Kaga Electronics Co., Ltd.
and Consolidated Subsidiaries
Consolidated Financial Statements for theYear Ended March 31, 2020and Independent Auditor’s Report

Kaga Electronics Co., Ltd. and Consolidated Subsidiaries
Consolidated Balance SheetAt March 31, 2020

ASSETS
CURRENT ASSETS:
Cash and bank deposits
Notes and accounts receivable-trade※3
Electronically recorded monetary claims※3
Short-term investment securities
Merchandise and finished goods
Work in process
Raw materials and supplies
OthersAllowance for doubtful accounts
Total CURRENT ASSETS¥

Millions of Yen
2019
2020

Thousands of
U.S. Dollars(Note 1)
2020

35,00396,1455,361
261
33,734
489
5,802
5,894
(296)
182,396

43,38485,4955,876
254
25,276
567
6,063
7,601
(188)
174,331$ 398,649
785,587
53,9942,334
232,261
5,217
55,713
69,845(1,730)1,601,873¥

NONCURRENT ASSETS:PROPERTY, PLANT AND EQUIPMENT
Buildings and structures
Accumulated depreciation
Buildings and structures, net

9,436(4,526)
4,910

13,899(6,533)7,365

127,716(60,033)
67,682

Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net

8,266(4,760)3,506

10,163(5,685)
4,477

93,392(52,245)
41,146

Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net

5,119(4,015)
1,104

5,092
(4,032)
1,060

46,797(37,049)
9,747

Land
Construction in progress
Total PROPERTY, PLANT AND EQUIPMENT

4,861
628
15,011

4,924
145
17,97445,246
1,334
165,158

INTANGIBLE ASSETS
Goodwill
Software
OthersTotal INTANGIBLE ASSETS

259
1,819
126
2,206

322
1,743
190
2,256

2,965
16,023
1,746
20,734INVESTMENTS AND OTHER ASSETS:
Investment securities ※1
Deferred tax assets
Guarantee deposits
Insurance funds
OthersAllowance for doubtful accounts
Total INVESTMENTS AND OTHER ASSETS

10,085
1,292
870
951
1,462
(515)
14,147

8,502
1,584
857
894
1,791
(552)
13,07578,122
14,557
7,875
8,216
16,457(5,078)120,150

Total NONCURRENT ASSETS

31,36433,306

306,043¥ 213,761¥ 207,638$ 1,907,917

Total ASSETS-1-

Kaga Electronics Co., Ltd. and Consolidated Subsidiaries
Consolidated Balance SheetAt March 31, 2020

Millions of Yen
2019
2020

LIABILITIESCURRENT LIABILITIES:
Notes and accounts payable-trade ※3
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for directors' bonuses
OthersTotal CURRENT LIABILITIESThousands of
U.S. Dollars(Note 1)
2020

¥ 77,884
30,656
5,307
1,147
105
6,239
121,340¥ 70,188
6,540
5,739
1,884
101
9,201
93,655$ 644,936
60,09452,741
17,314930
84,550860,569

1,882
1,300
94
1,997
280
2,606
8,161

20,833
1,378
95
1,969
329
3,127
27,732

191,431
12,665873
18,093
3,029
28,733
254,827

129,501

121,388

1,115,396

NET ASSETS:SHAREHOLDERS’ EQUITY
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total SHAREHOLDERS’ EQUITY

12,133
13,86551,297(2,024)75,272

12,133
13,87855,091(2,005)79,097

111,490
127,522506,212(18,427)
726,797

ACCUMULATED OTHER COMPREHENSIVE INCOME
Changes in the fair value of available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit obligations
Total ACCUMULATED OTHER COMPREHENSIVE INCOME

1,018
2
527
(215)
1,332

0
28
(707)
(133)
(812)

2
262
(6,501)(1,228)(7,464)

7,654
84,2597,965
86,25073,188792,520¥ 213,761¥ 207,638$ 1,907,917

NONCURRENT LIABILITIES:Long-term loans payable
Deferred tax liabilities
Provision for directors' retirement benefits
Net defined benefit liabilities
Asset retirement obligations
OthersTotal NONCURRENT LIABILITIES
Total LIABILITIES

Non-controlling interests
Total NET ASSETS
Total LIABILITIES AND NET ASSETS

The accompanying notes are an integral part of these financial statements.

-2-

Kaga Electronics Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Income and Comprehensive Income
For the Year Ended March 31, 2020

Millions of Yen
2019
2020
Net sales
Cost of sales ※2
Gross profit

Thousands of
U.S. Dollars(Note 1)2020

¥ 292,779
257,233
35,546¥ 443,615
396,598
47,016$ 4,076,221
3,644,202
432,019

Selling, general and administrative expenses ※1, 2
Operating income

27,976
7,570

37,001
10,014

339,995
92,023

NON-OPERATING INCOME
Interest income
Dividend income
Commission fee
Foreign exchange gains
House rent income
OthersTotal NON-OPERATING INCOME

174
175
209
106
349
1,015

269
199
228
275
126
385
1,485

2,477
1,835
2,095
2,530
1,165
3,541
13,645

NON-OPERATING EXPENSES
Interest expenses
Share of loss of entities accounted for using equity method
Foreign exchange losses
OthersTotal NON-OPERATING EXPENSES
Ordinary income

200
194
177
153
726
7,859

308
905
149
1,362
10,137

2,830
8,318
1,374
12,523
93,146EXTRAORDINARY INCOME
Gain on sales of property, plant and equipment ※3
Gain on sales of investment securities
Gain on negative goodwill
Gain on transfer of businessSettlement received
OthersTotal EXTRAORDINARY INCOME

17
215
2,164
7
2,403

61
135
12
498
1
709

564
1,246
115
4,580
13
6,520

EXTRAORDINARY LOSS
Loss on disposal of property, plant and equipment ※4
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on valuation of golf club membership
Special retirement expenses
Impairment loss
OthersTotal EXTRAORDINARY LOSS

16
2
550
6
31
8
¥ 614

12
57
880
199
380
30
¥ 1,560

117
525
8,086
1,833
3,495
278
14,337-3-$

Kaga Electronics Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Income and Comprehensive Income
For the Year Ended March 31, 2020

Millions of Yen
2019
2020
Income before income taxes¥ 9,649¥ 9,286$ 85,329

1,477
120
1,597
8,051

3,054
(61)
2,992
6,293

28,062(562)
27,49957,829

8,014
37

5,852
441

53,776
4,053

(489)
18
307
9

(1,018)26(1,260)68(9,354)239(11,578 )
624

(49)

(104)

(955)

(203)

(2,288)(21,024)¥ 7,848¥ 4,005$ 36,805¥ 7,80147¥ 3,708297$ 34,071
2,733

Income taxes-current
Income taxes-deferred
Total income taxes
Net income
Profit attributable to owners of the parent
Profit attributable to non-controlling interests
OTHER COMPREHENSIVE INCOME
Changes in the fair value of available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit obligations, net of tax
Share of other comprehensive income of entities accounted forusing equity method
Total OTHER COMPREHENSIVE INCOME ※5
Comprehensive income
Comprehensive income attributable to:
Owners of the parent
Non-controlling interests

The accompanying notes are an integral part of these financial statements.

-4-

Thousands of
U.S. Dollars(Note 1)
2020

Kaga Electronics Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets
For the Year Ended March 31, 2020
Fiscal year ended March 31, 2019

Millions of Yen
Shareholders’ equity
Capital stock

Balance at the beginning of
periodChanges of items during period
Dividends from surplus
Profit attributable to owners of
the parent
Purchase of treasury stock
Disposal of treasury shares
Change in treasury sharesarising from change in equity inentities accounted for using
equity method
Change in scope of equity
methodNet changes of items otherthan shareholders’ equity
Total changes of items
during period
Total

¥

Capital surplus

12,133¥Retained earnings

13,853

Total shareholders’equityTreasury stock¥ 45,183¥(2,042)¥(2,057)(2,057)

8,014
12

156

¥

－
12,133

12
13,865¥

69,127

6,113¥ 51,297

(1)
24

8,014
(1)
36

(0)

(0)

(4)

152

18
(2,024)

¥

¥

6,144
75,272Millions of Yen
Accumulated other comprehensive income

Changes in
the fair valueof availablefor-salesecurities

Balance at the beginning of
period¥ 1,504
Changes of items during period
Dividends from surplus
Profit attributable to owners of
the parent
Purchase of treasury stock
Disposal of treasury shares
Change in treasury sharesarising from change in equity inentities accounted for using
equity method
Change in scope of equity
methodNet changes of items otherthan shareholders’ equity(486)
Total changes of items
during period
(486)
Total
¥ 1,018

Deferred
gains orlosses onhedges¥Foreigncurrencytranslation
adjustment

(16)

¥

148

Remeasurement ofdefinedbenefitobligations

Total
accumulated
othercomprehen-sive income

Noncontrollinginterests

Total net
assets¥ (208 )¥ 1,428¥¥ 70,631

75(2,057)
8,014
(1)
36

(0)
152
18
¥

18
2

¥

-5 -

378

(6)

378
527

(6)
¥ (215 )(96)(96)¥ 1,332 ¥

7,579

7,482

7,579
7,654

13,627¥ 84,259

Kaga Electronics Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets
For the Year Ended March 31, 2020
Fiscal year ended March 31, 2020

Millions of Yen
Shareholders’ equity
Capital stock

Balance at the beginning of
periodChanges of items during period
Dividends from surplus
Profit attributable to owners of
the parent
Purchase of treasury stock
Disposal of treasury shares
Change in treasury sharesarising from change in equity inentities accounted for using
equity method
Net changes of items otherthan shareholders’ equity
Total changes of items
during period
Total

¥

Capital surplus

12,133¥Retained earnings

13,865

Total shareholders’equityTreasury stock¥ 51,297¥(2,024)¥(2,058)(2,058)

5,852
12

¥

－
12,133¥

12
13,87875,272

3,793¥ 55,091

¥

(0)
19

5,852
(0)
31

0

0

18
(2,005)¥

3,825
79,097

Millions of Yen
Accumulated other comprehensive income

Changes in
the fair valueof availablefor-salesecurities

Balance at the beginning of
period¥ 1,018
Changes of items during period
Dividends from surplus
Profit attributable to owners of
the parent
Purchase of treasury stock
Disposal of treasury shares
Change in treasury sharesarising from change in equity inentities accounted for using
equity method
Net changes of items otherthan shareholders’ equity(1,017)
Total changes of items
during period(1,017)
Total¥
0

Deferred
gains orlosses onhedges¥Foreigncurrencytranslation
adjustment

2

¥

527

Remeasurement ofdefinedbenefitobligations

Total
accumulated
othercomprehen-sive income

Noncontrollinginterests

Total net
assets¥ (215 )¥ 1,332¥ 7,654¥ 84,259(2,058)
5,852
(0)
31

(0)

¥

26

(1,234)81

26
28(1,234)¥ (707)81¥ (133 )-6 -(2,144)310(1,834)(2,144)¥ (812 ) ¥

310
7,965

1,990
¥ 86,250

Kaga Electronics Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets
For the Year Ended March 31, 2020
Fiscal year ended March 31, 2020

