Renesas Electronics : Reports Financial Results for the Year Ended March 31, 2016

Renesas Electronics Corporation (TSE:6723) today announced consolidated financial results for the year ended March 31, 2016.

Summary of Consolidated Financial Results

1. Consolidated financial results for the year ended March 31, 2016

2. Cash dividends

3. Forecast of consolidated results for the three months ending June 30, 2016

Renesas Electronics Group plans to implement a change of the fiscal term in which the fiscal year-end will change from March 31 to December 31 starting from the fiscal year 2016. The change is subject to approval of “a partial amendment to its Articles of Incorporation” at the 14th Ordinary General Shareholders’ Meeting to be held on June 28, 2016.

The same change in the fiscal term will be applied to the consolidated subsidiaries of Renesas Group, with some exceptions. The current fiscal year (fiscal year ending December 31, 2016) in which the transition to the new accounting period is to take place, will comprise the financial results for the nine months from April 1, 2016, to December 31, 2016.

Renesas Electronics reports its consolidated forecast on a quarterly basis as substitute for a yearly forecast. However, due to impacts of the Kumamoto Earthquake that occurred after April 14, 2016, it is difficult to disclose the forecast of consolidated results for the three months ending June 30, 2016 at the time of the issuance of this earnings report. For details, please refer to Appendix 1.1.2., “Consolidated Forecasts” on page 4.

4. Others

4.1 Changes in significant subsidiaries for the year ended March 31, 2016

(Changes in specified subsidiaries resulting in changes in scope of consolidation): No

4.2 Changes in Accounting Policies, Changes in Accounting Estimates and Corrections of Prior Period Errors

1. Changes in accounting policies with revision of accounting standard: Yes

2. Changes in accounting policies except for 4.2.1: No

3. Changes in accounting estimates: No

4. Corrections of prior period errors: No

4.3 Number of shares issued and outstanding (common stock)

1. Number of shares issued and outstanding (including treasury stock)

As of March 31, 2016: 1,667,124,490 shares

As of March 31, 2015: 1,667,124,490 shares

2. Number of treasury stock

As of March 31, 2016: 2,581 shares

As of March 31, 2015: 2,548 shares

3. Average number of shares issued and outstanding

For the year ended March 31, 2016: 1,667,121,924 shares

For the year ended March 31, 2015: 1,667,121,942 shares

(Reference) Non-consolidated results for the year ended March 31, 2016

(Note) Information regarding the implementation of audit procedures

These financial statements are under the audit procedures based upon the Financial Instruments and Exchange Act at the time of issuance of this report.

(Significant Subsequent Events)
(Impact of the Earthquake in Kumamoto Prefecture)
The Kawashiri Factory of Renesas Semiconductor Manufacturing Co., Ltd., a wholly-owned subsidiary of the Company was damaged by the Kumamoto Earthquake that occurred after April 14, 2016.
After that, the company resumed investigations inside the clean room and having completed a thorough assessment, the company has resumed production of some of the manufacturing processes starting April 22.
Some of the subcontractor companies have been confirmed damages by the earthquake. The company in cooperation with its suppliers and partner companies are accelerating recovery efforts.
In addition, amount of the damages for the consolidated financial statements is currently under consideration.

(Adoption of Stock Option (Stock Acquisition Right))
The Company has resolved at the Meeting of Board of Directors held on May 11, 2016, to submit a proposal concerning both the level of remuneration, etc., relating to stock options for Renesas members of the board (excluding outside directors) and the determination of the concrete details to the 14th Ordinary General Shareholders' Meeting to be held on June 28, 2016.

1. Reason for the proposal
The proposal will ask shareholders to approve the adoption of stock option plan in which Renesas members of the board (except for outside directors) will be allocated stock acquisition rights as remuneration. This would mean that Renesas members of the board would share the merits of a rise in Renesas’ share value and the risks of a drop in the share value with the shareholders, and would increase their desire to further contribute to increasing Renesas' stock price and increasing the value of the company.

