Detailed Consolidated Financial Statements
Years ended March 31, 2020 and 2019

Contents
Consolidated Balance Sheets ................................................................................................................................1
Consolidated Statements of Income .....................................................................................................................3
Consolidated Statements of Comprehensive Income .........................................................................................4
Consolidated Statements of Changes in Net Assets ..........................................................................................5
Consolidated Statements of Cash Flows..............................................................................................................8
Notes to Consolidated Financial Statements .....................................................................................................10
1. Major policies for preparing the consolidated financial statements .......................................................10
2. Significant accounting policies.................................................................................................................... 11
3. Changes in significant accounting policies ...............................................................................................14
4. Notes to Consolidated Balance Sheets .......................................................................................................16
5. Notes to Consolidated Statements of Income ............................................................................................18
6. Notes to Consolidated Statements of Comprehensive Income ...............................................................21
7. Notes to Consolidated Statements of Changes in Net Assets .................................................................22
8. Notes to Consolidated Statements of Cash Flows ....................................................................................25
9. Leases .............................................................................................................................................................27
10. Financial instruments..................................................................................................................................28
11. Marketable securities and investment securities.....................................................................................34
12. Derivative financial instruments ................................................................................................................36
13. Provision for retirement benefits ...............................................................................................................39
14. Taxes .............................................................................................................................................................42
15. Business combinations ..............................................................................................................................43
16. Business segment information ..................................................................................................................46
17. Information on related parties ....................................................................................................................52
18. Per share information..................................................................................................................................53
19. Subsequent events ......................................................................................................................................54
20. Borrowings ...................................................................................................................................................55
21. Supplementary schedule of asset retirement obligations ......................................................................57
22. Others............................................................................................................................................................58
Independent Auditor’s ReportConsolidated Balance Sheets
Asahi Kasei Corporation and Consolidated Subsidiaries
March 31, 2020 and 2019
Millions of yen
ASSETS:
Current assets:
Cash and deposits (Notes 8 and 10)
Notes and accounts receivable–trade (Note 4(e) and 10)
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts

Thousands of
U.S. dollars(Note 1)

2020

2019

¥207,957
330,999
216,463
160,064
101,313
92,153(1,519)¥193,893
350,716
201,699
131,686
93,961
82,900(3,461)$1,911,194
3,041,991
1,989,367
1,471,041
931,100
846,917(13,960)

1,107,430

1,051,393

10,177,649

Noncurrent assets:
Property, plant and equipment
Buildings and structures (Note 4(d))
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles (Note 4(d))
Accumulated depreciation

563,110(305,259)
257,851
1,466,958(1,243,780)

547,422(294,536)
252,886
1,439,166(1,222,201)

5,175,168(2,805,431)
2,369,736
13,481,831(11,430,751)

Machinery, equipment and vehicles, net
Land (Note 4(d))
Lease assets (Note 9)
Accumulated depreciation

223,179
67,024
9,645(8,964)

216,966
63,88910,159(9,423)

2,051,089
615,973
88,641(82,382)

Lease assets, net
Construction in progress
Other (Note 4(d))
Accumulated depreciation

681
75,487
172,674(143,210)

736
64,188160,631(137,930)

6,259
693,751
1,586,931(1,316,147)

29,464
653,686

22,701
621,366

270,784
6,007,591

469,535
215,947
685,482

319,898
210,080
529,978

4,315,182
1,984,625
6,299,807

244,581
7,951
20,46749,92928,883(435)

296,330
19,993－27,50829,052(418)

2,247,781
73,072
188,099458,864
265,444(3,998)351,377
1,690,545

372,465
1,523,810

3,229,271
15,536,669¥2,797,975¥2,575,203$25,714,319

Total current assets

Other, net
Subtotal
Intangible assets
Goodwill
Other
Subtotal
Investments and other assets
Investment securities (Notes 4(a), (b), 10 and 11)Long-term loans receivable (Note 10)Long-term advance payments-trade (Note 4(f))
Deferred tax assets (Note 14)
Other
Allowance for doubtful accounts
Subtotal
Total noncurrent assets
Total assets

2020

The accompanying notes are an integral part of these statements.

1

Millions of yen
LIABILITIES AND NET ASSETS:
Liabilities:
Current liabilities:
Notes and accounts payable–trade (Notes 4(e) and 10)
Short-term loans payable (Notes 10 and 20)
Commercial paper (Notes 10 and 20)
Current portion of bonds payable (Notes 10 and 20)
Lease obligations (Notes 9, 10 and 20)
Accrued expenses
Income taxes payable (Note 10)
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 10 and 20)
Long-term loans payable (Notes 10 and 20)
Lease obligations (Notes 9, 10 and 20)
Deferred tax liabilities (Note 14)
Provision for grant of shares
Provision for periodic repairs
Provision for removal cost of property, plant and equipment
Net defined benefit liability (Note 13)
Long-term guarantee deposits (Note 10)
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 7(b) (ii))
Treasury stock(2020―6,440,327 shares, 2019―6,491,383 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 4(c) and 9)
Total liabilities and net assets

Thousands of
U.S. dollars(Note 1)

2020

2019

2020

¥131,207
275,671
139,000－
1,006121,520
18,14573,623
78
4,043
3,738
2,640
71,863
842,531¥180,429
97,57977,00020,000164
113,221
24,97175,836
82
5,342
3,102
2,251
81,877
681,853$1,205,836
2,533,508
1,277,456－
9,2451,116,809
166,759
676,620717
37,15734,35324,262
660,445
7,743,139

60,000229,172
3,506
46,298
412
4,560
5,771
174,365
21,613
26,287
571,985
1,414,515

20,000209,878
253
48,299
289
2,929
3,018
168,685
21,143
16,145490,639
1,172,493

551,420
2,106,167
32,221
425,494
3,786
41,90853,037
1,602,472
198,631
241,586
5,256,732
12,999,862

103,389
79,641
1,125,738(5,990)103,389
79,7081,077,586(3,936)950,179
731,927
10,345,906(55,050)

1,302,777

1,256,747

11,972,953

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

101,971(40)
42,020(19,213)
124,738
21,225
1,402,710

616,000(2,215)
119,722(213,905)
519,603
221,901
12,714,456¥2,797,975¥2,575,203$25,714,319

The accompanying notes are an integral part of these statements.

2

Consolidated Statements of Income
Asahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2020 and 2019
Thousands of
U.S. dollars(Note 1)Millions of yen
2020

2019

2020

¥2,151,646
1,476,606¥2,170,403
1,481,855$19,774,341
13,570,499

Gross profit
Selling, general and administrative expenses (Note 5(a))

675,040
497,776

688,548
478,960

6,203,842
4,574,727

Operating income (Note 16)
Non-operating income:

177,264

209,587

1,629,115

Interest income
Dividends income
Equity in earnings of affiliates

2,769
5,251
7,138

3,094
6,060
12,11225,44848,25865,601

Other

5,320

4,238

48,893

20,47925,504

188,209

4,016
2,328
1,642

4,371
2,686
989

36,90821,39515,091

Net sales (Note 16)
Cost of sales (Note 5(b))

Total non-operating income
Non-operating expenses:
Interest expense
Foreign exchange loss
Costs associated with idle portion of facilities
Other

5,750

7,069

52,844

Total non-operating expenses
Ordinary income
Extraordinary income:Gain on sales of investment securities
Gain on sales of noncurrent assets (Note 5(c))

13,735
184,008

15,115219,976

126,229
1,691,095

13,6794,268

11,580655

125,715
39,224

Total extraordinary income
Extraordinary loss:
Loss on valuation of investment securities

17,948

12,235

164,948

1,953

173

17,949Loss on disposal of noncurrent assets (Note 5(d))
Impairment loss (Note 5(e))
Loss on disaster (Note 5(f))

9,668
21,9492,437

88,852201,719
22,397

Loss on product compensation (Note 5(g))
Business structure improvement expenses (Notes 5 (h))

5,173
4,840

6,630
11,090－－3,921-

Total extraordinary loss

46,022

21,814422,957

Income before income taxes
Income taxes (Note 14) — current— deferred

155,934
54,173(3,967)

210,397
63,730(3,148)1,433,085
497,868(36,458)

Total income taxes
Net income
Net income attributable to non-controlling interests

50,206
105,728
1,797

60,582
149,8152,303

461,410
971,675
16,515

Net income attributable to owners of the parent¥103,931¥147,512$955,160

47,542
44,481

The accompanying notes are an integral part of these statements.

3Consolidated Statements of Comprehensive Income
Asahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2020 and 2019

Thousands of
U.S. dollars(Note 1)Millions of yen
2020¥105,728

2019¥149,8152020$971,675

Net (decrease) increase in unrealized gain on other securities(34,895)(19,058)(320,697)

Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income of affiliates accounted forusing equity method
Total other comprehensive income (Note 6)
Comprehensive income(201)(26,115)(3,867)(132)
12,464
4,311(1,847)(240,006)(35,539)(3,482)

1,297(32,001)(68,561)¥37,167(1,119)¥148,696(630,098)$341,577

Comprehensive income attributable to:
Owners of the parent
Non-controlling interests¥35,730
1,437¥146,339
2,357$328,371
13,207

Net income
Other comprehensive income

The accompanying notes are an integral part of these statements.

