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Brief Report on the Settlement of Accounts (Consolidated)

for the Six Months Ended September 30, 2016 (J-GAAP)

November 8, 2016

Name of Listed Company: Daikin Industries, Ltd. Listed on TSE

Code No.: 6367

(URL: http://www.daikin.co.jp/)

Representative: Masanori Togawa, President and CEO

Contact: Motoshi Hosomi,

General Manager of the Corporate Communication Department of the Head Office

(Tel.: +81-6-6373-4320)

Planned date of the filing of quarterly report: November 10, 2016

Planned date of start of dividend payment: December 2, 2016

Preparation of supplementary explanatory materials for the settlement of accounts for the second quarter: Yes

Holding briefings on the settlement of accounts for the second quarter: Yes (for institutional investors and analysts)

1. Consolidated Business Results for the Six Months Ended September 30, 2016 (From April 1, 2016, to September 30, 2016)

(1) Consolidated Business Results (Accumulated) Note: Amounts less than one million yen are truncated. Percentages indicate year-over-year increases/decreases.

Net sales Operating income Ordinary income

Profit attributable to

owners of parent

Six months ended Millions of yen % Millions of yen % Millions of yen % Millions of yen %

September 30, 2016 1,044,818 -3.1 140,384 13.0 139,779 13.7 96,419 20.3

September 30, 2015 1,078,707 10.7 124,194 9.5 122,970 7.1 80,138 5.9

Note: Comprehensive income was ¥(26,657) million (―%) for the six months ended September 30, 2016, and ¥36,995 million (-71.5%) for the six months ended September 30, 2015.

Earnings per share

Diluted earnings

per share

Six months ended Yen Yen

September 30, 2016 330.08 329.82

September 30, 2015 274.55 274.30

(2) Consolidated Financial Position

Total assets Net assets Equity ratio

Millions of yen Millions of yen %

As of September 30, 2016 2,138,002 993,596 45.3

As of March 31, 2016 2,191,105 1,037,469 46.3

(Reference) Equity capital was ¥969,423 million as of September 30, 2016, and ¥1,014,409 million as of March 31, 2016.

<Translation>

Daikin Industries, Ltd. (6367), Brief Report on the Settlement of Accounts (Consolidated) for the Six Months Ended September 30, 2016

(J-GAAP)

2. Dividends

(Annual) Dividend per share

1Q-end 2Q-end 3Q-end Year-end Total

Yen Yen Yen Yen Yen

Fiscal Year ended March 31, 2016 ― 55.00 ― 65.00 120.00

Fiscal Year ending March 31, 2017 ― 60.00

Fiscal Year ending March 31, 2017

(forecast) ― 60.00 120.00

Note: Revisions to the dividend forecast announced most recently: None

3. Consolidated Business Forecast for the Fiscal Year Ending March 31, 2017 (From April 1, 2016, to March 31, 2017)

Note: Percentages indicate year-over-year increases/decreases.

Net sales Operating income Ordinary income

Profit attributable

to owners of

parent

Earnings per

share

Millions

of yen %

Millions

of yen %

Millions

of yen %

Millions

of yen % Yen

Full year 2,000,000 -2.1 222,000 1.9 220,000 5.0 145,000 5.8 496.15

Note: Revisions to the consolidated business forecast announced most recently: Yes

*Notes (1) Changes in Significant Subsidiaries during the Six Months Ended September 30, 2016: Yes (Changes in specified subsidiaries resulting in change in scope of consolidation)

New: 1 company Name: Flanders Holdings LLC Note: For details, see on page 5 of the attached “(1) Changes in Significant Subsidiaries during the Six Months Ended September

30, 2016” of “2. Matters Related to “*Notes” in the Summary Section.”

(2) Adoption of Accounting Treatment Specific to Quarterly Consolidated Financial Statement Preparation: Yes Note: For details, see on page 5 of the attached “(2) Adoption of Accounting Treatment Specific to Quarterly Consolidated

Financial Statement Preparation” of “2. Matters Related to “*Notes” in the Summary Section.”

