Contents
1

Corporate Principles of SHIBAURA MACHINE GROUP

2

Greetings

3

Corporate Information

4

Foreword

6

Financial Highlights (consolidated)

7

Overseas Operations for Fiscal Year Ended March 31, 2020

8

Overseas Offices
Financial Review

10

Consolidated Balance Sheet

12

Consolidated Statement of Income

13

Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets

14

Consolidated Statement of Cash Flows

15

Notes to Consolidated Financial Statements

45

Independent Auditor's Report48

Board Members

Corporate Principles of
SHIBAURA MACHINE GROUP
Corporate Identity
We will contribute to maximizing value for our customers around the world.

Basic Management Policy
Adapting to the times and innovating
We remain a company which adopts the latest technologies, adapts and innovates
without fear of change.

Customer satisfaction which exceeds expectations
We not only meet expectations, but also achieve customer satisfaction which
exceeds expectations.

Contributing to society by helping to create infrastructure
We take pride in our involvement in the industrial base and benefiting society
everywhere.

Developing human resources for the next generation
We will continue to nurture people who are responsible, take pride in their work,and develop their skills.

Appreciation, inspiration, and passion
We aim to share the excitement of creating solutions while remaining thankful toour customers, business partners, and families.

1Greetings
Since the SHIBAURA MACHINE Group was founded in 1949, it has played arole in helping Japan and the world develop by supplying the machines requiredby industry. Currently, we are aiming to become a “comprehensive machinery
manufacturer which supports the world’s ‘monozukuri’ by focusing on four
strategic key phrases: “energy and environment”, “improving labor productivity”,“IoT and ICT”, and “handling new materials”. These four strategic key phrases areimportant for the automobile, electronics, optical, and nanotechnology industries
which are in the spotlight today, because we will be developing, manufacturing,
selling, and providing retrofit after-sales services and enhanced systemengineering for injection molding machines, die casting machines, extrusion
machines, micro-pattern imprinting machines, precision machines, machine tools,
electronic control devices, industrial robots, etc.

From Apri l 1, 2020, our co m pany nam e w as changed from “TOSHIB A
MACHINE CO., LTD.” to “SHIBAURA MACHINE CO., LTD.”We started business as a machine tool manufacturer in 1938 under the
SHIBAURA name, and our SHIBAURA brand, which we continue to use, is stillwidely recognized around the world, especially in the machine tool industry.
We have continued to evolve by contributing to society through “monozukuri”,
which is imbued into our company’s DNA. The new company name shows we do
not forget our DNA origins and will continue to evolve together with ourcustomers in the future.

2

Corporate Information (as of March 31, 2020)
Company Name:TOSHIBA MACHINE CO., LTD.*

Headquarters:

2068-3, Ooka, Numazu-shi,
Shizuoka-ken 410-8510, Japan

Established:

1949

Capital:¥12,484 million

Shares of Common Stock issued:

29,977,106 shares

Number of Shareholders:

9,072

Number of Employees:

1,796 (Consolidated: 3,360)* our company name was changed from “TOSHIBA MACHINE CO., LTD.” to“SHIBAURA MACHINE CO., LTD.” on April 1, 2020.

3

Foreword 2020
In the fiscal year ended March 2020, the world economy saw various issues including
continuing slowdown of economy in China and other countries because of the impact of prolonged
international trade issues and British exit from EU, and the economic outlook still remains
unclear. Japanese economy was also affected by the decelerating world economy and theconditions of exports and productions were aggravated. In addition, outbreak of COVID-19
pandemic had an impact from late Q4 of the fiscal year and economic activities were significantly
limited and the world economy shrank rapidly.
With respect to the machinery industry of which our Group is a part, companies were
continuously careful about making capital investments both domestic and overseas, which was
especially conspicuous in automobile industry, and thus we were in severe businesscircumstances.
Under such economic conditions, our Group reviewed our mid-term management plan, the“Revolution E10 Plan” which was started on April 1, 2019 and announced “Management ReformPlan” on February 4, 2020. Based on this reform plan, we are addressing the reform to transform
ourselves into a highly profitable company.
In the fiscal year ended March 2020, orders were 94,224 million yen (down 29.9 percent fromour previous consolidated fiscal year) because companies were refraining from capital
investments due to factors including an impact of spreading COVID-19 and sales were 116,761
million yen (down 0.5 percent from our previous consolidated fiscal year). As for profit and loss,
operating profit was 3,529 million yen (down 8.0 percent from our previous consolidated fiscal
year), ordinary profit was 3,825 million yen (down 31.4 percent from our previous consolidated
fiscal year), and net income attributable to owners of parent was 7,338 million yen (up 79.9
percent from our previous consolidated fiscal year) due to gains on sales of affiliates’ shares.

In fiscal year ended March 2020, we had dividends of 42.5 yen per share at the end of thesecond quarter. Our year-end dividend was also 42.5 yen per share.

Outlook of economic conditions is expected to remain unclear in the coming months or years
because domestic and overseas economic circumstances are deteriorated due to the effect of4

COVID-19. In the machinery industry, rapid recovery of equipment demand is unlikely althoughsome improvement of the same demand is expected when COVID-19 infection comes to subside.
Severe business conditions are forecast to continue for some time.
Under these circumstances, we will strive to increase orders we receive by focusing our effortson those fields including infrastructure, energy and new materials in Japan and other countries
where equipment demand is expected to improve in late fiscal year ending March 2021, being
driven by economic policies introduced by governments in many countries. Furthermore, we will
also focus on robot and IT fields in view of the reformation of work style as well as automation andlabor-saving needs in production process that are expected to increase in society after COVID-19
pandemic subsided.
Additionally, our Group will endeavor to reform our organization into a highly profitablecompany by carrying out various measures based on the “Management Reform Plan”, including
further improvement of production efficiency of factories both in Japan and overseas countries,
Group-wide measures of total cost reduction, reduction of fixed costs through voluntary
retirement and other measures and promotion of investments in growth fields.

5FINANCIAL HIGHLIGHTS (consolidated)
2020¥116,761
Net sales$1,072,876¥83,301
Cost of sales$765,428¥29,930
Selling, general and$275,020
administrative expenses¥3,529Operating income$32,428¥12,648
Net income before income taxes$116,218¥5,309
Income taxes$48,786¥7,338Net income$67,433¥5,784Comprehensive income$53,147

2019¥117,405

2018¥116,862

2017¥111,327

2016¥117,259¥84,493¥83,712¥79,350¥85,004¥29,078¥28,509¥27,503¥28,448¥3,834¥4,640¥4,473¥3,806¥5,742¥6,860¥3,523¥7,608¥1,662¥1,844¥1,747¥2,802¥4,079¥5,016¥1,776¥4,806¥3,475¥5,789¥2,268¥1,197¥304.06$2.79¥85.00Cash dividends$0.78¥154,283
Total assets$1,417,652¥87,018
Net assets$799,582¥1,741
Capital expenditures$15,998(property, plant and equipment)¥1,781
Depreciation$16,368¥2,378R & D costs$21,851
3,360
Number of employees¥169.03¥207.83¥59.37¥158.07¥45.00¥14.00¥12.00¥12.00¥150,724¥148,763¥138,373¥156,346¥83,197¥81,334¥77,120¥93,345¥1,195¥4,687¥1,335¥1,547¥1,868¥2,049¥1,730¥1,756¥1,835¥1,899¥1,648¥1,668

3,346

3,273

3,236

3,286

Per common share:
Net income

Note 1: In millions of yen (thousands of U.S. dollars), except for per-share data and number of employees.
Note 2: Yen amounts have been translated into U.S. dollars, for convenience only, at the exchange rate of¥108.83=U.S.$1. See Note 3 of the Notes to the Consolidated Financial Statements.
Note 3: SHIBAURA MACHINE CO., LTD. executed the consolidation of shares at the ratio of 5 shares into 1
share effective from October 1, 2018. Net income per share is recalculated on the assumption that theconsolidation of shares was executed at the beginning of the year ended March 31, 2016. In addition,
the cash dividend per share at the end of March 31, 2019 is the sum of the interim dividend ¥7.50 andthe year-end dividend ¥37.50. Since the interim dividend amount is ¥37.50 when converted based on
the consolidation of shares, the annual dividend amount including the ¥37.50 year-end dividend
amount is ¥75.00 per share.
Note 4: The Companies have adopted the “Partial Amendments to Accounting Standard for Tax EffectAccounting” (ASBJ Statement No.28, February 16, 2018). This accounting standard has been
retrospectively applied to figures for the beginning of the year ended March 31, 2016.

6

Overseas Operations for Fiscal Year Ended March 31, 2020
Overseas sales in the fiscal year ended
March 2020 were 61,367 million yen, which was

Net Sales
Millions of yen

6,739 million yen less than the previous year.
Looking at overseas sales by region, inNorth America, although there was continuous
demand for machine tools, sales decreased by
4,085 million yen from the previous year
because of decreased demand for injection

117,259
10,747111,327
10,02632,931

29,469molding machines.
In Southeast Asia, sales increased by 401
million yen from the previous year because ofincreased demand for die casting machines andmachine tools.
In India, although demand for machine tools
increased, sales decreased by 1,325 million yen
from the previous year due to decreased
demand for injection molding machines.
In Europe, sales decreased by 202 million
yen from the previous year due to decreased
demand for injection molding machines, diecasting machines and machine tools.
In Korea, although demand for injection
molding machines increased, sales decreased
by 832 million yen from the previous year due
to decreased demand for machine tools.
In Taiwan, sales increased by 288 million
yen from the previous year because of greater
demand for extrusion machines.
In China, although demand for injection
molding machines, die casting machines andmachine tools decreased, sales increased by
133 million yen from the previous year due togreater demand for extrusion machines.
As a result, the percentage of overseas sales
relative to overall sales decreased from 58.0%
of the previous year to 52.6%.
The percentage of overseas sales bybusiness segment was: 78% for the molding
machinery business (2% decrease from theprevious year), 19% for the machine tools
business (2% increase from the previous year),and 3% for other products business, which

116,862
12,896
23,70080,26573,580

2016

117,405
10,83227,362

79,210116,761
9,869

Total
Other
Products

Machinels
29,684 Too

77,206 Moldingry
Machine71,831

2017

2018

2019

2020

Total Sales & Overseas Sales
Millions of yen

117,259

64,181

2016

111,327

63,515

2017

116,862

70,505

2018

117,405

68,1062019es
Total Sal116,761

61,367

Overseas

Sales

2020

Export Percentages by Major Products
Other
Products

MachineTools

3%

Molding
Machinery

19%

78%

remained unchanged from the previous year.

7Overseas Offices■ East Asia ■SHIBAURA MACHINE (SHANGHAI)
CO., LTD.

