Operating income
Currency rate assumption: 95 yen/US$
8 trillion yen
1 trillion yen
Revised Three-Year Investment Plan
(Total of FYE2015–2017)
R&D expenses
Capital expenditures
Depreciation & amortization
Original plan
Revised plan
250 billion yen
(+59%)
280 billion yen
(+78%)
330 billion yen
(+71%)
200 billion yen
(+22%)
400 billion yen
(+107%)
210 billion yen
(+28%)
( ): vs. previous 3 fiscal-year (FYE2012–FYE2014) period
it toward R&D expenses and capital expenditures as a way to
realize sustainable growth through proactive investments for
the future.
At present, FHI is enjoying favorable sales centered on the
U.S. market. Going forward, however, we expect environmental
regulations in markets around the world to strengthen, including
ZEV regulations in California and other states, and we predict
more intense competition in the development of advanced
safety technology with the prospect of automated driving in the
future. At FHI, we plan to continue boosting R&D expenses and
capital expenditures, taking advantage of the current tail wind
from favorable financial results in order to survive this highly
competitive environment.
Under our new mid-term management vision, “Prominence
2020,” announced in May 2014, we outlined a consolidated profit
plan (see table on this page) targeting total net sales, total operating
income, total R&D expenses, and total capital expenditures over the
three years from FYE March 2015 to 2017. When preparing the plan,
we assumed an exchange rate of 95 yen/US$, targeting three-year
total net sales of 8,000 billion yen and total operating income of
1,000 billion yen. Current exchange rate expectations, however,
show a large shift in the direction of a weaker yen and prospects
for significantly exceeding those targets. We have decided on
a policy for taking surplus profits from favorable exchange rates
and proactively channeling them to R&D expenses and capital
expenditures, raising the three-year total of R&D expenses from the
initial 250.0 billion yen to 280.0 billion yen, and likewise the total of
capital expenditures from 330.0 billion yen to 400.0 billion yen.
FUJI HEAVY INDUSTRIES LTD.
15
ANNUAL REPORT 2015
A certain amount of free cash flows maintained
while expanding proactive investments for the future
Next, I will explain our finances. FHI’s free cash flows in FYE
March 2015 amounted to 138.8 billion yen. Since we posted cash
flows of 279.1 billion yen in FYE March 2014, this appears to be
a reduction by half, unless special temporary factors are taken
into account. As I also noted last year, the first special factor was
an almost 50 billion yen cash inflow in FYE March 2014 due to
the sale of Polaris stock, a U.S. company of which FHI was the
largest shareholder. Another factor was due to the timing of tax
payments. In FYE March 2014, we had an unrecorded expense of
approximately 90 billion yen cash-out for corporate tax, due to net
operating loss carryforwards from past terms. This affected FYE
March 2015 with an inflated 190.0 billion yen cash-out, equivalent
to a year and half of corporate taxes, due to the previous fiscal
year’s corporate and other taxes on top of the interim payment of
half our annual corporate and other taxes, as required by the
taxation system that bases payments on previous fiscal year
performance.
Excluding these special factors, our actual free cash flows
were approximately 140.0 billion yen in FYE March 2014 and
approximately 200.0 billion yen in FYE March 2015, reflecting
steady improvement in cash flow generation accompanying
expansion in business. From FYE March 2016 and beyond,
we plan to increase the previously mentioned R&D expenses
and boost capital expenditures as proactive investment for
the future. Since we also forecast increased levels of sales, I
believe that even with this investment policy we can maintain
free cash flows within a range of 150.0 billion to 200.0 billion
yen going forward.
In FYE March 2015, FHI posted an operating income of 423.0 billion
In FYE March 2015, FHI posted an operating income of 423.0 billion
Although this fiscal year, excluding the boost from exchange
Although this fiscal year, excluding the boost from exchange
had to be shipped by air on short notice in order to work around the
had to be shipped by air on short notice in order to work around the
yen, a 96.6 billion yen increase year on year, and a record high profit
yen, a 96.6 billion yen increase year on year, and a record high profit
rates, showed a drop in profit of 7.1 billion yen, this result, in
rates, showed a drop in profit of 7.1 billion yen, this result, in
cargo delays in U.S. ports. Furthermore, as weakness in the yen
cargo delays in U.S. ports. Furthermore, as weakness in the yen
level for the third straight year. In addition, our operating margin of
level for the third straight year. In addition, our operating margin of
comparison to the previous fiscal year's 35.9 billion yen increase in
comparison to the previous fiscal year's 35.9 billion yen increase in
exceeded expectations this fiscal year, we intentionally chose not
exceeded expectations this fiscal year, we intentionally chose not
14.7% maintained its place among the highest in our industry. The
14.7% maintained its place among the highest in our industry. The
profit, also excluding the benefit from exchange rates, does not at
profit, also excluding the benefit from exchange rates, does not at
to book the increase as additional profit and instead funneled
to book the increase as additional profit and instead funneled
main driver of our profit increase was 103.7 billion yen from foreign
main driver of our profit increase was 103.7 billion yen from foreign
all indicate a decrease in profit generating capability year on year.
all indicate a decrease in profit generating capability year on year.
exchange gain, in addition to 70.3 billion yen from an improved sales
exchange gain, in addition to 70.3 billion yen from an improved sales
The special temporary factor this fiscal year was 10.5 billion yen
The special temporary factor this fiscal year was 10.5 billion yen
volume and mixture and 12.4 billion yen from cost reduction.
volume and mixture and 12.4 billion yen from cost reduction.
in logistics expenses for local production vehicle components that
in logistics expenses for local production vehicle components that
A Message from the CFO
A Message from the CFO
Three-Year Business Operation / Profit Plan
(Total of FYE2015–2017)
Net sales
Operating income
Currency rate assumption: 95 yen/US$
8 trillion yen
1 trillion yen
Revised Three-Year Investment Plan
(Total of FYE2015–2017)
R&D expenses
Capital expenditures
Depreciation & amortization
Original plan
Revised plan
250 billion yen
280 billion yen
(+59%)
(+78%)
330 billion yen
400 billion yen
(+71%)
(+107%)
200 billion yen
210 billion yen
(+22%)
(+28%)
( ): vs. previous 3 fiscal-year (FYE2012–FYE2014) period
it toward R&D expenses and capital expenditures as a way to
it toward R&D expenses and capital expenditures as a way to
realize sustainable growth through proactive investments for
realize sustainable growth through proactive investments for
the future.
the future.
A certain amount of free cash flows maintained
while expanding proactive investments for the future
Next, I will explain our finances. FHI’s free cash flows in FYE
Next, I will explain our finances. FHI’s free cash flows in FYE
At present, FHI is enjoying favorable sales centered on the
At present, FHI is enjoying favorable sales centered on the
March 2015 amounted to 138.8 billion yen. Since we posted cash
March 2015 amounted to 138.8 billion yen. Since we posted cash
U.S. market. Going forward, however, we expect environmental
U.S. market. Going forward, however, we expect environmental
flows of 279.1 billion yen in FYE March 2014, this appears to be
flows of 279.1 billion yen in FYE March 2014, this appears to be
regulations in markets around the world to strengthen, including
regulations in markets around the world to strengthen, including
a reduction by half, unless special temporary factors are taken
a reduction by half, unless special temporary factors are taken
ZEV regulations in California and other states, and we predict
ZEV regulations in California and other states, and we predict
into account. As I also noted last year, the first special factor was
into account. As I also noted last year, the first special factor was
more intense competition in the development of advanced
more intense competition in the development of advanced
an almost 50 billion yen cash inflow in FYE March 2014 due to
an almost 50 billion yen cash inflow in FYE March 2014 due to
safety technology with the prospect of automated driving in the
safety technology with the prospect of automated driving in the
the sale of Polaris stock, a U.S. company of which FHI was the
the sale of Polaris stock, a U.S. company of which FHI was the
future. At FHI, we plan to continue boosting R&D expenses and
future. At FHI, we plan to continue boosting R&D expenses and
largest shareholder. Another factor was due to the timing of tax
largest shareholder. Another factor was due to the timing of tax
capital expenditures, taking advantage of the current tail wind
capital expenditures, taking advantage of the current tail wind
payments. In FYE March 2014, we had an unrecorded expense of
payments. In FYE March 2014, we had an unrecorded expense of
from favorable financial results in order to survive this highly
from favorable financial results in order to survive this highly
approximately 90 billion yen cash-out for corporate tax, due to net
approximately 90 billion yen cash-out for corporate tax, due to net
competitive environment.
competitive environment.
operating loss carryforwards from past terms. This affected FYE
operating loss carryforwards from past terms. This affected FYE
Under our new mid-term management vision, “Prominence
Under our new mid-term management vision, “Prominence
March 2015 with an inflated 190.0 billion yen cash-out, equivalent
March 2015 with an inflated 190.0 billion yen cash-out, equivalent
2020,” announced in May 2014, we outlined a consolidated profit
2020,” announced in May 2014, we outlined a consolidated profit
to a year and half of corporate taxes, due to the previous fiscal
to a year and half of corporate taxes, due to the previous fiscal
plan (see table on this page) targeting total net sales, total operating
plan (see table on this page) targeting total net sales, total operating
year’s corporate and other taxes on top of the interim payment of
year’s corporate and other taxes on top of the interim payment of
income, total R&D expenses, and total capital expenditures over the
income, total R&D expenses, and total capital expenditures over the
half our annual corporate and other taxes, as required by the
half our annual corporate and other taxes, as required by the
three years from FYE March 2015 to 2017. When preparing the plan,
three years from FYE March 2015 to 2017. When preparing the plan,
taxation system that bases payments on previous fiscal year
taxation system that bases payments on previous fiscal year
we assumed an exchange rate of 95 yen/US$, targeting three-year
we assumed an exchange rate of 95 yen/US$, targeting three-year
performance.
performance.
total net sales of 8,000 billion yen and total operating income of
total net sales of 8,000 billion yen and total operating income of
Excluding these special factors, our actual free cash flows
Excluding these special factors, our actual free cash flows
1,000 billion yen. Current exchange rate expectations, however,
1,000 billion yen. Current exchange rate expectations, however,
were approximately 140.0 billion yen in FYE March 2014 and
were approximately 140.0 billion yen in FYE March 2014 and
show a large shift in the direction of a weaker yen and prospects
show a large shift in the direction of a weaker yen and prospects
approximately 200.0 billion yen in FYE March 2015, reflecting
approximately 200.0 billion yen in FYE March 2015, reflecting
for significantly exceeding those targets. We have decided on
for significantly exceeding those targets. We have decided on
steady improvement in cash flow generation accompanying
steady improvement in cash flow generation accompanying
a policy for taking surplus profits from favorable exchange rates
a policy for taking surplus profits from favorable exchange rates
expansion in business. From FYE March 2016 and beyond,
expansion in business. From FYE March 2016 and beyond,
and proactively channeling them to R&D expenses and capital
and proactively channeling them to R&D expenses and capital
we plan to increase the previously mentioned R&D expenses
we plan to increase the previously mentioned R&D expenses
expenditures, raising the three-year total of R&D expenses from the
expenditures, raising the three-year total of R&D expenses from the
and boost capital expenditures as proactive investment for
and boost capital expenditures as proactive investment for
initial 250.0 billion yen to 280.0 billion yen, and likewise the total of
initial 250.0 billion yen to 280.0 billion yen, and likewise the total of
the future. Since we also forecast increased levels of sales, I
the future. Since we also forecast increased levels of sales, I
capital expenditures from 330.0 billion yen to 400.0 billion yen.
capital expenditures from 330.0 billion yen to 400.0 billion yen.
believe that even with this investment policy we can maintain
believe that even with this investment policy we can maintain
Free Cash Flows & Shareholders’ Equity to Total Assets
(Billions of yen)
Free cash flows
Shareholders’ equity to total assets
300
240
180
120
60
0
279.1
40.5
46.5
138.8
37.7
95.3
34.7
33.3
87.1
28.3
2011
2012
2013
2014
2015
(FY)
(%)
50
40
30
20
10
0
operating environment and performance forecasts as close to
the payout date as possible. With this in mind, we have not
decided on our dividend plans for FYE March 2016 at this point.
Furthermore, we expect ROE (return on equity) to go down
in the future as shareholders’ equity increases. FHI does not
directly base dividend payout determinations on ROE. Going
forward, however, we want to both strengthen our financial
position and make continuous and stable returns of profit
to shareholders while keeping in mind the balance of our
shareholders’ equity ratio and ROE.
Although we are not large among automobile manufacturers,
we have built a position as a company with distinct individuality
in major markets inside and outside Japan by concentrating our
limited resources on limited markets and products. With our
mid-term management vision “Prominence 2020,” FHI aims to
achieve sustainable growth through proactive and future-oriented
investment and the securing of a fundamentally high level of
profitability. Thank you for your understanding and ongoing support
for the future.
free cash flows within a range of 150.0 billion to 200.0 billion
free cash flows within a range of 150.0 billion to 200.0 billion
yen going forward.
yen going forward.
Entering a new stage of shareholder returns while
striving to further enhance our financial position
Last, let me explain our policy of returning profits to shareholders.
FHI's basic dividend policy is to have stable and continuous
payouts while considering performance-linked benefits. We have
announced that the consolidated payout ratio would be between
20 and 40 percent in order to link dividends to performance. This
leeway in dividend payout ratio is to absorb a drop in dividends
within this 20-point range whereby a 20 percent level is set as the
basis for the income increase and a maximum of 40 percent is
set for the income decrease.
Compared to larger automakers, FHI's financial position has
not been especially airtight. Consequently, we have focused
on retained earnings up to this point and have tried to hold a
20% minimum payout ratio. At the same time, however, our
financial position has steadily improved in line with increased
business in the last several years. Shareholders’ equity to total
assets reached 46.5% in FYE March 2015 and it might very well
top 50% within FYE March 2016. So we see our operations as
having entered a new stage in FYE March 2016 and beyond
and we plan to return profits to shareholders without overly
emphasizing a 20% payout ratio, even though profits continue
to increase. However, we will carefully determine what ratio is
appropriate within the 20-40% range after closely judging our
FUJI HEAVY INDUSTRIES LTD.
16
ANNUAL REPORT 2015
Special Feature
PROMINENCE BY LEGACY
Leveraging Safety to Stand Out in the World
Subaru pursues automotive safety through development, design, production,
and sales, for which we have won praise throughout the world.
At Subaru, we design vehicles that reflect the voices of our customers;
we build production capabilities that deliver quality and meet demand;
and we constantly review and re-commit ourselves to the value that we offer.
17
FUJI HEAVY INDUSTRIES LTD.ANNUAL REPORT 2015 Introduction
Subaru pushes the evolution of its safety performance
from all directions and continues to devote effort
to reliable automobile manufacturing that delivers
enjoyment and peace of mind to our customers.
EyeSight®
The new Legacy/Outback models garnered
the highest performance ratings in Japanese, U.S.,
and European safety tests
Under its brand statement of “Confidence in Motion,” FHI is
committed to reliable automobile manufacturing that delivers
enjoyment and peace of mind to our customers. In order to
spur the evolution of the vehicle safety features that support
this “enjoyment and peace of mind,” we follow a philosophy
of “All-Around Safety” and strive for revolutionary safety
technology from all fronts: active safety, passive safety, and
pre-crash safety.
Amongst these technologies, the state-of-the-art Eye-
Sight on board new Legacy/Outback earned full marks in
preventative safety performance assessments conducted
by NASVA1 and the Ministry of Land, Infrastructure, Trans-
port and Tourism. Like Levorg, Forester, and Subaru XV
Hybrid, these new models were selected to receive the top
JNCAP ASV+ rating. In addition, new Outback outfitted
with EyeSight earned the highest marks in the 2014 Euro-
pean New Car Assessment Program. Furthermore, all five
models with EyeSight on board sold in the U.S. market
received 2015 Top Safety Pick+ awards, the highest evalu-
ation possible by the IIHS.2 These industry-leading safety
features recognized and awarded by ratings agencies
throughout the world are what bring the Subaru brand the
trust and support of its customers.
1 NASVA = National Agency for Automobile Safety and Victims' Aid
2 IIHS = Insurance Institute for Highway Safety
Control & Braking Systems
Symmetrical All-Wheel Drive
Active Torque Vectoring
SUBARU ALL AROUND SAFETY
Visibility & Child Safety
Protective Systems
SUBARU Rear Vehicle Detection
18
Special Feature
PROMINENCE BY LEGACY
Leveraging Safety to Stand Out in the World
Subaru pursues automotive safety through development, design, production,
and sales, for which we have won praise throughout the world.
At Subaru, we design vehicles that reflect the voices of our customers;
we build production capabilities that deliver quality and meet demand;
and we constantly review and re-commit ourselves to the value that we offer.
FUJI HEAVY INDUSTRIES LTD.ANNUAL REPORT 2015 the driving force behind our growth has been trust in our
brand, such that “Subaru = a vehicle with outstanding safety
performance,” which comes from Subaru safety features
being highly rated in safety assessments in countries
After taking charge of development for the new Legacy/Out-
throughout the world. The second pillar is our pursuit of
back, I first dedicated effort to incorporating customer
advanced safety technologies, as exemplified by EyeSight. At
feedback as completely as possible. Part of that process was
present, automakers have brought vehicles to market with
visiting the homes of owners, mainly in the U.S. market,
various kinds of driver support technologies, such as brake
which has shown the strongest demand for these models. I
assist. Despite the crowded field, EyeSight has garnered the
also considered how to gain further support for Legacy/Out-
highest level of assessments in various safety tests.
back and how to provide a reliable vehicle of course for the
Needless to say, we continued our pursuit of safety
U.S. market, but also globally. While lending an ear to a
performance from every angle in the development of the
variety of opinions and requests, we thoroughly researched,
new Legacy/Outback, including the adoption of the most up
and implemented the results, regarding what kind of vehicle
to date EyeSight ver. 3. If our cars are not reassuring enough
would bring the most enjoyment and fulfillment to our
so that anyone can ride in them with peace of mind, they will
customers’ lifestyles.
not be able to act as a partner for supporting enjoyable and
Of the stories that I learned from customers, I was
fulfilling lives for our customers.
particularly impressed by those regarding safety, including
comments like, “Although the car was badly damaged in an
accident, I avoided serious harm thanks to the reliable
collision safety performance.” Every time that I came in
contact with these examples of customer gratitude and
appreciation, it reaffirmed my awareness of the importance
of safety performance and of our great social responsibility as
an automaker.
Development of the new Legacy/Outback strove for “emo-
step further by envisioning a design that positively presents
There are two pillars to Subaru’s safety performance
tional value” in the new design and driving experience, in
initiatives. The first is our policy for “achieving a high level of
addition to Subaru’s already established competence in
safety performance for all vehicle models.” In actual practice,
functional value from safety performance, drivability, and
the vehicle’s achievement of high functionality and perfor-
mance while keeping the importance of emphasizing function-
al aesthetics. As our flagship models, the new Legacy/Out-
user friendliness. The concept of “emphasizing function and
performance for a real-world tool, with the design represent-
ing the results of that emphasis” was dominant in the minds
of our development team. Our recent approach has gone one
Special Feature: PROMINENCE BY LEGACY
Project General Manager (PGM) Interview
Development of the new Legacy/Outback started with
careful consideration of what kind of vehicle will bring
more fulfillment to our customers’ lifestyles.
Masayuki Uchida
Corporate Vice President,
Senior General Manager of the Subaru Engineering Division
(Previously Senior Project General Manager
of the Subaru Product & Portfolio Planning Division)
Professional Background
Joined Fuji Heavy Industries Ltd.
April 1981:
November 2003: General Manager, Body Design Department, Subaru Engineering Division
April 2005:
March 2008:
April 2010:
April 2011:
April 2015:
General Manager, Exterior Design Department, Subaru Engineering Division
General Manager, Subaru Engineering Division
PGM, Subaru Product & Portfolio Planning Division
Senior PGM, Subaru Product & Portfolio Planning Division
Corporate Vice President, Senior General Manager, Subaru Engineering Division
FUJI HEAVY INDUSTRIES LTD.
19
ANNUAL REPORT 2015
back feature superior drivability, safety, and reliability expressed
quality venturing into the domain of human sensibilities, or
of the development team argue that “we can settle for this
in the dynamic and powerful body, and emphasize quality
“emotional value” in other words. We strove for a vehicle that
level.” The entire team was committed to thoroughly pursuing
that appeals to all five senses. We have thoroughly polished
would heighten satisfaction for drivers and act as a partner for
the performance customers demand, which is the Subaru
every small detail, from the feel of the interior and other
supporting their fulfilling lifestyle.
way that development is done.
tactile surfaces, to the sounds of the engine and the various
Of course, aspects such as dynamic feel and inspirational
moving parts.
value differ from a vehicle's physical performance and cannot
In terms of the driving experience, our work did not stop at
be captured in numbers or figures. Our development process
physical driving performance, but extended to "dynamic feel"
had to use repeated road tests with prototypes to verify the
that would stimulate drivers to notice the comfort and smooth-
finer points of the driving feel, including steering and braking
ness of the ride, hopefully reacting with the sentiment, “I would
response, as well as running noise and vibration, etc. There
like to keep driving this forever.” Hence, our work on both the
were moments in the process when we were stuck and
design and the driving experience pursued a high level of
unable to attain our target results, but never once did members
Subaru’s commitment to automobile manufacturing from
the customer's perspective is also present in our approach to
fuel efficiency. To be sure, it is important to improve the adver-
tised catalog value for fuel efficiency, but we also emphasize
the actual mileage that customers will attain in normal driving
circumstances.
Our way of thinking with regard to an environmentally
conscious driving experience is not to impose restrictions on the
driver, but rather to achieve both efficiency and comfortable drivabil-
ity. Therefore, we have adopted an AWD system in order to deliver
safety and comfort under a wide variety of road surfaces, even
though it is disadvantageous for fuel efficiency due to increased
weight and mechanical loss compared with FWD vehicles. To
compensate, we improved engine and transmission efficiency,
boosted aerodynamic performance, and introduced “idling stop”
features to achieve best-in-class results for actual fuel efficiency
even compared to FWD vehicles. Indeed, customers of the
new Legacy/Outback have approved by remarking, “The fuel
Special Feature: PROMINENCE BY LEGACY
Project General Manager (PGM) Interview
Special Feature: PROMINENCE BY LEGACY
Project General Manager (PGM) Interview
If our cars are not reassuring enough so that anyone can ride
in them with peace of mind, they will not be able to act
as a partner for supporting customers' lifestyles.
Development of the new Legacy/Outback started with
careful consideration of what kind of vehicle will bring
more fulfillment to our customers’ lifestyles.
Masayuki Uchida
Corporate Vice President,
Senior General Manager of the Subaru Engineering Division
(Previously Senior Project General Manager
of the Subaru Product & Portfolio Planning Division)
Professional Background
April 1981:
Joined Fuji Heavy Industries Ltd.
November 2003: General Manager, Body Design Department, Subaru Engineering Division
April 2005:
General Manager, Exterior Design Department, Subaru Engineering Division
March 2008:
General Manager, Subaru Engineering Division
April 2010:
April 2011:
April 2015:
PGM, Subaru Product & Portfolio Planning Division
Senior PGM, Subaru Product & Portfolio Planning Division
Corporate Vice President, Senior General Manager, Subaru Engineering Division
We have thoroughly pursued safety performance
more than anything else in order to support
fulfilling lifestyles for our customers
After taking charge of development for the new Legacy/Out-
After taking charge of development for the new Legacy/Out-
back, I first dedicated effort to incorporating customer
back, I first dedicated effort to incorporating customer
feedback as completely as possible. Part of that process was
feedback as completely as possible. Part of that process was
visiting the homes of owners, mainly in the U.S. market,
visiting the homes of owners, mainly in the U.S. market,
which has shown the strongest demand for these models. I
which has shown the strongest demand for these models. I
also considered how to gain further support for Legacy/Out-
also considered how to gain further support for Legacy/Out-
back and how to provide a reliable vehicle of course for the
back and how to provide a reliable vehicle of course for the
U.S. market, but also globally. While lending an ear to a
U.S. market, but also globally. While lending an ear to a
variety of opinions and requests, we thoroughly researched,
variety of opinions and requests, we thoroughly researched,
and implemented the results, regarding what kind of vehicle
and implemented the results, regarding what kind of vehicle
would bring the most enjoyment and fulfillment to our
would bring the most enjoyment and fulfillment to our
customers’ lifestyles.
customers’ lifestyles.
Of the stories that I learned from customers, I was
Of the stories that I learned from customers, I was
particularly impressed by those regarding safety, including
particularly impressed by those regarding safety, including
comments like, “Although the car was badly damaged in an
comments like, “Although the car was badly damaged in an
accident, I avoided serious harm thanks to the reliable
accident, I avoided serious harm thanks to the reliable
collision safety performance.” Every time that I came in
collision safety performance.” Every time that I came in
contact with these examples of customer gratitude and
contact with these examples of customer gratitude and
appreciation, it reaffirmed my awareness of the importance
appreciation, it reaffirmed my awareness of the importance
of safety performance and of our great social responsibility as
of safety performance and of our great social responsibility as
an automaker.
an automaker.