Balance at the beginning of
periodChanges of items during period
Dividends from surplus
Profit attributable to owners of
the parent
Purchase of treasury stock
Disposal of treasury shares
Change in treasury sharesarising from change in equity inentities accounted for using
equity method
Net changes of items otherthan shareholders’ equity
Total changes of items
during period
Total

Thousands of U.S. Dollars (Note 1)
Shareholders’ equity
Capital stock

Capital surplus$$

111,490

Retained earnings

127,407$

Total shareholders’equityTreasury stock

471,350$(18,598 )$(18,914)(18,914)53,776
115－
111,490$$115
127,522$

34,862506,212

691,650

$

(7)
176

53,776
(7)
292

1

1

170
(18,427)$

35,147
726,797

Thousands of U.S. Dollars (Note 1)
Accumulated other comprehensive income

Changes in
the fair valueof availablefor-salesecurities

Balance at the beginning of
period$ 9,355
Changes of items during period
Dividends from surplus
Profit attributable to owners of
the parent
Purchase of treasury stock
Disposal of treasury shares
Change in treasury sharesarising from change in equity inentities accounted for using
equity method
Net changes of items otherthan shareholders’ equity(9,353)
Total changes of items
during period(9,353)
Total

$

2

Deferred
gains orlosses onhedges$ 19

Foreigncurrencytranslation
adjustment

Remeasurement ofdefinedbenefitobligations

Total
accumulated
othercomprehen-sive income$ 4,843$ (1,978 )$ 12,239 $ 70,338 $ 774,228

Noncontrollinginterests

Total net
assets(18,914)53,776
(7)
292

1
242

(11,344)749(19,702)2,849(16,854)242(11,344)749(19,702)

2,849

18,294$ 262$ (6,501) $ (1,228 )The accompanying notes are an integral part of these financial statements.

-7 -$ (7,464) $ 73,188 $ 792,520

Kaga Electronics Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
For the Year Ended March 31, 2020

Millions of Yen
2019
2020
NET CASH PROVIDED BY OPERATING ACTIVITIESIncome before income taxes
Depreciation and amortization
Impairment loss
Amortization of goodwill(Decrease) Increase in net defined benefit liability
Decrease in provision for directors' retirement benefits(Decrease) Increase in provision for directors' bonuses
Increase in allowance for doubtful accounts
Interest and dividend income
Interest expenses
Share of profit of entities accounted for using equity method
Gain on sales of property, plant and equipment
Loss on retirement of property, plant and equipment
Gain on sales of investment securities
Loss on valuation of investment securities
Gain on negative goodwill
Settlement received(Increase) Decrease in notes and accounts receivable-trade(Increase) Decrease in inventories
Decrease in notes and accounts payable-trade
Increase in accounts receivable-other
Increase in accrued expenses
Decrease (Increase) in advance payments(Increase) Decrease in consumption taxes refund receivable(Increase) Decrease in other current assets
Increase in other current liabilities
Others, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Settlement package received
Others, net
Net cash provided by (used in) operating activities-8 -¥ 9,649
1,740
31
85
(58)
(4)
(160)
53
(351)
200
194
(10)
16
(212)
550
(2,164)(1,152)(2,145)(6,746)
(207)
552
292
(2)
(191)
276
135
371
349
(189)
(2,078)0¥ (1,547)¥ 9,286
2,754
380
98
8
(1)
30
0
(469)
308
905
(43)
12
(78)
880
(498)
9,086
7,658
(6,667)(1,149)384(1,431)
266
93
2,106
(350)
23,571481(316)(1,829)498
0¥ 22,406

Thousands of
U.S. Dollars(Note 1)2020
$ 85,329
25,305
3,495
909
74
(16)
278
6
(4,312)
2,830
8,318
(397)
117
(721)
8,086
(4,580)83,49470,373(61,260)(10,560)
3,528(13,157)
2,452
859
19,358(3,219)216,593
4,427(2,904)(16,811)4,580
1$ 205,886

Kaga Electronics Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
For the Year Ended March 31, 2020

Millions of Yen
2019
2020
NET CASH USED IN INVESTING ACTIVITIESPayments for 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 of subsidiaries resulting in change in scope of
consolidation
Payments of short-term loans receivableCollection of short-term loans receivable
Purchase of insurance funds
Proceeds from cancellation of insurance funds
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Other payments
Other proceeds
Net cash used in investing activities¥ (2,661)
1,944(3,027)111(420)(2,977)
575

¥

(893)
2,924
(3,276)271(355)(2,180)651

Thousands of
U.S. Dollars(Note 1)
2020$

(8,207)
26,874(30,104)
2,497(3,262)(20,035)
5,983

(286)

(321 )(2,953)

(2)
3
(13)
10
(29)
25
(125)
12
(6,860)

(551)
1
(2)
59
(34)
41
(96)
108
(3,651)(5,063)
18
(24)
545
(321)
382
(885)
1,000
(33,556)

NET CASH USED IN FINANCING ACTIVITIES
Increase in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Purchase of treasury stock
Cash dividends paid
Others, net
Net cash (used in) provided by financing activities

15,137(1,269)(1)(2,054)(127)
11,684(24,038)
20,266(1,312)(0)(2,056)(402)(7,544)(220,884)
186,223(12,063)(7)(18,892)(3,697)(69,321)

Effect of exchange rate change on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents-beginning balance
Cash and cash equivalents-ending balance ※1

75
3,352
28,87932,231(748)
10,461
32,231¥ 42,693(6,878)96,129296,165$ 392,295

The accompanying note is an integral part of these financial statements.

-9 -

¥

Kaga Electronics Co., Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
For the Year Ended March 31, 2020
1.

BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act and its related accounting regulations, and in conformity withaccounting principles generally accepted in Japan ("Japanese GAAP"), which are different in certain respects as
to application and disclosure requirements of International Financial Reporting Standards.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which Kaga
Electronics Co., Ltd. (the "Company") is incorporated and operates. Amounts less than ¥1 million have been
omitted. As a result, the total shown in the consolidated financial statements and notes thereto do not necessarily
agree with the sum of the individual account balances. The translations of Japanese yen amounts into U.S.
dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rateof ¥108.83 to $1, the rate of exchange at March 31, 2020. Such translations should not be construed as
representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.

Consolidation
The consolidated financial statements include accounts of the Company and all of its subsidiaries (52 in2019 and 53 in 2020) (together, the "Group").
Under the control and influence concept, those companies in which the Company, directly or indirectly, isable to exercise control over operations are fully consolidated, and those companies over which theCompany has the ability to exercise significant influence are accounted for by the equity method.
There are three equity method affiliates, SICOX CORPORATION, OTAX Co., Ltd, Shuzou KagaIntelligent Equipment Co., LTD. For those companies accounted for under the equity method whose fiscal
year-end differs from the consolidated fiscal year-end, the financial statements of those companies for theirrespective fiscal years are used.
All significant intercompany balances and transactions have been eliminated in consolidation. All material
unrealized profits and losses included in assets resulting from transactions within the Group is eliminated.
The fiscal year-end of some of the Company's consolidated subsidiaries (15 in 2019 and 2020) is December
31. The consolidated financial statements incorporate accounts of these companies with adjustments for
significant intercompany transactions arising during the period from January 1 to March 31.

b.

Cash Equivalents
Cash equivalents are short-term investments that are readily convertible into cash and that are exposed toinsignificant risk of changes in value. Cash equivalents include time deposits and short-term investments, allof which mature or become due within three months of the date of acquisition.

c.

Inventories
The Company and its domestic subsidiaries state specific merchandise inventories ordered by customers at
the lower of cost, determined by the specific identification method, or market value and that othermerchandise inventories at the lower of cost, determined principally by the moving-average method, ormarket value.

-10 -

d.

Marketable and Investment Securities
Marketable and investment securities are classified and accounted for, depending on management's intent, as
follows: (1) trading securities, which are held for the purpose of earning capital gains in the near term aremeasured at fair value, and the related unrealized gains and losses are included in earnings, and(2) available-for-sale securities, which are measured at fair value, with unrealized gains and losses, net of
applicable taxes, reported in a component of other comprehensive income.
Non-marketable available-for-sale securities are stated at cost as determined by the moving-average method.
For other than temporary declines in fair value, investment securities are reduced to net realizable value by
charging to income.

e.

Property, Plant and Equipment
Property, plant and equipment are stated at cost. Significant replacements and additions are capitalized;
maintenance and repairs, and minor replacements and improvements are charged to the consolidated
statement of income as incurred.
Depreciation of property, plant and equipment of the Company and its consolidated domestic subsidiaries iscomputed substantially by the declining-balance method at rates based on the estimated useful lives of theassets, while the straight-line method is applied to buildings acquired after April 1, 1998, facilities attached
to buildings and structures acquired after April 1, 2016, lease assets of the Company and its consolidated
domestic subsidiaries, and all property, plant and equipment of foreign subsidiaries.
Buildings and structures
Machinery, equipment and vehicles
Tools, furniture and fixtures

2 to 50 years
2 to 12 years
2 to 20 yearsf.

Goodwill
Goodwill is amortized by the straight-line method principally over a period of 5 years.

g.

Software
Software is amortized using the straight-line method over its estimated useful life.
Internal use software
Software for sale

5 years
3 yearsh.

Retirement and Pension Plans
To prepare for disbursement of employees’ retirement benefits under the defined benefit plan, a defined
benefit liability, which is the amount of defined benefit obligations less plan assets based on the expected
benefit obligation at the end of the fiscal year, is recognized. The retirement benefit obligations arecalculated by allocating the estimated retirement benefit amount until the end of the current fiscal year on
the benefit formula basis. Past service cost is primarily amortized on a straight-line method over a fixed
number of years (10 years), which is shorter than the average remaining years of service of the eligible
employees. Net actuarial gain or loss is primarily amortized from the following year on a straight-line
method over a fixed number of years (principally 10 years), which is shorter than the average remaining
years of service of the eligible employees. Actuarial gain and loss and past service costs that are yet to berecognized as gains or losses are recorded as remeasurements of defined benefit obligations presented inother comprehensive income, after being adjusted for tax effects.

i.

LeasesThe Company applies the lease accounting standard, which requires all finance lease transactions becapitalized in the balance sheet.

j.

Allowance for doubtful accounts
The Company and its consolidated subsidiaries provide for doubtful accounts principally at an amountbased on the historical bad debt ratio during a certain reference period in addition to an estimateduncollectible amount based on the analysis of certain individual accounts.

k.

Provision for directors’ bonuses
Bonuses to directors and corporate auditors are accrued during the year in which such bonuses are
attributable.
-11 -

l.

Provision for directors’ retirement benefits
The Company accrues liabilities related to retirement benefit obligations for directors and corporate
auditors, which is, in general, based upon the amounts required by the internal rules.

m. Translation of Foreign Currencies
Receivables and payables denominated in foreign currencies are translated into yen at the exchange rates
prevailing at the balance sheet date, and differences arising from the translation are charged or credited tothe consolidated statement of income.
Assets and liabilities of the foreign subsidiaries are translated into yen at the exchange rates prevailing at
the balance sheet date, and revenue and expense accounts are translated at the average rates of exchange in
effect during the year. Differences arising from the translation are presented as foreign currency translation
adjustments after being adjusted for non-controlling interests and tax effects.
n.

