Detailed Consolidated Financial Statements
Years ended March 31, 2021 and 2020

Contents
Consolidated Balance Sheets ..........................................................................................................................2
Consolidated Statements of Income ...............................................................................................................4
Consolidated Statements of Comprehensive Income ....................................................................................5
Consolidated Statements of Changes in Net Assets .....................................................................................6
Consolidated Statements of Cash Flows ........................................................................................................9
Notes to Consolidated Financial Statements................................................................................................ 11
1. Major policies for preparing the consolidated financial statements ................................................... 11
2. Significant accounting policies .............................................................................................................. 11
3. Significant Accounting Estimates ..........................................................................................................14
4. Changes in significant accounting policies ..........................................................................................15
5. Notes to Consolidated Balance Sheets .................................................................................................16
6. Notes to Consolidated Statements of Income .......................................................................................17
7. Notes to Consolidated Statements of Comprehensive Income ...........................................................20
8. Notes to Consolidated Statements of Changes in Net Assets.............................................................21
9. Notes to Consolidated Statements of Cash Flows ...............................................................................23
10. Leases.....................................................................................................................................................24
11. Financial instruments ............................................................................................................................25
12. Marketable securities and investment securities ...............................................................................30
13. Derivative financial instruments ...........................................................................................................32
14. Provision for retirement benefits .........................................................................................................36
15. Taxes .......................................................................................................................................................39
16. Business combinations.........................................................................................................................40
17. Business segment information ............................................................................................................42
18. Information on related parties ..............................................................................................................48
19. Per share information ............................................................................................................................48
20. Subsequent events ................................................................................................................................49
21. Borrowings .............................................................................................................................................51
22. Supplementary schedule of asset retirement obligations .................................................................53
23. Others .....................................................................................................................................................53
Independent Auditor’s Report1Consolidated Balance Sheets
Asahi Kasei Corporation and Consolidated Subsidiaries
March 31, 2021 and 2020
Millions of yen
ASSETS:
Current assets:
Cash and deposits (Notes 9 and 11)
Notes and accounts receivable–trade (Note 11)
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets:
Property, plant and equipment
Buildings and structures (Note 5(d))
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles (Note 5(d))
Accumulated depreciation
Machinery, equipment and vehicles, net
Land (Note 5(d))
Lease assets (Note 10)
Accumulated depreciation
Lease assets, net
Construction in progress
Other (Note 5(d))
Accumulated depreciation
Other, net
Subtotal
Intangible assets
Goodwill
Other
Subtotal
Investments and other assets
Investment securities (Notes 5(a), (b), 11 and 12)Long-term loans receivable (Note 11)Long-term advance payments-trade (Note 5(e))
Deferred tax assets (Note 15)
Other
Allowance for doubtful accounts
Subtotal
Total noncurrent assets
Total assets

Thousands of
U.S. dollars(Note 1)

2021

2020

2021

¥221,779
338,640
203,159
166,494
111,798
97,131(2,225)
1,136,776¥207,957
330,999
216,463
160,064
101,313
92,153(1,519)1,107,430$2,003,243
3,058,802
1,835,056
1,503,875
1,009,827
877,346(20,098)
10,268,052

598,675(319,144)
279,531
1,535,326(1,286,057)
249,269
70,577
8,615(7,687)928
84,463
182,414(149,920)
32,495717,262

563,110(305,259)
257,851
1,466,958(1,243,780)
223,179
67,024
9,645(8,964)681
75,487
172,674(143,210)
29,464
653,686

5,407,596(2,882,703)
2,524,894
13,867,997(11,616,448)
2,251,549
637,494
77,816(69,434)
8,382
762,921
1,647,674(1,354,169)
293,515
6,478,746

351,921342,454694,374

365,680
349,566
715,246

3,178,764
3,093,253
6,272,008

286,517
1,241
29,39021,11632,709(445)
370,529
1,782,165¥2,918,941

244,581
7,951
20,46744,46628,883(435)
345,914
1,714,846¥2,822,277

2,587,996
11,209265,468
190,733
295,448(4,020)3,346,843
16,097,597$26,365,649

The accompanying notes are an integral part of these statements.

2

Millions of yen
LIABILITIES AND NET ASSETS
Liabilities:
Current liabilities:
Notes and accounts payable–trade (Note 11)
Short-term loans payable (Notes 11 and 21)
Commercial paper (Notes 11 and 21)
Lease obligations (Notes 10, 11 and 21)
Accrued expenses
Income taxes payable (Note 11)
Advances received
Provision for grant of shares
Provision for periodic repairs
Provision for product warranties
Provision for removal cost of property, plant and equipment
Other
Total current liabilities
Noncurrent liabilities:
Bonds payable (Notes 11 and 21)
Long-term loans payable (Notes 11 and 21)
Lease obligations (Notes 10, 11 and 21)
Deferred tax liabilities (Note 15)
Provision for grant of shares
Provision for periodic repairs
Provision for removal cost of property, plant and equipment
Net defined benefit liability (Note 14)
Long-term guarantee deposits (Note 11)
Other
Total noncurrent liabilities
Total liabilities
Net assets:
Shareholders’ equity
Capital stock
Authorized―4,000,000,000 shares
Issued and outstanding―1,393,932,032 shares
Capital surplus
Retained earnings (Note 8(b) (ii))
Treasury stock(2021―6,396,867 shares, 2020―6,440,327 shares)
Total shareholders’ equity
Accumulated other comprehensive income
Net unrealized gain on other securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Commitments and contingent liabilities (Notes 5(c) and 10)
Total liabilities and net assets

Thousands of
U.S. dollars(Note 1)

2021

2020

2021

¥142,087
144,571
84,000880
126,705
21,26878,601
124
7,222
3,522
5,651
88,533
703,163¥131,207
275,671
139,000
1,006
121,520
18,14573,623
78
4,043
3,738
2,640
71,863
842,531$1,283,416
1,305,853
758,739
7,949
1,144,477
192,106
709,972
1,120
65,23331,81351,043
799,684
6,351,396

110,000
320,404
3,921
58,669513
3,415
12,652
158,832
21,93930,899721,243
1,424,406

60,000229,172
3,506
70,600
412
4,560
5,771
174,365
21,613
26,287596,286
1,438,817

993,587
2,894,084
35,417529,934
4,634
30,846114,281
1,434,667
198,166
279,099
6,514,705
12,866,101

103,389
79,641
1,158,792(5,932)

103,389
79,641
1,125,738(5,990)933,872
719,366
10,466,914(53,581)

1,335,890

1,302,777

12,066,570

91,887(347)
50,462(10,416)
131,586
27,0581,494,535

67,027(241)
13,027(23,275)
56,53824,145
1,383,460

829,979(3,134)455,803(94,084)
1,188,565
244,404
13,499,548¥2,918,941¥2,822,277$26,365,649

The accompanying notes are an integral part of these statements.

3Consolidated Statements of Income
Asahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2021 and 2020
Thousands of
U.S. dollars(Note 1)Millions of yen
2021

2020

2021

Net sales (Note 17)¥2,106,051¥2,151,646$19,023,133

Cost of sales (Note 6(b))

1,425,342

1,476,606

12,874,555

680,709508,901

675,040
497,776

6,148,577
4,596,703

171,808

177,264

1,551,874

Interest income

1,895

2,769

17,117

Dividends income
Equity in earnings of affiliates

4,308
3,451

5,251
7,138

38,912
31,172

Insurance income
Other

2,618
5,059

1,724
3,596

23,64745,696

Total non-operating income

17,331

20,479156,544

Gross profit
Selling, general and administrative expenses (Note 6(a))
Operating income (Note 17)
Non-operating income:Non-operating expenses:
Interest expense

3,209

4,016

28,986

Other

7,893

9,720

71,294

Total non-operating expenses

11,102

13,735100,280

Ordinary income

178,036

184,008

1,608,129

Extraordinary income:Gain on sales of investment securities

17,312

13,679156,373

353

4,268

3,189

17,665

17,948

159,561

Loss on valuation of investment securities
Loss on disposal of noncurrent assets (Note 6(d))

66
10,637

1,953
9,668

596
96,080

Impairment loss (Note 6(e))
Loss on disaster (Note 6(f))

1,937
－

21,9492,437

17,496－

Loss on fire at plant facilities (Note 6(g))
Loss on product compensation (Note 6(h))

22,287
2,118

－
5,173

201,310
19,131Business structure improvement expenses (Notes 6(i))

7,750

4,840

70,003

Total extraordinary loss

44,79546,022404,616

Income before income taxes

150,906

155,934

1,363,075

Income taxes (Note 15) — current— deferred

73,273(4,465)54,173(3,967)

661,846(40,331)

Total income taxes

68,80850,206

621,516

Net income
Net income attributable to non-controlling interests

82,0982,330

105,728
1,797

741,559
21,046

Net income attributable to owners of the parent¥79,768¥103,931$720,513

Gain on sales of noncurrent assets (Note 6(c))
Total extraordinary income
Extraordinary loss:

The accompanying notes are an integral part of these statements.

4Consolidated Statements of Comprehensive Income
Asahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2021 and 2020
Thousandsof U.S.
dollars(Note 1)Millions of yen
2021

2020

2021

Net income¥82,098¥105,728$741,559

Other comprehensive income
Net (decrease) increase in unrealized gain on other securities

24,806(34,895)

224,063(106)
35,491(201)(26,115)(957)
320,576

12,631(3,867)

114,091

Share of other comprehensive income of affiliates accounted
for using equity method

3,020(3,482)

27,278

Total other comprehensive income (Note 7)

75,842(68,561)

685,051

Comprehensive income¥157,941¥37,167$1,426,619

Comprehensive income attributable to:
Owners of the parent¥154,817¥35,730$1,398,401

3,124

1,437

28,218Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans

Non-controlling interests

The accompanying notes are an integral part of these statements.

5Consolidated Statements of Changes in Net Assets
Asahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2021 and 2020
Millions of yen
Shareholders' equity

Balance at March 31, 2020

Capitalstock

CapitalsurplusRetainedearnings(Note 8(b))¥103,389¥79,641¥1,125,738

Accumulated other comprehensive income

Treasury
stock

Total
shareholders’equityNet
unrealized
gain onothersecurities

Deferred
gains(losses)on hedges

Foreigncurrencytranslation
adjustment¥(5,990)¥1,302,777¥67,027¥(241)¥13,027

Remeasurements ofdefinedbenefit plans¥(23,275)

Total
accumulated
othercomprehensive
incomeNoncontrollinginterests

Total net
assets¥56,538¥24,145¥1,383,460

Changesduring the fiscal year
Dividends from surplus(45,800)(45,800)(45,800)

Net income attributableto owners of the parent

79,76879,76879,768

(10)

(10)

(10)

69

69

69

－

－

(0)

－

－

(914)

(914)

(914)

0

0

Purchase of treasury stock
Disposal of treasury stock(0)

Cancellation of treasury
stock
Transfer from retained
earnings to capital surplus

0

Change of scope of
consolidation
Capital increase of
consolidated subsidiaries

0

Net changes of items otherthan shareholders' equity
Total changes of items during
the period
Balance at March 31, 2021

24,860(106)

37,434

12,85975,0492,913

77,962－0

33,054

59

33,11324,860(106)

37,434

12,85975,0492,913

111,075¥103,389¥79,641¥1,158,792¥(5,932)¥1,335,890¥91,887¥(347)¥50,462¥(10,416)¥131,586¥27,058¥1,494,535

6

Millions of yen
Shareholders' equity

Balance at March 31, 2019

Accumulated other comprehensive income

Capitalstock

CapitalsurplusRetainedearnings(Note 8(b))

Treasury
stock

Total
shareholders’equityNet
unrealized
gain onothersecurities

Deferred
gains(losses)on hedges

Foreigncurrencytranslation
adjustment¥103,389¥79,708¥1,077,586¥(3,936)¥1,256,747¥101,971¥(40)¥42,020

Remeasurements ofdefinedbenefit plans¥(19,213)

Total
accumulated
othercomprehensive
incomeNoncontrollinginterests

Total net
assets¥124,738¥21,225¥1,402,710

Changesduring the fiscal year
Dividends from surplus(48,723)(48,723)(48,723)

Net income attributableto owners of the parent

103,931103,931103,931(10,016)(10,016)(10,016)

Purchase of treasury stock
Disposal of treasury stock

0

83

84

84

Cancellation of treasurystock(7,878)

7,878

－

－

Transfer from retained
earnings to capital surplus

7,856(7,856)

－

－

801

801

801

(46)

(46)

Change of scope of
consolidation
Capital increase of
consolidated subsidiaries(46)

Net changes of items otherthan shareholders' equity
Total changes of items during
the period
Balance at March 31, 2020

(34,945)(201)(28,993)(4,062)(68,200)

2,920(65,280)－(67)

48,152(2,055)46,030(34,945)(201)(28,993)(4,062)(68,200)

2,920(19,250)¥103,389¥79,641¥1,125,738¥(5,990)¥1,302,777¥67,027¥(241)¥13,027¥(23,275)¥56,538¥24,145¥1,383,460

7

Thousands of U.S. dollars (Note 1)
Shareholders' equity

Balance at March 31, 2020

Accumulated other comprehensive income

Capitalstock

CapitalsurplusRetainedearnings(Note 8(b))

Treasury
stock

Total
shareholders’equityNet
unrealized
gain onothersecurities

Deferred
gains(losses)on hedges

Foreigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit plans

Total
accumulated
othercomprehensive
incomeNoncontrollinginterests

Total net
assets$933,872$719,366$10,168,350$(54,105)$11,767,474$605,429$(2,177)$117,668$(210,234)$510,686$218,092$12,496,251

Changesduring the fiscal year
Dividends from surplus(413,693)(413,693)(413,693)

Net income attributableto owners of the parent

720,513

720,513

720,513

(90)

(90)

(90)

623

623

623

－

－

(0)

－

－

(8,256)(8,256)(8,256)00

Purchase of treasury stock
Disposal of treasury stock(0)

Cancellation of treasury
stock
Transfer from retained
earnings to capital surplus

0

Change of scope of
consolidation
Capital increase of
consolidated subsidiaries

0

Net changes of items otherthan shareholders' equity
Total changes of items during
the period
Balance at March 31, 2021

224,551(957)

338,127

116,150

677,888

26,312704,200－

0298,564533

299,097

224,551(957)

338,127

116,150

677,888

26,312

1,003,297$933,872$719,366$10,466,914$(53,581)$12,066,570$829,979$(3,134)$455,803$(94,084)$1,188,565$244,404$13,499,548

The accompanying notes are an integral part of these statements.

