QUARTERLY REPORT(The Second Quarter of the 71st Term)
From July 1, 2018 to September 30, 2018

(TRANSLATION)

ARISAWA MFG. CO., LTD.

TABLE OF CONTENTS
Page Number
Cover Page
PART I.

INFORMATION ON THE BUSINESS ................................................................................ 1

I. General Conditions of Business ............................................................................................................ 1
1. Changes in Principal Management Indicators, etc. ........................................................................... 1
2. Description of Business..................................................................................................................... 1
II. Status of Business ................................................................................................................................ 2
1. Business Risks, etc. ........................................................................................................................... 2
2. Analyses of Consolidated Financial Position, Business Results and Cash Flows by the
Corporate Managers ...................................................................................................................... 2
3. Agreements with Managerial Implications, etc................................................................................. 5
III. Status of the Submitting Company ..................................................................................................... 6
1. Status of Shares, etc. ......................................................................................................................... 6(1) Total Number of Shares, etc. ......................................................................................................... 6(2) Status of Stock Acquisition Rights, etc. ........................................................................................ 6(3) Status of Exercise of Moving Strike Convertible Bonds, etc. ....................................................... 7(4) Changes in the Number of Shares Issued and Outstanding, Capital Stock, etc. ............................ 7(5) Status of Major Shareholders......................................................................................................... 8(6) Status of Voting Rights................................................................................................................ 10
2. Status of Directors and Officers ...................................................................................................... 10
IV. Status of Accounting ........................................................................................................................ 11
1. Quarterly Consolidated Financial Statements ................................................................................. 12(1) Quarterly Consolidated Balance Sheets....................................................................................... 12(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements ofComprehensive Income............................................................................................................... 14[Quarterly Consolidated Statements of Income] ......................................................................... 14[Quarterly Consolidated Statements of Comprehensive Income] ............................................... 15(3) Quarterly Consolidated Statements of Cash Flows ..................................................................... 16
2. Other................................................................................................................................................ 22
PART II. INFORMATION ON GUARANTY COMPANIES, ETC. OF THE
SUBMITTING COMPANY ................................................................................................ 23[Independent Auditors’ Quarterly Review Report]

Cover Page
Document to be filed:

Quarterly Report

Statutory basis:

Article 24-4-7, paragraph 1 of the Financial Instruments and Exchange Act

Filing to:

Director-General of the Kanto Local Finance Bureau

Date of filing:

November 14, 2018

Quarterly accounting period:

The Second Quarter of the 71st Term (From July 1, 2018 to September 30,
2018)

Company name (Japanese):

Kabushiki-Kaisha Arisawa Seisakusho

Company name (English):Arisawa Mfg. Co., Ltd.

Name and title of representative:

Yuta Arisawa, President and Representative Director

Location of head office:5-5, Minami-honcho 1-chome, Joetsu-shi, Niigata

Telephone number:(025) 524-5126

Contact person:

Shuichi Kubota, General Manager, Accounting Department

Place of contact:5-5, Minami-honcho 1-chome, Joetsu-shi, Niigata

Telephone number:(025) 524-5126

Contact person:

Shuichi Kubota, General Manager, Accounting Department

Places where copies of this Quarterly Report are

Arisawa Mfg. Co., Ltd., Tokyo Branch Officemade available for public inspection:(12-5, Yanagibashi 2-chome, Taito-ku, Tokyo)
Tokyo Stock Exchange, Inc.
(2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)

PART I. INFORMATION ON THE BUSINESS
I. General Conditions of Business1. Changes in Principal Management Indicators, etc.
Term

70h term
consolidated cumulative
second quarter

Accounting period
Net sales

From April 1, 2017
to September 30, 2017

71st term
consolidated cumulative
second quarter
From April 1, 2018
to September 30, 2018

From April 1, 2017
to March 31, 2018

19,30722,70740,909

2,179

2,589

4,044

1,557

1,772

3,452

(Millions of yen)

Ordinary income(Millions of yen)
Profit attributable to ownersof the parent(Millions of yen)70th term

Comprehensive income(Millions of yen)
Net assets (Millions of yen)

1,909

1,308

4,497

49,74252,51852,492

Total assets (Millions of yen)

65,762

71,431

72,290Net income per share (Yen)

43.55

49.10

96.31

43.24

48.71

95.48

71.9

69.8

68.7

102

1,084

2,181

△368

△1,454△471△1,250△1,695

△59

5,421

6,728

8,829

Fully diluted net income per
share
(Yen)
Equity ratio(%)
Cash flows from operating
activities (Millions of yen)
Cash flows from investing
activities (Millions of yen)
Cash flows from financing
activities (Millions of yen)
Cash and cash equivalents at
the end of period(Millions of yen)

Term
Accounting period

70th term
consolidated
second quarter
From July 1, 2017
to September 30, 2017

71st term
consolidated
second quarter
From July 1, 2018
to September 30, 2018

Net income per share (Yen)
26.87
25.33
Note: 1. As Arisawa Mfg. Co., Ltd. (hereinafter referred to as either the “Company” or the “Submitting Company”, as the casemay be) prepares the quarterly consolidated financial statements, the changes in principal management indicators, etc.
of the Submitting Company are not stated above.
2. Consumption tax, etc. are not included in the amount of net sales.
3. Partial amendments to "Accounting Standards for Tax Effect Accounting" (Accounting Standards Board of Japan No.
28, February 16, 2018), etc. were applied at the beginning of the current consolidated fiscal first quarter. Principal
Management Indicators, etc. for the previous consolidated cumulative second quarter and the previous consolidated
fiscal year are shown after retroactive application of the said Accounting Standards, etc.

2. Description of Business
There was no material change in information regarding the business lines of our corporate group (the Company
and its associated companies; hereinafter referred to as either the “Group” or “our Group”, as the case may be) in
the current consolidated cumulative second quarter.
The change of a principle affiliate with respect to each reportable segment in the current consolidated
cumulative second quarter is as follows.

-1-

(Industrial application structural materials)
Protec Arisawa Japan Co., Ltd., which was a consolidated subsidiary of the Company, extinguished through anabsorption-type merger with the Company as the surviving entity in the current consolidated fiscal second quarter,and so has been excluded from the scope of consolidation.