(3) Changes in Accounting Policies, Changes in Accounting Estimates, and Retrospective Restatement (i) Changes in accounting policies relating to revisions to accounting standards, etc.: None (ii) Changes in accounting policies other than (i) above: None (iii) Changes in accounting estimates: None (iv) Retrospective restatement: None

(4) Number of Shares Issued (common stock)

(i) Number of shares issued at end of period (including treasury shares) As of September 30, 2016 293,113,973 shares As of March 31, 2016 293,113,973 shares

(ii) Number of treasury shares at end of period As of September 30, 2016 863,435 shares As of March 31, 2016 1,075,356 shares

(iii) Average number of shares outstanding during the six months Six months ended September 30, 2016 292,111,996 shares Six months ended September 30, 2015 291,884,986 shares


(J-GAAP)

Presentation of Implementation Status of Quarterly Review Procedures

This Brief Report on the Settlement of Accounts is not subject to quarterly review procedures pursuant to

the Financial Instruments and Exchange Act, and review procedures for quarterly financial statements

pursuant to the Financial Instruments and Exchange Act had not been completed at the time of the

disclosure of this Brief Report on the Settlement of Accounts.

Explanation about the Appropriate Use of the Business Forecast and Other Noteworthy Points

The business forecasts are based on information currently available to Daikin Industries, Ltd. (the

“Company”) and certain assumptions that are deemed reasonable. Actual results may differ significantly

from these forecasts. For the basis of presumption of the business forecast and the notes on its use, please

refer to “(3) Explanation of Future Forecast Information Such as Consolidated Business Forecast” of “1.

Qualitative Information Regarding Settlement of Accounts for the Period under Review.”

The Company plans to hold a briefing on business results for institutional investors and analysts on

Wednesday, November 9, 2016. Documents and materials distributed in this briefing will be posted on the

Company’s website soon after the briefing.


(J-GAAP)

- 1 -

Content of Attachment

1. Qualitative Information Regarding Settlement of Accounts for the Period under Review ........................ 2

(1) Explanation of Operating Results .......................................................................................................... 2

(2) Explanation of Financial Position .......................................................................................................... 4

(3) Explanation of Future Forecast Information Such as Consolidated Business Forecast ......................... 4

2. Matters Related to “*Notes” in the Summary Section ............................................................................... 5

(1) Changes in Significant Subsidiaries during the Six Months Ended September 30, 2016 ...................... 5

(2) Adoption of Accounting Treatment Specific to Quarterly Consolidated Financial Statement

Preparation ............................................................................................................................................. 5

(3) Changes in Accounting Policies, Changes in Accounting Estimates, and Retrospective Restatement .. 5

3. Consolidated Financial Statements ............................................................................................................ 6

(1) Consolidated Balance Sheet ................................................................................................................... 6

(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ................ 8

(Consolidated Statement of Income)

For the Six Months Ended September 30 .......................................................................................... 8

(Consolidated Statement of Comprehensive Income)

For the Six Months Ended September 30 .......................................................................................... 9

(3) Consolidated Statement of Cash Flows ................................................................................................ 10

(4) Notes to Consolidated Financial Statements ........................................................................................ 12

Notes on the Premises of the Company as a “Going Concern” ....................................................... 12

Notes on Significant Changes in Shareholders’ Equity .................................................................... 12

Segment Information, etc. ................................................................................................................ 12


(J-GAAP)

- 2 -

1. Qualitative Information Regarding Settlement of Accounts for the Period

under Review

(1) Explanation of Operating Results

Looking at the overall world economy in the six months ended September 30, 2016 (from April 1, 2016, to

September 30, 2016), robust personal consumption bolstered the U.S. economy. Even as the European economy

maintained a moderate recovery, geopolitical risks, and other factors remained to put downward pressure on the

economy. The emerging economies slowed, especially in China. Turning to the Japanese economy, a moderate

recovery continued despite some signs of weakness. Personal consumption remained generally unchanged up to the

beginning of autumn, when it showed steady movements.

In such a business environment, the Daikin Group is making group-wide efforts to further expand sales and

reduce costs in order to overcome negative factors such as the impact of foreign exchange. The aim is to generate

results in the first year of “Fusion 20,” the Group’s strategic management plan that sets fiscal 2020 as its target

fiscal year. In particular, the Group made efforts to secure net sales and profit, mainly in sales of major

air-conditioning products in the critical strategic regions of North America and Asia, as well as other regions around

the world, such as Europe, China, and Japan.