8

Consolidated Statements of Cash FlowsAsahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2021 and 2020
Thousandsof U.S.
dollars(Note 1)Millions of yen
2021

2020

2021

Income before income taxes¥150,906¥155,934$1,363,075

Depreciation and amortization

Cash flows from operating activities:
108,369

96,016

978,855

Impairment loss

1,937

21,94917,496

Amortization of goodwill

24,90322,288

224,939

－

(79)

－

Increase in provision for grant of shares

148

119

1,337

Increase in provision for periodic repairs

2,033

332

18,363

Amortization of negative goodwill(Decrease) increase in provision for product warranties

(221)

640

(1,996)

Increase in provision for removal cost of property, plant and equipment

9,891

3,141

89,342

Decrease in net defined benefit liability(4,303)(4,069)(38,867)Interest and dividend income(6,202)(8,021)(56,020)

Interest expense

3,209

4,016

28,986Equity in earnings of affiliates(3,451)(7,138)(31,172)

Gain on sales of investment securities(17,312)(13,679)(156,373)

Loss on valuation of investment securities

66

1,953

596

(353)

(4,268)(3,189)Loss on disposal of noncurrent assets

10,637

9,668

96,080Decrease in notes and accounts receivable–trade

5,214

16,91947,096

Decrease (increase) in inventories

6,110(51,950)

55,189

Increase (decrease) in notes and accounts payable–trade

1,706(45,562)

15,410

Increase in accrued expenses

1,371

2,624

12,384Gain on sale of property, plant and equipment

Increase (decrease) in advances received

8,190(1,925)73,977

Other, net

15,896(20,688)

143,582

318,744

178,218

2,879,090

Interest and dividend income, received

8,690

10,83478,493

Interest expense paid

(3,086)(4,203)(27,875)

Income taxes paid

(70,672)(60,388)(638,352)

253,676

124,460

2,291,356

Subtotal

Net cash provided by operating activities
Cash flows from investing activities:
Payments into time deposits(6,262)(4,195)(56,562)

Proceeds from withdrawal of time deposits

4,333

13,34339,138Purchase of property, plant and equipment(133,347)(138,354)(1,204,471)

656

5,693

5,925

(16,945)(16,096)(153,058)

Purchase of investment securities(8,061)(10,820)(72,812)

Proceeds from sales of investment securities

20,26423,543

183,037

Purchase of shares in subsidiaries resulting in change in scope of consolidation(4,811)(175,759)(43,456)

Payments for transfer of business(17,566)(1,964)(158,667)

Payments of loans receivable(6,144)(23,170)(55,496)

Collection of loans receivable

10,428

9,253

94,192(297)

369(2,683)¥(157,751)¥(318,156)$(1,424,903)

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

Other, net
Net cash used in investing activities

9Thousands of
U.S. dollars(Note 1)Millions of yen
2021

2020

2021

Cash flows from financing activities:
Net (decrease) increase in short-term loans payable¥(168,641)¥172,022$(1,523,268)(Decrease) increase in commercial paper(55,000)

62,000(496,793)

Proceeds from long-term loans payable

143,467

45,816

1,295,881

Repayment of long-term loans payable(16,936)(17,586)(152,976)

Proceeds from issuance of bonds payable

50,00040,000451,630－(20,000)－(1,226)(1,276)(11,074)

Purchase of treasury stock(10)(10,016)(90)

Proceeds from disposal of treasury stock

69

84

623

Redemption of bonds
Repayments of lease obligations

－

849

－

Cash dividends paid

(45,800)(48,723)(413,693)

Cash dividends paid to non-controlling interests(1,198)(1,052)(10,821)

Payments from changes in ownership interests in subsidiaries that do not
result in change in scope of consolidation

(307)

－

(2,773)

Other, net

(287)

(194)

(2,592)

Proceeds from share issuance to non-controlling interests(95,869)

221,923(865,947)

Effect of exchange rate change on cash and cash equivalents

Net cash (used in) provided by financing activities

9,639(4,060)87,065

Net increase in cash and cash equivalents

9,695

24,167

87,571

204,771

180,520

1,849,616

1,769

85

15,979¥216,235¥204,771$1,953,166

Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents resulting from changes in scope of
consolidation
Cash and cash equivalents at end of year (Note 9)

The accompanying notes are an integral part of these statements.

10Notes to Consolidated Financial Statements
Asahi Kasei Corporation and Consolidated Subsidiaries

1. Major policies for preparing the consolidated financial statements
The consolidated financial statements, which are filed with the prime minister of Japan as required by the Financial Instruments and Exchange Act inJapan, are prepared in accordance with accounting principles generally accepted in Japan, which are different in certain respects from the applicationand disclosure requirements of International Financial Reporting Standards. The accompanying consolidated financial statements are a translation of
those filed with the prime minister of Japan and incorporate certain modifications to enhance foreign readers’ understanding of the consolidated
financial statements. In addition, the notes to the consolidated financial statements include certain financial information which is not required under
the disclosure regulations in Japan, but is presented herein as additional information.
The U.S. dollar amounts presented in the consolidated financial statements are included solely for the convenience of readers. These translations
should not be construed as representations that the Japanese yen amounts actually represent, have been, or could be converted into U.S. dollars.
As the amounts shown in U.S. dollars are for convenience only, and are not intended to be computed in accordance with generally accepted translation
procedures, the approximate current exchange rate of ¥110.71=US$1 prevailing on March 31, 2021, has been used.

Consolidation and investments in affiliated companies
The consolidated financial statements consist of the accounts of the parent company and 228 subsidiaries (211 subsidiaries at March 31, 2020,
hereinafter collectively referred to as the “Company”) which, with minor exceptions due to immateriality, are all majority or wholly owned companies,
including 7 core operating companies (Asahi Kasei Homes Corp., Asahi Kasei Construction Materials Corp., Asahi Kasei Microdevices Corp., Asahi
Kasei Pharma Corp., Asahi Kasei Medical Co., Ltd., ZOLL Medical Corporation, and Veloxis Pharmaceuticals, Inc.). Material inter-company
transactions and accounts have been eliminated.
Investments in unconsolidated subsidiaries and 20% to 50% owned companies in which the Company exercises significant influence are accounted
for, with minor exceptions due to immateriality, using the equity method of accounting. There were 62 such unconsolidated subsidiaries and 20% to
50% owned companies to which the equity method is applied at March 31, 2021 (56 at March 31, 2020), including Asahi Kasei Networks Corporation
and Asahi Yukizai Corporation.
Certain subsidiaries’ results are reported in the consolidated financial statements using a fiscal year ending December 31. Material differences ininter-company transactions and accounts arising from the use of different fiscal year-ends are appropriately adjusted for through consolidation
procedures.
All assets and liabilities of acquired companies are measured at their fair value and any difference between the net assets and the cost of investment
is recognized as goodwill. Goodwill is amortized using the straight-line method over a reasonable period during which its effects would last, with the
exception of minor amounts which are charged to income as incurred.

2. Significant accounting policies(a) Cash and cash equivalents
For cash flow statement purposes, cash and cash equivalents include all highly liquid investments, generally with original maturities of three months
or less, which are readily convertible to known amounts of cash, and therefore present an insignificant risk of changes in value due to changes ininterest rates.

(b) Inventories
Inventories held for sale in the ordinary course of business are stated at the lower of cost or net realizable value. Residential lots and dwellings forsale are stated at specifically identified costs.

(c) Noncurrent assets and depreciation/amortization
Property, plant and equipment (except for lease assets) are stated at cost. Significant renewals and improvements are capitalized at cost, while
maintenance and repairs are charged to income as incurred. Depreciation is provided for under the straight-line method, at rates based on estimated11useful lives of the assets, principally ranging from 7 to 60 years for buildings and from 2 to 22 years for machinery and equipment and vehicles.
Intangible fixed assets (except for lease assets), including software for internal use, are mainly amortized using the straight-line method over theestimated useful lives of the assets. The estimated useful life of software for internal use is mainly 5 years.
Lease assets (financing lease transactions without title transfer) are depreciated/amortized on a straight-line basis over the period of the lease withno residual value.

(d) Significant allowancesi) Allowance for doubtful accounts
Estimates of the unrecoverable portion of receivables, generally based on historical rates and for specific receivables of particular concern basedon individual estimates of recoverability, are recognized as allowance for doubtful accounts.
ii) Provision for grant of shares
To record the grant of shares to Directors, etc., in accordance with Share Grant Regulations, the provision for grant of shares is recorded basedon an estimate of grant of shares liabilities as of the closing date of the fiscal year.
iii) Provision for periodic repairs
The portion of foreseeable periodic repair expenses deemed to correspond to normal wear and tear of plant and equipment as of the closing dateof the fiscal year is recognized as provision for periodic repairs.
iv) Provision for product warranties
Estimates of product warranty expenses based on historical rates are recognized as provision for product warranties.
v) Provision for removal cost of property, plant and equipment
Provision for removal cost of property, plant and equipment is recorded based on estimated future removal cost of property, plant and equipment
at the end of each fiscal year.

(e) Accounting for retirement benefitsi) Method of attributing expected retirement benefits to each period
In calculating retirement benefit obligations, the Company applies a method of attributing expected retirement benefits to each period based on abenefit formula basis.
ii) Accounting for actuarial gains/losses and prior service costs
Actuarial gains/losses are amortized using the straight-line method from the fiscal year following their accrual over a certain period (mainly 10
years) within the average remaining service period of employees at the time of accrual. Prior service costs are amortized using the straight-line
method over a certain period (mainly 10 years) within the average remaining service period of employees at the time of accrual.
iii) Adoption of the simplified method
In calculating expected defined benefit liability and periodic retirement benefit expenses, certain consolidated subsidiaries have adopted thesimplified method. Under this method, the expected defined benefit liability is recorded at the severance payment amount to be required should
all employees retire voluntarily at fiscal year end.

(f) Significant revenue and expense recognitioni) Construction activities that are realizable as of fiscal year end
The percentage-of-completion method (progress of work is estimated using the percentage of costs incurred to the total projected costs) is applied.
ii) Other construction activities
The completed-contract method is used.

(g) Financial instrumentsi) Securities
Securities are classified into four categories: trading securities, held-to-maturity debt securities, equity securities of unconsolidated subsidiaries

12and affiliates, and other securities. At March 31, 2021 and 2020, the Company did not have trading securities or held-to-maturity debt securities.
Equity securities of unconsolidated subsidiaries and affiliates are accounted for, with minor exceptions due to immateriality, using the equity
method of accounting.
Other securities whose fair values are readily determinable are carried at fair value with net unrealized gains or losses, net of income taxes, being
included as a component of net assets. Other securities whose fair values are not readily determinable are stated at cost. In cases where any
significant decline in the realizable value is assessed to be other than temporary, the cost of other securities is devalued by the impaired amountand is charged to income. Realized gains and losses are determined using the average cost method and are reflected in the consolidated income
statements.
ii) Derivative financial instruments
All derivatives are stated at fair value. Gains or losses arising from changes in fair value are recognized in the period in which they arise, except
for derivatives that are designated as hedging instruments. Gains or losses arising from changes in fair value of these qualifying hedges aredeferred as “Deferred gains or losses on hedges” until being offset against gains or losses of the underlying hedged assets and liabilities.

(h) Taxes
Accrued income taxes are stated at the estimated amount of payables for corporation, enterprise, and inhabitant taxes. The asset and liability
approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the
carrying amounts and the tax bases of assets and liabilities.
The Company has elected to file its return under the consolidated tax filing system in Japan. Transactions subject to consumption taxes arerecorded at amounts net of consumption taxes.
Application of Tax Effect Accounting for Transition from the Consolidated Taxation System to the Group Tax Sharing System
Concerning items which transitioned to the group tax sharing system and those for which the non-consolidated tax payment system were reviewed
in line with the transition to the group tax sharing system, which has been established under the “Act for Partial Amendment of the Income Tax
Act, etc.” (Act No. 8 of 2020), the Company and certain domestic consolidated subsidiaries will not apply the provisions of Paragraph 44 of“Implementation Guidance on Tax Effect Accounting” (ASBJ Guidance No. 28), in accordance with Paragraph 3 of “Treatment of Tax EffectAccounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing System” (Practical Issues Task Force No. 39). As
a result, the amounts of deferred tax assets and deferred tax liabilities are reported based on the provisions of the tax act prior to the amendment.

(i) Translation of foreign currencies
Foreign currency receivables and payables are translated into Japanese yen at the exchange rates prevailing at the balance sheet date. Resulting
gains and losses are charged to income for the period.
Assets and liabilities of foreign subsidiaries are translated into Japanese yen at fiscal year-end exchange rates, and income and expenses ofsame are translated into Japanese yen at the average exchange rate for the fiscal year. Shareholders’ equity of foreign subsidiaries is translated
into Japanese yen at the historical exchange rates. The translation differences in Japanese yen amounts arising from the use of different rates
are recognized as foreign currency translation adjustments in the consolidated balance sheets. A portion of the foreign currency translation
adjustment is allocated to non-controlling interests and the Company’s portion is presented as a separate component of net assets in the
consolidated balance sheets.

133. Significant Accounting Estimates(a) Assessment of whether impairment indicators exist for goodwill as it relates to the acquisition of Polypore
International, LPi) Amount recorded in the consolidated financial statements for the fiscal year ended March 31, 2021

Goodwill recognized from acquisition of Polypore International, LP

Millions of yen

Thousands of
U.S. dollars

2021

2021

¥121,996$1,101,942

ii) Information on the nature of significant accounting estimates for identified items
The Company assesses the impairment indicators, recognition and measurement of impairment loss on goodwill based on a larger unit that consistsof an asset group related to the business together with goodwill. The Company assessed whether impairment indicators exist in the asset group of
the Separator business under the Material segment (refer to Note 17) to which Polypore International, LP’s goodwill belongs, based on the following
facts and circumstances.
・Whether or not the asset group’s performance falls into the category of “consistent negative operating results”, specified in the accounting
standards as an impairment indicator.
・Whether or not there are significant differences between assumptions for the size and timing of expansion of the market growth for eco-friendly
cars on which the latest business plan is based, compared to that used at the time of the acquisition.
The Company supplies both wet-process and dry-process separators for lithium-ion batteries, including the product line of Polypore International,
LP, and expects to create synergies especially in the area of lithium-ion battery applications for eco-friendly cars such as hybrid vehicles and electricvehicles, which continued demand growth is forecast. The business plan for the Separator business, to which the goodwill of Polypore International,
LP belongs, assumes rapid expansion of the market for eco-friendly cars through 2025, and the sales and operating income of the Separator
business will increase accordingly. In addition, the goodwill balance recognized from the acquisition of Polypore International, LP, which is recordedin the Separator business, is the most monetarily significant of the total goodwill balance of ¥351,921 million (US$3,178,764 thousand) recordedin the consolidated balance sheets for the current fiscal year.
The Company has concluded that no impairment indicators existed for the goodwill balance as it relates to the acquisition of Polypore International,
LP, as the performance of the Separator business has not fallen into the category of “consistent negative operating results” during the current fiscal
year, and also assumptions regarding the scale and timing of the expansion of the eco-friendly car market, which form the basis of the latest
business plan, have not significantly diverged from those at the time of the acquisition.
Since the eco-friendly car market is a growing market with rapidly evolving technology and intensifying competition, sales and operating income
may not achieve projects made in the business plan if management is not able to respond to unexpected changes in the business environment
appropriately. If there is a change in the assumed situation, an impairment indicator may be identified.