4788, Jin Du Road,
Xinzhuang Industry Zone,
Shanghai, 201108,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)21-5442-5455
Fax : [86]-(0)21-5442-5466

SHANGHAI SHIBAURA MACHINE
CO., LTD.
Head Office4788, Jin Du Road,
Xinzhuang Industry Zone,
Shanghai, 201108,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)21-5442-0606
Fax : [86]-(0)21-5866-2450
URL:http://www.shibaura-machine.com.cn

Beijing Office

RECREO-CHN MEDIA PLAZA A-1001
A-1, No.15 Jian Guo Road, Chao Yang
District, Beijing, 100024,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)10-6590-8977~8
Fax : [86]-(0)10-6590-8979

Tianjin Office

Room 1005, Li Jing Building,
53 Wei Ti Dao Road,
Hexi District, Tianjin, 300201,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)22-8836-3056
Fax : [86]-(0)22-2416-0380

Dalian Office

Room 1304, Gugeng International
Business Building, 138th Jinma Road,
Dalian Economic & Technological
Development Zone, Dalian, 116600,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)411-8732-7911
Fax : [86]-(0)411-8732-6899

Chongqing Office

Room 9-8, H2 Building, Diecai Center,
No. 9 Jintong Road, North New District,
Chongqing, 401122, PEOPLE'S
REPUBLIC OF CHINA
Tel : [86]-(0)23-6777-5805
Fax : [86]-(0)23-6790-5542

Ningbo Office

Room 713, Building 2, Silver City
National, No 668 jingjia Road jiangdong
District, Ningbo, Zhejiang, 315040,
PEOPLE`S REPUBLIC OF CHINA
Tel : [86]-(0)574-2795-9198
Fax : [86]-(0)574-2795-9199

8■ South East Asia ■SHIBAURA MACHINE (SHENZHEN)
CO., LTD.
Head Office

Room 608, Building 2, Animation Park,
Yuehai Road, Nanhai Street, Nanshan
District, Shenzhen, 518054,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)755-8625-0599
Fax : [86]-(0)755-8625-0522

Guangzhou Office

Room 102, No.23 Tianan Headquarters
Centre Building, No.555 Panyu Avenue
North, Donghuan Street, Panyu District,
Guangzhou, 511430,
PEOPLE’S REPUBLIC OF CHINA
Tel : [86]-(0)20-2916-1330
Fax : [86]-(0)20-2916-1338

SHIBAURA MACHINE TAIWAN
CO., LTD.
7F., No.168, Ruiguang Road,
Neihu District, Taipei City, 11491,
TAIWANTel : [886]-(0)2-2659-6558
Fax : [886]-(0)2-2659-6381

SHIBAURA MACHINEMANUFACTURING (THAILAND)
CO., LTD.
7/499 Moo 6, Tambol Mabyangporn,
Amphur Pluakdaeng, Rayong 21140,
THAILAND
Tel : [66]-(0)38-027313
Fax : [66]-(0)38-027317

SHIBAURA MACHINE INDIA
PRIVATE LIMITED
Head Office & FactoryNo. 65 (P.O. Box No. 5),
Chennai-Bangalore Highway,
Chembarambakkam,
Poonamallee Taluk, Thiruvallur,
Chennai-600123, Tamil Nadu, INDIA
Tel : [91]-(0)44-2681-2000
Fax : [91]-(0)44-2681-0303

Delhi Office
Plot No. 5, LSC Pocket 6 & 7,
Second Floor,
Sector-C, Vasant Kunj,
New Delhi-110070, INDIA
Tel : [91]-(0)11-4329-1111
Fax : [91]-(0)11-4329-1127

Mumbai Office
Unit No. 608, Powai Plaza,
Hiranandani Business Park,
Powai, Mumbai-400076, INDIA
Tel : [91]-(0)22-6671-0992
Fax : [91]-(0)22-6671-1014

Other Sales & Service Offices:
Kolkata, Pune, Ahmedabad, Vapi,
Bangalore, Hyderabad
SHIBAURA MACHINE (THAILAND)
CO., LTD.
127/28 Panjathanee Tower, 23rd Floor,
Nonthree Road, Khwaeng Chong
Nonthree, Khet Yannawa, Bangkok,
10120, THAILAND
Tel : [66]-(0)2-681-0158~61
Fax : [66]-(0)2-681-0162

■ America ■SHIBAURA MACHINE SINGAPORE
PTE. LTD.
Head Office

SHIBAURA MACHINE COMPANY,AMERICA
Head Office

123 Pioneer Road, Singapore 639596,
SINGAPORE
Tel : [65]-68611455
Fax : [65]-68612023

755 Greenleaf Avenue,
Elk Grove Village, IL 60007, U.S.A.
Tel : [1]-847-593-1616
Fax : [1]-847-593-0897
URL https://www.shibaura-machine.com/

Kuala Lumpur Branch
Unit No. 39-1, Block C2, Jalan PJU
1/39 Dataran Prima, 47301 Petaling
Jaya, Selangor Darul Ehsan, MALAYSIA
Tel : [60]-(0)3-7803-7544
Fax : [60]-(0)3-7803-7545

Los Angeles OfficePenang OfficeCharlotte Office

No. 61, Jalan Prai Jaya 4,
Bandar Prai Jaya, 13600 Prai, Penang,
MALAYSIA
Tel : [60]-(0)4-3980086
Fax : [60]-(0)4-3989652

8307 University Executive Park Drive,
Charlotte, NC 28262, U.S.A
Tel : [1]-888-593-1616

PT. SHIBAURA MACHINE INDONESIA
Galeri Niaga, Tanjung Barat Kav. KM 8-6.
7, JL. TB. Simatupang Kav.81, Tanjung
Barat, Jagakarsa, Jakarta Selatan, 12530,
INDONESIA
Tel : [62]-(0)21-7884-8694
Fax : [62]-(0)21-7884-8689

SHIBAURA MACHINE VIETNAMCOMPANY LIMITED
Head Office1440 South Balboa Avenue,
Ontario, CA 91761, U.S.A.
Tel : [1]-909-923-4009
Fax : [1]-909-923-7258

SHIBAURA MACHINE EUROPE S.R.L.
Via Gaudenzio Fantoli 7, Piano 2, 20138,
Milano, ITALY
Tel : [39]-02-50041667
Fax : [39]-02-50041668

SHIBAURA MACHINE UK LTD.
66 Burners Lane, Kiln Farm,
Milton Keynes MK11 3HD
UNITED KINGDOMTel : [44]-(0)1908-562327
Fax : [44]-(0)1908-562348

Atlanta Office6478 Putnam Ford Drive, Suite#106, Woodstock, GA 30189, U.S.A.
Tel : [1]-678-494-8005
Fax : [1]-678-494-8006

Canada Branch
6 Shields Court, Suite 101, Markham,
Ontario, L3R 4S1, CANADA
Tel : [1]-905-479-9111
Fax : [1]-905-479-6098

SHIBAURA MACHINE MEXICO, S.A. DE C.V.

2nd Floor, VIT Tower, No. 519 Kim Ma
Street, Ngoc Khanh Ward, Ba Dinh
District, Hanoi, VIETNAM
Tel : [84]-(0)24-2220-8700~1
Fax : [84]-(0)24-2220-8702

Circuito Luxma No.115, Poligono
Industrial Milenio, C.P. 37290 Leon,
Guannajuato, MEXICO
Tel : [52]-477-101-8600

Ho Chi Minh Branch

SHIBAURA MACHINE DO BRASIL
COMERCIO DE MAQUINAS LTDA.

3rd Floor, Unit 3.1A, E-Town Building,
364 Cong Hoa Street, Ward 13, Tan Binh
District, Ho Chi Minh City, VIETNAM
Tel : [84]-(0)28-3810-8658
Fax : [84]-(0)28-3810-8657■ Europe ■Rua Cubatao, 86 Conjunto 1307, Vila
Mariana, Sao Paulo, SP CEP 04013-000,
BRASILTel : [55]-(0)11-3253-3331
Fax : [55]-(0)11-3586-0138

9

Financial Review
CONSOLIDATED BALANCE SHEETSHIABURA MACHINE CO., LTD. AND CONSOLIDATED SUBSIDIARIESMarch 31, 2020

ASSETS
Current assets:
Cash and deposits (Notes 19 and 21)
Marketable securities (Notes 19, 21 and 22)
Notes and accounts receivable, trade (Notes 11 and 21)
Allowance for doubtful receivables
Net receivables
Inventories:
Finished products
Work in process
Raw materials and supplies
Total inventories
Other current assets (Notes 21 and 23)
Total current assets
Property, plant and equipment, net (Note 7)
Intangible assets (Note 8)
Investments and other assets:
Investments in:
Unconsolidated subsidiaries and affiliates (Note 21)
Other securities (Notes 21 and 22)
Long-term loans
Deferred tax assets (Note 25)
Other investments
Total investments and other assets
Total assets

Millions of yen
2020
2019

Thousands of
U.S. dollars(Note 3)2020

¥47,907104
36,064(49)
36,015¥25,592—
37,405(89)
37,315$440,204956
331,387(457)
330,930

9,052
26,87767
35,9972,340
122,364

12,15329,79373
42,0203,909
108,838

83,184
246,963620
330,768
21,506
1,124,364

20,541

20,765

188,744

561

641

5,157

780
5,779
13
3,142
1,100
10,816¥154,283

11,539
6,839
16
703
1,380
20,479¥150,724

7,169
53,110121
28,873
10,11599,388$1,417,652

See accompanying notes to financial statements.

10

LIABILITIES AND NET ASSETS
Current liabilities:
Short-term bank loans (Notes 21 and 32)
Notes and accounts payable, trade (Notes 11 and 21)
Income taxes payable (Note 25)
Accrued expenses
Warranty reserve
Advances received
Other current liabilities (Notes 21, 23 and 32)
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 21 and 32)
Long-term accounts payable, otherAccrued directors’ retirement benefits
Net retirement benefit liability (Note 24)
Asset retirement obligations
Deferred tax liabilities (Note 25)
Other long-term liabilities (Note 32)
Total long-term liabilities
Total liabilities

Millions of yen
2020
2019

Thousands of
U.S. dollars(Note 3)2020

¥10,090
21,279
7,218
5,351
720
6,403
1,941
53,006¥10,090
28,207
466
4,854
604
7,842
1,423
53,488$92,713
195,529
66,332
49,177
6,620
58,841
17,844
487,055

4,300
5
41
9,770
52
2
85
14,25867,264

4,300
5
32
9,475
51
66
105
14,03767,526

39,511
53
382
89,775484
21
789
131,014618,070

12,484
11,53877,359(16,376)
85,006

12,484
11,53871,983(16,375)
79,630114,718
106,020
710,830(150,476)
781,092

2,334
0
843
(1,165)2,012
87,018¥154,283

2,844
0
1,711
(988)
3,566
83,197¥150,724

21,4473
7,753(10,712)18,490799,582$1,417,652

Contingent liabilities (Note 9)
Net assets:
Shareholders’ equity: (Note 17)
Common stock
72,000,000 shares
Authorized Issued
29,977,106 shares
Additional paid-in capital
Retained earnings
Treasury stock, at cost (5,841,960 shares in 2020, 5,841,537 shares in 2019)
Total shareholders’ equity
Accumulated other comprehensive income
Unrealized holding gain on securities, net of tax
Deferred gains or losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets (Note 31)
Total liabilities and net assets

See accompanying notes to financial statements.

11

CONSOLIDATED STATEMENT OF INCOME
SHIBAURA MACHINE CO., LTD. AND CONSOLIDATED SUBSIDIARIES
Year ended March 31, 2020

Net sales
Cost of sales (Note 13)
Gross profit
Selling, general and administrative expenses (Notes 12 and 13)
Operating income
Other income:Interest and dividend income
Rent income
Foreign exchange income
Equity in earnings of affiliates
Gain on sales of property, plant and equipment
Gain on sales of shares of subsidiaries and affiliates (Note 14)
Gain on sales of investment securities (Note 22)
OthersOther expenses and losses:
Interest expense
Brand fee expense
Outsourcing expenses
Loss on disposal of property, plant and equipment and intangible assets
Loss on valuation of investment securities (Note 22)
Loss on impairment of fixed assets (Note 15)
Extra retirement payments (Note 16)
Others
Net income before income taxes
Income taxes (Note 25)
Current
Deferred
Net income
Net income attributable to owners of parent

Millions of yen
2020
2019
¥116,761¥117,405
83,301
84,49333,45932,91229,93029,078
3,529
3,834
556
50
76
728
6
10,13526
271
11,851

383
51
335
1,241
4
—
186
210
2,413

5,113
465
699
6,695
60
93,131
246
2,493
108,903

81
124
862
103
311
19
911
318
2,732

81
113
20
21
—
—
—
267
505

753
1,143
7,927
947
2,864
182
8,375
2,922
25,112

12,648

5,742

116,218

7,621(2,312)
5,309
7,338¥7,338

1,507
155
1,662
4,079
¥4,07970,034(21,248)
48,78667,433$67,4332019¥169.03

U.S. dollars(Note 3)
2019
$2.79

Yen
Net income per share of common stock (Note 31)

Thousands of
U.S. dollars(Note 3)2020
$1,072,876
765,428
307,448
275,020
32,4282020¥304.06

See accompanying notes to financial statements.