There are two pillars to Subaru’s safety performance
There are two pillars to Subaru’s safety performance
initiatives. The first is our policy for “achieving a high level of
initiatives. The first is our policy for “achieving a high level of
safety performance for all vehicle models.” In actual practice,
safety performance for all vehicle models.” In actual practice,
the driving force behind our growth has been trust in our
the driving force behind our growth has been trust in our
brand, such that “Subaru = a vehicle with outstanding safety
brand, such that “Subaru = a vehicle with outstanding safety
performance,” which comes from Subaru safety features
performance,” which comes from Subaru safety features
being highly rated in safety assessments in countries
being highly rated in safety assessments in countries
throughout the world. The second pillar is our pursuit of
throughout the world. The second pillar is our pursuit of
advanced safety technologies, as exemplified by EyeSight. At
advanced safety technologies, as exemplified by EyeSight. At
present, automakers have brought vehicles to market with
present, automakers have brought vehicles to market with
various kinds of driver support technologies, such as brake
various kinds of driver support technologies, such as brake
assist. Despite the crowded field, EyeSight has garnered the
assist. Despite the crowded field, EyeSight has garnered the
highest level of assessments in various safety tests.
highest level of assessments in various safety tests.
Needless to say, we continued our pursuit of safety
Needless to say, we continued our pursuit of safety
performance from every angle in the development of the
performance from every angle in the development of the
new Legacy/Outback, including the adoption of the most up
new Legacy/Outback, including the adoption of the most up
to date EyeSight ver. 3. If our cars are not reassuring enough
to date EyeSight ver. 3. If our cars are not reassuring enough
so that anyone can ride in them with peace of mind, they will
so that anyone can ride in them with peace of mind, they will
not be able to act as a partner for supporting enjoyable and
not be able to act as a partner for supporting enjoyable and
fulfilling lives for our customers.
fulfilling lives for our customers.
Our development staff, to the person, have
endeavored to improve and refine designs and
the quality of drivability from our customers’
point of view
Development of the new Legacy/Outback strove for “emo-
Development of the new Legacy/Outback strove for “emo-
tional value” in the new design and driving experience, in
tional value” in the new design and driving experience, in
addition to Subaru’s already established competence in
addition to Subaru’s already established competence in
functional value from safety performance, drivability, and
functional value from safety performance, drivability, and
user friendliness. The concept of “emphasizing function and
user friendliness. The concept of “emphasizing function and
performance for a real-world tool, with the design represent-
performance for a real-world tool, with the design represent-
ing the results of that emphasis” was dominant in the minds
ing the results of that emphasis” was dominant in the minds
of our development team. Our recent approach has gone one
of our development team. Our recent approach has gone one
step further by envisioning a design that positively presents
step further by envisioning a design that positively presents
the vehicle’s achievement of high functionality and perfor-
the vehicle’s achievement of high functionality and perfor-
mance while keeping the importance of emphasizing function-
mance while keeping the importance of emphasizing function-
al aesthetics. As our flagship models, the new Legacy/Out-
al aesthetics. As our flagship models, the new Legacy/Out-
FUJI HEAVY INDUSTRIES LTD.
20
ANNUAL REPORT 2015
back feature superior drivability, safety, and reliability expressed
back feature superior drivability, safety, and reliability expressed
quality venturing into the domain of human sensibilities, or
quality venturing into the domain of human sensibilities, or
of the development team argue that “we can settle for this
of the development team argue that “we can settle for this
in the dynamic and powerful body, and emphasize quality
in the dynamic and powerful body, and emphasize quality
“emotional value” in other words. We strove for a vehicle that
“emotional value” in other words. We strove for a vehicle that
level.” The entire team was committed to thoroughly pursuing
level.” The entire team was committed to thoroughly pursuing
that appeals to all five senses. We have thoroughly polished
that appeals to all five senses. We have thoroughly polished
would heighten satisfaction for drivers and act as a partner for
would heighten satisfaction for drivers and act as a partner for
the performance customers demand, which is the Subaru
the performance customers demand, which is the Subaru
every small detail, from the feel of the interior and other
every small detail, from the feel of the interior and other
supporting their fulfilling lifestyle.
supporting their fulfilling lifestyle.
way that development is done.
way that development is done.
tactile surfaces, to the sounds of the engine and the various
tactile surfaces, to the sounds of the engine and the various
Of course, aspects such as dynamic feel and inspirational
Of course, aspects such as dynamic feel and inspirational
moving parts.
moving parts.
value differ from a vehicle's physical performance and cannot
value differ from a vehicle's physical performance and cannot
In terms of the driving experience, our work did not stop at
In terms of the driving experience, our work did not stop at
be captured in numbers or figures. Our development process
be captured in numbers or figures. Our development process
physical driving performance, but extended to "dynamic feel"
physical driving performance, but extended to "dynamic feel"
had to use repeated road tests with prototypes to verify the
had to use repeated road tests with prototypes to verify the
that would stimulate drivers to notice the comfort and smooth-
that would stimulate drivers to notice the comfort and smooth-
finer points of the driving feel, including steering and braking
finer points of the driving feel, including steering and braking
ness of the ride, hopefully reacting with the sentiment, “I would
ness of the ride, hopefully reacting with the sentiment, “I would
response, as well as running noise and vibration, etc. There
response, as well as running noise and vibration, etc. There
like to keep driving this forever.” Hence, our work on both the
like to keep driving this forever.” Hence, our work on both the
were moments in the process when we were stuck and
were moments in the process when we were stuck and
design and the driving experience pursued a high level of
design and the driving experience pursued a high level of
unable to attain our target results, but never once did members
unable to attain our target results, but never once did members
Subaru’s commitment to automobile manufacturing from
Subaru’s commitment to automobile manufacturing from
the customer's perspective is also present in our approach to
the customer's perspective is also present in our approach to
fuel efficiency. To be sure, it is important to improve the adver-
fuel efficiency. To be sure, it is important to improve the adver-
tised catalog value for fuel efficiency, but we also emphasize
tised catalog value for fuel efficiency, but we also emphasize
the actual mileage that customers will attain in normal driving
the actual mileage that customers will attain in normal driving
circumstances.
circumstances.
Our way of thinking with regard to an environmentally
Our way of thinking with regard to an environmentally
conscious driving experience is not to impose restrictions on the
conscious driving experience is not to impose restrictions on the
driver, but rather to achieve both efficiency and comfortable drivabil-
driver, but rather to achieve both efficiency and comfortable drivabil-
ity. Therefore, we have adopted an AWD system in order to deliver
ity. Therefore, we have adopted an AWD system in order to deliver
safety and comfort under a wide variety of road surfaces, even
safety and comfort under a wide variety of road surfaces, even
though it is disadvantageous for fuel efficiency due to increased
though it is disadvantageous for fuel efficiency due to increased
weight and mechanical loss compared with FWD vehicles. To
weight and mechanical loss compared with FWD vehicles. To
compensate, we improved engine and transmission efficiency,
compensate, we improved engine and transmission efficiency,
boosted aerodynamic performance, and introduced “idling stop”
boosted aerodynamic performance, and introduced “idling stop”
features to achieve best-in-class results for actual fuel efficiency
features to achieve best-in-class results for actual fuel efficiency
even compared to FWD vehicles. Indeed, customers of the
even compared to FWD vehicles. Indeed, customers of the
new Legacy/Outback have approved by remarking, “The fuel
new Legacy/Outback have approved by remarking, “The fuel
the driving force behind our growth has been trust in our
brand, such that “Subaru = a vehicle with outstanding safety
performance,” which comes from Subaru safety features
being highly rated in safety assessments in countries
After taking charge of development for the new Legacy/Out-
throughout the world. The second pillar is our pursuit of
back, I first dedicated effort to incorporating customer
advanced safety technologies, as exemplified by EyeSight. At
feedback as completely as possible. Part of that process was
present, automakers have brought vehicles to market with
visiting the homes of owners, mainly in the U.S. market,
various kinds of driver support technologies, such as brake
which has shown the strongest demand for these models. I
assist. Despite the crowded field, EyeSight has garnered the
also considered how to gain further support for Legacy/Out-
highest level of assessments in various safety tests.
back and how to provide a reliable vehicle of course for the
Needless to say, we continued our pursuit of safety
U.S. market, but also globally. While lending an ear to a
performance from every angle in the development of the
variety of opinions and requests, we thoroughly researched,
new Legacy/Outback, including the adoption of the most up
and implemented the results, regarding what kind of vehicle
to date EyeSight ver. 3. If our cars are not reassuring enough
would bring the most enjoyment and fulfillment to our
so that anyone can ride in them with peace of mind, they will
customers’ lifestyles.
not be able to act as a partner for supporting enjoyable and
Of the stories that I learned from customers, I was
fulfilling lives for our customers.
particularly impressed by those regarding safety, including
comments like, “Although the car was badly damaged in an
accident, I avoided serious harm thanks to the reliable
collision safety performance.” Every time that I came in
contact with these examples of customer gratitude and
appreciation, it reaffirmed my awareness of the importance
of safety performance and of our great social responsibility as
an automaker.
Development of the new Legacy/Outback strove for “emo-
step further by envisioning a design that positively presents
There are two pillars to Subaru’s safety performance
tional value” in the new design and driving experience, in
initiatives. The first is our policy for “achieving a high level of
addition to Subaru’s already established competence in
safety performance for all vehicle models.” In actual practice,
functional value from safety performance, drivability, and
the vehicle’s achievement of high functionality and perfor-
mance while keeping the importance of emphasizing function-
al aesthetics. As our flagship models, the new Legacy/Out-
user friendliness. The concept of “emphasizing function and
performance for a real-world tool, with the design represent-
ing the results of that emphasis” was dominant in the minds
of our development team. Our recent approach has gone one
Special Feature: PROMINENCE BY LEGACY
Project General Manager (PGM) Interview
The entire team was committed to thoroughly
pursuing the performance customers demand,
which is the Subaru way that development is done.
back feature superior drivability, safety, and reliability expressed
in the dynamic and powerful body, and emphasize quality
that appeals to all five senses. We have thoroughly polished
every small detail, from the feel of the interior and other
tactile surfaces, to the sounds of the engine and the various
moving parts.
In terms of the driving experience, our work did not stop at
physical driving performance, but extended to "dynamic feel"
that would stimulate drivers to notice the comfort and smooth-
ness of the ride, hopefully reacting with the sentiment, “I would
like to keep driving this forever.” Hence, our work on both the
design and the driving experience pursued a high level of
quality venturing into the domain of human sensibilities, or
“emotional value” in other words. We strove for a vehicle that
would heighten satisfaction for drivers and act as a partner for
supporting their fulfilling lifestyle.
Of course, aspects such as dynamic feel and inspirational
value differ from a vehicle's physical performance and cannot
be captured in numbers or figures. Our development process
had to use repeated road tests with prototypes to verify the
finer points of the driving feel, including steering and braking
response, as well as running noise and vibration, etc. There
were moments in the process when we were stuck and
unable to attain our target results, but never once did members
of the development team argue that “we can settle for this
level.” The entire team was committed to thoroughly pursuing
the performance customers demand, which is the Subaru
way that development is done.
We strove toward the dual goals of
environmental performance and a comfortable
driving experience, and were able to achieve
high fuel efficiency in an AWD vehicle
Subaru’s commitment to automobile manufacturing from
the customer's perspective is also present in our approach to
fuel efficiency. To be sure, it is important to improve the adver-
tised catalog value for fuel efficiency, but we also emphasize
the actual mileage that customers will attain in normal driving
circumstances.
Our way of thinking with regard to an environmentally
conscious driving experience is not to impose restrictions on the
driver, but rather to achieve both efficiency and comfortable drivabil-
ity. Therefore, we have adopted an AWD system in order to deliver
safety and comfort under a wide variety of road surfaces, even
though it is disadvantageous for fuel efficiency due to increased
weight and mechanical loss compared with FWD vehicles. To
compensate, we improved engine and transmission efficiency,
boosted aerodynamic performance, and introduced “idling stop”
features to achieve best-in-class results for actual fuel efficiency
even compared to FWD vehicles. Indeed, customers of the
new Legacy/Outback have approved by remarking, “The fuel
FUJI HEAVY INDUSTRIES LTD.
21
ANNUAL REPORT 2015
the driving force behind our growth has been trust in our
the driving force behind our growth has been trust in our
brand, such that “Subaru = a vehicle with outstanding safety
brand, such that “Subaru = a vehicle with outstanding safety
performance,” which comes from Subaru safety features
performance,” which comes from Subaru safety features
being highly rated in safety assessments in countries
being highly rated in safety assessments in countries
After taking charge of development for the new Legacy/Out-
After taking charge of development for the new Legacy/Out-
throughout the world. The second pillar is our pursuit of
throughout the world. The second pillar is our pursuit of
back, I first dedicated effort to incorporating customer
back, I first dedicated effort to incorporating customer
advanced safety technologies, as exemplified by EyeSight. At
advanced safety technologies, as exemplified by EyeSight. At
feedback as completely as possible. Part of that process was
feedback as completely as possible. Part of that process was
present, automakers have brought vehicles to market with
present, automakers have brought vehicles to market with
visiting the homes of owners, mainly in the U.S. market,
visiting the homes of owners, mainly in the U.S. market,
various kinds of driver support technologies, such as brake
various kinds of driver support technologies, such as brake
which has shown the strongest demand for these models. I
which has shown the strongest demand for these models. I
assist. Despite the crowded field, EyeSight has garnered the
assist. Despite the crowded field, EyeSight has garnered the
also considered how to gain further support for Legacy/Out-
also considered how to gain further support for Legacy/Out-
highest level of assessments in various safety tests.
highest level of assessments in various safety tests.
back and how to provide a reliable vehicle of course for the
back and how to provide a reliable vehicle of course for the
Needless to say, we continued our pursuit of safety
Needless to say, we continued our pursuit of safety
U.S. market, but also globally. While lending an ear to a
U.S. market, but also globally. While lending an ear to a
performance from every angle in the development of the
performance from every angle in the development of the
variety of opinions and requests, we thoroughly researched,
variety of opinions and requests, we thoroughly researched,
new Legacy/Outback, including the adoption of the most up
new Legacy/Outback, including the adoption of the most up
and implemented the results, regarding what kind of vehicle
and implemented the results, regarding what kind of vehicle
to date EyeSight ver. 3. If our cars are not reassuring enough
to date EyeSight ver. 3. If our cars are not reassuring enough
would bring the most enjoyment and fulfillment to our
would bring the most enjoyment and fulfillment to our
so that anyone can ride in them with peace of mind, they will
so that anyone can ride in them with peace of mind, they will
customers’ lifestyles.
customers’ lifestyles.
not be able to act as a partner for supporting enjoyable and
not be able to act as a partner for supporting enjoyable and
Of the stories that I learned from customers, I was
Of the stories that I learned from customers, I was
fulfilling lives for our customers.
fulfilling lives for our customers.
particularly impressed by those regarding safety, including
particularly impressed by those regarding safety, including
comments like, “Although the car was badly damaged in an
comments like, “Although the car was badly damaged in an
accident, I avoided serious harm thanks to the reliable
accident, I avoided serious harm thanks to the reliable
collision safety performance.” Every time that I came in
collision safety performance.” Every time that I came in
contact with these examples of customer gratitude and
contact with these examples of customer gratitude and
appreciation, it reaffirmed my awareness of the importance
appreciation, it reaffirmed my awareness of the importance
of safety performance and of our great social responsibility as
of safety performance and of our great social responsibility as
an automaker.
an automaker.
Development of the new Legacy/Outback strove for “emo-
Development of the new Legacy/Outback strove for “emo-
step further by envisioning a design that positively presents
step further by envisioning a design that positively presents
There are two pillars to Subaru’s safety performance
There are two pillars to Subaru’s safety performance
tional value” in the new design and driving experience, in
tional value” in the new design and driving experience, in
initiatives. The first is our policy for “achieving a high level of
initiatives. The first is our policy for “achieving a high level of
addition to Subaru’s already established competence in
addition to Subaru’s already established competence in
safety performance for all vehicle models.” In actual practice,
safety performance for all vehicle models.” In actual practice,
functional value from safety performance, drivability, and
functional value from safety performance, drivability, and
the vehicle’s achievement of high functionality and perfor-
the vehicle’s achievement of high functionality and perfor-
mance while keeping the importance of emphasizing function-
mance while keeping the importance of emphasizing function-
al aesthetics. As our flagship models, the new Legacy/Out-
al aesthetics. As our flagship models, the new Legacy/Out-
user friendliness. The concept of “emphasizing function and
user friendliness. The concept of “emphasizing function and
performance for a real-world tool, with the design represent-
performance for a real-world tool, with the design represent-
ing the results of that emphasis” was dominant in the minds
ing the results of that emphasis” was dominant in the minds
of our development team. Our recent approach has gone one
of our development team. Our recent approach has gone one
Special Feature: PROMINENCE BY LEGACY
Project General Manager (PGM) Interview
Special Feature: PROMINENCE BY LEGACY
Project General Manager (PGM) Interview
The entire team was committed to thoroughly
pursuing the performance customers demand,
which is the Subaru way that development is done.
We will continue our quest to
develop high quality vehicles
that exceed customers' expectations.
Imperatives to consider during design and development
• Following the quality management cycle
• Handling recalls
• Pursuing safety features with our concept of
“ALL-AROUND SAFETY”
• Addressing fuel efficiency standards
• Improving and proliferating certified low-emission vehicles
• Recycling vehicles
Please see our CSR website for details.
• Customers and Products (http://www.fhi.co.jp/english/envi/csr/csr/consumers/)
• Environment (http://www.fhi.co.jp/english/envi/csr/csr/environment/environment.html)
back feature superior drivability, safety, and reliability expressed
back feature superior drivability, safety, and reliability expressed
quality venturing into the domain of human sensibilities, or
quality venturing into the domain of human sensibilities, or
of the development team argue that “we can settle for this
of the development team argue that “we can settle for this
in the dynamic and powerful body, and emphasize quality
in the dynamic and powerful body, and emphasize quality
“emotional value” in other words. We strove for a vehicle that
“emotional value” in other words. We strove for a vehicle that
level.” The entire team was committed to thoroughly pursuing
level.” The entire team was committed to thoroughly pursuing
that appeals to all five senses. We have thoroughly polished
that appeals to all five senses. We have thoroughly polished
would heighten satisfaction for drivers and act as a partner for
would heighten satisfaction for drivers and act as a partner for
the performance customers demand, which is the Subaru
the performance customers demand, which is the Subaru
every small detail, from the feel of the interior and other
every small detail, from the feel of the interior and other
supporting their fulfilling lifestyle.
supporting their fulfilling lifestyle.
way that development is done.
way that development is done.
tactile surfaces, to the sounds of the engine and the various
tactile surfaces, to the sounds of the engine and the various
Of course, aspects such as dynamic feel and inspirational
Of course, aspects such as dynamic feel and inspirational
moving parts.
moving parts.
value differ from a vehicle's physical performance and cannot
value differ from a vehicle's physical performance and cannot
In terms of the driving experience, our work did not stop at
In terms of the driving experience, our work did not stop at
be captured in numbers or figures. Our development process
be captured in numbers or figures. Our development process
physical driving performance, but extended to "dynamic feel"
physical driving performance, but extended to "dynamic feel"
had to use repeated road tests with prototypes to verify the
had to use repeated road tests with prototypes to verify the
that would stimulate drivers to notice the comfort and smooth-
that would stimulate drivers to notice the comfort and smooth-
finer points of the driving feel, including steering and braking
finer points of the driving feel, including steering and braking
ness of the ride, hopefully reacting with the sentiment, “I would
ness of the ride, hopefully reacting with the sentiment, “I would
response, as well as running noise and vibration, etc. There
response, as well as running noise and vibration, etc. There
like to keep driving this forever.” Hence, our work on both the
like to keep driving this forever.” Hence, our work on both the
were moments in the process when we were stuck and
were moments in the process when we were stuck and
design and the driving experience pursued a high level of
design and the driving experience pursued a high level of
unable to attain our target results, but never once did members
unable to attain our target results, but never once did members
Subaru’s commitment to automobile manufacturing from
Subaru’s commitment to automobile manufacturing from
We will continue to work as a team with our
subsidiaries, affiliated companies, and local
partners to deliver vehicles that exceed the
expectations of customers
When building our production facilities in the U.S., we
dispatched a large number of engineers to our local production
subsidiary, Subaru of Indiana Automotive, Inc. (SIA), and
cooperated across divisions, from development, to production
and quality control, in our efforts preparing for mass produc-
tion. Local employees were also proactive in providing ideas,
which helped everyone work as a team to achieve high quality
and high value for our users. In addition, expectations were
very high from Subaru of America Inc. (SOA), our U.S. sales
subsidiary, and from local dealers. During development, key
persons from SOA and local dealers reviewed the design,
were actively involved in test drives, and helped us toward the
final product with their candid input.
This demonstrates the comprehensive and collective effort
that went into developing the new Legacy/Outback, which
have garnered very high praise for their safety and driving
performance, as well as their design and overall feel. Conse-
quently, since the models debuted, strong sales numbers have
outstripped our expectations not only in the U.S. and Japan,
but in other parts of the world as well. To our delight, a consid-
erable number of buyers have chosen the new Legacy/Out-
back over premium European brands.
In response to this trust, and in order to further solidify
Subaru’s brand strength in the global car market, we will
continue our quest to develop high quality vehicles that exceed
customers’ expectations.
We strove toward the dual goals of
environmental performance and a comfortable
driving experience, and were able to achieve
high fuel efficiency in an AWD vehicle
the customer's perspective is also present in our approach to
the customer's perspective is also present in our approach to
fuel efficiency. To be sure, it is important to improve the adver-
fuel efficiency. To be sure, it is important to improve the adver-
tised catalog value for fuel efficiency, but we also emphasize
tised catalog value for fuel efficiency, but we also emphasize
the actual mileage that customers will attain in normal driving
the actual mileage that customers will attain in normal driving
circumstances.
circumstances.
Our way of thinking with regard to an environmentally
Our way of thinking with regard to an environmentally
conscious driving experience is not to impose restrictions on the
conscious driving experience is not to impose restrictions on the
driver, but rather to achieve both efficiency and comfortable drivabil-
driver, but rather to achieve both efficiency and comfortable drivabil-
ity. Therefore, we have adopted an AWD system in order to deliver
ity. Therefore, we have adopted an AWD system in order to deliver
safety and comfort under a wide variety of road surfaces, even
safety and comfort under a wide variety of road surfaces, even
though it is disadvantageous for fuel efficiency due to increased
though it is disadvantageous for fuel efficiency due to increased
weight and mechanical loss compared with FWD vehicles. To
weight and mechanical loss compared with FWD vehicles. To
compensate, we improved engine and transmission efficiency,
compensate, we improved engine and transmission efficiency,
boosted aerodynamic performance, and introduced “idling stop”
boosted aerodynamic performance, and introduced “idling stop”
features to achieve best-in-class results for actual fuel efficiency
features to achieve best-in-class results for actual fuel efficiency
even compared to FWD vehicles. Indeed, customers of the
even compared to FWD vehicles. Indeed, customers of the
new Legacy/Outback have approved by remarking, “The fuel
new Legacy/Outback have approved by remarking, “The fuel
22
FUJI HEAVY INDUSTRIES LTD.ANNUAL REPORT 2015
Special Feature: PROMINENCE BY LEGACY
Leveraging Production to Stand Above the Crowd
Gunma Manufacturing Division
(Main Plant & Yajima Plant)
U.S. (SIA Plant)
U.S. (SIA Plant)
Dedicating effort toward expanding capacity
and ensuring efficient operations to meet
continually growing North American demand.
After the launch of new Legacy/Outback in 2014, sales of Subaru vehicles in the North American
market jumped to a new level. In order to meet this increased demand in North America,
we decided to move forward plans for expanding capacity at our local production subsidiary
Subaru of Indiana Automotive, Inc. (SIA), whose facilities will be built out to handle some 390,000
vehicles annually by the end of 2016.
Moving into the future, we will also efficiently run our production lines, a total of five
in the U.S. and Japan, to meet demand in the global marketplace.
Overseas
U.S. (SIA Plant)
Japan
Gunma
Manufacturing
Division
(Main Plant &
Yajima Plant)
829,000 vehicles
200,000 vehicles
850,000 vehicles
218,000 vehicles
960,000 vehicles
328,000 vehicles
66,000 vehicle increase
1,026,000 vehicles
394,000 vehicles
629,000 vehicles
632,000 vehicles
632,000 vehicles
632,000 vehicles
End of 2014
Spring 2016
End of 2016 (initial plan)
End of 2016 (revised plan)
FUJI HEAVY INDUSTRIES LTD.
23
ANNUAL REPORT 2015
Special Feature: PROMINENCE BY LEGACY
Leveraging Production to Stand Above the Crowd
Special Feature: PROMINENCE BY LEGACY
Leveraging Production to Stand Above the Crowd
Imperatives to consider during production
• Following the quality management cycle
• Aiming for zero disasters and accidents (holding a Health and Safety Kickoff Meeting
at each business site at the beginning of each fiscal year)
• Risk assessment activities
• 5th Voluntary Plan for the Environment (FY2012–16)
• Primary environmental performance (amounts of CO2 emission, waste generation
(including scrap metal sold for profit) and PRTR materials)
• Communication with business partners (holding Purchasing Policy Briefings every
spring; collaborating with Cooperation Meetings composed of our business partners)
Please see our CSR website for details.
• Customers and Products (http://www.fhi.co.jp/english/envi/csr/csr/consumers/)
• Environment (http://www.fhi.co.jp/english/envi/csr/csr/environment/environment.html)
Dedicating effort toward expanding capacity
and ensuring efficient operations to meet
continually growing North American demand.
After the launch of new Legacy/Outback in 2014, sales of Subaru vehicles in the North American
market jumped to a new level. In order to meet this increased demand in North America,
we decided to move forward plans for expanding capacity at our local production subsidiary
Subaru of Indiana Automotive, Inc. (SIA), whose facilities will be built out to handle some 390,000
vehicles annually by the end of 2016.
Moving into the future, we will also efficiently run our production lines, a total of five
in the U.S. and Japan, to meet demand in the global marketplace.