With respect to the results for the six months ended September 30, 2016, the Daikin Group’s net sales decreased

by 3.1% year over year to ¥1,044,818 million, despite strong sales in the air conditioning business in each region

around the world. This was attributable to the rapid appreciation of the yen against other currencies, including the

Chinese yuan, U.S. dollar, and euro, which had a negative impact such as a decrease in the yen-equivalent. As for

profits, sales volume increased in each region and gross margin rates improved through cost reductions, despite a

factor of profit decline due to conversion to the yen-equivalent. As a result, operating income increased by 13.0% to

¥140,384 million, ordinary income increased by 13.7% to ¥139,779 million, and profit attributable to owners of

parent increased by 20.3% to ¥96,419 million.

Results by business segment are as follows:

(i) Air-Conditioning and Refrigeration Equipment

Overall sales of the Air-Conditioning and Refrigeration Equipment segment decreased by 2.5% year over year to

¥950,946 million. Operating income increased by 15.8% to ¥131,712 million.

In the Japanese commercial air-conditioning equipment market, industry demand rose, despite slow growth in

new construction, compared to the same period of the previous fiscal year when the demand was at a low level. This

increase was due to the heat wave in Western Japan and a retreat from the surge in demand ahead of the amendment

to the Energy Conservation Act. The Daikin Group increased net sales year over year by capturing demand for air

conditioners for stores and offices, especially that of “Eco-ZEAS” models, in which the new refrigerant HFC32

(R32) has been adopted throughout the series (SkyAir).

In the Japanese residential air-conditioning equipment market, industry demand increased compared to the same

period of the previous fiscal year due to the heat wave in Western Japan. The Daikin Group utilized the brand

power of its room air conditioner “Urusara 7,” an energy-saving, high value-added product, in an effort to expand

sales for all models of residential air conditioners, and net sales exceeded that of the same period of the previous

fiscal year.

In Europe, while sales were strong, net sales remained flat year over year in the region as a whole due to the

impact of foreign exchange. Net sales of residential air-conditioning systems, which continued to see increased

demand following the last year’s heat wave, increased significantly in the local currency, as the Group leveraged the

timely product supply capabilities made possible by production in plants within the Europe region to ride a wave of

market expansion. In Italy in particular, sales of new residential energy-saving models using the new refrigerant

HFC32 (R32) grew, contributing to greater sales. Sales of commercial air-conditioning systems remained strong

throughout Europe despite the impact of the U.K.’s decision to leave the EU. Net sales in the local currency

increased year over year, which was attributable to the acquisition of small-scale projects as a result of

strengthening dealer networks in each country.

In the Middle East and Africa, despite strong sales, net sales fell year over year due to the impact of foreign

exchange. Notwithstanding negative factors such as stagnation of crude oil price, weak performance of large-scale

projects in the Gulf nations, and slow economic growth in Africa, net sales in the local currency increased year over

year as a result of intensified sales activities for small-scale projects. In Saudi Arabia, where a sales company was

established in 2013, net sales in the local currency grew steadily. In Turkey, despite the negative impact in

commercial air-conditioning systems due to the attempted coup d’état in July, sales of residential air-conditioning

systems grew steadily, and overall net sales for Turkey rose significantly year over year in the local currency.


(J-GAAP)

- 3 -

In China, while large-scale real estate investment remained stagnant, the residential-use market showed a

recovery. The Group further intensified its retail sales to capture firm personal consumption. Net sales in the local

currency rose year over year in all regions, including East China, North China, South China, and Central and West

China. Although net sales after converting to the yen-equivalent fell year over year due to the rapid depreciation of

the Chinese yuan, a high level of revenue was maintained thanks to measures such as cost reductions. In the

residential-use market, the Group significantly increased sales at its own specialty “PROSHOPs.” The Group

leveraged its proposal and installation capabilities, which are its strengths, to expand sales in the mid-range and

high-end residential market where demand was strong, focusing on residential multi-split type room air conditioners

“New Life Multi Series” that offers various lifestyles for customers. Net sales of residential air-conditioning

systems increased year over year in the local currency. In commercial-use market, the Group had enhanced ‘spec-in’

activities to architectural firms and advertised products to users and expanded sales of products for stores and

general offices where demand was relatively strong, focusing on multi-split type room air conditioners for buildings

that are the Group’s strengths. Net sales of commercial air-conditioning systems remained flat year over year in the

local currency. In the large-building (Applied Systems) air-conditioning equipment market, the Group strengthened

the product lineup from high-end to mass market products and increased sales for small-scale projects. As a result,

net sales in the local currency grew year over year, increasing the Applied Systems market share.