(b) Valuation of intangible assets identified in connection with the acquisition of Veloxis Pharmaceuticals A/S as of theacquisition datei) Amount recorded in the consolidated financial statements for the fiscal year ended March 31, 2021
Millions of yen

Thousands of
U.S. dollars

2021

2021

¥35,855$323,864¥89,408$807,587

Customer-related assets recognized from acquisition of
Veloxis Pharmaceuticals A/STechnology-related assets recognized from acquisition of
Veloxis Pharmaceuticals A/Sii) Information on the nature of significant accounting estimates for identified items

The Company estimates the fair value of intangible assets acquired as the result of a business combination as of the date of the businesscombination based on values reasonably calculated by the cost approach, market approach, income approach, etc. In the previous fiscal year, theCompany completed the acquisition of 100% of the outstanding shares of Veloxis Pharmaceuticals A/S with cash consideration payment in

14¥147,220 million. The fair value of Technology-related assets identified based on the facts and circumstances that existed at the date of the businesscombination was measured using the relief-from-royalty method, and the fair value of Customer-related assets was measured using the multiperiod excess earning method. While provisional accounting treatment for these intangible assets was applied at the end of the previous fiscal year,
accounting treatment was finalized in the current fiscal year, and the consolidated balance sheets for the previous fiscal year have been adjusted
retrospectively.
The purpose of this acquisition is that Veloxis Pharmaceuticals A/S has knowledge of immunosuppressive drugs for renal transplant patients andexpects growth in the renal transplant market mainly in the United States. In addition, the Company aims to obtain a business platform in thepharmaceutical market in the United States through synergies between the Company and Veloxis Pharmaceuticals A/S.
In estimating the fair value of the intangible assets as of the acquisition date, in addition to the expansion of future sales volumes assumed in thebusiness plan, the royalty rate used in the relief-from-royalty method and the customer attrition rate used in the multi-period excess earning method
are identified as significant assumptions used, and in addition to being a significant transaction in terms of value, there is a high degree of estimation
uncertainty included in the assumptions.

4. Changes in significant accounting policies(a) Accounting Standards issued but not yet applied
1 For the Company and domestic consolidated subsidiaries:i) Accounting Standard for Revenue Recognition and Implementation Guidance on Accounting Standard for Revenue Recognition
The ASBJ issued ASBJ Statement No. 29 “Accounting Standard for Revenue Recognition” and ASBJ Guidance No. 30 “Implementation Guidanceon Accounting Standard for Revenue Recognition.”

This is a comprehensive standard related to revenue recognition, with the following five

steps to be applied for recognition of revenue:
Step 1: Identify the contract with customers
Step 2: Identify the separate performance obligations
Step 3: Determine the transaction price of the contract
Step 4: Allocate the transaction price to each of the separate performance obligations
Step 5: Recognize the revenue as each performance obligation is satisfied
The Company will apply the standard and guidance from the beginning of the fiscal year ending March 31, 2022. At the time of the preparation of
the consolidated financial statements, the effects of adoption are being assessed.
ii) Accounting Standard for Fair Value Measurement and Implementation Guidance on Accounting Standard for Fair Value Measurement,
etc.
The ASBJ issued ASBJ Statement No. 30 “Accounting Standard for Fair Value Measurement,” ASBJ Guidance No. 31 “Implementation Guidanceon Accounting Standard for Fair Value Measurement,” revised ASBJ Statement No. 9 “Accounting Standard for Measurement of Inventories,”
revised ASJB Statement No. 10 “Accounting Standard for Financial Instruments,” and revised ASJB Guidance No. 19 “Implementation Guidanceon Disclosures about Fair Value of Financial Instruments.” “Accounting Standard for Fair Value Measurement” and “Implementation Guidance on
Accounting Standard for Fair Value Measurement” were developed and guidance are established to improve comparability with international
accounting standards. The standard and guidance are applied to the market value of the following items.
・Financial instruments under “Accounting Standard for Financial Instruments”
・Inventories held for trading purposes under “Accounting Standard for Measurement of Inventories”“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” has been revised, and a note on the breakdown of financial
instruments by level of fair value was established. The Company will apply the standards and guidance from the beginning of the fiscal year
ending March 31, 2022. At the time of the preparation of the consolidated financial statements, the effects of adoption are being assessed.
2 For subsidiaries that apply US GAAP:
Leases (Topic 842, ASU No. 2016-02)
The Financial Accounting Standards Board (FASB) issued “Accounting Standards Update No. 2016-02, Leases (Topic 842).” This accounting
standard requires a lessee to recognize all leases as assets and liabilities on the balance sheet. The Company will apply the standard andguidance from the beginning of the fiscal year ending March 31, 2023. At the time of the preparation of the consolidated financial statements, theeffects of adoption are being assessed.

15

(b) Changes in presentationi) Application of Accounting Standard for Disclosure of Accounting Estimates
The Company has applied “Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement No. 31) issued by the AccountingStandards Board of Japan from the fiscal year ended March 31, 2021. Refer to Note 3 “Significant Accounting Estimates.” In the note, information
for the fiscal year ended March 31, 2020, is omitted in accordance with the standard.
ii) Consolidated Statements of Income
In the fiscal year ended March 31, 2021, insurance income, which had previously been included in others under non-operating income, exceeded
10% of total non-operating income, and is reported separately. The consolidated statements of income for the fiscal year ended March 31, 2020,
have been adjusted accordingly, resulting in others under non-operating income being ¥3,596 million, ¥1,724 million lower than the previously
reported ¥5,320 million, reflecting the separation of the same amount as insurance income.
In the fiscal year ended March 31, 2021, foreign exchange loss and costs associated with idle portion of facilities, both of which had previously beenreported separately, each became 10% or less of total non-operating expenses, and are included in others under non-operating expenses. The
consolidated statements of income for the fiscal year ended March 31, 2020, have been reclassified accordingly, resulting in foreign exchange lossof ¥2,328 million and costs associated with idle portion of facilities of ¥1,642 million being included in others under non-operating expenses.

(c) Additional Information
Assumptions regarding effect of COVID-19 on accounting estimates
Although it is difficult to predict when the impact of COVID-19 will subside, based upon information gathered from a wide range of industrial fields theCompany assumes that there will be incremental economic recovery toward the end of the fiscal year ending March 31, 2022, and has madeaccounting estimates accordingly regarding impairment of noncurrent assets, recoverability of deferred tax assets, etc.
There are many uncertainties regarding the impact of COVID-19, and if changes occur in the aforementioned assumptions, the financial position andoperating results may be affected from the next consolidated fiscal year onwards.

5. Notes to Consolidated Balance Sheets(a) Investment securities
Among investment securities, shares of unconsolidated subsidiaries and affiliates as of March 31, 2021 and 2020, amounted to ¥112,102 million(US$1,012,573 thousand) and ¥104,668 million, respectively. Included in those amounts are investments in joint ventures of ¥61,567 million(US$556,111 thousand) and ¥53,650 million, respectively.

(b) Pledged assets and secured debt
Cash and deposits pledged as collateral for bank guarantees at March 31, 2021 and 2020, were ¥353 million (US$3,189 thousand) and ¥314 million,
respectively. Investment securities pledged to suppliers as transaction guarantees at March 31, 2021 and 2020, were ¥55 million (US$497 thousand)and ¥55 million, respectively.

(c) Contingent liabilities
Contingent liabilities at March 31, 2021 and 2020, arising in the ordinary course of business were as follows:
Thousands of
U.S. dollars

Millions of yen

Loans guaranteed
Total

2021

2020

¥35,669¥40,3212021$322,184¥35,669¥40,321$322,184(d) Deferred gain on property, plant and equipment deducted for tax purposes
The accumulated reduced-value entries, which are directly deducted from property, plant and equipment, as of March 31, 2021 and 2020, were¥12,494 million (US$112,853 thousand) and ¥9,966 million, respectively.

16

The breakdown of reduced-value entries as of March 31, 2021 and 2020, was as follows:
Thousands of
U.S. dollars

Millions of yen
2021

2020

2021

Buildings and structures¥3,916¥3,439$35,372

Machinery, equipment and vehicles

8,262

6,215

74,627

Land

167

167

1,508

Other

149

145

1,346

Total

¥12,494¥9,966$112,853(e) Long-term advance payments–trade
The Company has concluded long-term purchase contracts with raw materials manufacturers, to ensure the stable procurement of nylon raw materials.
Advance payments have been made for a part of it in accordance with the contracts.

6. Notes to Consolidated Statements of Income(a) Selling, general and administrative expenses
Major components of selling, general and administrative expenses for the years ended March 31, 2021 and 2020, were as follows:
Thousands of
U.S. dollars

Millions of yen

Salaries and benefits
Research and development*

2021

2020

2021

¥205,671¥194,889$1,857,745

61,527

62,244555,749* The aggregate amounts of research and development expenses included in manufacturing costs and selling, generaland administrative expenses for the years ended March 31, 2021 and 2020, were ¥89,745 million (US$810,631
thousand) and ¥90,966 million, respectively.

(b) Gain or loss on valuation of inventories
Inventories held for sale in the ordinary course of business are stated at the lower of cost or net realizable value. (Gain) loss on valuation of inventories
for the years ended March 31, 2021 and 2020, were as follows:
Thousands of
U.S. dollars

Millions of yen
2021

2020

¥(689)

2021¥2,499$(6,223)(c) Gain on sales of noncurrent assets
Major components of gain on sales of noncurrent assets for the years ended March 31, 2021 and 2020, were as follows:
Thousands of
U.S. dollars

Millions of yen
2021
Land

2020

2021

¥234

¥2,693$2,114

Machinery

91

1,462

822

Other

28

113

253

(d) Loss on disposal of noncurrent assets
Loss on disposal of noncurrent assets for the years ended March 31, 2021 and 2020, was primarily loss on abandonment and sale of buildings,
machinery and equipment, etc. The abandonment and sale of buildings, machinery and equipment, etc. were performed under a single, all-inclusive
contract for each facility.

17(e) Impairment loss
Major components of impairment losses for the years ended March 31, 2021 and 2020, were as follows:
Use

Asset classThousands
ofU.S. dollars

Location
Millions of yen
2021

Production facility forsynthetic rubber
Sales rights ofpharmaceuticalproducts
R&D equipment
System for sales andlogistics

Machinery andequipment, etc.
Other
Intangible
assets
Machinery andequipment, etc.
Other
Intangible
assets2020

2021

Item on theConsolidated
Statements ofIncomeJurong Island,
Singapore¥－¥17,363$－

Impairment loss

－

－

1,721

－

Impairment loss

Fuji, Shizuoka,
etc.

－

1,091

－

Impairment loss

－

－

1,062

－

Impairment loss

Production facility forsynthetic resin

Machinery andequipment, etc.

Kawasaki Ward
Kawasaki,Kanagawa

－

878

－

Business structure
improvement
expenses

Production facility forbasic chemical
products

Buildings, etc.

Nobeoka,
Miyazaki

－

206

－

Impairment loss

Production facility forfiber products

Machinery andequipment, etc.

Amakusa,
Kumamoto

－

173

－

Business structure
improvement
expenses

Production facility forsynthetic fibers

Machinery andequipment, etc.

－

143

－

Impairment loss

Production facility for
nonwoven fabrics

Machinery andequipment, etc.

North RhineWestphalia,
GermanyMoriyama,
Shiga

－

112

－

Impairment loss

Others

Machinery andequipment, etc.

Nobeoka,
Miyazaki, etc.

－

627

－

Production facility forbattery materials

Machinery andequipment, etc.

Indiana, U.S.A.

2,128

－

19,221

Production facility forsynthetic resin
coatings raw materials

Machinery andequipment, etc.

Gobo,
Wakayama

1,008

－

9,105

Production facility forplastic raw materials

Machinery andequipment, etc.

Jurong Island,
Singapore

665

－

6,007

Impairment loss

Production facility for
nonwoven fabrics

Buildings, etc.

Nobeoka,
Miyazaki

477

－

4,309

Business structure
improvement
expenses

Goodwill, etc.

－

406

－

3,667

Impairment loss

236

－

2,132

Impairment loss

209

－

1,888

Impairment loss

Goodwill related tolining processing
business
Production facility for
nonwoven fabrics

Buildings, etc.

Nobeoka,
MiyazakiNaka Ward
Nagoya, Aichi,
etc.

Impairment loss andbusiness structure
improvement
expenses
Business structure
improvement
expenses
Business structure
improvement
expenses

Office assets

Buildings, etc.

Production facility for
textile products

Machinery andequipment, etc.

San Luis
Potosí, Mexico

178

－

1,608

Business structure
improvement
expenses

Production facility forpharmaceuticalproducts

Machinery andequipment, etc.

Fuji, Shizuoka

130

－

1,174

Impairment loss

Others

Machinery andequipment, etc.

Kawasaki Ward
Kawasaki,Kanagawa, etc.

377

－

3,405

Impairment loss andbusiness structure
improvement
expensesGrouping of operating assets is based on managerial accounting categories, with consideration given to production process, geographic location, anddomain of authority for making investment decisions. Idle assets are recorded separately in each fixed assets class.
The book value of production facility for synthetic resin coatings raw materials and goodwill related to lining processing business was reduced to the18

recoverable amount due to diminished profitability. The discount rate for calculation of the discounted cash flow is zero since the estimated future
cash flows are negative.
The book value of production facility for battery materials was reduced to zero due to a decision to dispose of certain facilities as a result ofreconsideration of the production system in order to streamline the supply chain. The book value of production facility for plastic raw materials,
production facility for nonwoven fabrics, office assets, production facility for textile products and production facility for pharmaceutical products was
reduced to zero due to the disappearance of prospects for future use.
Among the extraordinary losses under Others, ¥85 million (US$768 thousand) and ¥376 million were recorded under business structure improvement
expenses for the years ended March 2021 and 2020, respectively.

(f) Loss on disaster
Major components of loss on disaster for the years ended March 31, 2021 and 2020, were as follows:
Thousands of
U.S. dollars

Millions of yen
2021

2020

2021

Repair expenses¥－¥1,381$－

Fixed costs incurred during suspension ofoperations

－

684

－

Loss on disposal of inactive assets

－

372

－

(g) Loss on fire at plant facilities
Breakdown of the loss due to a fire that occurred on October 20, 2020, at the semiconductor manufacturing plant of Asahi Kasei Microdevices Corp.,
a consolidated subsidiary of the Company, is as follows:
Thousands of
U.S. dollars

Millions of yen
2021
Loss on destruction of noncurrent assets
and inventories, etc.
Expenses for removal of noncurrent
assets, etc.
Other related expenses
Insurance income

2020

2021

¥12,634¥－$114,118

7,017－

63,382

4,569－

41,270(1,933)－(17,460)(h) Loss on product compensation
Loss on product compensation was recorded due to the occurrence of quality defects in some of the customers’ final products which incorporated
electronic components that were manufactured and sold by the Company in the past.