In addition to popular new models, strong sales
continue for existing models
Subaru sales in the U.S. in 2014 posted a year-on-year gain of
21.0%, reaching approximately 510,000 vehicles. In addition
to seeing record high unit sales for six years running, Subaru is
the only automaker to beat previous-year U.S. results for seven
years in a row. On top of this, sales in Canada, with approximate-
ly 42,000 vehicles (up 14.3% year on year), have seen record
highs for three years in a row. Proof that the Subaru brand is
maintaining high approval in the North American market lies
not only in the strong sales growth for Legacy/Outback—last
year’s recipients of a full model change—but also in the steady
sales of Impreza and Forester, which have not been revamped
as recently.
829,000 vehicles
200,000 vehicles
850,000 vehicles
218,000 vehicles
960,000 vehicles
328,000 vehicles
66,000 vehicle increase
1,026,000 vehicles
394,000 vehicles
629,000 vehicles
632,000 vehicles
632,000 vehicles
632,000 vehicles
End of 2014
Spring 2016
End of 2016 (initial plan)
End of 2016 (revised plan)
Bringing SIA expansion plans ahead by four years
and building capacity for some 390,000 vehicles
by the end of 2016
In FHI’s mid-term management vision, announced in May 2014,
we explained plans to expand capacity at our U.S. production
subsidiary Subaru of Indiana Automotive, Inc. (SIA), in order to
meet growing demand in North America. Originally, we had
targeted staggered increases, starting from approximately
170,000 units initially and moving toward 310,000 in FY2017,
then 400,000 in FY2021. Increasingly robust North American
sales buoyed by the subsequent launch of new models,
however, led us to greatly expedite plans and announce a target
of 394,000 units by the end of 2016. Simultaneous with this
capacity expansion will be the shift of production of Impreza
vehicles for North America from Japan-based production to
production on a newly built line at SIA.
Our plans for boosting production
will give us, by the end of 2016, a total
of five production lines: three in Japan
and two at SIA. Going forward, we will
continue to dedicate effort to flexible
operations so that each plant will be
able to promptly handle increased sales
of any of our models, and so that we
can efficiently run these five production
lines at their maximum capacity.
FUJI HEAVY INDUSTRIES LTD.
24
ANNUAL REPORT 2015
Special Feature: PROMINENCE BY LEGACY
Special Feature: PROMINENCE BY LEGACY
Leveraging Marketing to Stand Above the Crowd
Focusing on the inspirational and emotional value
of cars supported by exceptional utility and safety
Subaru is esteemed in the global automobile market as a
company with distinct individuality. Part of that is our use of
proprietary technologies such as the horizontally-opposed
engine and Symmetrical All-Wheel Drive, which stem from our
pursuit of stability and control under a variety of road conditions.
Additionally, a significant Subaru characteristic is our thorough
effort to build cars that prioritize safety from every angle, from
primary safety (such as visibility) to collision safety. This reliability
with regard to safety and basic driving performance had previously
won Subaru acclaim from U.S. customers who value cars as
practical driving machines.
Furthermore, results of SOA’s surveys of owner awareness
and behavior have shown strong trust and affection from
many owners toward the Subaru brand and cars. Survey
results indicated that Subaru vehicles are actively utilized not
only in daily life, but also as part of owners’ lifestyles, be it
through hobbies, sports, leisure, or other pursuits. Amidst this
context, SOA started, from 2007, the LOVE Campaign to
showcase owners‘ enjoyment of the inspirational and emotional
value, over and above the functions and performance, of our
cars. The campaign seeks to effectively convey Subaru’s
characteristic individuality to a wide range of customers.
Following a marketing strategy localized for Subaru of America,
and communicating the appeal of the Subaru brand
from a thoroughly customer-centric standpoint
Sales of Subaru vehicles in the U.S. market have continued to grow well above the demand for
new vehicles and Subaru has continued to increase its brand presence since 2008. One of the
approaches that played a key role in enabling this rapid progress in the U.S. was the LOVE Campaign,
a marketing strategy started in 2007 by local subsidiary Subaru of America, Inc. (SOA).
FUJI HEAVY INDUSTRIES LTD.
25
ANNUAL REPORT 2015
Special Feature: PROMINENCE BY LEGACY
Leveraging Marketing to Stand Above the Crowd
Special Feature: PROMINENCE BY LEGACY
Leveraging Marketing to Stand Above the Crowd
SOA Initiatives
• Strengthening customer service through telephone support
and through the website.
Please see our CSR website for details.
• Customers and Products (http://www.fhi.co.jp/english/envi/csr/csr/consumers/)
Following a marketing strategy localized for Subaru of America,
and communicating the appeal of the Subaru brand
from a thoroughly customer-centric standpoint
Sales of Subaru vehicles in the U.S. market have continued to grow well above the demand for
new vehicles and Subaru has continued to increase its brand presence since 2008. One of the
approaches that played a key role in enabling this rapid progress in the U.S. was the LOVE Campaign,
a marketing strategy started in 2007 by local subsidiary Subaru of America, Inc. (SOA).
Focusing on the inspirational and emotional value
of cars supported by exceptional utility and safety
Subaru is esteemed in the global automobile market as a
company with distinct individuality. Part of that is our use of
proprietary technologies such as the horizontally-opposed
engine and Symmetrical All-Wheel Drive, which stem from our
pursuit of stability and control under a variety of road conditions.
Additionally, a significant Subaru characteristic is our thorough
effort to build cars that prioritize safety from every angle, from
primary safety (such as visibility) to collision safety. This reliability
with regard to safety and basic driving performance had previously
won Subaru acclaim from U.S. customers who value cars as
practical driving machines.
Furthermore, results of SOA’s surveys of owner awareness
and behavior have shown strong trust and affection from
many owners toward the Subaru brand and cars. Survey
results indicated that Subaru vehicles are actively utilized not
only in daily life, but also as part of owners’ lifestyles, be it
through hobbies, sports, leisure, or other pursuits. Amidst this
context, SOA started, from 2007, the LOVE Campaign to
showcase owners‘ enjoyment of the inspirational and emotional
value, over and above the functions and performance, of our
cars. The campaign seeks to effectively convey Subaru’s
characteristic individuality to a wide range of customers.
Marketing a fulfilling lifestyle achieved
by driving a Subaru
Prior to 2007, Subaru advertising in the U.S. had been short-term
in focus, targeting groups of prospective buyers by showing the
specific functions and performance of each model—such as
price or fuel economy. Consequently, the overall brand image
was vague and market awareness of Subaru idled at a low level.
To address this, the LOVE Campaign chose a unique marketing
strategy to express the brand value from an owner's standpoint,
including the owner‘s trust and love of their Subaru and the
fulfilling lifestyle they are able to create with their family
because they drive a Subaru.
The campaign struck a chord with U.S. buyers and successfully
expanded the customer demographic of the Subaru brand.
Furthermore, the revolutionary EyeSight advanced driving support
system made its debut, while at the same time all Subaru
models garnered the highest approval ratings from U.S. safety
agencies. These awards allowed us to further prove the high
level of safety that underscores owners’ “love for Subaru,”
boosting the campaign’s persuasiveness in the process.
Devoting effort to social contribution activities
while aiming to be the most loved company in
local communities
As part of the LOVE Campaign, SOA inaugurated “Share the
Love,” a program through which $250 is donated to a charitable
organization for each Subaru vehicle sold. The program was very
well received by customers, with many voicing opinions such as,
“I am glad that I can support society by purchasing a Subaru.”
Furthermore, SOA is currently rolling out a project called
“The Subaru Love Promise,” and is being run in collaboration
with dealers all across the U.S. Specifically, The Subaru Love
Promise is a variety of initiatives to contribute to local communi-
ties and societies through activities and charitable causes such
as environmental conservation, education, animal protection,
and similar activities.
VOICE
Through these types of activities, SOA and Subaru dealers
in each part of the U.S. hope to become objects of trust and
love in the eyes of owners and local communities, much the
same as the Subaru brand and cars. To that end, we are striving
to further increase the number of devotees to vehicles under
the Subaru brand, while also helping each dealer grow toward
being No. 1 in their region.
Providing cars that precisely reflect market demands,
while continuing to build relationships of long-term trust with customers
Subaru has won trust from its customers by continuing to provide
vehicles to the U.S. market with superior quality and the industry’s
most advanced safety features. Additionally, by becoming a partner in
the active lifestyles of owners, including responding to diverse
customer demands such as “wanting to safely navigate snowy roads”
and “wanting to enjoy long-distance family road trips,” the Subaru
brand has come to enjoy devotion and love from its owners.
Of course, it is indispensable to introduce models that deftly
perceive the needs of the marketplace in order to keep customers
choosing Subaru. This is why the Subaru models in our current lineup
are all situated in growth segments of the U.S. marketplace and reflect
customer demands in terms of size, price point, etc. We are proud to
declare that our success today in the U.S. is the result of collaboration
FUJI HEAVY INDUSTRIES LTD.
26
ANNUAL REPORT 2015
utilizing Fuji Heavy Industries’ advanced technological development
plus SOA’s market analysis and marketing acumen.
Going forward, we will continue to build long-term relationships of
trust with owners by providing them with special experiences that are
part of what make a Subaru a Subaru.
Thomas J. Doll
President
Chief Operating Officer
Corporate Governance
Corporate Governance
Corporate Governance System
for the selection of corporate officer candidates, and the Execu-
take various measures to further strengthen internal control,
tive Compensation Meeting is responsible for evaluating the
and will also disclose information fairly and in a timely manner
performance and determining the compensation of executives.
in order to increase management transparency.
Also, the execution of important business operations is
decided and supervised by the board of directors and audited
Since June 1999, FHI has employed an executive officer
by the board of corporate auditors. The board of directors
Internal Controls System
system that clarifies the managerial responsibilities of execu-
consists of eight members with two of them invited from the
tives in each division. In June 2003, we reduced the term of
outside as independent members to enhance governance.
Internal controls are an indispensable mechanism for achieving
directors and executive officers from two years to one. More-
The board of corporate auditors consists of four members
corporate objectives, and management is responsible for
over, since June 2004, based on a decision of the Board of
with three of them invited from the outside for higher objec-
establishing them and maintaining their effectiveness and
Directors, the Executive Nomination Meeting is responsible
tivity to monitor business management. In addition, we will
efficiency. At FHI, the Corporate Planning Department (which
System of Corporate Governance
General Meeting of Shareholders
Board of Corporate Auditors Meeting
4 Auditors
(Incl. 3 Outside Corporate Auditors)
Accounting Auditors
Committees
Board of Directors Meeting
8 Directors (Incl.2 Outside Directors)
Executive Compensation Meeting
plays a central role in the common functions of each busi-
ness) and other company-wide departments maintain close
links with other departments and companies to enhance risk
management.
In addition, the Audit Department performs planned
Executive Nomination Meeting
audits of each department and Group company. To support
internal controls, FHI has created a system and organization to
ensure compliance, which is the foundation of risk manage-
ment. Further, in compliance with the Standards for Manage-
ment Assessment and Audit Concerning Internal Control
Over Financial Reporting issued by the Business Accounting
Internal Audit Department
(Audit Department)
President / Representative Directors
CSR Committee
Deliberation Council of the Financial Services Agency on
February 15, 2007, we work to continuously strengthen the
Environmental Committee
internal controls system of the entire Group so as to achieve
Compliance Committee
the following:
1. Effective and efficient operations
2. Reliable financial reporting
Executive Management Board Meeting
Recall Committee
3. Compliance with laws and regulations in all business
Corporate Vice Presidents
Export Control Committee
activities
4. Safeguarding of assets
Corporate Operations at HQ, Automotive BU, Each Company and Affiliate of the Group
FUJI HEAVY INDUSTRIES LTD.
27
ANNUAL REPORT 2015
Corporate Governance
Executive Compensation
Risk Management
Location-Specific Business Continuity Plans (BCPs)
As approved by the Ordinary General Meeting of Share-
We define risk as uncertain elements with the potential for
With the goal of minimizing any reduction of service to
holders in June 2006, the total amount of yearly compensa-
negative impact on our business operations. While there are
customers and preventing loss of market share and corpo-
tion paid to directors and corporate auditors is limited to ¥600
many types of risk, we call those risks that are particularly
rate value, we have created a BCP for each business unit to
million and ¥100 million, respectively. The compensation paid
dangerous to our business operations and that we cannot
maintain business operations or restore them as quickly as
to directors must be approved by the Board of Directors and
handle through regular decision-making channels “crisis-level
possible in the event of an emergency. Should our resources
is divided into a fixed amount (based on position, the busi-
risks” and categorize them as follows: natural disaster, acci-
(employees, physical assets, monetary assets) be affected
ness environment, and other factors) and a performance-
dent, internal human factors, external human factors, social
by an emergency, we will leverage our remaining resources
based amount (based on consolidated ordinary income for
factors (domestic, overseas), and compliance. We have
to minimize the shutdown of priority operations and restore
the fiscal year under review, the business environment, and
created manuals for dealing with each type of emergency,
all operations to their original state as quickly as possible.
other factors). In fiscal 2015, compensation for directors and
which delineate what communication channels are to be
We have also established an Emergency Response Policy,
corporate auditors was as follows:
used once a risk is recognized, how to form crisis manage-
in accordance with which we strive to maintain operations
Total compensation (millions of yen)
optimally to the situation.
ment headquarters, and other methods to follow to respond
in the event of an emergency.
Classification
Number
Basic compensation
Directors
(excluding outside directors)
Corporate auditors
(excluding outside corporate auditors)
Outside executive officers
7
2
3
Fixed
amount
241
30
44
Performance-
based amount
229
470
−
−
30
44
Total
Note:
12
315
229
544
This table includes one corporate auditor who retired by the end of the fiscal year.
As of March 31, 2015, the Company maintains seven directors (including one outside
director) and four corporate auditors (including two outside corporate auditors).
Emergency Response Policy
1 Give first priority to people’s survival and physical safety.
2 Minimize loss of stakeholder interests and corporate
value.
3 Act always with honesty, fairness, and transparency,
even in an emergency.
FHI emergency response procedure manual and crisis
management (disaster prevention) guidelines
FUJI HEAVY INDUSTRIES LTD.
28
ANNUAL REPORT 2015
Board Directors / Executive Officers
FUJI HEAVY INDUSTRIES LTD.
29
ANNUAL REPORT 2015
Board Directors / Executive Officers
Directors of the Board
Yasuyuki Yoshinaga 1
Representative Director of the Board
President & CEO
April 1977 Joined the Company
April 2005 Corporate Vice President, Senior General Manager of Strategy Development
Division, and General Manager of Corporate Planning Department
June 2006 Corporate Vice President and Chief General Manager of Strategy Development Division
April 2007 Corporate Vice President, Chief General Manager of Subaru Japan Sales &
Marketing Division, and General Manager of Sales Promotion Department
June 2007 Corporate Senior Vice President and Chief General Manager of Subaru Japan
Sales & Marketing Division
June 2009 Director of the Board and Corporate Executive Vice President
June 2011 Representative Director of the Board, President & CEO
2
Jun Kondo
Representative Director of the Board
Deputy President
April 1976 Joined the Company
June 2003 Corporate Vice President, Chief General Manager of Subaru Manufacturing
Division, and Chief General Manager of Gunma Plant
May 2004 Corporate Vice President, Chief General Manager of Subaru Cost Planning &
Management Division, and General Manager of Cost Planning Department
June 2004 Corporate Senior Vice President and Chief General Manager of Subaru Cost
Planning & Management Division
June 2006 Corporate Senior Vice President, Chief General Manager of Subaru Cost Planning &
Management Division, and Senior General Manager of Subaru Purchasing Division
April 2007 Corporate Senior Vice President, Chief General Manager of Strategy Development
Division, and Chief General Manager of Subaru Cost Planning & Management Division
June 2008 Director of the Board and Corporate Executive Vice President
June 2011 Representative Director of the Board and Deputy President
3
Naoto Muto
Director of the Board
Corporate Executive Vice President
April 1977 Joined the Company
April 2005 Corporate Vice President, Senior General Manager of Subaru Product & Portfolio
Planning Division, and General Manager of Subaru Product & Portfolio Planning Division
June 2006 Corporate Vice President and Chief General Manager of Subaru Product & Portfolio
Planning Division
June 2007 Corporate Senior Vice President and Chief General Manager of Subaru Product &
Portfolio Planning Division
April 2009 Corporate Senior Vice President and Chief General Manager of Subaru Purchasing Division
June 2010 Corporate Executive Vice President and Chief General Manager of Subaru Purchasing
Division
June 2011 Director of the Board and Corporate Executive Vice President
4
Mitsuru Takahashi
Director of the Board
Corporate Executive Vice President
April 1978 Joined the Company
June 2006 Corporate Vice President and General Manager of Finance & Accounting Department
April 2009 Corporate Senior Vice President, CFO, and General Manager of Finance & Accounting
Department
April 2010 Corporate Senior Vice President, CFO, General Manager of Finance & Accounting
Department, and President of Eco Technologies Company
June 2010 Corporate Executive Vice President, CFO, General Manager of Finance & Accounting
Department, and. President of Eco Technologies Company
April 2011 Corporate Executive Vice President, CFO, and President of Eco Technologies Company
June 2012 Director of the Board, Corporate Executive Vice President, CFO, and President
Executive Officers
Outside Directors
The Company has appointed Toshio
Arima to the position of outside director.
Possessing considerable experience as an
executive and a high degree of expertise
in the area of CSR, Mr. Arima offers sound
advice to and ensures the independent
monitoring of the Board of Directors and
other bodies. The Company has appointed
Nobushige Imai to the position of outside
auditor. Mr. Imai is fully qualified for this po-
sition owing to the wealth of management
experience and knowledge he acquired as
an executive in the financial industry, and
he has the character and ability needed to
undertake audits in an objective manner.
In addition, the Company has appointed
Takatoshi Yamamoto to the position of
outside auditor. Mr. Yamamoto is fully quali-
fied for this position owing to the wealth of
knowledge of corporate activities he gained
as a securities analyst and the corporate
management experience he gained as an
executive in the manufacturing industry.
Further, since they possess exemplary
backgrounds and no conflict with the
interests of ordinary shareholders can be
foreseen, the Company has appointed Mr.
Arima and Mr. Yamamoto as independent
directors under Tokyo Stock Exchange
(TSE) regulations.
Corporate Executive Vice President
Shuzo Haimoto
Hisashi Nagano
Nobuhiko Murakami
Corporate Senior Vice President
Yasuo Kosakai
Tomomi Nakamura
Kazuo Hosoya
Masaki Okawara
Yasunobu Nogai
Satoshi Maeda
Toshiaki Okada
Corporate Vice President
Masashi Takahashi
Masami Iida
Hiromi Tsutsumi
Shoichiro Tozuka
Toshiaki Tamegai
Hiroki Kurihara
Tetsuo Onuki
Yoichi Katou
Masayuki Uchida
Takuji Dai
Fumiaki Hayata
Auditors
Standing Corporate Auditor
Akira Mabuchi
Nobushige Imai
Corporate Auditor
Takatoshi Yamamoto
Shinichi Mita
5
Takeshi Tachimori
Director of the Board
Corporate Executive Vice President
April 1977 Joined the Company
June 2006 Corporate Vice President and Senior General Manager of Subaru Product &
Portfolio Planning Division
April 2009 Corporate Vice President, Chief General Manager of Subaru Product &
Portfolio Planning Division, and President of Subaru Tecnica International Inc.
April 2010 Corporate Senior Vice President and Chief General Manager of Subaru
Product & Portfolio Planning Division
April 2011 Corporate Senior Vice President and Chairman, President & CEO of Subaru of
America, Inc.
June 2011 Corporate Senior Vice President; Chairman, President & CEO of Subaru of
America, Inc.; and Chief General Manager of Subaru Overseas Sales &
Marketing Division 1
April 2013 Corporate Executive Vice President, Chairman & CEO of Subaru of America,
Inc., and Chief General Manager of Subaru Overseas Sales & Marketing
Division 1
June 2013 Director of the Board and Corporate Executive Vice President
6
Masahiro Kasai
Director of the Board
Corporate Executive Vice President
April 1978 Joined the Company
June 2007 Corporate Vice President and President & CEO of Subaru of Indiana
Automotive, Inc.
April 2009 Corporate Vice President, Chief General Manager of Subaru
Manufacturing Division, and Chief General Manager of Gunma Plant
April 2010 Corporate Senior Vice President, Chief General Manager of Subaru
Manufacturing Division, and Chief General Manager of Gunma Plant
April 2014 Corporate Executive Vice President and Chief General Manager of
Subaru Purchasing Division
June 2015 Director of the Board and Corporate Executive Vice President
Toshio Arima
Outside Director
June 2011 Outside Director
7
Yoshinori Komamura
8
Outside Director
June 2015 Outside Director
7
5
3
1
6
2
8
4
FUJI HEAVY INDUSTRIES LTD.
30
ANNUAL REPORT 2015
Consolidated Ten-Year Financial Summary
FUJI HEAVY INDUSTRIES LTD. AND CONSOLIDATED SUBSIDIARIES Years ended March 31
(Millions of yen)
(Thousands of U.S. dollars1)
Consolidated Automobile Sales by Region
(Number of units)
Consolidated Automobile Sales
(Number of units)
For the year:
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income (loss)
Income (loss) before income taxes and minority interests
Net income (loss)
Comprehensive income
At year-end:
Net assets2
Shareholders’ equity
Total assets
Ratio of shareholders’ equity to total assets (%)
Per share: (in yen and U.S. dollars)
Net income (loss):
Basic
Diluted
Net assets
Other information:
Depreciation/amortization
Capital expenditures (addition to fixed assets)
Research and development expenses
Number of shares issued (thousands of shares)3
Number of shareholders3
Number of employees3
Parent only
Consolidated
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2015
¥
1,476,368
1,125,293
351,075
292,736
58,339
28,674
15,611
—
¥
1,494,817
1,142,674
352,143
304,237
47,906
45,589
31,899
—
¥
1,572,346
1,217,662
354,684
309,004
45,680
31,906
18,481
—
¥
1,445,790
1,164,564
281,226
287,029
（5,803）
（21,517）
（69,933）
—
¥
1,428,690
1,152,763
275,927
248,577
27,350
（443）
（16,450）
（13,416）
¥
1,580,563
1,241,427
339,136
255,001
84,135
63,214
50,326
34,900
¥
1,517,105
1,222,419
294,686
250,727
43,959
52,879
38,453
44,474
¥
1,912,968
1,501,809
411,159
290,748
120,411
93,082
119,588
152,009
¥
2,408,129
1,728,271
679,858
353,369
326,489
328,865
206,616
210,757
¥
2,877,913
2,017,490
860,423
437,378
423,045
392,206
261,873
309,271
$
23,928,769
16,774,674
7,154,095
3,636,634
3,517,461
3,261,046
2,177,376
2,571,473
¥
467,786
465,522
1,348,400
34.5%
¥
495,703
494,004
1,316,041
37.5%
¥
494,423
493,397
1,296,388
38.1%
¥
394,719
393,946
1,165,431
33.8%
¥
381,893
380,587
1,231,367
30.9%
¥
413,963
412,661
1,188,324
34.7%
¥
451,607
450,302
1,352,532
33.3%
¥
596,813
595,365
1,577,454
37.7%
¥
770,071
765,544
1,888,363
40.5%
¥
1,030,719
1,022,417
2,199,714
46.5%
$
8,570,042
8,501,104
18,289,798
¥
¥
20.66
20.66
649.41
80,073
119,289
46,893
782,865
46,367
11,998
26,115
¥
¥
44.46
44.44
687.81
81,454
126,329
50,709
782,865
42,920
11,752
25,598
¥
¥
25.73
25.73
687.02
87,164
118,869
52,020
782,865
44,484
11,909
26,404
¥
¥
¥
¥
（91.97）
—
505.59
74,036
95,153
42,831
782,865
40,839
12,137
27,659
（21.11）
—
488.58
65,785
89,077
37,175
782,865
39,223
12,483
27,586
¥
¥
64.56
—
528.88
56,062
67,378
42,907
782,865
34,240
12,429
27,296
¥
¥
49.27
—
576.97
58,611
67,035
48,115
782,865
33,139
12,359
27,123
¥
¥
153.23
—
762.87
61,544
94,986
49,141
782,865
28,890
12,717
27,509
¥
¥
264.76
—
980.98
61,486
98,537
60,092
782,865
51,386
13,034
28,545
¥
¥
335.57
—
1,310.15
71,821
135,346
83,535
782,865
70,942
13,883
29,774
$
$
2.79
—
10.89
597,165
1,125,351
694,562
1. U.S. dollar figures have been translated from yen, for convenience only, at the rate of ¥120.27 to US$1.00, the approximate rate of exchange at March 31, 2015.
2. Prior year amounts have been reclassified to conform to the current year presentation.
3. As of March 31
FUJI HEAVY INDUSTRIES LTD.
31
ANNUAL REPORT 2015
2011
2012
2013
2014
2015
United States
Canada
Russia
Europe
Australia
Japan
China
Others
1,000,000
910,695
825,098
724,466
656,964 639,862
2011
2012
2013
2014
2015
Overseas units by region:
Consolidated Automobile Sales by Model (Number of units)
Impreza
Tribeca
Others
Forester
Exiga
Minicars
Levorg
SUBARU BRZ
910,695
825,098
724,466
656,964 639,862
Overseas units by model:
Domestic units:
Legacy
Impreza
Forester
Levorg
WRX
Exiga
OEM
Others
SUBARU BRZ
Passenger cars
Minicars
Domestic total
U.S.