Derivatives and Hedging Activities(1) Hedge accounting method
The Company applies the deferred hedge method. The Company, however, adopts the allocation
method to account for forward exchange contracts if the requirements for the allocation method aremet. The Company also adopts the special method to account for interest rate swaps, which meet therequirements for specific matching criteria.
(2) Hedging instruments and hedged items(Hedging instruments)
Foreign currency forward contract transactions
NDF transactions
Interest rate swaps(Hedged items)
Assets and liabilities denominated in foreign currencies
Interest rates on long-term loans payable(3) Hedging policy
The Company determines the hedging policy based on the internal rules. Foreign currency forward
contracts where there is expected risk such as fluctuation in foreign exchange are used Interest rate
swaps where there is expected risk such as fluctuation in interest rates on long-term loans payable areused.
(4) Assessment of hedge effectivenessHedge effectiveness is assessed by comparing the changing ratio of cash flows arising from the hedged
items to the hedging instruments during the periods from the respective start dates of the hedges to theassessment dates. Also, regarding interest rate swaps, the Company omits assessment of hedge
effectiveness based upon the fulfillment of the requirements for specific matching criteria.

o.

Accounting for consumption tax
Consumption tax on goods and services is not included in the revenue and expense amounts.

p.

Application of Consolidated Taxation regime
The Company has adopted the consolidated taxation regime.

q.

Application of tax effect accounting for the transition from a consolidated tax payment system to a groupsummation system
As for the items subject to review in conjunction with the transition to the combined group taxation systemand the transition to the combined group taxation system established in the Act for Partial Revision of the
Income Tax Act, etc. (Act No. 8 of 2020), the provisions in paragraph 44 of ”Guidance on AccountingStandard for Tax Effect Accounting” (ASBJ Guidance No. 28, February 16, 2018) were not applied, andtherefore the amount of deferred tax assets and deferred tax liabilities were treated in accordance with theprovisions of the tax law before the revision in accordance with paragraph 3 of “Treatment of Deferred Tax
Assets and Deferred Tax Liabilities” (PITF No. 39, March 31, 2020).

-12 -

r.

Changes in accounting policies(IFRS 16 “Leases”)
Subsidiaries that adopt International Financial Reporting Standards are applying International Financial
Reporting Standard 16 “Leases” (hereafter, “IFRS 16”) from the beginning of the fiscal year ended March
31, 2020. In accordance with the standards, right-of-use assets and lease liabilities are recognized inprinciple for all of the lessee’s lease transactions, and depreciation of right-of-use assets and interest on
lease liabilities are recorded.
In the adoption of IFRS 16, the transition provisions are applied, opting therefore to measure lease liability
at the present value, discounted using lessee’s incremental borrowing rate at the date of initial application,and record this same amount for right-of-use asset.
As a result of the application of IFRS 16, the following items increased as of March 31, 2020: in non-current
assets, “buildings and structures (net)” by ¥1,039 million, “machinery, equipment and vehicles (net)” by ¥2
million, and “tools, furniture and fixtures (net)” by ¥1 million; “other” in current liabilities by ¥260 million,and “other” in non-current liabilities by ¥740 million.
The effect of this change on profit and loss for this consolidated fiscal year ended March 31, 2020 isimmaterial.

s.

Standards and Guidance not yet adopted
The following standards and guidance were issued but not yet adopted.
・ Accounting Standard for Revenue Recognition (ASBJ Statement No.29, issued by the AccountingStandards Board of Japan on March 31, 2020)
・ Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ Guidance
No.30, issued by the Accounting Standards Board of Japan on March 31, 2020)(1) Overview
The International Accounting Standards Board (IASB) and the U.S Financial Accounting Standards
Board (FASB), which jointly developed comprehensive accounting standards for revenue recognition,
announced in May 2014 the release of their respective new revenue standards, both of which are named
Revenue from Contracts with Customers (IASB: International Financial Reporting Standard 15 (IFRS
15); FASB: Topic 606). IFRS 15 is effective from annual reporting periods beginning on or afterJanuary 1, 2018; FASB Topic 606 is effective from annual reporting periods beginning after December
15, 2017. In light of this development, the Accounting Standards Board of Japan (ASBJ) developed andissued a comprehensive accounting standard for revenue recognition and its implementation guidance.
In developing the accounting standard for revenue recognition, the ASBJ retained as its basic policy theobjective of ensuring the comparability of financial statements, and as such established the standard todrive consistency with IFRS 15, starting by incorporating the basic principles of IFRS 15 and providing
some further accounting treatment provisions pertinent to the Japanese business environment, to theextent that these do not impair comparability.
(2) Effective date
To be applied from the beginning of the fiscal year ending March 31, 2022
(3) Effects of the application of the standard
The Company and its consolidated domestic subsidiaries are currently in the process of determining theeffects of this new standard on the consolidated financial statements.

-13 -Accounting Standard for Fair Value Measurement (ASBJ Statement No.30, July 4, 2019)
Accounting Standard for Measurement of Inventories (ASBJ Statement No.9, July 4, 2019)
Accounting Standard for Financial Instruments (ASBJ Statement No.10, July 4, 2019)
Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance
No.31, July 4, 2019)・ Implementation Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ
Guidance No.19, March 31, 2020)
・・・・(1) Summary
Under the circumstances that IASB and FASB have similar detailed guidance about fair value measurement
IFRS 13-Fair Value Measurement in IFRS and Topic 820 in the Accounting Standards Codification-Fair
Value Measurement in U.S. GAAP), ASBJ has made efforts to make the Japanese standards consistent withinternational accounting standards, mainly regarding the guidance and disclosure of the fair value offinancial instruments and has issued.
From the viewpoint of improving the comparability of financial statements between domestic and overseas
companies by using a uniform calculation method as a basic policy for the development of accounting
standards for fair value measurement, ASBJ has basically incorporated all the provisions of IFRS 13 and has
stipulated other treatments for individual items to the extent that comparability between financial statements
is not significantly impaired considering the practices that have been conducted in Japan.
(2) Planned Adoption Date
The Company and its consolidated companies plan to adopt the standards from the beginning of the fiscal
year ending March 31, 2022.
(3) Impact of Adoption
The impact of the application of the accounting standards on the consolidated financial statements has not
yet been determined.
・ Accounting Standard of Disclosure of Accounting Estimates (ASBJ Statement No. 31, March 31,
2020)(1) Summary
Regarding the “causes of estimation uncertainty” required to be disclosed in Paragraph 125 of IAS 1Presentation of financial statement, issued by the IASB in 2003, ASBJ has developed and issued an
accounting standard for the disclosure of accounting estimates because there were requests for greater
disclosure under Japanese standard for information that is highly useful to users of financial statements.
ASBJ’s basic policy for the development of the accounting standard was not to expand individual notes but
to show the principle (disclosure objectives) and specific disclosure content is determined by the disclosure
objectives of each company.
(2) Planned Adoption Date
The Company and its consolidated companies plan to adopt the standards form the year-end of the fiscal
year ending March 31, 2021.
・ Accounting Standards for Disclosure of Accounting Policies, Changes in Accounting and Correctionof Errors (ASBJ Statement No. 24, March 31, 2020)(1) Summary
In response to proposal to consider the enhancement of information regarding the “Principles andprocedures of accounting treatment adopted when the provisions of related accounting standards, etc., arenot clear,” ASBJ made the necessary revisions and announced accounting standards for the disclosure ofaccounting policies, changes in accounting and correction of errors.
In pursuing the enhancement of information pertaining to “Principles and procedures of accounting
treatment adopted when the provisions of related accounting standards, etc., are not clear,” if the relevant
accounting standards are clear, the provisions of the Note on Corporate Accounting Principles (Note 1-2)
will take over so as not to affect the current practices.
(2) Planned Adoption Date
The Company and its consolidated companies plan to adopt the standards form the year-end of the fiscal
year ending March 31, 2021.

-14 -(Additional information)(Accounting Estimate)
Although the spread of COVID-19 infection has a wide-ranging impact on the global economy, lifestyles
and corporate activities, the impact on the financial results for the current fiscal year is limited. It is assumed
that the impact of the new coronavirus on society would continue and be resolved after a certain period oftime, whereas the impact on the Company’s business performance onwards would be limited. In terms ofaccounting estimates, the Company has applied reasonable calculations based on information and facts
available at the time of preparation of the consolidated financial statements. However, accounting estimates
including the impact of the unprecedented spread of COVID-19 infections are subject to uncertainty, andthere may be discrepancies between these estimates and subsequent results.
3.
※1.

NOTES TO CONSOLIDATED BALANCE SHEETInvestment securities
Investment securities include the following accounts of affiliated companies.
Millions of Yen
2019
2020
Capital stock※2.

¥ 1,306

Thousands of
U.S. Dollars
2020¥ 1,061$

9,749

Contingent liabilities
Contingent liabilities for guaranteed employees' loans amounted to ¥26 million and ¥18 million(US$ 167 thousands) at March 31, 2019 and 2020, respectively.

※3.

Notes receivable and payable
The Company and its domestic consolidated subsidiaries record actual cash settlement of the notes on the dateof clearance. Since the closing date for the fiscal year ended March 31, 2019 was not a business day for
financial institutions, the following notes due to mature on the closing date are included in the year-end
balances.
Thousands ofMillions of Yen
U.S. Dollars
2019
2020
2020
Notes and accounts receivable – trade
Electronically recorded monetary claims
Notes and accounts payable - trade

※4.

¥

¥

196
59
63

－
－
－

$

－
－
－

Commitment line contract
The Company has entered into commitment line contracts with four banks for effective fund-raising:Thousands ofMillions of Yen
U.S. Dollars
2019
2020
2020
Total limit of contract
Loan balances
Available amounts

¥
¥

-15 -

10,000
1,500
8,500

¥
¥

15,000－15,000$137,829－$137,829

4.
※1.

NOTES TO CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
Selling, general and administrative expenses
Major items and the amounts under “Selling, general and administrative expenses” are as follows:
Thousands ofMillions of Yen
U.S. Dollars
2019
2020
2020
Salaries and bonuses
Retirement benefit expenses
Provision for directors’ retirement benefits
Provision for directors’ bonuses
Provision for doubtful accounts※2.

¥

11,903
692
226
88
37

¥

16,366
1,110
8
92
(39)

$ 150,513
10,210
82
854
(362)

Research and development costs
Research and development costs charged to income are ¥103 million and ¥185 million(US$ 1,702 thousands) for the years ended March 31, 2019 and 2020, respectively.

※3.

Gain on sales of property, plant and equipment
Details of gain on sales of property, plant and equipment are as follows:

Thousands of
U.S. Dollars
2020

Millions of Yen
2019
2020

※4.