12

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
SHIBAURA MACHINE CO., LTD. AND CONSOLIDATED SUBSIDIARIES
Year ended March 31, 2020

Net income
Other comprehensive income (loss): (Note 18)
Unrealized holding gain (loss) on securities, net of tax
Deferred gains or losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of affiliates accounted for using equity method
Total other comprehensive income (loss)
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests

Millions of yen
2020
2019
¥7,338¥4,079Thousands of
U.S. dollars(Note 3)
2020
$67,433

(536)
0
(867)
(228)
77
(1,554)¥5,784

(804)
(2)
104
128
(29)
(603)
¥3,475(4,934)
3(7,972)(2,096)714(14,285)$53,147

5,784
—

3,475
—

53,147—

See accompanying notes to financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETSSHIBAURA MACHINE CO., LTD. AND CONSOLIDATED SUBSIDIARIES
Year ended March 31, 2020
Millions of yen
Unrealized
Additional
Deferred gains
Remeasurements
Number of Common
Retained Treasury gain on
Translation
Total net
paid inor losses onof defined benefit
Shares stockearnings stock securities,
adjustments
assetscapitalhedgesplans
net of tax
Balance at April 1, 2018
29,907,106 ¥12,484 ¥11,538 ¥69,514 ¥(16,373)¥3,684¥2¥1,606¥(1,123) ¥81,334
Profit attributable to owners of parent
4,079
4,079
Purchases of treasury stock(2)(2)
Cash dividends(1,749)(1,749)
Increase by merger
138
138
Net changes in items other than shareholders’ equity
(839)
(2)
104
134
(603)
Balance at March 31, 2019
29,907,106
12,484
11,53871,983(16,375)
2,844
0
1,711
(988)
83,197
Profit attributable to owners of parent
7,338
7,338
Purchases of treasury stock(1)(1)
Cash dividends(1,930)(1,930)Decrease by merger
(31)
(31)
Net changes in items other than shareholders’ equity
(510)
0
(867)
(176)
(1,554)
Balance at March 31, 2020
29,977,106 ¥12,484 ¥11,538 ¥77,359 ¥(16,376)¥2,344¥0¥843¥(1,165) ¥87,018

Balance at April 1, 2019
Profit attributable to owners of parent
Purchases of treasury stock
Cash dividends
Decrease by merger
Net changes in items other than shareholders’ equity
Balance at March 31, 2020

Thousands of U.S. dollars (Note 3)
Unrealized
Additional
Deferred gains
Remeasurements
CommonRetained Treasury gain on
Translation
Total net
paid inor losses onof defined benefit
stock
earnings stock securities,
adjustments
assetscapitalhedgesplans
net of tax$114,718 $106,020 $661,427 $(150,467) $26,137$0 $15,725$(9,086) $764,474
67,43367,433(9)(9)(17,742)(17,742)
(288)
(288)
(4,690)
3(7,972)(1,626) (14,285)$114,718 $106,020 $710,830 $(150,476) $21,447$3$7,753 $(10,712) $799,582
See accompanying notes to financial statements.

13

CONSOLIDATED STATEMENT OF CASH FLOWSSHIBAURA MACHINE CO., LTD. AND CONSOLIDATED SUBSIDIARIES
Year ended March 31, 2020

Operating activities:
Net income before income taxes
Adjustments to reconcile net income before income taxes to net cash provided by operating activities:
Depreciation
Loss on impairment of fixed assets
Extra retirement payments
Allowance for doubtful receivables
Warranty reserve
Directors’ retirement benefit
Net defined benefit liability
Interest and dividend income
Interest expense
Gain on sales of investment securities
Gain on sales of shares of subsidiaries and affiliates
Loss on valuation of investment securities
Gain or loss on sales and disposal of property, plant and equipment and intangible assets
Equity in earnings of affiliates
Changes in operating assets and liabilities:
Notes and accounts receivable, trade
Inventories
Notes and accounts payable, trade
Advances received
Accrued expenses
Others
Sub totalInterest and dividend income received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Investing activities:
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of intangible assets
Purchases of investment securities
Proceeds from sales of investment securities
Purchase of shares of subsidiaries and affiliates
Proceeds from sales of shares of subsidiaries and affiliates
Payments for investments in capital of subsidiaries and affiliates
Increase (decrease) in short-term loans receivableCollection of long-term loans receivable
OthersNet cash provided by (used in) investing activities
Financing activities:
Increase (decrease) in short-term bank loans
Repayment of long-term loans payable
Purchases of treasury stock
Cash dividends paid
OthersNet cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents resulting from merger with unconsolidated subsidiaries
Cash and cash equivalents at end of year (Note 19)

Millions of yen
2020
2019

Thousands of
U.S. dollars(Note 3)
2020

¥12,648¥5,742$116,218¥1,781
19
911
662
115
8
66
(556)
81
(26)
(10,135)
311
96
(728)

¥1,868
—
—
289
7
2
291
(383)
81
(186)
—
—
17
(1,241)

16,368
182
8,375
6,087
1,064
79
615
(5,113)753(246)(93,131)2,864
886(6,695)

1,341
6,023
(6,973)(1,438)
495
997
5,702
827
(80)
(1,137)
5,312

1,128
(8,332)(1,652)
2,719
(385)
(803)
(835)
654
(89)
(1,906)(2,176)

12,32355,346(64,072)(13,218)
4,555
9,164
52,402
7,604(739)(10,453)
48,814(1,424)
13
(92)
—
208
(98)
21,525
(379)
(3)
3
20
19,772(1,101)
7
(74)
(99)
167
(400)
—
—
0
3
5
(1,493)(13,092)
128
(852)
—
1,914
(901)
197,794(3,490)(31)28
189
181,686——(1)(1,930)(33)(1,964)(701)
22,41925,592—¥48,0114,300(4,300)(2)(1,749)(33)(1,785)111(5,344)30,798
138¥25,592——(9)(17,742)(303)(18,054)(6,444)
206,002
235,158—$441,160

See accompanying notes to financial statements.

14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SHIBAURA MACHINE CO., LTD. AND CONSOLIDATED SUBSIDIARIES

1. Basis of Presenting Consolidated
Financial Statements
The accompanying consolidated financial statements of SHIBAURA MACHINE CO., LTD. (the“Company”) and its consolidated subsidiaries (collectively, the “Companies”) are prepared on thebasis of accounting principles generally acceptedin Japan, which are different in certain respects
as to the application and disclosure requirementsof International Financial Reporting Standards,
and are compiled from the consolidated financial
statements prepared by the Company as requiredby the Financial Instruments and Exchange Law
of Japan. The preparation of these consolidated financial statements requires management to makeestimates and assumptions that affect the reported amounts of assets and liabilities and disclosureof contingent assets and liabilities at the fiscal
year end and the reported amounts of revenues
and expenses during the reporting period. Actual
results could differ from these estimates.
Certain reclassifications and rearrangements
have been made to the consolidated financial
statements issued domestically in order to present
them in a form that is more familiar to readers
outside of Japan. In addition, the notes to the consolidated financial statements include information
which is not required under accounting principles
generally accepted in Japan but is presented herein as additional information.

2. Summary of Significant Accounting
Policies(a) Basis of consolidation and accounting forinvestments in unconsolidated subsidiaries andaffiliates
The consolidated financial statements include
the accounts of the Companies.
All significant intercompany transactions andaccounts and unrealized intercompany profits
among consolidated entities are eliminated in consolidation.
Investments in affiliates (15 to 50 percent-owned
companies) in which the Company has the ability

to exercise significant influence, except immaterial investments, are accounted for using theequity method. NuFlare Technology, Inc. was
excluded from the scope of equity method due tothe all sale of its stock (deemed sale date January
1, 2020). The change in the scope of the equity
method will have a material effect on the Company’s consolidated financial statements for the next
fiscal year. The effect will consist of decrease inequity in earnings of affiliates on the consolidated
statement of income.
Unconsolidated subsidiaries and affiliates notaccounted for by the equity method are stated atcost.
(b) Translation of foreign currencies
Monetary assets and liabilities denominated inforeign currencies are translated into Japanese
yen at the exchange rate prevailing at the balance
sheet date, except for those perfectly hedged byforward contracts, which are translated using thecontracted rate.
The foreign exchange gains and losses fromtranslation are recognized in the consolidated
statement of income to the extent that they are
not hedged by foreign exchange derivatives.
All assets and liabilities of foreign consolidated
subsidiaries are translated at the current rates
at the respective balance sheet dates, except forcomponents of shareholders’ equity which aretranslated at their historical rates. The revenue
and expense accounts of foreign consolidated subsidiaries are translated at the current rates at therespective balance sheet dates. Differences arisingfrom translation are recognized directly in foreign
currency translation adjustments in net assets.
(c) Securities
Marketable securities classified as other securities are carried at fair value with any changes in
unrealized holding gain or loss, net of income taxes, directly included in net assets.
Non-marketable securities classified as othersecurities are carried at cost. Cost of securities
sold is determined by the moving average method.

15

(d) Inventories
Finished products and work in process arestated at the lower of cost, determined by the individual identification method, or their net realizable value. Raw materials and supplies are statedat the lower of cost, determined by the moving
average method, or their net realizable value.
(e) Allowance for doubtful receivables
The allowance for doubtful receivables is stated at the amount determined based on the default
ratio sustained over a specific period in the pastand the estimated uncollectible amount determined based on the analysis of certain individual
accounts, including probable bad debt and claims
in bankruptcy.
(f) Warranty reserve
Warranty reserve is provided for warranty costs
to be incurred during the warranty period basedon historical experience.
(g) Employee bonuses
The bonuses to the employees are paid twice ayear and accrued based on the estimated amounts
incurred and to be paid in the subsequent period.
(h) Depreciation of property, plant and equipment(excluding leased assets)
Depreciation of buildings is principally computed by the straight-line method, facilities attached
to buildings and other non-building structuresacquired on or after April 1, 2016 is computed by
the straight-line method and depreciation of otherproperty, plant and equipment is computed by the
declining balance method over the estimated useful lives of respective assets, principally ranging
from 3 to 60 years for buildings and structures,and from 3 to 22 years for machinery, equipment
and vehicles.
(i) Amortization of intangible assets
Computer software held for internal use isamortized by the straight-line method over thecorresponding economic useful life (5 years). Other intangible assets, including patent rights, areamortized by the straight-line method over theestimated useful lives of respective assets.

16(j) Leased assets
Leased assets under finance lease transactions
that do not transfer ownership to the lessee aredepreciated by the straight-line method over thelease term with no residual value.
(k) Derivative financial instruments
All derivatives are stated at fair value. Gainsor losses arising from changes in fair value arecharged or credited to income for the period inwhich they arise, except for derivatives that aredesignated as hedging instruments. Gains or losses arising from changes in fair value of the derivatives designated as cash flow hedging instruments,
net of the applicable income taxes, are reported
as a component of net assets.
(l) Income taxes
The Companies accrue current income taxes
based on taxable income.
The Companies recognize a number of temporary
differences for financial reporting purposes, which,in the case of expenses, are not currently deductible
and in the case of income, are not currently taxable.
Income tax effects on such temporary differences between tax and financial reporting purposes are reflected as deferred income taxes in the
consolidated financial statements using the asset
and liability method.
(m) Employees’ retirement benefits
Accrued employees’ retirement benefits areprovided based on the projected retirement benefit obligation and the fair value of plan assets at
fiscal year-end.
The retirement benefit obligation for employees is attributed to each period by the benefit formula method.
Actuarial gain or loss is amortized in the following year in which the gain or loss is recognizedprimarily by the straight-line method over a period (10 years), which is shorter than the averageremaining years of service of the employees.
(n) Directors’ retirement benefits
Domestic consolidated subsidiaries accrue an
estimated amount calculated in accordance withinternal rules for retirement benefits for directors
and corporate auditors.

