The share exchange described in this press release involves securities of a foreign company. The share exchange
is subject to disclosure requirements of a foreign country that are different from those of the United States.
Financial information included in this document, if any, was excerpted from financial statements prepared inaccordance with foreign accounting standards that may not be comparable to the financial statements of UnitedStates companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal
securities laws, since the issuer is located in a foreign country and some or all of its officers and directors may beresidents of a foreign country. You may not be able to sue a foreign company or its officers or directors in aforeign court for violations of the U.S. securities laws. It may be difficult to compel a foreign company and its
affiliates to subject themselves to a U.S. court’s judgment.
You should be aware that the issuer may purchase securities otherwise than under the share exchange, such as inopen market or privately negotiated purchases.
This document has been translated from the Japanese-language original for reference purposes only. While thisEnglish translation is believed to be generally accurate, it is subject to, and qualified by, in its entirety, theJapanese-language original. Such Japanese-language original shall be the controlling document for all purposes.

I．

Notes to the Consolidated Financial Statements(Explanatory Notes on Important Matters That are to Become the Basis for Preparation of Consolidated
Financial Statements)
1.
Matters concerning the scope of consolidation(1)
Number of consolidated subsidiaries: 22
Major consolidated subsidiaries:
Kensei Kogyo Co., Ltd.
Litra Co., Ltd.
Orientec Co., Ltd.
Holon Co., Ltd.
A&D Engineering, Inc.
A&D Electronics (Shenzhen) Co., Ltd.
A&D Rus Co, Ltd.
(2)
Major non-consolidated subsidiary:
A&D Trading (HK) Company Limited(Reason for exclusion from scope of consolidation)
The non-consolidated subsidiary is small in scale and its total assets, net sales, profit (amountcommensurate with equity), retained earnings (amount commensurate with equity), etc. do nothave a significant impact on the consolidated financial statements.
2.

Matters concerning the application of the equity method(1)
Number of associates accounted for under the equity method: N/A(2)
Non-consolidated subsidiaries and affiliated companies not accounted for using the equity
methodThe non-consolidated subsidiary (A&D Trading (HK) Company Limited) and affiliatedcompany (A&D Boryung Medical Co., Ltd.) not accounted for using the equity method are
excluded from the scope of the equity method because their profit (amount commensurate withequity) and retained earnings (amount commensurate with equity) have minimal impact on
consolidated financial statements and because they are not significant on the whole.

3.

Matters concerning the business year, etc., of consolidated subsidiaries
Of the consolidated subsidiaries, the closing date for A&D Electronics (Shenzhen) Co.; Ltd., A&D Rus
Co, Ltd.; and A&D Technology Trading (Shanghai) Co., Ltd. is December 31.
Financial statements prepared pursuant to the provisional closing of accounts conducted as of March 31
are used for preparation of the consolidated financial statements.

4.
(1)

Matters concerning accounting policies
Valuation standards and methodology for securities
Other securities
Securities with a......
The market value method based on the market price as of the end of themarket value
fiscal year is adopted. (Valuation differences are handled using the direct
inclusion in total net assets method, and selling costs are calculated using
the moving average method.)
Securities without......
The cost method based on the moving average method is adopted.
market value(2)
Valuation standards and methodology for inventory assets
Merchandise,......
The cost method (book value is written down when profitability declines)
products, raw
mainly based on weighted average method (specific identification method
materials, andfor certain unfinished goods) is adopted.
unfinished goods
Supplies......
The cost method based on last purchase cost method (book value written
down when profitability declines) is adopted.
(3)
Depreciation method for fixed assets
Tangible fixed assets ......
With respect to the Company and its domestic consolidated subsidiaries, the(excluding leased
declining balance method is mainly adopted, and with respect to overseas
assets and right-of
consolidated subsidiaries, the straight-line method is mainly adopted.
use assets)(However, the straight-line method is adopted with respect to buildings
excluding ancillary equipment acquired by the Company or domestic
consolidated subsidiaries on or after April 1, 1998, and for ancillaryequipment and structures acquired on or after April 1, 2016.)
For the main part, useful life is as follows:
Buildings and structures 3–50 years
Machinery, equipment and vehicles 2–17 years
Tools, furniture and fixtures 2–20 years
Intangible noncurrent assets(excluding leased
assets)......

Leased assets......