Buildings and structures
Machinery, equipment and vehicles
Tools, furniture and fixtures
Land

¥

3
6
7
－

¥

－
41
7
11

$

－
384
72
107

Total

¥

17

¥

61

$

564

Loss on disposal of property, plant and equipment
Details of loss on disposal of property, plant and equipment are as follows:

Thousands of
U.S. Dollars
2020

Millions of Yen
2019
2020
Buildings and structures
Machinery, equipment and vehicles
Tools, furniture and fixtures
Software

¥

9
5
1
－

¥

0
3
7
1

$

4
36
65
10

Total

¥

16

¥

12

$

117

-16 -

※5.

Amount of reclassification and income tax effect associated with other comprehensive income
Millions of Yen
2019
2020
Net unrealized gain or loss on securities
Amount arising during the period
Amount of reclassification
Net gain before income tax effect
Income tax effectNet unrealized gain or loss on securities, net of
TaxDeferred gains or losses on hedges
Amount arising during the period
Amount of reclassification
Net gain before income tax effect
Income tax effect
Deferred gains or losses on hedges
Foreign currency translation adjustment
Amount arising during the period
Amount of reclassification
Foreign currency translation adjustment
Remeasurements of defined benefit obligations
Amount arising during the period
Amount of reclassification
Net gain before income tax effect
Income tax effectRemeasurements of defined benefit obligations
Share of other comprehensive income of entities
accounted for using equity method
Amount arising during the period
Total other comprehensive income

-17 -

¥

¥

447
206
654
(165)

¥

Thousands of
U.S. Dollars
2020(1,174)(115)(1,289)271$(10,792)(1,059 )(11,851)
2,497

(489)

(1,018)(9,354)

2
23
26
(8)
18

40
(2)
37
(11)
26

369
(24)
345
(105)
239

307
307

(1,260)(1,260)(11,578)

(25)
39
13
(4)
9

47
51
98
(30)
68

438
469
908
(283)
624

(49)
(203)

¥

(104)
(2,288)(11,578)$(955)(21,024)

5.

NOTES TO CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETSFor the year ended March 31, 2019
1. Type and number of issued shares of common stock and treasury stock
Number of shares
as of April 1, 2018

Increase in thenumber of shares

Decrease in thenumber of shares

Number of shares
as of March 31, 201928,702,118－－

28,702,118

1,267,393

2,731

15,2001,254,924

Number of outstanding shares
Common stock
Number of treasury stocks
Common stock (Note)

Note:
The breakdown of the increase and decrease of common stock is as follows:
Company's portion of teasury shares (shares of the company) held by an equity-method associate: 2,227 shares
Increase as a result of fractional share repurchases: 504 shares
Decrease as a result of the payment of restricted stock to our directors: 15,200 shares
2. Dividends(1) Dividends paid
Resolution

Generalshareholders’meeting held on
June 28, 2018
Board ofDirectors' meeting
held on November
6, 2018

Amount of dividends(Millions of yen)

Dividend per share(Yen)

Common
stock

1,097

Commonstock

960

Type of share

Record date

Effective date40

March 31, 2018

June 29, 201835

September 30, 2018

December 7, 2018

(2) Dividends whose effective date is after March 31, 2019 with record date during the year ended March 31,
2019.
Resolution

Generalshareholders’meeting heldon June 28,
2019Type of share

Amount of dividends(Millions of yen)

Source ofdividends

Dividend pershare (Yen)Common stock

1,235

Retainedearnings

45

-18 -

Record date

Effective date

March 31, 2019

June 28,2019For the year ended March 31, 2020
1. Type and number of issued shares of common stock and treasury stock
Number of shares
as of April 1, 2019

Increase in thenumber of shares

Decrease in thenumber of shares

Number of shares
as of March 31, 2020

28,702,118－－

28,702,118

1,254,924

358

12,003

1,243,279

Number of outstanding shares
Common stock
Number of treasury stocks
Common stock (Note)

Note:
The breakdown of the increase and decrease of common stock is as follows:
Increase as a result of fractional share repurchases: 358 shares
Decrease as a result of the disposition of fractional share: 42 shares
Decrease as a result of the payment of restricted stock to our directors: 11,900 sharesCompany's portion of teasury shares (shares of the company) held by an equity-method associate: 61 shares

2. Dividends(1) Dividends paid
Resolution

Generalshareholders’meeting held on
June 27, 2019
Board ofDirectors' meeting
held on November
7, 2019

Amount of dividends(Millions of yen)

Dividend per share(Yen)

Commonstock

1,235(US$11,350
thousand)Commonstock

823(US$7,566 thousand)Type of share

Record date

Effective date

45
(US$0.41)

March 31, 2019

June 28, 201930
(US$0.27)

September 30, 2019

December 6, 2019(2) Dividends whose effective date is after March 31, 2020 with record date during the year ended March 31,
2020.
Resolution

Generalshareholders’meeting heldon June 26,
2020

Type of share

Common stock

Amount of dividends(Millions of yen)

Source ofdividends

Dividend pershare (Yen)

1,098(US$10,093 thousand)

Retainedearnings

40(US$0.36)-19 -Record date

Effective date

March 31, 2020

June 29,
2020

6.

NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS※1. Cash and cash equivalents at March 31, 2019 and 2020 are reconciled to the accounts reported in the
consolidated balance sheet as follows:
Thousands ofMillions of Yen
U.S. Dollars
2019
2020
2020

7.

Cash and bank deposits
Time deposits with a deposit period of more than 3 months¥ 35,003(2,772)¥ 43,384(691)$ 398,649(6,353)

Cash and cash equivalents¥ 32,231¥ 42,693$ 392,295

LEASES
Finance leases that do not transfer ownership of the leased assets to lessees.
Leased assets:
The Group leases buildings, machinery, equipment and vehicles and other assets.
As described in Note 2.i, the lease accounting standard requires that all finance lease transactions should becapitalized to recognize lease assets and lease obligations in the balance sheet.
Future lease payments under non-cancelable operating leases at March 31, 2019 and 2020 were as follows:
Millions of Yen
2019
2020

8.

Thousands of
U.S. Dollars
2020

Due within one year
Due after one year

¥

11
5

¥

19
23

$

175
213

Total

¥

16

¥

42

$

389

FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group Policy for Financial Instruments
The Group has financial instruments, mainly debt from financial institutions, consistent with its capitalfinancing plan. Cash surpluses, if any, are invested in low risk financial assets. Derivatives are not used
for speculative purposes, but rather to manage exposure to foreign exchange risks.
(2) Nature and Extent of Risks Arising from Financial Instruments
Receivables and Payables in foreign currencies are exposed to the risk of fluctuation in foreign currency
exchange rates.
(3) Risk Management for Financial Instruments
Credit risk management
The Company manages its credit risk from receivables on the basis of internal guidelines, which include
monitoring the payment terms and balances of major customers by each business administration
department to identify the default risk of customers in an early stage.
Market risk management (foreign exchange risk)
Foreign currency trade receivables and payables are exposed to market risk resulting from fluctuations inforeign currency exchange rates. Such foreign exchange risk is hedged principally by forward foreign
currency contracts.
-20 -Marketable and investment securities are managed by monitoring market values and financial position ofissuers on a regular basis.
(4) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If quoted prices are notavailable, other rational valuation techniques are used. Please see Note 10 for the detail of fair value forderivatives.
Cash and bank deposits, receivables and payables, short-term bank loans, accrued expenses, income taxes
payablesThe carrying value of the above accounts approximate fair value because of their short maturities.
Guarantee deposits
The fair value of guaranteed deposits is calculated by the contract amount supplier presented or calculated
from past experience and discounted by a risk free rate.
Marketable and investment securities
The fair values of marketable and investment securities are measured at the quoted market price for theequity instruments, and at the quoted price obtained from the financial institution for certain debt
instruments. The information of the fair value for the marketable and investment securities by classification
is included in Note 9.
Long-term loans payable
The fair value of long-term loans payable is determined by discounting the cash flows related to the debt at
the Group's assumed corporate borrowing rate.
Derivatives
The information of the fair value for derivatives is included in Note 10.

-21 -(a) Fair Value of Financial Instruments
March 31, 2019
Cash and bank deposits
Notes and accounts receivable-trade
Electronically recorded monetary claims
Allowance for doubtful accounts ※1

Carrying
AmountMillions of Yen
Fair
Value

Unrealized
Loss¥¥ 35,003

Short-term investment securities
Investment securities
Guarantee deposits¥ 35,003
96,1455,361(296)
101,211
261
7,437
536

101,211
261
7,437
371

－
－
－
(164 )

Total¥144,450¥144,285¥ (164 )Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Long-term loans payable¥ 77,884
30,656
5,307
1,147
1,882

¥ 77,884
30,656
5,307
1,147
1,884

¥

－
－
－
－
(1 )

Total

¥ 116,878¥ 116,880¥(1 )Derivatives ※2

¥

¥

¥

－

(2)

(2)

－

※1 Allowance for doubtful accounts is deducted from Notes and accounts receivable-trade andelectronically recorded monetary claims.
※2 The value of assets and liabilities arising from derivatives is shown at net value, with net
liability position shown in parentheses.
Millions of Yen
Carrying
Fair
Unrealized
March 31, 2020
AmountValue
Loss
Cash and bank deposits
Notes and accounts receivable-trade
Electronically recorded monetary claims
Allowance for doubtful accounts ※1¥¥ 43,384

Short-term investment securities
Investment securities
Guarantee deposits¥ 43,384
85,4955,876(188)
91,183
254
6,449
529

91,183
254
6,449
365

－
－
－
(164 )

Total¥141,801¥141,637¥ (164 )Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Long-term loans payable¥ 70,188
6,540
5,739
1,884
20,383¥ 70,188
6,540
5,739
1,884
20,882¥

Total¥105,186¥105,235¥ (49 )

Derivatives ※2

¥

¥

¥

(34)

(34)

－

－
－
－
－
(49 )

※1 Allowance for doubtful accounts is deducted from Notes and accounts receivable-trade andelectronically recorded monetary claims.
※2 The value of assets and liabilities arising from derivatives is shown at net value, with net
liability position shown in parentheses.
-22 -

－

CarryingAmountCash and bank deposits
Notes and accounts receivable-trade
Electronically recorded monetary claims
Allowance for doubtful accounts ※1$

Short-term investment securities
Investment securities
Guarantee deposits

Thousands of U.S. Dollars
Fair
Unrealized
Value
Loss

398,649785,587
53,994(1,730)837,851
2,334
59,261
4,868$$

398,649－

837,851
2,334
59,261
3,358－－－(1,509)Total$ 1,302,965$ 1,301,455$ (1,509)

Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Long-term loans payable$

644,936
60,09452,741
17,314
191,431$644,936
60,09452,741
17,314
191,884

$

－
－
－
－
(453)

Total

$

966,518$

966,971$(453)

Derivatives ※2

$

(314)

$

(314)

$

－

※1 Allowance for doubtful accounts is deducted from Notes and accounts receivable-trade andelectronically recorded monetary claims.
※2 The value of assets and liabilities arising from derivatives is shown at net value, with net
liability position shown in parentheses.
(b) Financial Instruments whose Fair Value cannot be reliably determined
Carrying AmountThousands ofMillions of Yen
U.S. Dollars
2019
2020
2020
Shares of subsidiaries and related companies
Investments in equity instruments that
do not have a quoted market price inan active market
Guarantee deposits that do not have aquoted market price in an active market(5)¥ 1,306¥ 1,061¥ 1,341