(o) Amounts per share of common stock
Net income per share is computed based on
the weighted-average number of shares of common stock outstanding during a year.
Diluted net income per share is not presented
since the Company has never issued any securities
with dilutive effect, such as bonds with warrants
and convertible bonds. Cash dividends per sharerepresent the actual amount declared as applicable to the respective years.
(p) Cash equivalents
In preparing the consolidated statement ofcash flows, cash on hand, readily available deposits and short-term highly liquid investments withmaturities of not exceeding three months at thetime of purchase are considered to be cash andcash equivalents.
(q) Application of tax ef fect accounting fortransition from consolidated taxation system togroup tax sharing system
The Company and its domestic consolidated
subsidiaries have calculated the amounts of deferred tax assets and deferred tax liabilities according to the tax acts before amended based on

the treatment of Paragraph 3 of “Practical Solution
on the Treatment of Tax Effect Accounting for theTransition from the Consolidated Taxation System
to the Group Tax Sharing System” (ASBJ Practical
Issues Task Force No.39, March 31, 2020) insteadof applying the provision on Paragraph 44 of “Implementation Guidance on Tax Effect Accounting“(ASBJ Guidance No.28, February 16, 2018), regarding the transition to group tax sharing systemestablished in “Act for Partial Amendment of the
Income Tax Act, etc.” (Act No.8 of 2020), anditems for which the non-consolidated taxation system has been reviewed in line with the transition
to the group tax sharing system.

3. U.S. Dollar Amounts
U.S. dollar amounts are included solely for theconvenience of the readers and have been translated at the rate of ¥108.83=U.S.$1, the approximate exchange rate prevailing in the Japanese
foreign exchange market on March 31, 2020. Thistranslation should not be construed as a representation that the yen amounts actually represent,
have been, or could be converted into U.S. dollars.

17

4. Accounting Standards Issued but Not yet Effective
Accounting Standard for Revenue Recognition(ASBJ Statement No.29 on March 31, 2020)
Implementation Guidance on Accounting Standard for Revenue Recognition(ASBJ Guidance No.30 on March 31, 2020)
Implementation Guidance on Disclosures about Fair Value of Financial Instruments(ASBJ Guidance No.19 on March 31, 2020)(a) Outline
This is a comprehensive accounting standard for revenue recognition. Specifically, the accounting standard
establishes the following five-step model that will apply to revenue from contracts with customers:① : Identify the contract(s) with a customer② : Identify the performance obligations in the contract③ : Determine the transaction price④ : Allocate the transaction price to the performance obligations in the contract⑤ : Recognize revenue when (or as) the entity satisfies a performance obligation(b) Scheduled date of adoption
The Company expects to adopt the accounting standards and related implementation guidance fromthe beginning of the fiscal year ending March 31, 2022.
(c) Impacts of the adoption of accounting standard and implementation guidance
The impacts on the Company’s consolidated financial statements from the adoption of this accounting
standard and implementation guidance are being evaluated at the time of the preparation of consolidated
financial statements.

Accounting Standard for Fair Value Measurement(ASBJ Statement No.30 on July 4, 2019)
Accounting Standard for Measurement of Inventories(ASBJ Statement No.9 on July 4, 2019)
Accounting Standard for Financial Instruments(ASBJ Statement No.10 on July 4, 2019)
Implementation Guidance on Accounting Standard for Fair Value Measurement(ASBJ Guidance No.31 on July 4, 2019)
Implementation Guidance on Disclosures about Fair Value of Financial Instruments(ASBJ Guidance No.19 on March 31, 2020)(a) Outline
The ASBJ has developed an “Accounting Standard for Fair Value Measurement” and “Implementation
Guidance on Accounting Standard for Fair Value Measurement” (hereinafter collectively, the “Fair Value
Measurement Standard”), which provide guidance for fair value measurement in order to improve comparability with internationally recognized accounting standards. The Fair Value Measurement Standard isapplied with respect to the fair value of the following items;•Financial instruments defined in “Accounting Standard for Financial Instruments”•Inventories held for trading purposes defined in “Accounting Standard for Measurement of Inventories”(b) Scheduled date of adoption
The Company expects to adopt the accounting standards and related implementation guidance fromthe beginning of the fiscal year ending March 31, 2022.

18

(c) Impacts of the adoption of accounting standard and implementation guidance
The impacts on the Company’s consolidated financial statements from the adoption of this accounting
standard and implementation guidance are being evaluated at the time of the preparation of consolidated
financial statements.

Accounting Standard for Disclosure of Accounting Estimates(ASBJ Statement No.31 on March 31, 2020)(a) Outline
This accounting standard has been released to provide guidance on disclosure of information thatdeepens the understanding of users of the financial statements about estimates that embody a risk of asignificant impact on the financial statements of the following accounting period.
(b) Scheduled date of adoption
The Company expects to adopt the accounting standard from the end of the fiscal year ending March
31, 2021.

Accounting Standard for Accounting Policy Disclosures,
Accounting Changes and Error Corrections(ASBJ Statement No.24 on March 31, 2020)(a) Outline
This accounting standard has been released to provide an outline of the applicable accounting principles and procedures in cases where directly relevant accounting standards are not available.
(b) Scheduled date of adoption
The Company expects to adopt the accounting standard from the end of the fiscal year ending March
31, 2021.

5. Changes in Presentation
Consolidated Statement of Income
Outsourcing expenses, included within others of other expenses and losses until the fiscal year ended
March 31, 2019, is separately stated from the fiscal year ended March 31, 2020, as it has exceeded 10%of the total other expenses and losses. As a result of that, others under other expenses and losses in the
consolidated statement of income for the fiscal year ended March 31, 2019, ¥288 million, is replaced byoutsourcing expenses of ¥20 million and others of ¥267 million.

6. Additional Information
The spread of COVID-19 has caused a broad impact on the economy and corporate activities, and theCompanies business activities have been affected since automakers, our main customers, are making
production adjustments. Because it is difficult to predict when the spread of COVID-19 will be resolved,
the Company has made its best estimate, based on the information available for the preparation of theconsolidated financial statements, of the recoverability of deferred tax assets and impairment loss undercertain assumptions that the impact will be felt over a certain period of time in the next consolidated fiscal
year. It is assumed that the impact of COVID-19 will be eliminated by the second quarter of the next fiscal
year, and that normal business activities will be gradually resumed in the third quarter and thereafter. As
a result of the estimates made for the current fiscal year, the impact on the consolidated financial statements for the current fiscal year is not significant. However, as a result of revising the assumptions based19

on changes in future circumstances, the effect on the consolidated financial statements for the next fiscal
year and thereafter may be significant.

7. Property, Plant and Equipment
Property, plant and equipment at March 31, 2020 and 2019 consisted of the following:

Land
Buildings and structures
Machinery and equipment
VehiclesTools, furniture and fixtures
Lease assets
Construction in progress
Sub total
Less accumulated depreciation
Property, plant and equipment, net

Millions of yen
2020
2019
¥7,049¥6,46039,01439,35023,93823,883
286
302
7,327
7,428
240
264
135
130
77,991
77,821(57,450)(57,056)¥20,541¥20,765

Thousands of
U.S. dollars
2020$64,774
358,487
219,964
2,629
67,326
2,212
1,248
716,640(527,896)$188,744

Depreciation expenses for the years ended March 31, 2020 and 2019 were ¥1,781 million ($16,368
thousand) and ¥1,868 million, respectively.

8. Intangible Assets
Intangible assets at March 31, 2020 and 2019 consisted of the following:

Others
Total

Millions of yen
2020
2019
¥561
¥641
¥561
¥641

Thousands of
U.S. dollars
2020$5,157$5,157

9. Contingent Liabilities
As of March 31, 2020, contingent liabilities for loans guaranteed by the Company, principally on behalfof non-consolidated subsidiaries and affiliated companies, amounted to ¥983 million ($9,038 thousand).

10. Commitment Line
The Company has concluded commitment line contracts with three financial institutions in order toensure that it can safely and flexibly meet any demand for funds. The balance of unused committed lines
under these contracts at the end of the fiscal year was as follows:

Total amount of commitment line
Funds borrowed
Unused amount

20

Millions of yen
2020
2019
¥10,000¥10,000——¥10,000¥10,000

Thousands of
U.S. dollars
2020$91,886—$91,88611. Treatment of notes matured at the end of the fiscal year
Since the final day of the fiscal year falls on a holiday of financial institutions, the method is applied
where settlement of notes matured at the end of the fiscal year are accounted for on their clearing day.
Accordingly, the following notes matured at the end of the previous year are included in the consolidated balance sheet at the end of the previous year:
Millions of yen
2020
2019
¥—
¥1,476—14

Notes and accounts receivable, trade
Notes and accounts payable, trade

Thousands of
U.S. dollars
2020
$—
—

12. Selling, General and Administrative Expenses
Major components of selling, general and administrative expenses for the years ended March 31, 2020
and 2019 were as follows:

Sales commission
Shipping expenses
Provision for warranty reserve
Personnel-expenses
Retirement benefit expenses
Depreciation
Rent expenses
Travel expenses
Research and development expenses
Subcontract expenses
Others
Total

Millions of yen
2020
2019
¥1,486¥1,579
3,595
3,839
625
495
11,914
11,883
652
669
746
730
804
805
1,238
1,408
1,682
1,246
588
495
6,596
5,923
¥29,930¥29,078

Thousands of
U.S. dollars
2020$13,656
33,036
5,745
109,477
5,997
6,855
7,394
11,376
15,4595,410
60,616$275,020

13. Research and Development Costs
Research and development costs charged to income were ¥2,378 million ($21,851 thousand) and¥1,835 million for the years ended March 31, 2020 and 2019, respectively.

14. Gain or loss on sales of shares of subsidiaries and affiliates
For the year ended March 31, 2020, the Company sold all of its shares in NuFlare Technology, Inc.,
which was accounted for under the equity method.

21

15. Loss on Impairment of Fixed Assets
Grouping of assets is based on the business units, except for idle assets, which are grouped individually.
The Company wrote down the carrying amount of idle assets to the recoverable amount and recognized loss on
impairment of fixed assets ¥19 million in the consolidated statement of income for the year ended March 31, 2020.
The recoverable amount of the assets is measured at the net selling value, which is calculated based on
the memorandum value.
The loss on impairment of fixed assets for the year ended March 31, 2020 consisted of the following:
Millions ofyen
2020
Zama, Kanagawa, Japan:
Idle property (company housing)
Buildings and structures
Total

¥ 19
¥ 19

Thousands of
U.S. dollars
2020

$182
$182

There was no applicable matter for the years ended March 31, 2020.

16. Extra retirement payments
Extra retirement payments for the year ended March 31, 2020 include special additional retirement bonuses and other expenses with the implementation of the voluntary retirement measures.

17. Shareholders’ Equity
The Corporation Law of Japan (the “Law”), which went into effect on May 1, 2006, provides that an
amount equal to 10% of the amount to be distributed as distribution of additional paid in capital (otherthan the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capitalreserve and legal reserve, respectively, until the sum of the capital reserve and legal reserve equals 25% of
the common stock account. Such distributions can be made at any time by resolution of the shareholders
or by the Board of Directors if certain conditions are met, but neither the capital reserve nor the legal reserve is available for distributions.

