BUSINESS REPORTFOR THE 83RD FISCAL TERM

FROM APRIL 1, 2018
TO MARCH 31, 2019

10-1, Higashikotari 1-chome, Nagaokakyo-shi, Kyoto, Japan
Murata Manufacturing Co., Ltd.
Tsuneo Murata
Chairman of the Board,
President and Representative Director

Business Report
From April 1, 2018
to March 31, 2019

1. Matters Concerning Status of the Company Group(1) Main business areas
The Company Group is an electronic component manufacturer that primarily engages in manufacturing and sales ofelectronic components and related products primarily of ceramic material, Components (such as capacitors andpiezoelectric products) and Modules (communications modules and power supplies), and conducts vertically integrated
technological development and manufacturing, from inorganic and organic chemical materials, to ceramics andelectronic components. Through the creation of original products that utilize a technological base featuring uniquelydeveloped and accumulated materials development, process development, product design, manufacturing technology,
and software, analysis, and evaluation to support the above, the Company Group conducts sales for various electronic
components that are used in products such as AV devices, communications devices, computers and peripheral devices,automotive electronics, and home electric devices.

(2) Business progress and results
1) Business conditions
For the fiscal year under review, in the global economic environment, the U.S. economy showed strong momentum
due to continued growth in employment and private income. On the other hand, China suffered from the clear impact oftrade frictions with the U.S., while political uncertainty in Europe coincided with the weakening of the region’s
economy, slowing down the world economy more strongly towards the end of the fiscal year.
The electronics market, of which the Company Group is a part, generated growth in demand for electronic components
used for car electronics. Products for car electronics benefited from an increase in the number of electric components
installed in vehicles due to improvements in vehicle environmental friendliness and safety. Until the third quarter there
was growth in demand, mainly for component products used in various applications. For example, the increasing
functional sophistication of smartphones and PCs led to growth in the number of components used per end product. In
the fourth quarter, however, demand for components fell slightly partly because of reduced smartphone sales.
By focusing on promising markets, the Company Group increased net sales by 14.8% year-on-year to 1,575,026
million yen in the fiscal year under review. This growth was achieved due not only to the drastic growth of multilayer
ceramic capacitors (MLCCs), Murata’s core product group, but to the consolidation of the lithium-ion secondary
battery business, whose acquisition process was completed in September 2017.
Operating income was 266,807 million yen, up 63.4%, income before income taxes was 267,316 million yen, up
59.3%, and net income was 206,930 million yen, up 41.6% from the fiscal year ended March 31, 2018. Negative
factors such as production-related costs increased to meet demand and the impairment loss related to property, plant andequipment were more than canceled by the effects of a production increase as well as cost reduction initiatives, lower
depreciation and amortization, and continued launch of new products.

1

Key financial results

Net sales

1,575,026

million yen

YoY+14.8%

Operating income

266,807

million yen

YoY+63.4%

Income before income taxes

267,316

million yen

YoY+59.3%Net income attributable to the Company

206,930

million yen

YoY+41.6%2

2) Sales by product category<Components>
Orders and Backlogs

1,075,924 million yen

Net sales

1,105,010 million yen

YoY+19.6%[Capacitors](Main products: MLCCs, etc.)
Orders and Backlogs
550,421 million yen
Net sales
574,230 million yen
YoY+27.7%For the fiscal year under review, sales of MLCCs, the main product in thiscategory, grew significantly as demand increased in a broad range ofapplications. Products for car electronics were successful due to progressin vehicle electrification. In addition, there was strong demand for products
used in smartphones produced in Greater China, and computers andperipherals.
As a result, overall net sales increased by 27.7% year-on-year to 574,230
million yen.
<Net sales>(Millions of yen)

[Piezoelectric Components](Main products: SAW filters, ceramic resonators, piezoelectric sensors, and ceramic filters, etc.)
Orders and Backlogs
135,578 million yen
Net sales
138,586 million yen
YoY
+8.8%

For the fiscal year under review, SAW (surface acoustic wave) filters
suffered reduced sales due to the sales downturn and continued pricereductions in high-end products for smartphones.
As a result, overall net sales decreased by 8.8% year-on-year to 138,586
million yen.

<Net sales>

3(Millions of yen)

[Other Components](Main products: Inductors (coils), EMI (electro-magnetic interference) suppression filters, connectors, sensors,thermistors, and rechargeable lithium-ion batteries, etc.)
Orders and Backlogs
389,925 million yen
Net sales
392,194 million yen
YoY+21.7%For the fiscal year under review, this segment achieved substantial sales
growth. While RF coils for high-end smartphones faced a sales downturn,
MEMS sensors for car electronics grew. A further contribution came fromthe inclusion of the sales achieved by the lithium-ion secondary battery
business, following the completion of its acquisition process in September
2017.
As a result, overall net sales increased by 21.7% year-on-year to 392,194
million yen.
<Net sales>(Millions of yen)

<Modules>Orders and Backlogs

472,569 million yen

Net sales

466,699 million yen

YoY

+5.1%

[Communication Modules](Main products: Short-range wireless communication modules, circuit modules, RF sub modules, multilayered resin
substrate, and multilayer ceramic devices, etc.)
Orders and Backlogs
431,688 million yen
Net sales
425,486 million yen
YoY
+7.7%

For the fiscal year under review, multilayered resin substrates grew
substantially due to use in new high-end smartphones. Sales in RF sub
modules also increased.
As a result, overall net sales increased by 7.7% year-on-year to 425,486
million yen.

<Net sales>

4(Millions of yen)

[Power Supplies and Other Modules](Main products: Power supplies, etc.)
Orders and Backlogs
40,881 million yen
Net sales
41,213 million yen
YoY+15.6%For the fiscal year under review, power supplies including officeautomation equipment suffered a decline in sales.
As a result, overall net sales decreased by 15.6% year-on-year to 41,213
million yen.

<Net sales>

5(Millions of yen)(3) Issues to be addressed
In the automotive market where the shift towards EVs and the development of autonomous vehicles is accelerating,demand for electronic components is expected to expand in the medium to long term. In addition, the growth in thenumber of consumer electronic devices, mainly smartphones, is slowing, but the evolution and dissemination ofcommunication technology by 5G accelerates the realization of IoT society, and for the Company Group, based on thetelecommunications market, business opportunities will continue to spread further. Along with it, the customer base
expands further, and the understanding of diversifying customer needs and accurate demand forecasting are becoming
more difficult.
In order to strengthen the Company Group’s marketing system and accurately capture changes in customer needs andto follow the intense demand fluctuations centered on the consumer market, we will strive to build a supply system thatseamlessly links sales plans, production plans and procurement plans. In addition, capital expenditures are increasing tomeet the growing demand for electronic components, and to increase capital efficiency is a key issue. We will launchnew, high value-added products earlier than their competitors and contribute to the trend of reduced size and thicknessof electronic devices, add more manifold functions, and also create new business models and customer value.
In regard to corporate social responsibility, taking into account a set of 17 goals of UN’s “Sustainable Development
Goals: SDGs,” the Company Group will develop its business with equal emphasis on environmental preservation (E),social responsibility (S), and corporate governance (G).
The Company Group defines corporate governance as one of the most important principles of management. While
taking all stakeholders into consideration, we commit ourselves to always keeping an optimal management structure inplace to ensure the sound growth and development of the Company Group.

6Reference Mid-term Business Plan
Mid-term Direction 2021 (fiscals 2019 to 2021)
The Company Group has rapidly expanded the scale of the company for the last several years through businessexpansion in the communications market and a series of M&As. The Company Group’s business opportunities willfurther grow thanks to digitization of all types of “objects.” For the next three years, we will strengthen our businessand management foundation, including systems and organization, in accordance with the expanding scale of thecompany, and aim for healthy growth so that we can provide value that satisfies customers by seizing expanding
business opportunities and allowing each and every employee to feel rewarded as they continue to grow.
Murata focuses on strengthening “Business & Management Foundation” in order to seize expanding business
opportunities and realize Healthy & Sustainable Growth.
3 corporate-wide issues (3 pillars) for Healthy & Sustainable Growth.
“Resolution of issues and what we aim for”
Implementation of portfolio management
Murata’s portfolio consists of “global No.1 products” which are the first choice of customers, and Murata creates
further customer value by designing or proposing combinations of individual technologies and products.
Establishment of advanced supply system & exponential productivity enhancement
While meeting QCDS requirements to satisfy customers, Murata has achieved both exponential enhancement of capitaland labor productivity and a stable supply system that responds to changes in demand.
Harmony among people, organization, and society
Murata is a company trusted by society and one that responds to changing business opportunities through an evolving
structure of work and organization in accordance with growth of each and every employee and business.

7(4) Status of capital expenditures
During the fiscal year under review, the Company Group had capital expenditures totaling 291,581 million yen.
Primary components were 200,910 million yen in reinforcement and rationalization of manufacturing facilities of theCompany Group, 39,827 million yen in the acquisition of land and buildings, and 14,890 million yen in reinforcementof research and development facilities.
No eliminations or sales that had a significant effect on manufacturing capabilities were carried out.

(5) Status of property and profits
1) Status of property and profits of the Company Group
80th Fiscal Term
From April 1, 2015
to March 31, 2016
Year-onAmountyear change

81st Fiscal Term
From April 1, 2016
to March 31, 2017
Year-onAmountyear change

82nd Fiscal Term
From April 1, 2017
to March 31, 2018
Year-onAmountyear change(Millions of yen, %)83rd Fiscal Term
From April 1, 2018
to March 31, 2019Year-on-year
AmountchangeNet sales
Income before
Income taxes
Net income attributable
to Murata Corporation

1,210,841

116.0

1,135,524

93.8

1,371,842

120.8

1,575,026

114.8

279,173117.1

200,41871.8

167,801

83.7

267,316159.3

203,776

121.5

156,060

76.6

146,086

93.6

206,930

141.6

Total assets

1,517,784

106.0

1,634,999

107.7

1,797,013

109.9

2,048,893

114.0

Shareholders’ equity
Basic earnings attributable
to Murata Corporation per
share

1,229,159
Yen

109.4

1,354,819
Yen

110.2

1,456,600
Yen

107.5

1,603,976
Yen

110.1

-

228.62-323.45

Shareholders’ equity ratio

81.0

-

81.1

-

78.3

Term
Item

320.85-244.62-82.9%(Notes)

1.
2.

3.

4.

%

%

%

The Company’s consolidated financial statements are prepared in conformity with accounting
principles generally accepted in the United States of America.
The basic earnings attributable to Murata Corporation per share are calculated based on“Accounting Standards Codification (ASC) 260: Earnings Per Share” published by the Financial
Accounting Standards Board (FASB) of the United States of America.
The Company implemented a three-for-one common stock split, effective April 1, 2019. Basicearnings attributable to Murata Corporation per share were calculated on the assumption that therelevant stock had been implemented at the beginning of the 80th Fiscal Term.
Amounts of less than one million yen are rounded to the nearest million yen.