¥

334

$

9,749

991

9,111

327

3,006

Redemption Schedule of Monetary Assets and Securities with Contractual Maturities
March 31, 2019

Millions of Yen
Over 1 year
Over 5 years
Within 1 year within 5 years within 10 years Over 10 years
¥
－
¥
－
¥
－
Cash and bank deposits¥
35,003－－－
Notes and accounts receivable-trade96,145
Electronically recorded monetary－－－claims5,361－－
Investment securities with maturities
27
89
Guarantee deposits
41
134
1
191
Total

¥

136,552

-23 -

¥

161

¥

91

¥

191

March 31, 2020

Millions of Yen
Over 1 year
Over 5 years
Within 1 year within 5 years within 10 years Over 10 years
¥
－
¥
－
¥
－
Cash and bank deposits¥
43,384－－－
Notes and accounts receivable-trade85,495
Electronically recorded monetary－－－claims5,876－－
Investment securities with maturities
16
107
Guarantee deposits
38
134
1
191
Total

¥

134,811

¥

241

¥

1

¥

191

Thousands of U.S. Dollars
Over 1 year
Over 5 years
Within 1 year within 5 years within 10 years Over 10 years
$
－
$
－
$
－
Cash and bank deposits$ 398,649－－－
Notes and accounts receivable-trade785,587
Electronically recorded monetary－－－claims53,994－－
Investment securities with maturities
150
990
Guarantee deposits
354
1,232
16
1,755
Total
(6)

$ 1,238,735

$

2,223

$

16

$

1,755

The payment schedule for bonds, long-term loans, lease obligations and other interest-bearing
liabilities by payment due date at March 31, 2019 and 2020 is as follows:
March 31, 2019
Within1 yearMillions of Yen

Over 1 year Over 2 years Over 3 years Over 4 years
within 2 years within 3 years within 4 years within 5 years

Short-term loans
Long-term loans
Including current portion of longterm loans payable¥ 29,376 ¥Total¥ 30,656 ¥

1,280

－ ¥

－ ¥

－ ¥

－ ¥

－

1,247

635

－

－

－

1,247 ¥

635 ¥

－ ¥

－ ¥

－

March 31, 2020
Within1 yearShort-term loans
Long-term loans
Including current portion of longterm loans payable
Total

Millions of Yen

Over 1 year Over 2 years Over 3 years Over 4 years
within 2 years within 3 years within 4 years within 5 years¥ 5,260 ¥

－ ¥

－ ¥

－ ¥

1,279
¥ 6,540 ¥

668
668 ¥

5,032
5,032 ¥

5,032
5,032 ¥

Within1 yearOver
5 yearsOver
5 years

－ ¥

5,100
5,000
5,100 ¥ 5,000

Thousands of U.S. Dollars

Over 1 year Over 2 years Over 3 years Over 4 years
within 2 years within 3 years within 4 years within 5 years

－ $

－ $

－ $

Over
5 years

Short-term loans
Long-term loans
Including current portion of longterm loans payable$ 48,335 $
11,7586,139

46,243

46,243

46,86245,943

Total$ 60,094 $

6,139 $

46,243 $46,243 $46,862 $45,943

-24 -

－ $

－

－

9.

MARKETABLE AND INVESTMENT SECURITIESMarketable and investment securities as of March 31, 2019 and 2020 consisted of the following:(1) Current-Marketable equity securities

Unrealized gains (losses) included in net
income for the year

2019¥

Millions of Yen
66

Thousands of
U.S. Dollars
2020

2020
¥

(7)

$

(69))

(2) Investment securities with a readily determinable fair value
March 31, 2019
Carrying
amountMillions of Yen
Acquisition
cost

Securities for which the carrying
amount exceeds the acquisition costs
Non-current:
Marketable equity securities
Government and corporate bonds
OthersSubtotal¥ 3,71410261¥ 3,987¥ 1,54610
232¥ 1,789

Securities for which the carrying
amount does not exceed the acquisition costs
Non-current:
Marketable equity securities
Government and corporate bonds
OthersSubtotal

2,560
89
800
¥ 3,450¥ 7,437

Total

Difference

¥
¥

2,168
0
28
2,197

2,988
102
856
¥ 3,947

¥

(428)
(12)
(56)
(497)

¥ 5,736

¥

1,700

Note:
Non-marketable equity securities of ¥1,184 million, Investments in associated companies of ¥157 million,
and Shares of subsidiaries and related companies of ¥1,306 million are not included in the above because it is
not practicable to estimate their fair value due to difficulty in estimating fair value as market price is notavailable.
March 31, 2020
Carrying
amountMillions of Yen
Acquisition
cost

Securities for which the carrying
amount exceeds the acquisition costs
Non-current:
Marketable equity securities
Government and corporate bonds
OthersSubtotal¥ 2,480
10160¥ 2,651¥ 1,18010149¥ 1,339

Securities for which the carrying
amount does not exceed the acquisition costs
Non-current:
Marketable equity securities
Government and corporate bonds
OthersSubtotal

2,874
97
825
¥ 3,797¥ 6,449

Total

-25 -

Difference

¥
¥

1,300
0
10
1,311

3,597
102
997
¥ 4,697

¥

(722)
(4)
(172)
(899)

¥ 6,037¥

411

Thousands of
U.S. Dollars
Acquisition
cost

Carrying
amountSecurities for which the carrying
amount exceeds the acquisition costs
Non-current:
Marketable equity securities
Government and corporate bonds
OthersSubtotal
Securities for which the carrying
amount does not exceed the acquisition costs
Non-current:
Marketable equity securities
Government and corporate bonds
OthersSubtotal
Total

Difference$ 22,795
94
1,473$ 24,363$ 10,843
91
1,376$ 12,311$ 11,951
2
97$ 12,051

26,415896
7,586$ 34,898

33,055941
9,169$ 43,166$(6,640)(45)(1,582)(8,268)$ 59,261$ 55,478

$

3,783

Note:
Non-marketable equity securities of ¥838 million (US$7,708 thousands), Investments in associatedcompanies of ¥152 million (US$1,402 thousands), and Shares of subsidiaries and related companies of¥1,061 million (US$9,749 thousands) are not included in the above because it is not practicable to estimate
their fair value due to difficulty in estimating fair value as market price is not available.
(3) Investment securities sold during 2019 and 2020
March 31, 2019

Millions of Yen
Amounts soldInvestment securities
Government and corporate bonds
Others
Total¥

Gains on sales
522
－
－
522

¥

March 31, 2020

215
－
－
215

¥

¥

(2)
－
－
(2)

¥

Millions of Yen
Amounts soldInvestment securities
Government and corporate bonds
Others
Total¥

Loss on sales¥

Gains on sales
218
－
294
513

¥

¥

Loss on sales
135
－
－
135

¥

¥

(39)
－
(17)
(57)

¥

Thousands of
U.S. Dollars
Amounts soldInvestment securities
Government and corporate bonds
Others
Total$

Gains on sales

2,004
－
2,709
4,713

$

$

$

Loss on sales

1,246
－
－
1,246

$

$

(4) Impairment losses recognized on Investment securities are as follows:

Thousands of
U.S. Dollars

Millions of Yen
2019
¥

-26 -

2020
550

(360)
－
(164)
(525)

¥

2020
880

$

8,074

10.

DERIVATIVES
Derivative Transactions to Which Hedge Accounting Is Applied(1) Currency related transactions

March 31, 2019

Hedged Item

Foreign currency forward contracts:
Selling US$
Selling CNY
Buying US$

Receivables
Receivables
PayablesTotal

Millions of Yen
Contract
AmountContract
Due after
AmountOne Year

Fair
Value

930
58
2,025

¥

－
－
－

¥

(6)
0
8

¥ 3,014

¥

－

¥

2

¥

March 31, 2020

Hedged Item

Millions of Yen
Contract
AmountContract
Due after
AmountOne Year

Foreign currency forward contracts:
Selling US$
Selling CNY
Buying US$
Buying CNY

Receivables
Receivables
PayablesPayables¥ 2,788
36
2,551
1

¥

－
－
－

¥

(10)
0
45
0

¥ 5,377

¥

－

¥

34

Total

Foreign currency forward contracts:
Selling US$
Selling CNY
Buying US$
Buying CNY

Fair
Value

Hedged Item

Thousands of U.S. Dollars
Contract
AmountContract
Fair
Due after
AmountOne YearValue

Receivables
Receivables
PayablesPayables$ 25,618
338
23,440
11

$

－
－
－
－

$

(100)
(6)
421
0

$ 49,408

$

－

$

314

Total

The fair value of derivative transactions is measured at the quoted price obtained from the financial institutions.
The contract or notional amounts of derivatives which are shown in the above table do not represent the amounts
exchanged by the parties and do not measure the Group's exposure to credit or market risk.

-27 -(2) Interest related transactions
For the year ended March 31, 2019
Hedge
Accounting
MethodSpecialtreatment
for interest
rate swap

Type ofTransaction
Interest rate
swap
Receivefloating,
pay fixed

Hedged Item
Long-termloans payable

Millions of Yen, Thousands of U.S. Dollars
Contract
AmountContract
Fair
Due after
AmountOne Year
Value
¥

968

¥

581

(Note)

Note:
Specific matching criteria for interest rate swap is accounted for together with long-term loans payable designatedas the hedge item. Therefore, their fair values are included in the fair value of the long-term loans payable.
For the year ended March 31, 2020
Hedge
Accounting
MethodSpecialtreatment
for interest
rate swap

Type ofTransaction
Interest rate
swap
Receivefloating,
pay fixed

Hedged Item
Long-termloans payable

Millions of Yen, Thousands of U.S. Dollars
Contract
AmountContract
Fair
Due after
AmountOne YearValue¥ 13,481($123,874)

¥
($

193
1,780)(Note)

Note:
Specific matching criteria for interest rate swap is accounted for together with long-term loans payable designatedas the hedge item. Therefore, their fair values are included in the fair value of the long-term loans payable.