2218. Other Comprehensive Income
The components of other comprehensive income (loss) for the years ended March 31, 2020 and 2019were as follows:
Millions of yen
2020
2019
Unrealized holding gain (loss) on securities:
Current period changes in unrealized gain (loss)
Reclassification adjustment
Total unrealized holding gain (loss) on securities before tax effects
Tax effects
Unrealized holding gain (loss) on securities, net of tax effects
Deferred gains or losses on hedges
Current period changes
Total deferred gains or losses on hedges before tax effects
Tax effects
Deferred gains or losses on hedges, net of tax effects
Foreign currency translation adjustments:
Current period changes
Remeasurements of defined benefit plans
Current period changes in remeasurements of defined benefit plans
Reclassification adjustment
Total remeasurements of defined benefit plans before tax effectTax effects
Remeasurements of defined benefit plans, net of tax effects
Share of other comprehensive income of affiliates accounted for using equity method
Current period changes
Reclassification adjustment
Share of other comprehensive income of affiliates accounted for using equity method
Total other comprehensive income (loss)

Thousands of
U.S. dollars
2020¥(906)
176
(730)
193
(536)

¥(962)(186)(1,148)344(804)$(8,332)
1,618(6,714)
1,781(4,934)

0
0
(0)
0

(3)
(3)
1
(2)

4
4
(1)
3

(867)

104

(7,972)

(355)
127
(228)
—
(228)

(33)
162
128
—
128

(3,271)
1,175(2,096)—(2,096)15
61
77¥(1,554)

(29)
—
(29)
¥(603)

145
569
714$(14,285)

19. Cash Flow Information
Cash and Cash Equivalents
The reconciliation between cash and time deposits in the accompanying consolidated balance sheet
and cash and cash equivalents in the accompanying consolidated statement of cash flows at March 31,
2020 and 2019 were as follows:

Cash and time deposits
Marketable securities
Cash and cash equivalents

Millions of yen
2020
2019
¥47,907¥25,592
104—¥48,011¥25,592

Thousands of
U.S. dollars
2020$440,204956$441,160

20. Leases
This disclosure has been omitted for the year ended March 31, 2020 based on immateriality.

2321. Financial Instruments
Overview(a) Policy for financial instruments
The Companies invest in short-term deposits for fund management, where temporary cash surplus is invested in low-risk financial instruments. The Companies raise funds through bank borrowings. The Companies use
derivatives only to reduce risk, and do not enter into derivative transactions for speculative trading purposes.
(b) Financial instruments, related risk and risk management system
Operating receivables, such as notes and accounts receivable, trade are exposed to customer credit
risk. The Companies try to reduce this risk by adhering to their sales management rules. Investments, consisting of marketable securities of corporations, are exposed to stock price fluctuation risk in the market.
To address this risk, the Companies review stock prices in every quarter. Operating payables, such as notes
and accounts payable, trade are mainly due within six months. Borrowings are mainly used in for normal
operations and capital investments. The maturity of borrowings is up to four years from the balance sheet
date at the maximum.
Derivative transactions consist of foreign exchange forward contracts, etc. used for the purpose of hedging
foreign exchange risk associated with certain assets and liabilities denominated in foreign currencies.
These derivative transactions are managed under the internal management policies, to the extent deemednecessary. Note 23, “Derivative Financial Instruments,” provides more information on hedge accounting,hedging instruments and methods, hedging policy, hedged items and assessments of hedge effectiveness.
The Finance Department of the Companies prepares and updates its cash flow plan to manage liquidity
risk. A part of bank borrowings are subject to terms of financial covenants. If the Companies violate theterms of the financial covenants, the terms of the borrowings may be possibly revised.
The terms of the financial covenants related to a syndicated loan contract (¥4,000 million ($36,755
thousand) at March 31, 2020) are as follows:① At March 31 and September 30 every year, the Company must maintain net assets in the consolidated balance sheet over ¥57,840 million ($531,471 thousand).
In② the consolidated statement of income for the fiscal year ending March 31, the Company must notrecord operating loss for two consecutive years.
(c) Supplemental information on the fair value of financial instruments
Fair value of financial instruments is calculated based on market prices, or by using reasonable estimates when market prices are not available. These estimates include variable factors, and are subject tofluctuation due to a change in underlying assumptions. The contract amounts of derivatives presented in
Note 23, “Derivative Financial Instruments,” below do not represent the actual market risk associated with
derivative transactions.

24Fair value of financial instruments
Carrying value of financial instruments as of March 31, 2020 and 2019, and their fair value were as follows:(Financial instruments whose fair value was extremely difficult to determine were not included.)Millions of yen
2020
2019
Carrying value Fair value Difference Carrying value Fair value Difference
Cash and deposits¥47,907 ¥47,907¥— ¥25,592 ¥25,592¥—
Notes and accounts receivable, trade
36,06436,064(0) 37,405
37,406
0
5,799
5,799
—
17,606
17,857251
Marketable securities and investment securities¥89,771 ¥89,771¥(0) ¥80,604 ¥80,857¥252
Total assets
Short-term bank loans¥10,090 ¥10,090¥— ¥10,090 ¥10,090¥—
Notes and accounts payable, trade21,27921,279—28,20728,207
—
4,300
4,309
9
4,300
4,309
9
Long-term debt
¥35,669 ¥35,678¥9 ¥42,597 ¥42,606¥9
Total liabilities
Derivatives
¥0
¥0
¥—
¥(19)
¥(19)
¥—
Thousands of U.S. dollars
2020
Carrying value Fair value Difference
Cash and deposits$440,204 $440,204$—
Notes and accounts receivable, trade331,387 331,385(2)
53,292—Marketable securities and investment securities 53,292$824,883 $824,880$(2)
Total assets
Short-term bank loans$92,713 $92,713$—
Notes and accounts payable, trade
195,529 195,529—
39,511
39,59786
Long-term debt
$327,754 $327,839$86
Total liabilities
Derivatives
$4
$4
$—

Note : Derivatives are presented as net amounts receivable or payable with net amounts payable inparentheses.
(a) Method for calculating fair value of financial instruments, short-term investments and derivativetransactions① Cash and deposits
The carrying value approximates fair value because these are due within the short-term.
② Notes and accounts receivable, trade
The fair value of notes and accounts receivable, trade is classified based on certain terms and discounted using interest rate which reflects credit risk.
③ Marketable securities and investment securities
Investment securities are listed shares, and based on quoted market prices. Marketable securities
are mutual fund, and based on quoted financial institutions.
④ Short-term bank loans; ⑤Notes and accounts payable, trade
The carrying value approximates fair value because these are due within the short-term.
⑥ Long-term debt
The fair value of long-term debt is determined based on the present value of the principal and interest,
discounted by the interest rate that would be applied if similar new borrowings were entered into.
⑦ Derivatives
Please refer to Note 23, “Derivative Financial Instruments”

25

(b) Financial instruments whose fair value was extremely difficult to determine at March 31, 2020 and 2019were as follows:

Investment securities for which the market prices are not available

Millions of yen
2020
2019
¥864
¥772

Thousands of
U.S. dollars
2020$7,943Market prices are not available for these items, or the cost of estimating future cash flow is consideredprohibitive. As a result, these items are not included in ③Marketable securities and investment securities
in the above table, because their fair value is not readily determinable.
(c) The aggregate annual maturities of financial assets at March 31, 2020 and 2019 were as follows:
Millions of yen
2020
2019
Due after one Due after fiveDue after one Due after fiveDue within one
Due after ten Due within one
Due after ten
year through years throughyear through years through
year
years
year
years
five years
ten years
five years
ten years
Cash and deposits¥47,902¥—¥—¥— ¥25,586¥—¥—¥—
Notes and accounts receivable, trade35,733330—— 37,253
152——
Marketable securities and investment securities:
Mutual Fund
104
—
—
—
—
—
—
—
¥83,740¥330¥—¥— ¥62,839
¥152
¥—
¥—
Total
Thousands of U.S. dollars
2020
Due after one Due after fiveDue within one
Due after ten
year through years through
year
years
five years
ten years
Cash and deposits$440,157$—$—$—
Notes and accounts receivable, trade 328,346
3,041
—
—
Marketable securities and investment securities:
1,377
—
—
956
—
—
—
Mutual Fund
$769,460 $3,041
$—
$—
Total

(d) Annual maturities of short-term bank loans and long-term debt
Year ended March 31, 2020

Short-term bank loans
Long-term debt
Total
Year ended March 31, 2019

Short-term bank loans
Long-term debt
Total

26

Millions of yen
Due after one Due after two Due after three Due after four
Due within one
Due after five
year through years through years through years through
year
years
two years
three years four years
five years¥10,090
¥—
¥—
¥—
¥—
¥—
—
500
500
3,300
—
—
¥10,090¥500¥500 ¥3,300¥—¥—
Millions of yen
Due after one Due after two Due after three Due after four
Due within one
Due after five
year through years through years through years through
year
years
two years
three years four years
five years¥10,090
¥—
¥—
¥—
¥—
¥—
—
—
500
500
3,300
—
¥10,090¥—¥500¥500 ¥3,300¥—

Year ended March 31, 2020

Short-term bank loans
Long-term debt
Total

Thousands of U.S. dollars
Due after one Due after two Due after three Due after four
Due within one
Due after five
year through years through years through years through
year
years
two years
three years four years
five years$92,713
$—
$—
$—
$—
$—
—
4,594
4,594 30,323——$92,713 $4,594 $4,594 $30,323$—$—

22. Securities
Information regarding marketable securities classified as other securities included in investment securities were as follows:

Equity securities

Equity securities

Acquisitioncost¥2,384¥2,3842020
Carrying
value¥5,695¥5,695

Millions of yen
Unrealized Acquisition
gains
cost
¥3,311¥2,709¥3,311¥2,7092019
Carrying
value¥6,751¥6,751

Unrealized
gains¥4,041¥4,041Thousands of U.S. dollars
2020
Acquisition Carrying Unrealized
cost
value
gains
$21,910$52,336$30,425$21,910$52,336$30,425

Proceeds from sales and gain on sales of investment securities classified as other securities were¥21,570 million ($198,200 thousand) and ¥10,162 million ($93,377 thousand) for the year ended March
31, 2020, and ¥306 million and ¥186 million for the year ended March 31, 2019, respectively.
Loss on valuation of investment securities classified as other securities was ¥311 million ($2,864 thousand) for the year ended March 31, 2020. In the recognition of loss on valuation, total impairment is recognized when the fair value at the end of the fiscal year has fallen below 50% of the acquisition cost. Whenthe fair value has fallen between 30% and 50%, an impairment of the amount deemed by taking into account recoverability etc. is recognized.
Mutual fund classified as marketable securities totaled ¥104 million ($956 thousand) as of March 31,
2020. Non-marketable equity securities classified as other securities primarily consist of ¥84 million ($774
thousand) and ¥88 million as of March 31, 2020 and 2019, respectively.

23. Derivative Financial Instruments
The Companies have entered into derivative transactions (foreign exchange contracts) in order tomanage certain risks arising from adverse fluctuations in foreign currency exchange rates. The Company
does not hold or issue derivative financial instruments for the purpose of speculative trading. Derivativetransactions are entered into by the Finance Department under the rules approved by the Board of Directors. Derivative transactions are evaluated by the Corporate Auditing Office.

27

Derivatives not designated as hedging instruments at March 31, 2020 and 2019 were as follows:
Foreign exchange contracts
Millions of yen

Hedged item
Appropriated accounting for foreign currency
Foreign exchange contracts:
Sell:
U.S. dollars
Accounts receivable
Buy:
Japanese yen
Accounts payable
Total

Hedged item

2020
2019
Contract
Contract
Contract
Unrealized Contract
Unrealized
amount due Fair value
amount due Fair value
amountgain (loss) amountgain (loss)
after one year
after one year

¥39

¥—

¥(2)

¥(2)

¥6

¥—

¥(0)

¥(0)

158
¥198

—
¥—

2
¥0

2
¥0

826
¥833

—
¥—

(19)
¥(19)

(19)
¥(19)

Thousands of U.S. dollars
2020
Contract
Contract
Unrealized
amount due Fair value
amountgain (loss)
after one year

Appropriated accounting for foreign currency
Foreign exchange contracts:
Sell:
U.S. dollars
Accounts receivable $362
Buy:
Japanese yen
Accounts payable 1,459$1,820
Total

$—

$(21)

$(21)

—
$—

22
$0

2
$0

Derivatives designated as hedging instruments at March 31, 2020 and 2019 were as follows:
Foreign exchange contract, etc.

