(a) Principles of ConsolidationThe consolidated nancial statements as of and for the years ended September 30, 2015 and 2016 included the accounts of the Company, four domestic subsidiaries and thirteen foreign subsidiaries in the United States of America, EU and Asia. The Company has adopted the equity method of accounting for its investment in three afliates for the years ended September 30, 2015 and 2016. All signicant intercompany balances and transactions have been eliminated in consolidation.(b) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, readily available deposits and highly liquid investments with insignicant risk of changes in value, which have original maturities of three months or less.(c) Investment SecuritiesMarketable securities are valued by market price method based on the fair market price at the balance sheet date (unrealized gain or loss, net of applicable income taxes, included directly in net assets) and non-marketable securities are stated at cost determined by the total average method.(d) InventoriesInventories of the Company and consolidated subsidiaries are mainly stated at cost determined by the total average method or by reducing book value when the inventory protability declines. (e) Property, Plant and Equipment, and DepreciationProperty, plant and equipment are stated at cost. Signicant renewals and additions are capitalized. Maintenance and repairs, including minor renewals and improvements, are charged to income as incurred. Interest expense relating to the construction of property, plant and equipment is not capitalized. Depreciation of property, plant and equipment is determined by the declining-balance method over the estimated useful lives of the individual assets for the Company and its domestic subsidiaries. The straight-line method over the estimated useful lives of the individual assets is primarily applied to the property, plant and equipment of foreign subsidiaries.(f) Retirement BenetsWhen calculating retirement benet obligations, the Company applies the benet formula method to attribute expected retirement benets to the period until the end of the scal year. Prior service cost is amortized by the straight-line method over 10 years. Actuarial gain or loss is amortized by the straight-line method over 10 years from the following scal year.(g) Foreign Currency TranslationMonetary assets and liabilities denominated in foreign currencies are translated into yen at the exchange rates in effect on the respective balance sheet dates and differences arising from the translation are included in the consolidated statement of income. Assets and liabilities accounts of foreign consolidated subsidiaries are translated into yen amounts at the exchange rates in effect at the each balance sheet date. Revenue and expense accounts of foreign consolidated subsidiaries were translated into yen amounts at average rates for the period for each scal year. Any resulting translation differences are included in Foreign currency translation adjustment and Non-controlling interests as a separate component of net assets.(h) DerivativeThe Companies have entered into foreign forward contracts in order to manage the exposures to risk arising from uctuations in foreign currency exchange rates. All derivative nancial instruments are recognized as either assets or liabilities and measured at fair value with any changes in unrealized gain or loss recognized in the statements of income.(i) Income TaxesDeferred income taxes are provided on the asset and liability method by which deferred tax assets and liabilities are recognized based on the temporary differences between the assets and liabilities for nancial reporting and those for tax purpose, and are measured by applying currently enacted tax laws.(j) Per share informationEarnings per share is computed based on the prot attributable to owners of parent available for distribution to the shareholders of common stock and the weighted average number of shares outstanding during the year. Cash dividends per share represent dividends declared as applicable to the respective periods.2. Summary of Signicant Accounting PoliciesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. Basis of Presenting Consolidated Financial StatementsThe accompanying consolidated nancial statements of Hamamatsu Photonics K.K. (the “Company”) and consolidated subsidiaries are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards, and are compiled from the consolidated nancial statements prepared by the Company as required by the Financial Instruments and Exchange Law of Japan. For convenience, the accompanying consolidated nancial statements have been presented in U.S. dollars by arithmetically translating all Japanese yen amounts at JPY 101 = US$ 1, the exchange rate prevailing on September 30, 2016. The translations should not be construed as a representation that Japanese yen have been, could have been, or could in the future be, converted into U.S. dollars at that or any other rate.In preparing the consolidated nancial statements, certain rearrangements and reclassications have been made and certain additional nancial information has been included in the consolidated nancial statements issued in Japan for the convenience of readers outside Japan. Amount less than one million yen and one thousand dollars have been omitted. As a result, the total in Japanese yen and U.S. dollars shown in the consolidated nancial statements do not necessarily agree with the individual amounts.21Annual Report 2016


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