II. Status of Business
1. Business Risks, etc.
The current consolidated cumulative second quarter saw neither any new business risks, etc. emerging nor any
significant change in the business risks, etc. stated in the Financial Report for the previous business year.

2. Analyses of Consolidated Financial Position, Business Results and Cash Flows by the Corporate
Managers
Matters stated concerning the future in the text are based on judgments made as of the end of the current
consolidated second quarter.

(1) Financial Position and Operating Results1) Operating Results
The Japanese economy in the current consolidated cumulative second quarter remained on a recovery
track, owing to improvement in corporate earnings and employment situation, etc. Meanwhile, a sense of
uncertainty regarding the economic outlook persisted due to concern about trade friction caused by the trade
policy of the US and its financial policy, etc.
Under such circumstances, our group (the Company, its consolidated subsidiaries and the companies
accounted for under the equity method)’s results of operations for the current consolidated cumulative second
quarter showed net sales of 22,707 million yen (a 17.6% increase as compared with the year-earlier quarter),an operating income of 1,732 million yen (a 9.2% increase as compared with the year-earlier quarter), an
ordinary income of 2,589 million yen (a 18.8% increase as compared with the year-earlier quarter) and a
profit attributable to owners of the parent of 1,772 million yen (a 13.8% increase as compared with the yearearlier quarter).
Business results with respect to each segment are as follows.
a. Electronic materials segment
In the electronic materials segment, net sales were 14,698 million yen (a 16.9% increase as compared withthe year-earlier quarter) and consisting mainly of the sales of our mainstay product, i.e. materials for flexible
printed circuit boards (the amount of orders received increased by 10.1%, and the production output
decreased by 1.2%, as compared with the year-earlier quarter on a non-consolidated basis of the Submitting
Company), while the segment income was 1,391 million yen (a 0.7% decrease as compared with the yearearlier quarter).
b. Industrial application structural materials segment
In the industrial application structural materials segment, net sales (consisting mainly of the sales offilament winding molded products as well as honeycomb panels and prepregs for aircraft) were 4,257 million
yen (a 25.8% increase as compared with the year-earlier quarter), while the segment income was 742 million
yen (a 44.2% increase as compared with the year-earlier quarter).
c. Electrical insulating materials segment
In the electrical insulating materials segment, net sales (consisting mainly of the sales of prepregs and glass
cloth for electrical insulation) were 1,569 million yen (a 2.6% decrease as compared with the year-earlier
quarter), while the segment income was 230 million yen (a 23.2% decrease as compared with the year-earlier
quarter).
d. Display materials segment
In the display materials segment, net sales (consisting mainly of the sales of 3D imaging-related materials)
were 1,801 million yen (a 34.4% increase as compared with the year-earlier quarter), while the segment
income was 80 million yen (a segment loss of 91 million yen for the year-earlier quarter).

-2-

e. Other (other businesses)
In other businesses, net sales were 379 million yen (a 4.3% decrease as compared with the year-earlier
quarter), while the segment income was 108 million yen (a 17.0% decrease as compared with the year-earlier
quarter).
It should also be noted that the amounts of net sales, orders received, etc. stated in this section do notinclude consumption tax, etc.
2) Financial Position
Total assets as of the end of the current consolidated cumulative second quarter were 71,431 million yen,a decrease of 859 million yen compared with the end of the previous year. This was due largely to a decreaseof 2,278 million yen in cash and deposits.
Total liabilities as of the end of the current consolidated cumulative second quarter were 18,913 million
yen, a decrease of 884 million yen compared with the end of the previous year. This was due largely to adecrease of 358 million yen in notes and accounts payable-trade and a decrease of 327 million yen in shortterm loans payable.
Total net assets as of the end of the current consolidated cumulative second quarter were 52,518 million
yen, an increase of 25 million yen compared with the end of the previous year. This was due largely to anincrease of 548 million yen in retained earnings.

(2) Status of Cash Flows
Cash and cash equivalents (hereinafter referred to as the “Funds”) as of the end of the current consolidated
second quarter amounted to 6,728 million yen, increasing 1,306 million yen, or 24.1%, as compared with theend of the previous consolidated second quarter.
The following is the status of each cash flow category during the current consolidated cumulative second
quarter and the key factors of such status.
(Cash flows from operating activities)
Funds earned from operating activities were 1,084 million yen (a 959.1% increase as compared with theyear-earlier quarter). This was due largely to an increase in the Funds comprising the postings of 2,661
million yen in income before income taxes, 896 million yen in depreciation as well as a decrease in the Funds
comprising the postings of 360 million yen in share of profit of entities accounted for using equity method,
946 million yen in increase in notes and accounts receivable-trade and 262 million yen in decrease in notes
and accounts payable-trade.
(Cash flows from investing activities)
Funds disbursed from investing activities were 1,454 million yen (a 294.7% increase as compared with theyear-earlier quarter). This was due largely to an increase in the Funds comprising the proceeds of 890 million
yen from sales of investment securities as well as a decrease in the Funds comprising the expenditure of
1,315 million yen for purchase of investment securities and the expenditure of 1,075 million yen forpurchases of property, plant and equipment.
(Cash flows from financing activities)
Funds disbursed for financing activities were 1,695 million yen (a 35.6% increase as compared with theyear-earlier quarter). This was due largely to an increase in the Funds comprising the proceeds of 441 million
yen from long-term loans payable as well as a decrease in the Funds comprising the payment of 1,220 million
yen in cash dividends, the expenditure of 542 million yen for repayments of long-term loans payable.

(3) Management Policy, Management Strategy, etc.
There was no significant change, during the current consolidated cumulative second quarter, in the
management policy, management strategy, etc. set by our Group.

(4) Business and Financial Tasks to be Addressed
There was no significant change in the tasks to be addressed by our Group in the current consolidated
cumulative second quarter.
In this regard, the Company has a basic policy in place as to how the persons controlling the Company’s
financial and business policymaking shall act, and the contents, etc. of such basic policy (the matters set forthin Article 118, item 3 of the Ordinance for Enforcement of the Companies Act) are as follows.