Canada
Russia
Europe
Australia
China
Others
Overseas total
Legacy
Impreza
Forester
WRX
Tribeca
OEM
Others
SUBARU BRZ
Overseas total
Grand total
2011
22,673
20,184
12,685
0
0
0
7,859
4,430
303
68,134
89,971
158,105
278,959
28,059
11,320
48,244
41,150
62,412
28,715
498,859
225,388
87,066
176,453
5,643
0
0
3,865
444
498,859
656,964
2012
22,812
29,122
13,803
0
0
8,020
249
5,844
303
80,153
92,189
172,342
280,356
28,239
15,860
39,075
36,928
48,323
18,739
467,520
210,194
90,149
157,833
0
5,702
38
3,372
232
467,520
639,862
2013
24,207
53,250
18,044
0
0
7,392
6,711
2,778
368
112,750
50,372
163,122
357,569
32,644
14,719
46,382
38,120
50,185
21,725
561,344
207,460
190,864
147,679
0
4,243
10,100
591
407
561,344
724,466
2014
18,961
61,071
36,572
0
0
3,853
3,380
1,857
453
126,147
55,454
181,601
441,799
36,013
15,314
31,756
39,515
44,807
34,293
643,497
182,712
210,828
231,173
0
2,561
15,822
256
145
643,497
825,098
2015
13,845
39,462
21,103
40,559
7,514
1,937
1,890
1,127
439
127,876
34,876
162,752
527,630
42,439
11,559
35,730
38,889
53,821
37,875
747,943
235,791
196,403
269,649
37,982
64
7,914
135
5
747,943
910,695
800,000
600,000
400,000
200,000
0
Legacy
WRX
OEM
1,000,000
800,000
600,000
400,000
200,000
0
Five-Year Automobile Sales Years ended March 31
(Millions of yen)
(Thousands of U.S. dollars1)
Consolidated Automobile Sales by Region
(Number of units)
Consolidated Automobile Sales
(Number of units)
Selling, general and administrative expenses
Operating income (loss)
Income (loss) before income taxes and minority interests
For the year:
Net sales
Cost of sales
Gross profit
Net income (loss)
Comprehensive income
At year-end:
Net assets2
Shareholders’ equity
Total assets
Per share: (in yen and U.S. dollars)
Net income (loss):
Basic
Diluted
Net assets
Other information:
Depreciation/amortization
Capital expenditures (addition to fixed assets)
Research and development expenses
Number of shares issued (thousands of shares)3
Number of shareholders3
Number of employees3
Parent only
Consolidated
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2015
¥
1,476,368
¥
1,494,817
¥
1,572,346
¥
1,445,790
¥
1,428,690
¥
1,580,563
¥
1,517,105
¥
1,912,968
¥
2,408,129
¥
2,877,913
$
23,928,769
1,125,293
1,142,674
1,217,662
1,164,564
1,152,763
1,241,427
1,222,419
1,501,809
1,728,271
2,017,490
16,774,674
351,075
292,736
58,339
28,674
15,611
—
352,143
304,237
47,906
45,589
31,899
—
354,684
309,004
45,680
31,906
18,481
—
281,226
287,029
（5,803）
（21,517）
（69,933）
—
275,927
248,577
27,350
（443）
（16,450）
（13,416）
339,136
255,001
84,135
63,214
50,326
34,900
294,686
250,727
43,959
52,879
38,453
44,474
411,159
290,748
120,411
93,082
119,588
152,009
679,858
353,369
326,489
328,865
206,616
210,757
860,423
437,378
423,045
392,206
261,873
309,271
7,154,095
3,636,634
3,517,461
3,261,046
2,177,376
2,571,473
Ratio of shareholders’ equity to total assets (%)
34.5%
37.5%
38.1%
33.8%
30.9%
34.7%
33.3%
37.7%
40.5%
¥
467,786
¥
495,703
¥
494,423
¥
394,719
¥
381,893
¥
413,963
¥
451,607
¥
596,813
¥
770,071
¥
1,030,719
$
8,570,042
465,522
494,004
493,397
393,946
380,587
412,661
450,302
595,365
765,544
1,348,400
1,316,041
1,296,388
1,165,431
1,231,367
1,188,324
1,352,532
1,577,454
1,888,363
1,022,417
2,199,714
46.5%
8,501,104
18,289,798
¥
¥
¥
¥
（91.97）
¥
（21.11）
¥
64.56
¥
49.27
¥
153.23
¥
264.76
¥
335.57
$
—
505.59
—
488.58
—
528.88
—
576.97
—
762.87
—
—
980.98
1,310.15
20.66
20.66
649.41
44.46
44.44
687.81
25.73
25.73
687.02
¥
80,073
¥
81,454
¥
87,164
¥
¥
¥
¥
¥
¥
¥
71,821
$
597,165
119,289
46,893
782,865
46,367
11,998
26,115
126,329
50,709
782,865
42,920
11,752
25,598
118,869
52,020
782,865
44,484
11,909
26,404
74,036
95,153
42,831
782,865
40,839
12,137
27,659
65,785
89,077
37,175
782,865
39,223
12,483
27,586
56,062
67,378
42,907
782,865
34,240
12,429
27,296
58,611
67,035
48,115
782,865
33,139
12,359
27,123
61,544
94,986
49,141
782,865
28,890
12,717
27,509
61,486
98,537
60,092
782,865
51,386
13,034
28,545
135,346
83,535
782,865
70,942
13,883
29,774
2.79
—
10.89
1,125,351
694,562
1. U.S. dollar figures have been translated from yen, for convenience only, at the rate of ¥120.27 to US$1.00, the approximate rate of exchange at March 31, 2015.
2. Prior year amounts have been reclassified to conform to the current year presentation.
3. As of March 31
Japan
China
United States
Others
1,000,000
Canada
Russia
Europe
Australia
910,695
825,098
800,000
600,000
400,000
200,000
0
724,466
656,964 639,862
2011
2012
2013
2014
2015
Consolidated Automobile Sales by Model (Number of units)
Legacy
WRX
OEM
1,000,000
800,000
600,000
400,000
200,000
0
Impreza
Tribeca
Others
Forester
Exiga
Minicars
Levorg
SUBARU BRZ
910,695
825,098
724,466
656,964 639,862
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
Domestic units:
Legacy
Impreza
Forester
Levorg
WRX
Exiga
SUBARU BRZ
OEM
Others
Passenger cars
Minicars
Domestic total
Overseas units by region:
U.S.
Canada
Russia
Europe
Australia
China
Others
Overseas total
Overseas units by model:
Legacy
Impreza
Forester
WRX
Tribeca
SUBARU BRZ
OEM
Others
Overseas total
Grand total
22,673
20,184
12,685
0
0
7,859
0
4,430
303
68,134
89,971
158,105
278,959
28,059
11,320
48,244
41,150
62,412
28,715
498,859
225,388
87,066
176,453
0
5,643
0
3,865
444
498,859
656,964
FUJI HEAVY INDUSTRIES LTD.
32
ANNUAL REPORT 2015
22,812
29,122
13,803
0
0
8,020
249
5,844
303
80,153
92,189
172,342
280,356
28,239
15,860
39,075
36,928
48,323
18,739
467,520
210,194
90,149
157,833
0
5,702
38
3,372
232
467,520
639,862
24,207
53,250
18,044
0
0
7,392
6,711
2,778
368
112,750
50,372
163,122
357,569
32,644
14,719
46,382
38,120
50,185
21,725
561,344
207,460
190,864
147,679
0
4,243
10,100
591
407
561,344
724,466
18,961
61,071
36,572
0
0
3,853
3,380
1,857
453
126,147
55,454
181,601
441,799
36,013
15,314
31,756
39,515
44,807
34,293
643,497
182,712
210,828
231,173
0
2,561
15,822
256
145
643,497
825,098
13,845
39,462
21,103
40,559
7,514
1,937
1,890
1,127
439
127,876
34,876
162,752
527,630
42,439
11,559
35,730
38,889
53,821
37,875
747,943
235,791
196,403
269,649
37,982
64
7,914
135
5
747,943
910,695
Non-consolidated Automobile Sales
(Number of units)
Non-consolidated Domestic Automobile Sales by Model
(Number of units)
Domestic units:
Legacy
Impreza
Forester
Levorg
WRX
Exiga
SUBARU BRZ
OEM
Passenger cars
Minicars
Domestic total
Export units:
Legacy
Impreza
Forester
WRX
Tribeca
Exiga
SUBARU BRZ
OEM
Others
Export total
U.S. retail sales1
Legacy
Impreza
Forester
WRX
Tribeca
SUBARU BRZ
U.S. total
CKD 2 overseas
(SIA portion)
SIA production units 3
Legacy
Tribeca
2011
23,212
20,859
13,160
0
0
8,150
0
5,313
70,694
92,752
163,446
67,926
83,921
174,541
0
0
374
0
3,865
70
330,697
131,873
44,395
85,080
0
2,472
0
263,820
163,469
163,469
159,215
5,558
2012
23,968
30,566
13,990
0
0
8,477
585
5,993
83,579
96,457
180,036
48,304
100,350
162,199
0
331
232
211
3,372
0
314,999
146,806
41,196
76,196
0
2,791
0
266,989
175,256
175,256
164,968
5,661
2013
25,424
54,306
18,951
0
0
7,845
6,850
2,953
116,329
50,381
166,710
30,559
198,232
142,745
0
222
407
11,542
316
0
384,023
164,680
89,195
76,347
0
2,075
4,144
336,441
185,757
183,729
177,471
3,713
2014
19,272
62,519
37,124
0
0
3,869
3,334
1,944
128,062
57,779
185,841
22,817
206,022
247,362
7,644
0
145
15,118
86
0
499,194
160,340
130,567
123,591
0
1,598
8,587
424,683
165,554
159,266
161,204
2,307
2015
14,734
40,277
21,569
41,832
7,991
2,016
1,941
1,224
131,584
35,563
167,147
34,344
199,770
265,072
37,865
0
5
8,418
135
0
545,609
191,060
128,952
159,953
25,492
732
7,504
513,693
222,513
218,565
206,681
0
Legacy
Exiga
200,000
150,000
100,000
50,000
0
Impreza
SUBARU BRZ
Forester
OEM
Levorg
Minicars
WRX
180,036
185,841
163,446
166,710
167,147
2011
2012
2013
2014
2015
Non-consolidated Automobile Export Units by Model
(Number of units)
Legacy
Exiga
Impreza
SUBARU BRZ
Forester
OEM
WRX
Others
Tribeca
CKD Overseas
545,609
499,194
600,000
450,000
300,000
384,023
330,697 314,999
150,000
163,469
175,256
185,757
165,554
222,513
1. U.S. Retail Sales are the aggregate figures for the calendar year from January through December.
2. Completely Knocked Down
3. SIA Production Units are the aggregate figures for the calendar year from January through December until 2009.
FUJI HEAVY INDUSTRIES LTD.
33
ANNUAL REPORT 2015
0
2011
2012
2013
2014
2015
Non-consolidated Automobile Sales
(Number of units)
Domestic units:
Legacy
Impreza
Forester
Levorg
WRX
Exiga
SUBARU BRZ
OEM
Passenger cars
Minicars
Domestic total
Export units:
Legacy
Impreza
Forester
WRX
Tribeca
Exiga
SUBARU BRZ
OEM
Others
Export total
U.S. retail sales1
Legacy
Impreza
Forester
WRX
Tribeca
SUBARU BRZ
U.S. total
CKD 2 overseas
(SIA portion)
SIA production units 3
Legacy
Tribeca
2011
23,212
20,859
13,160
0
0
0
8,150
5,313
70,694
92,752
163,446
67,926
83,921
174,541
0
0
0
374
3,865
70
330,697
131,873
44,395
85,080
2,472
0
0
263,820
163,469
163,469
159,215
5,558
2012
23,968
30,566
13,990
0
0
8,477
585
5,993
83,579
96,457
180,036
48,304
100,350
162,199
0
331
232
211
3,372
0
314,999
146,806
41,196
76,196
2,791
0
0
266,989
175,256
175,256
164,968
5,661
2013
25,424
54,306
18,951
0
0
7,845
6,850
2,953
116,329
50,381
166,710
30,559
198,232
142,745
0
222
407
316
0
11,542
384,023
164,680
89,195
76,347
0
2,075
4,144
336,441
185,757
183,729
177,471
3,713
2014
19,272
62,519
37,124
0
0
3,869
3,334
1,944
128,062
57,779
185,841
22,817
206,022
247,362
7,644
15,118
0
145
86
0
499,194
160,340
130,567
123,591
0
1,598
8,587
424,683
165,554
159,266
161,204
2,307
2015
14,734
40,277
21,569
41,832
7,991
2,016
1,941
1,224
131,584
35,563
167,147
34,344
199,770
265,072
37,865
0
5
0
8,418
135
545,609
191,060
128,952
159,953
25,492
732
7,504
513,693
222,513
218,565
206,681
0
Legacy
Exiga
200,000
150,000
100,000
50,000
0
600,000
450,000
300,000
Non-consolidated Domestic Automobile Sales by Model
(Number of units)
Impreza
SUBARU BRZ
Forester
OEM
Levorg
Minicars
WRX
180,036
185,841
163,446
166,710
167,147
2011
2012
2013
2014
2015
Non-consolidated Automobile Export Units by Model
(Number of units)
Legacy
Exiga
Impreza
SUBARU BRZ
Forester
OEM
WRX
Others
Tribeca
CKD Overseas
545,609
499,194
384,023
330,697 314,999
150,000
163,469
175,256
185,757
165,554
222,513
1. U.S. Retail Sales are the aggregate figures for the calendar year from January through December.
2. Completely Knocked Down
3. SIA Production Units are the aggregate figures for the calendar year from January through December until 2009.
0
2011
2012
2013
2014
2015
Management’s Discussion and Analysis of Results of Operations and Financial Position
The Fuji Heavy Industries Ltd. Group
The Fuji Heavy Industries Ltd. Group ("the Group") is
engaged in activities conducted under four business divi-
sions: Automobiles (the Group’s core operating domain,
which accounts for over 90% of consolidated net sales),
Aerospace, Industrial Products, and Other.
On a consolidated settlement of accounts basis, FHI
("the Company") and 77 subsidiaries, as well as 2 equity-
method affiliated companies, were included in the scope
of the FHI Group’s consolidation as of March 31, 2015, the
end of the fiscal year under review.
Overview
Business Environment
During the fiscal year under review, the economy in Japan
displayed signs of a modest recovery mainly shown
in improved corporate profits, despite the effects of
an increase in the consumption tax rate. In the global
economy, although there was evidence of a loss of growth
momentum in Europe, China, and in emerging markets,
there was a moderate but steady recovery driven by the
favorable U.S. economy.
The Group formulated its mid-term management
vision in May of last year. The FY2015-FY2021 vision,
“Prominence 2020,” has a growth strategy that places
our Subaru Automobiles Division at the core as we move
forward with initiatives specifically focused on enhancing
the Subaru brand and building a strong business structure.
In the fiscal year under review, annual unit sales of
Subaru vehicles reached a new record, with the United
States, our most important market, continuing to lead
global sales. In addition, Group efforts steadily bore
fruit as Forester sales remained strong and new models
were launched for Legacy, Outback, Levorg, and WRX.
Vehicles with version 3 of EyeSight garnered approval—
a further step in the evolution of our preventative safety
and driving assistance features. We also worked to expand
and enhance capacity at complete vehicle assembly plants
inside and outside Japan in order to relieve the backlog of
customers waiting for a vehicle.
Performance Review
In light of the above factors, the FHI Group recorded
historically high levels of consolidated net sales as well as
all income categories for the third consecutive fiscal year.
Major consolidated performance figures were as follows.
Net sales amounted to ¥2,877.9 billion, up ¥469.8
billion, or 19.5%, year on year, owing to such factors as higher
unit sales in our core Automobiles Division and increased
net sales accompanying exchange rate fluctuations.
In terms of profitability, operating income followed
increased net sales, coming to ¥423.0 billion, an increase of
¥96.6 billion, or 29.6%, compared with the previous fiscal
year, while net income was up ¥55.3 billion, or 26.7%,
from the previous fiscal year, to ¥261.9 billion.
Cost of Sales, Expenses and Operating Income
Operating Income
Operating income, as mentioned above, came to ¥423.0
billion, an increase of ¥96.6 billion, or 29.6%.
Revenue decreasing factors, namely a ¥66.6 billion
increase in SG&A expenses and a ¥23.2 billion increase
in R&D expenses, were greatly outweighed by revenue
increasing factors, mostly ¥103.7 billion in exchange rate
differences, a ¥70.3 billion improvement in sales mix,
and ¥12.4 billion in progress on cost reduction. Conse-
quently, operating margin was able to achieve a high
level at 14.7%.
FUJI HEAVY INDUSTRIES LTD.
34
ANNUAL REPORT 2015
Net Sales (Billions of yen)
Years ended March 31
3,000
2,500
2,000
1,500
1,000
500
0
2,877.9
2,408.1
1,913.0
1,580.6
1,517.1
2011
2012
2013
2014
2015
Operating Income (Loss) / Net Income (Loss) (Billions of yen)
Years ended March 31
Operating Income (Loss)
Net Income (Loss)
500
400
300
200
423.0
326.5
261.9
206.6
120.4
119.6
100
84.1
50.3
44.0
38.5
0
2011
2012
2013
2014
2015
Income before Income Taxes and Minority
Interests, and Net Income
Income before income taxes and minority interests rose
¥63.3 billion, or 19.3%, compared with the previous fiscal
year, to ¥392.2 billion.
Net income after total income taxes and minority
interests rose ¥55.3 billion, or 26.7%, compared with
the previous fiscal year, to ¥261.9 billion. Total income
taxes this fiscal year rose ¥6.2 billion year on year (5.1%)
to ¥127.1 billion yen, due to the increase in net income
before total income taxes and minority interests.
Segment Information
Automobiles Division
Net sales for this division stood at ¥2,699.0 billion,
an increase of ¥452.4 billion, or 20.1%, year on year.
Segment income also increased ¥91.9 billion, or 29.7%,
year on year to ¥400.9 billion.
The number of units sold worldwide increased by
86,000 units, or 10.4%, year on year to 911,000 units, owing
to the strength in the North American market. Vehicle
unit sales posted a record for the third consecutive year
both globally and outside Japan, and for the sixth consec-
utive year in the North American market.
Domestic Market
In Japan, individual consumption fell in reaction to the
last-minute demand prior to the increase in the consump-
tion tax rate, which dampened demand for vehicles. Unit
sales of passenger and mini vehicles decreased year on
year by 8.9% and 3.9% respectively, for a combined 6.9%
dip, with overall unit sales of 5,297,000 units nationwide.
Amidst these market conditions, FHI's unit sales of
vehicles decreased by 19,000 units, or 10.4%, year on
year to 163,000 units. Unit sales of passenger vehicles
rose by 2,000 units, or 1.4%, year on year to 128,000
units, thanks primarily to the favorable launch of the new
model Levorg, among other new models. At the same
time, unit sales of mini vehicles were down 21,000 units,
or 37.1% year on year, to 35,000 units, impacted by
reduced demand after the rush ahead of the consump-
tion tax increase, as well as bearing the brunt of intensi-
fying competition due to the launch of new models by
our competitors.
Overseas Market
Overseas unit sales amounted to 748,000 units, an
increase of 104,000 units, or 16.2%, year on year. In
our key market of North America, sales were strong
for Forester, Legacy, and Outback, while the new WRX
model offered an added boost to results.
By region, units sold in North America increased
92,000 units, or 19.3%, year on year to 570,000 units. In
Europe and Russia, sales volume was relatively unchanged
at 47,000 units. China saw an increase of 9,000 units, or
20.1%, to 54,000 units, while unit sales in Australia dipped
1,000 units, or 1.6%, to 39,000 units, with other regions up
4,000 units, or 10.4%, to 38,000 units.
FUJI HEAVY INDUSTRIES LTD.
35
ANNUAL REPORT 2015
Analysis of Increases and Decreases in Operating Income
(Consolidated, Three-Year YoY Comparison)
(Billions of yen)
51.1
19.7
326.5
170.2
-24.0
-10.9
120.4
Operating income
FYE March 2013
Gain on currency
exchange
Improvement of
mixture and others
sales volume &
Cost reduction
SG&A expenses
and others
R&D expenses
Operating income
FYE March 2014
70.3
12.4
103.7
326.5
-66.6
-23.2
423.0
Operating income
FYE March 2014
Gain on currency
exchange
Improvement of
mixture and others
sales volume &
Cost reduction
SG&A expenses
and others
R&D expenses
Operating income
FYE March 2015
30.6
13.3
82.7
503.0
-33.1
-13.5
423.0
Operating income
FYE March 2015
Gain on currency
exchange
Improvement of
mixture and others
sales volume &
Cost reduction
SG&A expenses
and others
R&D expenses
Operating income
FYE March 2016
(plan)
Aerospace Division
Net sales in this division increased ¥18.4 billion, or 14.8%,
compared to the previous fiscal year to ¥142.8 billion.
Segment income also rose ¥4.8 billion, or 33.7%, year on
year to ¥18.9 billion.
Sales of the C-2 transport aircraft to the Japanese
Ministry of Defense exceeded that of the previous fiscal
year, while sales to the commercial sector increased
over the previous fiscal year thanks to net sales-boosting
factors such as the exchange rate and a surge in produc-
tion of the Boeing 787, among others.
Industrial Products Division
Net sales in the Industrial Products division were down
¥0.7 billion, or 2.5%, from the previous fiscal year to ¥29.0
billion. Segment income increased ¥0.1 billion, or 23.3%
year on year, to ¥0.8 billion.
Sales were higher for leisure-related engines in
North America, and sales were markedly higher for pres-
sure washer engines for North American big box hard-
ware stores. Sales for general purpose engines for Japan
and other products, however, were lower.
Other Division
Net sales in this division were down ¥0.2 billion, or
2.5%, year on year to ¥7.1 billion. Segment income was
also down, posting a ¥0.2 billion dip, or 10.2%, from
the previous fiscal year to ¥1.9 billion.
Liquidity and Financing
Financial Position
Total assets as of March 31, 2015 stood at ¥2,199.7 billion,
an increase of ¥311.4 billion compared with the previous
fiscal year-end.
Of this total, current assets stood at ¥1,473.3 billion,
up ¥199.5 billion compared with March 31, 2014. This is
primarily due to rises in funds in hand plus securities by
¥88.7 billion that include cash and deposits, as well as
products and goods by ¥43.8 billion. Meanwhile, total
property, plant and equipment rose ¥111.9 billion to ¥726.4
billion compared to the previous fiscal year-end. This was
mainly attributable to an increase in noncurrent assets of
¥53.9 billion and investment securities of ¥34.8 billion.
Total liabilities were up ¥50.7 billion year on year,
to ¥1,169.0 billion. The main factors behind this increase
were a ¥44.7 billion rise in accounts payable with accounts
Net Sales by Segment (Billions of yen)
Years ended March 31
Operating Income by Segment (Billions of yen)
Years ended March 31
Automobiles
Aerospace
Industrial Products
Other
Automobiles
Aerospace
Industrial Products
Other
Corporate and Elimination
2,408.1
1,913.0
1,580.6
1,517.1
3,000
2,500
2,000
1,500
1,000
500
0
2,877.9
450
423.0
326.5
300
150
0
120.4
84.1
44.0
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
Net Sales by Segment (Billions of yen)
Operating Income by Segment (Billions of yen)
2011
2012
2013
2014
2015
Automobiles
¥1,452.2
¥1,389.1
¥1,779.0
¥2,246.6
¥2,699.0
Aerospace
Industrial Products
Other
Total
82.8
30.1
15.5
80.3
33.6
14.2
89.1
30.1
14.7
124.4
142.8
29.8
7.3
29.0
7.1
¥1,580.6
¥15,17.1
¥1,913.0
¥24,08.1
¥2,877.9
Total
Automobiles
Aerospace
Industrial Products
Other
Corporate and Elimination
2011
¥80.4
2.3
(0.1)
1.5
0.1
¥84.1
2012
¥39.4
2.9
0.5
1.0
2.0
¥44.0
2013
¥111.0
6.8
0.6
1.6
0.4
¥120.4
2014
¥309.0
14.1
0.6
2.1
0.6
¥326.5
2015
¥400.9
18.9
0.8
1.9
0.6
¥423.0
FUJI HEAVY INDUSTRIES LTD.
36
ANNUAL REPORT 2015
payable-trade and electronically recorded monetary obliga-
tions, and a rise in accrued expenses of ¥34.1 billion, despite
a decrease in long-term borrowings of ¥38.4 billion.
Note that the fiscal year-end balance of interest-
bearing debt decreased ¥58.5 billion to ¥211.2 billion. The
debt/equity ratio (interest-bearing debt over shareholders'
equity) remained at a safe level of 0.21.
Net assets totaled ¥1,030.7 billion, up ¥260.6 billion
compared with the end of the previous fiscal year. This was
primarily due to an increase in retained earnings of ¥213.5
billion, reflecting the recording of net income in the fiscal
year under review. The increase in net assets boosted the
shareholders' equity ratio to 46.5%, a 6-point increase
year on year.
Cash Flows
In the fiscal year under review, net cash provided by oper-
ating activities was ¥311.5 billion compared with ¥313.0
billion in the previous fiscal year. Income before income
taxes and minority interests stood at ¥392.2 billion, and
total income taxes at ¥193.1 billion.
Net cash used in investing activities was ¥172.8
billion in the fiscal year under review compared with ¥33.9
billion used in the previous fiscal year. This figure primarily
reflects ¥25.5 billion in expenditures (net) due to acquisition
of investment securities and ¥113.6 billion in expenditures
(net) due to acquisition of noncurrent assets. As a result,
free cash flow amounted to ¥138.8 billion, compared to
¥279.1 billion provided in the previous fiscal year.