-28 -11. RETIREMENT BENEFITS(1) Outline of retirement benefits plans
Under the pension plans, employees terminating their employment are, in most circumstances, entitled topension payments based on their average pay during their employment, length of service and certain otherfactors. The defined benefit plans and lump-sum payment plans of some of the consolidated subsidiaries arecalculated using the simplified method.
(2) Defined benefit pension plans(a) Changes in the retirement benefit obligation for the years ended March 31, 2019 and 2020 (excluding
plans applying the simplified method) are as follows:
Millions of Yen
2019
2020

Thousands of
U.S. Dollars
2020

Retirement benefit obligation at the beginning of the year
Increase from newly consolidated subsidiary
Service cost
Interest cost
Actuarial gains (losses)
Benefits paid
Others¥ 4,522
2,016
344
23
80
(227)
(0)

¥ 6,760
－
452
24
(75)
(216)
26

$ 62,115
－
4,159
225
(695)
(1,989)239

Retirement benefit obligation at the end of the year

¥ 6,760¥ 6,971$ 64,055(b) Changes in the plan assets for the years ended March 31, 2019 and 2020 (excluding plans applying thesimplified method) are as follows:
Millions of Yen
2019
2020

Thousands of
U.S. Dollars
2020

Plan assets at fair value at the beginning of the year
Increase from newly consolidated subsidiary
Expected return on plan assets
Actuarial gains (losses)
Contributions by the employer
Benefits paid
Others¥ 3,868
1,733
113
61
373
(225)
(6)

¥ 5,918
－
112
(25)
443
(216)
41

$ 54,379
－
1,033
(231)
4,075
(1,989)385

Plan assets at fair value at the end of the year

¥ 5,918¥ 6,274$ 57,652-29 -(c) Changes in net defined benefit liabilities for plans which applied the simplified method for the years
ended March 31, 2019 and 2020 are as follows:
Millions of Yen
2019
2020

Thousands of
U.S. Dollars
2020

Net defined benefit liabilities at the beginning of the year
Increase from newly consolidated subsidiary
Retirement benefit expenses
Retirement benefits paid
Contributions to plan

¥ 1,083
48
138
(101)
(13)

¥ 1,155
46
175
(110)
(14)

$ 10,617
429
1,608(1,015)(130)

Net defined benefit liabilities at the end of the year

¥ 1,155¥ 1,252$ 11,508(d) Reconciliation between the funded status of the plans (retirement benefit obligation and plan assets) and theamounts recognized in the consolidated balance sheet (net defined benefit liabilities and net defined benefit
assets) as of March 31, 2019 and 2020 are as follows:
Millions of Yen
2019
2020
Retirement benefit obligation of funded plans
Plan assets
Retirement benefit obligation of unfunded plans
Net liabilities recorded in the consolidatedbalance sheet
Net defined benefit liabilities
Net liabilities recorded in the consolidatedbalance sheet

Thousands of
U.S. Dollars
2020¥ 7,184(6,044)
1,139857¥ 7,452(6,409)1,042
906$ 68,478(58,895)
9,583
8,328

¥ 1,997¥ 1,949$ 17,911

1,997

1,949

17,911¥ 1,997¥ 1,949$ 17,911(e) Components of retirement benefit expenses for the years ended March 31, 2019 and 2020 are as follows:
Millions of Yen
2019
2020
Service cost
¥ 329
Interest cost
23
Expected return on plan assets(112)
Amortization of actuarial loss
39－
Amortization of prior service cost
Redundancy pay
7
Retirement benefit expenses calculated based on the simplified
method138
Others4¥

Retirement benefit expenses for defined benefit pension plans ¥

¥

-30 -

430

452
24
(112)
48
－
15

Thousands of
U.S. Dollars
2020
$

175
26
630

4,158
224
(1,029)
445
－
137
1,608
245

$

5,791

(f) Remeasurements of defined benefit plans, net of tax for the years ended March 31, 2019 and 2020 are as
follows:
Components of remeasurements of defined benefit obligations, net of tax before income tax effectadjustment
Millions of Yen
2019
2020

Thousands of
U.S. Dollars
2020

Prior service cost
Actuarial gains and losses

¥

－
13

¥

－
98

$

－
908

Total

¥

13

¥

98

$

908

(g) Remeasurements of defined benefit obligations as of March 31, 2019 and 2020 are as follows:
Components of remeasurements of accumulated defined benefit obligations before income tax effectadjustment
Millions of Yen
2019
2020

Thousands of
U.S. Dollars
2020

Unrecognized prior service cost
Unrecognized actuarial gains or losses

¥

－
310

¥

－
211

$

Total

¥

310

¥

211

$ 1,947－
1,947(h) Items for plan assets
Components of plan assets
Ratio of primary components to total plan assets
General accounts
Other
Total

2019

2020

97.56%
2.44%

78.02%
21.98%

100%

100%

Determining expected long-term rate of return
In determining the long-term rate of return for plan assets, the Company considers the current andprojected asset allocations, as well as the current and expected long-term investment returns from thevarious assets that constitute the plan assets.
(i) Items related to the basis of actuarial calculation
Items that form the primary basis for actuarial calculations using the weighted average method
2019
2020
0.29～0.42%
0.42～0.46%
Discount rate
1.20～2.50%
1.20～2.50%
Expected long-term rate of return(3) Defined contribution pension plans
Contributions to defined contribution pension plans by the Company and its consolidated subsidiaries
Thousands ofMillions of Yen
U.S. Dollars
2019
2020
2020
¥
-31 -

330

¥

609

$ 5,597

12.

INCOME TAXES(1) The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred
tax assets and liabilities at March 31, 2019 and 2020 are as follows:
Thousands ofMillions of Yen
U.S. Dollars
2019
2020
2020
Deferred tax assets:
Loss on revaluation of investment securities
Retirement benefits for directors and corporate auditors
Retirement benefits for directors (and other officers)
Allowance for doubtful accounts
Accrued bonuses
Net defined benefit liability
Tax loss carryforwards
Devaluation of inventories
Impairment loss
Deferred tax assets of the planned liquidation company
OthersSub-total
Valuation allowance on tax loss carryforwards
Valuation allowance on deductible temporary differences
Less valuation allowance—total

¥

514
30
427
185
685
618
1,137
509
181
－
1,473
5,763
(697)
(2,084)(2,782)

¥

750
29
401
206
758
588
1,582
337
256
105
1,748
6,765
(1,149 )(2,629 )(3,778)

$

6,893
272
3,687
1,899
6,974
5,404
14,541
3,097
2,356
967
16,07062,165(10,558)(24,161)(34,720 )Deferred tax assets—total

2,981

2,986

27,444

Deferred tax liabilities:
Undistributed earnings of overseas subsidiaries
Unrealized gain on property and equipment
Unrealized gain on available-for-sale securities
Advanced depreciation on fixed assets
Others(1,921 )(86 )(661 )(195 )(123 )(2,018 )(116 )(402 )(187 )(55 )(18,547)(1,072)(3,696)(1,725)(510)

Deferred tax liabilities—total(2,988 )(2,780 )(25,552)

Net deferred tax assets

¥

(7 )

¥

205

$

1,892

(Note)
1. The valuation allowance increased by ¥996 (US$9,153 thousands) million compared to the previous
fiscal year. The main reason is the valuation allowance on the tax loss carryforwards.
2. Tax loss carryforwards and the amount of deferred tax assets by carry forward
March 31, 2019

Tax loss carryforwards※
Less valuation allowance
Deferred tax assets

Within1 year¥Over 1 year
within 2 years

－
－
－

¥

0
－
0

Over 2 years
within 3 years

¥

1
－
1

March 31, 2020

Tax loss carryforwards※
Less valuation allowance
Deferred tax assets

Within1 year¥Over 1 year
within 2 years

17
(17)
－

¥

102
(102)
－

Over 2 years
within 3 years

¥

118
(111)
6
-32 -

Millions of Yen
Over 3 years
within 4 years

¥

18
－
18

Millions of Yen
Over 3 years
within 4 years

¥

155
(75)
80

Over 4 years
within 5 yearsOver
5 years

¥

¥

135
(55)
80

Over 4 years
within 5 years

¥

171
(131)
39

980
(641)
338

Total

¥

Over
5 years

¥

1,017
(710)
307

1,137
(697)
439

Total

¥

1,582
(1,149)433

Within1 yearOver 1 year
within 2 years

Thousands of U.S. Dollars

Over 2 years
within 3 years

Over 3 years
within 4 years

Tax loss carryforwards※
$
162 $
940
$
1,084 $
1,429
Less valuation allowance
(162)
(940)
(1,028)(692)－－
Deferred tax assets
56
737※Tax loss carryforwards are multiplied by the effective statutory tax rate.

Over 4 years
within 5 yearsOver
5 years

$

$

1,573
(1,210)
362

Total

9,351
(6,523)
2,827$(2) A reconciliation between the effective statutory tax rate and the actual effective tax rate reflected in theaccompanying consolidated statements of operations for the years ended March 31, 2019 and 2020 is asfollows:
2019

2020

30.6%
1.3
(10.8)
(5.7)

30.6%
1.4
0.1
(9.1)

Impact of adoption of consolidated tax payment system
Others, net

2.5
4.5
0.6
(6.9)
0.5

2.5
4.8
3.0
－
(1.1)

Actual effective tax rate

16.6

32.2

Effective statutory tax rate
Expenses not deductible for income tax purposesTax benefits not recognized on operating losses of subsidiaries
Difference in tax rates of foreign subsidiaries
Dividends from overseas subsidiaries and deferred income taxes
on retained profits of overseas subsidiaries
Change in valuation allowance

13.

SEGMENT INFORMATION(1) Description of reportable segments
The Group's reportable segments are those for which separate financial information is available and regular
evaluation by the Company's management is being performed in order to decide how resources areallocated among the Group. The Group has four reporting segments that are made of different categories of
products and services: electronic components, information equipment, software and other. The electronic
components segment includes the development, manufacture and sale of semiconductors, generalelectronic components and other products, the electronics manufacturing service (EMS), and otheractivities. The information equipment segment includes sales of PCs, PC peripherals, photograph andimaging products, original brand products, and other products. The software segment includes the
production of computer graphics, planning and development of amusement products, and other activities.
The other segment includes the fix and support of electronic components, the manufacture and sale ofamusement equipment, sales of sports goods and other activities.
(2) Methods of measurement for the amounts of sales, profit (loss), assets, liabilities and other items for eachreportable segment
The accounting policies of each reportable segment are consistent to those disclosed in Note 2.,"SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES".