-3-1) Contents of the basic policy and the efforts toward the realization of the basic policy (including, but notlimited to, effective utilization of the assets of the Company and formation of an appropriate corporategroup)The Company, ever since its initiation in 1909, has been working on technological innovations andproduct development to build up unique technologies that integrate the “weaving, coating and molding”
elements of its expertise while consistently fulfilling users’ needs, thereby increasing its corporate
value under favorable labor-management climate. The Company’s Board of Directors believes that theCompany is obligated to adhere to such time-honored principle of nurturing technologicalaccumulation and also to understand, foster and enhance the said corporate value in the long run.
In light of the above, our Group stands on a management policy centering on the motto “Creation,
Innovation and Challenge” as we aim to enhance profitability through creation of new business bases
and new markets with the utmost emphasis on the pursuit of safety and quality.
2) Efforts to prevent inappropriate persons from controlling the Company’s financial and business
policymaking
Stock markets in late years witnessed such takeover methods that, for instance, force through largescale purchases of shares without providing sufficient explanation to, or consultation with, theshareholders and the management of the target company. Many of the takeovers using such methods
apparently entail erosion of corporate value and forced sales of shares, etc. to the detriment ofshareholders’ interests.
Such being the case, we acknowledged the need to ensure proper disclosure of necessary andsufficient information and also secure the time required for examination and consideration of an offer
to purchase by presenting a set of rules and procedures for large-block purchasers and purchaseofferors (hereinafter individually referred to as a “Purchaser”) to comply with. Thus the Company,
pursuant to the provisions of its Articles of Incorporation, established the measures to address largescale acquisitions of the Company’s shares (hereinafter referred to as the “Rules”) and obtained theshareholders’ approval of the Rules at the 69th Ordinary General Meeting of Shareholders held on
June 28, 2017.
In the event that: (i) invocation of a countermeasure is approved under the Rules at a general
meeting of shareholders, etc. held to confirm the shareholders’ intentions; (ii) the Purchaser does notcomply with the Rules; or (iii) it is evident that a large-scale acquisition of the Company’s shares or
any similar act or an offer of any of such acts (hereinafter individually referred to as a “Purchase”)
will impair the Company’s corporate value, the countermeasure(s) shall be invoked in accordancewith the Rules.
(For the details of the Rules, please refer to the Company’s website at: http://www.arisawa.co.jp/)
3)

The fact that the aforesaid efforts, in accordance with the basic policy, do not erode the Company’s
corporate value and the common interests of the shareholders and that such efforts do not aim to
maintain the status of the Company’s directors and officers
The Company’s Board of Directors believes that, with the Company’s shares listed on the stock
exchange for unfettered trading by the investors, a large-scale purchase of the Company’s sharesconducted against the will of the Company’s Board of Directors or an offer to purchase entailing achange of control of the Company should not be ruled out by the Company’s Board of Directors if
and to the extent that such acts contribute to the common interests of the shareholders throughenhancement of the Company’s corporate value, and so the final judgment as to the said acts should
be made collectively by the shareholders of the Company.
If and when such Purchase is conducted, we deem it best to collect detailed information from thePurchaser and provide the shareholders with sufficient levels of disclosure (in order for theshareholders to make a proper judgment) and also to have the Company’s Board of Directors express
its opinions, inviting the shareholders to directly express their intentions at a general meeting ofshareholders, etc. as to which of the cases is more conducive to securing and enhancing theCompany’s corporate value and the common interests of the shareholders. The Rules set forth asfollows:-4-

a. Judgment by direct resolution of the shareholders
The Rules provide that the shareholders shall directly pass judgment on whether an offer topurchase made by a Purchaser should be approved, except where the Purchaser does not comply
with the Rules, etc. It is virtually impossible, in the process and procedures of confirming theshareholders’ intentions, for a director of the Company to make individual solicitations, etc. inpursuit of his or her own interests, and no room is left for an arbitrary intent of any of theCompany’s directors to impinge on the shareholders’ intentions.
b. Restrictions on invocation of countermeasures by the judgment of the Board of Directors
Invocation by the Company’s Board of Directors of a countermeasure without confirming theshareholders’ intentions is possible only when any breach of the Rules or erosion of theCompany’s corporate value and the common interests of the shareholders is evident, and also theso-called “sunset clause” is attached to limit the valid term of the Rules to approximately two (2)years.
Therefore, the Company’s Board of Directors believes that this “Basic Policy for the Control of
Kabushiki-Kaisha” represents the Company’s efforts to secure and maintain the Company’s
corporate value and the common interests of the shareholders and that such basic policy does not
impair the interests of the Company’s shareholders.

(5) Research and Development Activities
The Group’s total expenses for research and development activities incurred in the current consolidated
cumulative second quarter amounted to 1,022 million yen.
In this regard, there was no significant change in the status of research and development activities of ourGroup in the current consolidated cumulative second quarter.

3. Agreements with Managerial Implications, etc.
In the current consolidated second quarter, there was no decision made on, or execution of, agreements withmanagerial implications, etc.

-5-

III. Status of the Submitting Company
1. Status of Shares, etc.
(1) Total Number of Shares, etc.
1) Total number of shares
Class

Total number of shares authorized to be issued

Common stock

130,000,000

Total

130,000,000

2) Shares issued and outstandingClass

Number of shares issued
and outstanding as of theend of the second quarter(As of September 30, 2018)

Number of shares issued andoutstanding as of the filingdate of this Quarterly Report(As of November 14, 2018)

Name of financial
instruments exchange
where the shares arelisted or authorized
financial instruments
firms association where
the shares are registered

Remarks

Common stock

36,188,524

36,189,524

Tokyo Stock Exchange(First Section)

Number of sharesconstituting one
full unit: 100

Total

36,188,524

36,189,524

---

---

Note: The number of shares issued through the exercise of stock acquisition rights in the period from November 1, 2018 to thefiling date of this Quarterly Report is not included in the column “Number of shares issued and outstanding as of the filingdate of this Quarterly Report”.