8-2) Status of property and profits of the Company
Term

Item

80th Fiscal Term
From April 1, 2015
to March 31, 2016
Year-onAmountyear change

81st Fiscal Term
From April 1, 2016
to March 31, 2017
Year-on-year
Amountchange82nd Fiscal Term
From April 1, 2017
to March 31, 2018
Year-onAmountyear change(Millions of yen, %)83rd Fiscal Term
From April 1, 2018
to March 31, 2019Year-onAmountyear change

Net sales

889,121118.1

831,136

93.5

948,594114.1

1,053,105

111.0

Ordinary income

95,73279.2

73,13476.4

41,19356.3

63,623154.5

Net income

80,72181.8

75,754

93.8

48,09563.5

67,005

139.3

Total assets

840,658

98.3

942,873112.2 1,015,877

107.7

1,053,270

103.7

Net assets

533,022Yen
127.10
%
63.4

106.7

580,270
Yen
118.74
%
61.5

108.9

101.3

595,827
Yen
104.73
%
56.6

101.3

Basic earnings per share
Shareholders’ equity ratio(Notes)

1.

2.

-

-

587,945
Yen
75.27
%
57.9

-

-

The Company implemented a three-for-one common stock split, effective April 1, 2019. Basicearnings per share were calculated on the assumption that the relevant stock had been implemented
at the beginning of the 80th Fiscal Term.
Amounts of less than one million yen are rounded down to the nearest million yen.

(6) Primary sites and status of significant subsidiaries of the Company
1) The Company (As of March 31, 2019)
Name

Location

Head Office

Nagaokakyo-shi, Kyoto

Tokyo Branch

Shibuya-ku, Tokyo

Yokaichi Plant

Higashiomi-shi, Shiga

Yasu Division

Yasu-shi, Shiga

Yokohama Technical Center

Yokohama-shi, Kanagawa

Nagaoka Plant

Nagaokakyo-shi, Kyoto

2) Subsidiaries (As of March 31, 2019)
Company name
Fukui Murata ManufacturingCo., Ltd.
Izumo Murata ManufacturingCo., Ltd.
Toyama Murata ManufacturingCo., Ltd.
Kanazawa Murata ManufacturingCo., Ltd.
Okayama Murata ManufacturingCo., Ltd.
Tohoku Murata ManufacturingCo., Ltd.
Murata Electronics North
America, Inc.
Murata Company Limited

Share ofvoting rights held by
the Company

CapitalMillions of yen
300

100

430

100

450

100

480

100

480

100

300
Thousands of US$
14,406100
100

Thousands of HK$
1,900,000

100
9Head officelocation%
Echizen-shi,
Manufacturing of components
Fukui
Izumo-shi,
Manufacturing of components
ShimaneManufacturing of components and Toyama-shi,
modulesToyamaManufacturing of components and Hakusan-shi,
modules
Ishikawa
Manufacturing of components and Setouchi-shi,
modulesOkayamaManufacturing and development of Koriyama-shi,components
Fukushima
Sales of products of the Company United States ofand its subsidiaries and associates America
People’s
Sales of products of the Company
Republic ofand its subsidiaries and associates
China
Primary business areas

Company name
Murata (China) Investment
Co., Ltd.
Murata Electronics Trading(Shanghai) Co., Ltd.
Wuxi Murata Electronics
Co., Ltd.
Shenzhen Murata Technology
Co., Ltd.
Murata Energy Device Wuxi
Co., Ltd.
Murata Electronics Europe B.V.
Korea Murata Electronics
Company, Limited
Philippine Manufacturing Co. of
Murata, Inc.
Murata Electronics Singapore(Pte.) Ltd.

Murata Energy Device Singapore
Pte. Ltd.

(Note)

Share ofvoting rights held by
the Company

CapitalThousands of US$
145,000
Thousands of US$
23,400Thousands of US$
312,000
Thousands of US$
58,100Thousands of US$
366,220
Thousands of EURO245,000
Thousands of WON
1,500,000
Thousands of PHP
7,700,000

Thousands of SD
4,000
Thousands of SD
0
Thousands of US$
162,000

Primary business areas

Head officelocation

Marketing and engineering
People’s
activities in Greater China, General
Republic ofmanagement of Chinese sales
China
100
companies
People’s
Sales of products of the Company
Republic ofand its subsidiaries and associates
100 (Note)
China
People’s
Manufacturing of components
Republic ofChina
100 (Note)
People’s
Manufacturing of modules
Republic ofChina
100 (Note)
People’s
Manufacturing of components
Republic ofChina
100 (Note)
Sales of products of the Company Kingdom of the100
and its subsidiaries and associates Netherlands
Sales of products of the Company Republic of
100
and its subsidiaries and associates Korea
Republic of the
Manufacturing of components
100
Philippines
Manufacturing of components,
Sales of products of the Company
and its subsidiaries and associates, Singapore
General management of ASEAN
100
sales companies
Manufacturing of components

Singapore

100

Ratio includes indirect holdings.

3) Progress and results of business combinations
1. In April 2018, the Company merged with subsidiary Murata Active Partner Co., Ltd. in an absorption-typemerger.
2. In April 2019, the Company merged with subsidiary Murata Electronics Co., Ltd. in an absorption-typemerger.
3. In April 2019, subsidiary Murata Electronics Singapore (Pte.) Ltd. merged with subsidiary Murata Energy
Device Singapore Pte. Ltd. in an absorption-type merger.
4. The number of consolidated subsidiaries is 91, including 18 significant subsidiaries above. The results ofbusiness combinations are as stated in “(2) Business progress and results” in “1. Matters Concerning Status of
the Company Group.”10(7) Employees
1) Employees of the Company Group
Number of employees
As of March 31, 2019Year-on-year change

Persons

Persons

77,571(Note)

2,245

The number of employees is the number of persons in regular employment at the Company (excluding
persons seconded outside of the Company Group), and does not include seasonal, part-time, or
temporary employees (1,894 persons).

2) Employees of the Company
Number of employees
As of March 31, 2019

(Note)

Year-on-year change

Average age

Average length of service

Persons

Persons

Years old

8,783

398

40.0

Years
14.1

The number of employees is the number of persons in regular employment at the Company (excluding
persons seconded to subsidiaries, etc., but including persons seconded from subsidiaries, etc.), and does
not include seasonal, part-time, or temporary employees (216 persons).

(8) Lenders (As of March 31, 2019)
Lenders

Loan balance
Millions of yen

Mizuho Bank, Ltd.

7,000

Sumitomo Mitsui Banking Corporation

7,000

The Bank of Kyoto, Ltd.

4,650

THE SHIGA BANK, LTD.

4,650

Other

501
Total

23,801(9) Funds raised
During the fiscal year under review, the Company Group raised total funds of 100,000 million yen from the issuance ofcorporate bonds, as follows.
Issue dateCompany name

Details

January 24, 2019

Murata Manufacturing Co., Ltd.

January 24, 2019

Murata Manufacturing Co., Ltd.

11

1st Unsecured
Straight Corporate Bonds
2nd Unsecured
Straight Corporate Bonds

Issue amount
40,000 million yen
60,000 million yen

2. Matters Concerning Stock (As of March 31, 2019)(1) Total number of authorized shares

581,000,000 shares (Number of shares per unit: 100 shares)(2) Total number of issued shares

225,271,427 shares (Includes 12,014,752 shares of treasury stock)(3) Number of shareholders

62,402 persons(4) Major shareholders (Top 10)
Number of shares held(Thousands of shares)

Shareholder name

Ownership ratio (%)

1

Japan Trustee Services Bank, Ltd. (Trust Account)

14,591

6.8

2

The Master Trust Bank of Japan, Ltd. (Trust Account)

11,970

5.6

3

JPMorgan Chase Bank 380055

9,335

4.4

4

Nippon Life Insurance Company

7,361

3.5

5

SSBTC CLIENT OMNIBUS ACCOUNT

5,411

2.5

6

The Bank of Kyoto, Ltd.

5,260

2.5

7

Meiji Yasuda Life Insurance Company

5,240

2.5

8

Japan Trustee Services Bank, Ltd. (Trust Account 5)

4,117

1.9

9

THE SHIGA BANK, LTD.

3,551

1.7

10

Mizuho Bank, Ltd.

3,000

1.4

(Note)

Ownership ratio is calculated after subtracting treasury stock (12,014 thousand shares) from the total
number of issued shares.

Shareholding by shareholder category(5) Other significant matters concerning stock
The Company implemented a three-for-one common stock split, effective April 1, 2019.
In line with the above, the total number of authorized shares and total number of issued shares increased to
1,743,000,000 shares and 675,814,281 shares, respectively.

12

3. Matters Concerning Corporate Officers of the Company(1) Members of the Board of Directors (As of March 31, 2019)
Name
Tsuneo Murata
Yoshitaka Fujita
Toru Inoue

Positions and responsibilities

Significant concurrent positions* Chairman of the Board and President
Vice Chairman of the Board* Member of the Board of Directors
Senior Executive Vice President
Director of Components Business Unit

Norio Nakajima

The Murata Science Foundation

Chairman

Murata (China) Investment Co., Ltd.

President

Fukui Murata Manufacturing Co., Ltd.

Toyama Murata Manufacturing Co.,Ltd.

President and Representative
Director
President and Representative
Director
President and Representative
Director

Kanazawa Murata ManufacturingCo., Ltd.
Okayama Murata ManufacturingCo., Ltd.
Tohoku Murata Manufacturing Co.,Ltd.

President and Representative
Director
President and Representative
Director
President and Representative
Director

Hitachi, Ltd.

Outside Director

HOYA CORPORATION

Outside Director

Bando Chemical Industries, Ltd.

Outside Director

Izumo Murata Manufacturing Co., Ltd.

* Member of the Board of Directors
Senior Executive Vice President
Director of Module Business Unit

Hiroshi Iwatsubo

Member of the Board of Directors
Executive Vice President
Director of Corporate Technology & Business
Development Unit

Yoshito Takemura

Member of the Board of Directors
Executive Vice President
Director of Corporate Planning & Administration
Unit

Hiroaki Yoshihara

Member of the Board of Directors

Takashi ShigematsuMember of the Board of Directors

Yoshiro Ozawa

Member of the Board of Directors
Audit and Supervisory Committee Member(Standing)

Hiroshi Ueno

Member of the Board of Directors
Audit and Supervisory Committee Member

Osaka Shinkin Bank

Part-time Director

Hyo Kambayashi

Member of the Board of Directors
Audit and Supervisory Committee Member

Protiviti LLC

Chairman and Senior
Managing Director
ChairmanJapan Internal Control Research
Association
Sojitz Corporation
Yuko Yasuda(Notes)Member of the Board of Directors
Audit and Supervisory Committee Member

Russell Reynolds Associates Japan
Inc.
Showa Shell Sekiyu K. K.