Net cash used in financing activities totaled ¥110.5
billion in the fiscal year ended March 31, 2015, compared
with ¥63.0 billion in the preceding fiscal year. This is mainly
attributable to ¥36.7 billion in expenditures (net) for the
repayment of long-term borrowings and ¥49.9 billion in
dividend payments.
Accounting for the aforementioned activities and the
effect of translation adjustments, cash and cash equiva-
lents as of the end of the fiscal year under review stood at
¥612.1 billion.
Research and Development Expenses
During the fiscal year under review, R&D expenses
increased ¥23.4 billion, or 38.9%, year on year to ¥83.5
billion. Of that amount, ¥82.4 billion was related to the
Automobiles Division.
Our vehicle R&D is dedicated to comprehensive
performance, safety, design, environmentally conscious
features, and quality improvement as part of the "Six
initiatives to enhance the Subaru brand" announced in our
mid-term management vision, Prominence 2020. In the
same vein, we are advancing product development to
exceed customer expectations for safety and comfort.
The next generation Subaru Global Platform (SGP) is
compliant with the most recent collision safety standards
worldwide and has entered the final development stage
before commercialization. We will use this platform to
manufacture new Subaru products from 2016 onward.
In addition, our EyeSight advanced driving support
system continues to undergo research and development,
with automated highway driving, including lane change
features, targeted for 2020.
FUJI HEAVY INDUSTRIES LTD.
37
ANNUAL REPORT 2015
Total Assets, Shareholders’ Equity & Ratio of Shareholders’ Equity
to Total Assets (Billions of yen)
Years ended March 31
Total Assets
Shareholders’ Equity
Ratio of Shareholders’ Equity to Total Assets
2,500
2,000
2,199.7
1,888.4
46.5%
1,500
34.7%
1,352.5
1,577.5
37.7%
40.5%
1,188.3
33.3%
60.0
48.0
36.0
1,000
500
414.0
451.6
1,030.7
24.0
770.1
596.8
12.0
0
1.00
0.75
0.50
0
2011
2012
2013
2014
2015
Interest-Bearing Debt Balance & D/E Ratio
Years ended March 31
(Billions of yen, Times)
Interest-Bearing Debt Balance
D/E Ratio
400
300
200
100
0
330.6
341.0
0.80
0.76
307.2
269.7
0.52
211.2
0.35
0.25
0.21
2011
2012
2013
2014
2015
0
Capital Expenditures and Depreciation
Capital expenditures rose ¥42.2 billion, or 61.6%,
compared with the previous fiscal year, to ¥110.7 billion.
The main expenditure was investing in facilities related to
production, R&D, and sales in the Automobiles Division.
In this Division, ¥42.5 billion was spent primarily
on building out production capacity accompanying the
increase in vehicle sales, building production facilities
for new models, building R&D facilities, and expanding
and enhancing our sales network. In addition, ¥39.6 billion
was spent at Subaru of Indiana Automotive, Inc. (SIA), our
production base in the U.S., primarily on production facili-
ties and production capacity expansion.
Depreciation increased ¥9.9 billion, or 18.0%, year
on year, to ¥64.8 billion.
Basic Policy Regarding the Distribution of Profits
FHI views the interest of shareholders as a critical task
for management. Regarding the return of profits to
shareholders, based on maintaining continual dividend
payments, we apply a results-linked approach that takes
into consideration such factors as earnings, investment
plans, and operating conditions of each fiscal year. The divi-
dend each fiscal year is determined based on a 20-40%
consolidated dividend payout ratio and takes a variety of
conditions into consideration.
During the fiscal year under review, FHI distributed a
total dividend of ¥68 per share, a ¥15 increase over the
previous fiscal year. Retained earnings are allocated toward
bolstering our financial position and investing in future
growth and progress, including strengthening R&D and
our production and sales frameworks.
The dividend for the next fiscal year is undetermined
at present. We are aware that FHI is entering a new stage
now that our financial standing has improved, but our policy
is to comprehensively consider and review future operating
conditions, external factors, changes in ROE, etc.
Cash Flows from Operating Activities & Cash Flows from
Investing Activities
Years ended March 31
(Billions of yen)
Cash Flows from Operating Activities
Cash Flows from Investing Activities
Outlook
Results for FYE March 2016
For the fiscal year ending March 31, 2016, we are fore-
casting a new all-time-high consolidated unit sales figure,
for the fourth year in a row, of 928,000 units, an increase of
18,000 units, or 1.9%, compared with the fiscal year under
review. Along with the unit sales target, we are also aiming
to post new historical records for net sales and all income
categories for a fourth year running.
At present (July 2015), targets for the consolidated
financial results of the fiscal year ending March 31, 2016
are as follows.
For net sales, FHI plans to achieve ¥3,030.0 billion,
representing an increase of ¥152.1 billion, or 5.3%,
compared with the previous fiscal year, thanks to a ¥19.0
billion improvement in sales mix resulting from increasing
unit sales outside Japan, and a ¥131.1 billion gain on
currency exchange.
For operating income, despite increases in R&D
expenses and SG&A expenses, we anticipate posting
¥503.0 billion, an increase of ¥80.0 billion, or 18.9%, year
on year thanks to the positive effects of ¥82.7 billion from
currency fluctuations and ¥30.6 billion from improved sales
mix, among other gains. Net income* is slated to climb
¥75.1 billion, or 28.7%, year on year to ¥337.0 billion.
These forecasts are based on average annual
exchange rates of ¥118/US$ (previously ¥108/US$) and
¥125/€ (previously ¥140/€).
400
300
200
100
0
-100
-200
313.0
311.5
138.2
166.7
54.9
-26.6
-51.1
-33.9
-71.4
2011
2012
2013
2014
2015
-172.8
Free Cash Flow (Billions of yen)
Years ended March 31
300
200
100
87.1
95.3
279.1
138.8
*Expected net income for the consolidated fiscal year ending March 31, 2016 is the fiscal
year net income attributable to shareholders of the parent company.
0
2011
28.3
2012
2013
2014
2015
FUJI HEAVY INDUSTRIES LTD.
38
ANNUAL REPORT 2015
Research and Development Expenses
Years ended March 31
(Billions of yen)
100
80
60
40
20
0
83.5
60.1
48.1
49.1
42.9
2011
2012
2013
2014
2015
Capital Expenditures, Depreciation Expenses
Years ended March 31
(Billions of yen)
Capital Expenditures
Depreciation Expenses
110.7
70.2
68.5
64.8
54.3
53.7
55.9
54.9
49.8
43.1
120
90
60
30
0
Reassessing the Three-Year Investment Plan
We have decided to reassess our consolidated three-
year investment plan (FYE March 2015 to 2017), which
was announced last year, as automobiles sales, mainly
in North America, continue their strength. This invest-
ment will help considerably to relieve supply shortfalls
and further bolster our environmental and safety tech-
nologies. We increased the initially allocated amount of
capital expenditures by ¥70.0 billion, to ¥400.0 billion,
and the initial amount of R&D expenses by ¥30.0 billion,
to ¥280.0 billion.
These investment plan revisions will allow us to
bring Subaru of Indiana Automotive, Inc. (SIA) expansion
plans ahead by four years and build out global produc-
tion capacity to 1,026,000 vehicles by the end of 2016. In
addition, we are renovating our painting facility in Japan,
slated to be operational in 2018, as we strive for the dual
objectives of improved quality and stronger environ-
mental responsiveness.
Scheduled FYE March 2016 increases over the fiscal
year under review are: capital expenditures up ¥19.3 billion,
to ¥130.0 billion; R&D expenses up ¥13.5 billion, to ¥97.0
billion; and depreciation up ¥2.2 billion, to ¥67.0 billion.
Performance forecasts and medium- to long-term
management strategies are based on information available
to management as of the date of this report. Accord-
ingly, actual results may differ materially due to a
variety of factors.
Business Risks
Operational and other risks that could significantly influ-
ence the decisions of investors and impact the Compa-
ny’s financial status are set out below.
Forecast for Consolidated Results (Billions of yen)
Net sales
Japan
Overseas
Operating income
Income before income taxes and minority interest
Net income
Exchange rate (in yen)
¥/$
¥/€
2015
2,877.9
652.9
2,225.0
423.0
392.2
261.9
10.8
14.0
2016 (plan)
3,030.0
565.5
2,464.5
503.0
485.0
337.0
Change
152.1
(87.4)
239.5
80.0
92.8
75.1
11.8
12.5
1.0
(1.5)
Forecast for Global Automobile Sales (Thousand units)
Japan:
Passenger cars
Minicars
Subtotal
Overseas:
United States
Canada
Russia
Europe
Australia
China
Other
Subtotal
Total
2015
2016 (plan)
Change
127.9
34.9
162.8
527.6
42.4
11.6
35.7
38.9
53.8
37.9
747.9
910.7
106.7
37.6
144.2
554
46.2
12.8
37.7
42.3
49.7
41.4
784.1
928.3
(21.2)
2.7
(18.5)
26.4
3.8
1.2
2.0
3.4
(4.1)
3.5
36.2
17.6
2011
2012
2013
2014
2015
Based on information available to the FHI Group as
FUJI HEAVY INDUSTRIES LTD.
39
ANNUAL REPORT 2015
or a limited number of suppliers. Due to tightening supply
and demand or other factors, the inability to procure
supplies in a manner that ensures stable costs, delivery
dates and quality could seriously impact the Group’s busi-
ness performance and financial position.
(6) Protection of Intellectual Property
The FHI Group works to protect its intellectual property
through the use of patents, designs, and trademarks in
such areas as technologies and expertise that ensure
product differentiation. However, the Group could experi-
ence a decrease in sales or the need for litigation proce-
dures in cases where a third party makes unauthorized
use of the Group’s intellectual property to manufacture
similar products, as well as in specific regions where intel-
lectual property right protection is limited. Such factors
could impact the Group’s profitability.
of the submission date of our financial report (June 24,
2015), the enumerated risks include forward-looking state-
ments, but do not encompass every possible risk posed
to the FHI Group. As such, there are other risk factors
which could influence investors and their decisions.
(1) Economic Trends
Economic trends in countries and regions that comprise
important markets for the FHI Group could potentially
impact the Group’s business performance. In Japan and
North America, key markets for the Group, economic
recession, decreasing demand or increasing price compe-
tition could undermine the sales and profitability of the
Group’s products and services.
(2) Currency Exchange Rate Fluctuations
The FHI Group’s ratio of overseas net sales stood at 77.3%.
The Group’s consolidated financial statements, which are
presented in Japanese yen, are affected by translation of
overseas net sales, operating income and assets from local
currencies, particularly U.S. dollars, into yen. Accordingly,
in the event that discrepancies arise between projected
exchange rates in full-year forecasts and actual rates at the
time of account settlement, the Group’s business perfor-
mance and financial position may be adversely affected
when the yen appreciates or positively affected when the
yen depreciates.
The Company uses forward exchange rate contracts
and other risk hedges to minimize the Group’s sensitivity
to such currency exchange risks. However, the effect
of severe fluctuations in currency exchange rates at the
end of the fiscal year could result in a loss on valuation
of derivatives and have a major impact on non-operating
expenses.
(3) Dependence on Certain Businesses
The FHI Group is mainly comprised of the Automobiles,
Industrial Products and Aerospace business segments.
However, the Automobiles business segment accounts
for the overwhelming majority of the Group’s business
operations. Accordingly, in the event that automobile-
related demand, market conditions, price competition
with other automakers, or other factors exceed projected
levels, the entire Group’s overall business performance
and financial position could be significantly affected.
(4) Changes in Market Appraisal
The FHI Group develops, manufactures and releases new
products based on appropriate timing and pricing in line
with product planning that reflects market demand and
customer needs. Such actions are the most important
factors in maintaining stable increases in Group busi-
ness performance. In the event that market appraisals
of new model vehicles and other products do not meet
sales plan expectations or that the obsolescence rate of
current products exceeds forecasts, the Group’s busi-
ness performance and financial position could be signifi-
cantly affected.
(5) Dependence on Suppliers for Raw Materials and
Components
The FHI Group procures raw materials, components and
other items from numerous suppliers. However, there
are cases in which the Group relies on certain items and/
FUJI HEAVY INDUSTRIES LTD.
40
ANNUAL REPORT 2015
(7) Product Defects
The FHI Group places the highest priority on the safety of
the products it develops, manufactures and sells. However,
completely avoiding defects and recalls regarding all prod-
ucts and services is impossible. The substantial costs
associated with a major recall could significantly affect
the Group’s business performance and financial position.
In addition, although the Group purchases product liability
insurance, the risk of incomplete coverage exists.
(8) Retirement Benefit Obligations
The FHI Group’s employee retirement benefit costs
and obligations are calculated based on the following
assumptions: retirement benefit obligation discount
rates and the expected rate of return on pension assets,
both of which are established based on mathematical
calculations. However, in the event that actual perfor-
mance differs from the assumptions, the Group’s busi-
ness performance and financial position could be affected
over the long term.
(9) Environmental and Other Legal Regulations
The FHI Group is subject to various domestic and over-
seas legal regulations in relation to such areas as exhaust
emissions, energy conservation, noise, recycling, the
level of pollutants emitted from manufacturing facilities
and automobile safety. The Group’s business perfor-
mance and financial position could be affected by an
increase in costs due to future regulatory changes.
(10) The Impact of Natural Disasters, War, Terror,
Strikes and Other Events
The occurrence of major earthquakes, diseases, wars,
terrorist attacks or other events could impede the FHI
Group’s business activities as well as delay or suspend raw
material/component purchases, production, product sales/
transport, and the provision of services. The Group’s busi-
ness performance and financial position could be affected
in the event that such delays or suspensions are prolonged.
FUJI HEAVY INDUSTRIES LTD.
41
ANNUAL REPORT 2015
Corporate Data
(as of March 31, 2015)
Stock Information
(as of March 31, 2015)
Company Name
Fuji Heavy Industries Ltd.
Established
July 15, 1953
Paid-in Capital
¥153,795 million
Number of Employees
13,883 (consolidated: 29,774)
Website Address
http://www.fhi.co.jp/english/ir/
Head Office
Ebisu Subaru Bldg., 1-20-8, Ebisu, Shibuya-ku, Tokyo 150-8554, Japan
Phone: +81-3-6447-8000 Fax: +81-3-6447-8184
Investor Relations Office
Ebisu Subaru Bldg., 1-20-8, Ebisu, Shibuya-ku, Tokyo 150-8554, Japan
Phone: +81-3-6447-8878 Fax: +81-3-6447-8107
Domestic Manufacturing Divisions
Gunma Manufacturing Division (Automobiles Division)
Utsunomiya Manufacturing Division (Aerospace Division)
Saitama Manufacturing Division (Industrial Products Division)
Common Stock Authorized
1,500,000,000 shares
Common Stock Issued
782,865,873 shares
Number of Shareholders
76,446
Stock Exchange Listing
Tokyo Stock Exchange
Transfer Agent
Mizuho Trust & Banking Co., Ltd.
2-1, Yaesu 1-chome, Chuo-ku, Tokyo
103-0028, Japan
Major Shareholders
Name
Toyota Motor Corporation
The Master Trust Bank of Japan, Ltd.
(Trust account)
Japan Trustee Services Bank, Ltd.
(Trust account)
Mizuho Bank, Ltd.
Suzuki Motor Corporation
Sompo Japan Nipponkoa Insurance Inc.
FHI's Client Stock Ownership
Tokio Marine & Nichido Fire Insurance Co., Ltd.
THE BANK OF NEW YORK MELLON
SA/NV 10
MIZUHO SECURITIES ASIA
LIMITED-CLIENT A/C 69250601
Number of Shares Held
(in thousands)
Percentage of
Total Shares
129,000
16.48
42,266
34,282
16,078
13,690
12,157
10,962
10,295
10,251
9,905
5.40
4.38
2.05
1.75
1.55
1.40
1.32
1.31
1.27
Principal Consolidated Subsidiaries and Affiliates
Quarterly Common Stock Price Range (Tokyo Stock Exchange)
(Yen)
Company Name
Percentage of
Voting Rights
Main Business Activities
Japan
Fuji Machinery Co., Ltd.
Ichitan Co., Ltd.
Kiryu Industrial Co., Ltd.
100.0%
100.0%
97.7%
Manufacture and sales of automobile parts and industrial product parts
Manufacture and sales of forged automobile / industrial product parts
Manufacture of Subaru specially equipped automobiles and distribution of Subaru automobile parts
Subaru Tecnica International Inc.
100.0%
Management of SUBARU Motorsport Activities, Development and manufacture of competition
parts, tuning parts and accessories for SUBARU cars
Subaru Kohsan Co., Ltd.
Subaru Finance Co., Ltd.
Yusoki Kogyo K.K.
TOKYO SUBARU INC.
Overseas
Subaru of America, Inc.
Fuji Heavy Industries U.S.A., Inc.
Subaru Research & Development, Inc.
Subaru of Indiana Automotive, Inc.
Subaru Canada, Inc.
Subaru Europe N.V./S.A.
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Leasing of real estate, shopping mall management and travel agency operations
Lease & credit facilities provider for Subaru automobiles, financing for FHI subsidized companies,
lease for various facility equipment, rolling stock & FHI made garbage trucks and sales of insurance
Manufacture and sales for aircraft parts
Distribution, sales and services of Subaru automobiles (including 32 other dealerships)
Distribution and sales of Subaru automobiles and parts
Engineering research of Subaru automobiles in North America Market
Research and development of automobiles
Manufacture of Subaru automobiles and contracted manufacture of Toyota automobiles
Distribution and sales of Subaru automobiles and parts
Distribution, sales and marketing of Subaru automobiles and parts
5,000
4,000
3,000
2,000
1,000
0
High
Low
1Q 2Q 3Q 4Q
1Q 2Q 3Q 4Q
1Q 2Q 3Q 4Q
1Q 2Q 3Q 4Q
1Q 2Q 3Q 4Q
2011
758
435
2012
697
402
2013
1,609
545
2014
3,015
1,330
2015
4,617
2,380
FUJI HEAVY INDUSTRIES LTD.
42
ANNUAL REPORT 2015
Fuji Heavy Industries Ltd.
Ebisu Subaru Bldg., 1-20-8, Ebisu, Shibuya-ku, Tokyo 150-8554
Phone: +81-3-6447-8000
Fax: +81-3-6447-8184
http://www.fhi.co.jp/english/ir/
Annual Report
2015
For the year ended March 31, 2015
Consolidated Balance Sheets
FUJI HEAVY INDUSTRIES LTD. AND CONSOLIDATED SUBSIDIARIES
As of March 31, 2015 and 2014
ASSETS
Current assets:
Cash and deposits (Note 4 and 5)
Notes and accounts receivable-trade (Note 5)
Lease investment assets (Note 5 and 18)
Short-term investment securities (Notes 4, 5 and 6)
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets (Note 12)
Short-term loans receivable (Note 5, 23)
Other current assets
Allowance for doubtful accounts
Total current assets
Property, plant and equipment (Notes 7 and 9)
Accumulated depreciation
Accumulated impairment loss
Total property, plant and equipment
Investments and other assets:
Intangible assets
Investment securities (Note 5 and 6)
Investments in non-consolidated subsidiaries and affiliated companies
Net defined benefit assets(Note 11)
Deferred tax assets (Note 12)
Other assets
Allowance for doubtful accounts
Total investments and other assets
Total assets
LIABILITIES AND NET ASSETS
Current liabilities:
Notes and accounts payable-trade (Note 5)
Electronically recorded obligations-operating (Note 5)
Short-term loans payable (Note 5 and 7)
Current portion of long-term debts (Note 5 and 7)
Accrued expenses (Note 5)
Provision for bonuses
Provision for product warranties
Accrued income taxes (Note 5 and 12)
Other current liabilities (Note 5, 7 and 12)
Total current liabilities
Long-term liabilities:
Long-term debts (Note 5 and 7)
Net defined benefit liability(Note 11)
Deferred tax liabilities (Note 12)
Other long-term liabilities (Note 7)
Total long-term liabilities
Contingent liabilities (Note 20)
Net assets: (Note 13)
Shareholders' equity:
Capital stock
Authorized— 1,500,000,000 shares
782,865,873 shares
Issued —
Capital surplus
Retained earnings
Less－treasury stock, at cost,
2015—
2014—
Total shareholders’ equity
2,483,395 shares
2,477,430 shares
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Remeasurements of other postretirement benefits
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
The accompanying notes are an integral part of these balance sheets.
120.27
Thousands of
U.S. dollars
(Note 1)
Millions of yen
2015
2014
2015
¥228,821
164,540
24,098
444,737
203,347
52,734
39,569
78,789
157,070
80,796
(1,233)
1,473,268
1,423,977
(882,752)
(26,528)
514,697
16,850
104,157
10,678
3,659
13,113
96,371
(33,079)
211,749
¥2,199,714
¥351,125
181,646
23,633
233,766
159,536
51,659
33,008
64,214
122,681
53,375
(862)
1,273,781
1,305,951
(817,421)
(27,717)
460,813
14,712
75,647
4,479
1,222
18,332
72,974
(33,597)
153,769
¥1,888,363
Millions of yen
2015
2014
¥317,801
74,420
41,443
44,329
126,007
21,668
49,708
54,987
142,693
873,056
125,420
17,963
13,996
138,560
295,939
¥279,926
67,637
59,193
46,617
91,921
20,446
39,494
110,426
117,248
832,908
163,844
22,852
9,827
88,861
285,384
$1,902,561
1,368,088
200,366
3,697,822
1,690,754
438,463
329,001
655,101
1,305,978
671,788
(10,252)
12,249,672
11,839,835
(7,339,752)
(220,570)
4,279,513
140,101
866,026
88,784
30,423
109,030
801,289
(275,039)
1,760,614
$18,289,798
Thousands of
U.S. dollars
(Note 1)
2015
$2,642,396
618,774
344,583
368,579
1,047,701
180,161
413,303
457,196
1,186,439
7,259,134
1,042,820
149,356
116,371
1,152,074
2,460,622
153,795
160,071
697,414
(1,382)
153,795
160,071
483,910
(1,395)
1,278,748
1,330,930
5,798,736
(11,491)
1,009,898
796,381
8,396,924
17,986
10,025
(11,616)
(3,876)
12,519
8,302
10,629
(26,661)
(13,886)
(919)
(30,837)
4,527
149,547
83,354
(96,583)
(32,227)
104,091
69,028
1,030,719
770,071
8,570,042
¥2,199,714
¥1,888,363
$18,289,798
Consolidated Statements of Income
FUJI HEAVY INDUSTRIES LTD. AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2015 and 2014
120.27
Net sales (Note 2)
Cost of sales (Note 14)
Gross profit
Selling, general and administrative expenses (Note 2 and 15)
Operating income (loss)
Other income (expenses):
Interest and dividend income
Interest expenses
Equity in earnings of affiliates
Real estate rent
Foreign exchange gains (losses)
Gain (loss) on valuation of derivatives
Gain (loss) on sales and retirement of noncurrent assets
Gain (loss) on sales of investment securities (Note 6 and 16)
Loss on valuation of investment securities (Note 6)
Depreciation
Impairment loss (Note 9)
Provision of allowance for doubtful accounts(Note 17)
Other, net
Income (loss) before income taxes and minority interests
Income taxes (Note 12):
Current
Deferred
Income (loss) before minority interests
Minority interests in income (loss)
Net income (loss)
Per share data (Note 2) :
Net income (loss)
—Basic
—Diluted *
Net assets
Cash dividends (Note 13)
Millions of yen
Thousands of
U.S. dollars
(Note 1)
2015
2014
2015
¥2,877,913
2,017,490
860,423
437,378
423,045
¥2,408,129
1,728,271
679,858
353,369
326,489
$23,928,769
16,774,674
7,154,095
3,636,634
3,517,461
4,127
(2,903)
499
532
(24,277)
(2,003)
(3,305)
953
-
(985)
(38)
-
(3,439)
(30,839)
392,206
133,256
(6,199)
127,057
265,149
3,276
¥261,873
2,914
(2,804)
320
541
(16,924)
7,414
(2,696)
47,155
(6)
(1,024)
(35)
(29,624)
(2,855)
2,376
328,865
134,315
(13,435)
120,880
207,985
1,369
¥206,616
¥335.57
-
1,310.15
68.00
¥264.98
-
980.98
53.00
34,314
(24,137)
4,149
4,423
(201,854)
(16,654)
(27,480)
7,924
-
(8,190)
(316)
-
(28,594)
(256,415)
3,261,046
1,107,974
(51,542)
1,056,432
2,204,615
27,239
$2,177,376
U.S. dollars
$2.79
-
10.89
0.57
120.27
The accompanying notes are an integral part of these statements.
*For the year ended March 31, 2015 and 2014 diluted information is not presented because potentially dilutive securities do not exist.