4Consolidated Statements of Changes in Net Assets
Asahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2020 and 2019
Millions of yen
Shareholders' equity

Capitalstock

Balance at March 31, 2019

¥103,389

Retainedearnings(Note 7(b))

Capitalsurplus¥79,708¥1,077,586

Accumulated other comprehensive income

Treasurystock¥(3,936)

Total
shareholders’equity¥1,256,747

Net
unrealized
gain onothersecurities

Deferred
gains(losses)on hedges

Foreigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit plans¥101,971¥(40)¥42,020¥(19,213)

Total
accumulated
othercomprehensive

Noncontrollinginterests

Total net
assets¥21,225¥1,402,710

income¥124,738

Changes during the fiscal
year
Dividends from surplus(48,723)(48,723)(48,723)

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

0

83

84

84

(7,878)

7,878

－

－

(7,856)

－

－

801

801

801

(46)

(46)

Net income attributable toowners of the parent
Purchase of treasury
stock
Disposal of treasury stock
Cancellation of treasury
stock
Transfer from retained
earnings to capitalsurplus
Change of scope of
consolidation
Capital increase of
consolidated subsidiaries
Net changes of items
other than shareholders'equityTotal changes of items
during the period
Balance at March 31, 2020

7,856

(46)

(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

5Millions of yen
Shareholders' equity

Capitalstock

Balance at March 31, 2018

¥103,389

Retainedearnings(Note 7(b))

Capitalsurplus¥79,440¥981,934

Accumulated other comprehensive income

Treasurystock¥(3,930)

Total
shareholders’equity¥1,160,833

Net
unrealized
gain onothersecurities

Deferred
gains(losses)on hedges

Foreigncurrencytranslation
adjustment¥121,128¥92¥28,676

Remeasurements ofdefinedbenefit plans¥(23,343)

Total
accumulated
othercomprehensive

Noncontrollinginterests

Total net
assets¥17,827¥1,305,214

income¥126,553

Changes during the fiscal
year
Dividends from surplus
Net income attributable toowners of the parent
Purchase of treasury
stock
Disposal of treasury stock
Cancellation of treasury
stock
Transfer from retained
earnings to capitalsurplus
Change of scope of
consolidation
Capital increase of
consolidated subsidiaries
Net changes of items
other than shareholders'equityTotal changes of items
during the period
Balance at March 31, 2019

(51,674)(51,674)(51,674)

147,512

147,512

147,512

(40)

(40)

(40)

34

40

40

－

－

－

－

(187)

(187)

262

262

6

(187)
262

(19,157)(132)

13,3444,130(1,815)

3,398

1,582

－

268

95,652(6)

95,914(19,157)(132)

13,3444,130(1,815)

3,398

97,496¥103,389¥79,708¥1,077,586¥(3,936)¥1,256,747¥101,971¥(40)¥42,020¥(19,213)¥124,738¥21,225¥1,402,710

6

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

Capitalstock

Balance at March 31, 2019

$950,179

Retainedearnings(Note 7(b))

Capitalsurplus$732,543$9,903,373

Accumulated other comprehensive income

Treasurystock$(36,173)

Total
shareholders’equity$11,549,922

Net
unrealized
gain onothersecurities

Deferred
gains(losses)on hedges

Foreigncurrencytranslation
adjustment$937,147$(368)$386,178

Remeasurements ofdefinedbenefit plans$(176,574)

Total
accumulated
othercomprehensive

Noncontrollinginterests

Total net
assets$195,065$12,891,370

income$1,146,384

Changes during the fiscal
year
Dividends from surplus(447,781)(447,781)(447,781)

955,160

955,160

955,160(92,050)(92,050)(92,050)

0

763

772

772

(72,401)

72,401－－(72,199)

－

－

7,361

7,361

7,361

(423)

(423)

Net income attributable toowners of the parent
Purchase of treasury
stock
Disposal of treasury stock
Cancellation of treasury
stock
Transfer from retained
earnings to capitalsurplus
Change of scope of
consolidation
Capital increase of
consolidated subsidiaries
Net changes of items
other than shareholders'equityTotal changes of items
during the period
Balance at March 31, 2020

72,199(423)(321,156)(1,847)(266,455)(37,331)(626,781)

26,836(599,945)

－

(616)

442,533(18,886)

423,031(321,156)(1,847)(266,455)(37,331)(626,781)

26,836(176,914)$950,179$731,927$10,345,906$(55,050)$11,972,953$616,000$(2,215)$119,722$(213,905)$519,603$221,901$12,714,456

The accompanying notes are an integral part of these statements.

7

Consolidated Statements of Cash FlowsAsahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2020 and 2019
Millions of yen

Cash flows from operating activities:
Income before income taxes
Depreciation and amortization
Impairment loss
Amortization of goodwill
Amortization of negative goodwill
Increase in provision for grant of shares
Increase in provision for periodic repairs
Increase in provision for product warranties
Increase in provision for removal cost of property, plant and equipment
Decrease in net defined benefit liability
Interest and dividend income
Interest expense
Equity in earnings of affiliates
Gain on sales of investment securities
Loss on valuation of investment securities
Gain on sale of property, plant and equipment
Loss on disposal of noncurrent assets
Decrease in notes and accounts receivable–trade
Increase in inventories
Decrease in notes and accounts payable–trade
Increase in accrued expenses(Decrease) increase in advances received
Other, net
SubtotalInterest and dividend income, received
Interest expense paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of shares in subsidiaries resulting in change in scope of consolidation
Payments for transfer of business
Payments of loans receivableCollection of loans receivable
Other, net
Net cash used in investing activities

Thousandsof U.S.
dollars(Note 1)

2020

2019

2020

¥155,934
96,016
21,94922,288
(79)
119
332
640
3,141
(4,069)(8,021)
4,016(7,138)(13,679)
1,953(4,268)
9,668
16,919(51,950)(45,562)2,624(1,925)(20,688)¥210,397
84,556
11,09019,490
(159)
170
1,823
364
145
(4,287)(9,154)
4,371(12,112)(11,580)
173
(655)
6,630
3,942
(57,968)
(776)
5,859
5,266
15,328$1,433,085
882,419
201,719
204,834
(726)
1,094
3,051
5,882
28,867(37,395)(73,716)
36,908(65,601)(125,715)
17,949(39,224)
88,852
155,491(477,438)(418,730)
24,115(17,691)(190,130)

178,218

272,914

1,637,883

10,834(4,203)(60,388)

11,247(4,412)(67,687)

99,568(38,627)(554,986)

124,460

212,062

1,143,829(4,195)
13,343(138,354)
5,693(16,096)(10,820)
23,543(175,759)(1,964)(23,170)
9,253
369(13,812)
7,880(114,718)
652(10,136)(2,624)
17,030(93,487)(2,764)(5,092)
18,813(659)(38,553)
122,627(1,271,519)
52,321(147,928)(99,439)
216,368(1,615,284)(18,050)(212,940)
85,0383,391¥(318,156)¥(198,917)$(2,923,959)

8

Thousandsof U.S.
dollars(Note 1)Millions of yen
2020

2019

2020

¥172,022¥(36,840)$1,580,939

Increase in commercial paper

62,00057,000569,801

Proceeds from long-term loans payable

45,81685,492421,064

Repayment of long-term loans payable(17,586)(53,833)(161,621)

Proceeds from issuance of bonds payable

40,00020,000367,613

Redemption of bonds(20,000)－(183,807)

Repayments of lease obligations(1,276)(237)(11,727)

Purchase of treasury stock(10,016)(40)(92,050)

Proceeds from disposal of treasury stock

84

40

772

Proceeds from share issuance to non-controlling interests

849

-

7,803

Cash dividends paid

(48,723)(51,674)(447,781)

Cash dividends paid to non-controlling interests(1,052)(1,155)(9,668)－(1,148)－Cash flows from financing activities:
Net increase (decrease) in short-term loans payable

Payments from changes in ownership interests in subsidiaries that do not resultin change in scope of consolidation
Other, net

(194)

(217)

(1,783)

Net cash provided by financing activities

221,923

17,3882,039,546

Effect of exchange rate change on cash and cash equivalents(4,060)543(37,313)

Net increase in cash and cash equivalents

24,16731,077

222,103

Cash and cash equivalents at beginning of year

180,520

148,596

1,659,039

85

846

781

¥204,771¥180,520$1,881,913

Increase in cash and cash equivalents resulting from changes in scope of
consolidation
Cash and cash equivalents at end of year (Note 8)
The accompanying notes are an integral part of these statements.

9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 ¥108.81=US$1 prevailing on March 31, 2020, has been used.

Consolidation and investments in affiliated companies
The consolidated financial statements consist of the accounts of the parent company and 211 subsidiaries (203 subsidiaries at March 31, 2019,
hereinafter collectively referred to as the “Company”) which, with minor exceptions due to immateriality, are all majority or wholly owned companies,
including 6 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., and ZOLL Medical Corporation). 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 56 such unconsolidated subsidiaries and 20% to
50% owned companies to which the equity method is applied at March 31, 2020 (53 at March 31, 2019), including Asahi Kasei EIC Solutions Corp.
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 or negative goodwill. Goodwill, and negative goodwill incurred through business combinations which took place before April
1, 2010, are amortized using the straight-line method over a reasonable period during which their effects would last, with the exception of minor
amounts which are charged to income as incurred.