(2) Status of Stock Acquisition Rights, etc.
1) Details of Stock Option Scheme
Date of Resolution
Category and number of persons to whom stock acquisitionrights shall be granted

June 28, 2018
5 directors of the Company, 211 employees of the Company, and
11 directors and employees of subsidiaries of the Company

Number of stock acquisition rights (Units) ※3,323

Class, contents and number of shares subject to stockacquisition rights ※Common stock

332,300

Amount to be paid per share at the time of exercising eachstock acquisition right (Yen) ※1,104

Exercise period for stock acquisition rights ※July 1, 2020 through June 30, 2023

Issuance price and amount credited to equity capital in theevent of share issuance through the exercise of stockacquisition rights (Yen) ※Issuance priceAmount credited to equity capital

1,272
636

Conditions for the exercise of stock acquisition rights ※Being a director or an employee of the Company (including anadvisor and a counselor) or a director or an employee of a
subsidiary of the Company (including an advisor) at the time of
exercising the rights.

Matters concerning the transfer of stock acquisition rights※

Any transfer of stock acquisition rights shall be subject to theapproval of the Board of Directors.

Matters concerning the grant of stock acquisition rights inconnection with acts of reorganization ※In the event that a merger agreement in which the Company
becomes a defunct company has been approved, or that a
proposal for approval of a stock swap agreement (or for a transferof shares) in which the Company becomes a wholly owned
subsidiary has been approved at a general meeting ofshareholders, except where the surviving company or theCompany’s wholly owning parent company succeeds to the
obligation to grant stock acquisition rights, the Company shall beable to acquire the stock acquisition rights without consideration.

The details shown above are as of the date of issuance of Stock Acquisition Right certificates (August 17, 2018).

-6-2) Status of Other stock acquisition right
No applicable matter.

(3) Status of Exercise of Moving Strike Convertible Bonds, etc.
No applicable matter.

(4) Changes in the Number of Shares Issued and Outstanding, Capital Stock, etc.
PeriodFrom July 1, 2018 toSeptember 30, 2018
(See Note 1)
Note:

1.
2.

Capital stock(Thousands of yen)

Number of shares issued andoutstanding

Legal capital surplus(Thousands of yen)

ChangeBalance

ChangeBalance

ChangeBalance

51,00036,188,524

17,465

7,528,782

17,4616,640,705

The increases are due to the exercise of stock acquisition rights.
In the period from October 1, 2018 to October 31, 2018, the number of shares issued and outstanding increased by
1,000 shares, and the amount of capital stock and that of legal capital surplus increased by 317 thousand yen
respectively, all through the exercise of stock acquisition rights.

-7-(5) Status of Major Shareholders

Full name or
corporate name

Address

As of September 30, 2018
Ratio of the numberof shares held to thenumber of shares
Number ofissued andshares held
outstanding(excluding treasury
stock) (%)

The Master Trust Bank of Japan,
Ltd. (Trust account)11-3, Hamamatsu-cho 2-chome,
Minato-ku, Tokyo

3,345,200

9.24

Japan Trustee Services Bank, Ltd.
(Trust account)

8-11, Harumi 1-chome,
Chuo-ku, Tokyo

3,268,000

9.03

THE BANK OF NEW YORKMELLON（INTERNATIONAL） 2-4,RUE EUGENE RUPPERT,L-2453
LUXEMBOURG,GRAND DUCHY OF
LIMITED 131800
LUXEMBOURG（Standing Proxy: Mizuho Bank
(Shinagawa Intercity Tower A, 15-1, Konan 2Ltd., Settlement & Clearing Services chome, Minato-ku, Tokyo)
Department）

1,542,500

4.26

BNP PARIBAS SECURITIESSERVICESLUXEMBOURG/JASDEC/FIM/LU
33 RUE DE GASPERICH, L-5826 HOWALDXEMBOURG FUNDS/UCITSHESPERANGE, LUXEMBOURGASSETS(11-1, Nihonbashi 3-chome, Chuo-ku, Tokyo)(Standing Proxy: The Hongkong andShanghai Banking Corporation Ltd.,Tokyo Branch)

1,500,000

4.14

Mitsubishi Gas Chemical Company, 5-2, Marunouchi 2-chome,
Inc.
Chiyoda-ku, Tokyo

1,472,166

4.06

1,000,930

2.76

The Hachijuni Bank, Ltd.
(Standing Proxy: The Master Trust
Bank of Japan, Ltd.)

178-8, Nakagosho Okada,
Nagano-shi, Nagano(11-3, Hamamatsu-cho 2-chome,
Minato-ku, Tokyo)

DFA INTL SMALL CAP VALUE
PORTFOLIO(Standing Proxy: Citibank Japan
Ltd.)

Palisades West 6300, Bee Cave Road Building
One, Austin, TX 78746 US(27-30, Shinjuku 6-chome, Shinjuku-ku, Tokyo)

846,582

2.33

Arisawa Kenko Ltd.

11-44, Nishishiro-cho 3-chome,
Joetsu-shi, Niigata

834,338

2.30

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

8-11, Harumi 1-chome,
Chuo-ku, Tokyo

631,300

1.73

The Daishi Bank, Ltd.
(Standing Proxy: The Master Trust
Bank of Japan, Ltd.)1071-1, Higashiborimae-dori 7-bancho,
Chuo-ku, Niigata-shi, Niigata(11-3, Hamamatsu-cho 2-chome,
Minato-ku, Tokyo)

628,903

1.73

15,069,919

41.65

Total

---

Note: 1. The number of shares held by Mitsubishi Gas Chemical Company, Inc. includes 966,306 shares that have been contributed
by Mitsubishi Gas Chemical Company, Inc. as the trust property of retirement benefit trust. The pertinent name in the
Company’s register of shareholders is “The Master Trust Bank of Japan, Ltd. (Retirement benefit trust account and
Mitsubishi Gas Chemical Company, Inc. account).”
2. Though it is described in the Report on Bulk Holding available for public inspection as of February 7, 2018 that
Sumitomo Mitsui Asset Management Company, Limited and a joint holder thereof hold the shares described below as ofJanuary 31, 2018, the Company has confirmed no beneficial ownerships of the number of shares as of September 30,
2018. Therefore, such number of shares is not included in above-mentioned Status of Major Shareholders. Details of theReport on Bulk Holding are as follows:-8-Bulk Holders
thereof: Sumitomo Mitsui Asset Management Company, Limited and one joint holder

Address
Number of shareholdings etc.