Trademark rights are amortized evenly based on the expected validity
period (15 years).
Software used in-house is amortized using the straight-line method over theperiod it can be used internally (5 years), and software for sales in themarket is amortized using the method based on estimated sales revenue(estimated effective period, 5 years).
Intangible assets other than the above are amortized using the straight-line
method.
The straight-line method assuming the lease period is the useful economic
life, and residual value is zero (or, for those with an agreed guaranteedvalue, such guaranteed value) is adopted.
-2-

Right-of-use assets

The straight-line method assuming the lease period is the useful economic
life, and residual value is zero is adopted.

(4)
Recognition criteria for important allowances
Allowance for......
In order to provide for losses due to unrecoverable claims, the projecteddoubtful accounts
unrecoverable amount for ordinary claims pursuant to the loan loss ratio,
and for specific claims such as doubtful accounts receivable, by individuallyconsidering the possibility of recovery, is recorded.
Provision for......
In order to provide for the payment of employee bonuses, the anticipatedbonusesamount of total bonus payments attributable to the current consolidated
fiscal year is recorded.
Provision for product ......
In order to provide for expenditures for repair of products to be performed
warranties
free of charge, the required amount is recorded based on the ratio of past
expenditures to net sales.
Provision for......
In order to provide for provision of Company share compensation to
director’ shareofficers based on the Officer Share Payment Regulations, the amount iscompensation
recorded based on the estimated amount of share compensation obligations
at the end of the current consolidated fiscal year.
(5)
Accounting method pertaining to retirement benefits
Period attribution......
When calculating retirement benefit obligations, the Company uses benefit
method for projected
formula criteria as the method of attributing expected amounts of retirement
retirement benefit
benefits to periods of time up to the end of the current fiscal year.
amounts
Expense reporting......
Past service costs are recognized using the straight-line method based on amethod for actuarial
certain number of years (10 years) within the average remaining service
differences and for
period for employees at the time of their occurrence.
past service expenses
Differences in actuarial calculations are respectively recognized from theconsolidated fiscal year immediately following the consolidated fiscal year
in which they occur in the amount obtained by proportional division using
the straight-line method based on a certain number of years (10 years)
within the average remaining service period for employees in eachconsolidated fiscal year in which they occur.
Use of simplified......
Certain consolidated subsidiaries apply simplified accounting that uses theaccounting for small
amount that would be paid if all eligible employees voluntarily retired at thecompanies
period end as the retirement benefit obligations when calculating retirement
benefit liabilities and costs.
(6)

Standards on recognition of material revenues and expenses
Standards on recognition of sales and cost of sales
Work for which the......
Percentage-of-completion method (the estimated percentage of completion
outcome of theis based on the ratio of the cost incurred to the estimated total cost)
construction activity
is deemed certain by
the end of the current
consolidated fiscal
year
All other work......
Completed-contract method

-3-

(7)

Hedge accounting method
Deferral hedge accounting is used. Forward exchange contracts are accounted for using the designatedhedge method when the required conditions are met; interest rate swaps are subject to special treatment
when the required conditions are met.

(8)

Amortization method and amortization period of goodwill
Goodwill is evenly amortized over 5 to 15 years.

(9)

Accounting treatment for consumption tax
Consumption tax, etc. is accounted for using the tax exclusion method.

(10)

Application of consolidated return system
The consolidated return system is applied.

(11)

Application of tax effect accounting for transition from the consolidated taxation system to the group tax
sharing system
The Company and certain domestic consolidated subsidiaries do not apply the provisions of Paragraph
44 of the Implementation Guidance on Tax Effect Accounting (ASBJ Guidance No. 28; February 16,2018) in accordance with Paragraph 3 of the Practical Solution on the Treatment of Tax EffectAccounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing System(ASBJ PITF No. 39; March 31, 2020) in regard to the transition to the group tax sharing system that wasestablished under the Act for Partial Amendment of the Income Tax Act, etc. (Act No. 8 of 2020) anditems for which the non-consolidated taxation system was revised in conjunction with the transition to
the group tax sharing system. Accordingly, the amounts of deferred tax assets and deferred tax liabilities
are presented pursuant to the provisions in tax laws before the amendment.