Outside Corporate Auditor
Managing Director
Outside Director

1. “*” indicates Representative Director.
2. Members of the Board of Directors Messrs. Hiroaki Yoshihara and Takashi Shigematsu, and Members of
the Board of Directors and Audit and Supervisory Committee Members Messrs. Hiroshi Ueno and Hyo
Kambayashi and Ms. Yuko Yasuda are Outside Directors as stipulated by Article 2, Paragraph 15 of theCompanies Act.
3. Member of the Board of Directors and Audit and Supervisory Committee Member Mr. Yoshiro Ozawa has
experience in finance and accounting operations at the Company, and possesses adequate insight into thefields of finance and accounting.
Member of the Board of Directors and Audit and Supervisory Committee Member Mr. Hiroshi Ueno has
13experience in important positions at the Ministry of Finance and the National Tax Agency, and possesses
adequate insight into the fields of finance and accounting.
Member of the Board of Directors and Audit and Supervisory Committee Member Mr. Hyo Kambayashi
is a certified public accountant, and possesses adequate insight into the fields of finance and accounting.
4. Member of the Board of Directors and Audit and Supervisory Committee Member Mr. Yoshiro Ozawa is aStanding Audit and Supervisory Committee Member.
The Company designates a Standing Audit and Supervisory Committee Member to improve theeffectiveness of audits and supervision of the Audit and Supervisory Committee through collecting
information by attending important internal meetings on a daily basis and deep cooperation with the
Independent Auditor and Internal Audit Department, etc.
5. There are no special interests between the Company Group and companies, etc. at which Members of theBoard of Directors Messrs. Hiroaki Yoshihara and Takashi Shigematsu, and Members of the Board of
Directors and Audit and Supervisory Committee Members Messrs. Hiroshi Ueno and Hyo Kambayashi
and Ms. Yuko Yasuda hold concurrent positions.
6. The Company has designated Members of the Board of Directors Messrs. Hiroaki Yoshihara and Takashi
Shigematsu, and Members of the Board of Directors and Audit and Supervisory Committee Members
Messrs. Hiroshi Ueno and Hyo Kambayashi and Ms. Yuko Yasuda as Independent Directors/Auditors as
specified in the regulations of the Tokyo Stock Exchange and notified the exchange accordingly.
7. The Company has a total of 24 Vice Presidents. Aside from Members of the Board of Directors above that
hold concurrent positions as Vice Presidents, the Company has 20 other Vice Presidents.
8. Changes in Members of the Board of Directors during the fiscal year under review are as follows.
At the conclusion of the 82nd Ordinary General Meeting of Shareholders held on June 28, 2018, Membersof the Board of Directors and Audit and Supervisory Committee Members Messrs. Junichi Tanaka, Hiroaki
Yoshihara, and Masakazu Toyoda retired from their positions owing to the expiration of their terms ofoffice.
At the 82nd Ordinary General Meeting of Shareholders held on June 28, 2018, Mr. Hiroaki Yoshihara was
appointed as Member of the Board of Directors, and Messrs. Yoshiro Ozawa and Hyo Kambayashi and
Ms. Yuko Yasuda were each newly elected and appointed as Members of the Board of Directors and Audit
and Supervisory Committee Members.
9. Changes in significant concurrent positions of Members of the Board of Directors during the fiscal year
under review are as follows.
Member of the Board of Directors Mr. Takashi Shigematsu retired from his position as Chairman and
Representative Director of DENSO TEN Limited on June 22, 2018.
Member of the Board of Directors Mr. Hiroaki Yoshihara was appointed as Outside Director of HOYACORPORATION on June 21, 2018.
Member of the Board of Directors and Audit and Supervisory Committee Member Mr. Hiroshi Ueno was
appointed Part-time Director of Osaka Shinkin Bank on June 18, 2018.
10. After the final day of the fiscal year under review, the following changes occurred to the significant
concurrent positions of Members of the Board of Directors.
In line with the business integration of Idemitsu Kosan Co., Ltd. and Showa Shell Sekiyu K. K., effective
April 1, 2019, Member of the Board of Directors and Audit and Supervisory Committee Member Ms.
Yuko Yasuda retired from her position as Outside Director of Showa Shell Sekiyu K. K. on March 31,
2019, and was appointed as Outside Director of Idemitsu Kosan Co., Ltd. on April 1, 2019.

14

(2) Summary of liability limitation agreements
The Company has entered into liability limitation agreements with Members of the Board of Directors (excluding those
who are the executive officers) to restrict liabilities for damages as stipulated by Article 423, Paragraph 1 of theCompanies Act based on the provisions of Article 427, Paragraph 1 of the Companies Act. The liability limit under these
agreements is the minimum liability amount stipulated in Article 425, Paragraph 1 of the Companies Act.
(3) Compensation, etc., of Members of the Board of Directors and Audit and Supervisory Committee Members
Category

Persons

Members of the Board of Directors (excluding those who
are Audit and Supervisory Committee Members)

Persons

Amount ofcompensation, etc.

8Millions of yen
426

Members of the Board of Directors who are Audit andSupervisory Committee Members

7

73

Total

15

500

(Notes) 1. The above number includes three Members of the Board of Directors who are Audit andSupervisory Committee Members who retired during the fiscal year ended March 31, 2019.
2. Out of the total shown above, total compensation, etc., provided to six Outside Directors, is 70
million yen.
3. The total number of persons receiving compensation is cumulative. The actual number of
persons eligible for compensation is 14.
4. Of the above, the cumulative total number of Outside Directors is seven, and the actual
number of persons eligible for compensation is six.
5. Included in the above are restricted share remuneration (72 million yen for six Members of theBoard of Directors, excluding Members of the Board of Directors who are Audit andSupervisory Committee Members, and Outside Directors) for the fiscal year under review.
6. The maximum amount of compensation (per annum) is 700 million yen (resolved at theOrdinary General Meeting of Shareholders in June 2016) for Members of the Board of
Directors (excluding those who are Audit and Supervisory Committee Members). However,this does not include employee compensation and bonuses provided to Members of the Boardof Directors concurrently serving as Vice Presidents. The maximum amount of compensation(per annum) for the restricted share remuneration is 300 million yen (resolved at the Ordinary
General Meeting of Shareholders in June 2017).
7. The maximum amount of compensation (per annum) is 100 million yen for Members of theBoard of Directors who are Audit and Supervisory Committee Members (resolved at theOrdinary General Meeting of Shareholders in June 2016).

15

[Policy on Member of the Board of Directors Remuneration]
To improve corporate governance and to enhance objectivity and transparency, for the decision making process formatters related to the remuneration of Members of the Board of Directors, the Company has established a Remuneration
Advisory Committee, consisting of four (4) Members of the Board of Directors of which two (2) are Outside Directors,
and the decision is made at the Board of Directors meeting upon receiving report from that committee.
With respect to remuneration for Members of the Board of Directors, the Company makes it a basic policy to provide asystem and level of remuneration that is considered suitable for executive-level managers of a globally competitiveelectronic equipment and component manufacturer in order to ensure recruitment of human talent considered to be
excellent based on a comparison with same-industry competitors, to raise the morale and motivation to improve financial
results and to contribute to the maximization of corporate value.
Remuneration for Members of the Board of Directors who are not Audit and Supervisory Committee Members is madeup of (i) monthly remuneration, (ii) bonus with the aim of giving a short-term incentive, and (iii) share-based
remuneration with the aim of making them further share values with our shareholders by giving a medium- to long-term
incentive.
(i) Monthly remuneration:(ii) Bonus:

The monthly remuneration is a fixed remuneration of an amount individually decided foreach Member of the Board of Directors based on a fixed amount for service as a Memberof the Board of Directors, and an amount that is decided based on consideration of the levelof importance of each Member of the Board of Directors’ business execution allocation andresponsibility and the previous fiscal year’s financial performance.

The total amount of bonus is decided according to the Company’s financial performance, and the amountallocated to each Member of the Board of Directors is decided by giving consideration to the level ofcontribution to financial performance of each individual.

(iii) Share-based remuneration: The share-based remuneration is set by position of each Member of the Board of
Directors.
The remuneration paid to Outside Directors who are not Audit and Supervisory Committee Members and to Membersof the Board of Directors who are Audit and Supervisory Committee Members is only monthly remuneration. The
amount paid to Members of the Board of Directors who are Audit and Supervisory Committee Members is decided as afixed individual remuneration through discussion by the Members of the Board of Directors who are Audit andSupervisory Committee Members.

16

(4) Key activities of Outside Directors
Category
OutsideDirector

Name

Attendance atmeetings of theBoard ofDirectors

Attendance atmeetings of the Audit
and Supervisory
Committee

Hiroaki Yoshihara
8/8

—

10/10

—

1/2

2/3

10/10

10/10

8/8

7/7

8/8

7/7

Takashi Shigematsu

OutsideDirectors
who areAudit andSupervisory
Committee
Members

Hiroaki Yoshihara

Hiroshi Ueno

Hyo Kambayashi

Yuko Yasuda

Key activities
Mr. Hiroaki Yoshihara made comments on
overall management based on his extensive
insight as an accounting specialist, andabundant experience in global corporate
management and consulting for global
companies, etc.
Mr. Takashi Shigematsu made comments on
overall management based on his insight into
the automotive industry and abundant
experience as a corporate manager.
Mr. Hiroaki Yoshihara made comments on
overall management based on his extensive
insight as an accounting specialist, andabundant experience in global corporate
management and consulting for global
companies, etc.
Mr. Hiroshi Ueno made comments on
overall management based on his insight andabundant experience as a specialist mainly ingovernment administration of such fields as
tax and finance, as well as the AntimonopolyAct.
Mr. Hyo Kambayashi made comments on
overall management based on his insight as acertified public accountant, and insight into
the fields of corporate accounting, auditing,internal controls, and risk management, andhis abundant experience as a corporate
manager.
Ms. Yuko Yasuda made comments on
overall management based on her insight
into and abundant experience in the fields ofexecutive personnel assessment,
development, and corporate governance.

(Notes) 1. Mr. Hiroaki Yoshihara retired from his position as Member of the Board of Directors andAudit and Supervisory Committee Member at the conclusion of the 82nd Ordinary General
Meeting of Shareholders held on June 28, 2018, and was newly elected as a Member of theBoard of Directors at the same Ordinary General Meeting of Shareholders. Accordingly, thenumber of times that meetings of the Board of Directors and meetings of the Audit andSupervisory Committee were held differs from other Outside Directors.
Furthermore, two (2) meetings of the Board of Directors and three (3) meetings of the Audit
and Supervisory Committee were held prior to his retirement as Member of the Board of
Directors and Audit and Supervisory Committee Member, and eight (8) meetings of the Boardof Directors were held after his appointment as Member of the Board of Directors.
2. Mr. Hyo Kambayashi and Ms. Yuko Yasuda were elected at the 82nd Ordinary General
Meeting of Shareholders held on June 28, 2018, and therefore the number of times thatmeetings of the Board of Directors and meetings of the Audit and Supervisory Committee
were held differs from other Outside Directors.
Furthermore, eight (8) meetings of the Board of Directors, and seven (7) meetings of the Audit
and Supervisory Committee were held after the appointment of Mr. Hyo Kambayashi and Ms.
Yuko Yasuda.