-33 -14,541(10,558)
3,982

(3)

Information about sales, profit (loss), assets and other items is as follows:
Millions of Yen
2019
Reportable Segment

Sales:
Sales toexternal customers
Inter segment sales
or transfers
Total sales

Electronic
Components¥

Information
Equipment

Software

Other

Total

Reconciliations(Note 1)¥

22,598 ¥44,344 ¥ 2,876 ¥

19,959 ¥292,779

2,855

1,004

4,450

9,007

697

－

Consolidated(Note 2)¥

(9,007)292,779－¥

228,454 ¥

45,349 ¥ 3,574 ¥

24,409 ¥301,787¥(9,007)¥292,779

Segment profit (loss)¥
Segment assets
Others:Depreciation
Increase in-property,
plant and equipment
and intangible assets

4,761 ¥
197,476

1,906 ¥
247 ¥
14,951
1,859

490 ¥
11,482

7,406
225,769¥163(12,008)¥

7,570
213,761

1,182

58

69

103

1,413

(7)

1,406

2,338

40

66

1,087

3,533

(84)

3,448

-34 -

Millions of Yen
2020
Reportable Segment

Sales:
Sales toexternal customers
Inter segment sales
or transfers
Total sales

Electronic
Components
¥

Other

Total

Reconciliations(Note 1)

43,466 ¥ 2,778 ¥

19,781 ¥443,615

¥

1,745

3,514

8,362

Information
Equipment

377,587 ¥2,337

Software765－

Consolidated(Note 2)¥443,615(8,362)－¥379,925 ¥45,211 ¥ 3,544 ¥

23,295 ¥451,977¥(8,362)¥443,615

Segment profit (loss)¥
Segment assets
Others:Depreciation
Increase in-property,
plant and equipment
and intangible assets

7,503 ¥
187,750

1,707 ¥
236 ¥
16,575
1,799

452 ¥
12,0169,900
218,141¥

114(10,503)¥

10,014
207,638

1,883

54

48

145

2,132

(6)

2,125

2,774

144

21

813

3,754

(123)

3,631

Thousands of U.S. Dollars
2020
Reportable Segment

Sales:
Sales toexternal customers
Inter segment sales
or transfers
Total sales

Electronic
Components

Information
Equipment$ 3,469,520 $
21,478$ 3,490,998 $Segment profit (loss)$
68,949 $Segment assets
1,725,170
Others:Depreciation
17,305
Increase in-property,
plant and equipment
and intangible assets
25,496

Software

Other

Reconciliations(Note 1)

Total

399,399 $ 25,543 $ 181,767 $ 4,076,221 $Consolidated(Note 2)－

$ 4,076,221

76,836(76,836)－

415,433 $ 32,568 $ 214,057 $ 4,153,058$ (76,836)$ 4,076,221

16,034

7,034

32,29015,693 $ 2,174 $4,155 $
90,972 $
152,306
16,532
110,418
2,004,428

1,051(96,510)$92,023
1,907,917

504

447

1,337

19,595(61)

19,533

1,325

198

7,477

34,498(1,132)33,366

Note: 1. The adjustment for segment operating income is as follows:(1) Segment income
Millions of Yen
2019
2020

Thousands of
U.S. Dollars
2020

Elimination of inter-segment trade
Amortization of goodwill

¥ 163
－

¥ 114
－

$

1,051
－

Total

¥ 163

¥ 114

$

1,051

-35 -

(2) Segment assets
Millions of Yen
2019
2020

Thousands of
U.S. Dollars
2020

Elimination of inter-segment trade
Reconciliations¥ (14,111)
2,102¥ (12,507)
2,004$ (114,929)
18,418Total¥ (12,008 )¥ (10,503 )$ (96,510)

Note: Total corporate assets principally consist of surplus funds of the Companies under management (cashand securities).
(3) Depreciation and amortization
Millions of Yen
2019
2020

Thousands of
U.S. Dollars
2020

Elimination of inter-segment trade

¥ (7)

¥ (6)

$

(61)

Total

¥ (7)

¥ (6)

$

(61)

(4) Increase amount of tangible and intangible fixed assets
Millions of Yen
2019
2020

Thousands of
U.S. Dollars
2020

Elimination of inter-segment trade

¥

(84)

¥ (123)$ (1,132)

Total

¥

(84)

¥ (123)$ (1,132)

2. Segment income is adjusted for operating income in the consolidated statement of income andcomprehensive income.
Associated Information
For the year ended March 31, 2019(1) Information about individual products and services
This information is not presented because the Group prepares reports in accordance with a management
approach based on individual products and services.
(2) Geographic information(a) Sales

Japan

North America

Millions of Yen
2019
Europe¥ 180,306¥ 13,078¥ 9,903

Asia

Total

¥ 89,492¥ 292,779

Note: Sales are classified in countries or regions based on the location of customers.

-36 -(b) Property, plant and equipment

Japan

North America¥10,318¥ 519

Notes:

Millions of Yen
2019
Europe

Asia

¥ 227

¥

3,946

Total
¥ 15,011

1. Countries and regions are classified according to geographical proximity.
2. Countries and regions outside Japan are broken down into the following geographicalareas:(1) North America:(2) Europe:(3) Asia:(3) Information about major customers

the United States, the United Mexican States
United Kingdom, Czech Republic and Russia
Hong Kong, Singapore, Taiwan, Korea, China, Malaysia,
Thailand, India, Indonesia and Vietnam

This information is not presented because no sales to any individual customer were more than 10% ofconsolidated sales.
For the year ended March 31, 2020
(1) Information about individual products and services
This information is not presented because the Group prepares reports in accordance with a management
approach based on individual products and services.
(2) Geographic information(a) Sales

Japan

North America

Millions of Yen
2020
Europe¥ 270,585¥ 26,894¥ 20,019

Asia

Total

¥ 126,115¥ 443,615

Asia

Total

$ 1,158,831$ 4,076,221

Thousands of U.S. Dollars
2020
North America
EuropeJapan$ 2,486,316$ 247,123$183,948

Note: Sales are classified in countries or regions based on the location of customers.
(b) Property, plant and equipment

Japan

North America¥11,254

¥ 983

Japan

North America$ 103,413$ 9,038

Notes:

Millions of Yen
2020
Europe¥ 174
Thousands of U.S. Dollars
2020
Europe$ 1,600

Asia
¥

5,561

Total
¥ 17,794

Asia

Total

$ 51,106$ 165,158

1. Countries and regions are classified according to geographical proximity.
-37 -2. Countries and regions outside Japan are broken down into the following geographicalareas:(1) North America:(2) Europe:(3) Asia:

the United States, the United Mexican States
United Kingdom, Czech Republic and Russia
Hong Kong, Singapore, Taiwan, Korea, China, Malaysia,
Thailand, India, Indonesia and Vietnam(3) Information about major customers
This information is not presented because no sales to any individual customer were more than 10% ofconsolidated sales.
Information of impairment loss on fixed assets of reportable segments
For the year ended March 31, 2019

Impairment loss

Millions of Yen
2019
Reportable Segment
Information
SoftEquipment
ware
¥ －
¥ －

Other
¥ 9

Total
¥ 31

Electronic
Components¥ 245

Millions of Yen
2020
Reportable Segment
Information
SoftEquipment
ware
¥ －
¥ －

Other
¥ 135

Total
¥ 380

Electronic
Components$ 2,254

Thousands of U.S. Dollars
2020
Reportable Segment
Information
SoftEquipment
ware
Other
$ －
$ －
$ 1,241

Total$ 3,495

Electronic
Components¥ 22

For the year ended March 31, 2020

Impairment loss

Impairment loss

Information of amortization of goodwill and balance of goodwill of reportable segments
For the year ended March 31, 2019

Electronic
Components
Amortization of goodwill
for fiscal year
¥ 81
Balance of goodwill at theend of fiscal year
258

Millions of Yen
Reportable Segment
Information
SoftEquipment
ware
Other

Total

Reconciliations

Consolidated

¥ －

¥ 3

¥ －

¥ 85

¥ －

¥ 85

－

1

－

259

－

259

For the year ended March 31, 2020

Electronic
Components
Amortization of goodwill
for fiscal year
¥ 97
Balance of goodwill at theend of fiscal year
322

Millions of Yen
Reportable Segment
Information
SoftEquipment
Ware
Other

Total

Reconciliations

Consolidated

¥ －

¥ 1

¥ －

¥ 98

¥ －

¥ 98

－

－

－

322

－

322

-38 -

Electronic
Components
Amortization of goodwill
for fiscal year
$ 893
Balance of goodwill at theend of fiscal year
2,965

Thousands of U.S. Dollars
Reportable Segment
Information
SoftEquipment
ware
Other
Total

Reconciliations

Consolidated

$ －

$ 15

$ －

$ 909

$ －

$ 909

－

－

－

2,965

－

2,965

Information of gain on negative goodwill by reportable segments
For the year ended March 31, 2019
In the Electric Components segment the Company recorded a ¥2,164 million gain on negative goodwill of a
subsidiary, Fujitsu Electronics which shares were acquired on January 1, 2019.
For the year ended March 31, 2020
No significant items to be reported.

14. RELATED PARTY TRANSACTIONS(1) Principal transactions between the Company and its related party
For the year ended March 31, 2019
Principal transactions between the Company and its related party for the year ended March 31, 2019 aresummarized as follows:

Type

Major
stockholder

CompanyName

SankyoCo., Ltd.

Head
OfficeShibuya-ku,
Tokyo

CapitalStockBusiness
Activities¥14,840

Manufacturing andsales ofgame
machines

Percentage
forPossession of
Voting Rights

Owned
directly
13.96%(Amount unit: Millions of yen)
RelationshipWith Related
Party

Content ofTransaction

Sales offinishedproducts

Sales offinishedproducts(Note)

Amount forTransaction

Title of
Account

Amount asof March
31, 2019¥1,402¥6,230Electronically recordedmonetaryclaims
Accounts
receivable

¥821

Note:
Trade condition and policy
Sales contracts are entered into between Sankyo and the Company, and the sales price of products is determinedbased on the discussions between those two parties.
For the year ended March 31, 2020
Principal transactions between the Company and its related party for the year ended March 31, 2020 are
summarized as follows:

Type

Major
stockholder

CompanyName

SankyoCo., Ltd.

Head
OfficeShibuya-ku,
Tokyo

CapitalStockBusiness
Activities¥14,840($136,359)

Manufacturing andsales ofgame
machines

Percentage
forPossession of
Voting Rights

Owned
directly
13.95%(Amount unit: Millions of yen, Thousands of U.S. dollars)
RelationshipWith Related
Party

Content ofTransaction

Sales offinishedproducts

Sales offinishedproducts(Note)

Amount forTransaction¥6,344($58,294)

Title of
Account

Amount asof March
31, 2020

Electronically recordedmonetaryclaims¥1,311($12,055)

Accounts
receivable¥2,026($18,621)

Note:
Trade condition and policy
Sales contracts are entered into between Sankyo Co., Ltd. and the Company, and the sales price of products isdetermined based on the discussions between those two parties.

-39 -(2) Principal transactions between the Company’s director and its related party
For the year ended March 31, 2019
Principal transactions between the Company’s director and its related party for the year ended March 31, 2019are summarized as follows:Type
Majority
owned
company
by adirectorand thedirector’s
relatives

Company
Name orDirector
Name

Head
OfficeKGF CO.,LTD.

Chiyoda-ku,
Tokyo(Amount unit: Millions of yen)

CapitalStockBusiness
Activities or
Occupation

Percentage
forPossession of
Voting Rights

RelationshipWith Related
Party

Content ofTransaction

Amount forTransaction

Title of
Account

Amount asof March
31, 2019¥74

Managementof restaurant
andconvenience
store

－

Interlocking
directorate

Managementof in-house
store(Note2)¥12－－Notes: The Company concluded the contract transaction at a price equivalent to market price.
For the year ended March 31, 2020
Principal transactions between the Company’s director and its related party for the year ended March 31, 2020are summarized as follows:Type
Majority
owned
company
by adirectorand thedirector’s
relatives

Company
Name orDirector
Name

Head
OfficeKGF CO.,LTD.

Chiyoda-ku,
Tokyo(Amount unit: Millions of yen, Thousands of U.S. dollars)

CapitalStockBusiness
Activities or
Occupation

Percentage
forPossession of
Voting Rights

RelationshipWith Related
Party

Content ofTransaction

Amount forTransaction

Title of
Account

Amount asof March
31, 2020¥74($684)

Managementof restaurant
andconvenience
store

－

Interlocking
directorate

Managementof in-house
store(Note2)¥13($121)－－

Notes: The Company concluded the contract transaction at a price equivalent to market price.