In Asia and Oceania, net sales remained flat year over year in the region as a whole due to the impact of foreign

exchange. Nevertheless, net sales in the local currency increased considerably year over year thanks to efforts such

as dealer development, expanded sales of differentiated energy-saving products that met local needs, and

reinforcement of the service structure, which led to the capturing of demand among the growing middle class. In the

residential air-conditioning systems, sales of inverter-type, cooling-only air conditioners with exceptional

energy-saving performance were strong, and sales grew significantly in Vietnam, Indonesia, Thailand and India.

Sales of multi-split type room air conditioners for buildings grew due to enhanced ‘spec-in’ activities and greater

focus on dealer development.

In the Americas, despite strong sales, net sales remained flat year over year due to the impact of foreign exchange.

Net sales of residential air-conditioning systems rose year over year in the local currency thanks to favorable

weather. Net sales in the local currency grew year over year in the light commercial air-conditioning systems for

medium-sized office buildings due to the implementation of sales strategies for each route. In the Applied Systems

market, net sales in the local currency grew year over year thanks to expanded sales of Applied Systems, mainly air

handling units, and rooftops equipped with inverters, backed by a higher level of demand than the same period of

the previous fiscal year, as well as sales growth in the after sales service business.

In the marine vessels business, net sales fell year over year due to a decrease in sales of marine container

refrigeration units associated with falling demand.

(ii) Chemicals

Overall sales of the Chemicals segment decreased by 7.9% year over year to ¥72,544 million. Operating income

decreased by 17.7% year over year to ¥7,261 million.

Demand for fluoropolymers was robust for semiconductor-related applications, mainly in Asia. However, overall

sales of fluoropolymers fell year over year. This was due to the strong yen, the aggressive price competition by rival

companies and a decrease in sales in cable applications, etc., for telecommunications base stations in the Chinese

market, and the impact of a price competition in the U.S. market from rival companies and products made in China

and India. In addition to being significantly affected by foreign exchanges, fluoroelastomers faced stagnant growth

in the European automotive fields and in Asia and the Americas, and sales fell year over year.

Turning to specialty chemicals, net sales fell year over year due to sluggish sales affected by delays in

switchovers to new products of oil and water repellents, among other factors, as well as the impact of foreign

exchange. Sales of anti-fouling surface coating agents used in devices, such as touch panels, increased year over

year, supported by robust demand. Sales of etchant for cleaning semiconductors increased year over year due to

sales growth in Japan and Asia where related demand was favorable. While sales of intermediates for use in

pharmaceuticals and liquid crystal showed a trend of slowing in Europe, net sales almost remained flat year over

year. Overall sales of specialty chemicals were down compared to the same period of the previous fiscal year.

As for fluorocarbon gas, overall sales of gas increased year over year as a result of the growth in sales, both for

after sales service in the Americas and for car air conditioner manufacturers in Europe.

(iii) Other Divisions

Overall sales of the “Others” segment fell by 13.9 % year over year to ¥21,328 million. Operating income decreased

by 10.4% year over year to ¥1,397 million.

Sales of oil hydraulic equipment for industrial machinery fell year over year due to the impact of stagnant

demand in the Japanese and Chinese markets. Although demand recovered for key Japanese customers in the U.S.


(J-GAAP)

- 4 -

markets, sales of oil hydraulic equipment for construction machinery and vehicles remained flat against the same

period of the previous fiscal year due to the retreat from the surge in demand by domestic construction machinery

manufacturers ahead of exhaust emission regulations and the impact of production volume adjustments by Chinese

agricultural machinery manufacturers.

Sales of defense systems-related products decreased year over year due to sales of ammunitions to the Ministry of

Defense being deferred until the third quarter or after. Sales of home oxygen equipment fell year over year due to

the impact of decreased demand resulting from inventory adjustments in sales routes.