(i) Business structure improvement expenses
Major components of business structure improvement expenses for the years ended March 31, 2021 and 2020, were as follows:
Thousands of
U.S. dollars

Millions of yen
2021
Impairment of fixed assets
Additional payment of retirement benefits
due to application of early retirement, etc.
Loss on disposal and devaluation of
inventory and others

2020

2021

¥3,877¥1,428$35,019

711

233

6,422

3,162

3,179

28,56119

7. Notes to Consolidated Statements of Comprehensive Income
Recycling adjustment and tax effects on other comprehensive income for the years ended March 31, 2021 and 2020, were as follows:
Thousands of
U.S. dollars

Millions of yen
2021

2020

2021

Changes during the fiscal year

¥52,903¥(37,687)$477,852

Recycling adjustment(17,230)(12,418)(155,632)

Pre-tax effect

35,674(50,105)

322,229

Tax effect(10,868)

15,210(98,166)

Net unrealized gain on other securities

24,806(34,895)

224,063

(220)

(781)

(1,987)

29

11

262

Net unrealized gain on other securities

Deferred gains or losses on hedges
Changes during the fiscal year
Recycling adjustment

－

579

－

(191)

(190)

(1,725)

85

(11)

768

(106)

(201)

(957)

35,467(25,807)

320,359

24

(308)

217

35,491(26,115)

320,576

Changes during the fiscal year

11,058(9,475)99,883

Recycling adjustment

7,048

4,055

63,662Pre-tax effect

18,106(5,421)

163,544

Adjustment on the acquisition cost of assets
Pre-tax effectTax effect
Deferred gains or losses on hedges
Foreign currency translation adjustment
Changes during the fiscal year
Recycling adjustment
Foreign currency translation adjustment
Remeasurements of defined benefit plans

Tax effect(5,476)

1,553(49,463)

Remeasurements of defined benefit plans

12,631(3,867)

114,091

Share of other comprehensive income of affiliates accounted for using equity method
Changes during the fiscal year

3,120

(3,478)28,182

Recycling adjustment

(100)

(4)

(903)

3,020

(3,482)

27,278¥75,842¥(68,561)$685,051

Share of other comprehensive income ofaffiliates accounted for using equity method
Total other comprehensive income208. Notes to Consolidated Statements of Changes in Net Assets
For the year ended March 31, 2021
(a) Class and total number of issued and outstanding shares and treasury stockThousands of shares
Number ofshares as ofMarch 31, 2020

Increase in numberof shares during the
fiscal year

Decrease in
number of shares
during the fiscal
year

Number ofshares as ofMarch 31, 2021

Common stock

1,393,932－－

1,393,932

Total

1,393,932－－

1,393,932

Common stock(Notes 1,2,3)

6,440

10

53

6,397

Total

6,440

10

53

6,397

Issued and outstanding shares

Treasury stock

Notes:

1. The increase of 10 thousand shares in common stock of treasury stock was primarily attributable to the purchase of 10 thousand shares in quantitiesof less than one share unit.
2. The decrease of 53 thousand shares in common stock of treasury stock was primarily attributable to the disposal of 53 thousand shares by the trust
for granting shares to Directors, etc., and the sale of 1 thousand shares in quantities of less than one share unit.
3. The number of shares of treasury stock as of March 31, 2021, includes 327 thousand shares held by the trust for granting shares to Directors, etc.

(b) Dividendsi) Cash dividends paid
1) The following was resolved by the Board of Directors on May 22, 2020.
Dividends for common stock
Total dividends¥22,206 million (US$200,578 thousand)

Dividend per share¥16.00 (US$0.14)

Date of record

March 31, 2020

Payment dateJune 10, 2020

Note: Total dividends includes ¥6 million (US$54 thousand) for shares held by the trust for granting shares to Directors, etc.
2) The following was resolved by the Board of Directors on Nov 6, 2020.
Dividends for common stock
Total dividends¥23,594 million (US$213,115 thousand)

Dividend per share¥17.00 (US$0.15)

Date of record

September 30, 2020

Payment date

December 1, 2020

Note: Total dividends includes ¥6 million (US$54 thousand) for shares held by the trust for granting shares to Directors, etc.

ii) Dividends for which the date of record falls within the fiscal year under review but the payment date occurs in the following fiscal
year
The following was resolved by the Board of Directors on May 13, 2021.
Dividends for common stock
Total dividends¥23,594 million (US$213,115 thousand)Source of dividends

Retained earnings

21Dividend per share¥17.00 (US$0.15)

Date of record

March 31, 2021

Payment dateJune 3, 2021

Note: Total dividends includes ¥6 million (US$54 thousand) for shares held by the trust for granting shares to Directors, etc.

For the year ended March 31, 2020(a) Class and total number of issued and outstanding shares and treasury stockThousands of shares
Number of shares
as of March 31,
2019

Increase in number ofshares during the
fiscal year

Decrease in number ofshares during the
fiscal year

Number of shares
as of March 31,
2020

Common stock (Note 1)

1,402,616

－

8,684

1,393,932

Total

1,402,616

－

8,684

1,393,932

Common stock(Notes 2,3,4)

6,491

8,698

8,749

6,440

Total

6,491

8,698

8,749

6,440

Issued and outstanding shares

Treasury stock

Notes:

1. The decrease of 8,684 thousand shares in common stock issued was attributable to the cancellation of treasury stock based on a resolution of theBoard of Directors.
2. The increase of 8,698 thousand shares in common stock of treasury stock was primarily attributable to the acquisition of 8,684 thousand sharesbased on a resolution of the Board of Directors, the purchase of 13 thousand shares in quantities of less than one share unit, and an increase of 1
thousand shares from the application of the equity method to a company which holds shares of the Company.
3. The decrease of 8,749 thousand shares in common stock of treasury stock was primarily attributable to the cancellation of 8,684 thousand sharesbased on a resolution of the Board of Directors, the disposal of 63 thousand shares by the trust for granting shares to Directors, etc., and the saleof 2 thousand shares in quantities of less than one share unit.
4. The number of shares of treasury stock as of March 31, 2020, includes 379 thousand shares held by the trust for granting shares to Directors, etc.

(b) Dividendsi) Cash dividends paid
1) The following was resolved by the Board of Directors on May 10, 2019.
Dividends for common stock
Total dividends¥23,742 million

Dividend per share¥17.00Date of record

March 31, 2019

Payment dateJune 4, 2019

Note: Total dividends includes ¥8 million for shares held by the trust for granting shares to Directors, etc.
2) The following was resolved by the Board of Directors on November 6, 2019.
Dividends for common stock
Total dividends¥24,982 million

Dividend per share¥18.00Date of record

September 30, 2019

Payment date

December 3, 2019

Note: Total dividends includes ¥7 million for shares held by the trust for granting shares to Directors, etc.

22ii) Dividends for which the date of record falls within the fiscal year under review but the payment date occurs in the following fiscal
year
The following was resolved by the Board of Directors on May 22, 2020.
Dividends for common stock
Total dividends¥22,206 million

Source of dividends

Retained earnings

Dividend per share¥16.00Date of record

March 31, 2020

Payment dateJune 10, 2020

Note: Total dividends includes ¥6 million for shares held by the trust for granting shares to Directors, etc.

9. Notes to Consolidated Statements of Cash Flows(a) Cash and cash equivalents
Reconciliation of cash and cash equivalents on the consolidated statements of cash flows to the amounts disclosed on the consolidated balance
sheets at March 31, 2021 and 2020, was as follows:
Thousands of
U.S. dollars

Millions of yen

Cash and deposits
Time deposits with deposit term of over 3 months
Cash and cash equivalents

2021

2020

2021

¥221,779¥207,957$2,003,243(5,543)(3,186)(50,068)¥216,235¥204,771$1,953,166(b) Assets and liabilities of newly consolidated subsidiaries through acquisition of shares
For the year ended March 31, 2020
Assets and liabilities of acquired companies (Cardiac Science Corporation and 6 consolidated subsidiaries) and net cash outflow for such acquisitionis as follows:
Millions of yen
Current assets¥2,870Noncurrent assets

13,860Goodwill

17,635Current liabilities(2,848)

Noncurrent liabilities(2,455)Acquisition cost of shares

29,063

Cash and cash equivalents(119)

Net cash used for acquisition

28,94423

Assets and liabilities of acquired companies (Veloxis Pharmaceuticals A/S and 1 consolidated subsidiary) and net cash outflow for such acquisition is
as follows:
Millions of yen
Current assets¥11,012

Noncurrent assets

133,785

Goodwill

45,245Current liabilities(20,100)

Noncurrent liabilities(24,331)

Foreign currency translation adjustment

1,609

Acquisition cost of shares

147,220

Cash and cash equivalents(5,749)Net cash used for acquisition

141,471

In the fiscal year under review, provisional accounting treatment for the allocation related to a business combination was finalized.
Accordingly, the figures for the previous year reflect the finalization of the provisional accounting treatment.

(c) Assets and liabilities of newly acquired business
For the year ended March 31, 2021
Assets and liabilities of acquired business (Adient plc’s automotive fabric business) and net cash outflow for such acquisition is as follows:
Millions of yen

Thousands of U.S. dollars

Current assets¥6,012$54,304

Noncurrent assets

11,956

107,994

Goodwill

4,799

43,347

Current liabilities(4,291)(38,759)(451)(4,074)

Acquisition cost of business

18,025

162,813

Cash and cash equivalents(460)(4,155)

17,566

158,667

Noncurrent liabilities

Net cash used for acquisition

10. Leases(a) Financing lease transactions
Financing lease transactions without title transfer and right-of-use assets of overseas subsidiaries under IFRS 16(Lessee)i) Components of lease assets are as follows:
1) Property, plant and equipment: Mainly the right to use land and production facilities.
The right-of-use assets are included in "Other" in the consolidated balance sheets for the fiscal year under review.
2) Intangible fixed assets: Softwareii) Depreciation of lease assets:
As stated in Note 2 “Significant accounting policies (c) Noncurrent assets and depreciation/amortization.”24

(b) Operating lease transactions(Lessee)
Future lease payments for the non-cancelable portion of the Company’s operating leases at March 31, 2021 and 2020, were as follows:
Thousands of
U.S. dollars

Millions of yen
2021

2020

2021

Due within one year

¥9,294¥9,593$83,949

Due after one year

23,68831,821

213,964

Total¥32,982¥41,414$297,913

11. Financial instruments(a) Overview of financial instrumentsi) Policy related to financial instruments
The Company raises long-term funds as required mainly for its planned capital expenditures by borrowing from banks, borrowing from life
insurance companies, issuing bonds, etc. A portion of the surplus funds is invested only in highly stable financial assets. Short-term working funds
are raised by bank borrowings, issuance of commercial paper, etc. Derivative transactions are mainly entered into for the purpose of reducing
risks related to assets and liabilities which are exposed to risks of fluctuations of exchange rate and interest rate. Derivatives are not traded for
speculative purposes.
ii) Components of financial instruments, their risks and risk management structure
As operating receivables, notes and accounts receivable–trade are exposed to credit risk of customers. As the business of the Company spansa wide range of fields, operating receivables are not excessively concentrated on specific customers, but the parent company and eachconsolidated subsidiary monitor and manage the credit condition of each customer.
Investment securities are exposed to the risk of fluctuations in market price, but they are mainly equity securities of companies with which theCompany has business relationships. These securities are held for the purpose of maintaining the business relationships. Fair value is periodicallyevaluated, and the financial condition of the issuing company is monitored.
As operating liabilities, notes and accounts payable–trade generally have a payment term of 1 year or less.
Variable interest-rate borrowings are exposed to the risk of interest-rate fluctuations, but derivatives (interest-rate and currency swaps, interestrate swaps) are used as hedges to fix interest expenses for a portion of long-term variable interest-rate borrowings.
Operating receivables and operating liabilities include those denominated in currencies other than Japanese yen, and are thus exposed to therisk of exchange-rate fluctuations. In order to minimize the effects of short-term exchange-rate fluctuations, the Company hedges with derivativetransactions (forward exchange contracts), in principle, within the range of the underlying receivables and liabilities amount.
Derivative transactions are exposed to the credit risk of transacting financial institutions, but the credit condition of those financial institutions isreviewed through periodical monitoring. Such transactions are performed and managed in accordance with the Company’s internal regulations
which stipulate the related authority, procedures, limits, etc.
Borrowings are exposed to liquidity risk, but the parent company specifies standards for required on-hand funds based on the Company’s fundingplans, prepares and revises plans for cash receipts and disbursements as appropriate, and enters into commitment-line agreements withtransacting financial institutions to manage such risk.
Loan securitization in the housing business is exposed to the risk of interest-rate fluctuations between the time of origination of housing loans andthe time of execution of their securitization, but derivative transactions (interest-rate swaps) are entered into in order to reduce such risk.
iii) Supplementary explanation of fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. In the case where no quoted market price is available, areasonably estimated fair value is used. As variable factors are incorporated in its estimation, fair value may change due to the adoption of different
assumptions, conditions, etc. The stated amount of contracts regarding derivative transactions included in Note 12 “Derivative financial
instruments” is not itself an indication of the market risk of the derivative transactions.

25

(b) Fair value of financial instruments
Amounts carried on the consolidated balance sheets, their fair values, and the differences between them as of March 31, 2021 and 2020, were asshown below.
Financial instruments whose fair values are deemed extremely difficult to determine are not included in this table (See Notes 2), 3) and 4) below).
Millions of yen
2021
Carrying amount

Fair value

Difference

Cash and deposits¥221,779¥221,779¥－

Notes and accounts receivable–trade338,640

338,640－Investments in affiliates

16,816

13,490(3,326)

Other securities

164,018

164,018

－

9,584

9,589

5

Total assets

750,836

747,515(3,321)

Notes and accounts payable–trade142,087

142,087－

Short-term loans payable

89,27889,278－Commercial paper

84,00084,000－

Income taxes payable

21,26821,268－

Bonds payable

110,000

109,743257

Long-term loans payable

375,697376,201

(504)

4,801

5,103

(302)

Investment securities:

Long-term loans receivable

Lease obligations
Long-term guarantee deposits

10,23010,274(44)

Total liabilities

837,360

837,953(593)

Derivative financial instruments (*)¥(1,680)¥(1,680)¥－

Millions of yen
2020
Carrying amount

Fair value

Difference

Cash and deposits¥207,957¥207,957¥－

Notes and accounts receivable–trade

330,999

330,999－

Investments in affiliates

15,863

11,758(4,105)

Other securities

Investment securities:

130,771

130,771－

Long-term loans receivable

14,191

14,1998

Total assets

699,782695,685(4,097)

Notes and accounts payable–trade131,207131,207－

Short-term loans payable

251,063251,063－

Commercial paper

139,000

139,000－

Income taxes payable

18,145

18,145－

Bonds payable

60,00059,412588

Long-term loans payable

253,780

255,810(2,031)

Lease obligations

4,511

4,819

(308)

Long-term guarantee deposits

9,795

9,841

(46)

867,500

869,296(1,797)

¥120

¥120

¥－

Total liabilities
Derivative financial instruments (*)

26

Thousands of U.S. dollars
2021
Carrying amount

Fair value

Difference

Cash and deposits$2,003,243$2,003,243$－

Notes and accounts receivable–trade

3,058,802

3,058,802－

151,892

121,850(30,042)

1,481,510

1,481,510－

86,56986,61445

Total assets

6,782,007

6,752,010(29,997)

Notes and accounts payable–trade

Investment securities:
Investment in affiliates
Other securities
Long-term loans receivable

1,283,416

1,283,416－

Short-term loans payable

806,413806,413－

Commercial paper

758,739758,739－

Income taxes payable

192,106

192,106－

Bonds payable

993,587

991,265

2,321

3,393,524

3,398,076(4,552)

Lease obligations

43,36646,093(2,728)Long-term guarantee deposits

92,40492,801(397)

Total liabilities

7,563,544

7,568,901(5,356)

Derivative financial instruments (*)$(15,175)$(15,175)$－

Long-term loans payable(*) The amounts represent net amount of assets and liabilities resulting from derivative transactions. In the case of a net liability, the amount isshown in parentheses.
Note 1) Method to determine the estimated fair value of financial instruments; securities and derivative financial instrumentsi) Assets
1) Cash and deposits, notes and accounts receivable–trade
As their fair value approximates book value due to their short maturity, the corresponding book value amount is used as fair value.
2) Investment securities
The stock exchange prices are used to determine fair value of traded stocks. Refer to Note 12 “Marketable securities and investment securities”
for information on securities classified by holding purpose.
3) Long-term loans receivable
The carrying amounts shown include long-term loans receivable that are scheduled for repayment within one year of March 31, 2021 and 2020,
amounting ¥8,343 million (US$75,359 thousand) and ¥6,240 million, respectively. Their fair values are determined based on the present valueof principal and interest, discounted using current assumed rates for similar long-term loans receivable. For long-term loans receivable bearing
variable interest rates, as they are deemed to reflect market interest rates within a short term, book values are used as fair value.
ii) Liabilities
1) Notes and accounts payable–trade; short-term loans payable; commercial paper; income taxes payable
As their fair values approximate book value due to their short maturity, the corresponding book value amounts are used as fair value.
2) Bonds payable
Fair value of the bonds payable issued by the parent company is based on the quoted market price if available. For those without a quoted
market price that are subject to special treatment for interest-rate swaps, fair value is based on the present value by totaling the amount ofprincipal and interest, together with related interest-rate swaps, discounted by the interest rate that would apply if equivalent bonds were newly
issued.
3) Long-term loans payable
The carrying amounts shown include long-term loans payable that are scheduled for repayment within one year of March 31, 2021 and 2020,
amounting to ¥55,293 million (US$499,440 thousand) and ¥24,608 million, respectively. Their fair values are based on present value of principal