Consolidated Statements of Comprehensive Income
FUJI HEAVY INDUSTRIES LTD. AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2015 and 2014
Income (loss) before minority interests
Other comprehensive income (Note 3)
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Remeasurements of other postretirement benefits of foreign consolidated subsidiaries
Share of other comprehensive income of associates accounted for using equity method
Total other comprehensive income
Comprehensive income
(Comprehensive income attributable to)
Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests
Millions of yen
Thousands of
U.S. dollars
(Note 1)
2015
2014
2015
¥265,149
¥207,985
$2,204,615
7,357
37,321
2,270
(2,957)
131
44,122
(17,253)
19,855
－
－
170
2,772
61,171
310,310
18,874
(24,586)
1,089
366,858
309,271
210,757
2,571,473
305,229
4,042
209,150
1,607
2,537,865
33,608
Consolidated Statements of Changes in Net Assets
FUJI HEAVY INDUSTRIES LTD. AND CONSOLIDATED SUBSIDIARIES
As of March 31, 2015 and 2014
Shareholders' equity
Capital stock
Balance at the beginning of current period
Balance at the end of current period
Capital surplus
Balance at the beginning of current period
Changes of items during the period
Disposal of treasury stock
Total changes of items during the period
Balance at the end of current period
Retained earnings
Balance at the beginning of current period
Cumulative effects ofchanges in accounting policies
Restated balance
Changes of items during the period
Dividends from surplus
Net income (loss)
Disposal of treasury stock
Other
Total changes of items during the period
Balance at the end of current period
Treasury stock
Balance at the beginning of current period
Changes of items during the period
Purchase of treasury stock
Disposal of treasury stock
Other
Total changes of items during the period
Balance at the end of current period
Total shareholders' equity
Balance at the beginning of current period
Cumulative effects ofchanges in accounting policies
Restated balance
Changes of items during the period
Dividends from surplus
Net income (loss)
Purchase of treasury stock
Disposal of treasury stock
Other
Total changes of items during the period
Balance at the end of current period
Millions of yen
Thousands of
U.S. dollars
(Note 1)
2015
2014
2015
¥153,795
153,795
¥153,795
153,795
$1,278,748
1,278,748
160,071
160,071
1,330,930
0
0
160,071
483,910
1,385
485,295
(49,970)
261,873
-
216
212,119
697,414
(1,395)
(22)
-
35
13
(1,382)
796,381
1,385
797,766
(49,970)
261,873
(22)
-
251
212,132
¥1,009,898
0
0
160,071
301,357
-
-
(23,424)
206,616
-
(639)
182,553
483,910
(1,292)
(103)
0
-
(103)
(1,395)
613,931
-
-
(23,424)
206,616
(103)
0
(639)
182,450
¥796,381
0
0
1,330,930
4,023,530
11,516
4,035,046
(415,482)
2,177,376
-
1,796
1,763,690
5,798,736
(11,599)
(183)
-
291
108
(11,491)
6,621,610
11,516
6,633,125
(415,482)
2,177,376
(183)
-
2,087
1,763,799
$8,396,924
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Foreign currency translation adjustment
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Remeasurements of defined benefit plans
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Remeasurements of other postretirement benefits
of foreign consolidated subsidiaries
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Total accumulated other comprehensive income
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Minority interests
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Total net assets
Balance at the beginning of current period
Cumulative effects of changes in accounting policies
Restated balance
Changes of items during the period
Dividends from surplus
Net income (loss)
Purchase of treasury stock
Disposal of treasury stock
Other
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
The accompanying notes are an integral part of these statements.
Millions of yen
2015
2014
Thousands of
U.S. dollars
(Note 1)
2015
¥10,629
¥27,882
7,357
7,357
17,986
(17,253)
(17,253)
10,629
$88,376
61,171
61,171
149,547
(26,661)
(46,448)
(221,676)
36,686
36,686
10,025
(13,886)
2,270
2,270
(11,616)
(919)
(2,957)
(2,957)
(3,876)
19,787
19,787
(26,661)
305,030
305,030
83,354
-
(115,457)
(13,886)
(13,886)
(13,886)
-
(919)
(919)
(919)
18,874
18,874
(96,583)
(7,641)
(24,586)
(24,586)
(32,227)
(30,837)
(18,566)
(256,398)
43,356
43,356
12,519
4,527
3,775
3,775
8,302
770,071
1,385
771,456
(49,970)
261,873
(22)
-
251
47,131
259,263
¥1,030,719
(12,271)
(12,271)
(30,837)
1,448
3,079
3,079
4,527
596,813
-
596,813
(23,424)
206,616
(103)
0
(639)
(9,192)
173,258
¥770,071
360,489
360,489
104,091
37,640
31,388
31,388
69,028
6,402,852
11,516
6,414,368
(415,482)
2,177,376
(183)
-
2,087
391,877
2,155,675
$8,570,042
Consolidated Statements of Cash Flows
FUJI HEAVY INDUSTRIES LTD. AND CONSOLIDATED SUBSIDIARIES
As of March 31, 2015 and 2014
Net cash provided by (used in) operating activities
Income (loss) before income taxes
Depreciation and amortization
Increase (decrease) in allowance for doubtful accounts
Interest and dividends income
Interest expenses
Loss (gain) on sales and retirement of noncurrent assets
Loss (gain) on sales and valuation of investment securities
Decrease (increase) in operating loans receivable
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Other, net
Sub total
Interest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Net decrease (increase) in time deposits
Purchase of short-term investment securities
Proceeds from sales of short-term investment securities
Purchase of non-current assets
Proceeds from sales of non-current assets
Purchase of investment securities
Proceeds from sales of investment securities
Payments of loans receivable
Collection of loans receivable
Other, net
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Redemption of bonds
Cash dividends paid
Proceeds from stock issuance to minority shareholders
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents resulting
from change of scope of consolidation
Cash and cash equivalents at end of period
The accompanying notes are an integral part of these statements.
Millions of yen
Thousands of
U.S. dollars
(Note 1)
2015
2014
2015
¥392,206
71,821
(146)
(4,127)
2,903
3,305
(953)
(23,112)
19,283
(27,180)
38,223
30,920
503,143
4,361
(2,839)
(193,122)
311,543
(11,944)
(43,424)
17,905
(115,173)
1,540
(47,031)
26,364
(104,891)
108,065
(4,191)
(172,780)
(18,811)
6,190
(42,858)
(4,060)
(49,887)
－
(1,120)
(110,546)
25,998
54,215
¥328,865
61,486
29,512
(2,914)
2,804
2,696
(47,149)
(25,478)
(49,129)
16,095
39,814
(10,304)
346,298
2,936
(2,742)
(33,468)
313,024
(7,215)
(12,408)
19,237
(72,855)
1,643
(28,687)
65,344
(95,589)
97,409
(782)
(33,903)
(2,893)
8,995
(45,893)
(10)
(23,350)
1,280
(1,140)
(63,011)
12,691
228,801
$3,261,046
597,165
(1,214)
(34,314)
24,137
27,480
(7,924)
(192,168)
160,331
(225,992)
317,810
257,088
4,183,446
36,260
(23,605)
(1,605,737)
2,590,363
(99,310)
(361,054)
148,873
(957,620)
12,805
(391,045)
219,207
(872,129)
898,520
(34,847)
(1,436,601)
(156,406)
51,468
(356,348)
(33,757)
(414,792)
－
(9,312)
(919,149)
216,164
450,777
557,870
328,947
4,638,480
-
¥612,085
122
¥557,870
－
$5,089,258
Notes to Consolidated Financial Statements
FUJI HEAVY INDUSTRIES LTD. AND CONSOLIDATED SUBSIDIARIES
1. Basis of Presentation of the Financial Statements
The accompanying consolidated financial statements of Fuji Heavy Industries Ltd. (the "Company") have
been prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Law
and its related accounting regulations, and in conformity with accounting principles generally accepted in
Japan ("Japanese GAAP"), which are different in certain respects as to application and disclosure
requirements of International Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English from
the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed
with the appropriate Local Finance Bureau of the Ministry of Finance, as required by the Financial Instruments
and Exchange Law. Certain supplementary information included in the statutory Japanese-language
consolidated financial statements, but not considered necessary for fair presentation, is not presented in the
accompanying consolidated financial statements.
The translations of the Japanese yen amounts into U.S. dollars in the accompanying consolidated financial
statements are included solely for the convenience of readers outside Japan, using the prevailing exchange
rate at March 31, 2015, which was ¥120.27 to U.S.$1. The convenience translation should not be construed
as a representation that the Japanese yen amounts have been, could have been, or could in the future be
converted into U.S. dollars at this or any other rate of exchange.
2. Summary of Significant Accounting Policies
[1] The Scope of Consolidation and Application of the Equity Method
The accompanying consolidated financial statements include the accounts of the Company and its majority
owned subsidiaries. All significant intercompany transactions and balances have been eliminated in
consolidation. The fiscal year-end of consolidated subsidiaries is the same as that of the parent company,
except for 5 consolidated foreign subsidiaries in fiscal year 2015 and 5 consolidated foreign subsidiaries in
fiscal year 2014, respectively, the fiscal year-end of those subsidiaries is December 31. The operating
results of those subsidiaries that have different fiscal year-end are consolidated by using the financial
statements as of each subsidiary’s respective fiscal year-end, the necessary adjustments being made
in consolidation if there are any significant transactions between January 1 and March 31.
The consolidated financial statements include the accounts of the Company and 77 subsidiaries in fiscal year
2015 and 77 subsidiaries in fiscal year 2014, respectively.
In addition, 1 non-consolidated subsidiary and 1 affiliated company were accounted for by the equity method
in fiscal 2015; 1 non-consolidated subsidiary and 1 affiliated company were accounted for by the equity
method in fiscal 2014, respectively.
Investments in insignificant non-consolidated subsidiaries and affiliated companies not accounted for by the
equity method are carried at cost.
The difference between the cost and the underlying net equity of investments in subsidiaries and affiliated
companies is allocated to identifiable assets based on their fair value at the date of acquisition. The
unallocated residual value of the excess of the cost over the fair value of the underlying net assets is
recognized as goodwill and amortized over a period of five years on a straight-line basis.
All assets and liabilities of subsidiaries, which include not only the Company’s interest in the subsidiaries but
also the minority interest portion, are valued based on their fair value at the time the Company first
consolidates the subsidiary.
[2] Short-Term Investment Securities and Investment Securities
Under the Japanese accounting standards for financial instruments, available-for-sale securities for which fair
1
values are available are stated at their fair value as of the balance sheet dates with unrealized holding gains
and losses included as a separate component of net assets until realized, while securities for which fair values
are not readily available are stated at cost, as determined by the moving-average method, after taking into
consideration devaluation, if any, for permanent impairment. Held-to-maturity debt securities are stated using
the amortized cost method.
[3] Inventories
Inventories for regular sales are stated at cost, determined mainly by the moving-average cost method. (Book
value on the balance sheet is measured based on the lower of cost or market value.)
[4] Property, Plant and Equipment (Excluding Leased Assets)
Property, plant and equipment are stated at cost. Significant renewals and additions are capitalized; ordinary
maintenance, ordinary repairs, minor renewals and minor improvements are charged to the consolidated
statements of income as incurred.
Depreciation of the property, plant and equipment of the Company and its consolidated domestic subsidiaries
is principally calculated by the declining-balance method, except for those buildings (excluding building
improvements) acquired on or after April 1, 1998, for which the straight-line method is applied.
Depreciation of the property, plant and equipment of consolidated foreign subsidiaries is calculated by the
straight-line method over the estimated useful lives of the assets.
Estimated useful lives for depreciable assets are as follows:
Buildings and structures: 7–50 years
Machinery, equipment and vehicles: 2–11 years
[5] Intangible Assets (Excluding Leased Assets)
Computer software used internally by the Company and its consolidated subsidiaries is amortized by the
straight-line method over the relevant economic useful lives of 3 or 5 years.
[6] Leased Assets
For leased assets under finance lease transactions in which the ownership is transferred to the lessee:
The leased assets are depreciated by the same method as used for other property, plant and equipment.
For leased assets under finance lease transactions in which the ownership is not transferred to the lessee:
The leased assets are depreciated by the straight-line method over the leased period and the residual value is
zero.
In addition, finance lease transactions in which the ownership is not transferred to the lessee on or before
March 31, 2008 are recorded as regular rental transactions.
[7] Allowance for Doubtful Accounts
Allowance for doubtful accounts is provided based on the amount calculated from the historical ratio of bad
debt for ordinary receivables, and estimated amounts of uncollectible accounts for specific overdue
receivables.
[8] Provision for Bonuses
Employees' bonuses are recognized as expenses for the period in which those are incurred.
[9] Provision for Product Warranties
The Company and its consolidated subsidiaries provide for accrued warranty claims on products sold based
on their past experiences of warranty services and estimated future warranty costs, which are included in
2
"Accrued expenses" in the accompanying consolidated balance sheets.
[10] Provision for Loss on Construction Contracts
The provision for losses on uncompleted construction of contracts in the Aerospace segment is provided
when substantial losses on the contracts are anticipated at the fiscal year-end for the next fiscal year and
beyond and such losses can be reasonably estimated.
[11] Accounting method for Retirement Benefits
Net defined benefit liability (assets) for employees is provided based on the estimated amounts of projected
pension and severance obligation and the fair value of plan assets at the end of the fiscal year. In determining
retirement benefit obligations, the straight-line basis is used for attributing expected benefit to periods.
Unrecognized prior service cost is being amortized on the straight-line method over a period (10-19 years)
that is shorter than the average remaining service period of the eligible employees. Unrecognized net
actuarial gain or loss is amortized from the following fiscal year on the straight-line method over a period
(primarily 16 years for fiscal years 2015 and 2014) that is shorter than the average remaining service period of
the eligible employees.
Directors and statutory auditors of the Company and its consolidated domestic subsidiaries are entitled to
receive a lump-sum payment at the time of severance or retirement, subject to shareholder approval. The
liabilities for such benefits, which are determined based on the Company’s and its consolidated subsidiaries’
internal rules, are included in "Other long-term liabilities" in the accompanying consolidated balance sheets.
[12] Translation of Foreign Currency-Denominated Accounts
Under the Japanese accounting standards for foreign currency translation, monetary assets and liabilities
denominated in foreign currencies are translated into Japanese yen at the exchange rates prevailing at each
balance sheet date with the resulting gain or loss included currently in the statement of income.
The assets and liabilities of foreign subsidiaries and affiliated companies are translated into Japanese yen at
the exchange rates in effect at the balance sheet dates of the foreign subsidiaries and affiliated companies,
except for common stock and capital surplus, which are translated at historical rates. Revenue and expense
accounts are translated at the average exchange rates during the respective years. The resulting foreign
currency translation adjustments are included in "Foreign currency translation adjustments" and "Minority
interest" in the net assets section of the accompanying consolidated balance sheets.
[13] Revenue Recognition
The percentage-of-completion method is applied to revenue from construction contracts of Aerospace
division productions where certain elements are determinable with certainty at the end of fiscal year. (The
percentage of completion is estimated using the proportion-of-cost method). The completed-contract method
is applied to other works.
[14] Accounting for Lease Transactions
Sales and corresponding cost of sales under finance lease transactions conducted by certain domestic
consolidated subsidiaries are recognized on the effective date of each lease contract.
[15] Derivative Financial Instruments and Hedge Accounting
The Japanese accounting standards for financial instruments require that the Company and its consolidated
domestic subsidiaries state derivative financial instruments at their fair value and recognize changes in the fair
value as a gain or loss, unless such derivative financial instruments are used for hedging purposes.
For interest rate swap contracts used as a hedge that meet certain hedging criteria, the net amount to be paid
or received under the interest rate swap contract is added to or deducted from the interest on the assets or
liabilities for which the swap contract is executed.
3
Derivative financial instruments qualifying as a hedge, along with the underlying transactions, assets and
liabilities are as follows:
Financial Instrument
Interest swaps
Transactions, assets and liabilities
Borrowings
The risk exposures to movements in interest rates are hedged according to the Company’s and its
consolidated subsidiaries’ risk management policy. An evaluation of hedge effectiveness is not considered
necessary as the terms and notional amounts of these hedging instruments are the same as those of the
underlying transactions, assets and liabilities, and therefore they are presumed to be highly effective in
offsetting the effect of movements in interest rates at their inception as well as during their terms.
[16] Goodwill
Goodwill is principally amortized by the straight-line method over 5 years.
[17] Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investments with original maturities of 3 months or less
that are readily convertible to known amounts of cash and have negligible risk of changes in value due to their
short maturities.
[18] Income Taxes
Income taxes are comprised of corporation, enterprise, and inhabitants taxes. The provision for income taxes
is computed based on the pretax income for financial reporting purposes. Deferred tax assets and liabilities
are recognized for expected future tax consequences of temporary differences between the financial
statement carrying amounts and the tax bases of assets and liabilities. A valuation allowance is recorded to
reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.
[19] Research and Development Expenses
Research and development costs are expensed as incurred and amounted to ¥83,535million (US$ 694,562
thousand) and ¥60,092 million for fiscal years 2015 and 2014, respectively.
[20] Net Income per Share
Basic net income per share (EPS) is computed based on the average number of shares of common stock
outstanding during each year. Diluted EPS assumes the potential dilution that occurs if all the convertible
securities are converted or other contracts to issue common stock are exercised to the extent that they are
not anti-dilutive.
[21] Reclassification
Certain reclassifications have been made in the consolidated financial statements for the year ended March
31, 2014 to conform to the presentation for the year ended March 31, 2015.”
[22] Changes in Accounting Policy
The Company has applied Accounting Standard for Retirement Benefits (ASBJ Statement No. 26, May 17,
2012 (hereinafter, the “Statement No.26”)) and Guidance on Accounting Standard for Retirement Benefits
(ASBJ Guidance No. 25, May 17, 2012 (hereinafter, the “Guidance No.25”)) from the first quarter of fiscal year
2015 in accordance with the article 35 of the Statement No.26 and the article 67 of the Guidance No.25.
The Company has reviewed the method of calculating retirement benefit obligations and current service costs
and has changed the method of attributing expected benefits to periods from a straight-line basis to a benefit
formula basis, and the method of determination of discount rate from the method using discount rate based
4
on the average remaining service period for employees to the method using a single weighted average
discount rate reflecting the expected payment periods and the amounts for each expected payment period.
In accordance with the article 37 of the Statement No.26, the effect of changes in the calculation method of
retirement benefit obligations and current service costs has been recognized in retained earnings at the
beginning of the first quarter of fiscal year 2015.
The effect of application of the Statement No.26 and the Guidance No.25 is not material.
In addition, the influence to Per share information refers to the concerned note.
[23] Changes in Presentation Method
(Consolidated Statements of Cash Flows)
In the fiscal year ended March 31, 2015, the presentation method in the Consolidated Statements of Cash
Flows was changed to raise the clarity as follows.
In the fiscal year ended March 31, 2014, “Impairment loss,” “Increase (decrease) in provision for bonuses,”
“Increase (decrease) in provision for product warranties,” “Increase (decrease) in provision for loss on
construction contracts,” “Increase (decrease) in net defined benefit liability,” “Increase (decrease) in provision
for loss on litigation,” “Loss (gain) on valuation of derivatives,” “Equity in (earnings) losses of affiliates,”
“Decrease (increase) in lease investment assets" “Decrease (increase) in vehicles and equipment on
operating leases" "Increase (decrease) in deposits received" which had been listed in separately under “Net
cash provided by (used in) operating activities,” was included in "Other," in the fiscal year ended March 31,
2015 .
In the fiscal year ended March 31, 2014, “Purchase of property, plant and equipment,” “Purchase of intangible
assets,” which had been listed in separately under “Net cash provided by (used in) investing activities,” was
included in "Purchase of non-current assets" and "Net decrease (increase) in time deposits" which had been
included in "Other" was listed in separately in the fiscal year ended March 31, 2015.
In the fiscal year ended March 31, 2014, “Repayment of lease obligations,” which had been listed in
separately under “Net cash provided by (used in) financing activities,” was included in "Other" in the fiscal year
ended March 31, 2015.
As a result, in Consolidated Statements of cash Flows for the fiscal year ended March 31, 2014, the following
items that had been shown separately under “ Net cash provided by (used in) operating activities,” were
reclassified as "Other,".
“Impairment loss,” ¥35 million
“Increase (decrease) in provision for bonuses,” ¥2,391 million
“Increase (decrease) in provision for product warranties,” ¥3,116 million
“Increase (decrease) in provision for loss on construction contracts,” ¥114 million
“Increase (decrease) in net defined benefit liability,”( ¥17,692 million)
“Increase (decrease) in provision for loss on litigation,”(¥369 million)
“Loss (gain) on valuation of derivatives,” (¥7,414 million)
“Equity in (earnings) losses of affiliates,” (¥320 million)
“Decrease (increase) in lease investment assets" (¥1,488 million)
“Decrease (increase) in vehicles and equipment on operating leases" (¥400 million)
"Increase (decrease) in deposits received" (¥2,240 million)
In the fiscal year ended March 31, 2014, “Purchase of property, plant and equipment,”(¥67,409 million)
“Purchase of intangible assets,”(¥5,446 million) which had been listed in separately under “Net cash provided
by (used in) investing activities,” was included in "Purchase of non-current assets"(¥72,855 million) in the
fiscal year ended March 31, 2015."Other"(¥7,997 million) was reclassified as "Net decrease (increase) in time
deposits"(¥7,215 million) and "Other"(¥782 million).
In the fiscal year ended March 31, 2014, “Repayments of lease obligations,”(¥1,036million) which had been
listed in separately under “Net cash provided by (used in) financing activities,” was reclassified as "Other" in
the fiscal year ended March 31, 2015.
5
3. Other comprehensive income
Amounts reclassified to net income (loss) in fiscal 2015 and 2014, which were recognized in other
comprehensive income in the current or previous periods and tax effects for each component of other
comprehensive income were as follows:
Millions of yen
2015
2014
Thousands of
U.S. dollars
2015
Valuation difference on available-for-sale
securities
Increase(decrease) during the year
Reclassification adjustments
Sub-total, before tax
Tax (expense) or benefit
Sub-total, net of tax
Foreign currency translation adjustment
Increase during the year
Reclassification adjustments
Sub-total, before tax
Tax (expense) or benefit
Balance at end of year, net of tax
Remeasurements of defined benefit plans
Increase(decrease) during the year
Reclassification adjustments
Sub-total, before tax
Tax (expense) or benefit
Balance at end of year, net of tax
Remeasurements of other postretirement
benefits of foreign consolidated
subsidiaries
Increase(decrease) during the year
Reclassification adjustments
Sub-total, before tax
Tax (expense) or benefit
Balance at end of year, net of tax
Share of other comprehensive income
of associates accounted for using
equity method
Increase during the year
Total other comprehensive income
¥10,660
(953)
9,707
(2,350)
7,357
37,321
-
37,321
-
37,321
1,246
3,035
4,281
(2,011)
2,270
(4,642)
-
(4,642)
1,685
(2,957)
(¥90,720)
47,266
(43,454)
26,201
(17,253)
19,691
164
19,855
-
19,855
-
-
-
-
-
-
-
-
-
-
$88,634
(7,924)
80,710
(19,539)
61,171
310,310
-
310,310
-
310,310
10,360
25,235
35,595
(16,721)
18,874
(38,596)
-
(38,596)
14,010
(24,586)
131
¥44,122
170
¥2,772
1,089
$366,858
6
4. Additional Cash Flow Information
Cash and cash equivalents as of March 31, 2015 and 2014, consisted of the following:
Millions of yen
Cash and deposits
Short-term investment securities
Short-term loans receivable
Sub-total
Less maturity over three months
Short-term investment securities excluding
cash equivalents
Short-term loans receivable excluding
repurchase agreement
Cash and cash equivalents
2015
¥228,821
444,737
157,070
830,628
(25,911)
(45,562)
2014
¥351,125
233,766
122,681
707,572
(13,756)
(13,265)
Thousands of
U.S. dollars
2015
$1,902,561
3,697,822
1,305,978
6,906,361
(215,440)
(378,831)
(147,070)
(122,681)
(1,222,832)
¥612,085
¥557,870
$5,089,258
7
5. Financial Instruments
(1) Summary of Financial Instruments Status
[1] Action Policy with Regard to Financial Instruments
With regard to planned capital expenditure to support Fuji Heavy Industries Ltd., its consolidated subsidiaries
and affiliated companies (the "FHI Group") in their main operations of automobile manufacturing and sales,
the FHI Group finances mainly from bank loans and the issue of corporate bonds. Temporary surpluses are
invested in highly secure financial assets. Bank loans and liquidation of accounts receivable are utilized to
provide short-term working capital. It is the FHI Group's policy to use derivatives as a way to avoid the risks
stated below and not to conduct speculative transactions.
[2] Details of Financial Instruments and Respective Risks
Notes and accounts receivable-trade and Lease investment assets are subject to customer credit risks. In
addition, operating receivables denominated in foreign currencies due to globalized business of the FHI
Group are subject to the risk of changes in foreign exchange rates. As a general rule, however, forward
foreign exchange contracts are utilized to hedge the foreign exchange rate risk, considering the net amount of
operating receivables denominated in foreign currencies that exceed foreign currency denominated operating
liabilities. Available-for-sale securities and investment securities are mainly stocks associated with business
and capital alliances with principal business partners, and are subject to risk of market price fluctuation.
Majority of payables included in Notes and accounts payable-trade and Electronically recorded
obligations-operating are due within one year. A certain portion of such liabilities involve foreign currency
denominated transactions associated with the import of raw materials and is subject to exchange rate
fluctuation risk, although it is consistently less than accounts receivable balance denominated in the same
foreign currency. Funds financed by bank loans and corporate bonds are primarily used for capital
expenditure, whose repayment or redemption dates will come within 9 years after March 31, 2015 at the
latest. A certain portion of those liabilities may have variable interest rates and are subject to the risk of
changes in interest rates, although such risk is mitigated using derivative transactions (interest rate swap
transactions).
Derivative transactions include foreign exchange forward contracts to hedge against exchange rate
fluctuations associated with trade accounts receivables and liabilities denominated in foreign currencies, and
interest rate swap contracts to hedge against the risk of change in interest rates on bank loans. With regard to
hedging instruments and hedged items, hedge policy, the method of evaluation of hedge effectiveness and
other related items, please refer to "2-[15] Derivative Financial Instruments and Hedge Activities".
[3] Risk Management System with Regard to Financial Instruments
(a) Credit Risk management (Risks Associated with Business Partner’s Breach of Contract)
The Company and its consolidated subsidiaries have credit control function and regularly monitor the
financial status of key customers with regard to accounts receivables and lease investment assets. In
addition to keeping track of payment due dates and balances of each customer, such credit control
function identifies and mitigates the potential risk of uncollectibility due to deterioration in financial status
or other factors of customers.