In the electronics business, net sales were on a par with the same period of the previous fiscal year, as sales

especially of database systems for design and development sectors expanded, while IT investment demand

remained flat.

(2) Explanation of Financial Position

(i) Assets, Liabilities and Net Assets

Total assets decreased by ¥53,102 million from the end of the previous fiscal year to ¥2,138,002 million. Current

assets decreased by ¥13,920 million to ¥1,052,848 million, mainly due to a decrease in notes and accounts

receivable – trade. Non-current assets decreased by ¥39,181 million to ¥1,085,154 million, primarily due to a

decrease associated with market value variation in investment securities.

Liabilities decreased by ¥9,229 million from the end of the previous fiscal year to ¥1,144,406 million, mainly due

to a decrease in current portion of bonds. Interest bearing debt ratio rose to 29.0% from 27.8% at the end of the

previous fiscal year.

Net assets decreased by ¥43,873 million from the end of the previous fiscal year to ¥993,596 million, primarily

reflecting fluctuations in foreign currency translation adjustment.

(ii) Cash Flows

During the six months ended September 30, 2016, net cash provided by operating activities was ¥175,418 million,

an increase of ¥36,807 million from the same period of the previous fiscal year, principally due to an increase in

profit before income taxes and a decrease in income taxes paid. Net cash used in investing activities was ¥77,254

million, an increase of ¥28,900 million from the same period of the previous fiscal year, primarily due to an increase

in payment for acquisition of consolidated subsidiaries. Net cash used in financing activities was ¥20,489 million, a

decrease of ¥8,715 million from the same period of the previous fiscal year, mainly due to an increase in proceeds

from long-term loans payable. After including the effect of foreign exchange rate change to these results, net

increase in cash and cash equivalents for the six months ended September 30, 2016, amounted to ¥40,443 million, a

decrease of ¥5,876 million from the same period of the previous fiscal year.

(3) Explanation of Future Forecast Information Such as Consolidated Business Forecast

In light of the business results for the six-month period and exchange rate fluctuations, etc., the Group revised the

business forecast announced on May 10, 2016, as below.

In and after the third quarter of the fiscal year ending March 31, 2017, despite the uncertain outlook of the

business environment surrounding the Group, we will aim to achieve the planned goals by vigorously pursuing

substantial increases in profitability through efforts such as expanding sales by enhancing our sales and marketing

capabilities globally in all regions and promoting further reductions to total costs, which include a review of fixed

costs.

The estimated exchange rate in and after the third quarter is based on the assumption that US$1 equals ¥100 and

1 euro equals ¥110.


(J-GAAP)

- 5 -

Revisions to the Consolidated Business Forecast for the Fiscal Year Ending March 31, 2017

(From April 1, 2016, to March 31, 2017)

(Millions of yen except for per share amounts and percentages)

Net sales Operating

income

Ordinary income

Profit

attributable to

owners of parent

Earnings per

share (Yen)

Previous forecasts (A) 2,080,000 220,000 217,000 140,000 479.39

New forecasts (B) 2,000,000 222,000 220,000 145,000 496.15

Increase/decrease (B-A) -80,000 2,000 3,000 5,000 ―

Increase/decrease (%) -3.8 0.9 1.4 3.6 ―

(Reference)

Results for the fiscal year

ended March 31, 2016

2,043,691 217,872 209,536 136,986 469.23

The business forecasts are based on information currently available to the Company and certain assumptions that

are deemed reasonable. A number of factors, some major ones of which are explained below, could cause actual

results to differ significantly from these forecasts.

- Drastic changes in demand and supply for products or in the political and economic situations in the major

markets of Japan, Europe, the United States, China, and other Asian countries

- Fluctuations in demand for air-conditioning equipment due to unseasonable weather

- Drastic changes in the exchange rates (especially the U.S. dollar and euro rates)

- Serious problems related to quality and manufacturing

- Substantial fluctuations in the market value of securities held by the Company

- Impairment of non-current assets

- Natural disasters

2. Matters Related to “*Notes” in the Summary Section

(1) Changes in Significant Subsidiaries during the Six Months Ended September 30, 2016

On April 27, 2016, the Company completed the acquisition procedures of Flanders Holdings LLC through a

consolidated subsidiary, American Air Filter Company, Inc., turning Flanders Holdings LLC into a specified

subsidiary.