27

and interest discounted using the current assumed rates for similar long-term loans payable. For long-term loans payable bearing variableinterest rates, fair value of those subject to special treatment of interest rate-swaps is based on present value by totaling the amount of principal
and interest, together with related interest-rate swaps, discounted by the interest rate that would apply if equivalent long-term loans were newly
entered. For other long-term loans payable, book value is used as fair value as they are deemed to reflect market interest rates within a shortterm.
4) Lease obligations
The carrying amounts shown are the total amount of lease obligations under current liabilities and lease obligations under noncurrent liabilities.
Present value, calculated by discounting the total amount of principal and interest using the presumed interest rate that would apply if leasetransactions were newly made, is used as the fair value.
5) Long-term guarantee deposits
In cases where the deposit period can be estimated, the fair value of long-term guarantee deposits is determined using a discounted cash flow
over that period.
iii) Derivative transactions
Refer to Note 13 “Derivative financial instruments.”
Note 2) For equity investments in nonpublic companies, with a carrying amount as of March 31, 2021 and 2020, amounting to ¥105,225 million(US$950,456 thousand) and ¥97,238 million, respectively, fair value is not included in investment securities and investment securities, as noquoted market price is available and it is deemed extremely difficult to determine fair value due to the impossibility of estimating future cash
flows.
Note 3) For investment securities, with a carrying amount as of March 31, 2021 and 2020, amounting to ¥458 million (US$4,137 thousand) and ¥709
million, respectively, fair value is not included in investment securities and investment securities, as no quoted market price is available and it
is deemed extremely difficult to determine fair value due to the impossibility of estimating future cash flows.
Note 4) For long-term guarantee deposits, the fair value of a portion having a carrying amount as of March 31, 2021 and 2020, amounting to ¥11,710
million (US$105,772 thousand) and ¥11,819 million, respectively, is not included as no quoted market price is available and it is deemed
extremely difficult to determine fair value due to the impossibility of estimating future cash flows.
Note 5) For monetary credits and securities with maturity, the amounts scheduled for redemption subsequent to the closing date are as follows:
Millions of yen
2021
Due within

Due after one

Due after fiveDue after

one year

year, within five

years, within ten

more than ten

years

years

years

Cash and deposits¥221,779

¥－

¥－

¥－

Notes and accounts receivable–trade338,640

－

－

－

8,343

873

369

－

¥568,761

¥873

¥369

¥－

Long-term loans receivable
Total

Millions of yen
2020
Due within

Due after one

Due after fiveDue after

one year

year, within five

years, within ten

more than ten

years

years

years

Cash and deposits¥207,957

¥－

¥－

¥－

Notes and accounts receivable–trade

330,999

－

－

－

6,240

7,657

295

－

¥545,196¥7,657¥295¥－

Long-term loans receivable
Total

28

Thousands of U.S. dollars
2021
Due within

Due after one

Due after fiveDue after

one year

year, within five

years, within ten

more than ten

years

years

years

Cash and deposits$2,003,243

$－

$－

$－

Notes and accounts receivable–trade

3,058,802－－－

75,359

7,885

3,333

－

$5,137,395$7,885$3,333$－Long-term loans receivable
Total

Note 6) For bonds payable, long-term loans payable, lease obligations, and other interest-bearing debt, the amounts scheduled for repayment
subsequent to the closing date are as follows:Year ending

Millions of yen

March 312021
Short-term

Commercial

Bonds

Long-termloans payablepaper

payableloans payable

Lease obligations

Total

2022

¥89,278¥84,000¥－¥55,293¥880¥229,451

2023

－

－

－

70,521

403

70,9252024－－

40,00051,294260

91,5542025－－

20,00051,207204

71,4112026－－

10,00062,278208

72,4862027 and－－

40,00085,103

2,845

127,948

thereafterYear ending

Millions of yen

March 312020
Short-term

Commercial

Bonds

Long-termloans payablepaper

payableloans payable

Lease obligations

Total

2021

¥251,063¥139,000¥－¥24,608¥1,006¥415,676

2022

－

－

－

54,876717

55,593

2023

－

－

－

70,089296

70,3852024－－

20,00051,026

129

71,1552025－－

20,00030,710121

50,8312026 and－－

20,00022,471

2,243

44,713

thereafter

29

Year ending

Thousands of U.S. dollars

March 312021
Short-term

Commercial

loans payable

paper

Bonds payable

Long-termLeaseloans payable

obligations

Total

2022

$806,413$758,739$－$499,440$7,949$2,072,541

2023

－

－

－

636,989

3,640

640,638

2024

－

－

361,304

463,319

2,348

826,971

2025

－

－

180,652

462,533

1,843

645,028

2026

－

－

90,326

562,533

1,879

654,7382027 and－－361,304

768,702

25,6981,155,704

thereafter

12. Marketable securities and investment securities(a) Other securities with available fair value
The aggregate cost, carrying amount which was identical to fair value, and gross unrealized gains and losses of debt and equity securities classified
as other securities for which fair values were available at March 31, 2021 and 2020, were as follows:
Millions of yen
2021
Carrying amount

Unrealized gains

Cost(losses)
Securities with unrealized gains:
Equity securities¥161,391¥28,675¥132,716

Subtotal

161,391

28,675

132,716

Equity securities

2,627

3,444

(817)

Subtotal

2,627

3,444

(817)

¥164,018¥32,119¥131,899

Securities with unrealized losses:

Total

For equity investments in nonpublic companies and investment securities, with a carrying amount of ¥105,225 million and ¥458 million,
respectively, as of March 31, 2021, fair value is not included in the above table as no quoted market price is available and it is deemed extremely
difficult to determine fair value due to the impossibility of estimating future cash flows.

30

Millions of yen
2020
Carrying amount

Unrealized gains

Cost(losses)
Securities with unrealized gains:
Equity securities¥123,394¥25,195¥98,199

Subtotal

123,394

25,19598,199Equity securities

7,377

9,148

(1,771)

Subtotal

7,377

9,148

(1,771)¥130,771¥34,343¥96,428

Securities with unrealized losses:

Total

For equity investments in nonpublic companies and investment securities, with a carrying amount of ¥97,238 million and ¥709 million,
respectively, as of March 31, 2020, fair value is not included in the above table as no quoted market price is available and it is deemed extremely
difficult to determine fair value due to the impossibility of estimating future cash flows.

Thousands of U.S. dollars
2021
Carrying amount

Unrealized gains

Cost(losses)
Securities with unrealized gains:
Equity securities$1,457,782$259,010$1,198,772

Subtotal

1,457,782

259,010

1,198,772

Equity securities

23,72931,108(7,380)Subtotal

23,72931,108(7,380)$1,481,510$290,118$1,191,392

Securities with unrealized losses:

Total

For equity investments in nonpublic companies and investment securities, with a carrying amount of $950,456 thousand and $4,137 thousand,respectively, as of March 31, 2021, fair value is not included in the above table as no quoted market price is available and it is deemed extremely
difficult to determine fair value due to the impossibility of estimating future cash flows.

(b) Realized gains and losses on the sale of other securities
The realized gains and losses on the sale of other securities during the years ended March 31, 2021 and 2020, were as follows:
Thousands ofMillions of yen
2021

U.S. dollars
2020

2021

Selling amount¥20,060¥24,310$181,194

Gain on sales of securities

17,312

13,679156,373

Loss on sales of securities

－

－

－

(c) Loss on other devaluation of investment securities whose fair values are readily determinable
Loss on other devaluation of investment securities whose fair values are readily determinable for the year ended March 31, 2021, was ¥66 million(US$596 thousand), which is for other securities, and for the year ended March 31, 2020, ¥1,953 million, which is the sum of ¥534 million for equity
securities of unconsolidated subsidiaries and affiliates and ¥1,419 million for other securities.

31

13. Derivative financial instruments(a) Derivative financial instruments for which hedge accounting is not appliedi) Foreign exchange forward contracts
Millions of yen
2021
Classification
Off-market
transactions

Items

Amount ofcontract over
1 yearAmount ofcontract

Profit (loss)
fromvaluation

Fair value(*)

Foreign exchange
forward contracts
Selling
U.S. dollar¥30,420¥－¥(1,169)¥(1,169)Euro

13,305

－

(316)

(316)

Thai baht

1,564

－

(23)

(23)

British pound

16

－

(0)

(0)

Chinese yuan

2,508

－

(80)

(80)

11

－

0

0

15,223

－

311

311

132

－

1

1

¥63,179¥－¥(1,276)¥(1,276)

Fair value(*)

Profit (loss)
fromvaluation

Australian dollar
BuyingU.S. dollar
Euro
Total

Millions of yen
2020
Classification
Off-market
transactions

Items

Amount ofcontract over
1 yearAmount ofcontract

Foreign exchange
forward contracts
Selling
U.S. dollar¥27,355

¥－

¥72

¥72

Euro

11,005－48

48

Thai baht

1,307

－

(50)

(50)

British pound

47

－

(1)

(1)

Chinese yuan

1,911

－

(7)

(7)

－

－

－

－

3,957

－

12

12

42

－

0

0

¥45,624

¥－

¥75

¥75

Australian dollar
BuyingU.S. dollar
Euro
Total

32

Thousands of U.S. dollars
2021
Classification
Off-market
transactions

Items

Amount ofcontract over
1 yearAmount ofcontract

Profit (loss)
fromvaluation

Fair value(*)

Foreign exchange
forward contracts
Selling
U.S. dollar$274,772$－$(10,559)$(10,559)

Euro

120,179－(2,854)(2,854)

Thai baht

14,127

－

(208)

(208)

British pound

145

－

(0)

(0)

Chinese yuan

22,654

－

(723)

(723)

99

－

0

0

137,503

－

2,809

2,809

1,192

－

9

9

$570,671$－$(11,526)$(11,526)

Australian dollar
BuyingU.S. dollar
Euro
Total

(*) The fair value is provided by counterparty financial institutions.

(b) Derivative financial instruments for which hedge accounting is appliedi) Foreign exchange forward contracts
Millions of yen
2021
Classification

Items

Hedged assets/liabilities

Amount ofcontract over
1 yearAmount ofcontract

Fair
value(*)

Foreign exchange
forward contracts
Selling

Principle-based
accounting

U.S. dollar

Accounts receivable–trade¥8,096¥413¥(398)

Euro

Accounts receivable–trade

458

－

(15)

British pound

Accounts receivable–trade

2

－

(0)

U.S. dollar

Accounts payable–trade

192

－

10

Euro

Accounts payable–trade

7

－

0

¥8,755¥413¥(404)

BuyingTotal

33

Millions of yen
2020
Classification

Items

Hedged assets/liabilities

Amount ofcontract

Amount ofcontract over
1 yearFairvalue(*)

Foreign exchange
forward contracts
Selling

Principle-based
accounting

U.S. dollar

Accounts receivable–trade¥2,688

¥393

¥37

Euro

Accounts receivable–trade

1,047

－

8

British pound

Accounts receivable–trade

－

－

－

U.S. dollar

Accounts payable–trade

372

－

0

Euro

Accounts payable–trade

1

－

0

¥4,108¥393¥45

BuyingTotal

Thousands of U.S. dollars
2021
Classification

Items

Hedged assets/liabilities

Amount ofcontract

Amount ofcontract over
1 yearFairvalue(*)

Foreign exchange
forward contracts
Selling

Principle-based
accounting

U.S. dollar

Accounts receivable–trade$73,128$3,730$(3,595)

Euro

Accounts receivable–trade

4,137

－

(135)

British pound

Accounts receivable–trade

18

－

(0)

U.S. dollar

Accounts payable–trade

1,734

－

90

Euro

Accounts payable–trade

63

－

0

$73,128$3,730$(3,649)

BuyingTotal(*) The fair value is provided by counterparty financial institutions.

34ii) Interest-rate swaps, and interest-rate and currency swaps
Millions of yen
2021
Classification

Items

Hedged assets/liabilities

Amount ofcontract
over 1 year

Fair value¥71,597¥58,143(*)¥71,597¥58,143¥－

Amount ofcontract

Interest-rate swaps
Special treatment forinterest-rate swaps

Pay fixed/receive
Long-term loans payable
floating
Total

Millions of yen
2020
Classification

Special treatment forinterest-rate swaps

Items

Hedged assets/liabilities

Amount ofcontract
over 1 year

Fair value¥88,114¥71,647(*)¥88,114¥71,647¥－

Amount ofcontract

Interest-rate swaps
Pay fixed/receive
Long-term loans payable
floating
Total

Thousands of U.S. dollars
2021
Classification

Special treatment forinterest-rate swaps

Items

Hedged assets/liabilities

Amount ofcontract over
1 yearFair value$646,708$525,183(*)$646,708$525,183$－

Amount ofcontract

Interest-rate swaps
Pay fixed/receive

Long-term loans payable

floating
Total(*) Fair value of interest-rate swaps and interest-rate and currency swaps, for which special treatment is applied, is included in fair value ofthe corresponding long-term loans payable for which hedge accounting is applied.