10

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 estimateduseful 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 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.
iii) Provision for product warranties
Estimates of product warranty expenses based on historical rates are recognized as provision for product warranties.
iv) 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.
v) 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.

(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.

11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
and affiliates, and other securities. At March 31, 2020 and 2019, 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.

12

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. Changes in significant accounting policies(a) Accounting Standards issued but not yet applied
For the Company and domestic consolidated subsidiaries:i) Accounting Standard for Disclosure of Accounting Estimates
The Accounting Standards Board of Japan (ASBJ) issued ASBJ Statement No. 31 “Accounting Standard for Disclosure of Accounting Estimates.”
The purpose of this standard is to disclose information that will help users of the consolidated financial statements understand the nature ofaccounting estimates for items for which the amounts recorded in the consolidated financial statements for the fiscal year under review are basedon accounting estimates and for which there is a risk that they may have a material impact on the consolidated financial statements for thefollowing fiscal year. The Company will apply the standard after the end of the fiscal year ending March 31, 2021.
ii) Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections
The ASBJ issued the revised ASBJ Statement No. 24 “Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error
Corrections.” The purpose of this standard is to provide an overview of the accounting principles and procedures adopted in cases where therelevant accounting standards are not clear. The Company will apply the standard after the end of the fiscal year ending March 31, 2021.
iii) 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.
iv) 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.
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.

14

(b) Changes in presentation
Consolidated Statements of Income
In the fiscal year ended March 31, 2020, costs associated with idle portion of facilities, which had previously been included in others under nonoperating expenses, exceeded 10% of total non-operating expenses, and is reported separately. The consolidated statements of income for the fiscal
year ended March 31, 2019, have been adjusted accordingly, resulting in others under non-operating expenses being ¥7,069 million, ¥989 million
lower than the previously reported ¥8,058 million, reflecting the separation of the same amount as costs associated with idle portion of facilities.

(c) Additional Information
Assumptions regarding effect of COVID-19 on accounting estimates
COVID-19 is causing a global economic downturn, and in particular the reduction or temporary suspension of production by automobile manufacturers
is having an effect on the Company’s operations. 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 the Company assumes that there will be incremental economic recovery toward the end of the fiscal
year ending March 31, 2021, and has made accounting estimates accordingly regarding impairment of noncurrent assets, recoverability of deferred
tax assets, etc.

15

4. Notes to Consolidated Balance Sheets(a) Investment securities
Among investment securities, shares of unconsolidated subsidiaries and affiliates as of March 31, 2020 and 2019, amounted to ¥104,668 million(US$961,934 thousand) and ¥98,357 million, respectively. Included in those amounts are investments in joint ventures of ¥53,650 million (US$493,061
thousand) and ¥52,095 million, respectively.

(b) Pledged assets and secured debt
A summary of assets pledged as collateral as of March 31, 2020 and 2019, is shown below:
Thousands ofMillions of yen
U.S. dollars
2020

2019

2020

Cash and deposits

¥314

¥－

$2,886

Total

¥314

¥－

$2,886

Investment securities pledged to suppliers as transaction guarantees at March 31, 2020 and 2019, were ¥55 million (US$505 thousand) and ¥65
million, respectively.

(c) Contingent liabilities
Contingent liabilities at March 31, 2020 and 2019, arising in the ordinary course of business were as follows:
Thousands of
U.S. dollars

Millions of yen
2020

2019

2020

Loans guaranteed¥40,321¥38,736$370,563

Total¥40,321¥38,736$370,563(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, 2020 and 2019, were ¥9,966
million (US$91,591 thousand) and ¥9,792 million, respectively.
The breakdown of reduced-value entries as of March 31, 2020 and 2019, was as follows:
Thousands of
U.S. dollars

Millions of yen
2020

2019

2020

Buildings and structures¥3,439¥3,324$31,606

Machinery, equipment and vehicles

6,215

6,156

57,118

Land

167

167

1,535

Other

145

145

1,333

Total

¥9,966¥9,792$91,59116

(e) Notes maturing on March 31, 2020
Although financial institutions in Japan were closed on March 31, 2019, and notes maturing on that date were actually settled on the following businessday, April 1, 2019, those were accounted for as if settled on March 31, 2019.
The breakdown of those notes at March 31, 2019 was as follows:
Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

Notes and accounts receivable-trade¥－¥2,799$－Notes and accounts payable-trade

－

1,273

－

(f) Long-term advance payments–trade
The Company has concluded long-term purchase contracts with raw materials manufactures, to ensure the stable procurement of nylon raw materials.
Advance payments have been made for a part of it in accordance with the contracts.

175. 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, 2020 and 2019, were as follows:
Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

¥194,889¥186,552$1,791,095

Research and development*

62,24462,924572,043

Freight and storage

40,971

41,353

376,537

Salaries and benefits* The aggregate amounts of research and development expenses included in manufacturing costs and selling, generaland administrative expenses for the years ended March 31, 2020 and 2019, were ¥90,966 million (US$836,008
thousand) and ¥90,124 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, 2020 and 2019, were as follows:
Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

¥2,499¥535$22,967(c) Gain on sales of noncurrent assets
Major components of gain on sales of noncurrent assets for the years ended March 31, 2020 and 2019, were as follows:
Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

Land

¥2,693¥497$24,750

Machinery

1,462

8

13,436

113

150

1,039

Other

(d) Loss on disposal of noncurrent assets
Loss on disposal of noncurrent assets for the years ended March 31, 2020 and 2019, 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.

18

(e) Impairment loss
Major components of impairment losses for the years ended March 31, 2020 and 2019, were as follows:
Use

Asset class

Location

Thousands

Millions of yen

Item on theof U.S.

Consolidated

dollars

Statements of

2020

2019

2020

Income¥－¥6,657$－

Impairment loss

Production facility forpharmaceuticals
business

Goodwill and
Other
Intangible
assets

Production facility forbattery materials

Machinery andequipment,
etc.

Cheongju, Korea

－

2,966

－

Impairment loss

Production facility forsynthetic fibers

Machinery andequipment,
etc.

North RhineWestphalia,
Germany

143

947

1,314

Impairment loss

Production facility forsynthetic resin

Buildings, etc.

Kawasaki Ward
Kawasaki,Kanagawa

－

468

8,069

Business structure
improvement
expenses

Production facility for
artificial kidneys andtherapeutic apheresis
devices

Machinery andequipment,
etc.

Nobeoka, Miyazaki

－

170

－

Impairment loss

OthersConstruction inprogress, etc.

Fuji, Shizuoka, etc.

－

381

－

Impairment loss andbusiness structure
improvement
expenses

Production facility forsynthetic rubber

Machinery andequipment,
etc.

Jurong Island,
Singapore

17,363－

159,572

Impairment loss

Sales rights ofpharmaceutical products

Other
Intangible
assets

－

1,721

－

15,817

Impairment loss

R&D equipment

Machinery andequipment,etc.

Fuji, Shizuoka, etc.

1,091

－

10,027

Impairment loss

System for sales andlogistics

Other
Intangible
assets

－

1,062

－

9,760

Impairment loss

Production facility forsynthetic resin

Machinery andequipment,
etc.

Kawasaki Ward
Kawasaki,Kanagawa

878

－

8,069

Business structure
improvement
expenses

Production facility forbasic chemical products

Buildings, etc.

Nobeoka, Miyazaki

206

－

1,893

Impairment loss

Production facility forfiber products

Machinery andequipment,etc.

Amakusa,
Kumamoto

173

－

1,590

Business structure
improvement
expenses

Production facility for
nonwoven fabrics

Machinery andequipment,etc.

Moriyama, Shiga

112

－

1,029

Impairment loss

Others

Machinery andequipment,
etc.

Nobeoka, Miyazaki,
etc.

627

－

5,762

Impairment loss andbusiness structure
improvement
expenses－19

Grouping 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 rubber, sales rights of pharmaceutical products, production facility for synthetic resin, production
facility for fiber products, and production facility for synthetic fiber was reduced to the recoverable amount due to diminished profitability. The
recoverable amount is stated as the value for future usage, which is calculated based on discounted future cash flows within the applicable discountrate of 6–10% as of March 31, 2020, and 6% as of March 31, 2019.
The book value of R&D equipment, system for sales and logistics, production facility for basic chemical products, and production facility for nonwoven
fabrics was reduced to zero due to the disappearance of prospects for future use.
Among the extraordinary losses under Others, ¥376 million (US$3,456 thousand) and ¥31 million were recorded under business structure
improvement expenses for the years ended March 2020 and 2019, respectively.

(f) Loss on disaster
Major components of loss on disaster for the years ended March 31, 2020 and 2019, were as follows:
Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

¥1,381¥－$12,692

Fixed costs incurred during suspension of operations

684

－

6,286

Loss on disposal of inactive assets

372

－

3,419

Repair expenses(g) 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.