Hedged item
Accounting in principle
Foreign exchange contracts:
Sell:
U.S. dollars
Accounts receivable
Buy:
U.S. dollars
Accounts payable
Appropriated accounting for foreign currency
Foreign exchange contracts:
Sell:
U.S. dollars
Accounts receivable
Buy:
U.S. dollars
Accounts payable
Total

28

Millions of yen
2020
2019
Contract Contract amountContract Contract amount
Fair value
Fair value
amount due after one year
amount due after one year

¥93

¥—

¥0

¥—

¥—

¥—

—

—

—

194

—

0

2,267

—

*

4,903

—

*

85
¥2,447

—
¥—

*
¥0

27
¥5,125—¥—*¥0Hedged item

Thousands of U.S. dollars
2020
Contract Contract amount
Fair value
amount due after one year

Accounting in principle
Foreign exchange contracts:
Sell:
$863
U.S. dollars
Accounts payable
Appropriated accounting for foreign currency
Foreign exchange contracts:
Sell:
U.S. dollars
Accounts receivable $20,835
Buy:789
U.S. dollars
Accounts payable$22,486
Total

$—

$4

—

*

—
$—

*
$4

Note : Foreign exchange contracts are accounted for using the appropriation method as part of theaccounts receivable and accounts payable. Therefore, the fair value of foreign exchange contracts is included in the fair value of the underlying accounts receivable.

24. Employees’ Retirement Benefits(a) Overview
The Company and certain subsidiaries have funded defined benefit plans, i.e., lump-sum payment plansand defined benefit pension plans, and defined contribution plans for employees. Certain overseas subsidiaries have unfunded defined benefit plans for benefit payments to their employees.
Certain domestic subsidiaries participate in multiemployer pension plans. Multiemployer pension plans,
in which pension assets belonging to the Companies are not reasonably determinable, are accounted for as
if those are defined contribution plans.
Certain domestic consolidated subsidiaries have adopted the simplified method in calculating their projected benefit obligation.
(b) Defined benefit plans① The changes in the retirement benefit obligation during the years ended March 31, 2020 and 2019were as follows:

Retirement benefit obligation at beginning of year
Service cost
Interest cost
Actuarial gain or loss
Retirement benefit paid
Retirement benefit obligation at end of year

Millions of yen
2020
2019
¥14,360¥14,141
918
929
0
0
139
(2)
(961)
(709)
¥14,457¥14,360

Thousands of
U.S. dollars
2020$131,953
8,439
7
1,280
(8,831)$132,84829

② The changes in pension plan assets during the year ended March 31, 2020 and 2019 were as follows:

Pension plan assets at beginning of year
Expected return on pension plan assets
Actuarial gain or loss
Contribution by the Companies
Retirement benefit paid
Pension plan assets at end of year

Millions of yen
2020
2019
¥4,885¥4,829
71
84
(216)
(35)
202
197
(254)
(190)
¥4,687¥4,885

Thousands of
U.S. dollars
2020$44,889655(1,991)
1,859(2,339)$43,073③ The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheet as of March 31, 2020 and 2019 for the defined benefit plans

Funded retirement benefit obligation
Pension plan assets at fair value
Unfunded retirement benefit obligation
Net retirement benefit liability recognized in the consolidated balance sheet
Retirement benefit liability
Net retirement benefit liability recognized in the consolidated balance sheet

Millions of yen
2020
2019
¥4,886¥4,721(4,687)(4,885)
199
(163)
9,571
9,639
9,770
9,475
9,770
9,475
¥9,770¥9,475

Thousands of
U.S. dollars
2020$44,902(43,073)
1,829
87,946
89,77589,775$89,775④ The components of retirement benefit expense for the years ended March 31, 2020 and 2019 wereas follows:

Service cost
Interest assets
Expected return on pension assets
Actuarial gain or loss
Retirement benefit expense

Millions of yen
2020
2019
¥918
¥929
0
0
(71)
(84)
127
162
¥975
¥1,007

Thousands of
U.S. dollars
2020$8,439
7
(655)
1,175
$8,966Note : Other than the retirement benefit expense above, ¥911 million ($8,375 thousand) is posted in
extra retirement payments under other expenses and losses for the years ended March 31, 2020.
⑤ Remeasurements of defined benefit plans included in other comprehensive income (before tax effect) for the years ended March 31, 2020 and 2019 were as follows:

Actuarial gain or loss
Total

30

Millions of yen
2020
2019
¥(228)¥128¥(228)¥128

Thousands of
U.S. dollars
2020$(2,096)$(2,096)

⑥ Remeasurements of defined benefit plans included in accumulated other comprehensive income(before tax effect) as of March 31, 2020 and 2019 were as follows:

Unrecognized actuarial loss
Total

Millions of yen
2020
2019
¥1,165¥937¥1,165¥937

Thousands of
U.S. dollars
2020$10,712$10,712⑦ The fair value of pension plan assets, by major category, as a percentage of total plan assets as ofMarch 31, 2020 and 2019 were as follows:
Domestic bonds
Domestic equity securities
Foreign bonds
Foreign equity securities
Insurance assets (General accounts)
Other
Total

2020
53%
11
15
11
8
2
100%

2019
51%
13
12
14
8
2
100%

The expected return on pension plan assets has been estimated based on the anticipated allocation toeach asset class and the expected long-term returns on assets held in each category.
⑧ The assumptions used in accounting for the above plans were as follows:
Discount rate
Expected rate of return on pension plan assets
Expected rate of salary increase

2020
0.0%
1.5
9.4

2019
0.0%
1.5
9.4

The expected rate of salary increase was the rate of increase points calculated using the age specificindex of the expected rate of salary increase under the retirement benefits point system.
(c) Defined contribution plans
The required contributions to defined contribution plans of the Company and certain domestic consolidated subsidiaries for the years ended March 31, 2020 and 2019 were ¥169 million ($1,559 thousand) and¥170 million, respectively.
(d) Multiemployer pension plans
The required contributions to the multiemployer pension plans for the years ended March 31, 2020 and2019 were ¥30 million ($283 thousand) and ¥31 million, respectively.
① Funded status of the multiemployer pension plans as of the most recent calculation dates

Amount of pension assets
Total amount of actuarial obligations and minimum reserve in the pension financial calculation (Note)
Difference

Millions of yen
2020
2019
¥127,216¥130,908
141,568
146,380¥(14,351)¥(15,471)

Thousands of
U.S. dollars
2020$1,168,951
1,300,824$(131,873)

Note : This item was presented as “Amount of obligations” in the previous fiscal year.

31

② The Companies’ portion of contributions in multiemployer pension plans
The Companies’ portion in the total contributions of the multiemployer plans

2020
0.612%

2019
0.606%The difference above was principally attributable to the differences in retained earnings of ¥(828) million ($(7,611) thousand) and ¥4,850 million in the pension financial calculation, at March 31, 2020 and
2019, respectively special reserve of ¥3,363 million ($30,904 thousand) and ¥(1,486) million at March 31,
2020 and 2019 and unrecognized prior service cost of ¥16,886 million ($155,166 thousand) and ¥18,834
million at March 31, 2020 and 2019, respectively.
Prior service cost of the plans is amortized by the straight-line method over 20 years. The Companies
paid and recognized premium contributions of ¥31 million ($286 thousand) and ¥30 million for amortization of prior service cost in the consolidated financial statements for the years ended March 31, 2020 and
2019, respectively.
The Companies’ portion of contributions described above was not equal to the actual share to be allocated to the Companies.

25. Income Taxes
Income taxes in Japan applicable to the Company and its domestic consolidated subsidiaries generallycomprise corporation, enterprise and prefectural and municipal inhabitants taxes. The statutory tax rates
for the years ended March 31, 2020 and 2019 were approximately 29.9% and 30.0%, respectively.
The reconciliation between the statutory tax rate and effective tax rate for the year ended March 31,
2019 was omitted because such difference is less than 5% of the statutory tax rate.
The reconciliation between the statutory tax rate and effective tax rate for the years ended March 31,
2020 was as follows:
Statutory tax rate
Per-capita portion of inhabitant tax
Permanently non-deductible expenses
Permanently non-taxable revenue such as dividends income
Change in valuation allowance
Effects of elimination in consolidation
Difference in statutory tax rates for foreign subsidiaries
Tax on pensions
Others
Effective tax rate

32

2020
29.9%
0.3
0.3
(0.8)
(0.2)
25.6
0.1
(12.1)(1.1)
42.0%

The significant components of deferred tax assets and liabilities at March 31, 2020 and 2019 were as follows:
Millions of yen
2020
2019
Deferred tax assets:
Tax loss carry forwards (Note)
Allowance for doubtful receivables
Net defined benefit liability
Devaluation of inventories
Unrealized intercompany profit on inventories
Accrued employee’s bonuses
Devaluation of securities
Enterprise taxes payable
Other
Total deferred tax assets
Valuation allowance of tax loss carry forwards (Note)
Valuation allowance of deductible temporary difference
Subtotal Valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Deferral of gain on sale of fixed assets
Unrealized holding gain on securities
Asset retirement obligations
Foreign consolidated subsidiaries’ retained earnings
Affiliates’ retained earnings accounted for using equity method
Enterprise taxes receivable
OthersTotal deferred tax liabilities
Net deferred tax assets

Thousands of
U.S. dollars
2020

¥256
322
2,589
709
500
633
257
390
2,145
¥7,805(256)(2,642)(2,899)¥4,905

¥328
123
2,568
721
641
609
327
79
1,665
¥7,066(328)(2,589)(2,918)¥4,148$2,361
2,960
23,795
6,515
4,602
5,819
2,368
3,584
19,714$71,718(2,361)(24,280)(26,641)$45,077

(87)
(978)
(5)
(678)
—
(0)
(15)
¥(1,765)¥3,139(91)(1,171)(5)(763)(1,441)(5)(33)¥(3,511)
¥636

(807)
(8,987)(49)(6,238)—(5)(140)$(16,225)$28,852

Note : A breakdown of Tax loss carryforwards and valuation allowance by expiry date as of March 31,
2020 and 2019 were as follows:

Tax loss carryforwards
Valuation allowance
Deferred tax assets

Millions of yen
2020
Due after one Due after two Due after three Due after four
Due in one
year through year through year through year through After five years
years or lesstwo years
three years
four years
five years
¥110
¥61
¥16
¥18
¥50
¥—
(110)
(61)
(16)
(18)
(50)
—
¥—
¥—
¥—
¥—
¥—
¥—

Tax loss carryforwards
Valuation allowance
Deferred tax assets

Millions of yen
2019
Due after one Due after two Due after three Due after four
Due in one
year through year through year through year through After five years
years or lesstwo years
three years
four years
five years
¥108
¥115
¥64
¥17
¥23
¥—
(108)
(115)
(64)
(17)
(23)
—
¥—
¥—
¥—
¥—
¥—
¥—

Total
¥256
(256)
¥—

Total
¥328
(328)
¥—

33

Taxlosscarryforwards
Valuationallowance
Deferredtaxassets

Thousands of U.S. dollars
2020
Due after one Due after two Due after three Due after four
Due in one
Total
year through year through year through year through After five years
years or lesstwo years
three years
four years
five years$1,012
$564
$155
$166
$464
$—
$2,361(1,012)
(564)
(155)
(166)
(464)
—
(2,361)
$—
$—
$—
$—
$—
$—
$—

The amount is determined by multiplying the corresponding tax loss carryforwards by the effective
statutory tax rate.

26. Business Combinations
This disclosure has been omitted for the year ended March 31, 2020 based on immateriality.

27. Asset Retirement Obligations
This disclosure has been omitted for the year ended March 31, 2020 based on immateriality.

28. Rental Property
This disclosure has been omitted for the year ended March 31, 2020 based on immateriality.

29. Segment Information(a) General information about reportable segments
The reportable segments of the Companies are the business units for which the Company is able to obtain respective financial information separately in order for Board of Directors to conduct periodic assessments to determine distribution of management resources and evaluate their business results.
The Companies’ business is classified into certain segments based on the types of products and services. The Companies’ segments are categorized into the following two reportable segments: “Molding
Machinery” and “Machine Tools” based on the similarities of the economic nature, type of business andmanufacturing method:
Molding Machinery: Injection molding machines, Die casting machines, Plastic extrusion
Large size machine tools, Portal type machine tools, Machining centers, Horizontal
Machine Tools:
boring machines, High-precision machines(b) Basis of measurement for reportable segment profit or loss, segment assets and other material items
The accounting treatment for the reportable business segments is generally the same as described in
Note 2, “Summary of Significant Accounting Policies.” Reportable segment income is calculated on the basis of operating income. The prices of intersegment transactions and transfers are calculated based on themarket prices.