: 5-1, Atago 2 chome, Minato-ku, Tokyo: 1,842,229

Holding ratio of share certificates etc. : 5.12%
3. Though it is described in the Report on Bulk Holding available for public inspection as of July 20, 2018 that BlackRock
Japan Co., Ltd. and a joint holder thereof hold the shares described below as of July 13, 2018, the Company has confirmed
no beneficial ownerships of the number of shares as of September 30, 2018. Therefore, such number of shares is notincluded in above-mentioned Status of Major Shareholders. Details of the Report on Bulk Holding are as follows:
Bulk Holders: BlackRock Japan Co., Ltd. and one joint holder thereof
Address
Number of shareholdings etc.

: 8-3, Marunouchi 1 chome, Chiyoda-ku, Tokyo: 1,849,900

Holding ratio of share certificates etc. : 5.13%
4. Though it is described in the Amendment Report on Bulk Holding available for public inspection as of September 5, 2018that Sumitomo Mitsui Trust Bank, Limited and a joint holder thereof hold the shares described below as of August 31,
2018, the Company has confirmed no beneficial ownerships of the number of shares as of September 30, 2018. Therefore,such number of shares is not included in above-mentioned Status of Major Shareholders. Details of the Amendment
Report on Bulk Holding are as follows:
Bulk Holders
Address: Sumitomo Mitsui Trust Bank, Limited and one joint holder thereof: 4-1, Marunouchi 1 chome, Chiyoda-ku, Tokyo

Number of shareholdings etc.
: 1,488,200
Holding ratio of share certificates etc. : 4.12%-9-

(6) Status of Voting Rights
1) Shares issued and outstanding
As of September 30, 2018
Number of shares

Number of voting rights(Units)Remarks

Shares without voting rights

---

---

---

Shares with restricted voting rights(Treasury stock, etc.)

---

---

---

Shares with restricted voting rights (Other)

---

---

---

---

---

Category

Shares with full voting rights (Treasury
stock, etc.)

Common stock

Shares with full voting rights (Other)(See Note 1)

Common stock 36,099,900

Shares constituting less than one full unit
(See Note 2)

Common stock

Number of shares issued and outstanding

7,200

360,999---

81,424------36,188,524

---

---

Total number of voting rights held by--360,999--shareholders
Note:1. 500 shares held in the name of Japan Securities Depository Center, Inc. are included in the row “Shares with full voting
rights (Other)”. 5 units of voting rights pertaining to shares with full voting rights held in the name of Japan Securities
Depository Center, Inc. are included in the column “Number of voting rights”.
2. 42 shares of treasury stock are included in the row "Shares constituting less than one full unit".

2) Treasury Stock, etc.
As of September 30, 2018
Name and address of shareholder

Number of shares held

Ratio of the number ofshares held to thenumber of sharesissued and outstanding(%)

Full name or corporate
nameAddress

Under own
name

Under thenames ofothers

Total

Arisawa Mfg. Co., Ltd.

5-5, Minami-honcho 1chome, Joetsu-shi,
Niigata

7,200

---

7,200

0.01

---

7,200

---

7,200

0.01

Total

2. Status of Directors and Officers
No applicable matter.

- 10 -

IV. Status of Accounting
1.

Method of Preparation of Quarterly Consolidated Financial Statements
The quarterly consolidated financial statements of the Company are prepared in compliance with the“Regulations for Terminology, Forms and Preparation Methods of Quarterly Consolidated Financial Statements”(Cabinet Office Ordinance No. 64 of 2007).

2.

Certification of Audit
The Company received a quarterly review of its quarterly consolidated financial statements for the current
consolidated second quarter (From July 1, 2018 to September 30, 2018) and the current consolidated cumulative
second quarter (From April 1, 2018 to September 30, 2018) conducted by Ernst & Young ShinNihon LLC under
the provisions of Article 193-2, paragraph 1 of the Financial Instruments and Exchange Act.

- 11 -

1. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets(Thousands of yen)Previous consolidated
fiscal year
(As of March 31, 2018)

Current consolidated
second quarter(As of September 30, 2018)

AssetsCurrent assets
Cash and deposits

9,123,877

Notes and accounts receivable-trade*

15,947,189

6,845,845*

16,586,315

Securities

1,180,101

1,426,814

Merchandise and finished goods

3,915,375

3,489,009

Work in process

1,898,096

1,881,585

Raw materials and supplies

2,951,263

3,380,341

Other

1,328,865

1,275,255

Allowance for doubtful accounts△562,185△654,583

Total current assets

35,782,583

34,230,583

11,635,655

11,914,857

Other

418,631393,766

Total intangible assets

418,631393,766

23,365,824

23,935,333

Non-current assets
Property, plant and equipment
Intangible assets

Investments and other assets
Investment securities
Other

1,264,902

1,142,975

Allowance for doubtful accounts△176,835△186,047

Total investments and other assets

24,453,891

24,892,262

Total non-current assets

36,508,177

37,200,885

Total assets

72,290,761

71,431,469- 12 -

(Thousands of yen)
Current consolidated
second quarter(As of September 30, 2018)

Previous consolidated
fiscal year
(As of March 31, 2018)
Liabilities
Current liabilities
Notes and accounts payable-trade*