(h) Business structure improvement expenses
Major components of business structure improvement expenses for the years ended March 31, 2020 and 2019, were as follows:
Thousands ofMillions of yen

Impairment of fixed assets
Additional payment of retirement benefits due to

U.S. dollars

2020

2019

2020

¥1,428¥499$13,124

233

692

2,141

3,179

2,730

29.216,¥4,840¥3,921$44,481application of early retirement, etc.
Loss on disposal and devaluationof inventory and others
Total

20

6. Notes to Consolidated Statements of Comprehensive Income
Recycling adjustment and tax effects on other comprehensive income for the years ended March 31, 2020 and 2019, were as follows:
Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

Changes during the fiscal year¥(37,687)¥(15,870)$(346,356)

Recycling adjustment(12,418)(11,554)(114,126)

Pre-tax effect(50,105)(27,423)(460,482)

Tax effect

15,2108.365

139,785

Net unrealized gain on other securities(34,895)(19,058)(320,697)

(781)

(343)

(7,178)Recycling adjustment

11

218

101

Adjustment on the acquisition cost of assets

579

－

5,321

Pre-tax effect

(190)

(125)

(1,746)

Tax effect

(11)

(7)

(101)

Deferred gains or losses on hedges

(201)

(132)

(1,847)(25,807)12,464(237,175)

(308)

－

(2,831)(26,115)

12,464(240,006)

Changes during the fiscal year

(9,475)(2,214)(87,078)

Recycling adjustment

4,055

8,453

37,267Pre-tax effect(5,421)

6,238(49,821)Tax effect

1,553(1,927)

14,273Remeasurements of defined benefit plans(3,867)

4,311(35,539)(3,478)

1,297(31,964)

(4)

0

(37)

(3,482)

1,297(32,001)¥(68,561)¥(1,119)$(630,098)

Net unrealized gain on other securities

Deferred gains or losses on hedges
Changes during the fiscal year

Foreign currency translation adjustment
Changes during the fiscal year
Recycling adjustment
Foreign currency translation adjustment
Remeasurements of defined benefit plans

Share of other comprehensive income of affiliates accounted for using equity method
Changes during the fiscal year
Recycling adjustment
Share of other comprehensive income of affiliates
accounted for using equity method
Total other comprehensive income217. Notes to Consolidated Statements of Changes in Net Assets
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

Increase in number

Decrease in number

Number of shares as

as of March 31,

of shares during theof shares during theof March 31, 20202019

fiscal year

fiscal year

Issued and outstanding shares
Common stock (Note 1)

1,402,616

－

8,684

1,393,932

Total

1,402,616

－

8,684

1,393,932

6,491

8,698

8,749

6,440

6,491

8,698

8,749

6,440

Treasury stock
Common stock(Notes 2,3,4)
Total

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 (US$218,197 thousand)

Dividend per share¥17.00 (US$0.16)

Date of record

March 31, 2019

Payment dateJune 4, 2019

Note: Total dividends includes ¥8 million (US$74 thousand) 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 (US$229,593 thousand)

Dividend per share¥18.00 (US$0.17)

Date of record

September 30, 2019

Payment date

December 3, 2019

Note: Total dividends includes ¥7 million (US$64 thousand) 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 (US$204,081 thousand)Source of dividends

Retained earnings

Dividend per share¥16.00 (US$0.15)

Date of record

March 31, 2020

Payment dateJune 10, 2020

Note: Total dividends includes ¥6 million (US$55 thousand) for shares held by the trust for granting shares to Directors, etc.

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

Increase in number of

Decrease in number

Number of shares asof March 31, 2018

shares during theof shares during theof March 31, 2019fiscal year

fiscal year

Issued and outstanding shares
Common stock

1,402,616－－

1,402,616

Total

1,402,616－－

1,402,616

6,492

31

32

6,491

6,492

31

32

6,491

Treasury stock
Common stock(Notes 1, 2, 3)
Total

Notes: 1. The increase of 31 thousand shares in common stock of treasury stock was due to the purchase of shares in quantities of less than one share unit.
2. The decrease of 32 thousand shares in common stock of treasury stock was primarily attributable to the disposal of 22 thousand shares by the trust
for granting shares to Directors, etc., and the sale of 10 thousand shares in quantities of less than one share unit.
3. The number of shares of treasury stock as of March 31, 2019, includes 442 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 11, 2018.
Dividends for common stock
Total dividends¥27,932 million

Dividend per share¥20.00Date of record

March 31, 2018

Payment dateJune 5, 2018

Note: Total dividends includes ¥9 million for shares held by the trust for granting shares to Directors, etc.

232) The following was resolved by the Board of Directors on November 2, 2018.
Dividends for common stock
Total dividends¥23,742 million

Dividend per share¥17.00Date of record

September 30, 2018

Payment date

December 3, 2018

Note: Total dividends includes ¥8 million 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 10, 2019.
Dividends for common stock
Total dividends¥23,742 million

Source of dividends

Retained earnings

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.

24

8. 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, 2020 and 2019, was as follows:
Thousands ofMillions of yen

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

U.S. dollars

2020

2019

2020

¥207,957¥193,893$1,911,194(3,186)(13,374)(29,280)¥204,771¥180,520$1,881,913(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

Thousands of U.S. dollars

Current assets¥2,870$26,376

Noncurrent assets

13,860127,378

Goodwill

17,635

162,072

Current liabilities(2,848)(26,174)

Noncurrent liabilities(2,455)(22,562)

Acquisition cost of shares

29,063

267,099

Cash and cash equivalents(119)(1,094)

Net cash used for acquisition

28,944

266,005

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

Thousands of U.S. dollars¥11,012$101,204

5,630

51,742

Goodwill

149,100

1,370,278

Current liabilities(20,100)(184,726)

(30)

(276)

1,609

14,787

Acquisition cost of shares

147,220

1,353,001

Cash and cash equivalents(5,749)(52,835)

Net cash used for acquisition

141,471

1,300,165

Current assets
Noncurrent assets

Noncurrent liabilities
Foreign currency translation adjustment25

For the year ended March 31, 2019
Assets and liabilities of acquired companies (Senseair AB and 4 consolidated subsidiaries) and net cash outflow for such acquisition is as follows:
Millions of yen
Current assets¥1,296

Noncurrent assets

1,544

Goodwill

4,171

Current liabilities(580)

Noncurrent liabilities(352)

Acquisition cost of shares

6,079

Gain on step acquisitions(173)

Carrying value of previously held equity interest(322)

Cash and cash equivalents(351)

Net cash used for acquisition

5,233

Assets and liabilities of acquired companies (Sage Automotive Interiors, Inc. and 13 consolidated subsidiaries) and net cash outflow for suchacquisition is as follows:
Millions of yen
Current assets¥23,467

Noncurrent assets

59,076

Goodwill

68,171

Current liabilities(55,254)

Noncurrent liabilities(11,193)

Non-controlling interests(4,363)Acquisition cost of shares

79,904

Cash and cash equivalents(6,916)

Net cash used for acquisition

72,988Assets and liabilities of acquired companies (Erickson Framing Operations LLC and 4 consolidated subsidiaries) and net cash outflow for suchacquisition is as follows:
Millions of yen
Current assets¥3,728

Noncurrent assets

9,137

Goodwill

1,230

Current liabilities(4,240)Noncurrent liabilities(38)

Foreign currency translation adjustment

233

Acquisition cost of shares

10,050Cash and cash equivalents(90)

Net cash used for acquisition

9,959

26

9. Leases(a) Financing lease transactions
Financing lease transactions without title transfer and right-of-use assets of overseas subsidiaries under IFRS 16i) 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.”(b) Operating lease transactions
Future lease payments for the non-cancelable portion of the Company’s operating leases at March 31, 2020 and 2019, were as follows:
Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

Due within one year

¥9,593¥9,442$88,163

Due after one year

31,821

38,949292,446

Total¥41,414¥48,391$380,60827

10. 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.