34

(c) Reportable segment information
Reportable segment information of the Companies for the years ended March 31, 2020 and 2019 wereas follows:Year ended March 31, 2020

Net sales:
External customers
Inter-segment
Total
Segment income
Segment assets
OthersDepreciation
Capital expenditures

Millions of yen
Reportable segments
Other
Molding Machine
Total
Sub total
Products
Machinery
Tools¥77,206—
77,206¥3,747¥71,929¥1,021
1,111¥29,684 ¥106,891
13
13
29,697
106,904¥300¥4,047¥34,787 ¥106,717
¥560
194

¥1,581
1,305

Reportable segments
Molding Machine
Sub total
Machinery
Tools

Year ended March 31, 2020

Netsales:Externalcustomers
Inter-segment
Total
Segmentincome
Segmentassets
OthersDepreciation
Capitalexpenditures

¥199
435

¥1,781
1,741¥— ¥116,761(2,928)—(2,928) 116,761¥50¥3,529¥31,005 ¥154,283¥——¥1,781
1,741

Millions of yen

Year ended March 31, 2019

Net sales:
External customers
Inter-segment
Total
Segment income
Segment assets
OthersDepreciation
Capital expenditures¥9,869 ¥116,761
2,915
2,928
12,785
119,689¥(568)¥3,478¥16,560 ¥123,277

Adjustments Consolidated¥79,210—
79,210¥3,510¥85,863¥1,102804¥27,362 ¥106,573
2
2
27,365
106,575¥(129)¥3,380¥36,168 ¥122,032
¥533
212

¥1,635
1,016

Other
Products

Total¥10,832 ¥117,405
3,114
3,116
13,946
120,522¥436¥3,817¥19,029 ¥141,061
¥232
178

¥1,868
1,195

Thousands of U.S. dollars
Reportable segments
Other
Molding Machine
Total
Sub total
Products
MachineryTools$709,422—
709,422$34,434$660,935$272,762122
272,884$2,760$319,649$982,184
122
982,306$37,194$980,585$9,387
10,210$5,1491,786$14,536
11,996$90,692 $1,072,876
26,791
26,913
117,483 1,099,789$(5,228)$31,967$152,167 $1,132,752$1,832
4,001$16,368
15,998Adjustments Consolidated¥— ¥117,405(3,116)—(3,116) 117,405¥16¥3,834¥9,662 ¥150,724¥——¥1,868
1,195

Adjustments Consolidated$— $1,072,876(26,913)—(26,913) 1,072,876$461$32,428$284,900 $1,417,652$——$16,368
15,998Note : “Other products” is a business segment that is not included in the reportable segments. It included business activities related to industrial robots and electronic controls, etc.

35

(d) Difference between total reportable segments and consolidated financial statements
The main differences between total reportable segments and consolidated financial statements for theyears ended March 31, 2020 and 2019 were as follows:

Sales
Total reportable segments
Other products
Eliminations
Net sales in the consolidated financial statements

IncomeTotal reportable segments
Other products
Eliminations
Operating income in the consolidated financial statements

AssetsTotal reportable segments
Other productsCompany-wide assets
Eliminations
Net assets in the consolidated financial statements

Millions of yen
2020
2019
¥106,904¥106,575
12,785
13,946(2,928)(3,116)¥116,761¥117,405

Thousands of
U.S. dollars
2020$982,306
117,483(26,913)$1,072,876

Millions of yen
2020
2019
¥4,047¥3,380
(568)
436
50
16
¥3,529¥3,834

Thousands of
U.S. dollars
2020$37,194(5,228)461$32,428

Millions of yen
2020
2019
¥106,717¥122,032
16,56019,02931,48810,046(482)(383)¥154,283¥150,724

Thousands of
U.S. dollars
2020$980,585
152,167
289,333(4,432)$1,417,652

Note : Company-wide assets are mainly cash and cash equivalents, securities and investment securities
that are not allocated to the reportable segments.
(e) Other information① Information about products and services
Information about products and services is not disclosed because reportable segment information isbased on products and services.
② Information about geographical areas
Sales information by country or geographical areas for the years ended March 31, 2020 and 2019were as follows:Japan
United States
China
Other Asia
Other
Total

Millions of yen
2020
2019
¥55,393¥49,298
11,216
14,19822,60322,432
22,43923,7105,107
7,765¥116,761¥117,405

Note : Sales figures are classified based on customer locations.

36

Thousands of
U.S. dollars
2020$508,993
103,066
207,695
206,192
46,930$1,072,876

Property, plant and equipment information by country or geographical areas as of March 31, 2020 and2019 were as follows:Japan
North America
Asia
Total

Millions of yen
2020
2019
¥17,627¥18,178
198
205
2,715
2,381
¥20,541¥20,765

Thousands of
U.S. dollars
2020$161,970
1,820
24,955$188,744③ Information about major customers
Information about major customers is not disclosed, because net sales to any customer did not exceed 10% of the consolidated net sales for the years ended March 31, 2020 and 2019.
(f) Information about impairment loss on fixed assets for each reportable segment
Information about impairment loss on long-lived assets for the years ended March 31, 2020 was as follows:

MoldingMachinery
MachineTools
Otherproducts
Adjustments
Total

Millions of yen
2020
2019
¥—
¥—
—
—
—
—
19
—
¥19
¥—

Thousands of
U.S. dollars
2020
$—
—
—
182
$182

There was no applicable matter for the years ended March 31, 2019.
(g) Information about amortization of goodwill and unamortized balance for each reportable segment
There was no amortization of goodwill for the year ended March 31, 2020 and 2019.
(h) Information about gain on negative goodwill for each reportable segment
There was no applicable matter for the years ended March 31, 2020 and 2019.

30. Related Party Transactions(a) Transactions with related parties
This disclosure has been omitted for the year ended March 31, 2020 and 2019 based on immateriality.

37

(b) Summary of financial information for significant affiliate company
During the year ended March 31, 2019, the Company’s significant affiliate is NuFlare Technology, Inc. A
summary of financial information with NuFlare Technology, Inc. for the years ended March 31, 2019 was asfollows:

Total current assets
Total non-current assets

Millions of yen
2020
2019
¥—
¥85,936—
14,171Thousands of
U.S. dollars
2020
$—
—

Total current liabilities
Total non-current liabilities——

26,643
1,113——

Total net assets—

72,351—

Net sales
Net income before income taxes
Net income———

57,32011,983
8,236

—
—
—

The Company sold all of its shares in NuFlare Technology, Inc. As a result, it is no longer an affiliatecompany for the year ended March 31, 2020.

31. Net Income and Net Assets per Share
Net income and net assets per share as of and for the years ended March 31, 2020 and 2019 were as
follows:

Net income per share
Net assets per share2020¥304.06
3,605.47

Yen

2019¥169.033,447.10

U.S. dollars
2020
$2.79
33.13

The Company executed the consolidation of shares at the ratio of 5 shares into 1 share effective from
October 1, 2018. Net assets per share and income per share are recalculated on the assumption that theconsolidation of shares was executed at the beginning of the year ended March 31, 2019.
Basic information for the calculation of net income per share was as follows:

38

Weighted-average number of shares of common stockThousands of shares
2020
2019
24,135
24,135

Net income
Net income not applicable to shareholders of common stock
Net income applicable to shareholders of common stock

Millions of yen
2020
2019
¥7,338¥4,079——¥7,338¥4,079Thousands of
U.S. dollars
2020$67,433—$67,433

Basic information for the calculation of net assets per share was as follows:

Number of shares at year-end

Thousands of shares
2020
2019
24,135
24,135

Net assets
Non-controlling interests in consolidated subsidiaries
Net assets applicable to shareholders of common stock

Millions of yen
2020
2019
¥87,018¥83,197——¥87,018¥83,197

Thousands of
U.S. dollars
2020$799,582—$799,582

32. Short-term Bank Loans and Long-term Debt
The annual interest rates applicable to the short-term bank loans outstanding as of March 31, 2020
and 2019 ranged principally from 0.51% to 0.58% and 0.49% to 0.56%, respectively. Long-term debt as ofMarch 31, 2020 and 2019 consisted of the following:
Millions of yen
2020
2019
Loans, principally from Japanese banks and insurance companies:
maturing 2023, interest 0.53% - 0.85%
Less current portion¥4,3004,300—¥4,300¥4,3004,300—¥4,300Thousands of
U.S. dollars
2020$39,511
39,511—$39,511

The aggregate annual maturities of long-term debt at March 31, 2020 were as follows:Year ending March 31
2021
2022
2023
2024
2025 and later
Total

Millions of yen
¥—
500
500
3,300
—
¥4,300Thousands of
U.S. dollars
$—
4,594
4,594
30,323—$39,511

The aggregate annual maturities of finance lease obligations at March 31, 2020 were as follows:Year ending March 31
2021
2022
2023
2024
2025 and later
Total

Millions of yen
¥32
27
20
6
4
¥92

Thousands of
U.S. dollars
$302
257
185
63
40
$846

39

33. Subsequent Event(a) Cash dividends
The following appropriation of retained earnings, which has not been reflected in the accompanying
consolidated financial statements for the year ended March 31, 2020, was approved at the meeting of theBoard of Directors held on May 27, 2020 and June 1, 2020.
Type ofsharesMeeting of the Board of
Directors held on May 27, 2020

Commonstock

Meeting of the Board of
Directors held on June 1, 2020

Common
stock

Cash
Cash
dividends
dividends
per share¥1,025¥42.50($9,425)($0.39)¥2,999 ¥124.30($27,566)($1.14)

Record date

Effective date

March 31, 2020

June 15, 2020

June 30, 2020

September 2, 2020(b) Withdrawal of the tender offer for the Company’s shares by CITYINDEX 11 Co., Ltd.
A tender offer for the Company’s shares (the “Tender Offer”) was conducted on and after January 21,
2020 by City Index Eleventh Co., Ltd. (the “Tender Offeror”) a subsidiary of Office Support K.K. The Tender Offeror made a public notice of withdrawal of the Tender Offer and submitted a notice of withdrawal of
the Tender Offer on April 2, 2020. As of the date of the announcement, the Tender Offer was withdrawn.
(c) Discontinuation of the Allotment of Share Options without Contribution
Following the approval and passage of a proposal for the Allotment Options without Contribution at theextraordinary general meeting of shareholders held on March 27, 2020 the meeting of the Board of Directors held on the same day, had decided to allot the First Share Options-A (the “Share Options”). However,
the meeting of the Board of Directors held on April 7, 2020 resolved to discontinue Share Options.
1. Details of Share Options(1) Number of Share Options
The latest total number of issued shares of the Company as of the Record Date (as defined in Section 4; hereafter the same) (excluding the number of the Company shares held by the Company).
(2) Form of allotment
Allotment to shareholders. The Share Options shall be allotted to the shareholders who are listed orrecorded in the shareholder registry on the Record Date at the rate of one Share Option per share of
the Company held by them. However, Share Options will not be allotted for the Company shares heldby the Company.
(3) Amount to be paid in for Share Options
None(4) Record Date
April 24, 2020
(5) Date on which the allotment of Share Options becomes effective
April 27, 2020
(6) Type and number of shares underlying Share Options
The type and number of shares underlying one Share Option shall be one common share of theCompany.
(7) Exercise period for Share Options
From September 1, 2020 to December 31, 2020
(8) Value of assets required for exercise Share Options① The form assets required to exercise each Share Option shall be cash, and the value thereof shallbe an amount calculated by multiplying the Exercise Price (as defined in ② below) by the number of shares to be allotted.