(b) Market Risk Management (Risks Associated with Fluctuations in Foreign Exchange and Interest Rates)
With regard to operating assets and liabilities denominated in foreign currencies, as a general rule, the
Company uses foreign exchange forward contracts to hedge against risks of exchange rate fluctuation
on a monthly basis by each currency. Depending on the status of exchange rates, foreign exchange
forward contracts with no longer than six months term are used to hedge against the risk of exchange
rate fluctuation to the extent that net position of accounts receivable and accounts payable dominated in
foreign currency is exposed. In addition, the Company and certain consolidated subsidiaries use interest
rate swap transactions to mitigate the risk of fluctuation in interest rates on bank loans and corporate
bonds.
8
The Company also regularly monitors the market values of investments included in Short-term
investment securities and Investment securities as well as the financial conditions of issuers (business
partner companies), and continuously reviews its investment portfolio taking into consideration its
relationships with respective business partner companies.
Basic policies with regard to derivative transactions are approved by the Executive Management Board.
Finance & Accounting Department engages in derivative transactions in line with the applicable the
Company’s rule. The results of these transactions are reported to the Finance Officer every time the
transactions are conducted.
(c) Liquidity Risk Management (Risk of Becoming Unable to Make Payments by the Due Date)
The Company secures liquidity at a level sufficient to satisfy its current needs with commitment lines
contracted with major banks in combination with keeping cash and cash equivalents balance at a certain
level.
[4] Supplemental Explanation of Items with Regard to Fair Value of Financial Instruments
Fair value of financial instruments includes quoted prices of financial instruments in the market and, in the
event market prices are not available, prices that are calculated based on the underlying assumptions under
the appropriate valuation model. Because the factors incorporated into the valuation model are subject to
change, calculated fair value may differ. The values of derivative transactions contracts stated in "(2) Items
with Regard to Fair Value of Financial Instruments" do not by themselves indicate the market risk associated
with the respective derivative transactions.
9
(2) Items with Regard to Fair Value of Financial Instruments
The consolidated balance sheet amounts, the fair value and difference as of March 31, 2015 and 2014 were
as follows:
The items whose fair values were extremely difficult to measure were not included in the table below (refer to
Note [2] ).
As of March 31, 2015
Cash and deposits
Notes and accounts receivable-trade
Allowance for doubtful accounts (*1)
Lease investment assets
Allowance for doubtful accounts (*1)
Short-term loans receivable
Allowance for doubtful accounts (*1)
Short-term investment securities, Investment securities
and Other securities
Total Assets
Notes and accounts payable-trade
Electronically recorded obligations-operating
Short-term loans payable
Current portion of long-term loans payable
Current portion of bonds
Accrued income taxes
Accrued expenses
Bonds payable
Long-term loans payable
Total Liabilities
Derivative transactions (*2)
hedge accounting is not applied
hedge accounting is applied
Consolidated
balance sheet
amounts
¥228,821
164,540
(640)
163,900
24,098
(66)
24,032
157,070
(341)
156,729
118,702
692,184
317,801
74,420
41,443
44,329
-
54,987
126,007
10,000
115,420
784,407
(2,725)
¥-
Millions of yen
Fair Value
Difference
¥228,821
163,900
-
-
28,794
4,762
158,313
1,584
118,702
698,530
317,801
74,420
41,443
44,441
-
54,987
126,007
10,059
116,074
785,232
(2,725)
¥-
-
6,346
-
-
-
(112)
-
-
-
(59)
(654)
(825)
-
¥-
10
As of March 31, 2015
Cash and deposits
Notes and accounts receivable-trade
Allowance for doubtful accounts (*1)
Lease investment assets
Allowance for doubtful accounts (*1)
Short-term loans receivable
Allowance for doubtful accounts (*1)
Short-term investment securities, Investment securities
and Other securities
Total Assets
Notes and accounts payable-trade
Electronically recorded obligations-operating
Short-term loans payable
Current portion of long-term loans payable
Current portion of bonds
Accrued income taxes
Accrued expenses
Bonds payable
Long-term loans payable
Total Liabilities
Derivative transactions (*2)
hedge accounting is not applied
hedge accounting is applied
Consolidated
balance sheet
amounts
$1,902,561
1,368,088
(5,321)
1,362,767
200,366
(549)
199,817
1,305,978
(2,835)
1,303,143
986,963
5,755,251
2,642,396
618,774
344,583
368,579
-
457,196
1,047,701
83,146
959,674
6,522,049
Thousands of U.S. dollars
Fair Value
Difference
$1,902,561
1,362,767
$-
-
239,411
39,594
1,316,313
13,170
986,963
5,808,015
2,642,396
618,774
344,583
369,510
-
457,196
1,047,701
83,637
965,112
6,528,909
-
52,764
-
-
-
(931)
-
-
-
(491)
(5,438)
(6,860)
(22,657)
$-
(22,657)
$-
-
$-
*1. Allowance for doubtful accounts corresponding to Notes and accounts receivable-trade, Lease
investment assets and Short-term loans receivable is deducted.
*2. Indicated are the net amounts of assets and liabilities results from derivative transactions, with the
total net liabilities indicated in ( ).
11
As of March 31, 2014
Cash and deposits
Notes and accounts receivable-trade
Allowance for doubtful accounts (*1)
Lease investment assets
Allowance for doubtful accounts (*1)
Short-term loans receivable
Allowance for doubtful accounts (*1)
Short-term investment securities, Investment securities
and Other securities
Total Assets
Notes and accounts payable-trade
Electronically recorded obligations-operating
Short-term loans payable
Current portion of long-term loans payable
Current portion of bonds
Accrued income taxes
Accrued expenses
Bonds payable
Long-term loans payable
Total Liabilities
Derivative transactions (*2)
hedge accounting is not applied
hedge accounting is applied
Consolidated
balance sheet
amounts
¥351,125
181,646
(275)
181,371
23,633
(44)
23,589
122,681
(397)
122,284
84,077
762,446
279,926
67,637
59,193
42,557
4,060
110,426
91,921
10,000
153,844
819,564
(722)
¥-
Millions of yen
Fair Value
Difference
¥351,125
181,371
¥-
-
27,792
4,203
123,209
925
84,077
767,574
279,926
67,637
59,193
42,753
4,085
110,426
91,921
10,091
154,823
820,855
(722)
¥-
-
5,128
-
-
-
(196)
(25)
-
-
(91)
(979)
(1,291)
-
¥-
*1. Allowance for doubtful accounts corresponding to Notes and accounts receivable-trade, Lease
investment assets and Short-term loans receivable is deducted.
*2. Indicated are the net amounts of assets and liabilities results from derivative transactions, with the
total net liabilities indicated in ( ).
[1] The calculation methods of financial instrument fair value together with securities and derivative
transactions
Assets
Cash and deposits and Notes and accounts receivable-trade
Because these are settled in the short-term, the fair value is mostly the same as the book value and
as such the book value is deemed as fair value.
Lease investment assets and Short-term loans receivable
Fair value is the present value calculated by discounting relevant cash flows by each category of the
assets and timing of cash flow, where discount rates were adopted taking into consideration the
period until maturity and credit risks. In addition, the estimated residual value is included in the
12
balance of Lease investment assets.
Short-term investment securities and investment securities
Fair value is determined by the stock exchange price, while bonds are determined by the stock
exchange price or by quotations received from financial institutions. Please refer to the note entitled
"5.Short-term investment securities and investment securities" regarding to respective objectives for
holding securities.
Liabilities
Notes and accounts payable-trade, Short-term loans payable, Accrued income taxes and Accrued
expenses
Because these are settled in the short-term, the fair value is mostly the same as the book value and
as such the book value is deemed as fair value.
Current portion of long-term loans payable and Long-term loans payable
Fair value is measured based on the present value that is calculated as discounted cash flow of the
total amount of principal and interest, where the interest would be set, if the Company concluded a
brand new loan agreement with the same condition at the date of measurement.
Current portion of bonds and Bonds payable
The fair value of bonds issued by the Company is based on market prices if available. For bonds
with no available market price, fair value is calculated using the present value that is calculated as
discounted cash flow of the total amount of principal and interest by, where discount rates are
adopted taking into consideration the remaining redemption period and credit risks.
Derivative transactions
Fair value of interest rate swap that meets certain hedging criteria is included in the fair value of
long-term debt as a hedged item.
[2] Financial instruments which fair value is extremely difficult to measure
Consolidated balance sheet amount as of March 31, 2015 and 2014:
Other securities (available-for-sale securities)
Millions of yen
Certificate of deposit
Commercial paper
Money management fund
Unlisted stocks (excluding over-the-counter stocks)
Medium Term Note
Other
2015
¥140,000
144,982
114,192
1,015
30,000
¥3
2014
¥90,000
79,987
50,515
4,832
-
¥3
Thousands of
U.S. dollars
2015
$1,164,048
1,205,471
949,464
8,439
249,439
$25
These have no available market prices and are expected to entail excessive costs in the estimation of
future cash flows. Consequently, estimating their fair value is recognized as extremely difficult and they
are not included in "Short-term investment securities, Investment securities and Other securities".
13
[3] Scheduled redemption of monetary assets and securities with maturity
As of March 31, 2015:
Cash and deposits
Notes and accounts receivable-trade
Lease investment assets
Short-term investment securities, Investment
securities and Other securities
Government and municipal bonds
Corporate bonds
Other
Short-term loans receivable
As of March 31, 2015:
Cash and deposits
Notes and accounts receivable-trade
Lease investment assets
Short-term investment securities, Investment
securities and Other securities
Government and municipal bonds
Corporate bonds
Other
Short-term loans receivable
As of March 31, 2014:
Cash and deposits
Notes and accounts receivable-trade
Lease investment assets
Short-term investment securities, Investment
securities and Other securities
Government and municipal bonds
Corporate bonds
Other
Short-term loans receivable
Within 1
Year
¥228,821
158,147
7,002
1 to 5
Years
¥-
6,393
16,864
Millions of yen
Over 10
years
¥-
-
-
5 to 10
Years
¥-
-
232
11,186
3,930
345,429
¥58,335
14,963
17,001
1,571
¥96,412
2,226
2,762
829
¥2,323
3,838
2,392
4,437
¥-
Within 1
Year
$1,902,561
1,314,933
58,219
Thousands of U.S. dollars
Over 10
years
$-
-
-
5 to 10
Years
$-
-
1,929
1 to 5
Years
$-
53,155
140,218
93,007
32,676
2,872,113
$485,034
124,412
141,357
13,062
$801,630
18,508
22,965
6,893
$19,315
31,912
19,889
36,892
$-
Within 1
Year
¥351,125
174,668
7,097
1 to 5
Years
¥-
6,978
16,303
Millions of yen
Over 10
years
¥-
-
-
5 to 10
Years
¥-
-
233
11,240
2,024
169,987
¥42,364
8,418
11,977
384
¥77,592
1,774
1,329
454
¥2,725
3,290
732
2,625
¥-
14
[4] Amount of repayment for long-term debt and other interest-bearing debt
As of March 31, 2015:
Short-term loans payable
Bonds payable
Long-term loans payable
As of March 31, 2015:
Short-term loans payable
Bonds payable
Long-term loans payable
As of March 31, 2014:
Short-term loans payable
Bonds payable
Long-term loans payable
Within 1
Year
¥41,443
-
¥44,329
1 to 5
Years
¥-
10,000
¥113,022
Millions of yen
Over 10
years
¥-
-
¥-
5 to 10
Years
¥-
-
¥2,398
Within 1
Year
$344,583
-
$368,579
1 to 5
Years
$-
83,146
$939,736
Thousands of U.S. dollars
Over 10
years
$-
-
$-
5 to 10
Years
$-
-
$19,938
Within 1
Year
¥59,193
4,060
¥42,557
1 to 5
Years
¥-
10,000
¥150,028
Millions of yen
Over 10
years
¥-
-
¥-
5 to 10
Years
¥-
-
¥3,816
6. Short-Term Investment Securities and Investment Securities
Information on the value of short-term investment securities and investment securities as of March 31, 2015
and 2014 was as follows:
(1) Other securities (available-for-sale securities):
As of March 31, 2015:
Book value exceeding acquisition cost:
Equity securities
Debt securities
Government and municipal bonds
Corporate bonds
Other
Sub-total
Book value not exceeding acquisition cost:
Equity securities
Debt securities
Government and municipal bonds
Corporate bonds
Other
Other
Sub-total
Total
Book value
Acquisition cost
Millions of yen
Difference
¥50,341
¥24,170
¥26,171
20,802
21,366
6,139
98,648
20,471
21,067
6,013
71,721
2,778
2,918
11,411
4,719
-
1,146
20,054
¥118,702
15
11,479
4,768
-
1,165
20,330
¥92,051
331
299
126
26,927
(140)
(68)
(49)
-
(19)
(276)
¥26,651
As of March 31, 2015:
Book value exceeding acquisition cost:
Equity securities
Debt securities
Government and municipal bonds
Corporate bonds
Other
Sub-total
Book value not exceeding acquisition cost:
Equity securities
Debt securities
Government and municipal bonds
Corporate bonds
Other
Other
Sub-total
Total
As of March 31, 2014:
Book value exceeding acquisition cost:
Equity securities
Debt securities
Government and municipal bonds
Corporate bonds
Other
Sub-total
Book value not exceeding acquisition cost:
Equity securities
Debt securities
Government and municipal bonds
Corporate bonds
Other
Other
Sub-total
Total
Book value
Acquisition cost
Difference
Thousands of U.S. dollars
$418,567
$200,964
$217,603
172,961
177,650
51,043
820,221
170,209
175,164
49,996
596,333
2,752
2,486
1,047
223,888
23,098
24,262
(1,164)
94,878
39,237
-
9,529
166,742
$986,963
95,444
39,644
-
9,687
169,038
$765,371
(566)
(407)
-
(158)
(2,296)
$221,592
Book value
Acquisition cost
Millions of yen
Difference
¥37,854
¥21,503
¥16,351
6,894
10,014
2,353
57,115
6,798
9,806
2,297
40,404
1,615
1,616
17,829
6,361
49
1,108
26,962
¥84,077
17,990
6,404
50
1,126
27,186
¥67,590
96
208
56
16,711
(1)
(161)
(43)
(1)
(18)
(224)
¥16,487
16
(2) Other securities (available-for-sale securities) sold during fiscal years 2015 and 2014:
For the year ended March 31, 2015:
Equity securities
Debt securities
Government and municipal bonds
Corporate bonds
Other
Other
Total
For the year ended March 31, 2015:
Equity securities
Debt securities
Government and municipal bonds
Corporate bonds
Other
Other
Total
For the year ended March 31, 2014:
Sales amount
Total gains
Total losses
Millions of yen
¥3,300
¥741
32,673
6,626
1,529
119
¥44,247
190
116
5
-
¥1,052
¥12
50
17
20
-
¥99
Sales amount
Total gains
Total losses
Thousands of U.S. dollars
$27,438
$6,161
271,664
55,093
12,713
989
$367,897
1,580
964
42
-
$8,747
$100
416
141
166
-
$823
Sales amount
Total gains
Total losses
Millions of yen
Equity securities
Debt securities
Government and municipal bonds
Corporate bonds
Other
Total
¥49,172
¥47,148
23,566
9,902
1,972
¥84,612
127
50
8
¥47,333
¥2
133
21
14
¥170
17
7. Short-Term Loans Payable and Long-Term Debts
Short-term loans payable as of March 31, 2015 and 2014, consisted of the following:
Millions of yen
2014
Thousands of
U.S. dollars
2015
2015
Bank loans with average interest rate of 1.49% and 0.43%
per annum as of March 31, 2015 and 2014, respectively
¥41,443
¥59,193
$344,583
Long-term debts as of March 31, 2015 and 2014 consisted of the following:
Loans principally from banks and insurance companies due
through 2025 with average interest rate of 0.82% and
0.93% per annum as of March 31, 2015 and 2014,
respectively
Unsecured 0.71% bonds due June 13, 2016
Subtotal
Less-Portion due within one year
Total
Millions of yen
2014
Thousands of
U.S. dollars
2015
2015
¥159,749
¥196,401
$1,328,253
10,000
169,749
(44,329)
¥125,420
10,000
210,461
(46,617)
¥163,844
83,146
1,411,399
(368,579)
$1,042,820
Annual maturities of long-term loans payable and bonds payable as of March 31, 2015 were as follows:
2016
2017
2018
2019
2020
2021 and thereafter
Total
Millions of yen
¥44,329
41,496
43,798
36,038
1,690
2,398
¥169,749
Thousands of
U.S. dollars
$368,579
345,024
364,164
299,642
14,052
19,938
$1,411,399
18
Lease obligations as of March 31, 2015 and 2014 consisted of the following:
Lease obligations due within one year as of March 31,2015
and 2014
Millions of yen
2014
¥882
2015
¥1,016
Thousands of
U.S. dollars
2015
$8,448
Lease obligations due after one year as of March 31,2015
and 2014
Total
1,065
1,099
8,855
¥2,081
¥1,981
$17,303
Annual maturities of lease obligations as of March 31, 2015 were as follows:
2016
2017
2018
2019
2020
2021 and thereafter
Total
Millions of yen
¥1,016
903
114
39
9
-
¥2,081
Thousands of
U.S. dollars
$8,448
7,508
948
324
75
-
$17,303
The following assets as of March 31, 2015 and 2014 were pledged as collateral for certain loans:
Property, plant and equipment
Total
Millions of yen
2014
¥41,358
¥41,358
Thousands of
U.S. dollars
2015
$294,629
$294,629
2015
¥35,435
¥35,435
To raise working capital efficiently, the FHI Group has entered into the commitment-line contracts. The
maximum amount that can be made available under these contracts is ¥127,041 million (US$1,056,298
thousand) as of March 31, 2015. At the end of the fiscal year under review, there were no borrowings under
the commitment line.
19
8. Derivative transactions
In the normal course of business, the Company and its consolidated subsidiaries employ derivative financial
instruments, including foreign exchange forward contracts, foreign currency options and interest rate swaps,
to manage their exposures to fluctuations in foreign currency exchange rates and interest rates. The
Company and its consolidated subsidiaries do not use derivatives for speculative or trading purposes.
The fair value information of derivative financial instruments as of March 31, 2015 and 2014 was as follows:
Derivative transactions to which hedge accounting is not applied
(1) Foreign currency contracts:
As of March 31, 2015
Notional
Amount
Millions of yen
Valuation
Fair value gain (loss)
Thousands of U.S. dollars
Valuation
Fair value gain (loss)
Notional
Amount
Foreign exchange
forward contracts:
Sell-
U.S. dollar
Euro
Canadian dollar
As of March 31, 2014
¥313,502
4,488
23,102
(¥2,955)
55
175
(¥2,955) $2,606,652
37,316
192,084
55
175
($24,570)
457
1,455
($24,570)
457
1,455
Foreign exchange forward contracts:
Sell-
U.S. dollar
Euro
Canadian dollar
Notional
Amount
Fair value
Millions of yen
Valuation
gain (loss)
¥218,776
6,134
20,782
(¥686)
(36)
0
(¥686)
(36)
0
Note: The method to determine the fair value is based on quotations obtained from financial institutions.
Derivative transactions to which hedge accounting is applied
(1) Interest rate contracts:
Accounting treatment: Exception processing of interest rate swap
Hedge item: Long-term loans payable
As of March 31, 2015
Interest rate swap
contracts:
Receive floating rate
pay fixed rate
Millions of yen
Thousands of U.S. dollars
Notional
Amount
Over
1 year
Fair value
Notional
Amount
Over
1 year
Fair value
¥10,105
¥3,000
(*)
$84,019
$24,944
(*)
20
As of March 31, 2014
Interest rate swap contracts:
Receive floating rate pay fixed rate
Millions of yen
Notional
Amount
Over
1 year
Fair value
Note *Fair value of interest rate swap that meets certain hedging criteria is included in the fair value of
long-term debt as a hedged item.
¥23,395
¥10,105
(*)
9. Property, Plant and Equipment
Property, plant and equipment as of March 31, 2015 and 2014 are summarized as follows:
Buildings and structures
Machinery, equipment and vehicles
Vehicles and equipment on operating leases, net
Other
Subtotal
Accumulated depreciation
Accumulated impairment loss
Land
Construction in progress
Total
2015
¥348,685
526,302
13,181
318,806
1,206,974
(882,752)
(26,528)
188,392
28,611
¥514,697
Millions of yen
2014
¥327,549
485,990
14,666
265,699
1,093,904
(817,421)
(27,717)
187,931
24,116
¥460,813
Thousands of
U.S. dollars
2015
$2,899,185
4,376,004
109,595
2,650,752
10,035,536
(7,339,752)
(220,570)
1,566,409
237,890
$4,279,513
10. Unexecuted Balance of Overdraft Facilities and Lending Commitments
The unexecuted balance of overdraft facilities and lending commitments at a consolidated subsidiary (Subaru
Finance Co., Ltd.) as of March 31, 2015 and 2014 was as follows:
Total overdraft facilities and lending commitments
Less amounts currently executed
Unexecuted balance
Millions of yen
2014
¥4,150
569
¥3,581
Thousands of
U.S. dollars
2015
$39,910
4,132
$35,778
2015
¥4,800
497
¥4,303
A portion of the overdraft facilities and lending commitments above is subject to credit considerations as
documented in the customer contracts. Therefore, the total balance above is not always available.
21
11. Pension and Severance Plans
The Company and its consolidated domestic subsidiaries have lump-sum retirement payment plans,
contributory defined benefit employees’ welfare pension funds, defined benefit pension plan, and certain
domestic subsidiaries have defined contribution pension plans. In addition, in certain occasions, additional
retirement payments are made to employees for their retirement. Consolidated foreign subsidiaries primarily
have defined contribution plans.
As of March 31, 2015, the Company and 53 of its consolidated domestic subsidiaries, which add up to a total
of 54 companies, have lump-sum retirement payment plans. Within the FHI Group, there are also 20 defined
contribution plans, and 5 defined benefits pension plans. In addition, there are 7 single-employer employees’
welfare pension funds subject to the provisions of Article 33 of "Accounting Standard for Retirement Benefits."
Certain insignificant consolidated subsidiaries calculated their pension liability using the simplified method.
Under the simplified method, an accrued pension and net defined benefit liability is provided at the amount
that would have been payable had all the employees voluntarily retired at the end of the fiscal year, less an
amount to be covered from the plan assets, while the Company and significant subsidiaries provide an
accrued pension and net defined benefit liability based on the estimated amount of pension and severance
obligation (projected benefit obligations), less the fair value of plan assets at the end of the fiscal year under
the actuarial method.
Defined benefit pension plans (including the multi-employer pension plan of contributory defined benefit
employees’ welfare pension funds settled as defined benefit pension plan.)
Movement in retirement benefit obligation, except plans applied simplified method
Millions of yen
2014
¥101,700
-
Thousands of
U.S. dollars
2015
$854,901
(20,629)
Balance at the beginning of the period
Cumulative effects of
changes in accounting policies
Restated balance
a. Service cost
b. Interest cost
c. Actuarial loss (gain)
d. Benefits paid
e. Other
Balance at the end of the period
2015
¥102,819
(2,481)
100,338
5,508
1,397
4,520
(4,366)
-
¥107,397
101,700
5,565
1,173
(1,569)
(4,049)
(1)
¥102,819
Movements in plan assets, except plans applied simplified method
Balance at the beginning of the period
a. Expected return on plan assets
b. Actuarial loss (gain)
c. Contributions paid by the employer
d. Benefits paid
Balance at the end of the period
2015
¥87,069
1,913
4,961
8,330
(3,133)
¥99,140
Millions of yen
2014
¥66,714
1,697
(1,628)
23,029
(2,743)
¥87,069
Movement in net defined benefit liability in the plans applying the simplified method
22
834,273
45,797
11,616
37,582
(36,302)
-
$892,996
Thousands of
U.S. dollars
2015
$723,946
15,906
41,249
69,261
(26,050)
$824,312
Balance at the beginning of the period
a. Increase due to the change of scope of
consolidation
b. Retirement benefit cost
c. Benefits paid
d. Contributions paid by the employer
Balance at the end of the period
2015
¥5,880
-
703
(482)
(29)
¥6,072
Millions of yen
2014
¥5,399
203
720
(417)
(25)
¥5,880
Thousands of
U.S. dollars
2015
¥48,890
-
5,845
(4,008)
(241)
$50,486
Reconciliation from retirement benefit obligations and plan assets to net defined benefit liability (asset),
include plans applied simplified method
a. Funded retirement benefit obligations
b. Plan assets
Sub total
c. Unfunded retirement benefit
obligations
a+b+c. Total Net liability (asset) for
retirement benefits
d. Net defined benefit liability
e. Net defined benefit asset
d+e. Total Net liability (asset) for
retirement benefits
Retirement benefit costs
a. Service cost
b. Interest cost
c. Expected return on plan assets
d. Net actuarial loss amortization
e. Past service costs amortization
f. Additional retirement payments
g. Retirement benefit cost of the plan
applying the simplified method
Total retirement benefit costs for the fiscal
year ended
2015
¥97,944
(99,346)
(1,402)
15,706
Millions of yen
2014
¥93,446
(87,248)
6,198
15,432
Thousands of
U.S. dollars
2015
$814,368
(826,025)
(11,657)
130,590
14,304
21,630
118,932
17,963
(3,659)
¥14,304
22,852
(1,222)
¥21,630
149,356
(30,423)
$118,932
2015
¥5,508
1,397
(1,913)
2,377
58
379
703
Millions of yen
2014
¥5,565
1,173
(1,697)
2,429
42
311
720
Thousands of
U.S. dollars
2015
¥45,797
11,616
(15,906)
19,764
482
3,151
5,845
¥8,509
¥8,543
¥70,749
23
Adjustments for retirement benefit (before tax effect)
a. Past service costs
b. Actuarial gains and losses
Total
2015
¥249
4,032
¥4,281
Millions of yen
2014
¥ -
-
¥ -
Accumulated adjustments for retirement benefit (before tax effect)
Thousands of
U.S. dollars
2015
$2,070
33,525
$35,595
Thousands of
U.S. dollars
2015
$1,280
2015
¥154
Millions of yen
2014
¥403
16,813
20,845
139,794
¥16,967
¥21,248
$141,074
2015
51%
14%
25%
10%
100%
Percentage
2014
54%
13%
23%
10%
100%
a. Past service costs that are yet to be
recognized
b. Actuarial gains and losses that are yet
to be recognized
Total
Plan assets
Plan assets comprise:
a.Bonds
b.Equity securities
c.Cash and deposit
d.Other
Total
Long-term expected rate of return
Current and target asset allocations, historical and expected returns on various categories of plan assets have
been considered in determining the long-term expected rate of return.