17

4. Matters Concerning the Independent Auditor(1) Name of Independent Auditor
Deloitte Touche Tohmatsu LLC(2) Independent Auditor Compensation, etc., for the fiscal year under review
Category(1)(2)

Compensation, etc., as Independent Auditor
Total amount of cash and other beneficial property payable by the Company and its
subsidiaries

Amount ofcompensation, etc.
Millions of yen
208
232(Notes) 1. The Audit and Supervisory Committee has given its consent to the amount of compensation,etc. for the Independent Auditor for the fiscal year under review upon receiving explanation
on quotation of compensation from the Independent Auditor and internal related departments,
and conducting necessary verification on the content of the Independent Auditor’s audit
plans, the performance status of its accounting audit duties, and whether the calculation basis,
etc. of quotation of compensation is appropriate.
2. In the audit agreement between the Company and the Independent Auditor, audits based on
the Companies Act and audits based on the Financial Instruments and Exchange Act are notdistinguished, and as they are not distinguishable in practice, the amount in (1) is the total ofthese amounts.
3. Other than operations stipulated in Article 2, Paragraph 1 of the Certified Public Accountants
Act, the Company makes payment to the Independent Auditor for advisory operations on
accounting operations.
4. Of the Company’s significant subsidiaries, Murata Electronics North America, Inc., Murata
Company Limited, Murata (China) Investment Co., Ltd., Murata Electronics Trading(Shanghai) Co., Ltd., Wuxi Murata Electronics Co., Ltd., Shenzhen Murata Technology Co.,
Ltd., Murata Energy Device Wuxi Co., Ltd., Murata Electronics Europe B.V., Korea Murata
Electronics Company, Limited, Philippine Manufacturing Co. of Murata, Inc., Murata
Electronics Singapore (Pte.) Ltd., and Murata Energy Device Singapore Pte. Ltd. are audited(as defined by the Companies Act or the Financial Instruments and Exchange Act [including
corresponding foreign laws and regulations]) by certified public accountants or Independent
Auditors (including parties that hold corresponding foreign certifications) other than the
Independent Auditor serving the Company.
(3) Policy for dismissal or nonrenewal of the Independent Auditor
If the Audit and Supervisory Committee determines that the any of the items in Article 340, Paragraph 1 of theCompanies Act applies to the Independent Auditor and that dismissal is appropriate, the Independent Auditor shall bedismissed upon unanimous approval of the Audit and Supervisory Committee.
Additionally, if the Audit and Supervisory Committee determines that the Independent Auditor cannot appropriately
fulfill its duties, the Audit and Supervisory Committee shall determine the content of a proposal to be submitted to a
General Meeting of Shareholders regarding the dismissal or nonrenewal for the Independent Auditor.

18

Systems to Secure the Appropriateness of Company Operations
The Company’s Board of Directors has defined a basic policy regarding the maintenance of a system to secure theappropriateness of company operations (internal control system), as shown below. Based on this, the Company works toappropriately maintain and operate the internal control system.
[Systems to Secure the Appropriateness of Company Operations](1) System to secure compatibility between execution of duties of Members of the Board of Directors and employeeswith laws and regulations and the Articles of Incorporation
1) The Company shall appoint Outside Directors to strengthen operational execution decisions of the Board of
Directors and monitoring functions of business execution by Members of the Board of Directors.
2) The Company shall establish an organizational committee to evaluate the maintenance and operational conditionsof the internal control system, and work to maintain and continuously improve the internal control system.
3) In order to fulfill corporate social responsibilities (CSR), the Company shall establish an organizational committee
which manages activities regarding CSR areas such as compliance, risk management, and environment, etc., andpromote CSR management of the Company Group continuously and systematically.
4) The Company shall establish an organization responsible for promotion of CSR activities. This organization will
work in tandem with organizational committees related to CSR, and act as a central group to spread CSR within
the Company and handle issues with the outside of the Company.
5) In order for Members of the Board of Directors, Vice Presidents, and employees to adhere to laws and regulations
and the Articles of Incorporation, and conduct business activities based on higher ethical standards, the Company
shall define and work to spread Corporate Ethics Policy and Code of Conduct and regulations regarding
compliance.
6) In order to appropriately deal with issues related to compliance, the Company shall establish a reporting hotline
within and outside of the Company, and ensure that measures are in place such that there is no detriment toreporters.
7) The Company shall clearly define within its Corporate Ethics Policy and Code of Conduct to firmly refusecorrespondence and contact with anti-social activities and organizations and to not resolve unreasonable requests
received from anti-social forces via the use of cash, etc., and will appropriately deal with such events based on thepolicy and the code.
8) The Company shall establish an independent internal auditing department to evaluate and monitor theeffectiveness of the internal control system.
(2) System to store and manage information regarding the execution of duties by Members of the Board of Directors
1) Minutes and group approval documents of the Board of Directors and other important documents concerning theexecution of duties by Members of the Board of Directors shall be stored based upon internal regulations of theCompany, and shall be suitably made available for viewing by Members of the Board of Directors.
2) Basic items regarding storing and managing documents shall be defined within the internal regulations of theCompany, and documents contained in the above item shall be appropriately stored and managed.
3) A meeting structure shall be established to deliberate the necessity and content of timely disclosure of company
information, and company information shall be disclosed in a timely and appropriate manner.
(3) Regulations and other systems regarding management of risks of loss
1) Regulations shall be defined regarding risk management, and the division that supervises each business function
shall conduct risk management.
2) Deliberations regarding the Company Group’s risk management structure and operational status shall be
conducted at an organizational committee. Additionally, evaluations will be made regarding countermeasuresagainst significant risks, driving forward the activities of the Company Group.

19(4) System to secure efficient execution of duties by Members of the Board of Directors
1) The Company shall formulate long and medium term policies and based on such long and medium term policies
formulate yearly policies, budgets, and action plans, and manage the progress and confirm status of theachievement.
2) The Company shall implement a Vice President system, and by separating decision making for management
policies and important business execution with daily business execution, strengthen monitoring functions andbusiness execution functions.
3) To conduct appropriate decision making, approval regarding matters that are defined in the internal regulations of
the Company shall be conducted via group approval procedures utilizing information technology (IT), throughdeliberation by concerned Members of the Board of Directors, Vice Presidents, and significant employees.
4) As a deliberation body to supplement decision making by the Board of Directors and Representative Directors, theCompany shall establish the Management Executive Committee composed of executive Members of the Board of
Directors and Members of the Board of Directors who concurrently serve as Vice Presidents. The Management
Executive Committee shall receive reports and deliberate on matters that are defined in the internal regulations of
the Company.
5) Various information regarding the status of business execution shall be provided to concerned Members of theBoard of Directors, Vice Presidents, and employees periodically or as required, and a system to share information
shall be established via the use of IT.
(5) System to secure appropriate business in the Company Group, composed of the Company and its subsidiaries
1) The Company Group shall share corporate policy that acts as a fundamental management policy, in addition tostrictly enforcing and sharing Corporate Ethics Policy and Code of Conduct, and regulations regarding
compliance.
2) The Company Group shall establish regulations and procedures regarding decision making. Based on these,
deliberations will be made with subsidiaries regarding the business operations of subsidiaries, in addition to sharing
various information regarding business operations of the Company Group.
3) Divisions that supervise the various business functions of the Company shall define frameworks, processing
procedures, and judgment standards for duties to ensure that duties within the Company Group are performed
appropriately and efficiently, in addition to providing appropriate direction to subsidiaries as required.
4) The Internal Audit Department shall evaluate and monitor whether or not duties within the Company Group are
conducted appropriately and efficiently, adhering to laws and regulations and the internal regulations, etc. of theCompany.
5) Members of the Board of Directors, Vice Presidents, and employees of subsidiaries shall report to the Company
matters defined in items 2) through 4) above, and other items regarding the execution of duties.
6) The Company shall direct each subsidiary to establish and operate internal control systems that are appropriate forthe content and scale of each business.
(6) Matters regarding Members of the Board of Directors and employees who assist the duties of the Audit andSupervisory Committee, matters regarding the independence of these employees from Members of the Board of
Directors who are executive officers, and matters regarding securing the ability to execute orders given to these
employees
1) The Company shall station an appropriate number of dedicated employees to assist the duties of Audit andSupervisory Committee.
2) These employees shall not receive supervision or orders from Members of the Board of Directors who are
executive officers. Additionally, for matters regarding human resources of these employees, Members of the Boardof Directors who are executive officers must consult with and obtain permission from the Audit and Supervisory
Committee.

20(7) System for reporting to the Audit and Supervisory Committee and system to ensure that parties that report to the
Audit and Supervisory Committee do not receive detrimental treatment as a result of reporting
1) Members of the Board of Directors who are executive officers, Vice Presidents, and employees shall submit to the
Audit and Supervisory Committee minutes and materials from Management Executive Committee, etc., group
approval documents of the Company Group, and periodic reports of business reports, etc., and also report on facts
that may conflict with the Corporate Ethics Policy and Code of Conduct, status of risks and risk management,
status and content of reports to the internal reporting hotline, and audit results of external public institutions.
2) In the event that facts are discovered regarding the business execution of the Company Group that conflict withlaws and regulations, the Articles of Incorporation, Corporate Ethics Policy and Code of Conduct, or other internal
regulations of the Company, or may cause significant harm to the Company Group, Members of the Board of
Directors who are executive officers, Vice Presidents, and employees shall immediately report to the Audit andSupervisory Committee.
3) In the event that facts are discovered regarding the business execution of the Company Group that conflict withlaws and regulations, the Articles of Incorporation, Corporate Ethics Policy and Code of Conduct, or other internal
regulations of the Company, or may cause significant harm to the Company Group, Members of the Board of
Directors, Statutory Auditors, Vice Presidents, and employees of subsidiaries or parties that received such reports
from the Members of the Board of Directors, Statutory Auditors, Vice Presidents, and employees of subsidiaries
shall report to the Audit and Supervisory Committee.
4) Apart from the previous items, if requested by the Audit and Supervisory Committee, Members of the Board of
Directors who are executive officers, Vice Presidents, and employees shall submit requested documents, etc., orreport as required.
5) Regarding the previous items, the Company shall not give detrimental treatment to reporters as a result ofreporting.
(8) Other systems to secure the effectiveness of audits by the Audit and Supervisory Committee
1) Members of the Board of Directors who are executive officers shall maintain an environment that allows for Audit
and Supervisory Committee Members designated by the Audit and Supervisory Committee to attend important
meetings.
2) Members of the Board of Directors who are executive officers and employees shall conform to the “Audit Plan” asformulated on a yearly basis by the Audit and Supervisory Committee, and cooperate to allow for effective audits.
3) Members of the Board of Directors who are executive officers and employees shall cooperate with and fulfill therequests of the Audit and Supervisory Committee in the event that evaluation hearings are required with attorneysat-law or the Independent Auditor.
4) Fees, etc., incurred as a result of the execution of duties by Audit and Supervisory Committee Members shall beborne by the Company.
5) Members of the Board of Directors who are executive officers and employees shall cooperate with and fulfill therequests of the Audit and Supervisory Committee during the course of cooperation between the Audit andSupervisory Committee and the Independent Auditor.
6) The Internal Audit Department shall work to cooperate with the Audit and Supervisory Committee as requested.
7) Representative Directors, etc., shall work to exchange information with the Audit and Supervisory Committee.