-40 -

15.

PER SHARE INFORMATION
Yen

2019

U.S. Dollars
2020

2020

Net assets per share¥ 2,790.97¥ 2,850.99$ 26.20

Net income per share

292.07213.21

1.96

Notes 1. Diluted net income per share has not been disclosed because there were no potentially dilutive
Shares.
2. The basis for computation of net income per share is as follows:2019
Net income per share
Profit attributable to owners of the parent
Net income unallocated to common stock
Profit attributable to owners of the parent
allocated to common stock
Average number of common stock
outstanding during the fiscal year (Share)¥

Millions of Yen

2020
5,852
－

$ 53,776
－

8,014

5,852

53,77627,439,524

27,449,833－－

Outline of the residual securities whichwere not included in the calculation of thediluted net income per share because there
was no dilutive effect.

8,014
－

Thousands of
U.S. Dollars
2020¥

3. The basis for computation of net assets per share is as follows:2019
Net assets per share
Total net assets
Amount deducted from total net assets(Non-controlling interests)
Net assets corresponding to common stockat the end of the fiscal year
Number of common stock shares used forthe calculation of net assets per share(Share)¥Millions of Yen

84,2597,654(7,654)

Thousands of
U.S. Dollars
2020

2020
¥

86,2507,965(7,965)$ 792,520
73,188(73,188)

76,60478,284

719,332

27,447,194

27,458,839

16. SIGNIFICANT SUBSEQUENT EVENTS(Share transfer agreement with CITY INDEX ELEVENTH CO., Ltd. for acquisition of shares in EXCEL CO., LTD.)At the board of directors’ meeting held on December 9, 2019, the Company resolved to conclude a sharetransfer agreement with CITY INDEX ELEVENTH CO., Ltd (“CI11”) with respect to the outstanding sharesissued by EXCEL CO., LTD. (“EXCEL”), and concluded the agreement on the same date. The acquisition of
EXCEL shares under the agreement (“the Share Acquisition”) was executed on April 1, 2020, upon which
EXCEL became the Company’s wholly-owned subsidiary.
Pursuant to the integrated contract entered into between the Company, EXCEL, Office Support K.K., theparent company of CI11, and CI11 on December 9, 2019, the Share Acquisition executed upon (1) CI11
making EXCEL a wholly-owned subsidiary through share exchange for cash consideration, andsubsequently (2) payment of dividend in kind being made to CI11 using a portion of assets owned by
EXCEL as dividend property.

-41 -1. Reasons for the management integration and acquisition of the shares
Since its foundation, the Company has been expanding its business domain by responding to the various
needs of customers in accordance with its philosophy of “everything we do is for our customers”. As an
independent general trading company that specializes in electronics, the Company is engaged in a wide
variety of business activities and offers a variety of services to customers both in Japan and abroad, ranging
from distribution of Electronic Parts and Semiconductors that leverages its expertise in the segment, theEMS business where it has a competitive advantage in high-mix low-volume production, to support forcustomers in planning, development and design of their products, creation of software/video images, andprovision of network solutions and other system support services.
Meanwhile, changes are taking place with increasing speed in the business environment surrounding theelectronics trading industry, where there still are many players competing with each other. We have seen
reorganization and consolidation of semiconductor/device manufacturers, our suppliers, which have led toreview of their policies on distribution agents, moves by end-products manufacturers, our customers, torelocate their production facilities to overseas sites for assembly of finished products, changes in demandand supply and price fluctuations in both domestic and overseas markets reflecting US-China tariff policies
and uncertainty in the future of the global economy. There has also been shortening of product life cycles asa result of ongoing technological innovations. Against this backdrop, we believe that the competition forsurvival among electronic trading companies will become more and more intense in the coming years.
Under these circumstances, the Company has formulated the three-year “Medium Term Management Plan
2021” that runs from the fiscal year ending March 31, 2020 to March 31, 2022 (announced on November 6,
2018, “the Medium Term Plan”), in line with which it is working on enhancement of revenue base,stabilization of management base and creation of new businesses, being guided by its medium to long-term
vision of becoming “Japan’s No. 1 corporate group in the industry” by establishing “profit-focusedmanagement” and putting it firmly in place, with the aim of developing into a competitive “world-classcompany”. In January last year, Fujitsu Electronics Inc., a core trading company of the Fujitsu Group, wasconverted to a subsidiary of the Group, to achieve expansion the Group’s trading company business. In
October, the Company acquired from Pioneer Corporation shares of Towada Pioneer Corporation (currently
Kaga EMS Towada Co., Ltd.), a manufacturing subsidiary of Pioneer, to strengthen manufacturing
capabilities. The decision to make EXCEL a subsidiary based on the share transfer agreement concluded
with CI11 also forms a part of the Company’s efforts to achieve its growth strategy. In the course of thedecision, the Company recognized that EXCEL’s strengths in its key domestic and overseas products in thearea of liquid crystal devices as well as its customer base in China were particularly attractive for theCompany as it seeks to achieve its growth strategy.
EXCEL operates a business focusing on electronic devices led by liquid crystal, semiconductors andintegrated circuits, and its integration into the Group is expected to generate the following synergies.
(1) Market share expansion for the Electronic Parts and Semiconductor business
The Company seeks to strengthen ability to respond to customer needs and expand share in the electronicparts and semiconductor markets by complementing the respective companies’ offerings and sales
channels. In particular, realization of synergies can be expected with EXCEL’s strengths in its key
domestic and overseas products in the LCD domain to expand sales to the Company’s customers, as wellas EXCEL’s customer base in China to strengthen distribution of the Company’s products.
(2) Expansion in the scale of the EMS business
The Company strives to further strengthen the profitability of the Company’s EMS business by sharing
the Company’s global network of EMS manufacturing bases with EXCEL, and reaching out to the
EXCEL customer base with the Company’s EMS business.
(3) Acquisition of new businesses
The Company brings in EXCEL’s promising new businesses such as EV-related business and mobilize
the collective strength of the Group to achieve early commercialization.
(4) Further improvement in management efficiency through business collaboration between the twocompanies
The Company seeks to improve the profitability of both the Company and EXCEL by optimizing andsharing to the greatest extent possible the two firms’ sales related organizations and other functions.
Through the Share Acquisition, the Company seeks to solidify our footing as “Japan’s No. 1 corporategroup in the industry” as set out in the Medium Term Plan, and continues efforts to expand and improve thescale and the quality of Group management, with the aim of achieving sustainable growth as a competitive“world-class company” which can stand up to overseas competition with their sales crossing the trillion yen
mark.
-42 -

2. Name, business details, and size of company whose shares are to be acquired(1) Name
EXCEL CO., LTD.
(2) Business Sale, import and export of LCD devices, integrated circuits, semiconductor devices andother electronic components and equipment(3) Size of company (consolidated figures for the fiscal year ended March 2019)¥24,611 million (US$ 226,148 thousands)
Consolidated net assets¥43,739 million (US$ 401,907 thousands)
Consolidated total assets¥67,499 million (US$ 620,225 thousands)
Consolidated net sales¥369 million (US$ 3,398 thousands)
Consolidated operating income¥252 million (US$ 2,320 thousands)
Consolidated ordinary income¥569 million (US$ 5,233 thousands)
Ordinary income attributable to owners of parent
3. Name of the selling shareholder
CITY INDEX ELEVENTH CO., Ltd
4. Date of share acquisition
April 1, 2020
5. Number of shares to be acquired, acquisition price, and ownership ratio following acquisition(1) Shares to be acquired
8,665,854 shares(2) Acquisition price¥389 million (US$ 3,576 thousands)
Shares of common stock in EXCEL CO., LTD.
¥176 million (US$ 1,623 thousands)
Advisory and other fees
¥565 million (US$ 5,200 thousands)
Total(3) Ownership ratio following acquisition
100.0%
Notes 1: It is anticipated that the Company would recognize approximately ¥8.2 billion (US$ 75,346
thousands) of gain on bargain purchase from the Share Acquisition.
2: In addition to payment of the acquisition price, the Company had planned to provide about ¥8billion to EXCEL CO., LTD. as working capital on the execution date of the share acquisition, but
the Company instead guaranteed the bank transactions for EXCEL and its subsidiary.
(Dissolution of a specific subsidiary)
The Board of Directors of the Company resolved at its meeting on July 22, 2020 to dissolve and liquidate theCompany's specified subsidiaries as follows(1) Reasons for Dissolution and Liquidation
To improve business efficiency(2) Summary of Subsidiaries to be Dissolved and Liquidated
Name
Advanced Display Solutions (Hong Kong) Limited.
Address
Hong Kong, China
Name of representative
Yasuhiro Ohashi, Chairman of the Board
Amount of capital
US$23,000 thousand
Description of Business
Sales of electronic components
Investment Ratio
100% (100% of which is indirectly owned)(3) Dismissal and Settlement Schedule
The liquidation is expected to be completed as soon as the necessary procedures are completed inaccordance with the local laws.
(4) The effect of the dissolution and liquidation on profit and loss
The dissolution and liquidation of this specific subsidiary is not expected to have a material impact on the
consolidated financial results.

-43 -

17.

CONSOLIDATED SUPPLEMENTARY SCHEDULE(1) Schedule of bonds
Not applicable.
(2) Schedule of loans
Category
Short-term loans payable
Current portion of longterm loans payable
Current portion of leaseobligations
Long-term loans payable(excluding current
portion)Lease obligations(excluding current
portion)
Other interest-bearing
debt
Total

2019

Millions of Yen

Thousands of U.S.
Dollars
2020

2020

Interest
rate (%)

Maturity¥ 29,376¥ 5,260$ 48,336

1.84%

－

1,280

1,279

11,758

0.77%

－

116

418

3,843

2.12%

－

1,882

20,833

191,4310.51%

2021 to 2025

196

944

8,678

2.25%

2021 to 2025

－

－

－

－

¥ 32,851¥ 28,736$ 264,047－

Notes:
1. Interest rates are stated at weighted average interest rates based on the average balance of borrowings for the year.
2. The repayment schedule of long-term loans payable and lease obligations (excluding current portion) per year for 5 years
subsequent to March 31, 2020 is summarized as follows:
Millions of Yen
Over 1 year
Over 2 years
Over 3 years
Over 4 years
Category
within 2 years
within 3 years
within 4 years
within 5 years
Long-term loans payable
¥
668
¥
5,032
¥
5,032
¥
5,100
Lease obligations
219
90
114
76
Total
¥
887
¥
5,122
¥
5,146
¥
5,176

Category
Long-term loans payable
Lease obligations
Total

Over 1 year
within 2 years$ 6,139
2,018$ 8,157

Thousands of U.S. Dollars
Over 2 years
within 3 years$ 46,243829$ 47,072

Over 3 years
within 4 years$ 46,243
1,050$ 47,293

Over 4 years
within 5 years$ 46,862
701$ 47,563(3) Schedule of asset retirement obligations
According to the Article 92-2 of the “Regulations for Consolidated Financial Statements,” schedule of asset
retirement obligations is abbreviated, as the amount of asset retirement obligations is less than 1 percent of the total
amount of liabilities and net assets.

-44 -