28

(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, 2020 and 2019, 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
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 (*)

Millions of yen
2019
Carrying amount

Fair value

Difference

Cash and deposits¥193,893¥193,893¥－

Notes and accounts receivable–trade350,716

350,716－

Investments in affiliates

15,37314,015(1,358)Other securities

188,070

188,070－

Long-term loans receivable

20,65020,658

8

Total assets

768,702767,353(1,349)Notes and accounts payable–trade180,429

180,429－

Short-term loans payable

75,48475,484－

Commercial paper

77,00077,000－

Income taxes payable

24,971

24,971－

Bonds payable

40,00040,198(198)

Long-term loans payable

231,973

230,677

1,296

417

417

1

9,246

9,300

(54)

639,520

638,475

1,045

¥162

¥162

¥－

Investment securities:

Lease obligations
Long-term guarantee deposits
Total liabilities
Derivative financial instruments (*)

29

Thousands of U.S. dollars
2020
Carrying amount

Fair value

Difference

Cash and deposits$1,911,194$1,911,194$－

Notes and accounts receivable–trade

3,041,991

3,041,991－

145,786

108,060(37,726)

1,201,829

1,201,829－

130,420

130,49474

Total assets

6,431,229

6,393,576(37,653)

Notes and accounts payable–trade

1,205,836

1,205,836－

Short-term loans payable

2,307,352

2,307,352－

Commercial paper

1,277,456

1,277,456－

Income taxes payable

166,759

166,759－

Bonds payable551,420

546,016

5,404

2,332,322

2,350,979(18,666)

Lease obligations

41,45844,288(2,831)Long-term guarantee deposits

90,01990,442(423)

7,972,613

7,989,119(16,515)$1,103$1,103$－

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

Long-term loans payable

Total liabilities
Derivative financial instruments (*)(*) 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 11 “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, 2020 and 2019,
amounting ¥6,240 million (US$57,348 thousand) and ¥657 million, respectively. Their fair values are determined based on the present value ofprincipal 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, 2020 and 2019,
amounting to ¥24,608 million (US$226,156 thousand) and ¥22,095 million, respectively. Their fair values are based on present value of principal

30

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 12 “Derivative financial instruments.”
Note 2) For equity investments in nonpublic companies, with a carrying amount as of March 31, 2020 and 2019, amounting to ¥97,238 million(US$893,649 thousand) and ¥89,661 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, 2020 and 2019, amounting to ¥709 million (US$6,516 thousand) and ¥3,226
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, 2020 and 2019, amounting to ¥11,819
million (US$108,621 thousand) and ¥11,897 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
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

Millions of yen
2019
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¥193,893

¥－

¥－

¥－

Notes and accounts receivable–trade350,716

－

－

－

4,542

15,848260－¥549,151¥15,848¥260¥－

Long-term loans receivable
Total

31

Thousands of U.S. dollars
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$1,911,194

$－

$－

$－

Notes and accounts receivable–trade

3,041,991－－－

57,34870,3702,711－$5,010,532$70,370$2,711$－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 312020
Short-term

Commercial

Bonds

loans payablepaper

payableLong-term

Lease obligations

Total

loans
payable2021¥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

thereafterYear ending

Millions of yen

March 312019
Short-term

Commercial

Bonds

Long-termloans payablepaper

payableloans payable

Lease obligations

Total

2020

¥75,484¥77,000¥20,000¥22,095¥164¥194,743

2021

－

－

－

24,951

141

25,092

2022

－

－

－

55,33471

55,405

2023

－

－

－

70,66830

70,6982024－－

20,00025,785

10

45,7952025 and－－－

33,140－33,140

thereafter

32

Year ending

Thousands of U.S. dollars

March 312020
Short-term

Commercial

loans payable

paper

Bonds payable

Long-term

Lease

loans

obligations

Total

payable2021$2,307,352$1,277,456$－$226,156$9,245$3,820,200

2022

－

－

－

504,3296,589

510,918

2023

－

－

－

644,1412,720

646,862

2024

－

－

183,807468,946

1,186

653,938

2025

－

－

183,807282,235

1,112

467,1542026 and－－

183,807

206,516

20,614410,927

thereafter33

11. 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, 2020 and 2019, were as follows:
Millions of yen
2020
Carrying

Cost

Unrealized gains(losses)amountSecurities 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 (US$893,649 thousand),and ¥709 million (US$6,516 thousand), 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.

Millions of yen
2019
Carrying

Cost

Unrealized gains(losses)amountSecurities with unrealized gains:
Equity securities¥177,464¥29,367¥148,097

Subtotal

177,464

29,367148,097

Equity securities

10,607

12,563(1,956)

Subtotal

10,607

12,563(1,956)¥188,070¥41,930¥146,140

Securities with unrealized losses:

Total

For equity investments in nonpublic companies and investment securities, with a carrying amount of ¥89,661 million and ¥3,226 million,
respectively, as of March 31, 2019, 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.

34

Thousands of U.S. dollars
2020
Carrying

Unrealized gains

Cost(losses)amountSecurities with unrealized gains:
Equity securities$1,134,032$231,550$902,481

Subtotal

1,134,032

231,550

902,481

Equity securities

67,797

84,073028(16,276)

Subtotal

67,797

84,073(16,276)$1,201,829$315,624$886,205

Securities with unrealized losses:

Total

For equity investments in nonpublic companies and investment securities, with a carrying amount of ¥97,238 million (US$893,649 thousand),and ¥709 million (US$6,516 thousand), 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.

(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, 2020 and 2019, were as follows:
Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

Selling amount¥24,310¥16,176$223,417

Gain on sales of securities

13,67911,580125,715

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, 2020, was ¥1,953
million (US$17,949 thousand), which is the sum of ¥534 million (US$4,908 thousand) for equity securities of unconsolidated subsidiaries andaffiliates and ¥1,419 million (US$13,041 thousand) for other securities, and for the year ended March 31, 2019, ¥173 million, which is for othersecurities.

35

12. Derivative financial instruments(a) Derivative financial instruments for which hedge accounting is not appliedi) Foreign exchange forward contracts
Millions of yen
2020
Amount ofcontract

Amount ofcontract over
1 yearFair value(*)

Profit (loss)
fromvaluation

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

Euro

42

－

0

0

Thai baht

－

－

－

－

¥45,624

¥－

¥75

¥75

Classification

Items

Off-market

Foreign exchangetransactions

Sellingcontracts
forward

Australian dollar
BuyingU.S. dollar

Total

Millions of yen
2019
Amount ofcontract

Amount ofcontract over
1 yearFair value(*)

Profit (loss)
fromvaluation

U.S. dollar¥40,157

¥－

¥(9)

¥(9)

Euro

11,379－88

88

Thai baht

2,306

－

39

39

British pound

45

－

0

0

Chinese yuan

5

－

(0)

(0)

Australian dollar

8

－

0

0

4,373

－

(20)

(20)

Euro

14

－

(0)

(0)

Thai baht

4

－

0

0

¥58,291

¥－

¥98

¥98

Classification

Items

Off-market

Foreign exchangetransactions

Sellingcontracts
forward

BuyingU.S. dollar

Total

36

Thousands of U.S. dollars
2020
Amount ofcontract

Amount ofcontract over
1 yearFair value(*)

Profit (loss)
fromvaluation$251,402

$－

$662

$662

Euro

101,140

－

441

441

Thai baht

12,012

－

(460)

(460)

British pound

432

－

(9)

(9)

Chinese yuan

17,563

－

(64)

(64)

－

－

－

－

36,366

－

110

110

Euro

386

－

0

0

Thai baht

－

－

－

－

$419,300

$－

$689

$689

Classification

Items

Off-market

Foreign exchangetransactions

Selling
forward contracts
U.S. dollar

Australian dollar
BuyingU.S. dollar

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

Classification

Items

Hedged assets/liabilities

Amount ofcontract

2020
Amount ofcontract over
1 yearFairvalue(*)

Foreign exchange
Selling contracts
forwardPrinciple-based
accounting

U.S. dollar

Accounts receivable–trade¥2,688

¥393

¥37

Euro

Accounts receivable–trade

1,047

－

8

U.S. dollar

Accounts payable–trade

372

－

0

Euro

Accounts payable–trade

1

－

0

¥4,108¥393¥45

Buying

Total

Millions of yen

Classification

Items

Hedged assets/liabilities

Amount ofcontract

2019
Amount ofcontract over
1 yearFairvalue(*)

Foreign exchange
Selling contracts
forwardPrinciple-based
accounting

U.S. dollar

Accounts receivable–trade¥4,601

¥44

¥56

Euro

Accounts receivable–trade

687

－

10

U.S. dollar

Accounts payable–trade

382

－

(1)

Euro

Accounts payable–trade

23

－

(1)

¥5,694¥44¥64

BuyingTotal

37

Thousands of U.S. dollars
2020
Classification

Hedged assets/liabilities

Amount ofcontract

Amount ofcontract over
1 year

U.S. dollar

Accounts receivable–trade$24,704$3,612$340

Euro

Accounts receivable–trade

9,622

－

74

U.S. dollar

Accounts payable–trade

3,419

－

0

Euro

Accounts payable–trade

9

－

0

$37,754$3,612

$414

Items

Fair
value(*)

Foreign exchange
Selling contracts
forwardPrinciple-based
accounting

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

ii) Interest-rate swaps, and interest-rate and currency swaps
Millions of yen
2020
Classification

Items

Special treatment forInterest-rate swaps

interest-rate swaps

Pay fixed/receive

Hedged assets/liabilities

Amount ofcontract

Amount ofcontract
over 1 year

Fair value

Long-term loans payable¥88,114¥71,647(*)¥88,114¥71,647¥－

Total
floating

Millions of yen
2019Classification

Items

Special treatment forInterest-rate swaps

interest-rate swaps

Pay fixed/receive

Hedged assets/liabilities

Amount ofcontract

Amount ofcontract
over 1 year

Long-term loans payable¥98,712¥78,605(*)¥98,712¥78,605¥－

Total
floating

Fair value

Thousands of U.S. dollars
2020
Classification

Items

Special treatment forInterest-rate swaps

interest-rate swaps

Pay fixed/receive

Hedged assets/liabilities

Amount ofcontract

Amount ofcontract over
1 yearLong-term loans payable$809,797$658,460(*)$809,797$658,460$－

Total
floating

Fair value(*) 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.