(Explanatory Notes on Changes in the Method of Presentation)
Application of Accounting Standard for Disclosure of Accounting Estimates
Accounting Standard for Disclosure of Accounting Estimates (ASBJ Guidance No. 31, March 31, 2020)
is applied from the consolidated financial statements for the end of the current consolidated fiscal year,
and the consolidated financial statements include explanatory notes regarding significant accounting
estimates.
(Explanatory Notes on Changes to Accounting Estimates)
Items for which the amount is recognized in the consolidated financial statements for the current
consolidated fiscal year based on accounting estimates and that may have a significant impact on the
consolidated financial statements for the next consolidated fiscal year are as follows.
Inventory assets
Amount presented in the consolidated financial statements for the current consolidated fiscal year
Account title
Amount (million yen)
Merchandise and products
6,583
Unfinished goods
2,259
Raw materials and supplies
3,606
Inventory assets total
12,448-4-

This amount for inventory assets is recorded after deducting the valuation loss, and the main amount of thevaluation loss is the valuation loss related to the inventory assets held by the Company.
The Company occupies the center of sales, manufacturing and R&D activities of the Group, and holds a wide
variety of inventory assets in large quantities such as a wide variety of products, raw materials, and unfinishedgoods. Therefore, inventory assets owned by the Company, excluding individually ordered products, tend tohave a large valuation loss.
The Group has reduced the book value of inventory assets excluding individual orders based on past sales andexpenditures to reflect the fact that profitability has decreased. This valuation loss on inventory assets is
estimated based on past sales and expenditures in anticipation of future conditions. Therefore, if the status of
future sales, expenditures, and disposal differs from the assumptions of the estimate, there may be a significant
impact on inventory assets in the consolidated financial statements for the next consolidated fiscal year.
(Additional Information)(Share Compensation Trust for Directors)
The Company has introduced a share compensation plan for its directors (excluding outside directors) called “Board Benefit
Trust (BBT)”, and Practical Solution on Transactions of Delivering the Company’s Own Stock to Employees etc. throughTrusts (PITF No. 30, March 26, 2015) is applied mutatis mutandis.

(i)

(ii)

(iii)

Outline of the transaction
The BBT plan is a performance-linked share compensation plan in which the Company’s sharesare acquired through a trust using money contributed by the Company, and the Company’s
shares and the amount equivalent to the market value of the Company’s shares as of the date ofretirement will be paid to the directors through the trust in accordance with the Officer Share
Payment Regulations established by the Company.
Company shares remaining in the trust
The shares remaining in the trust is recognized as treasury shares in the net assets section of thebalance sheet, at the book value reported by the trust (excluding ancillary costs). The book valueof the treasury shares was 126 million yen, and the number of shares was 335,000 at the end of
the current consolidated fiscal year.
Book value of borrowings recognized by applying the gross method
No applicable information.

-5-

(Notes on Consolidated Balance Sheet)1.
Accumulated depreciation for tangible fixed assets
14,532 million yen
2.
Collateralized assets
Nature of collateralized assets and their amount
Buildings and structures
1,171 million yen
Land3,150 million yen
Investment securities
3 million yen
Investment and other assets (Other)
75 million yen
Amount of the obligation pertaining to the security
Short-term loans payable
3,539 million yen
Long-term borrowings payable in 1 year
1,661 million yen
Long-term loans payable
2,628 million yen(Note) In addition to the above, 71 million yen in shares of affiliated companies that have been eliminated on aconsolidated basis are pledged as collateral.
3.
Financial restrictions
Of the loan balance at the end of the current consolidated fiscal year, 3,032 million yen is subject tofinancial restrictions.
The terms of each contract are different, but the main items are as follows:(i) Maintaining the amount of net assets on the consolidated and non-consolidated balance sheets at theend of each fiscal year at 75% or more of the end of the previous fiscal year.
(ii) No loss for ordinary profit or loss on the consolidated or non-consolidated income statement at theend of each fiscal year.
(Notes on Consolidated Statements of Changes in Equity)
1. Matters concerning classes and total amounts of issued shares and classes and number of treasury sharesClass of shares
Number of shares
Increase in number Decrease in number Number of sharesat beginning ofof shares inof shares inat end ofconsolidated
consolidated
consolidated
consolidated
accounting period
accounting period
accounting period
accounting period
Issued shares
Common share
22,579,700 shares––
22,579,700 shares
Treasury shares
Common share
1,951,360 shares
110 shares–
1,951,470 shares
Notes: 1.
Treasury shares include 335,400 shares of common share owned by Custody Bank of Japan,
Ltd. (formerly Trust & Custody Services Bank, Ltd.) (Trust E Account) as the trust assets of the officer
share compensation trust plan.
2.
The increase in treasury shares is due entirely to purchases of fractional units of shares.
2.
Matters concerning share option, etc.
Company
Breakdown Class of
Number of underlying shares (shares)
nameunderlying Beginning Increase
Decreasesharesof current
fiscal year

ReportingCompany

Fourthshare

Commonshare

2,860,000-6-–

2,860,000

End ofcurrent
fiscal year

Balance at
end ofcurrent
fiscal year
(millionyen)––option(issuedDecember17, 2018)
Total
2,860,000
Note: The decrease is due to the cancellation of share option.