21

[Operational Conditions of Systems to Secure the Appropriateness of Company Operations](1) System to secure compatibility between business execution of Members of the Board of Directors and employeeswith laws and regulations and the Articles of Incorporation
 Based on internal regulations such as “Regulations of the Board of Directors,” the Board of Directors conducts
monitoring of decision making of management policies and important business executions as well as theexecution of duties of Members of the Board of Directors.
 “Independent Outside Director Appointment Standards” have been established. Based on the standards, a numberof Outside Directors are elected and they are giving their opinions based on their specialized views and abundant
experience in the meeting of the Board of Directors and conducting vigorous discussions.
 An Internal Control Committee has been established to develop the internal control system, evaluate andinvestigate operational conditions, and periodically report such content to the Board of Directors.
 “Compliance Promotion Committee,” “Risk Management Committee,” “Environmental Committee,” “Global
Warming Prevention Special Committee,” and “Social & Community Contributions Committee” have been
established, as well as a “CSR Management Committee” that acts as a controlling committee. A dedicatedorganization responsible for promoting CSR activities has also been established.
 Compliance-related regulations are formulated such as “Compliance Program Regulations” and “Corporate
Ethics Policy and Code of Conduct,” and through measures such as selecting compliance promotion leaders ineach division, an appropriate compliance system is maintained and continued while actions for further
improvement are also taken. Also, regarding the Compliance Promotion Committee, the status of its activities andothers are periodically reported to the Board of Directors.
 The Company has established a reporting hotline both within and outside of the Company that receives
anonymous, pseudonymous, and identifiable reports. A systematic approach is taken with regards to the treatmentof reporters so that they are not subject to detrimental treatment and efforts are taken toward appropriate
responses.
 A response manual regarding anti-social forces is distributed to all offices and related companies.
 Through establishing an Internal Audit Department independent from executive divisions and implementing
third-party assessment regarding the effectiveness of internal control systems at the department, the Company
works to enhance transparency and effectiveness of operations.
(2) System to store and manage information regarding the execution of duties by Members of the Board of Directors
 Based on internal regulations such as “Regulations on Document Storage and Preservation Management,” efforts
are being made to construct a system to appropriately store and manage information. Also, “Information Security
Management Regulations” and others have been established and a commitment has been made to educating
employees and others in an effort toward thoroughly appropriate information management.
 Regarding important decisions, an “Information Disclosure Committee” was established and creates a system todeliberate on the necessity of disclosing individual items and the content of disclosure in an effort towardrealizing timely and appropriate disclosure.
(3) Regulations and other systems regarding management of risks of loss
 In addition to developing internal regulations such as “Risk Management Basic Regulations,” each department
responsible for each business function periodically surveys and evaluates the existence, content, etc. of Companywide risks, and a system has been created to report these to the Risk Management Committee. Regarding theindividual risks received in these reports, a system has been created where the Risk Management Committee
deliberates on countermeasures and verifies the state of implementation of those measures.
(4) System to secure efficient execution of duties by Members of the Board of Directors
 A Mid-term Direction (three years) has been formulated and progress reports are periodically given at the Boardof Directors. Yearly policies are decided by the Board of Directors and are then shared within the Company.
 By implementing a Vice President system and having Vice Presidents conduct daily business execution, theCompany aims to realize efficient decision making.
 Regarding decision making in the Company and the Company Group, a group approval system has been
established that is used to carry out decision making. A dedicated information system is also being used to not
only realize efficient deliberations, but also to record both the results and progress of decision making through aframework to visualize the process.
 The Management Executive Committee deliberates on management items provided by internal regulations suchas important management policies, plans, business execution, etc., and also receives reports on the status ofpolicies and budgets, evaluates them, and works on their improvement.
 In addition to constructing a system where the Board of Directors periodically receives reports on the status ofbusiness execution, a dedicated information system that allows related Members of the Board of Directors, Vice
Presidents, and employees to share periodic reports and others is used.
22

(5) System to secure appropriate business in the Company Group, composed of the Company and its subsidiaries
 Efforts are made to share the management policy including the corporate policy by posting them on the Intranetsite as well as in internal company reports, and measures such as incorporating them in the education system.
Additionally, similar efforts to spread awareness of Corporate Ethics Policy and Code of Conduct are being taken.
 As stated earlier, a group approval system has been established in both the Company and the Company Group.
The Company also operates a system where advice and approval is given on certain matters for decisions by
subsidiaries.
 Divisions that supervise each function of the Company maintain regulations so that operations within the
Company Group are carried out in a standardized, efficient, and appropriate manner and appropriately guide
operations and other measures taken in the course of operations.
 The Internal Audit Department evaluates and monitors the Company and the Company Group regarding theeffectiveness and efficiency of operations, the credibility of financial statements, the development status ofimportant compliance items, and the status of operations, and works to increase transparency and effectiveness.
Additionally, proposals are implemented through internal control evaluations of operation process levels.
(6) Matters regarding Members of the Board of Directors and employees who assist the duties of the Audit andSupervisory Committee, matters regarding the independence of these employees from Members of the Board of
Directors who are executive officers, and matters regarding securing the ability to execute orders given to these
employees
 The Company has stationed an appropriate number of dedicated employees to assist the duties of the Audit andSupervisory Committee.
 These employees receive direction regarding their duties directly from Standing Audit and Supervisory
Committee Members, and the appointment, transfer, and other personnel evaluations of these employees are
made by Directors who are executive officers upon discussion with Standing Audit and Supervisory Committee
in a system where consent is received from the Audit and Supervisory Committee.
(7) System for reporting to the Audit and Supervisory Committee and system to ensure that parties that report to the
Audit and Supervisory Committee do not receive detrimental treatment as a result of reporting Minutes and materials from the Management Executive Committee, etc., group approval documents, andperiodic business reports are available for inspection as necessary by Standing Audit and Supervisory Committee
Members. Additionally, a system is in place where Standing Audit and Supervisory Committee Members may
attend meeting bodies such as the Management Executive Committee, CSR Management Committee, Internal
Control Committee, Information Disclosure Committee, Compliance Promotion Committee, and Risk
Management Committee at any time, and their minutes, audit results from internal and external bodies, and others
are delivered and reported to Standing Audit and Supervisory Committee Members. Furthermore, documents,
information, etc., requested by the Audit and Supervisory Committee are individually submitted and reported.
 In the event that Members of the Board of Directors who are executive officers, Vice Presidents, and employeesof the Company, as well as Members of the Board of Directors, Statutory Auditors, Vice Presidents, andemployees of subsidiaries of the Company discover facts regarding the business execution of the Company
Group that conflict with laws and regulations, the Articles of Incorporation, Corporate Ethics Policy and Code of
Conduct, or other internal regulations, or that may cause significant harm to the Company Group, a system wheresuch reports can be made to the Audit and Supervisory Committee is developed, and reporters are not given
detrimental treatment as a result of reporting. Furthermore, a hotline allowing for direct reports and consultations
with Standing Audit and Supervisory Committee Members has been established as a reporting and consultation
hotline for compliance violations.
(8) Other systems to secure the effectiveness of audits by the Audit and Supervisory Committee
 As noted above, Standing Audit and Supervisory Committee Members are allowed to attend important meetings
such as the Management Executive Committee.
 Audit plans formulated by the Audit and Supervisory Committee are reported to the Board of Directors andshared with Members of the Board of Directors. Members of the Board of Directors actively cooperate withaudits by the Audit and Supervisory Committee and hearings from attorneys-at-law and the Independent Auditor.
 A system to secure budget necessary for the execution of duties by Audit and Supervisory Committee Members
and to bear fees, etc., actually incurred as a result of the execution of duties by Audit and Supervisory Committee
Members is in place.
 The Audit and Supervisory Committee, the Independent Auditor, and the Internal Audit Department periodically
meet, and a sufficient level of cooperation is realized.
 Representative Directors are sharing the status and results of the Audit and Supervisory Committee’s audits in themeeting with the Audit and Supervisory Committee on a regular basis and actively exchanging opinions.
23

Consolidated Balance Sheets(As of March 31, 2019)(Millions of yen)

Item

AmountItem

AmountAssets2,048,893

Liabilities

444,353

Current assets

933,941

Current liabilities

259,771

Cash

181,956

Short-term borrowings

23,007

Short-term investments

69,781

Trade accounts payable

75,491Marketable securities

27,364

Accrued payroll and bonuses

43,485Trade notes receivable

4,053

Income taxes payable

38,315Trade accounts receivable271,566

Accrued expenses and other79,473Long-term liabilities

184,582(1,510)Bonds payable

99,813Inventories

349,315

Long-term debt

594

Prepaid expenses and other

31,416

Termination and retirement benefits

75,789Property, plant and equipment

856,453

Deferred income taxes

6,673

Land

68,133

Other

1,713

Buildings

536,781

Equity1,604,540

Machinery and equipment

1,250,288

Murata Corporation’s Shareholders’ equity

1,603,976

Construction in progress

109,057

Common stock

69,444

Accumulated depreciation(1,107,806)

Capital surplus

120,702258,499

Retained earnings

1,493,697

Investments

66,697

Accumulated other comprehensive loss

Intangible assets

47,526

Unrealized gains on securities

46

Goodwill

78,389Pension liability adjustments(21,574)

Deferred income taxes

42,065

Other

23,822Foreign currency translation
adjustments(4,745)

Allowance for doubtful
notes and accounts

Investments and other assets

Treasury stock, at cost
Noncontrolling interests
Total assets

Total liabilities and total equity

2,048,893

24(26,273)(53,594)564
2,048,893

Consolidated Statements of Income
From April 1, 2018
to March 31, 2019
(Millions of yen)

Item

AmountNet sales

1,575,026

Operating expenses
Cost of sales

974,808

Selling, general and administrative

231,822

Research and development

101,589

Operating income

1,308,219
266,807

Other income
Interest and dividend income

3,519Interest expense(422)

Foreign currency exchange loss

(2,401)Other - net(187)

Income before income taxes

509
267,316

Income taxes
Current income tax

65,036

Deferred income tax(4,679)Net income

60,357
206,959

Net income attributable to noncontrolling interests

29

Net income attributable to Murata Corporation

206,930

25

Consolidated Statements of Shareholders’ Equity
From April 1, 2018
to March 31, 2019
(Shares, millions of yen)
Number of
Itemcommonshares issued

Balance at March 31, 2018

675,814,281

Common stock Capital surplus

69,444

120,596

Retainedearnings

Accumulated
other
Treasury stockcomprehensive loss

1,336,208(16,052)

7,850(7,850)

Cumulative effects of accounting standard
update-adoption of ASU No. 2016-01(after tax effect adjustments)
Purchases of treasury stock at cost
Disposal of treasury stock3(53,596)Controllinginterests

Noncontrolling

Total equity

interests

1,456,600

616

1,457,216

-

-

(33)

(33)

(33)

1

4

4

Net income

206,930

206,930

29

206,959

Cash dividends(57,579)(57,579)(6)(57,585)(2,371)(14)(2,385)

Other comprehensive loss, net of tax(2,371)

Restricted share remuneration

103

34

Equity transaction with noncontrollinginterests and other
Balance at March 31, 2019

288
675,814,281

69,444

120,702

1,493,697(26,273)(53,594)

137

137

288

(61)

227

1,603,976

564

1,604,540(Note) The Company implemented a three-for-one common stock split, effective April 1, 2019. The number of common sharesissued was calculated on the assumption that the relevant stock split had been implemented on March 31, 2018.