6,794,393*

6,435,423

Current portion of bonds

36,80036,800

Short-term loans payable

4,242,472

3,915,262

Current portion of long-term loans payable

864,130

730,294

Income taxes payable

930,529

687,405

Provision for bonuses

598,261594,711

Provision for directors' bonuses

5,956

2,858

Provision for product warranties

125

42

Other

*

Total current liabilities

2,509,831*

2,698,804

15,982,499

15,101,602

164,800

146,400

Long-term loans payable

1,642,485

1,643,851

Net defined benefit liability

603,556

607,301

Asset retirement obligations

Non-current liabilities
Bonds payable

92,83792,304

Other

1,312,028

1,321,916

Total non-current liabilities

3,815,706

3,811,773

19,798,206

18,913,376

Capital stock

7,458,242

7,528,782

Capital surplus

6,570,209

6,640,705

Retained earnings

33,492,381

34,040,668

Treasury stock△4,467△4,64347,516,364

48,205,513

1,214,473

1,188,137－△7,057

Foreign currency translation adjustment

1,081,810

659,647

Remeasurements of defined benefit plans△176,694△159,905

Total accumulated other comprehensive income

2,119,588

1,680,821

Subscription rights to shares

127,640

119,733

Non-controlling interests

2,728,960

2,512,024

Total net assets

52,492,554

52,518,093

72,290,761

71,431,469

Total liabilities
Net assets
Shareholders’ equity

Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

Total liabilities and net assets- 13 -

(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements ofComprehensive Income[Quarterly Consolidated Statements of Income][Consolidated cumulative second quarter](Thousands of yen)
Current consolidated
cumulative second quarter(From April 1, 2018
to September 30, 2018)

Previous consolidated
cumulative second quarter(From April 1, 2017
to September 30, 2017)
Net sales

19,307,076

22,707,154

Cost of sales

15,554,421

18,496,710

Gross profit

3,752,655

Selling, general and administrative expenses*

Operating income

2,166,268

4,210,443*

2,477,821

1,586,387

1,732,622

Interest income

179,511

163,334

Dividends income
Share of profit of entities accounted for using equity
methodForeign exchange gains

49,22550,256250,320360,187

30,117295,978

Other

189,826

212,129

Total non-operating income

699,000

1,081,887

33,187

Non-operating income

Non-operating expenses
Interest expenses－

41,176
95,887

Other

72,50787,476

Total non-operating expenses

105,694

224,541

2,179,693

2,589,969

Provision of allowance for doubtful accounts

Ordinary income
Extraordinary income

2,960

441

Gain on sales of investment securities

90,29165,010Other

10,904

13,391

Total extraordinary income

104,156

78,843

Loss on retirement of non-current assets

7,432

7,435

Other

63,650－Total extraordinary losses

71,082

7,435

Income before income taxes

2,212,767

2,661,376

551,405

742,344

1,661,361

1,919,032

104,040

146,165

1,557,321

1,772,866

Gain on sales of non-current assets

Extraordinary losses

Income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of the parent- 14 -

[Quarterly Consolidated Statements of Comprehensive Income][Consolidated cumulative second quarter]
Previous consolidated
cumulative second quarter(From April 1, 2017
to September 30, 2017)
Profit(Thousands of yen)
Current consolidated
cumulative second quarter(From April 1, 2017
to September 30, 2017)

1,661,361

1,919,032

329,799△26,288

Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges△4,989△7,057

Foreign currency translation adjustment△20,765△488,849

4,825

13,526△60,644△102,046

Remeasurements of defined benefit plans
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income

248,226△610,714

Comprehensive income

1,909,587

1,308,317(Breakdown)Comprehensive income attributable to owners of theparentComprehensive income attributable to non-controllinginterests

1,805,692

1,334,100

103,895△25,782- 15 -

(3) Quarterly Consolidated Statements of Cash Flows(Thousands of yen)
Current consolidated
cumulative second quarter(From April 1, 2018
to September 30, 2018)

Previous consolidated
cumulative second quarter(From April 1, 2017
to September 30, 2017)
Cash flows from operating activities
Income before income taxes

2,212,767

2,661,376

819,998

896,379－

35,552

Share-based compensation expenses

19,71323,965Gain on reversal of subscription rights to shares△1,442△6,601

Increase ( decrease) in allowance for doubtful accounts

11,032

100,835

Increase ( decrease) in provision for bonuses

162,332△3,549

Increase ( decrease) in provision for product warranties

△42

△82

Increase ( decrease) in provision for directors' bonuses

15△3,097

Increase ( decrease) in net defined benefit liability

17,93923,207

Loss ( gain) on redemption of investment securities△23,029△13,698

Interest and dividends income△228,736△213,591

Interest expenses

33,187

41,176

Foreign exchange losses ( gains)Share of ( profit) loss of entities accounted for using
equity method
Loss ( gain) on change in equity
Loss ( gain) on sales of short-term and long-term
investment securities
Loss (gain) on valuation of investment securities△739△137,454△250,320△360,187△9,462△6,790△90,235△65,010

63,595－△2,960

△619

4,381

2,426

△2,386,160△946,055△1,428,726△86,007

1,356,077△262,819

Depreciation
Amortization of goodwill

Loss ( gain) on sales of non-current assets
Loss on retirement of property, plant and equipment
Decrease ( increase) in notes and accounts receivabletrade
Decrease ( increase) in inventories
Increase ( decrease) in notes and accounts payabletrade
Increase ( decrease) in accrued consumption taxes

5,022

141,268

Decrease ( increase) in other assets△227,813△108,761

Increase ( decrease) in other liabilities

159,325△30,059

Subtotal

215,717

1,681,802

Interest and dividends income received

292,514293,018

Interest expenses paid

△38,430△42,011△367,380△848,043

102,420

1,084,766

Income taxes paid
Net cash provided by (used in) operating activities- 16 -

(Thousands of yen)
Current consolidated
cumulative second quarter(From April 1, 2018
to September 30, 2018)

Previous consolidated
cumulative second quarter(From April 1, 2017
to September 30, 2017)
Cash flows from investing activities
Proceeds from withdrawal of time deposits

229,918－

Purchase of property, plant and equipment△949,181△1,075,368

6,084

1,758

△7,396△25,113△254,743△1,315,662

593,045

890,254

Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities

31,096－

Payments of loans receivable△105,742△20,000

Collection of loans receivable

80,00033,760

Other proceeds

8,390

55,672△368,526△1,454,698△444,132△211,650

Proceeds from long-term loans payable

482,698

441,600

Repayments of long-term loans payable△547,793△542,270

Repayments of lease obligations△10,941△10,830

Redemption of bonds－△18,400

Payments for long-term accounts payable - other－△57,586

103,280

115,765

Proceeds from liquidation of subsidiaries

Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase ( decrease) in short-term loans payable