–

2,860,000––

3.
Matters concerning dividends(1)
Dividend payment amountResolution
Class of shares
Total dividend
Dividend per
Date of record
Effective dateamount (million share (yen)yen)
Annual Meeting Common share 209
10.00
March 31, 2020 June 26, 2020ofShareholders,June 25, 2020
Board ofCommon share 209
10.00
September 30,
December 7,
Directors,
2020
2020
November 6,
2020
Note: The total amount of dividends for each includes dividends of 3 million yen for the Company’s shares
held by the trust.
(2)
Dividends for which the date of record falls in the current accounting period but the effective date will
be in the next period.
Resolution
Class of
Total
Dividend
Dividend per Date ofEffective
sharesdividendsourceshare (yen)recorddate
amount(million yen)
AnnualCommon314
Retained
15.00
March 31,
June 25,
Meeting of
shareearnings
2021
2021
Shareholders,June 24, 2021
Note: The total amount of dividends includes dividends of 5 million yen for the Company’s shares held by thetrust.
4.
Class and number of shares subject to share option issued by the Company on the last day of the current
consolidated fiscal year
Common share
47,100 shares(Explanatory Notes on Financial Instruments)
1.
Matters concerning the status of financial instruments(1) Policy for dealing with financial instruments
The Group mainly raises ordinary working capital through bank loans. Temporary surplus funds areinvested in highly secure financial assets. Derivatives are used for the purpose of avoiding risks as
described below, and no speculative transactions are allowed.
(2) Details and risks of financial instruments-7-

Notes and accounts receivable, which are trade receivables, are exposed to customers’ credit risk. In
addition, foreign currency-denominated trade receivables arising from global business are exposed to therisk of exchange rate fluctuations, but close attention is paid to the net position of foreign currencydenominated debt, and forward exchange contracts are used for hedging if the position is significantly
biased. Investment securities mainly consist of shares related to business or capital alliances withbusiness partners, and are exposed to the risk of fluctuations in market prices.
Notes and accounts payable, which are trade payables, have payment dates within one year. Some ofthese are foreign currency-denominated obligations and are therefore exposed to currency fluctuation
risk. However, the value of these obligations is generally less than the value of foreign-currency
denominated receivables. Corporate bonds, borrowings, and lease obligations are mainly for the purposeof raising funds necessary for ordinary business activities, and the redemption date is generally within
five years after the settlement date. Some of these are denominated in foreign currencies for the purposeof hedging the risk of foreign currency fluctuations on foreign currency receivables. In addition, some ofthem are exposed to the risk of fluctuations in interest rates because they have variable interest rates.
The derivatives used are forward exchange contracts designed to hedge against the risk of exchange rate
fluctuation on foreign currency-denominated trade receivables and payables, and interest rate swaps
designed to hedge against the risk of fluctuations in interest payable on loans and corporate bonds.
(3) Risk management for financial instruments(i) Management of credit risk (risk of counterparty default on contractual obligations)Regarding trade receivables, the Company manages credit status with the sales management
department playing a central role in accordance with the accounts receivable management rules, etc.
while working to quickly identify and reduce concerns about collection due to deterioration offinancial status. Consolidated subsidiaries also conduct similar management.
Bonds held to maturity have limited credit risk because they are managed by limiting amount andinvestment targets in accordance with accounting rules and securities management rules.
(ii) Management of market risk (risk of fluctuation in exchange rates and interest rates)
The Company and some consolidated subsidiaries use forward exchange contracts when deemednecessary to hedge against the risk of currency fluctuations by currency and by month for foreign
currency-denominated trade receivables and payables. Depending on the exchange rate conditions,forward exchange contracts for up to three months in principle are adopted for foreign currencydenominated trade receivables that are certain to arise from anticipated export transactions.
In addition, the Company and some consolidated subsidiaries use interest rate swap transactions
when deemed necessary to curb the risk of fluctuations in interest payments on borrowings andcorporate bonds.
For securities and investment securities, the market value and the financial position of the issuingentity (business partner) are regularly identified, and for those other than bonds held to maturity,
holdings are reviewed by taking the relationship with the business partner into consideration.
Derivative transactions are reported to the Board of Directors every six months and are managed by
the accounting department in accordance with the derivative transaction management rules that
stipulate transaction authority and scope. Consolidated subsidiaries also manage derivativetransactions in accordance with similar derivative transaction management rules.
(iii) Management of liquidity risk related to financing (risk that payments cannot be made on payment
dates)-8-

The Company manages liquidity risk by the preparation and updating of a financing plan, as
required, by the accounting department based on reports from each division and by maintaining
liquidity on hand. Consolidated subsidiaries also conduct similar management.
(4) Supplementary explanation for market value of financial instruments
The market value of financial instruments includes the value based on market prices or, in cases where
no market price is available, a value that is reasonably determined. The value calculation takes accountof variable factors and may differ based on the assumptions used.
2.