38

13. 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, 2020 and 2019, were as follows:
Thousands ofMillions of yen

U.S. dollars

2020

2019

¥402,461¥400,855$3,698,750

Service cost

14,844

15,466

136,421

Interest cost

705

728

6,479

2,515

2,061

23,114

Payment of retirement benefits(16,954)(16,451)(155,813)

Prior service cost

(1,599)－(14,695)

2

(198)

18

¥401,975¥402,461$3,694,284

Beginning balance of the projected benefit obligations

Actuarial gains/losses

Other
Ending balance of the projected benefit obligations

2020

Reconciliations of beginning and ending balances of plan assets for the fiscal years ended March 31, 2020 and 2019, were as follows:
Thousands ofMillions of yen

U.S. dollars

2020

2019

¥233,776¥230,220$2,148,479

Expected return

5,810

5,737

53,396

Actuarial gains/losses(8,937)(387)(82,134)

Contributions

6,128

7,408

56,318

Payment of retirement benefits(9,134)(9,206)(83,944)

(35)

4

(322)

¥227,609¥233,776$2,091,802

Beginning balance of plan assets

Other
Ending balance of plan assets

2020

39

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, 2020 and 2019, were as follows:
Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

Projected benefit obligations of funded plans¥256,681¥258,381$2,358,984

Plan assets(227,609)(233,776)(2,091,802)

Subtotal

29,072

24,605

267,181

Projected benefit obligations of unfunded plans

145,294

144,080

1,335,300

Net of liability and asset that have been recorded in
the consolidated balance sheets¥174,365¥168,685$1,602,472

Net defined benefit liability¥174,365¥168,685$1,602,472

Net of liability and asset that have been recorded in
the consolidated balance sheets¥174,365¥168,685$1,602,472

Periodic retirement benefit expenses for employees and the breakdown of items for the years ended March 31, 2020 and 2019, were as follows:
Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

¥14,201¥13,829$130,512

705

728

6,479

Expected return on plan assets(5,810)(5,737)(53,396)

Amortization of actuarial gains/losses

4,424

8,407

40,658

8

82

74

769

1,327

7,067

¥14,297¥18,636$131,394

Service cost (net of employee contributions)Interest cost

Amortization of prior service costs
Additional retirement benefits and other
Retirement benefit expenses of defined benefit plans

The components of other comprehensive income on defined benefit plans for the fiscal years ended March 31, 2020 and 2019, were as follows:
Thousands ofMillions of yen
2020

U.S. dollars
2019

2020

Prior service costs¥1,607¥82$14,769

Actuarial gains/losses(7,028)6,156(64,590)

Total¥(5,421)¥6,238$(49,821)

40

Accumulated other comprehensive income on defined benefit plans at March 31, 2020 and 2019, was as follows:
Thousands ofMillions of yen
2020

U.S. dollars
2019

2020

Unrecognized prior service costs¥(1,611)¥(4)$(14,806)

Unrecognized actuarial gains/losses

34,651

27,623

318,454

Total¥33,040¥27,619$303,649

Share by major classifications for plan assets at March 31, 2020 and 2019, was as follows:
2020

2019

Bonds

40%

38%

Stock

22%

25%

Alternative investments

21%

17%

Life insurance

13%

13%

Cash and deposits

2%

5%

Other

1%

2%

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, 2020 and 2019, were as follows:
2020

2019

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, 2020, amounted to ¥5,236 million (US$48,121 thousand), and at March 31, 2019,
amounted to ¥2,738 million.

41

14. 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, 2020 and 2019, were as follows:
Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

¥53,111¥51,489$488,108

Tax loss carry forwards

9,733

3,701

89,449Accrued bonuses

7,788

7,857

71,574Foreign tax credit carry forwards

6,729

6,990

61,842

Unrealized gain on noncurrent assets and others

4,536

4,368

41,687

Impairment losses

4,437

3,171

40,778Loss on disposal of noncurrent assets

3,668

3,143

33,710Other

25,524

21,670234,574

Subtotal deferred tax assets

115,526

102,390

1,061,722

Less: Valuation allowance(13,418)(13,218)(123,316)

Total deferred tax assets

102,108

89,172

938,406

Identified intangible assets during business combination(38,089)(37,071)(350,051)

Unrealized gain on other securities(29,841)(44,241)(274,249)

Depreciation―overseas subsidiaries(9,568)(8,958)(87,933)

Deferred gain on property, plant and equipment(8,814)(8,305)(81,004)

Other(12,166)(11,387)(111,810)

Total deferred tax liabilities(98,477)(109,963)(905,036)

Net deferred tax assets (liabilities)¥3,631¥(20,791)$33,370

Deferred tax assets:
Net defined benefit liability

Deferred tax liabilities:

In the fiscal year ended March 31, 2020, tax loss carry forwards, which had previously been included in Other under deferred tax assets, isreported separately due to increased materiality. The figure for the fiscal year ended March 31, 2019, has been adjusted accordingly, resulting
in Other under deferred tax assets being ¥21,670 million, ¥3,701 million lower than the ¥25,371 million previously reported, reflecting theseparation of the same amount as tax loss carry forwards.

Reconciliation of the differences between the statutory tax rate and the effective income tax rate for the years ended March 31, 2020 and 2019, was
as follows:
2020

2019

30.6%

30.6%
30.9%

Non-deductible expenses and non-taxable income

1.0

R&D expenses deductible from income taxes

(3.5)

1.0
0.3
(2.8)

Amortization of goodwill and negative goodwill

4.4

Equity in (losses) earnings of unconsolidated subsidiaries and affiliates

(1.4)

2.8
(2.9)
(1.8)

Undistributed earnings (losses) of foreign subsidiaries

0.5

2.5
0.6

Difference of tax rates for foreign subsidiaries

0.4

(1.7)
(1.9)

Other

0.3

(0.0)
0.4

32.2%

28.8%
(0.4)

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

Effective income tax rate

(7.9)
0.1
21.1%201742

15. Business combinations
Business combinations accounted for by the purchase method were as follows:(a) Acquisition of Cardiac Science Corporationi) Outline of business combination
1) Name and nature of the businesses of counterparty
Name of counterparty:

Cardiac Science Corporation

Nature of the businesses:

Development, manufacture, and sale of automated external defibrillators (AEDs)

2) Main reasons for the acquisition
To expand the AED product lineup and to obtain the sales network of Cardiac Science Corporation with strength in commercial facilities, etc.
3) The acquisition dateAugust 26, 20194) Statutory form of business combination
Stock purchase for cash as consideration
5) Name of company after transaction
Cardiac Science Corporation
6) Acquired voting right
Voting right before the acquisition:

0%

Voting right after the acquisition:

100%7) Basic means of materializing the acquisition
Stock purchase for cash as consideration by a consolidated subsidiary of the Companyii) The period of acquiree’s results included in the consolidated financial statements
From August 26, 2019, to March 31, 2020iii) Cost of acquisition and details
Millions of yen

Thousands of U.S. dollars

Stock purchase price¥29,063$267,099

Purchase price¥29,063$267,099iv) Major acquisition related costs
Advisory fees and others:¥253 million (US$2,325 thousand)v) Amount of goodwill, measurement principle, amortization method, and useful life
1) Amount of goodwill¥17,635 million (US$162,072 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 10 years

43vi) Details of assets acquired and liabilities assumed as of the acquisition dateMillions of yen

Thousands of U.S. dollars

Current assets¥2,870$26,376

Noncurrent assets

13,860127,378

Total assets¥16,730$153,754

Current liabilities¥2,848$26,174

Noncurrent liabilities

2,455

22,562

Total liabilities¥5,302$48,727vii) 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
Customer-related assets

Thousands of U.S. dollars¥10,636$97,748

2,028

18,638494

4,540

Trademark rights
Technology-related assets
2) Major weighted average useful life
Customer-related assets

14 years

Trademark rights

10 yearsTechnology-related assets

10 years

Total

13 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.

(b) Acquisition of Veloxis Pharmaceuticals A/Si) Outline of business combination
1) Name and nature of the businesses of counterparty
Name of counterparty:

Veloxis Pharmaceuticals A/SNature of the businesses:

R&D, manufacture, and sale of pharmaceuticals and medical care related products, and ancillary operations

2) Main reasons for the acquisition
The acquisition provides the Company with a U.S. pharmaceutical business platform. By maximizing the value of both the existing and acquired
pharmaceutical businesses, the Company advances the globalization of both pharmaceutical and medical device businesses, which will contributeto further growth in healthcare and to a sustainable increase in corporate value. The Company aims to achieve the following synergies throughthe acquisition.
• Increasing opportunities to obtain pharmaceuticals as new growth drivers, by enhancing licensing and other activities leveraging the businessplatforms of both companies (the Company in Japan and Asia, Veloxis Pharmaceuticals, Inc. in the USA).
• Creating new drugs that meet high unmet needs by combining the Company’s drug discovery research capabilities with the ability of Veloxis
Pharmaceuticals, Inc. to understand the medical needs of the USA market.
• Creating new healthcare-related businesses in the USA by leveraging access to innovation and clinical sites.
3) The acquisition date
January 23, 2020
4) Statutory form of business combination

44

Stock purchase for cash as consideration
5) Name of company after transaction
Veloxis Pharmaceuticals A/S
6) Acquired voting right
Voting right before the acquisition:

2.2%

Voting right after the acquisition:

100%7) Basic means of materializing the acquisition
Stock purchase for cash as consideration by a special purpose subsidiary of the Companyii) The period of acquiree’s results included in the consolidated financial statements
Earnings not included as the deemed acquisition date is set to the end of the fiscal year under review.

iii) Cost of acquisition and details
Millions of yen

Thousands of U.S. dollars

Stock purchase price¥147,220$1,353,001

Purchase price¥147,220$1,353,001iv) Major acquisition related costs
Advisory fees and others:¥2,105 million (US$19,346 thousand)v) Amount of goodwill, measurement principle, amortization method, and useful life
1) Amount of goodwill¥149,100 million (US$1,370,278 thousand)** Based on provisional calculation
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
Not determined at presentvi) Details of assets acquired and liabilities assumed as of the acquisition dateMillions of yen
Current assets

Thousands of U.S. dollars¥11,012$101,204

5,630

51,742

Total assets¥16,641$152,936

Current liabilities¥20,100$184,72630

276¥20,130$185,001

Noncurrent assets

Noncurrent liabilities
Total liabilitiesvii) 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.