Proceeds from issuance of common stock

△298

△175

Cash dividends paid

△711,355△1,220,470

Cash dividends paid to non-controlling interests△121,662△191,154

Net cash provided by (used in) financing activities△1,250,204△1,695,171

Purchase of treasury stock

Effect of exchange rate change on cash and cash equivalents
Net increase ( decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Decrease in cash and cash equivalents resulting fromexclusion of subsidiaries from consolidation
Cash and cash equivalents at end of period*- 17 -

21,898△39,209△1,494,413△2,104,313

7,026,200

8,832,805△110,040－

5,421,746*

6,728,492

[Notes](Change in the scope of consolidation or application of equity method)(1) Material change in the scope of consolidation
Protec Arisawa Japan Co., Ltd. which was the subsidiary of the Company, was combined into the Company
through an absorption-type merger, with the Company as the surviving entity, and extinguished and so havebeen excluded from the scope of consolidation as of the consolidated second quarter.
(Particular accounting treatments applied in preparation of quarterly consolidated financial statements)<Calculation of tax expenses>
Tax expenses are calculated by multiplying the quarterly income before income taxes by an estimated effective
tax rate. Such effective tax rate is reasonably estimated after applying tax effect accounting to the income before
income taxes for the consolidated fiscal year including the current consolidated second quarter.
(Additional Information)(Application of the Partial amendments to "Accounting Standards for Tax Effect Accounting", etc.)
Partial amendments to "Accounting Standards for Tax Effect Accounting" (Accounting Standards Board of Japan No. 28,
February 16, 2018), etc. were applied at the beginning of the consolidated fiscal first quarter. Deferred tax assets are shownin the column of Investments and other assets and deferred tax liabilities are shown in the column of Non-current liabilities.

(Notes Related to Quarterly Consolidated Balance Sheets)* Notes, etc. maturing at the end of the consolidated second quarter
For accounting treatment of notes, electronically recorded monetary claims and electronically recorded
obligations maturing at the end of the consolidated third quarter, settlement is made as of the clearing date ofeach note or as of the settlement date of each electronically recorded monetary claim and electronically recorded
obligation, as the case may be. As the end of the current consolidated second quarter falls on a bank holiday,
the following notes, electronically recorded monetary claims and electronically recorded obligations maturing
at the end of the consolidated second quarter are included in their respective balances as of the end of theconsolidated second quarter.
(Thousands of yen)Previous consolidated fiscal year Current consolidated second quarter(As of March 31, 2018)(As of September 30, 2018)
Notes and accounts receivable-trade
Notes and accounts payable-trade
Current liabilities and others (Notes payablefacilities, Electronically recorded obligations-nonoperating)*

49,502
144,191

54,560140,081

40,34336,094(Notes Related to Quarterly Consolidated Statements of Income)
Major items under selling, general and administrative expenses and their respective amounts are as follows.
Previous consolidated
cumulative second quarter(From April 1, 2017
to September 30, 2017)(Thousands of yen)
Current consolidated
cumulative second quarter(From April 1, 2018
to September 30, 2018)

Salaries, benefits and bonuses

564,587

683,948

Provision for bonuses

120,292

120,581

Provision for directors' bonuses

3,588

2,858

Retirement benefit expenses
Provision of allowance for doubtful
accounts

26,10733,26012,8958,044- 18 -

(Notes Related to Quarterly Consolidated Statements of Cash Flows)* The correlation between the balance of cash and cash equivalents at the end of the current consolidated second
quarter and the amounts shown for the corresponding items on the quarterly consolidated balance sheets is asfollows.
(Thousands of yen)Previous consolidated
cumulative second quarter(From April 1, 2017
to September 30, 2017)I

Current consolidated
cumulative second quarter(From April 1, 2018
to September 30, 2018)

Cash and deposits
Time deposits with a deposit term of
more than three months
Securities (Money management fund)5,586,187

6,845,845△535,000△535,000

370,558

417,647

Cash and cash equivalents

5,421,746

6,728,492(Notes Related to Shareholders’ Equity, etc.)
Previous consolidated cumulative second quarter (From April 1, 2017 to September 30, 2017)
Dividends paid

(Resolution)

Class ofsharesOrdinary General
Meeting of
Shareholders ofJune 28, 2017

Common stock

Total amount ofdividends(Thousands ofyen)

Dividend
per share(Yen)

713,461

20.00

Record date

Effective
date

Source ofdividends

March 31, 2017

June 29, 2017

Retained earnings

II Current consolidated cumulative second quarter (From April 1, 2018 to September 30, 2018)
Dividends paid
(Resolution)

Class ofsharesOrdinary General
Meeting of
Shareholders ofJune 28, 2018

Common stock

Total amount ofdividends(Thousands ofyen)

Dividend
per share(Yen)

1,224,579

34.00- 19 -

Record date

Effective
date

Source ofdividends

March 31, 2018

June 29, 2018

Retained earnings

(Segment Information, etc.)[Segment Information]
I Previous consolidated cumulative second quarter (From April 1, 2017 to September 30, 2017)
1. Information on the amount of net sales and income or loss with respect to each reportable segment(Thousands of yen)
Other
Total
(See Note)

Reportable segment
Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Subtotal

Net sales
Net sales toexternal
12,575,626
3,383,148
1,611,855
1,340,027
18,910,658
396,418
19,307,076
customers
Inter-segment
－
－
－
－
－
409,534
409,534
sales or transfers
Total
12,575,626
3,383,148
1,611,855
1,340,027
18,910,658
805,952
19,716,611
Segment income or△91,780
1,401,196
514,847
300,783
2,125,046
130,423
2,255,470
loss ()Note: The column “Other” represents business operations that do not fall under any of the reportable segments and includes therelated goods sales, the logistics-related operations and other businesses, etc.

2. Difference between the aggregate amount of income or loss of reportable segments and the pertinent
amount shown on the quarterly consolidated statements of income as well as the key components of suchdifference (Matters concerning difference adjustment)(Thousands of yen)
IncomeAmountTotal of reportable segments

2,125,046

Income in the category “Other”

130,423

Elimination of inter-segment transactions△40,772

Unallocated corporate expenses (See Note)△605,323△22,986
Operating income shown on the quarterly
1,586,387
consolidated statements of income
Note: Unallocated corporate expenses are mostly general and administrative expenses
that are not attributable to any of the reportable segments.
Adjustment of inventories

3. Information on impairment loss on non-current assets or goodwill, etc. with respect to each reportablesegment
No applicable matter.