35

14. Provision for retirement benefits
Upon terminating employment, employees of the parent company and its subsidiaries are entitled, under most circumstances, to lump-sum severance
indemnities and/or pension payments determined by reference mainly to their current basic rate of pay and length of service and/or defined contributionplans. Additional benefits may be granted to employees depending on the conditions under which termination of employment occurs. Certain
consolidated subsidiaries adopt the simplified method in calculating expected defined benefit liability.
Reconciliations of beginning and ending balances of projected benefit obligations for the fiscal years ended March 31, 2021 and 2020, were as follows:

Thousands ofMillions of yen
2021

U.S. dollars
2020

2021

¥401,975¥402,461$3,630,882

Service cost

14,657

14,844132,391

Interest cost

685

705

6,187

Actuarial gains/losses

11,1862,515

101,039

Payment of retirement benefits(18,007)(16,954)(162,650)

Prior service cost－

(1,599)

－

Other

451

2

4,074

¥410,947¥401,975$3,711,923

Beginning balance of the projected benefit obligations

Ending balance of the projected benefit obligations

Reconciliations of beginning and ending balances of plan assets for the fiscal years ended March 31, 2021 and 2020, were as follows:
Thousands ofMillions of yen
2021
Beginning balance of plan assets

U.S. dollars
2020

2021

¥227,609¥233,776$2,055,903

Expected return

5,640

5,810

50,944

Actuarial gains/losses

22,270(8,937)201,156

Contributions

5,632

6,128

50,872

Payment of retirement benefits(9,294)(9,134)(83,949)

258

(35)

2,330

¥252,115¥227,609$2,277,256

Other
Ending balance of plan assets

36

Reconciliations of ending balance of projected benefit obligations and the plan assets, and of net defined benefit liability and net defined benefit asset,
as recorded in the consolidated balance sheet at March 31, 2021 and 2020, were as follows:
Thousands ofMillions of yen

2021

U.S. dollars
2020

2021

Projected benefit obligations of funded plans¥265,651¥256,681$2,399,521

Plan assets(252,115)(227,609)(2,277,256)

Subtotal

13,53629,072

122,265

Projected benefit obligations of unfunded plans

145,296

145,294

1,312,402

Net of liability and asset that have been recorded in
the consolidated balance sheets¥158,832¥174,365$1,434,667

Net defined benefit liability¥158,832¥174,365$1,434,667

Net of liability and asset that have been recorded in
the consolidated balance sheets¥158,832¥174,365$1,434,667

Periodic retirement benefit expenses for employees and the breakdown of items for the years ended March 31, 2021 and 2020, were as follows:
Thousands ofMillions of yen
2021
Service cost (net of employee contributions)

U.S. dollars
2020

2021

¥14,386¥14,201$129,943

685

705

6,187

Expected return on plan assets(5,640)(5,810)(50,944)

Amortization of actuarial gains/losses

7,375

4,424

66,615

Amortization of prior service costs

(297)

8

(2,683)

Additional retirement benefits and other

1,444

769

13,043¥17,954¥14,297$162,171Interest cost

Retirement benefit expenses of defined benefit plans

The components of other comprehensive income on defined benefit plans for the fiscal years ended March 31, 2021 and 2020, were as follows:
Thousands ofMillions of yen
2021

U.S. dollars
2020

2021

Prior service costs¥(297)¥1,607$(2,683)

Actuarial gains/losses

18,403(7,028)166,227

Total¥18,106¥(5,421)$163,544

Accumulated other comprehensive income on defined benefit plans at March 31, 2021 and 2020, was as follows:
Thousands ofMillions of yen
2021

U.S. dollars
2020

2021

Unrecognized prior service costs¥(1,314)¥(1,611)$(11,869)

Unrecognized actuarial gains/losses

16,24834,651

146,762

Total¥14,934¥33,040$134,893

37

Share by major classifications for plan assets at March 31, 2021 and 2020, was as follows:
2021

2020

Bonds

37%

40%

Stock

29%

22%

Alternative investments

15%

21%

Life insurance

12%

13%

Cash and deposits

6%

2%

Other

1%

1%

Total

100%

100%

Note: Alternative investments include mainly investments in real estate, private equity and hedge funds.

The current and future allocation of plan assets, and the current and future long-term rate of expected return from the variety of assets that make up
the plan assets, are considered in determining the long-term rate of expected return on plan assets.

Major actuarial assumptions at March 31, 2021 and 2020, were as follows:
2021

2020

Discount rate

Mainly 0.1%

Mainly 0.1%

The long-term rate of expected return on plan assets

Mainly 2.5%

Mainly 2.5%

Expected rate of increase in salary

2.0–6.5%

2.0–6.5%

Required payments to defined contribution plans at March 31, 2021, amounted to ¥6,920 million (US$62,506 thousand), and at March 31, 2020,
amounted to ¥5,236 million.

38

15. Taxes
Income taxes applicable to the parent company and subsidiaries in Japan include (1) corporation tax, (2) enterprise tax, and (3) inhabitants tax.

Significant components of deferred tax assets and liabilities at March 31, 2021 and 2020, were as follows:
Thousands ofMillions of yen

U.S. dollars

2021

2020

2021

Net defined benefit liability¥48,449¥53,111$437,621

Tax loss carry forwards

15,5689,733

140,620

Accrued bonuses

7,426

7,788

67,076

Foreign tax credit carry forwards

7,202

6,729

65,053

Impairment losses

7,014

4,437

63,355

Loss on disposal of noncurrent assets

6,498

3,668

58,694

Unrealized gain on noncurrent assets and others

4,325

4,536

39,066

Other

33,55325,524

303,071

Subtotal deferred tax assets

130,037

115,526

1,174,573

Less: Valuation allowance (Note 1)(26,862)(13,418)(242,634)

Total deferred tax assets

103,175

102,108

931,939

Identified intangible assets during business combination(44,027)(67,853)(397,679)

Unrealized gain on other securities(39,795)(29,841)(359,453)

Foreign subsidiary's unitary tax(24,696)－(223,069)

Depreciation―overseas subsidiaries(9,617)(9,568)(86,867)

Deferred gain on property, plant and equipment(8,736)(8,814)(78,909)

Other(13,857)(12,166)(125,165)

Total deferred tax liabilities(140,728)(128,241)(1,271,141)

Net deferred tax assets (liabilities)¥(37,553)¥(26,134)$(339,202)

Deferred tax assets:

Deferred tax liabilities:

Notes

1: Valuation allowance increased mainly due to business combinations.
2: In the fiscal year under review, provisional accounting treatment for the allocation related to a business combination was finalized.
Accordingly, the figures for the previous year reflect the finalization of the provisional accounting treatment.

Reconciliation of the differences between the statutory tax rate and the effective income tax rate for the years ended March 31, 2021 and 2020, was
as follows:
2021

2020

30.6%

30.6%
30.9%

Non-deductible expenses and non-taxable income

0.2

R&D expenses deductible from income taxes

(2.7)

1.0
0.3
(3.5)

Amortization of goodwill and negative goodwill

5.1

Equity in (losses) earnings of unconsolidated subsidiaries and affiliates

(0.7)

4.4
(2.9)
(1.4)

Undistributed earnings (losses) of foreign subsidiaries

0.5

2.5
0.5

Difference of tax rates for foreign subsidiaries

(4.5)

0.4
(1.9)

Foreign subsidiary's unitary tax

15.9

－
0.4

Other

1.2

0.3
(0.4)
32.2%
(7.9)

Statutory tax rate
Increase (reduction) in taxes resulting from:

Effective income tax rate

45.6%

0.1
21.1%201739

16. Business combinations
Business combinations accounted for by the purchase method were as follows:(a) Finalization of the provisional accounting treatment related to a business combination
The business combination of Veloxis Pharmaceuticals A/S, which took place on January 23, 2020, was provisionally accounted for in the previous
fiscal year and finalized in the fiscal year under review.
Due to the use of this provisional accounting treatment, the allocation amount of acquisition cost within the comparative information contained in
the consolidated financial statements for the fiscal year under review was significantly revised. The details of this revision are as follows.
i) Details of revision to allocation amount
Revised items

Millions of yen

Thousands of U.S. dollars¥149,100$1,346,762(95,862)(865,884)

Customer-related assets(37,757)(341,044)

Deferred tax liabilities

29,764

268,847

Total revised amount¥(103,854)$(938,072)

Goodwill (after revision)¥45,245$408,680

Goodwill (before revision)
Technology-related
assetsii) Amortization method and useful life of goodwill
Straight-line method over 20 yearsiii) Major weighted average useful life
Technology-related assets

12 years

Customer-related assets

15 years

Total

13 years(b) Business combination by purchase
Sage Automotive Interiors, Inc. (“Sage”), a subsidiary of the Company, concluded an agreement with Adient, plc (“Adient”) on March 5, 2020, toacquire Adient’s automotive fabrics business, and the acquisition was completed on September 30, 2020 (U.S. Eastern time). In connection with theacquisition, shares in 11 companies related to the said business were acquired from Adient, with 6 companies becoming consolidated subsidiaries
and 5 companies becoming equity-method affiliates.
i) Outline of business combination
1) Name and nature of the businesses of counterparty
Name of counterparty:

Adient, plc

Nature of the businesses:

Development, manufacture, and sale of fabrics for automotive interiors

2) Main reasons for the acquisition
By combining the automotive fabrics business acquired from Adient, having marketing, manufacturing, and development centered in Europe,
together with its own established business, Sage will be able to further expand in Europe, the largest market for automotive interior fabric and thesource of innovative automotive trends. Sage plans to achieve the following synergies through this acquisition.
• Optimum global manufacturing• Mutually complementary relationships with NA/EU OEMs
• Full product lineup (fabric, artificial suede, synthetic leather)
By advancing its regional strategy and product strategy around the world to reinforce its position as one of the leading suppliers of vehicle seatfabric and strengthen its relationships with automotive OEMs in each region, Sage is expected to make a growing contribution to the Company’s
overall expansion of business in the automotive field. Sage also expects that expansion in Europe will enable it to maintain its leading position in
the global market for automotive interior materials.

403) The acquisition date
September 30, 2020
4) Statutory form of business combination
Asset and stock purchase for cash as consideration
5) Grounds for determining acquiring company
Asset and stock purchase for cash as consideration by a consolidated subsidiaryii) The period of acquiree’s results included in the consolidated financial statements
From October 1, 2020, to March 31, 2021iii) Cost of acquisition and details
Millions of yen

Thousands of U.S. dollars

Asset and stock purchase price¥18,025$162,813

Purchase price¥18,025$162,813iv) Major acquisition related costs
Advisory fees and others:¥1,732 million (US$15,644 thousand)v) Amount of goodwill, measurement principle, amortization method, and useful life
1) Amount of goodwill¥4,799 million (US$43,347 thousand)2) Measurement principle
Goodwill is measured as the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed.
3) Amortization method and useful life
Straight-line method over 20 yearsvi) Details of assets acquired and liabilities assumed as of the acquisition dateMillions of yen

Thousands of U.S. dollars

Current assets¥6,012$54,304

Noncurrent assets

11,956

107,994

Total assets¥17,968$162,298

Current liabilities¥4,291$38,759

451

4,074

¥4,741$42,824

Noncurrent liabilities
Total liabilitiesvii) Amount of identifiable intangible assets other than goodwill, its details and major weighted average useful life
1) Purchase price allocated to intangible assets and its major items
Millions of yen

Thousands of U.S. dollars¥2,586$23,358

Customer-related assets

2) Major weighted average useful life
Customer-related assets

19 yearsviii) Pro forma effects on the consolidated statements of income assuming the business combination had occurred at the beginning of
the fiscal year, and its measurement
Information is omitted due to immateriality. This note is not audited.

41

17. Business segment information(a) Overview of reportable segments
The Company’s business segments are based on organizational units for which separate financial information is available, and the Board of Directors
carries out periodic review to allocate management resources and evaluate business performance.
The Company is organized under an operating holding company configuration with the operating holding company and core operating companies
performing operations in three business sectors. The operating holding company and each core operating company lays out strategy and develops
business activities in Japan and abroad.
Main businesses and main products of the three reportable segments are as follows:

Material segment
Basic Materials business
The Company manufactures, processes, and sells petrochemical products such as styrene, acrylonitrile, polyethylene, and polystyrene.
Performance Products business
The Company manufactures, processes, and sells fiber products such as cupro fiber, elastic polyurethane filament, nonwoven fabrics, and nylon
66 filament, performance polymer products such as synthetic rubber and engineering plastics, and consumable products such as food wrapping
film, and plastic films and sheets.
Specialty Solutions business
The Company manufactures, processes, and sells performance material products such as coating materials, microcrystalline cellulose, explosives,
explosion-bonded metal clad, hollow-fiber filtration membranes, ion-exchange membranes, and electronic materials, battery separator products
such as lithium-ion battery separator and lead-acid battery separator, and electronic devices such as mixed-signal LSIs and Hall elements.

Homes segment
Homes business
The Company constructs unit homes and apartment buildings, and operates real estate businesses, remodeling businesses, and financial andother services.
Construction Materials business
The Company manufactures and sells autoclaved aerated concrete (AAC) panels, insulation panels, foundation systems, and structuralcomponents.

Health Care segment
Pharmaceuticals business
The Company manufactures and sells pharmaceuticals and diagnostic reagents.
Medical Care business
The Company manufactures and sells artificial kidneys, therapeutic apheresis devices, and virus removal filters.
Critical Care business
The Company manufactures and sells products centered on cardiopulmonary resuscitation; notably defibrillators for medical professionals,
automated external defibrillators (AEDs), and wearable defibrillators.

OthersThe Company performs plant and environmental engineering, research and analysis, employment agency/staffing operations, etc.

(b) Methods to determine net sales, income or loss, assets, and other items by reportable business segment
Profit by reportable business segment is stated on an operating income basis. Intersegment net sales and transfers are based on the values oftransactions undertaken between third parties.

42

(c) Information concerning net sales, income or loss, assets, and other items for each reportable segment
Millions of yen
2021
Material

Homes

Health Care

Subtotal

Others (Note 1)

Total

Sales:
External customers
Intersegment
Total
Operating income
Assets¥991,227¥692,639¥407,904¥2,091,770¥14,281¥2,106,051

5,515

22

24

5,561

41,01046,572996,743

692,661

407,928

2,097,331

55,292

2,152,623

66,46163,54867,603

197,6123,800

201,413

1,567,831

568,563734,658

2,871,052

92,8782,963,930

59,01911,18031,106

101,305

1,538

102,843

11,93491

12,87824,903－24,90362,204

14,121

2,192

78,517

19,08597,602

100,458

18,65815,934135,050809

135,859

Other items:
Depreciation andamortization (Note 2)

Amortization of
goodwill
Investments inaffiliates accounted forusing equity method
Increase in property,
plant and equipment,
and intangible assets

Notes: 1. The “Others” category includes plant engineering and environmental engineering, research and analysis, and employment agency/staffing
operations.
2. Amortization of goodwill is not included.
Millions of yen
2020
Material

Homes

Health Care

Subtotal

Others

Total(Note 3)(Note 3)(Note 1)

(Note 3)

Sales:
External customers
Intersegment
Total
Operating income
Assets¥1,093,145¥704,423¥337,788¥2,135,356¥16,290¥2,151,646

5,105

123

11

5,240

36,64541,884

1,098,249

704,546

337,799

2,140,595

52,9352,193,530

92,36572,711

43,506

208,582

3,177

211,758

1,481,133

551,515

703,7732,736,421

84,0932,820,515

58,561

10,545

19,26888,374

1,472

89,845

12,072

60

10,15622,288－22,28856,902

9,543

1,500

67,945

18,38886,333

104,466

18,20815,943

138,616

2,175

140,792

Other items:
Depreciation andamortization (Note 2)

Amortization of
goodwill
Investments inaffiliates accounted
for using equity
methodIncrease inproperty, plant andequipment, andintangible assets

Notes: 1. The “Others” category includes plant engineering and environmental engineering, research and analysis, and employment agency/staffing
operations.
2. Amortization of goodwill is not included.
3. In the fiscal year under review, provisional accounting treatment for the allocation related to a business combination was finalized.

43

Accordingly, the figures for the previous year reflect the finalization of the provisional accounting treatment.
Thousands of U.S. dollars
2021
Material

Homes

Health Care

Subtotal

Others (Note 1)$8,953,365

Total$6,256,336$3,684,437$18,894,138$128,995$19,023,133

49,815199

217

50,230370,427

420,667

9,003,189

6,256,535

3,684,654

18,944,368

499,431

19,443,799

600,316574,004

610,6311,784,952

34,324

1,819,285

14,161,602

5,135,607

6,635,878

25,933,086

838,931

26,772,017

533,095

100,985

280,968

915,048

13,892928,940

107,795

822

116,322

224,939—

224,939561,864

127,549

19,799709,213

172,387

881,601

907,398

168,530

143,926

1,219,854

7,307

1,227,161

Sales:
External customers
Intersegment
Total
Operating income
AssetsOther items:
Depreciation andamortization (Note 2)

Amortization of
goodwill
Investments inaffiliates accounted
for using equity
methodIncrease inproperty, plant andequipment, andintangible assets

Notes: 1. The “Others” category includes plant engineering and environmental engineering, research and analysis, and employment agency/staffing
operations.
2. Amortization of goodwill is not included.