Matters concerning the market value, etc. of financial instruments
The amounts included on the consolidated balance sheet, their market values, and the differences
between the two as of March 31, 2021, are as follows. The following table does not include anything forwhich the ascertainment of market value is deemed to be extremely difficult (see (Note 2)).
Amount presented onmarket value (million
Difference (million yen)consolidated balanceyen)sheet (million yen)
13,118
13,118–
13,108
13,108–(1) Cash and deposits(2) Bills and accounts
receivable(3) Investment
securities
Other marketable
89
89–
securities
Total assets
26,31626,316–(1) Bills and accounts
4,290
4,290
–
payable(2) Short-term
11,374
11,374–borrowings(3) Long-term
6,692
6,697
4
borrowings(including them tobe repaid within one
year)
Total liabilities
22,35722,357
4
Derivatives–––
Note 1.
Notes on the market value calculation method for financial instruments, and notes on derivatives
Assets(1)
Cash and deposits(2)
Bills and accounts receivable
These instruments are calculated at book value, which is close to market value since these
instruments are settled in the short term.
(3)
Investment securities
The market value for shares is calculated at the market price on a stock exchange, and themarket value for bonds is calculated at the market price on a securities exchange or the priceoffered by financial institutions.
Liabilities(1)
Bills and accounts payable(2)
Short-term borrowings-9-

These instruments are calculated at book value, which is close to market value since these
instruments are settled in the short term.
(3)Long-term borrowings (including them to be repaid within one year)
The market value for these instruments is calculated as the present value obtained bydiscounting the sum of principal and interest at the interest rate that would be expected if asimilar new borrowing were undertaken. Long-term borrowings with variable interest are
eligible for special treatment on interest-rate swaps and are calculated for by discounting thesum of the principal and interest treated together with the interest rate swap at an interest ratethat could be reasonably expected to be applied if a new similar borrowing were undertaken.
Derivative transactions
The market value of currency options is calculated at the price offered by the financial institutions,etc. Interest rate swaps are subject to special treatment and are treated together with the long-termborrowings being hedged against, so that market value is disclosed under market value disclosuresfor long-term borrowings.
Note 2.
Financial instruments for which it is extremely difficult to ascertain market value.
Amount presented on consolidated balance sheet
Category(million yen)(i)
Shares of subsidiaries and affiliates
19(ii)
Other marketable securities
Unlisted shares
55
These are not included in “Assets (3) Investment securities” because there is no market price, it is not possible toestimate future cash flow, and their market value may be deemed to be extremely difficult to ascertain.
(Explanatory Notes on Per-share Information)
1.
2.

Net asset value per share
Net profit per share

1,007.01 yen
161.87 yen(Explanatory Notes on Material Subsequent Events)
No applicable information.

-10-II. Notes to the Financial Statements(Explanatory Notes on Material Accounting Policies)(1)
Valuation standards and methodology for securities
Shares of subsidiary......
The cost method based on the moving average method is adopted.
companies andaffiliated companies
Other securities
Securities with amarket value

Securities withoutmarket value......

......

The market value method based on the market price as of the end of the
fiscal year is adopted. (Valuation differences are handled using the direct
inclusion in total net assets method, and selling costs are calculated using
the moving average method.)
The cost method based on the moving average method is adopted.

(2)
Valuation standards and methodology for inventory assets
Merchandise,......
The cost method (book value is written down when profitability declines)
products, raw
based on weighted average method (specific identification method formaterials, andcertain unfinished goods) is adopted.
unfinished goods
Supplies......
The cost method based on last purchase cost method (book value written
down when profitability declines) is adopted.
(3)

Depreciation method for fixed assets

Tangible fixed assets(excluding leased
assets)......

Intangible fixed
assets (excluding
leased assets)......

Leased assets......

Long-term pre-paid
expenses......