- 20 -

II Current consolidated cumulative second quarter (From April 1, 2018 to September 30, 2018)
1. Information on the amount of net sales and income or loss with respect to each reportable segment(Thousands of yen)
Other
Total
(See Note)

Reportable segment
Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Subtotal

Net sales
Net sales to
14,698,956
4,257,503
1,569,732
1,801,587
22,327,780
379,374
22,707,154
externalcustomers
Inter-segment
－
－
－
－
－
396,797396,797
sales ortransfers
Total
14,698,956
4,257,503
1,569,732
1,801,587
22,327,780
776,171
23,103,952
Segment income
1,391,669
742,434
230,980
80,1092,445,192
108,260
2,553,453
or loss ()Note: The column “Other” represents business operations that do not fall under any of the reportable segments and includes
the related goods sales, the logistics-related operations and other businesses, etc.

2. Difference between the aggregate amount of income or loss of reportable segments and the pertinent
amount shown on the quarterly consolidated statements of income as well as the key components of suchdifference (Matters concerning difference adjustment)(Thousands of yen)
IncomeAmountTotal of reportable segments

2,445,192

Income in the category “Other”

108,260

Elimination of inter-segment transactions△54,424

Amortization of goodwill△35,552

Unallocated corporate expenses (See Note)△703,377△27,476
Operating income shown on the quarterly
1,732,622
consolidated statements of income
Note: Unallocated corporate expenses are mostly general and administrative expenses
that are not attributable to any of the reportable segments.
Adjustment of inventories

3. Information on impairment loss on non-current assets or goodwill, etc. with respect to each reportablesegment
No applicable matter.

- 21 -

(Per Share Information)
The amounts of net income per share and fully diluted net income per share with their respective bases ofcalculation are as follows.
Previous consolidated
cumulative second quarter(From April 1, 2017
to September 30, 2017)(1) Net income per share

Current consolidated
cumulative second quarter(From April 1, 2018
to September 30, 2018)43.55 yen

49.10yen

1,557,321

1,772,866

---

---

1,557,321

1,772,866

35,760,445

36,110,689

43.24yen

48.71 yen

---

---

254,631285,755(Basis of calculation)
Profit attributable to owners of the parent(Thousands of yen)Amount not attributable to common
stockholders (Thousands of yen)
Profit attributable to owners of the parent
pertaining to common stock(Thousands of yen)
Average number of shares of common stockduring the period(2) Fully diluted net income per share(Basis of calculation)
Adjustment of profit attributable to ownersof the parent (Thousands of yen)
Increase in the number of shares of common
stockOutline of dilutive shares that were not includedin the calculation of fully diluted net income pershare due to a lack of dilutive effect and also
underwent a significant change after the end of
the previous consolidated fiscal year---

2. Other
No applicable matter.

- 22 ----

PART II. INFORMATION ON GUARANTY COMPANIES, ETC. OF THE SUBMITTING
COMPANYNo applicable matter.

- 23 -

Independent Auditors’ Quarterly Review Report
November 13, 2018
To the Board of Directors of Arisawa Mfg. Co., Ltd.

Ernst & Young ShinNihon LLC
Satoshi Ejima[Seal]

Designated Limited Liability Partner and Engagement Partner,

Certified Public Accountant
Akira Igarashi[Seal]

Designated Limited Liability Partner and Engagement Partner,

Certified Public Accountant
We have conducted, under the provisions of Article 193-2, paragraph 1 of the Financial Instruments and ExchangeAct, a quarterly review of the quarterly consolidated financial statements of Arisawa Mfg. Co., Ltd. listed in the “Statusof Accounting” for the consolidated second quarter (From July 1, 2018 to September 30, 2018) and the consolidated
cumulative second quarter (From April 1, 2018 to September 30, 2018) of the consolidated fiscal year from April 1,2018 to March 31, 2019, consisting of the quarterly consolidated balance sheets, quarterly consolidated statements ofincome, quarterly consolidated statements of comprehensive income, quarterly consolidated statements of cash flows
and notes.
Responsibility of Management for the Quarterly Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the quarterly consolidated financial
statements in accordance with the standards for preparation of quarterly consolidated financial statements generally
accepted in Japan. This includes improvement and operation of such internal control as the management deems
necessary for the preparation and fair presentation of quarterly consolidated financial statements free from material
misstatement, whether due to fraud or error.
Responsibility of Auditors
Our responsibility is to express a conclusion on the quarterly consolidated financial statements from an independent
standpoint based on our quarterly review. We conducted our quarterly review in accordance with the quarterly review
standards generally accepted in Japan.
A quarterly review consists principally of making inquiries to the management and the persons responsible forfinancial and accounting matters, etc., applying analytical procedures and conducting other quarterly review procedures.
The quarterly review procedures are less exhaustive than the procedures for annual financial statement audits
conducted in accordance with the audit standards generally accepted in Japan.
We believe that the evidence we have obtained provides a basis for our conclusion.
Conclusion of Auditors
In our quarterly review, no matter has come to our attention that causes us to believe that the above quarterly
consolidated financial statements do not fairly present, in any material respect, the financial conditions of Arisawa
Mfg. Co., Ltd. and its consolidated subsidiaries as of September 30, 2018 as well as the results of their operations andthe status of their cash flows in the consolidated cumulative second quarter ended September 30, 2018 in accordancewith the standards for preparation of quarterly consolidated financial statements generally accepted in Japan.
Interest
There exists no special interest between the Company and this audit corporation or its engagement partners whichis required to be stated pursuant to the provisions of the Certified Public Accountants Act.
Note:

1. All the matters stated above have been electronically copied from the matters stated in the original quarterly review report. The
original quarterly review report is separately archived by the Company (the company submitting the Quarterly Report).
2. XBRL data are not included in the subject of the quarterly review.