45

16. 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 defibrillators and temperature management systems.

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.

46

(c) Information concerning net sales, income or loss, assets, and other items for each reportable segment
Millions of yen
2020
Material

Homes

Health Care

Subtotal

Others (Note 1)

Total¥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

679,472

2,712,120

84,093

2,796,213

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

Sales:
External customers
Intersegment
Total
Operating income(Note 2)
AssetsOther items:
Depreciation andamortization
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
2019
Material

Homes

Health Care

Subtotal¥1,176,217¥659,754¥316,166¥2,152,138¥18,265¥2,170,403

5,066

207

34

5,307

31,35936,666

1,181,283

659,961

316,201

2,157,445

49,6242,207,069

129,565

68,161

41,825239,551

2,411

241,962

1,492,277

523,692

472,8462,488,815

84,873

2,573,688

50,471

9,069

18,042

77,582

1,375

78,957

10,70015

8,774

19,490－19,49055,424

11,671

226

67,321

19,42486,74586,64017,613

17,306

121,558

1,624

123,182

Others (Note 1)

Total

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

47

Thousands of U.S. dollars
2020
Material

Homes

Health Care

Subtotal$10,046,365$6,473,881$3,104,384$19,624,630$149,711$19,774,341

46,9171,130

101

48,157

336,780

384,928

10,093,273

6,475,011

3,104,485

19,672,778

486,490

20,159,268

848,865

668,238

399,835

1,916,938

29,198

1,946,126

13,612,104

5,068,606

6,244,573

24,925,283

772,843

25,698,125

538,195

96,912

177,079

812,186

13,528825,705

110,946551

93,337

204,834—

204,834

522,948

87,703

13,785

624,437

168,992

793,429

960,077

167,338

146,521

1,273,927

19,9891,293,925

Others (Note 1)

Total

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

48

(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

2020

2019

¥2,140,595¥2,157,445$19,672,778

Net sales in “Others” category

52,93549,624486,490

Elimination of intersegment transactions(41,884)(36,666)(384,928)¥2,151,646¥2,170,403$19,774,341

Total of reporting segments

Net sales on consolidated statements of income

Operating income

2020

Thousands of U.S.

Millions of yen

dollars

2020

2019

2020

¥208,582¥239,551$1,916,938

Operating income in “Others” category

3,177

2,411

29,198Elimination of intersegment transactions

303

(133)

2,785

(34,797)(32,241)(319,796)¥177,264¥209,587$1,629,115

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

2020

2019

Total of reporting segments¥2,712,120¥2,488,815$24,925,283

Assets in “Others” category

84,09384,873772,843

Elimination of intersegment transactions(589,354)(425,141)(5,416,359)

Corporate assets*

591,115426,656

5,432,543¥2,797,975¥2,575,203$25,714,319

Total assets on consolidated balance sheets

2020* Corporate assets include assets of the parent company—surplus operating funds (cash and deposits), long-term investment capital(investment securities, etc.), and land, etc.

49

Total of reportable segments

Other items

Millions of yen

Depreciation andThousands

OthersMillions of yen

Adjustments (Note 1)

Thousands

Millions of yen

Amounts from consolidated financial
statements

Thousands

Millions of yen

Thousandsof U.S.

of U.S.

of U.S.

of U.S.

dollars

dollars

dollars

dollars

2020

2019

2020

2020

2019

2020

2020

2019

2020

2020

2019

2020

¥88,374¥77,582$812,186¥1,472¥1,375$13,528¥6,170¥5,599$56,704¥96,016¥84,556$882,419

22,28819,490204,834

－

－

－

－

－

－

22,28819,490204,834

67,94567,321

624,437

18,38819,424

168,992－－－

86,33386,745

793,429

138,616

121,558

1,273,927

2,175

1,624

19,98913,33013,024

122,507

154,122

136,206

1,416,432

amortization(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.

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

Thousands of U.S. dollars

2020

2020

Japan

United States

China

Other regions

Total

Japan

United States

China

Other regions

Total¥1,290,077¥269,481¥188,553¥403,535¥2,151,646$11,856,236$2,476,620$1,732,865$3,708,621$19,774,341

Millions of yen
2019
Japan

United States

China

Other regions

Total¥1,311,136¥227,993¥211,504¥419,770¥2,170,403

2) Property, plant and equipment
Millions of yen

Thousands of U.S. dollars

2020
Japan

¥477,359

2019

UnitedOther

Statesregions¥105,925¥70,403

Total

Japan

¥653,686¥428,900

2020

UnitedOther

Statesregions¥104,413¥88,053

Total¥621,366Japan$4,387,088

UnitedOther

Statesregions$973,486$647,027

Total$6,007,591

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.

51

17. Information on related parties
For the year ended March 31, 2020: None
For the year ended March 31, 2019: None52

18. Per share information
Basic and diluted net assets per share and net income per share for the years ended March 31, 2020 and 2019, were as follows:
Yen

U.S. dollars

2020

2019

2020

Basic net assets per share¥979.69¥989.51$9.00

Basic net income per share

74.85

105.660.69

Note: As the Company had no dilutive securities at March 31, 2020 and 2019, the Company does not disclose diluted net income
per share for the years ended March 31, 2020 and 2019.

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

U.S. dollars

2020

2019

2020

¥1,383,460¥1,402,710$12,714,456

Amount deducted from total net assets

24,145

21,225

221,901of which, non-controlling interests(24,145)(21,225)(221,901)

Net assets allocated to capital stock¥1,359,314¥1,381,485$12,492,547

1,387,492

1,396,125

1,387,492

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 379 thousand at March 31, 2020, and 442 thousandat March 31, 2019, 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 tocommon stock shareholders
Net income attributable to common stock owners of
the parent
Weighted-average number of shares of capital stock(thousand)

U.S. dollars

2020

2019

2020

¥103,931¥147,512$955,160－－－¥103,931¥147,512$955,160

1,388,564

1,396,130

1,388,564

Note: Shares held by the trust for granting shares to Directors, etc., numbering 398 thousand during the year ended March 31, 2020,
and 450 thousand during the year ended March 31, 2019, are excluded from the weighted-average number of shares of capitalstock used in calculation of net income per share.

53

19. Subsequent events
For the year ended March 31, 2020: None

Additional Information
Acquisition of shares and assets in the automotive interior fabrics business of Adient plc
Sage Automotive Interiors, Inc. (Sage), a subsidiary of the Company, concluded an agreement with Adient plc (“Adient”, Headquarters: Plymouth,
Michigan, USA; President and CEO: Douglas G. Del Grosso, a New York Stock Exchange-listed company) on March 5, 2020, to acquire Adient’s
automotive fabrics business, for US$175 million. Completion of the acquisition is subject to obtaining regulatory clearance and other customary
closing conditions.
(Although Adient's registered headquarters is in Dublin, Ireland, Adient US LLC in Plymouth, Michigan, USA, has the actual headquarters function.)

1) Main reasons for the acquisition of stocks and assets
Centered in the US, Sage develops, manufactures, and sells various fabric materials for automotive interiors, and is one of the world’s leading
suppliers of vehicle seat fabric with a firm established presence among automotive OEMs and Tier-1 suppliers. To facilitate further growth, Sage
had sought to expand its footprint in Europe, the largest market for automotive interior fabric and the source of innovative automotive trends.
By acquiring Adient’s automotive fabrics business, Sage will gain several operating sites around the world centered in Europe. The business tobe acquired has a strong reputation for design and quality among Europe’s major vehicle manufacturers, and is one of the leading suppliers in
the European market for automotive seat fabric.
The agreement for the acquisition was reached based on a recognition that Adient’s automotive fabrics business with its strengths in marketing,manufacturing, and development centered in Europe would complement Sage’s strengths and enable the combined business to create positivesynergies while further expanding in Europe.
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 Asahi Kasei
Group’s overall expansion of business in the automotive field.