Actuarial assumptions
The principal actuarial assumptions
2015
2014
a. Attribution of expected benefit obligation Benefit formula method
b. Discount rate
c. Long-term expected rate of return
d. Amortization of actuarial gain/loss
0.8%–1.4%
1.4%–3.5%
Primarily 16 years (amortized
by the straight-line method
starting from the following
fiscal year, over a period
shorter than the average
remaining service periods of
the eligible employees)
10 to 19 years
The straight-line method
0.6%–1.5%
1.4%–3.5%
Primarily 16 years (amortized
by the straight-line method
starting from the following
fiscal year, over a period
shorter than the average
remaining service periods of
the eligible employees)
10 to 19 years
e. Amortization of past service cost
24
Defined contribution pension plan
The amount required to contribute to defined contribution plans was 4,414 million (US$36,701 thousand) and
4,127 million for fiscal years 2015 and 2014 respectively which included the multi-employer pension plan of
contributory defined benefit employees’ welfare pension funds settled as defined contribution plans.
Certain information concerning the multi-employer pension plan, which requires contributions that are
expensed as they become due as pension and severance costs, was as follows:
(1) Overall funded status of the multi-employer pension plan (mainly as of March 31, 2015 and 2014)
Plan assets
Projected benefit obligation
Funded status
2015
¥83,089
94,207
(¥11,118)
Millions of yen
2014
¥91,753
100,556
(¥8,803)
Thousands of
U.S. dollars
2015
$690,854
783,296
($92,442)
(2) Contributions by the Company and its consolidated domestic subsidiaries as a percentage of total
contributions to the multi-employer pension plan for fiscal years 2015 and 2014 respectively: 5%
Other than the above, ¥27,203 million (US$226,183 thousand) and ¥17,403 million of postretirement benefit
plan obligation for fiscal years 2015 and 2014 respectively is included in "Other" of accrued expense and
long-term liabilities in some American subsidiaries.
12. Income Taxes
The Company and its consolidated subsidiaries were subject to a number of taxes based on income, which in
the aggregate resulted in a normal statutory income tax rate of approximately 35.4% and 37.8% for fiscal
years 2015 and 2014, respectively.
A reconciliation of the statutory income tax rates in Japan to the Company’s effective income tax rates for
fiscal years 2015 and 2014 were as follows:
2015
35.4%
2014
-
Statutory income tax rate in Japan
Increase (reduction) in taxes resulting from:
Adjustment of deferred tax assets in the end of fiscal year 2015 by change of the tax rate
Deduction of research and development expense
Entertainment expenses not qualifying for deduction
Changes in valuation allowance and tax benefits realized from loss carry forwards
Adjustment to past corporate income taxes payable and corporate income taxes refundable
Equity in earnings of affiliates
Difference of applicable tax rate in subsidiaries
Other
Effective income tax rate
Note:The note for fiscal year 2014 is omitted because the difference between the statutory income tax
rates in Japan and the Company’s effective income tax is 5% or less of the statutory income tax rates.
0.7%
(3.6)%
0.1%
(0.5)%
0.2%
0.1%
35.4%
0.3%
32.4%
-
-
-
-
-
-
-
-
25
Significant components of the deferred tax assets and liabilities as of March 31, 2015 and 2014, were as
follows:
Deferred tax assets:
Accrued expenses
Provision for product warranties
Net defined benefit liability
Depreciation and amortization expenses
Long-term accounts payable-other
Provision for bonuses
Unrealized profit on inventories
Loss on valuation of inventories
Net operating loss carryforwards
Other
Total deferred tax assets
Valuation allowance
Total deferred tax assets, net of valuation allowance
Deferred tax liabilities:
Valuation difference on available-for-sale securities
Depreciation and amortization expenses
Reserve for reduction entry
Net defined benefit asset
Other
Total deferred tax liabilities
Net deferred tax assets
Millions of yen
2014
Thousands of
U.S. dollars
2015
2015
¥18,569
17,549
13,534
10,938
10,919
7,241
25,954
2,079
860
31,253
138,896
(20,018)
118,878
(8,668)
(11,246)
(2,072)
(1,006)
(17,980)
(40,972)
¥77,906
¥15,409
13,804
15,077
10,559
7,069
7,265
15,894
2,011
1,274
32,574
120,936
(23,669)
97,267
(5,822)
(4,821)
(2,389)
(441)
(11,075)
(24,548)
¥72,719
$154,394
145,913
112,530
90,945
90,787
60,206
215,798
17,286
7,151
259,857
1,154,868
(166,442)
988,426
(72,071)
(93,506)
(17,228)
(8,365)
(149,497)
(340,667)
$647,759
The net deferred tax assets are included in the following line items in the accompanying consolidated balance
sheets.
Current assets—Deferred tax assets
Investments and other assets—Deferred tax assets
Current liabilities—Deferred tax liabilities
(Other current liabilities)
Long-term liabilities—Deferred tax liabilities
Total net deferred tax assets
Millions of yen
2014
¥64,214
18,332
Thousands of
U.S. dollars
2015
$655,101
109,030
-
(9,827)
¥72,719
-
(116,371)
$647,759
2015
¥78,789
13,113
-
(13,996)
¥77,906
26
(Adjustment of deferred tax assets and liabilities for enacted changes in tax laws and rates)
(Fiscal 2014)
On March 31, 2014, amendments to the Japanese tax regulations were enacted into law, and the statutory
income tax rate for years beginning on or after April 1, 2014 will be changed. As a result of these amendments,
the statutory income tax rates utilized for the measurement of deferred tax assets and liabilities expected to be
settled for years beginning on April 1, 2014 has been changed from 37.8% to 35.4%.
Due to these changes in statutory income tax rates, net deferred tax assets as of March 31, 2014 decreased
by ¥1,861million and deferred income tax expense recognized for the year ended March 31, 2014 increased
by the same amount.
(Fiscal 2015)
On March 31, 2015, amendments to the Japanese tax regulations were enacted into law. Based on the
amendments, the statutory income tax rates utilized for the measurement of deferred tax assets and liabilities
expected to be settled or realized from April 1, 2015 to March 31, 2016 and on or after April 1, 2016 are
changed from 35.4% for the fiscal year ended March 31, 2015 to 32.9% and 32.1%, respectively, as of March
31, 2015.
Due to these changes in statutory income tax rates, net deferred tax assets (after deducting the deferred tax
liabilities) decreased by ¥2,375 million (US$19,747 thousand) as of March 31, 2015, deferred income tax
expense recognized for the fiscal year ended March 31, 2015 increased by ¥2,826 million (US$23,497
thousand), evaluation differences of other securities increased by ¥765 million (US$6,361 thousand) and
accumulated adjustments for employee retirement benefits increased by minous ¥529 million (minous
US$4,398 thousand).
13. Net Assets
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as
common stock. However, a company may, by a resolution of its Board of Directors, designate an amount not
exceeding one half of the price of the new shares as additional paid-in capital, which is included in capital
surplus.
Under the Japanese Companies Act (“the Act”), in cases where a dividend distribution of surplus is made, the
smaller of an amount equal to 10% of the dividend or the excess, if any, of 25% of common stock over the
total of additional paid-in capital and legal earnings reserve must be set aside as additional paid-in capital or
legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying
consolidated balance sheets.
Under the Act, both legal earnings reserve and additional paid-in capital used to eliminate or reduce a deficit
generally require a resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Act, all
additional paid-in capital and all legal earnings reserve may be transferred to other capital surplus and
retained earnings, respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the
non-consolidated financial statements of the Company in accordance with the Act.
At the annual shareholders’ meeting held on June 23, 2015, the shareholders approved cash dividends
amounting to ¥28,889 million (US$240,201 thousand). Such appropriations have not been accrued in the
consolidated financial statements as of March 31, 2015. Such appropriations are recognized in the period in
which they are approved by the shareholders.
14. Presentation of inventories and provision for loss on construction contracts
¥Minus 988 million (US$ Minus 8,215 thousand) and ¥70 million as "Provision for loss on construction
contracts" is included in "Cost of sales" for fiscal years 2015 and 2014, respectively.
27
15. Selling, General and Administrative Expenses
Selling, general and administrative expenses for fiscal years 2015 and 2014 consisted of the following:
Freightage and packing expenses
Advertising expenses
Sales incentives
Salaries and bonuses
Research and development expenses
Other
Total
Millions of yen
2014
¥26,523
64,332
65,425
50,274
59,896
86,919
¥353,369
2015
¥34,856
81,538
82,597
49,894
83,104
105,389
¥437,378
Thousands of
U.S. dollars
2015
$289,815
677,958
686,763
414,850
690,979
876,270
$3,636,634
16. Gain on sales of investment securities
(Fiscal 2014)
Gain on sales of investment securities includes ¥47,118 million, the profit related to the sales of stock of
Polaris Industries Inc. owned by FHI.
17. Allowances for doubtful accounts
(Fiscal 2014)
Allowances for doubtful accounts, the loss is associated with initial investment fees related to the AH-64D
combat helicopter for the Japan Ministry of Defense as a precaution for the case that the ruling is upheld.
18. Finance Leases
As allowed under the Japanese accounting standards, the Company and its consolidated subsidiaries in
Japan account for finance leases.
Information as Lessee
(1) Transfer of title through finance lease transaction
[1] Leased assets
Mainly implements of production in the automotive business
[2] Depreciation method for leased assets
Leased assets are depreciated by the same method as used for other property, plant and equipment.
(2) Finance leases which do not transfer ownership title
[1] Leased assets
Mainly network equipment and terminal units (Other tangible assets) in the automotive business
[2] Depreciation method for leased assets
Leased assets are depreciated by the straight-line method over the leased period and the residual value is
zero.
28
Information as Lessor
(1) The details of lease investment assets as of March 31, 2015 and 2014 were as follows:
Obligation of lease fee receivable
Estimated residual value
Interest expense portion
Lease investment assets
Millions of yen
2014
¥28,363
322
(5,052)
¥23,633
Thousands of
U.S. dollars
2015
$239,145
2,844
(41,623)
$200,366
2015
¥28,762
342
(5,006)
¥24,098
(2) Lease revenue related to lease investment assets
Amounts of collections on lease receivable after the fiscal year ended March 31, 2015 and 2014, were as
follows;
Within 1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
Over 5 years
Millions of yen
2014
¥8,510
6,924
5,510
4,276
2,840
¥303
Thousands of
U.S. dollars
2015
$69,835
58,743
49,464
35,528
23,223
$2,353
2015
¥8,399
7,065
5,949
4,273
2,793
¥283
29
19. Operating Lease
Information as Lessee
The future minimum lease/rent payments, excluding the portion of interest thereon, as of March 31, 2015 and
2014, were as follows:
Operating leases:
Due within one year
Due after one year
Total
Millions of yen
2014
Thousands of
U.S. dollars
2015
¥2,130
12,241
¥14,371
$20,279
116,654
$136,934
2015
¥2,439
14,030
¥16,469
Information as Lessor
The future minimum lease/rent payments receivable, excluding the portion of interest thereon, as of March 31,
2015 and 2014, were as follows:
Operating leases:
Due within one year
Due after one year
Total
20. Contingent Liabilities
Contingent liabilities as of March 31, 2015 and 2014, were as follows:
Millions of yen
2014
Thousands of
U.S. dollars
2015
¥212
101
¥313
$1,580
765
$2,345
2015
¥190
92
¥282
Thousands of
Millions of yen U.S. dollars
2015
2014
2015
As guarantor of third-party indebtedness from financial
institutions
¥45,214
¥40,284
$375,937
21. The Amount of Discount of Export Bill
The amount of discount of export bill as of March 31, 2015 and 2014, were as follows:
The amount of discount of export bill
Thousands of
Millions of yen U.S. dollars
2015
$24,345
2014
¥812
2015
¥2,928
22. Transfer of Financial Assets to Special Purpose Company
The balance of financial assets transferred to special purpose company as of March 31, 2015 and 2014, were
as follows:
Balance of financial assets transferred to special purpose
company(loan receivable of Automobiles and accounts
receivable-trade of Aerospace)
30
Thousands of
Millions of yen U.S. dollars
2015
2014
2015
¥5,037
¥7,073
$41,881
23. Fair value of collateral financial assets with free disposal right
Collateral investment securities
Thousands of
Millions of yen U.S. dollars
2015
$83,146
2014
-
2015
¥10,000
The above relates transaction with repurchase agreement and the same amount is included in short-term
loans receivable of current assets.
24. Segment Information
(1)General information about reportable segments
The business segments the Company reports are the business units for which the Company is able to obtain
respective financial information separately in order for the Board of Directors to conduct periodic investigation to
determine distribution of management resources and evaluate their business result.
The Company places Automobile at the center of the whole businesses, and introduces an internal company
system into Aerospace and Industrial products divisions. This framework makes clearer the responsibility of each
division and accelerates business execution. The Company manages the subsidiaries on the basis of this
classification. Therefore, the business segments consist of Automobile, Aerospace, Industrial products, and Other
which does not belong to any division.
Automobile segment manufactures and sells vehicles and related products. Aerospace segment manufactures
aircrafts, parts of space-related devices. Industrial products segment manufactures and sells Robin engines and
related products.
(2)Calculation method of sales, profit or loss, assets, liabilities and other items by reportable segments
Accounting method for reportable segments is almost the same as "2. Summary of Significant
Accounting Policies".
Segment income are calculated based on operating income.
Net sales - Inter-segment are calculated based on current market prices.
31
(3)Information on sales, income, assets and other items by reportable segments for the fiscal years ended
March 31, 2015 and 2014 was summarized as follows
Net Sales:
Automobiles
Outside customers
Inter-segment
Sub-total
Aerospace
Outside customers
Inter-segment
Sub-total
Industrial products
Outside customers
Inter-segment
Sub-total
Other (*1)
Outside customers
Inter-segment
Sub-total
Total
Adjustment (*2)
Consolidated total (*3)
Segment income:
Automobiles
Aerospace
Industrial products
Other (*1)
Total
Adjustment (*2)
Consolidated total (*3)
Millions of yen
2014
2015
Thousands of
U.S. dollars
2015
¥2,698,974
4,236
2,703,210
¥2,246,624
3,261
2,249,885
$22,440,958
35,221
22,476,179
142,801
-
142,801
29,029
207
29,236
124,436
-
124,436
29,776
567
30,343
7,109
15,744
22,853
2,898,100
(20,187)
¥2,877,913
7,293
14,642
21,935
2,426,599
(18,470)
¥2,408,129
Millions of yen
2014
2015
¥400,874
18,912
779
1,884
422,449
596
¥423,045
¥308,973
14,148
632
2,099
325,852
637
¥326,489
1,187,337
-
1,187,337
241,365
1,721
243,086
59,109
130,905
190,014
24,096,616
(167,847)
$23,928,769
Thousands of
U.S. dollars
2015
$3,333,117
157,246
6,477
15,665
3,512,505
4,956
$3,517,461
32
Segment assets:
Automobiles
Aerospace
Industrial products
Other (*1)
Total
Adjustment (*2)
Consolidated total (*3)
Other Items:
Depreciation and amortization:
Automobiles
Aerospace
Industrial products
Other (*1)
Total
Adjustment (*2)
Consolidated total (*3)
Investment to equity-method affiliates:
Automobiles
Aerospace
Industrial products
Other (*1)
Total
Adjustment (*2)
Consolidated total (*3)
Increase of property, plant and equipment and
intangible fixed assets:
Automobiles
Aerospace
Industrial products
Other (*1)
Total
Adjustment (*2)
Consolidated total (*3)
Millions of yen
2014
2015
¥1,944,178
186,292
32,926
59,735
2,223,131
(23,417)
¥2,199,714
¥1,639,760
182,123
29,692
53,533
1,905,108
(16,745)
¥1,888,363
Millions of yen
2014
2015
¥65,342
4,583
429
1,467
71,821
-
¥71,821
¥589
-
775
-
1,364
-
¥1,364
¥122,689
4,509
985
7,163
135,346
-
¥135,346
¥56,265
3,758
411
1,052
61,486
-
¥61,486
¥6
-
520
-
526
-
¥526
¥90,782
4,074
533
3,148
98,537
-
¥98,537
Thousands of
U.S. dollars
2015
$16,165,112
1,548,948
273,767
496,674
18,484,502
(194,703)
$18,289,798
Thousands of
U.S. dollars
2015
$543,294
38,106
3,567
12,198
597,165
-
$597,165
$4,897
-
6,444
-
11,341
-
$11,341
$1,020,113
37,491
8,190
59,558
1,125,351
-
$1,125,351
Note: *1. "Other" means the category which is not included into any reportable segments. It consists of
garbage collection vehicles, specialized vehicles, real estate lease, etc.
*2. Adjustment of segment income refers to elimination of intersegment transaction.
*3.Segment income is adjusted on operating income on the consolidated statements of income.
33
Related Information
(1)Products and services information
Products and services information is not shown since the same information is in the segment information.
(2)Information about geographic areas
[1]Sales for the fiscal years ended March 31, 2015 and 2014 was summarized as follows:
Sales: (*1)
Japan
North America
[United States] (*2)
Europe
Asia
Other
Consolidated total
Millions of yen
2014
2015
¥652,894
1,730,947
[1,607,897]
123,250
238,749
132,073
¥2,877,913
¥672,060
1,322,760
[1,220,961]
134,680
154,392
124,237
¥2,408,129
Thousands of
U.S. dollars
2015
$5,428,569
14,392,176
[13,369,061]
1,024,778
1,985,109
1,098,138
$23,928,769
Note: *1 Sales is categorized by country or area which is based on customer location.
*2 Sales of the United States is included in North America area.
[2]Property, plant and equipment for the fiscal years ended March 31, 2015 and 2014 was summarized as
follows:
Property, plant and equipment: (*1)
Japan
North America
[United States] (*2)
Europe
Asia
Other
Consolidated total
Millions of yen
2014
2015
Thousands of
U.S. dollars
2015
¥412,623
101,042
[100,274]
481
-
551
¥514,697
¥394,163
65,987
[65,233]
486
-
177
¥460,813
$3,430,806
840,126
[833,741]
3,999
-
4,581
$4,279,513
Note: *1 Property, plant and equipment is categorized by country or area according to geographic adjacent
level.
*2 Property, plant and equipment of the United States is included in North America area.
[3]Major customers Information
Information about major customers is not shown because outside sales for major customers accounted for
less 10% of operating revenue on the consolidated statements of income for the fiscal years ended March 31,
2015 and 2014.
34
Information on Impairment Loss in Fixed Assets by Reportable segments
Impairment loss in fixed assets by reportable segments for the fiscal years ended March 31, 2015 and 2014
was summarized as follows:
Impairment loss in fixed assets:
Automobiles
Aerospace
Industrial products
Other
Total
Adjustment
Total
Millions of yen
2014
2015
Thousands of
U.S. dollars
2015
¥38
-
-
-
38
-
¥38
¥35
-
-
-
35
-
¥35
$316
-
-
-
316
-
$316
Information on Amortization of Goodwill and Unamortized Balance by Reportable segments
Information on amortization of goodwill and unamortized balance by reportable segments for the fiscal years
ended March 31, 2015 and 2014 was summarized as follows:
Goodwill
Millions of yen
2014
Thousands of
U.S. dollars
2015
¥258
-
-
-
258
-
¥258
¥2,369
-
-
-
2,369
-
¥2,369
$2,212
-
-
-
2,212
-
¥2,212
$20,554
-
-
-
20,554
-
$20,554
2015
¥266
-
-
-
266
-
¥266
¥2,472
-
-
-
2,472
-
¥2,472
Amount written off of current period:
Automobiles
Aerospace
Industrial products
Other
Total
Corporate and elimination
Total
Balance at the end of current period:
Automobiles
Aerospace
Industrial products
Other
Total
Corporate and elimination
Total
Information on Negative Goodwill by Reportable segments
No items to be reported.
35
25. Fair Value of Investment and Rental Property
The Company and certain consolidated subsidiaries own rental office buildings and rental commercial
facilities with the objective of generating rental income in Saitama prefecture and other locations. Certain
domestic rental office buildings in Japan are classified as properties that include portions used as investment
and rental property, because part of them are used by the Company and certain consolidated subsidiaries.
The consolidated balance sheet amounts, principal changes during fiscal 2015 and 2014, fair value at the
end of fiscal 2015 and 2014 were as follows:
As of March 31, 2015
beginning
balance
Consolidated balance sheet amounts
Increase(dec
rease) during
the year
ending
balance
Millions of yen
Fair value as
the end of the
fiscal year
Investment and rental property
Properties that include portions used as
investment and rental property
As of March 31, 2015
¥30,343
(¥1,095)
¥29,248
¥37,704
¥9,206
¥6,022
¥15,228
¥19,537
Thousands of U.S. dollars
beginning
balance
Consolidated balance sheet amounts
Increase(dec
rease) during
the year
ending
balance
Fair value as
the end of the
fiscal year
Investment and rental property
Properties that include portions used as
investment and rental property
As of March 31, 2014
$252,291
($9,105)
$243,186
$313,495
$76,544
$50,071
$126,615
$162,443
beginning
balance
Consolidated balance sheet amounts
Increase(dec
rease) during
the year
ending
balance
Millions of yen
Fair value as
the end of the
fiscal year
Investment and rental property
Properties that include portions used as
investment and rental property
¥30,410
(¥67)
¥30,343
¥36,779
¥6,830
¥2,376
¥9,206
¥13,569
Note 1. The amounts of consolidated balance sheet excludes accumulated depreciation and accumulated
impairment loss from acquisition costs.
2. Among changes in the amount of investment, rental property and properties that include portions
used as investment and rental property during the fiscal 2015, principal increases were properties
acquisitions etc, which amounted to ¥7,263 million (US$60,389 thousand), and principal decreases
were depreciation, which amounted to ¥1,009 million (US$8,389 thousand), loss on sales and
retirement, which amounted to ¥1,408 million (US$11,707 thousand).
Among changes in the amount of investment, rental property and properties that include portions
used as investment and rental property during the fiscal 2014, principal increases were properties
acquisitions etc, which amounted to ¥3,370 million, and principal decreases were depreciation, which
amounted to ¥612 million, loss on sales and retirement, which amounted to ¥450 million.
36
3. Fair value of a part of main investment and rental property is the amount estimated by based value of
real-estate appraiser, and fair value of a part of other investment and rental property is the amount
estimated by the Company based principally on land assessment value.
Profit and loss in fiscal 2015 and 2014 concerning investment and rental property and properties that include
portions used as investment and rental property were as follows:
As of March 31, 2015
Investment and rental property
Properties that include portions used as
investment and rental property
As of March 31, 2015
Investment and rental property
Properties that include portions used as
investment and rental property
As of March 31, 2014
Rental
income
Rental
expenses
Change
Millions of yen
Other profit
and loss
¥3,868
¥2,167
¥1,701
(¥418)
¥394
¥1,265
(¥871)
¥-
Thousands of U.S. dollars
Rental
income
Rental
expenses
Change
Other profit
and loss
$32,161
$18,018
$14,143
($3,476)
$3,276
$10,518
($7,242)
$-
Rental
income
Rental
expenses
Change
Millions of yen
Other profit
and loss
Investment and rental property
Properties that include portions used as
investment and rental property
¥3,476
¥2,074
¥1,402
¥392
¥221
¥171
¥44
¥-
Note:1. Rental income (from the properties that include portions used as investment and rental property) does
not include the portion that the Company or certain subsidiaries use as the provision of services and
business administration purposes. Rental expenses, however, include all portions of the expenses
(costs related to depreciation, repairs, insurance and taxes).
2. Other profit and loss include in gain on sale and impairment loss.
26.Subsequent Event
None identified.
27.Other
On January 15, 2010, the Company filed a lawsuit with the Tokyo District Court against the Government of
Japan for the payment totaling ¥35,124 million (US$ 292,043 thousand) of uncollected initial investment fees
(amount paid for customization to the Japanese specifications) for the manufacture of the AH-64D combat
helicopters for the Japan Ministry of Defense. On February 28, 2014, the Tokyo District Court rejected the
case. On March 13, 2014, the Company appealed against the Tokyo District Court’s decision to the Tokyo
High Court.
On January 29, 2015, the Tokyo High Court upheld the Company’s claims in almost all respects. However,
the Government of Japan filed a petition of objection to the Supreme Court of Japan on February 10, 2015.
37
On April 6, 2015, the Company made an additional appeal to the Supreme Court of Japan in order to have the
Company’s claims rejected at the Tokyo High Court upheld.
38