26

Notes to the Consolidated Financial Statements(Basis of preparation of Consolidated Financial Statements)
1. Scope of consolidation and application of the equity method
1) Number of consolidated subsidiaries: 91
Major consolidated subsidiaries:
Fukui Murata Manufacturing Co., Ltd.
Izumo Murata Manufacturing Co., Ltd.
Toyama Murata Manufacturing Co., Ltd.
Kanazawa Murata Manufacturing Co., Ltd.
Okayama Murata Manufacturing Co., Ltd.
Tohoku Murata Manufacturing Co., Ltd.
Murata Electronics North America, Inc.
Murata Company Limited
Murata (China) Investment Co., Ltd.
Murata Electronics Trading (Shanghai) Co., Ltd.
Wuxi Murata Electronics Co., Ltd.
Shenzhen Murata Technology Co., Ltd.
Murata Energy Device Wuxi Co., Ltd.
Murata Electronics Europe B.V.
Korea Murata Electronics Company, Limited
Philippine Manufacturing Co. of Murata, Inc.
Murata Electronics Singapore (Pte.) Ltd.
Murata Energy Device Singapore Pte. Ltd.
2) Number of unconsolidated subsidiaries
None (Companies accounted for by equity method
None)3) Number of affiliated companies
1 (Companies accounted for by equity method
1)
2. Changes in scope of consolidation and application of the equity method(Consolidated subsidiaries)
2 companies were newly consolidated.
9 companies were excluded from consolidation.
Murata BUNSEKI Partner Co., Ltd.
Murata Active Partner Co., Ltd.
Murata Elektronik GmbH, and others
3. Significant Accounting Policies(1) Standards for preparation of consolidated financial statements
The consolidated financial statements of the Company, pursuant to the regulations of Article 120-3, Paragraph 1 of theCompany Accounting Ordinance, are prepared in accordance with terminology, style, and preparation method based on
generally accepted corporate accounting standards in the United States of America (hereinafter “US Accounting
Principles”). However, based on regulations in the latter segment of the Article 120, Paragraph 1 of the said Ordinance byapplying Paragraph 3 of Article 120-3 mutatis mutandis, a portion of content and notes required by US Accounting
Principles are omitted.
(2) Inventories

Inventories are stated at the lower of cost, which is determined principally by the average
cost method, or market.

27

(3) Marketable securities and investments
Under ASC320 “Investments - Debt,” ASC321 “Investments - Equity Securities,” and ASC825 “Financial
Instruments” in the Statement of Financial Accounting Standards of the Financial Accounting Standards Board (FASB),
the Company Group classifies debt securities as available-for-sale and carries them at fair value with a corresponding
recognition of the net unrealized holding gain or loss (net of tax) as a separate component of shareholders’ equity, except
investments whose unrealized holding gain and loss is recorded as net income by electing the fair value option. In addition,
equity securities (except those accounted for under the equity method of accounting or those that result in consolidation of
the investee) are measured at fair value, with any gains or losses recorded in net income. Nonmarketable equity securities
whose fair value cannot be reliably determined are measured at cost after impairment, adjusted for observable changes in
the price of orderly transactions for the same or similar investments by the same issuer. Gains and losses on sales ofinvestments are computed on an average cost basis.
(4) Depreciation of property, plant and equipment Straight-line method
The Company and domestic consolidated subsidiaries formerly principally used the declining-balance method forcomputing the depreciation of property, plant and equipment, but has changed to the straight-line method from the fiscal
year under review. Under the Mid-term Business Plan, the Company will implement large-scale capital investment plans ingrowth businesses, and so the Company took this opportunity to review the actual conditions under which property, plantand equipment is used. As a result, the Company believes that depreciation by the straight-line method is desirable as thestable operation of property, plant and equipment is anticipated in future, and depreciation by the straight-line method willmore appropriately reflect the actual conditions under which property, plant and equipment is used in future. In accordancewith ASC250 “Accounting Changes and Error Corrections,” changes in depreciation methods are considered changes inaccounting estimates. Accordingly, the effect of this change shall be recorded prospectively. This change in depreciation
method resulted in increases of 28,720 million yen and 44.89 yen to net income attributable to Murata Corporation andbasic earnings attributable to Murata Corporation per share, respectively, in the fiscal year under review. Furthermore, theeffect on diluted earnings attributable to Murata Corporation per share in the fiscal year under review is not stated since
there are no potential dilutive securities.
(Note) The Company implemented a three-for-one common stock split, effective April 1, 2019. “Basic earnings
attributable to Murata Corporation per share” are calculated based on the number of common shares issued after
the relevant stock split.
(5) Goodwill and other intangible assets
The Company Group accounts for goodwill and other intangible assets in accordance with ASC350 “Intangibles Goodwill and Other.”In accordance with this statement, goodwill is not amortized and is instead tested at least annually for impairment.
Intangible assets that have finite useful lives will continue to be amortized over their useful lives.
Also, this statement requires that an intangible asset that is determined to have an indefinite useful life is not amortized but
is instead tested at least annually for impairment until its useful life is determined to be no longer indefinite.
In January 2017, the FASB issued Accounting Standards Update (ASU) No. 2017-04, “Intangibles - Goodwill andOther (Topic 350): Simplifying the Test for Goodwill Impairment.” The update eliminates Step 2 of the current goodwill
impairment test, under which a goodwill impairment loss is measured by comparing the implied fair value of a reporting
unit’s goodwill with the carrying amount of that goodwill. The new guidance requires that goodwill impairment loss berecognized for any excess of a reporting unit’s carrying amount over its fair value. The Company Group was an early
adopter of this update in the previous fiscal year and will use the new standards prospectively towards the future.
Application of these standards will not impact the operating results or financial position of the Company Group during the
fiscal year under review.
(6) Termination and retirement benefits
To provide for retirement benefits to employees, the Company Group records benefits based on the estimated present
value of the projected benefit obligation less the fair value of plan assets at the end of the fiscal year under review, in
accordance with ASC715 “Compensation - Retirement benefits.” The overfunded or underfunded status of a defined
benefit postretirement plan is recognized as an asset or liability in its statement of financial position, with an adjustment toaccumulated other comprehensive income or loss.
The unrecognized prior service expenses due to certain plan amendments is being amortized on a straight-line basis
over the average remaining service period of employees.
The unrecognized actuarial gains and losses in excess of ten percent of the larger of the projected benefit obligation orplan assets are being amortized over five years.

28

(7) Revenue recognition
The Company Group adopted ASC606 “Revenue from Contracts With Customers.” The Company Group recognizes
revenue based on the following five-step:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the entity satisfies a performance obligation
The Group conducts sales of electronic items, including Components (Capacitors, Piezoelectric Components, etc.) andModules (Communication Modules, Power Supplies, etc.), and related products. With regard to the sales of products, theCompany Group recognizes revenue at the time of delivery of a product since it considers that the customer obtains control
over the product and performance obligations are satisfied at the time of delivery of the product. In addition, revenue isrecognized at the amount of consideration promised in the contract with the customer less discounts, rebates, returned
goods, etc.
(8) Consumption taxes are separately accounted for, and are excluded from the amounts of the underlying income and expense
transactions.
(Changes in accounting policy)
Revenue
In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with
Customers.” Further, in August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers:
Deferral of the Effective Date.” The ASUs outline a single comprehensive model for entities to use in accounting forrevenue arising from contracts with customers and supersedes current revenue recognition guidance. The ASUs require
entities to disclose both quantitative and qualitative information that contributes to users of financial statements tounderstand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.
The Company Group adopted the ASUs from the fiscal year under review by applying the modified retrospective methodof adoption to contracts that were not completed as of the adoption date. The adoption of this guidance does not have amaterial impact on consolidated financial statements.
Financial instruments
In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall: Recognition and Measurement of
Financial Assets and Financial Liabilities.” The ASU requires equity investments (except those accounted for under theequity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes infair value recognized in net income.
The Company Group adopted the ASU from the fiscal year under review. The Company Group recognized a cumulativeeffect adjustment to retained earnings of 7,850 million yen at the beginning of the fiscal year under review for the unrealized
gains, after tax effect adjustment, of available-for-sale securities previously recognized in accumulated other comprehensive
income. The adoption of this guidance resulted in a decrease in income before income taxes of 2,500 million yen for the
fiscal year under review.
Compensation – retirement benefits
In March 2017, the FASB issued ASU No. 2017-07, “Compensation - Retirement Benefits: Improving the Presentationof Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” The ASU requires entities to disaggregate theservice cost component from the other components of net periodic pension cost and net periodic postretirement benefit costand present the service cost in the same line item as other compensation costs arising from services rendered by employees
in the income statement, and present the other components in the income statement separately from the service cost
component and outside a subtotal of income and expenses. In addition, among net periodic pension cost and net periodic
postretirement benefit cost, only the service cost may be capitalized as part of an asset such as inventory. The amendmentsin this guidance are applied retrospectively for the presentation in the income statement of the service cost component andthe other components, and prospectively for the capitalization in assets of only the service cost component.
The Company Group adopted the ASU from the fiscal year under review. The adoption of this guidance resulted in an
increase in operating income and a decrease in other-net of 388 million yen for the fiscal year under review. The adoption of
the guidance stating that only the service-cost component of net benefit cost is eligible for capitalization did not have a29

material impact on their consolidated financial statements.
(Note to Consolidated Balance Sheet)Amounts of less than one million yen are shown rounded to the nearest million yen.

30

(Marketable securities and investment securities)
The cost and amortized cost, gross unrealized gains, gross unrealized losses and fair value for debt securities classified asavailable-for sale securities by major security type are as follows.
(Millions of yen)
Gross
Cost andGrossTypeunrealized
Fair value
amortized costunrealized gains
lossesPrivate debt securities
64,355119
51
64,423Maturity dates of debt securities classified as available-for-sale securities are as follows.
(Millions of yen)
Maturity dateAmountWithin 1 year
27,364
Over 1 year, within 5 years
37,059Over 5 years
Total
64,423
As no debt securities classified as available-for-sale securities were sold, there are no realized gains or realized losses.
Realized gains (losses) and unrealized gains (losses) for equity securities included in investments on the consolidatedbalance sheet are as follows.
(Millions of yen)AmountTotal gains (losses) in the fiscal year under review(3,387)
Realized gains (losses) from the sale of equity securities in the fiscal year under review(286)
Impairment of equity securities(601)
Unrealized gains (losses) on equity securities(2,500)From the fiscal year under review, the Company Group measures nonmarketable equity securities whose fair value
cannot be reliably determined at cost after impairment, adjusted for observable changes in the price of orderlytransactions for the same or similar investments by the same issuer. The carrying amount of such nonmarketable equity
securities was 3,183 million yen as of the end of the fiscal year under review.
(Financial instruments and concentration of risk)
During the course of normal business, the Company Group records various types of financial assets and liabilities.
1. Assets and liabilities(1) Cash, short-term investments, trade notes receivable, trade accounts receivable, financial instruments included in othernoncurrent assets, short-term borrowings, trade accounts payable, bonds payable and long-term debt
The fair value of these financial instruments approximate the amounts carried on the consolidated balance sheet.