2. Details of stock acquisition rights to be granted as stock option
(1) Type and number of stocks to be issued upon exercise of the stock acquisition rights
The type of shares to be issued upon exercise of the stock acquisition rights shall be Renesas common stock, and the number of stocks that are in each stock acquisition right (hereinafter “number of shares granted”) shall be 100 shares. However, following the date of passage of this proposal (hereinafter "date of passage"), if Renesas performs either a stock split (including an allotment of shares without contribution of Renesas common stock. This applies to all mentions of stock splitting in the remainder of this document.) or a stock consolidation, the number of stocks granted shall be adjusted according to the following formula. If the result of the adjustment includes a fractional part of a stock, that fractional part would be discarded.

(Adjusted number of shares granted) = (Number of shares granted prior to adjustment) × (Stock split or stock consolidation ratio)

In addition to the above, if, at any time after the date of passage, Renesas undergoes a merger or a company split, or similar situation of this type and an adjustment of the number of shares granted, Renesas may appropriately adjust the number of shares granted within a logical range. Note that if, at any time after the date of passage, Renesas performs an adjustment of the number of share unit (excluding cases where this is associated with a stock split or a stock consolidation; this definition applies to the term “adjustment of the number of share unit” in the remainder of this document), Renesas may appropriately adjust the number of shares granted within a logical range and proportional to the ratio of the said adjustment of the number of share unit. This applies to these new stock options as resolved by the Meeting of Board of Directors for that issuance following the date that the said adjustment of the number of share unit takes effect.
Note that while there are now five members of the board (of whom two are outside directors), if the company director appointment proposal is adopted without change at Renesas' 14th Ordinary General Shareholders’ Meeting scheduled for June, 28, 2016, then there will be five members of the board (of whom three are outside directors).

(2) Total number of stock acquisition rights
The maximum number of stock acquisition rights to be allocated is limited to the number (with the fractional part, if any, dropped) calculated as follows. This number is given by dividing the value to be given as remuneration or other compensation as stock options to members of the board by the fair price of a stock option as calculated by a fair calculation method such as the Black-Scholes Model based on the closing price of Renesas common on the previous business day of the Meeting of Member of the Board at which the stock option allocation was determined (in case there was no closing price, the reference price of the next business day shall be used).

(3) Amount to be paid for stock acquisition rights
The amount paid for each individual stock option shall be an amount determined at the Meeting of the Board of Directors based on a fair price for the stock option as calculated by a fair calculation method such as the Black-Scholes Model when the stock options are allocated.

(4) The amount to be invested when exercising each stock acquisition right
The amount to be invested when exercising each stock acquisition right shall be given by multiplying a monetary value of 1 JPY per each individual stock that can be granted by exercising the corresponding stock option by the number of assigned stocks.

(5) Exercise period for stock acquisition rights
The exercise period shall be determined by the Meeting of Board of Directors within the range of ten years from the following day after the stock options are allocated (hereinafter “allocation date”).

(6) Transfer restrictions of stock acquisition rights
Regarding the acquisition of stock acquisition rights due to transfer, approval is required as a resolution of the Meeting of Board of Directors.

(7) Conditions relating to exercise of stock acquisition rights
In principle, a person granted an allocation of stock options may execute those options starting on the day one year after the share allocation date. However, when such a person lose his position both as Member of the Board and as Senior Vice President due to, for example, expiration of the term of office, the said person may execute the said stock options starting on the day following said loss of position. Other conditions on execution of stock options shall be decided by the Meeting of Board of Directors.

(8) Other items for exercise of stock acquisition rights
The details of other items for exercise of stock acquisition rights, etc. shall be determined by the Meeting of Board of Directors that resolves the subscription requirements of the allocation of stock acquisition rights.

(Reference)
Renesas expects following the conclusion of the General Shareholders’ Meeting, to grant stock options with the same conditions as the above-mentioned stock options, to Renesas senior vice presidents (excluding senior vice presidents with joint appointment as members of the board), Renesas employees, and members of the board (excluding outside directors), senior vice presidents, and employees of Renesas consolidated subsidiary companies.

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