40

② The amount of money per common share of the Company required to exercise the Share Options(the “Exercise Price”) shall be ¥1.
(9) Conditions for exercise of Share Options① Persons who fall under any of the items (i) through (iii) below (the “Ineligible Persons”) may not
exercise the Share Options:(i) City Index Eleventh Co., Ltd. (the “Large-scale Purchaser”);(ii) Joint holder (meaning a “joint holder” defined in Article 27-23, paragraphs (5) of the Financial Instruments and Exchange Act and including a person deemed to be a joint holder pursuant to Article 27-23, paragraphs (6) of the same Act) or a specially related party (meaninga “specially related party” defined in Article 27-2, paragraph (7) of the Financial Instruments
and Exchange Act) of a Large-scale Purchaser, including Mr. Yoshiaki Murakami, Ms. Mitsue
Murakami, Ms. Aya Nomura, Ms. Rei Murakami, Mr. Yukihiro Nomura, Mr. Tatsuya Ikeda, Mr.
Hironao Fukushima, Mr. Fuminori Nakashima, Mr. Masahiro Ohmura, Mita Securities Co., Ltd.,
Reno Co., Ltd., Fortis Co., Ltd., C&I Holdings Co., Ltd., Kabushiki Kaisha Minami-Aoyama Fudosan, Office Support K.K., ATRA Co., Ltd., S-Grant Co., Ltd., City Index Holdings Co., Ltd.,and City Index Hospitality Co., Ltd.; or(iii) A person who the Company’s board of directors reasonably determines falls under either ofthe following, taking into account the Independent Committee’s recommendations:(a) A person who acquires or succeeds to a Share Option from any of the persons set forth in(i) above through to and including (iii) without the Company’s approval;(b) A “related party” of any of the persons set forth in (i) above through to and including (iii).
A “related party” means investment banks, securities corporations, and other financial institutions that have concluded a financial advisory agreement with any of the persons set
forth in (i) above through to and including (iii), other persons who share common substantial interests with those persons, tender offer agents, lawyers, accountants, other advisors,or persons who are substantially controlled by those persons or who act jointly or cooperatively with those persons. In deciding whether a partnership or other fund falls undera “related party,” the fund manager’s substantive identity and other factors shall be taken
into account.
Aholderof Share Options may exercise its Share Options only if the Company determines that②
the holder is not an Ineligible Person, such as where the holder provides the Company with thefollowing: a document containing its representations and warranties regarding the holder not
being an Ineligible Person as listed in ① above (if the Share Options are exercised on behalf of athird party, including the third party not being an Ineligible Person in ① above), indemnifications
and other matters designated by the Company; materials that demonstrate the satisfaction of
conditions reasonably required by the Company; and a document required by any laws, regulations, or the like.
③ If, pursuant to applicable securities laws and other laws, regulations and the like of foreign countries, it is necessary to implement prescribed procedures or satisfy prescribed conditions withrespect to exercise of the Share Options by any person residing in the jurisdiction of these laws,
regulations and the like, the person residing in that jurisdiction may exercise the Share Options
only if the Company deems that all of these procedures and conditions have been implemented
or satisfied. Meanwhile, even if implementation or satisfaction of the above procedures and conditions by the Company would enable a person residing in that jurisdiction to exercise the Share
Options, the Company will not be obligated to implement or satisfy them.
④ The confirmation regarding the satisfaction of the conditions specified in ③ above shall be pursuant to the procedures to be prescribed by the Company’s board of directors, which will be similar
to those set forth in ② above.
⑤ No Stock Option may be partially exercised.

41

(10) Limitation on transfer of Share Options
Any transfer of the Share Options will require the approval of the Company’s board of directors.
(11) Acquisition of Share Options① If there is a resolution of the Company’s board of directors on or after April 28, 2020, then on theacquisition date designated by the Company’s board of directors, the Company may acquire allof the Share Options held by the holder of the Share Options (except the Company) that could
be exercised in accordance with Section 9 ① and ② above, but that have not been exercised asof such acquisition date (hereinafter referred to as “Exercisable Share Options” in ② below) by
providing, as consideration therefor, common shares of the Company in the number equivalent
to the integer portion of the product of: (a) the number of Share Options to be acquired; and (b)the number of shares underlying one Share Option.
② If there is a resolution of the Company’s board of directors on or after April 28, 2020, then on theacquisition date designated by the Company’s board of directors, the Company may acquire theShare Options other than the Exercisable Share Options, held by the holder of all of the Share
Options (except the Company) that have not been exercised as of such acquisition date. It may
do this by providing, as a consideration therefor, with share options of the Company, the exerciseof which by Ineligible Persons is subject to certain restrictions (i.e., subject to the contents described in the Exhibit), in the same number as the number of the Share Options to be acquired.
At
any time not later than August 31, 2020, if the Company’s board of directors considers it ap③
propriate for the Company to acquire the Share Options, the Company may acquire all the Share
Options without consideration on a date separately designated by the Company’s board of directors.
④ The satisfaction of the conditions regarding acquisition of the Share Options pursuant to ① and② above shall be confirmed by procedures similar to those set forth in Section 9 ②.
(12) Stated capital and capital reserves to be increased in conjunction with the issuance of shares by exercising Share Options
The amount of stated capital to be increased in conjunction with the issuance of shares by exercising Share Options shall be the product of the maximum amount of increase in stated capital calculated in accordance with Article 17 of the Rules of Corporate Accounting and 0.5, and if such calculated
amount includes a fraction less than one yen, such fraction shall be rounded up. The amount of capitalreserves to be increased shall be the difference in the maximum amount of increase in stated capital by
the amount of stated capital to be increased.
(13) Method for requesting the exercise of the Share Options① If the Share Options are to be exercised, the matters necessary for the request to exercise theShare Options shall be notified to the place accepting the request, set forth in Section 15, during
the exercise period of the Share Options set forth in Section 7.
② If the Share Options are to be exercised, in addition to the notice for the request to exercise theShare Options provided in the preceding item, the total amount of assets to be contributed at theexercise of the Share Options shall be paid in cash to the account designated by the Company atthe place handling payments, set forth in Section 16.
③ The request for the exercise of Share Options shall become effective on the date when all thematters necessary for the request have been notified to the place accepting the request, set forthin Section 15, and the total amount of assets to be contributed at the exercise of the Share Options have been paid in to the account set forth in the preceding item.
(14) Non-issuance of share option certificates
The Company will not issue share option certificates for the Share Options.
(15) Place of accepting requests for exercise of Share Options
Management Strategy Department of the Company(16) Place of handling payments

42

Sumitomo Mitsui Trust Bank, Limited(17) Others
Other than as set forth above, the decision-making for necessary matters regarding the issuance of
the Share Options, and any other acts will be entrusted to the representative director president of theCompany
2. Reason for discontinuation
The Company had planned from the outset to discontinue the allotment of Share Options in the eventthat the tender offer for the Company’s shares (the “Tender Offer”) by City Index Eleventh Co., Ltd. (the“Tender Offeror”) a subsidiary of Office Support K.K. is withdrawn if the Company determines that there
is no longer a need to trigger a countermeasure based on the guidelines for responding to a tender offer
for the Company’s shares by Office Support K.K. or its subsidiaries, respecting the opinion of the Independent Committee to the maximum extent possible.
Subsequently, following the withdrawal of the Tender Offer by the Tender Offeror on April 2, 2020, theCompany carefully considered whether or not to discontinue the allotment of Share Options. The Board of
Directors received a recommendation from the Independent Committee on April 7, 2020 that the discontinuation of the allotment of Share Options is appropriate. As a result of careful consideration in light ofsuch recommendation, at the meeting of the Board of Directors on the same day resolved to discontinue
the allotment of Share Options.
As a result of the discontinuation of the allotment of Share Options, the Company has withdrawn the
securities notice for the offer of Share Options filed on March 27, 2020 and has not made the public noticeof record date that was scheduled for April 8, 2020.
(d) Commitment Line Agreement
The Company entered into a syndicated commitment line increase agreement on May 1, 2020 as follows:
1. Purpose of the Agreement
To ensure that it can safely and flexibly meet any demand for funds.
2. Overview of the Commitment Line Agreement① Participating Financial Institutions: Sumitomo Mitsui Banking Corporation, The Shizuoka Bank, Ltd.,
Sumitomo Mitsui Trust Bank, Limited¥20,000 million ($183,773 thousand)② Composition amount:(increase of ¥10,000 million ($91,886 thousand))May 1, 2020
③ Date of Contract Amendment:
March 31, 2021
④ Settlement date:Unsecured⑤ Guaranteed assets:(e) Adoption of Remuneration for Granting Restricted Shares
At the meeting of the Board of Directors held on June 1, 2020 resolved to adopt new share-based remuneration plans (the “Plan”) that enlist two types of shares with transfer and other restrictions for theCompany’s Directors (excluding Directors who are Audit and Supervisory Committee Members and Outside Directors). The plan was proposed at the 97th annual general meeting of shareholders held on June29, 2020 and approved at the meeting.
1. Reasons for adopting the Plan
The Company has announced the “New ‘Shibaura Machine’ Long-term Vision 2030” as the long-term
strategy to achieve both the resolving of social issues and the enhancing of corporate value through responding to megatrends facing the global manufacturing industry with outstanding technological innova-

43

tions, and “Management Reform Plan” as the medium-term management plan. The Plan entails granting
share-based remuneration to the Eligible Directors with the objectives of giving them an incentive toachieve the performance targets stated in the “Management Reform Plan” and make continuous improvements to the corporate value through further strengthening the link between remuneration for Eligible Directors and the medium- to long-term performance of the Company and promoting shared values between
the Eligible Directors and shareholders in accordance with the basic policy set forth as follows:① Provide sound incentive to Directors by furnishing an appropriate mix of fixed remuneration composed of basic remuneration and variable remuneration composed of (i) share-based remuneration
contingent on continuous service, (ii) bonus in cash linked to short-term performance, and (iii)
share-based remuneration linked to medium- to long-term performance, underpinned by the objectives of transforming the Company into a highly profitable enterprise and achieving sustainablegrowth, with the aim of increasing the Company’s corporate value over the medium to long term
② Strongly motivate Directors to achieve the performance targets by linking the Company’s medium-term management plan, including the Management Reform Plan, and share-based remuneration③ Share the benefits and risks of share price fluctuations with the shareholders by increasing the ratioof share-based remuneration and promoting the Directors’ shareholding
The share-based remuneration granted under the Plan further promotes a continuous sharing of value
with shareholders under a system that restricts the transfer of shares until retirement of the Director.
2. Overview of the Plan
Under the Plan, the Company shall, based on the resolution of the Board of Directors, grant Eligible
Directors with monetary remuneration claims for the allocation of restricted shares, and, by having the
Eligible Directors make contribution in kind to the Company using all the monetary remuneration claims
as contributed assets, shall issue or dispose of its common shares to the Eligible Directors and allow themto hold such shares. The Plan consists of two types of share-based remuneration plan; “continuous service-type restricted share-based remuneration,” which requires the Eligible Director’s continuous service
for a certain period as the Company’s Director in order for the transfer restriction to be lifted, and the“performance-linked and restricted share-based remuneration,” in which the number of restricted shares
to be granted varies in accordance with the achievement level of the performance targets established inadvance by the Board of Directors. As a general rule, the date on which transfer restriction is lifted andthe retirement date of a respective Director are one and the same under either plan.

44

Independent Auditor's Report

45

46

47

Board Members

Directors Chairman and Chief Executive Officer		 Yukio Iimura
President and Chief Operating Officer
		 Shigetomo Sakamoto
Director and Executive Operating Officer
		 Akiyoshi Kobayashi
		 Hiroaki Ota
Outside Directors
		 Kiyoshi Sato
		 Seigo Iwasaki
		 Hiroshi Inoue
		 Kazumine Terawaki
		 Chisa Hayakawa
Director / Audit and Supervisory Committee Members
		 Hiroshi Takahashi
Outside Directors / Audit and Supervisory Committee Members
		 Yoshihiro Ogura
		 Yutaka Usami

48