31

(2) Marketable securities and investment securities
Fair values are primarily calculated based on discounted present value computed using market value or the mostrecent market interest rate of products traded under similar terms. Fair values of marketable securities andinvestment securities are as follows.
(Millions of yen)
Fair value
Private debt securities
64,423Equity securities
24,468Investment trusts
1,987
Total
90,878
2. Financial derivatives
In order to hedge market risk arising from fluctuations in the foreign exchange market, the Company Group enters into
forward exchange contracts. Additionally, the Group does not hold any forward exchange contracts for trading purposes.
Counterparties are large-scale financial institutions, and as such, the credit risk is negligible. Furthermore, the Group
does not foresee any defaults with regard to the counterparties.
The Company Group records changes in fair value of forward exchange contracts as gains or losses upon theiroccurrence.
Estimated principal on forward exchange contracts is as follows.
(Millions of yen)
Estimated principal
Forward exchange contracts
182,030
Fair values of forward exchange contracts are as follows.
(Millions of yen)
AssetsForward exchange
contracts

Item
Prepaid expenses
and other current
assetsLiabilities
Fair value
220

Item
Accrued expenses
and other current
liabilities

Fair value
1,390

3. Concentration of credit risk
The Company Group conducts sales in the global electronic device market.
In general, the Company Group grants credit to its customers, and the recovery possibility of these trade receivables isaffected by conditions in the electronics industry. However, the Company Group is strict in granting credit, and has notexperienced any large losses in the past.
(Notes to amounts per share)
1. Shareholders’ equity per share

2,507.11 yen

2. Basic earnings attributable to Murata Corporation per share

323.45 yen(Note) The Company implemented a three-for-one common stock split, effective April 1, 2019. “Shareholders’ equity pershare” and “basic earnings attributable to Murata Corporation per share” are calculated on the assumption that therelevant stock split had been implemented at the beginning of the fiscal year under review.

32

(Notes to subsequent events)
The Company executed a stock split effective April 1, 2019, according to the resolution of the Board of Directors’ meetingon January 31, 2019.
1. Purpose of the stock split
The purpose of the stock split is to expand its investor base by lowering the stock price per investment unit and to increase
the liquidity of the Company’s stock.
2. Overview of the stock split
1) Method of the stock split
Each share of common stock owned by shareholders listed or recorded in the closing register of shareholders on therecord date of Sunday, March 31, 2019 will be split into three shares. Provided that, since this day falls on a non-business
day of the shareholder registry administrator, the practical record date will be Friday, March 29, 2019.
2) Number of shares increased by the stock split
Total number of issued shares prior to the stock split
225,271,427 shares
Number of shares increased by the stock split
450,542,854 shares
Total number of issued shares after the stock split
675,814,281 shares
Total number of authorized shares after the stock split
1,743,000,000 shares
Furthermore, amounts in (Notes to amounts per share) are calculated assuming the relevant stock split had been
implemented.

33

Balance Sheets(As of March 31, 2019)(Millions of yen)

Item

AmountItem

AmountAssets

1,053,270

Liabilities

457,442

Current assets

470,367

Current liabilities

328,626

Cash

53,765Trade accounts payable

86,220

17

Short-term borrowings

147,711

Trade notes receivable
Trade accounts receivable276,212Current portion of long-term borrowings

33,274Marketable securities

24,056

Other accounts payable

14,011

Merchandise and finished goods

19,759Accrued expenses

22,239Raw materials and supplies

20,181

Accrued income tax

21,627Work in process

17,036

Other

3,542

Accounts receivable
Current portion of long-term loans
receivable
Other

34,812Long-term liabilities

128,815

19,804

Bonds payable

100,000

4,731

Long-term borrowings

1,060

Termination and retirement benefits

27,215

Allowance for doubtful notes andaccounts

(9)

Other

539

582,902

Net assets

595,827

Property, plant and equipment

113,149

Murata Corporation’s Shareholders’ equity

590,222

Buildings

39,770Common stock

69,444Structures

4,601

Capital surplus

126,429

Machinery

23,979Legal capital surplus

107,733

Vehicles85

Other capital surplus

18,696Equipment

7,515

Land

27,213

Legal retained earnings

7,899

Construction in progress

9,984

Other retained earnings

440,042

Intangible assets

25,121

Reserve for reduction entry of land

13

Investments and other assets

444,631

Reserve for special depreciation

147

Investment securities

62,160Shares of subsidiaries and associates

272,268

Reserve for reduction entry of
replaced property

49

Investments in capital of subsidiaries
and associates

19,109Long-term loans receivable

64,790Treasury stock

Deferred tax assets

19,969Valuation and translation adjustments

5,605

Other

6,357

Valuation difference on other marketablesecurities

5,605

Noncurrent assets

Allowance for doubtful notes andaccounts
Total assets

Retained earnings

447,941

General reserve

162,707

Retained earnings brought forward

277,122(53,593)(26)
Total liabilities and total net assets

1,053,270
34

1,053,270

Income Statements
From April 1, 2018
to March 31, 2019

(Millions of yen)

Item

AmountNet sales

1,053,105

Cost of sales

813,053

Gross profit

240,052

Selling, general and administrative

193,905

Operating income

46,146

Non-operating income
Interest and dividend income

34,317

Other

3,745

38,062Non-operating expenses
Interest expense

1,034

Foreign currency exchange loss

5,212

Product replacement and repair costs

9,807

Other

4,530

Ordinary income

20,584
63,623Extraordinary income
Gain on extinguishment of tie-in shares

527

Income before income taxes

527
64,151

Current income tax

2,225

Deferred income tax(5,079)Net income(2,853)67,00535

Statements of Shareholders’ Equity
From April 1, 2018
to March 31, 2019
(Millions of yen)
Murata Corporation’s Shareholders’ equity
Capital surplus
Common stock Legal capitalsurplus
Balance at April 1, 2018

69,444

107,733

Retained earnings

Other capitalsurplus

Total capitalsurplus18,588126,322

105

105

2

2

Other retained earnings
Reserve forLegal retained Reserve forReserve for reduction entry
earnings
reduction entry
specialof replacedof landdepreciation
property
7,899

13

234

50

Changes of items during period
Restricted share remuneration
Cash dividends
Net income
Purchases of treasury stock at
cost
Disposal of treasury stockReversal of reserve for special
depreciation
Reversal of reserve for
reduction entry of replaced
property
Net changes of items other thanshareholders’ equity
Total changes of items during
periodBalance at March 31, 2019

(86)
(0)

-

-

107

107

-

-

(86)

(0)

69,444

107,733

18,696

126,429

7,899

13

147

49

Murata Corporation’s Shareholders’ equity

Valuation and translation
adjustments

Retained earnings
Other retained earnings
Retained
Generalearnings
reservebrought
forwardBalance at April 1, 2018

162,707267,609

Total Murata
Corporation’s
Treasurystock
Total retained
Shareholders’earnings
equity438,515

Total net assets
Valuationdifference on Total valuationotherand translation
marketableadjustments
securities(53,596)580,685

7,260

7,260

587,945

34

139

139

Changes of items during period
Restricted share remuneration
Cash dividends(57,578)(57,578)(57,578)(57,578)

Net income

67,00567,00567,00567,005Purchases of treasury stock at
cost

(33)

(33)

(33)

Disposal of treasury stock

1

4

4

Reversal of reserve for special
depreciation
Reversal of reserve for
reduction entry of replaced
property
Net changes of items other thanshareholders’ equity
Total changes of items during
periodBalance at March 31, 2019

86

-

-

-

0

-

-

(1,655)(1,655)(1,655)

-

9,513

9,426

2

9,537

(1,655)(1,655)

7,881

162,707277,122447,941(53,593)590,222

5,605

5,605

595,82736

Notes to Unconsolidated Financial Statements(Notes to significant accounting policies)
1. Valuation standards and valuation methods of assets(1) Valuation standards and valuation methods of marketable securities
Stock of subsidiaries and affiliatedMoving-average method
companies
Other marketable securities
With market valueMarket value method based on market prices(Valuation differences are reported as a component of net assets, and thecost of securities sold is calculated using the moving-average method)
Without market value
At cost based on the moving-average method(2) Valuations standards and valuation methods of derivatives
Derivatives
Market value method(3) Valuation standards and valuation methods of inventories
Finished goods
At cost based on the moving-average method (balance sheet amounts arecalculated by writing down the book value of assets that have decreased in
profitability)
Products, work in process
At cost based on the weighted-average method (balance sheet amounts arecalculated by writing down the book value of assets that have decreased in
profitability)
Raw materials and supplies
At cost based on the weighted-average method (balance sheet amounts arecalculated by writing down the book value of assets that have decreased in
profitability)
2. Depreciation method for noncurrent assets(1) Property, plant and equipment(2) Intangible assets

Straight-line method
Primary useful lives are as follows.
Buildings
Machinery and equipment

10 to 50 years
4 to 17 years

Straight-line method
Software for internal use is amortized by the straight-line method based onan estimated useful life of 3 to 10 years.

3. Standards for recording of allowances(1) Allowance for doubtful notes and accounts
To provide for possible losses resulting from uncollectible receivables such as trade accounts and loans, the estimateduncollectible amount is recorded based on historical default rate with regard to general accounts, and by individuallyassessing possible collectability for certain receivables such as loans with default possibility.
(2) Termination and retirement benefits
To provide for retirement benefits to employees, benefits are recorded based on the estimated amount of termination andretirement liabilities and pension assets as of the closing date.
Prior service cost is recorded as expenses using the straight-line method based on the average remaining years of serviceof employees as of the time of occurrence. Actuarial differences are amortized using the straight-line method over theperiod of 5 years within the average remaining years of service of employees commencing the following fiscal year after
incurrence.

37

4. Other significant matters concerning the preparation of unconsolidated financial statements(1) Method of treatment for consumption taxes
Amounts are exclusive of consumption taxes.
(2) Application of consolidated taxation system
The consolidated taxation system is applied.
(3) Amounts of less than one million yen are rounded down.

(Changes in accounting policies)
The Company formerly used the declining-balance method for computing the depreciation of property, plant and equipment,
but has changed to the straight-line method from the fiscal year under review. Under the Mid-term Business Plan, theCompany will implement large-scale capital investment plans in growth businesses, and so the Company took this opportunity
to review the actual conditions under which property, plant and equipment is used. As a result, the Company believes that
depreciation by the straight-line method is desirable as the stable operation of property, plant and equipment is anticipated infuture, and depreciation by the straight-line method will more appropriately reflect the actual conditions under which property,
plant and equipment is used in future. This change in depreciation method resulted in a decrease of 5,441 million yen in
depreciation and amortization, and increases of 5,259 million yen in each of operating income, ordinary income and income
before income taxes in the fiscal year under review.
(Note to changes in presentation methods)
Balance sheets
1. “Current portion of long-term loans receivable,” which had been included in “Other” under “Current assets” until theprevious fiscal year, is presented from the fiscal year under review as a separate item as its significance has increased.
2. Application of “Partial Amendments to Accounting Standard for Tax Effect Accounting”“Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February 16, 2018) has
been applied from the beginning of the fiscal year under review. Accordingly, “Deferred tax assets” are presented under“Investments and other assets” and “Deferred tax liabilities” are presented under “Long-term liabilities.”(Notes to unconsolidated balance sheets)
1. Accumulated depreciation of property, plant and equipment

193,022 million yen

2. Short-term monetary claims with affiliated companies
Long-term monetary claims with affiliated companies
Short-term monetary liabilities with affiliated companies
Long-term monetary liabilities with affiliated companies

276,933 million yen
66,464 million yen
225,203 million yen
1,060 million yen(Notes to the unconsolidated income statements)
1. Transactions with affiliated companies
Business transactions
Net sales
Purchase turnoverNon-business transactions
Interest income
Dividend income
Asset transfer
Interest expense
Asset purchase
2. Research and development expenses

917,545 million yen
740,655 million yen
534 million yen
32,487 million yen
786 million yen
721 million yen
2,143 million yen
92,759 million yen

38

(Notes to statements of shareholders’ equity)
1. Type and total number of issued shares as of March 31, 2019
Common stock
225,271,427 shares
2. Type and number of treasury stock as of March 31, 2019
Common stock
12,014,752 shares
3. Matters concerning dividends(1) Amount of dividends paid

Resolution

Total
amount ofDividend perType of stock dividends
share (yen)(Millions ofyen)June 28, 2018
Ordinary General Meeting Common stockof Shareholders
October 31, 2018
Meeting of the Board of Common stock
Directors

Record date

Effective date

27,722130

March 31, 2018

June 29, 2018

29,855140

September 30, 2018

December 3, 2018

(2) Of dividends with a record date during the fiscal year under review, and with an effective date during the following fiscal year
As a proposal at the Ordinary General Meeting of Shareholders on June 27, 2019, the Company plans to propose the following
concerning dividends for common stock.
1) Total amount of dividends
29,855 million yen
2) Dividend per share
140 yen3) Record date
March 31, 20194) Effective dateJune 28, 2019
The Company plans to use retained earnings as source of funds for dividends.
(Note) The Company implemented a three-for-one common stock split, effective April 1, 2019, but amounts for dividends
with a record date of March 31, 2019 are based on the number of shares prior to the stock split.