The declining balance method is adopted (the straight-line method isadopted with respect to buildings excluding ancillary equipment acquired on
or after April 1, 1998, and ancillary equipment and structures acquired on orafter April 1, 2016).
Useful life is based on the standards as same as the standards stated in the
Corporation Tax Law.
The straight-line method is adopted. However, software used in-house isamortized using the straight-line method over the period it can be usedinternally (5 years), and software for sales in the market is amortized using
the method based on estimated sales revenue (estimated effective period, 3
years).
The straight-line method assuming the lease period is the useful economic
life, and residual value is zero (or, for those with an agreed guaranteedvalue, such guaranteed value) is adopted.
These are amortized evenly.

(4) Recognition criteria for allowances
Allowance for......
In order to provide for losses due to unrecoverable claims, the projecteddoubtful accounts
unrecoverable amount for ordinary claims pursuant to the loan loss ratio,
and for specific claims such as doubtful accounts receivable, by individuallyconsidering the possibility of recovery, is recorded.

-11-

Allowance forinvestment loss......

Provision forbonuses
Provision for productwarranties......

Provision for
retirement benefit......

Provision for sharecompensation for
officers......

......

In order to provide for a loss on investment in affiliated companies, theamount deemed necessary in consideration of the financial condition ofaffiliated companies is recorded.
In order to provide for the payment of employee bonuses, the anticipatedamount of total bonus payments attributable to this fiscal year is recorded.
In order to provide for expenditures for repair of products to be performed
free of charge, the required amount is recorded based on the ratio of past
expenditures to net sales.
In order to provide for provision of retirement benefits to employee, theamount is recorded based on the estimated amount of the retirement benefit
obligations and pension assets at the end of the current fiscal year.
The treatment of provision for retirement benefit and retirement benefit
costs is as follows.
(i) Period attribution method for estimated amount of retirement benefit
The method of attributing the estimated amount of retirement benefits
to the period lasting until the end of the current fiscal year whencalculating the retirement benefit obligations is based on the benefit
formula.
(ii) Expense reporting method for actuarial differences and for past service
expenses
Differences in actuarial calculations are respectively recognized fromthe fiscal year immediately following the fiscal year in which theyoccur in the amount obtained by proportional division using thestraight-line method based on a certain number of years (10 years)
within the average remaining service period for employees in eachfiscal year in which they occur.
Past service costs are recognized using the straight-line method basedon a certain number of years (10 years) within the average remaining
service period for employees at the time of their occurrence.
Unrecognized differences in actuarial calculations and unrecognized
past service costs are handled differently on the balance sheet than on
the consolidated balance sheet.
In order to provide for provision of Company share compensation to
officers based on the Officer Share Payment Regulations, the amount isrecorded based on the estimated amount of share compensation obligations
at the end of the current fiscal year.

(5)Standards on recognition of material revenues and expenses
Standards on recognition of sales and cost of sales
Work for which the......
Percentage-of-completion method (the estimated percentage of completion
outcome of theis based on the ratio of the cost incurred to the estimated total cost)
construction activity
is deemed certain by
the end of the current
fiscal year
All other work......
Completed-contract method(6)

Hedge accounting method-12-

Deferral hedge accounting is used. Forward exchange contracts are accounted for using the designatedhedge method when the required conditions are met; interest rate swaps are subject to special treatment
when the required conditions are met.
(7)

Accounting treatment for consumption tax
Consumption tax, etc. is accounted for using the tax exclusion method.

(8)

Application of tax effect accounting for transition from the consolidated taxation system to the group tax
sharing system
The Company does not apply the provisions of Paragraph 44 of the Implementation Guidance on Tax
Effect Accounting (ASBJ Guidance No. 28; February 16, 2018) in accordance with Paragraph 3 of the“Practical Solution on the Treatment of Tax Effect Accounting for the Transition from the Consolidated
Taxation System to the Group Tax Sharing System” (ASBJ PITF No. 39; March 31, 2020) in regard to
the transition to the group tax sharing system that was created under the Act for Partial Amendment of
the Income Tax Act, etc. (Act No. 8 of 2020) and items for which the non-consolidated taxation system
was revised in conjunction with the transition to the group tax sharing system. Accordingly, the amountsof deferred tax assets and deferred tax liabilities are presented pursuant to the provisions in tax laws
before the amendment.