(2) Adoption of Accounting Treatment Specific to Quarterly Consolidated Financial Statement

Preparation

[Calculation of tax expenses]

The Company and some of its consolidated subsidiaries, reasonably estimate the effective income tax rate after the

adoption of tax-effect accounting for profit before income taxes for the consolidated fiscal year ending March 31,

2017, and multiply profit before income taxes for the reporting period by the estimated effective tax rate. However,

if as a result of the computation using the estimated effective income tax rate lacks rationality to a remarkable extent,

the Company adopts the method of using the legal effective tax rate.

(3) Changes in Accounting Policies, Changes in Accounting Estimates, and Retrospective

Restatement

None applicable

[Additional information]

Effective from the first quarter ended June 30, 2016, the Company has applied the Revised Implementation

Guidance on Recoverability of Deferred Tax Assets (ASBJ Guidance No. 26, March 28, 2016).


(J-GAAP)

- 6 -

3. Consolidated Financial Statements

(1) Consolidated Balance Sheet (Millions of yen)

FY2015

(As of March 31, 2016)

Second Quarter of FY2016

(As of September 30, 2016)

Assets

Current assets

Cash and deposits 291,205 331,649

Notes and accounts receivable – trade 355,646 330,335

Merchandise and finished goods 232,018 211,404

Work in process 40,027 46,091

Raw materials and supplies 61,605 56,841

Other 92,543 83,723

Allowance for doubtful accounts (6,279) (7,198)

Total current assets 1,066,768 1,052,848

Non-current assets

Property, plant and equipment 385,099 382,728

Intangible assets

Goodwill 329,753 318,166

Other 189,108 183,284

Total intangible assets 518,861 501,451

Investments and other assets

Investment securities 176,152 160,813

Other 44,885 40,914

Allowance for doubtful accounts (663) (752)

Total investments and other assets 220,374 200,975

Total non-current assets 1,124,336 1,085,154

Total assets 2,191,105 2,138,002

Liabilities

Current liabilities

Notes and accounts payable – trade 156,038 152,723

Short-term loans payable 40,675 46,857

Commercial papers 14,000 20,000

Current portion of bonds 30,000 ―

Current portion of long-term loans payable 42,940 82,539

Income taxes payable 11,511 17,911

Provision for product warranties 46,567 44,295

Other 221,994 209,973

Total current liabilities 563,727 574,300

Non-current liabilities

Bonds payable 110,000 120,000

Long-term loans payable 367,491 339,882

Net defined benefit liability 10,982 10,082

Other 101,433 100,140

Total non-current liabilities 589,907 570,105

Total liabilities 1,153,635 1,144,406


(J-GAAP)

- 7 -

(Millions of yen)

FY2015

(As of March 31, 2016)

Second Quarter of FY2016

(As of September 30, 2016)

Net assets

Shareholders’ equity

Capital stock 85,032 85,032

Capital surplus 83,585 84,217

Retained earnings 720,547 797,983

Treasury shares (4,598) (3,689)

Total shareholders’ equity 884,567 963,544

Accumulated other comprehensive income

Valuation difference on available-for-sale securities 46,319 35,465

Deferred gains or losses on hedges (2,124) (1,422)

Foreign currency translation adjustment 93,798 (21,447)

Remeasurements of defined benefit plans (8,151) (6,716)

Total accumulated other comprehensive income 129,842 5,879

Subscription rights to shares 1,118 1,257

Non-controlling interests 21,942 22,916

Total net assets 1,037,469 993,596

Total liabilities and net assets 2,191,105 2,138,002


(J-GAAP)

- 8 -

(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income

(Consolidated Statement of Income)

For the Six Months Ended September 30 (Millions of yen)

First Six Months of

FY2015

(April 1, 2015, to

September 30, 2015)

First Six Months of

FY2016

(April 1, 2016, to

September 30, 2016)