39

(Notes to tax effect accounting)
1. Breakdown of primary causes for occurrence of deferred tax assets and liabilities
Deferred tax liabilities
Deferred tax assets
Other marketable securities
2,614 million yen
Accrued bonuses
valuation adjustment
6,865 million yen
Inventories
Reserve for special depreciation
1,747 million yen
Accrued expenses
Other
23 million yen
Accounts payable - other571 million yen Total deferred tax liabilities
Accrued enterprise tax
8,345 million yen Elimination with deferred tax assets
Termination and retirement benefits
3,518 million yen Net deferred tax liabilities
Stock of affiliated companies
2,263 million yen
Tangible and intangible assets
101 million yen
Deferred tax adjustment
438 million yen
Investment securities
599 million yen
Other27,089 million yen
Deferred tax assets subtotal
Valuation allowance for total deductible(4,738) million yen
temporary differences, etc.
Total deferred tax assets
22,350 million yen
Elimination with deferred tax liabilities (2,381) million yen
Net deferred tax assets
19,969 million yen
2. Difference between effective statutory tax rate and income tax rate after application of tax effect accounting
30.5 %
Effective statutory tax rate
(Adjustments)(15.3) %Exemption for dividend income(16.8) %Tax exemption for R&D promotion tax system(0.6) %
Valuation allowance for deferred tax assets(2.2) %
Other
Income tax rate after application of tax effect accounting

40(4.4) %

2,238 million yen
64 million yen
78 million yen
2,381 million yen(2,381) million yen-

(Notes to transactions with related parties)
1. Subsidiaries and affiliated companies, etc.
(Millions of yen)Type

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Name ofcompany, etc.
Fukui Murata
ManufacturingCo., Ltd.

Izumo Murata
ManufacturingCo., Ltd.

Percentage ofvoting rights
holding (orheld)
Holding
Directly, 100%

Holding
Directly, 100%

Kanazawa Murata
ManufacturingCo., Ltd.

Holding
Directly, 100%

Okayama Murata
ManufacturingCo., Ltd.

Holding
Directly, 100%

Toyama Murata
ManufacturingCo., Ltd.

Holding
Directly, 100%

Tohoku Murata
ManufacturingCo., Ltd.

Holding
Directly, 100%

Murata Company
Limited

Holding
Directly, 100%

Relationship withrelated party

Summary oftransactions

Transaction
amountManufacturing of
the Company’s
products
Officers
concurrently serving
at the Company

Procurement of
products, etc.
(Note 1)

118,037(Note 2)

Borrowing of
funds
Payment ofinterest(Note 3)33,545

Manufacturing of
the Company’s
products
Officers
concurrently serving
at the Company

Procurement of
products, etc.
(Note 1)

167,602(Note 2)

Borrowing of
funds
Payment ofinterest(Note 3)

15,170

Manufacturing of
the Company’s
products
Officers
concurrently serving
at the Company

Borrowing of
funds
Payment ofinterest(Note 3)25,401

Manufacturing of
the Company’s
products
Officers
concurrently serving
at the Company

Borrowing of
funds
Payment ofinterest(Note 3)

20,129Manufacturing of
the Company’s
products
Officers
concurrently serving
at the Company

Lending offunds
Reception ofinterest(Note 3)60,339Manufacturing of
the Company’s
products
Officers
concurrently serving
at the Company

Borrowing of
funds
Payment ofinterest(Note 3)

16,171

Sales of products of
the Company andsubsidiaries

Sales ofproducts, etc.
(Note 1)

252,551

Borrowing of
funds
Payment ofinterest(Note 3)

22,202

41

34

7

5

18

393

4

630

Item

Balance atthe end of
the fiscal
year

Trade accounts
payable6,973(Note 2)

Short-termborrowings
Current portionof long-termborrowings

21,684

Trade accounts
payable6,767(Note 2)

Short-termborrowings
Current portionof long-termborrowings

12,032

Short-termborrowings

17,789

Short-termborrowings
Current portionof long-termborrowings

14,140Current portionof long-termloans receivable
Long-term loans
receivable

51,010

Short-termborrowings

21,086

Trade accounts
receivable

64,903

Short-termborrowings

22,202

Type

Subsidiary

Subsidiary

Subsidiary

Name ofcompany, etc.

Percentage ofvoting rights
holding (orheld)

Relationship withrelated party

Summary oftransactions

Transaction
amountMurataElectronics
Trading(Shanghai) Co.,Ltd.

Holding
Indirectly,
100%

Sales of products of
the Company andsubsidiaries
Officers
concurrently serving
at the Company

Sales ofproducts, etc.
(Note 1)

139,549

Korea Murata
Electronics
Company,
Limited

Holding
Directly, 100%

Sales of products of
the Company andsubsidiaries
Officers
concurrently serving
at the Company

Sales ofproducts, etc.
(Note 1)

145,306

Philippine
Manufacturing
Co. of Murata,
Inc.

Holding
Directly, 100%

Manufacturing of
the Company’s
products

Lending offunds
Reception ofinterest(Note 3)

17,16044

Item

Balance atthe end of
the fiscal
year

Trade accounts
receivable

55,852

Trade accounts
receivable

19,529Current portionof long-termloans receivable
Long-term loans
receivable

23,900Transaction conditions and standard for determining transaction conditions(Note 1) Determined via the same method as general transactions, in consideration of market prices.
(Note 2) Transaction amounts do not include consumption taxes. Balance at the end of the fiscal year includes
consumption taxes.
(Note 3) Borrowing of funds includes transactions via the cash management system (CMS), and is determined inconsideration of market interest rates.
As the fund management operations business for the Japanese subsidiaries is concentrated within the Company,
there are borrowings from each company and lending of funds to each company.
Furthermore, transaction amounts are the average balance over the course of the fiscal year under review.

422. Officers and primary shareholders, etc.
(Millions of yen)
Type
Officer andclose relative

Name ofcompany, etc.
Tsuneo Murata

Percentage ofvoting rights
holding (or held)
Held
Directly, 0.7%

Relationship withrelated party

Summary oftransactions

Chairman of theBoard andPresidentof the Company

Transactions with the
Murata Science
Foundation, for which
he serves as Chairman* Donation of cash

Transaction
amount100

Balance at theend of the fiscal
year

Item
-

-

* For a third party.
(Notes to amounts per share)
Net assets per share
931.32 yen
Net income per share
104.73 yen(Note) The Company implemented a three-for-one common stock split, effective April 1, 2019. “Net assets per
share” and “net income per share” are calculated on the assumption that the relevant stock split had been
implemented at the beginning of the fiscal year under review.
(Notes to subsequent events)
The Company executed a stock split effective April 1, 2019, according to the resolution of the Board of Directors’ meetingon January 31, 2019.
1. Purpose of the stock split
The purpose of the stock split is to expand its investor base by lowering the stock price per investment unit and to increase
the liquidity of the Company’s stock.
2. Overview of the stock split
1) Method of the stock split
Each share of common stock owned by shareholders listed or recorded in the closing register of shareholders on therecord date of Sunday, March 31, 2019 will be split into three shares. Provided that, since this day falls on a non-business
day of the shareholder registry administrator, the practical record date will be Friday, March 29, 2019.
2) Number of shares increased by the stock split
Total number of issued shares prior to the stock split
225,271,427 shares
Number of shares increased by the stock split
450,542,854 shares
Total number of issued shares after the stock split
675,814,281 shares
Total number of authorized shares after the stock split
1,743,000,000 shares
Furthermore, amounts in (Notes to amounts per share) are calculated assuming the relevant stock split had been
implemented.

43

(Other notes)
Accounting for termination and retirement benefits(1) Summary of termination and retirement benefit system utilized by the Company
As a defined benefit plan, the Company has established a fund-type defined benefit corporate pension plan
and a lump-sum retirement pension plan. It also operates a defined contribution pension plan.
(2) Matters concerning the defined-benefit type termination and retirement benefit liabilities (As of March 31,
2019)
a. Termination and retirement benefit liabilities
b. Pension assetsc. Termination and retirement benefit liabilities in excess ofpension assets (a – b)d. Unrecognized actuarial differencese. Unrecognized prior service cost
f. Termination and retirement benefits (c – d – e)113,410 million yen
77,046 million yen
36,363 million yen
11,107 million yen(1,960) million yen
27,215 million yen(3) Matters concerning the defined-benefit type termination and retirement expenses (From April 1, 2018 toMarch 31, 2019)a. Service cost
5,123 million yen
b. Interest expenses
635 million yen
c. Expected operational profit(1,513) million yen
d. Recorded amount of actuarial difference expenses
2,829 million yen
e. Recorded amount of prior service cost
(769) million yen
f. Termination and retirement expenses (a + b + c + d + e)
6,304 million yen(4) Matters concerning calculation of the defined-benefit type termination and retirement benefit liabilities
a. Distribution period method for expected
Benefit formula standard
termination and retirement benefits
b. Discount rate
0.4 %c. Expected operational profit rate
2.0 %d. Number of years for evaluating prior service
16 to 20 years
cost(Amortized using the straight-line method based on
the average remaining years of service of
employees as of the time of occurrence)e. Number of years for evaluating actuarial
5 years
differences(Amortized using the straight-line method over acertain number of years within the averageremaining years of service commencing thefollowing fiscal year after incurrence.)(5) Matters concerning defined contribution pension plans (From April 1, 2018 to March 31, 2019)
The Company converted part of its lump-sum retirement pension plans to defined contribution pension plansin April 2015.
Total assets converted as a result of this change to defined contribution pension plans are 8,986 million yen
and conversion has been fully completed as of the end of the fiscal year under review.
Recognized costs involved in contributions to defined contribution pension plans during the fiscal year underreview are 853 million yen.

44