(Explanatory Notes on Changes in the Method of Presentation)
Application of Accounting Standard for Disclosure of Accounting Estimates
Accounting Standard for Disclosure of Accounting Estimates (ASBJ Guidance No. 31, March 31, 2020)
is applied from the financial statements for the end of the current fiscal year, and the financial
statements include explanatory notes regarding significant accounting estimates.
(Explanatory Notes on Changes to Accounting Estimates)
Items for which the amount is presented in the financial statements for the current fiscal year based on
accounting estimates and that may have a significant impact on the financial statements for the next
fiscal year are as follows.
Inventory assets
Amount presented in the financial statements for the current fiscal year
Account title
Amount (million yen)
Merchandise and products
1,929
Unfinished goods
224
Raw materials and supplies
779
Inventory assets total
2,933
Information that contributes to understanding the contents of accounting estimates is omitted because the samecontents are described in the consolidated financial statements.
(Additional Information)(Share Compensation Trust for Directors)
The Company has introduced a share compensation plan for its directors (excluding outside directors)
called “Board Benefit Trust (BBT)”, and Practical Solution on Transactions of Delivering theCompany’s Own Stock to Employees etc. through Trusts (PITF No. 30, March 26, 2015) is appliedmutatis mutandis.
-13-

(i)

(ii)

(iii)

Outline of the transaction
The BBT plan is a performance-linked share compensation plan in which the Company’s sharesare acquired through a trust using money contributed by the Company, and the Company’s
shares and the amount equivalent to the market value of the Company’s shares as of the date ofretirement will be paid to the directors through the trust in accordance with the Officer Share
Payment Regulations established by the Company.
Company shares remaining in the trust
The shares remaining in the trust is recognized as treasury shares in the net assets section of thebalance sheet, at the book value reported by the trust (excluding ancillary costs). The book valueof the treasury shares was 126 million yen and the number of shares was 335,000 at the end of
the current fiscal year.
Book value of borrowings recognized by applying the gross method
No applicable information.

(Notes on the Balance Sheet)1.
Accumulated depreciation for intangible fixed assets
8,524 million yen
2.
Monetary claims with respect to affiliates
Short-term monetary claims
3,066 million yen
3.
Monetary obligations with respect to affiliates
Short-term monetary obligations
2,971 million yen
4.
Guarantee obligations
The Company provides debt guarantees for loans from financial institutions for the following affiliatedcompanies:
A&D Engineering, Inc.
752 million yen
A&D Instruments Limited
182 million yen
A&D Korea Limited
528 million yen
A&D Electronics (Shenzhen) Co., Ltd.
331 million yen
A&D Technology Trading (Shanghai) Co., Ltd.
101 million yen
Total
1,896 million yen
5.

Collateralized assets
Nature of collateralized assets and their amount
Buildings
Structures
Land
Investment securities
Shares of subsidiaries and affiliates
Investment and other assets (Other)Amount of the obligation pertaining to the security
Short-term loans payable
Long-term borrowings payable in 1 year
Long-term loans payable

815 million yen
235 million yen
2,310 million yen
3 million yen
71 million yen
75 million yen
2,671 million yen
1,661 million yen
2,628 million yen(Notes to the Income Statement)
Total amount of transactions with affiliated companies
Total amount of the transaction volume from business transactions with affiliated companies-14-

Sales12,485 million yen
Purchase of goods
16,166 million yen
Other non-operating expenses
401 million yen
Total amount of the transaction volume other than from business transactions with affiliated companies 677
million yen(Notes on Statements of Changes in Equity)
Matters concerning classes and number of treasury shares
Number of shares
Increase in number Decrease in number Number of sharesat beginning ofof shares inof shares inat end ofaccounting period
accounting period
accounting period
accounting period
Common share
1,951,360 shares
110 shares–
1,951,470 shares
Note 1.
Treasury shares include 335,400 shares of common share owned by Custody Bank of Japan,
Ltd. (formerly Trust & Custody Services Bank, Ltd.) (Trust E Account) as the trust assets of the officer
share compensation trust plan.
2.
The increase in treasury shares is due entirely to purchases of fractional units of shares.

-15-

(Notes on Tax-effect Accounting)Breakdown of deferred tax assets and deferred tax liabilities by main cause of occurrence
Deferred tax assets
Loss on valuation of inventory assets
202 million yen
Allowance for doubtful accounts
23 million yen
Excess depreciation
54 million yen
Loss on valuation of investment securities
37 million yen
Loss on valuation of associated companies’ shares
264 million yen
Accrued expenses
19 million yen
Statutory welfare costs payable
42 million yen
Business taxes payable
43 million yen
Provision for bonuses
286 million yen
Provision for product warranties
16 million yen
Provision for retirement benefits
151 million yen
Allowance for investment loss
21 million yen
Provision for share compensation for officers
24 million yen
Other
4 million yen
Deferred tax assets subtotal
1,190 million yen
Valuation allowance(535 million yen)
Deferred tax assets total
655 million yen
Deferred tax liabilities
Valuation differences on other marketable securities(11 million yen)
Deferred tax liabilities total(11 million yen)
Net amount of deferred tax assets
643 million yen-16-(Notes on Transactions with Related Parties)
Subsidiaries and affiliated companies, etc.