Net sales 1,078,707 1,044,818

Cost of sales 704,609 660,776

Gross profit 374,097 384,042

Selling, general and administrative expenses 249,902 243,658

Operating income 124,194 140,384

Non-operating income

Interest income 3,565 3,442

Dividend income 2,160 2,180

Other 3,804 2,041

Total non-operating income 9,529 7,664

Non-operating expenses

Interest expenses 4,167 4,897

Foreign exchange losses 4,562 2,038

Other 2,023 1,333

Total non-operating expenses 10,754 8,269

Ordinary income 122,970 139,779

Extraordinary income

Gain on sales of investment securities 88 ―

Gain on reversal of subscription rights to shares 3 ―

Gain on sales of shares of subsidiaries and associates ― 48

Other ― 4

Total extraordinary income 91 53

Extraordinary losses

Loss on disposal of non-current assets 329 196

Loss on valuation of investment securities 605 5

Other 0 0

Total extraordinary losses 934 202

Profit before income taxes 122,127 139,630

Income taxes 39,339 40,094

Profit 82,788 99,535

Profit attributable to non-controlling interests 2,649 3,116

Profit attributable to owners of parent 80,138 96,419


(J-GAAP)

- 9 -

(Consolidated Statement of Comprehensive Income)

For the Six Months Ended September 30 (Millions of yen)

First Six Months of

FY2015

(April 1, 2015, to

September 30, 2015)

First Six Months of

FY2016

(April 1, 2016, to

September 30, 2016)

Profit 82,788 99,535

Other comprehensive income

Valuation difference on available-for-sale securities (16,405) (10,853)

Deferred gains or losses on hedges (966) 701

Foreign currency translation adjustment (28,517) (114,993)

Remeasurements of defined benefit plans (296) 1,435

Share of other comprehensive income of entities

accounted for using equity method 394

(2,484)

Total other comprehensive income (45,792) (126,193)

Comprehensive income 36,995 (26,657)

Comprehensive income attributable to

Comprehensive income attributable to owners of parent 34,925 (27,543)

Comprehensive income attributable to non-controlling

interests

2,069

885


(J-GAAP)

- 10 -

(3) Consolidated Statement of Cash Flows (Millions of yen)

First Six Months of

FY2015

(April 1, 2015, to

September 30, 2015)

First Six Months of

FY2016

(April 1, 2016, to

September 30, 2016)

I. Cash flows from operating activities

Profit before income taxes 122,127 139,630

Depreciation 28,578 28,278

Amortization of goodwill 13,521 12,343

Increase (decrease) in allowance for doubtful accounts (162) 1,147

Interest and dividend income (5,725) (5,623)

Interest expenses 4,167 4,897

Share of (profit) loss of entities accounted for using

equity method 28

(220)

Loss (gain) on disposal of non-current assets 329 196

Loss (gain) on sales of investment securities (88) ―

Loss (gain) on valuation of investment securities 605 5

Decrease (increase) in notes and accounts receivable –

trade (12,176)

806

Decrease (increase) in inventories 10,871 (1,330)

Increase (decrease) in notes and accounts payable –

trade 7,214

3,132

Increase (decrease) in net defined benefit liability 1,086 (79)

Decrease (increase) in net defined benefit asset 151 (176)

Other, net 8,427 16,674

Subtotal 178,958 199,681

Interest and dividend income received 6,357 5,766

Interest expenses paid (4,306) (4,945)

Income taxes paid (42,398) (25,083)

Net cash provided by (used in) operating activities 138,610 175,418

II. Cash flows from investing activities

Purchase of property, plant and equipment (41,199) (48,342)

Proceeds from sales of property, plant and equipment 409 511

Purchase of investment securities (363) (98)

Proceeds from sales of investment securities 153 ―

Payments for transfer of business (3,082) ―

Purchase of shares of subsidiaries resulting in change in

scope of consolidation (1,310)

(5,800)

Purchase of investments in capital of subsidiaries

resulting in change in scope of consolidation ―

(22,452)

Proceeds from sales of shares of subsidiaries resulting

in change in scope of consolidation ―

705

Other, net (2,959) (1,777)

Net cash provided by (used in) investing activities (48,353) (77,254)


(J-GAAP)

- 11 -

(Millions of yen)

First Six Months of

FY2015

(April 1, 2015, to

September 30, 2015)

First Six Months of

FY2016

(April 1, 2016, to

September 30, 2016)