44

(d) Reconciliation of differences between total amounts of reportable segments and amounts appearing in the consolidated
financial statements (adjustment of difference)
Sales

Thousands of U.S.

Millions of yen

dollars

2021

2020

¥2,097,331¥2,140,595$18,944,368

Net sales in “Others” category

55,292

52,935499,431

Elimination of intersegment transactions(46,572)(41,884)(420,667)¥2,106,051¥2,151,646$19,023,133

Total of reporting segments

Net sales on consolidated statements of income

Operating income

2021

Thousands of U.S.

Millions of yen

dollars

2021

2020

2021

¥197,612¥208,582$1,784,952

Operating income in “Others” category

3,800

3,177

34,324

Elimination of intersegment transactions

551

303

4,977

(30,156)(34,797)(272,387)¥171,808¥177,264$1,551,874

Total of reporting segments

Corporate expenses, etc.*
Operating income on consolidated statements ofincome* Corporate expenses, etc. include corporate revenue, basic research expense, and group management expense, etc. which are not allocatedto reporting segments.

AssetsThousands of U.S.

Millions of yen

dollars

2021

2020

¥2,871,052¥2,736,421$25,933,086

92,87884,093

838,931

Elimination of intersegment transactions(602,842)(589,354)(5,445,235)

Corporate assets*

557,853

591,115

5,038,867¥2,918,941¥2,822,277$26,365,649

Total of reporting segments (Note 1)
Assets in “Others” category

Total assets on consolidated balance sheets

2021* Corporate assets include assets of the parent company—surplus operating funds (cash and deposits), long-term investment capital(investment securities, etc.), and land, etc.
Note:1. In the fiscal year under review, provisional accounting treatment for the allocation related to a business combination was finalized.
Accordingly, the figures for the previous year reflect the finalization of the provisional accounting treatment.

45

Total of reportable segments

Other items

OthersAdjustments (Note 1)

Amounts from consolidated financial
statements

Millions of yen

Thousands

Millions of yen

Thousands

Millions of yen

Thousands

Millions of yen

Thousandsof U.S.

of U.S.

of U.S.

of U.S.

dollars

dollars

dollars

dollars

2021

2020

2021

2021

2020

2021

2021

2020

2021

2021

2020

2021

¥101,305¥88,374$915,048¥1,538¥1,472$13,892¥5,527¥6,170$49,923¥108,369¥96,016$978,855

24,90322,288

224,939

－

－

－

－

－

－

24,90322,288

224,939

78,517

67,945709,213

19,085

18,388172,387－－－

97,602

86,333881,601

135,050

138,616

1,219,854

809

2,175

7,307

17,797

13,330160,753

153,656

154,122

1,387,914

Depreciation andamortization(Note 2)
Amortization of
goodwill
Investments inaffiliates accounted
for using equity
methodIncrease inproperty, plant andequipment, andintangible assets
Notes:1. Adjustments include elimination of intersegment transactions and corporate expenses, etc.
2. Amortization of goodwill is not included.

(e) Related Informationi) Information on products and services
Please refer to (c) Information concerning net sales, income or loss, assets, and other items for each reportable segment.

46ii) Geographic information
1) Net sales
Millions of yen

Thousands of U.S. dollars

2021

2021

Japan

United States

China

Other regions

Total

Japan

United States

China

Other regions

Total¥1,204,218¥309,723¥198,903¥393,206¥2,106,051$10,877,229$2,797,606$1,796,613$3,551,676$19,023,133

Millions of yen
2020
Japan

United States

China

Other regions

Total¥1,290,077¥269,481¥188,553¥403,535¥2,151,646

2) Property, plant and equipment
Millions of yen

Thousands of U.S. dollars

2021
Japan

¥518,408

2020

UnitedOther

Statesregions¥107,365¥91,489

Total

Japan

¥717,262¥477,359

2021

UnitedOther

Statesregions¥105,925¥70,403

Total

Japan

¥653,686$4,68,576

UnitedOther

Statesregions$969,786$826,384

Total$6,478,746

3) Information by major customer
Information by major customer is not shown because no customer accounts for 10% or more of net sales on the consolidated statements of income.

47

18. Information on related parties
For the year ended March 31, 2021: None
For the year ended March 31, 2020: None

19. Per share information
Basic and diluted net assets per share and net income per share for the years ended March 31, 2021 and 2020, were as follows:
Yen

U.S. dollars

2021

2020

2021

Basic net assets per share¥1,057.61¥979.69$9.55

Basic net income per share

57.49

74.85

0.52

Note: As the Company had no dilutive securities at March 31, 2021 and 2020, the Company does not disclose diluted net income
per share for the years ended March 31, 2021 and 2020.

(a) Basis for calculation of net assets per share
Thousands ofMillions of yen

U.S. dollars

2021

2020

2021

¥1,494,535¥1,383,460$13,499,548

Amount deducted from total net assets

27,05824,145

244,404of which, non-controlling interests(27,058)(24,145)(244,404)

Net assets allocated to capital stock¥1,467,476¥1,359,314$13,255,135

1,387,535

1,387,492

1,387,535

Total net assets

Number of shares of capital stock outstanding at
fiscal year end used in calculation of net assets per
share (thousand)Note: Shares held by the trust for granting shares to Directors, etc., numbering 327 thousand at March 31, 2021, and 379 thousandat March 31, 2020, are excluded from the number of shares of capital stock outstanding at fiscal year end used in calculation of
net assets per share.

(b) Basis for calculation of net income per share
Thousands ofMillions of yen

Net income attributable to owners of the parent
Amount not attributable to common stock
shareholders
Net income attributable to common stock owners of
the parent
Weighted-average number of shares of capital stock(thousand)

U.S. dollars

2021

2020

2021

¥79,768¥103,931$720,513－－－¥79,768¥103,931$720,513

1,387,526

1,388,564

1,387,526

Note: Shares held by the trust for granting shares to Directors, etc., numbering 342 thousand during the year ended March 31, 2021,
and 398 thousand during the year ended March 31, 2020, are excluded from the weighted-average number of shares of capitalstock used in calculation of net income per share.

48

20. Subsequent events
Business combination by purchase(a) Acquisition of Respicardia, Inc.
ZOLL Medical Corporation (“ZOLL”), a consolidated subsidiary of the Company, has acquired Respicardia, Inc. (“Respicardia”, Headquarters:
Minnesota*, USA; CEO: Peter Sommerness), a U.S. medical equipment company which develops, manufactures, and sells the remedē® System,
an implantable neurostimulator device for the treatment of central sleep apnea (CSA). The acquisition process was completed on April 9, 2021
(U.S. Eastern time).
* Registered in Delaware with head office functions in Minnesota.

i) Outline of business combination
1) Name and nature of the businesses of counterparty
Name of counterparty: Respicardia, Inc.
Nature of the businesses: Development, manufacture, and sale of implantable neurostimulator device
2) Main reason for the acquisition
With established businesses centered on cardiopulmonary resuscitation, notably defibrillators for medical professionals, automated external
defibrillators (AEDs), and LifeVest® wearable defibrillators, ZOLL has sought to further expand in the field of acute critical care including
peripheral areas such as heart failure and respiratory dysfunction. Respicardia develops innovative therapies for conditions with large unmet
clinical needs. With this acquisition, ZOLL will combine its expertise in cardiac and respiratory care with Respicardia’s novel remedē®
System to make a meaningful difference in the health and quality of life for many patients.
3) The acquisition date
April 9, 2021
4) Statutory form of business combination
Stock purchase for mainly cash as consideration
5) Name of company after transaction
Respicardia, Inc.
6) Acquired voting right
Voting right before the acquisition:

0%

Voting right after the acquisition:

100%7) Grounds for determining acquiring company
Stock purchase for mainly cash as consideration by a consolidated subsidiaryii) Cost of acquisition and details
Purchase consideration*

cash

US$122 million

loans and accrued interest

US$108 million

Purchase price

US$229 million* Not including conditional consideration.

iii) Substance of conditional consideration specified in the stock purchase agreement and policy for accounting treatment
1) Substance of conditional consideration
The agreement provides for additional payment based on the acquired company’s achievement of certain performance targets
2) Policy for accounting treatment
Variable portion of conditional consideration will be treated in accordance with Generally Accepted Accounting Principles of the UnitedStatesiv) Amount of goodwill, measurement principle, amortization method, and useful life
Not determined at present49

(b) Acquisition of additional shares in McDonald Jones Homes Pty Ltd
Asahi Kasei Homes Australia Pty Ltd, a consolidated subsidiary of the Company, concluded an agreement on April 16, 2021, to purchaseadditional shares in McDonald Jones Homes Pty Ltd (“McDonald Jones”), an equity-method affiliate of the Company. The acquisition process
was completed on June 11, 2021, and McDonald Jones became a consolidated subsidiary of the Company.

i) Outline of business combination
1) Name and nature of the businesses of counterparty
Name of counterparty: McDonald Jones Homes Pty Ltd
Nature of the businesses: Construction of custom-built homes and sale of pre-built homes
2) Main reason for the acquisition
In July 2017, the Company acquired a 40% interest in McDonald Jones, a detached housing company in Australia. Expertise of Asahi Kasei
Homes Corp., a consolidated subsidiary of the Company, regarding industrialized housing provided valuable support for sales and marketing,and helped to reduce costs by shortening the construction period. The acquisition of additional shares will accelerate such measures andenable further market expansion and growth in the Australian housing market, contributing to sustainable growth in corporate value for theCompany.
3) The acquisition dateJune 11, 2021
4) Statutory form of business combination
Stock purchase for cash as consideration
5) Name of company after transaction
McDonald Jones Homes Pty Ltd
6) Acquired voting right
Voting right before the acquisition: 40%
Additional voting right acquired as of the acquisition date: 40%
Voting right after the acquisition: 80%
7) Grounds for determining acquiring company
Stock purchase for cash as consideration by a consolidated subsidiaryii) Cost of acquisition and details
Market value of stock held before acquisition as of the acquisition date

AU$113 million

A

AU$113 million

Cash

d
P
d
u

AU$225 million

iriii) Difference between
cost of acquisition and total of individual transactions leading to the acquisitiontc
Not determined at presentihoaiv) Amount of goodwill, measurement principle, amortization method, and useful lifens
Not determined ata present
e
lp
a
r
c
i
q
c
u
e
i
s
i
t
i
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50

21. Borrowings(a) Bonds payable at March 31, 2021 and 2020, comprised the following:Thousands ofMillions of yen

U.S. dollars

2021

2020

2021

Unsecured 0.10% yen bonds due in 2023

¥20,000¥20,000$180,652

Unsecured 0.07% yen bonds due in 2024

20,00020,000180,652

Unsecured 0.21% yen bonds due in 2029

20,00020,000180,652

Unsecured 0.12% yen bonds(Green Bond) due in 2025

10,000－90,326

Unsecured 0.01% yen bonds due in 2023

20,000－180,652

Unsecured 0.28% yen bonds due in 2030

20,000－180,652¥110,000¥60,000$993,587

Total

Notes: 1. The current portion of bonds payable is recorded under current liabilities on the consolidated balance sheets.
2. The aggregate annual maturities of long-term debt after March 31, 2021, are as follows:Year ending March 31

Millions of yen

Thousands of U.S. dollars

2022

¥－

$－

2023

－

－

2024

40,000361,3042025

20,000180,6522026

10,00090,3262027 and thereafter

40,000361,304¥110,000$993,587

Total

51

(b) Loans payable at March 31, 2021 and 2020, comprised the following:Thousands ofMillions of yen

Short-term loans payable
with an interest rate of 0.29%

U.S. dollars

2021

2020

2021

¥89,278¥251,063$806,413

55,29324,608499,440

880

1,006

7,949

320,404

229,172

2,894,084

3,921

3,506

35,41784,000139,000

758,739¥553,776¥648,354$5,002,041

Current portion of long-term loans payable
with an interest rate of 0.48%
Current portion of lease obligations
with an interest rate of 3.27%
Long-term loans payable(except portion due within one year)with an interest rate of 0.27%
Lease obligations(except portion due within one year)with an interest rate of 4.62%
Commercial paper(portion due within one year)with an interest rate of (0.02)%
Total

Notes: 1. Interest rates shown are weighted average interest rates for the balance outstanding at March 31, 2021.
2. The aggregate annual maturities of long-term loans payable and lease obligations (except portion due within one year) after
March 31, 2021, are as follows:Year ending March 31

Long-term loans payable

Millions of yen

Thousands of
U.S. dollars

Lease obligations

Millions of yen

Thousands of
U.S. dollars

2023¥70,521$636,989¥403$3,6402024

51,294463,319

260

2,348

2025

51,207

462,533

204

1,843

2026

62,278562,533

208

1,879

2027 and thereafter

85,103768,702

2,845

25,69852

22. Supplementary schedule of asset retirement obligations
Because the amounts of asset retirement obligations on April 1, 2020, and March 31, 2021, were not more than 1% of the combined totals of
liabilities and net assets on the respective dates, preparation of a supplementary schedule of asset retirement obligations is omitted in accordancewith Article 92-2 of the Ordinance on Terminology, Forms, and Preparation Methods of Consolidated Financial Statements.

23. Others
Litigation
Litigation related to pile installation
On November 28, 2017, Mitsui Fudosan Residential Co., Ltd. filed suit (hereinafter “First Lawsuit”) in the Tokyo District Court against the threecompanies of Sumitomo Mitsui Construction Co., Ltd., Hitachi High-Tech Corporation (company name changed from Hitachi High-Technologies
Corporation on February 12, 2020), and Asahi Kasei Construction Materials Corporation, a subsidiary of the Company, seeking compensation fordamages of approximately ¥45.9 billion (subsequently changed to approximately ¥51.0 billion) related to the cost of rebuilding a condominium
complex in Yokohama City due to concerns of unsound installation of a portion of foundation piles; Sumitomo Mitsui Construction being the prime
contractor for construction of said condominium complex, Hitachi High-Tech the primary subcontractor for pile installation, and Asahi Kasei
Construction Materials the secondary subcontractor for pile installation. Asahi Kasei Construction Materials holds that there is no basis for Mitsui
Fudosan Residential’s claim, and will make this argument during the proceedings of the First Lawsuit.
Related to the First Lawsuit, on April 27, 2018, Sumitomo Mitsui Construction filed suit (hereinafter “Second Lawsuit”) against Hitachi High-Techand Asahi Kasei Construction Materials seeking compensation for any damages it may incur in the First Lawsuit. Regarding this Second Lawsuit,the date of service of complaint to Asahi Kasei Construction Materials was May 14, 2018. Asahi Kasei Construction Materials holds that there isno basis for Sumitomo Mitsui Construction’s claim, and will make this argument during the proceedings of the Second Lawsuit.
Related to the First Lawsuit and Second Lawsuit, on May 25, 2018, Hitachi High-Tech filed suit (hereinafter “Third Lawsuit”) against Asahi Kasei
Construction Materials seeking compensation for any damages it may incur in the First Lawsuit or Second Lawsuit. Asahi Kasei Construction
Materials holds that there is no basis for Hitachi High-Tech’s claim, and will make this argument during the proceedings of the Third Lawsuit.