Type

Name ofcompany,etc.

Kensei
KogyoCo., Ltd.

Litra Co.,Ltd.

OrientecCo., Ltd.

Subsidiaries

A&D
Engineering, Inc.

A&D
Instruments
Limited

A&D
Korea
LimitedA&D
Electroni
cs(Shenzhen) Co.,
Ltd.

Location

CapitalLine ofbusiness or
profession

Manufactur
e ofelectronic
weighing
equipment
andmedicalequipment
Manufactur
e ofelectronic
weighing
equipment
andmedicalequipment

Shimotsu
ma,
Ibaraki81
millionyen

Hidaka,Saitama

200
millionyen

Fukaya,Saitama268
millionyen

Manufactur
ing ofmeasuring
instruments

USD
200,000

Sale ofelectronic
weighing
equipment
andmedical &healthcare
equipment

USA
California

UK
Oxford

South
Korea
Seoul
SpecialCity

Guangdong, China

GBP
1,800,00
0

KRW
1,000
millionHKD 45
millionSale ofmeasuring&weighing
equipment
andmedical &healthcare
equipment
Sale ofmeasuring&weighing
equipment
andmedical &healthcare
equipment
Manufactur
e ofhealthcare
equipment
andelectronic

Proporti
on ofvotingrightsheld(heldthereby)(%)

Relationship to related
party
Details ofthetransactio
ns

Officer(s)serving
concurren
tly

Working
relationsh
ips(Owned) direct100.0

One
personserving
concurren
tly

Manufact
ure of theCompany’s
products,
etc.

Manufact
ure of theCompany’s
products(Note 1)

(Owned) direct100.0

One
personserving
concurren
tly

Manufact
ure of theCompany’s
products,
etc.

Manufact
ure of theCompany’s
products(Note 1)

(Owned) direct100.0

Two
peopleserving
concurren
tly

Manufact
ure of theCompany’s
products,
etc.

Manufact
ure of theCompany’s
products(Note 1)
Sales oftheCompany’s
products(Note 2)
Debt
guarantees(Note 3)(Owned) direct100.0

Two
peopleserving
concurren
tly

Sales oftheCompany’s
products

Transactionamount(millionyen)

Account title

Closi
ng
balan
ce
(milli
on
yen)

2,539

Accounts
payable-trade421

2,601

Accounts
payable-trade

1,159

1,504

Accounts
payable-trade281

5,054

Accounts
receiva
ble trade

720

752

―

―

465

(Owned) direct100.0

One
personserving
concurren
tly

Sales oftheCompany’s
products

Sales oftheCompany’s
products(Note 2)765

Accounts
receiva
ble trade(Owned) direct
100.0

Three
peopleserving
concurren
tly

Sales oftheCompany’s
products

Debt
guarantees(Note 3)

528

―

―

(Owned) direct100.0

Two
peopleserving
concurren
tly

Manufact
ure of theCompany’s
products,
etc.

Manufact
ure of theCompany’s
products,
etc.

5,217

Accounts
payable-trade473-17-

weighingequipment(Note 1)
Debt
guarantees(Note 3)

A&D RusCo, Ltd.

RussianFederation
Moscow

RUB
505,247,000

Sale ofelectronic
weighing
equipment
andmedical &healthcare
equipment(Owned) direct100.0

One
personserving
concurren
tly

Sales oftheCompany’s
products

Sales oftheCompany’s
products(Note 2)

331

―

―

4,063

Accounts
receiva
ble trade494

The transaction terms and conditions and the transaction terms and conditions decision policy
Notes: 1.
Determined taking market price and total cost into consideration.
2.
Determined taking market price into consideration.
3.
Debt guarantees for loans from financial institutions are provided without receiving guarantee
fees.
4.
Consumption tax, etc. is excluded from transaction amounts.
(Explanatory Notes on Per-share Information)
1.
Net asset value per share2.
Net profit per share

833.78 yen
101.03 yen(Explanatory Notes on Material Subsequent Events)
No applicable information.6-18-