III. Cash flows from financing activities

Net increase (decrease) in short-term loans payable 17,465 9,813

Proceeds from long-term loans payable ― 39,030

Repayments of long-term loans payable (25,098) (30,276)

Proceeds from issuance of bonds ― 9,946

Redemption of bonds ― (30,000)

Cash dividends paid (17,510) (18,982)

Dividends paid to non-controlling interests (2,778) (121)

Proceeds from share issuance to non-controlling

shareholders

― 233

Other, net (1,284) (132)

Net cash provided by (used in) financing activities (29,205) (20,489)

IV. Effect of exchange rate change on cash and cash

equivalents (14,731) (37,230)

V. Net increase (decrease) in cash and cash equivalents 46,320 40,443

VI. Cash and cash equivalents at beginning of period 286,949 291,205

VII. Cash and cash equivalents at end of period 333,270 331,649


(J-GAAP)

- 12 -

(4) Notes to Consolidated Financial Statements

Notes on the Premises of the Company as a “Going Concern”

None applicable

Notes on Significant Changes in Shareholders’ Equity

None applicable

Segment Information, etc.

I. For the six months ended September 30, 2015 (From April 1, 2015, to September 30, 2015)

1. Information on net sales and income or loss amounts by reported segment (Millions of yen)

Reported segment

Others

(Note 1) Total

Adjustment

(Note 2)

Amount

recorded on

Consolidated

Statement of

Income

(Note 3)

Air-

Conditioning

and

Refrigeration

Equipment

Chemicals Subtotal

Net sales

Sales to outside customers 975,175 78,752 1,053,927 24,779 1,078,707 ― 1,078,707

Intersegment sales 285 5,094 5,380 239 5,619 (5,619) ―

Total 975,461 83,846 1,059,307 25,019 1,084,327 (5,619) 1,078,707

Segment income 113,788 8,828 122,617 1,558 124,175 18 124,194

Notes: 1. The “Others” segment is a business segment not included in reported segments. It includes the oil hydraulic equipment

business, the defense systems-related product business, and the electronics business.

2. The adjustment of ¥18 million to segment income comprises the elimination of intersegment transactions.

3. Segment income is adjusted with operating income in the Consolidated Statement of Income.

2. Information related to impairment loss of non-current assets and goodwill by reported segment

(Significant impairment loss of non-current assets)

None applicable

(Significant change in goodwill amount)

None applicable

(Significant gain on bargain purchase)

None applicable


(J-GAAP)

- 13 -

II. For the six months ended September 30, 2016 (From April 1, 2016, to September 30, 2016)

1. Information on net sales and income or loss amounts by reported segment (Millions of yen)

Reported segment

Others

(Note 1) Total

Adjustment

(Note 2)

Amount

recorded on

Consolidated

Statement of

Income

(Note 3)

Air-

Conditioning

and

Refrigeration

Equipment

Chemicals Subtotal

Net sales

Sales to outside customers 950,946 72,544 1,023,490 21,328 1,044,818 ― 1,044,818

Intersegment sales 154 6,618 6,773 263 7,036 (7,036) ―

Total 951,101 79,162 1,030,263 21,591 1,051,855 (7,036) 1,044,818

Segment income 131,712 7,261 138,974 1,397 140,371 12 140,384

Notes: 1. The “Others” segment is a business segment not included in reported segments. It includes the oil hydraulic equipment

business, the defense systems-related product business, and the electronics business.

2. The adjustment of ¥12 million to segment income comprises the elimination of intersegment transactions.

3. Segment income is adjusted with operating income in the Consolidated Statement of Income.

2. Information related to impairment loss of non-current assets and goodwill by reported segment

(Significant impairment loss of non-current assets)

None applicable

(Significant change in goodwill amount)

None applicable

(Significant gain on bargain purchase)

None applicable

The above represents a translation, for reference and convenience only, of the original notice issued in Japanese. We did our

utmost to ensure accuracy in our translation and believe it to be of the highest standard. However, due to differences of

accounting, legal and other systems as well as of language, this English version might contain inaccuracies, and therefore

might be inconsistent with the original intent imported from the Japanese. In the event of any discrepancies between the

Japanese and English versions, the former shall prevail as the official version.