2) Name of counterparty to acquisition of stocks and assets
Adient plc

3) Nature of businesses of counterparty
With this acquisition, assets related to the automotive fabric business and stocks comprising the business will be purchased.

4) Purchase price
US$175 million(The actual purchase price is subject to change due to the balance of cash and cash equivalents, borrowings, etc., as well as increase/decreaseof working capital at the time of closing.)

5) Method of raising funds
Cash on hand, borrowing

54

20. Borrowings(a) Bonds payable at March 31, 2020 and 2019, comprised the following:Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

Unsecured 1.46% yen bonds due in 2019¥－

¥20,000$－

Unsecured 0.10% yen bonds due in 2023

20,00020,000183,807

Unsecured 0.07% yen bonds due in 2024

20,000－183,807

Unsecured 0.21% yen bonds due in 2029

20,000－183,807¥60,000¥40,000

Total$551,420

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, 2020, are as follows:Year ending March 31

Millions of yen

Thousands of U.S. dollars

2021

¥－

$－

2022

－

－

2023

－

－

2024

20,000183,8072025

20,000183,8072026 and thereafter

20,000183,807

Total¥60,000$551,42055

(b) Loans payable at March 31, 2020 and 2019, comprised the following:Thousands ofMillions of yen

Short-term loans payable
with an interest rate of 0.19%
Current portion of long-term loans payable
with an interest rate of 1.28%

U.S. dollars

2020

2019

2019

¥251,063¥75,484$2,307,352

24,60822,095226,156

1,006

164

9,245

229,172

209,878

2,106,167

3,506

253

32,221

139,000

77,0001,277,456¥648,354¥384,874$5,958,588

Current portion of lease obligations
with an interest rate of 3.21%
Long-term loans payable(except portion due within one year)with an interest rate of 0.58%
Lease obligations(except portion due within one year)with an interest rate of 4.47%
Commercial paper(portion due within one year)with an interest rate of 0.00%
Total

Notes: 1. Interest rates shown are weighted average interest rates for the balance outstanding at March 31, 2020.
2. The aggregate annual maturities of long-term loans payable and lease obligations (except portion due within one year) after
March 31, 2020, 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

2022¥54,876$504,329¥717$6,5892023

70,089644,141

296

2,720

2024

51,026468,946

129

1,186

2025

30,710282,235

121

1,112

2026 and thereafter

22,471

206,516

2,243

20,61456

21. Supplementary schedule of asset retirement obligations
Because the amounts of asset retirement obligations on April 1, 2019, and March 31, 2020, 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.

5722. 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.

58

P'C
Independent Auditor's ReDOrt

To the Board ofI)irectors ofAsahi Kasei Corporation蜘
We have audited the consolidated anancial statements of Asahi Kasei Corporation and its
subsidiaries(the Group),WhiCh comprise the consolidated statement ofinancial position as at

MarCh 31,2020,and the consolidated statement ofincome,consolidated statement ofcomprehens市 eincome,consolidated statement ofchanges in equity and consolidated statement ofcash aows forthe yearthen ended,and notes to the consoldated inancial statements.
In our opinion,the accompanylng consolidated financial statements present fai』y,in an material
respects,the consolidated inancial posttion ofthe Group as at March 31,2020,and tts
consoldated inancial performance and tts consoldated cash aows forthe year then ended inaё cordance Ⅶ th accounting principles genera■ y accepted in Japan.

Basis for ODiniOn
We conducted our auditin accordance wth auditing standards generaⅢ
y accepted in Japan. Our
responsib』 五ies under those standards are further descrbed in theAvど orそ Rcsponsfb誼 Ocsデο
r th9
Avど it oデ ど
れ9 Cbnsο どαを
9ご Fを 配αncど αど
β と
cm9■ とs section of our report,We are independent ofthe=αGroup in accordance Ⅶ th the ethical requirements that are relevant to our audit ofthe consolidated
inancial statements in Japan,and we haveful■ lled our other ethical responsibnities in accordance
wth these requirementso We believe thatthe audit ttdence we have obtained is suricient andiとappropriate to proⅥ de a basis lor our opinion.

ResDOnSibilities ofManattement and Those Chartted with(3overnance fbr the Consolidated
Financial Statements
Managementis responsible for the preparation and fair presentation ofthe consolidated inancial
statements in accordance Ⅶ th accounting principles generally accepted in Japan,and for suchinternal control as lnanagement deterH五 nes is necessav to enable the preparation ofconsolidated
anancial statements that are free from material Hlisstatement,whether due to fraud or error.

In preparing the consolidated anancial statements,managementis responsible for assessing theGroup's ability to continue as a going concern and disclosing,as apphcable,Inatters related to going
concern。

Those charged Ⅶ th governance are responsible lbr Overseeing the Group's inancial reporLing
process,

PricewaterhouseCoopers Aarata LLC
Otemachi Park Building,と ぃ1‑1 0temachi,Chiyoda‐ ku,Tokyo loo‑0004,Japan

T:+81(3)6212 68oo,F:+81(3)6212 68ol,―.pWC・ COmん p/aSSurance

P″C
Auditor's ResDOnSibilities for the Audit ofthe Consolidated Financial Statements

Our ottect市 eS are to obtain reasonable assurance about whether the consolidated anancial
statements as a whole are free froln rnaterial lnisstatement,whether due to fraud or error,and toissue an audttor's report that includes our opinion. Reasonable assurance is a high level ofassurance,butis not a guarantee that an audit conducted in accordance wth auditing standards
generally accepted in Japan胡 ll always detect a material misstatement when h exists.
Misstatements can arise from fraud or error and are considered materialit indi宙

dually orin theaggregate,they could reasonably be expected to inauence the economic decisions ofusers taken on
the basis ofthese consohdated inancial statements.
As ParL ofan auditin accordance Ⅶth audtting standards generally accepted in Japan,we exercise
professionaljudgment and maintain professional skepticism throughout the audit,We also:
Identi,and aSSess the risks ofmaterial misstatement ofthe consolidated anancial statements,
whether due to fraud or error,design and perforHl audit procedures responsive to those risks,and obtain audit ewidence thatis sutthcient and appropriate to proⅥ de a basis for our opinion.
The risk ofnot detecting a lnaterial Hlisstatement resulting from fraud is higher than for one
resulting froln error,as fraud lnay involve collusion,forgery,intentional oHlissions,misrepresentations,or the override ofinternal control.
Obtain an understanding ofinternal control relevant to the auditin order to design audit

procedures that are appropnate in the circumstances,while the purpose ofthe consolidated
inancial statement audttis notto express an opinion on the erectiveness ofthe Group's internal
control.

Evaluate the appropriateness ofaccounting policies used and the reasonableness ofaccounting
estilnates and related disclosures lnade by lnanagement.

Conclude on the appropriateness ofmanagement's usc ofthe going concern basis ofaccounting
and,based on the audit evidence obtained,whether a rnatedal uncertainty exists related toevents or conditions that rnay cast slgnincant doubl on the Group's ab』 ity to continue as a going
concern,Ifwe condude that a mate五 al uncertainサ existS,We are required to draw attention in
our auditor's report to the related disclosures in the consohdated inancial statements or,ifsuch

disclosures are inadequate,to inodilyourOpinion. Our condusions are based on the audit
eⅥ dence obtained up to the date ofour auditor's reporL. However,future events or conditions
may cause the Group to cease to continue as a going concern.

Evaluate whether the presentation and disclosures ofthe consolidated inancial statements arein accordance wtth accounting principles generally accepted in Japan,the overall presentation,

structure and content ofthe consoldated anancial statements,including the disclosures,and
whether the consolidated anancial statements represent the underlying transactions and eventsin a manner that achieves fair presentation.

Obtain sumcient appropriate audit evidence regarding the anancialinformation ofthe entities
or business activities Ⅶ thin the Group to express an opinion on the consoldated inancial

statements, We are responsible for the direction,supemsion and performance ofthe groupaudit.We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding,among other llnatters,the planned
scope and tilning ofthe audit and significant audit indings,including any signiacant deficiencies ininternal control thatwe identiftt during our aud止
.

20f3

畔

We also pro宙 de those charged with governance Ⅶ th a statementthat we have cornplied l帆 th
relevant ethical requirements regarding independence,and to coHIInunicate Ⅶ th thena all
relationships and other matters that may reasonably be thOughtto bear on ourindependence,and
where applicable,related safesuards,

Convenience translation
The U.S.dollar amounts in the accompanylng consolidated inancial statements
Ⅶ th respect to theyear ended March 31,2020 are presented solely for conveniencet Our audit also induded thetranslation ofJapanese yen amounts into UoS.donar amounts and,in our opinion,such translation
has been lnade on the basis described in Note l to the consolidated anancial statements.

Our trni and its designated engagement partners do not have any interestin the Group which is
required to be disclosed pursuantto the proⅥ sions ofthe Certined Pubhc Accountants Act ofJapan.

拷独

え野 粧 ―えYuichiro Amano

Designated Engagement Partner
Certined Publc Accountant

井

歩

ヘ

Designated Engagement Partner
Certified Pubhc Accountant

多、ふHideki Godai
Designated Engagement Partner
Certified Public Accountant,

Ausust 13,2020

30f3ととC.