53

騨

t
Independent Auditor's RcPort
To the Board ofDirectors ofAsahi Kasei Corporation

OpttionWe have audhed the consolidated inancial statements pfAsahi Kasei Corporation and itt subsitha五 es(the Group"),whiCh COmp五 se he consdidated statement offinancial pos近 on as at March 31,2021,

and the consolidated statement ofincome,consolidated statement ofcomprehensive income,consolidated statement ofchanges in equiサ and COnsolidated statement ofcash aows for he year hen
ended,and notes to the consolidated inancial statements.
h our opinion,the accompanylng consolttated inandal statements present fairly,in all material
respects,he consolidated anancial Posiこ on ofthe Group as at March 31,2021,and its consoldated
anancial performance and■ s consolidated cash■ ows for the yearthen ended in accordance wi血
accouning p五 ndples generally accepted in Japan.

Basis for Opinion
We conducted our auditin accordance wih audithg standards genera■ y accepted in Japan.Our
responsibilities under those standards are血

山 er described in the Auditoゴ s Responsibilities fbr the

Audit ofthe Consoldated F血 ancial Statements secion ofour reporLo We are independent ofhe Groupul accordance■ 帆th the ehical requirements that are relevant to our audit ofthe consolidated anancial
statements in Japan,and we have色 lmled our oher ethical responsib』 ides in accordance Ⅶ th theserequirementso We bOlieve thatthe audit eⅥ dence we have Obtained is sumcient and approp五 ate toproⅥ de a basis for our opinion。

KeyAudt Matters
Key audit matters are hose matters that,h ourprofessbnaljudgment,were ofmost signiacance in
our audit ofthe consolidated hancial statements ofthe current pe五 od.These matters were addressed
五 he context ofour audit ofthe consolidated ananc注 1l statements as a whole,and in fo....ing Our
opinion thereon,and we do not proⅥ de a separate opulion on these lnatters.

PicewatethouseCoopers Aarata LLC
Otemachi Park Bunding,1‐ 1 0temachi,Chiyoda―ku,Tokyo loo― o004,Japan
T:+81(3)6212 68oo,F:+81(3)6212 68ol,w.pWC・ Com)lp/assurance1‐

畔Assessment ofwhetherimpai....ent hdicators emst for goodwill as tt rdates to the acquismon of

Polypore lntemaional,LP
Kev audit matter desc五 ption
As des9正 bed in Note 3 tO the consohdated

How our audit addressed ule key audit matter二▲
ent lndicators
In orderto assess wheherixnpai▲ ▲inandal statements,the Compaげ s conSOlidated

existed for goodwill as it rdates to the acquisition

goodwill balance was JPY 351,921 1ndhon(12。 1%
oftotal assets)aS OfMaК h 31,2021,Ofhis

proceduresi

ofPolypore,we performed the following

amount,JPY 121,996 1nillion arose as a result ofhe acquisition of Polypore lnternational,LP(herehater referred to as

Polypore")completed

in the iscalyear ended March 31,2016 and was

We evaluated the design and operating
erectiveness ofthe internal controls as they
relate to the deterlnination ofasset groups

he most monetarily slgniacant ofhe total
goodwill balance.The goodwill related to
Polypore was recorded in the ScParatOrbusinessand identiication ofilnpairment indicators

underthe Mate五 alsegment and the Company
assessed the impairmentindicators based on a

We obtained he understanding ofhe recent
developments in the market for eco― 価 endly

larger unit hat consists ofan asset group related
to the Separatorbusiness togeher Ⅶ th goodwill.

cars through inquiries to rnanagement andexamining the relevant documents.

田■
e Company supplies bott wet― process and dry―

We compared and considered ifhere were

oftted assets,induding good司1.

process separators for lithiuHl― ion batte五 es,signincant direrences betteen assumptions

indudhg the pЮ ductline of Polypore.Infor the stte and tinling ofexpansion ofthemarket growth for eco― friendly cars on which

particdar,the Company expects to createsynergies in the area oflithiuHl― ion battev
applications for eco― friendly cars such as hyb五 d

he latest business plan was based,comparedto that used at the thne ofthe acquisition.

vehたles and dectic vehides.

We compared management's bushess plan¶le business plan for the Separator business,toto the production volume estilnates

which he goodwill ofPolypore bdongs,assumes

pubhshed by exLernil research organttaions

rapid expansion ofhe marketfor eco― 価 endly
cars through 2025,and the sales and operating
income ofthe Separatorbusiness will increase
accordingly,However,since he eco― 伍 endly car
marketis a gro価 ng market witt rapidy evol宙 ng
the technology and intensi,ing competttion,sales
and operathg income may not achieve prtteCtS

on the size and tilning ofexPansion ofthemarket growth for eco― friendly cars on tthichmade in the business Plan ifmanagementis notable to resPond to unexpected changes in thebusiness environment appropnately。
Regarding the asset group ofthe ScParator
business to which Polyporets goodwiⅡ bdongs,

the Company conduded that no impairment
hdicators exlsted based on the fo■ o前 ng facts
and circunstances.

The performance ofthe Separatorbusinessdid not fallinto the catesory of

consistent

negative operaing results"specited in theaccounting standards as an■ 4Pai■ iⅡ ent
hdicator.

20f6

the business plan was based.
We ensured the business perfo.Ⅱ .ance ofthe
asset gЮ up to which Polypore's goodwill
belongs as to whether there were consistent
negative operating results.

PりC
There were no signincant direrences
betteen assumptions for the size and tilning

ofexpansion ofthe market growLh for eco―

mendly Cars on which helatest bushessplan was based,compared to that used atthet近 neofthe acquisttion.

As a result ofthe lnonetav signincance ofthe
goodwill balance at the Separator business andhe achievabttiサ ofthe bushess Plan due to

unexpected changesin the bushess envronment
involved management'sjudgement,wedeterxnined that the assessment ofwheher
江n as五relates to tte acquisidon of Polypore was a key
audtt matter.

ilnpairment indicators exlsted fbr goodl、Valuation ofintangible assets identined in connection
A/S as ofthe accuisition date
Kev audit matter desc五 っ■on
As desc五 bed in Note 3 and Note 16 to theconsolidated hancial statements,the Company

completed he acqulsmon ofloo%ofhe
outstanding shares ofVdoxis Pha....aceuticals
eloxis")du五 ng
A/S(hereinafter refered to as̀ヽ 石Ⅶ th the acquisition ofVelo涎 s Pha.iⅡ aceuticals
How our audit addressed the key audit matterIn order to evaluate the valuation ofintangible
assets identified in connection wih theacquisition ofVelo対s as ofthe acquisttion date,
we perforェ ned he follo前 ng procedures:

he iscalyear ending Mard1 31,2020 With cash
consideration Pattentin JPY 147,220 1ndlon.

We evaluated the design and operating

The pЮ ducts sold byVelo道 s are
immunosuppressitt dmgs for renaltransplantesumaing the fair value ofintangible assets
induding the deterHlination ofsignincant
assumptions such as ttture sales volume
forecasts,as well as the development ofthepatients.The Company expected gro■ 、たh in therenaltransPlant market maidy in the UnttedStates.In addition,6btaining a newbusiness

orectiveness ofthe intemal controls as they
relate to dhe manageコnent process ofroyalty rate and customer attrition rate.

platfo.▲ 班in the pha.tt.aceutical market in the

United States through synergies bemeen the

We obtained the understanding oftheCompany and Veloxls wasthe p五 marybus血 ess

discounted cash aow model,the data used,assumpions lnade such as ttture sales

PurpOSe ofthe acquisition.
As a result ofthe completion ofhe accoundng fbr
the purchase p五ce a■ ocation durlllg the iscal

year ending March 31,2021,baSed on thevolume forecastt as weu as royalty rate andcustomer attrition rate and the work ofa

management's valuation expert.

(JPY 95,862m』 iOn)and CuStOmer― rdated assets(JPY 37,757 mmon)and retЮ actiⅥ け reStatedⅥrih heinvolvement ofthe audioゴ svaluation specialists,we evaluated ule modd
and assumptions lnade such as ttture sales
volume forecasts,royalty rate and customer

he consolidated balance sheet as ofMarch 31,

attrition rate,and tested he underlying data

2020,aCCordingly.Notethat he Company used

used in the xnodel.

avanable information as ofhe acquisi■ on date,

the Company identiied Technology― related assets

he relief― 缶om― royalサ methOd and muld― pe■ odexcess earnings lnethod for he fair value
measurement ofTechnology― related assets andWe exaH五 ned ofthe stock purchaseagreement,due ddigence report,exLernal

Customer― rdated assets,respecuvely.

valuadon reporに for the equityvalue,and

30f6

PりC
In esumating the fa置 valuc ofthe h絋 ngible■linutes ofthe board ofdirectors lneeting asassets as ofhe acquisition date,the expansion ofhture sales volumes was assumed in the businessplan.Further,he royalty mte used in he rdief―
from― royalサ methOd and he customer attl■ ionrate used in the lnulti― pe五 od excess earnings
method were identified as signincant assumptions
used which contained a high degrec ofestilnation

well as the results ofinquiries to

uncerLamサ

management related to the detads ofthebusiness conbination ofVelo適 s,and
ensured that he information was internallyconsistent Ⅶ th the assump■ ons used for the色ture sales volume fbrecast applied to the
fairvalue measurement ofintangible assets.

.

Based on the facts and circumstances,hevaluation ofintangible assets identined inconnection witt the acqulsidon ofVeloxis as ofhe acqulsition date was a kev audtt matter.

Responsibuides ofMa■ lagement and Those Charged Ⅵ嵐h Governance for theConsolidated Finandal State】 ments
Management is responsible for the preparadon and fair presentatiom ofthe consolidated inancial
statementsin accordance wih accouning p五 nciples genera■ y accepted in Japan,and for such intemal
control as lnanagement dete....ines is necessary to enable the preparation ofconsolidated inancial
statements that are free ttom xnaterial lnisstatement,whether due to IIaud or error.
In prepa五 ng the consolidated inancial statements,Inanagement is responsible for assesshg the
GrouP's ab』 iサ to continue as a going concern and dね dosing,as apphcable,matters related to gohg

concern.

Those charged Ⅶ th governance are responsible for overseeing the Group's anancial rePorLing process.

Auditor's ResPonsibiLdes forthe Audit ofhe Consoldated Fh劇 nCial Statements

Our就卜 CtiVes are to obtain reasonable assurance about wheher he consolidated financial statements
as a whole are ttee from mate五 al Hlisstatement,whether due to ttaud or error,and to issue an

audior's reporLthatindudes our opi五 on.Reasonable assurance is a high level ofassurance,butis nota guarantee that an audit conducted in accordance with auditing standards generally accepted inJapan will always detect a mate五 al mね statement when五 函 sts,Misstatements can a五 se from IIaud oreror and are considered mate五 al i indMdually orin the aggregate,they could reasonablybe
expected to in■ uence the econoHlic decisions ofusers taken on the basis ofthese consoldated anancial

statements
As part ofan auditin accordance■ 帆th audiing standards generally accepted in Japan,we exercise

professionaljudgment and maintain professional skepticismthroughouthe audit,We also:・ Identi,and assess he dsks ofmate五 al misstatement ofthe consolidated anancial statements,
whether due to fraud or error,design and perforHi audtt procedures responsive to those nsks,and
obtain audit evidence thatis sumcient and approp五 ate to proⅥ de a basis fbr our opinion.The isk
ofnot detecthg a mate五 al misstatement resuling ttom fraud is higher han for one resulting fromeror,as fraud lnay involve collusion,forgery,intendonal omissions,Inisrepresentations,or the
over五 de ofintemal control.
・Obtain an understanding ofinternal control relevant to the auditin order to design audit

procedures that are approp五 ate in the circumstances,while the purpose Ofthe consoldated

40f6

W
inancial statement auditis notto express an opttlion on the erectiveness ofthe Group's internal
control.

Evaluate the appropnateness ofaccounting policies used and the reasonableness ofaccounting

esimates and rdated disdosures made by management.
Condude on the approp五 ateness of management's use ofthe going concern basis ofaccounting and,based on the audit evidence Obtained,whelher aコ nate五 al uncerLainサ eXlStS related to events orcondttions hat may cast sign岨 cant doubt on he GrouP's ab遺 1サ to continue as a going concem.If

we condudethat a mate五 al uncertainサ cxistS,We are required to draw attendon in our auditor'sreportto the related disclosures in the consolidated inancial statements or,ifsuch disclosures aredence obtained up to
the date ofour auditor's report.However,future events or conditions lnay cause the Croup to cease

inadequate,to mod近 サour Opinion,Our condusions are based on the audi gぬto continue as a going concern.

Evaluate wheher the presentation and disdosures ofthe consohdated financial statements are inaccordance wih account血 g Pinclples generally accepted in Japan,he overall presentation,
struchre and content ofthe consohdated anancial statements,including the disclosures,and
whether he consolidated inancial statements represent the underlying transactions and events ina lnanner that achieves fair presentation.

Obtain sumcient approp五 ate audit evidence regarding the inancialinformaion ofthe entities orbusiness acti宙 ties wihin the Gttoup to express an opinion on the consolidated anancial statements.

We are resPonsible fbr the direction,supemsion and Performance ofthe group audit.We remainsolely responsible for our audit opinion.

We communictte wih hose charged

Ⅶ th governance regarding,among oher matters,the planned

scope and dHling ofthe audit and slgnincant audit indings,lnduding any slgniacant deiciencies inhternal controlthat we iden出 け du五 ng Our audit.
We also provide those charged■ 帆th 80Vernance■ith a statementthat we have complied Ⅵ th relevant
ehictt requirements regarding independence,and to coHllnuniCate wih heln all rdationships andoher matters that may reasonablybe ttoughtto bear on ourindependence,and where applicable,
related safeguards.

From the rnatters communicated■ 慌th those charged■ 帆th govemance,we deterHline those lnatters
hat were ofmost signiacance in the audit ofthe consolidated inancial statements ofthe current
pe五 od and are herefore he key audtt matterso We desc五 be hese mattersin our audttor's reporL
unless law or regulation predudes Public disdosure aboutthe matter or when,m extremely rare
circumstances,we dete....ine that a lnatter should not be coHIInuniCated in our repott because theadverse consequences ofdohg so would reasonablybe expected to outweigh he public interest
beneits ofsuch coHIInunication.

Convenience ranslaiOn
Ⅶ th respect to theyear ended March 31,2021 are presented solely
for convenience.Our
also五 duded he"ng consolidated
anancialaudttstatements
translation ofJapanese yen amounts into UoS.dollar amounts and,in our opinion,such translation
has been lnade on the basis desc五 bed in Note l to the consoldated inancial statements.

The U.S.donar amounts in the accompa■

Interest reqЩ red to be disdosed by the CeJh五 ed Pibhc Accountants tt ofJ4Pan
our a.Ⅱ .and tts designated engagement partners do not have any interestin the Group which is
required to be disclosed Pursuant to the provlsions ofthe Ce瀾 直ied PdblicAccountants Act ofJapan.

50f6

邸 II

騨

t
￨

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デ

Ohno

Yuichiro Amano
Deslgnated Engagement Pattner
Ce丈 置絶d PdblcAc∞ 1江 ltant

Deslgnated EngageElent Parmer

Certined PdblcAccountant

咽MurataDesttated Engagement Patter
ed PdblittAcconntant
CeJヒ 丘

と
えと
ν
死
じ
◆
●
ノ
August 6,2021

6 of6″尿