AICHI CORPORATION
Audited Financial Statements(English Translation)

March 31, 2020

Independent Auditors’ Report(English Translation*)
May 21, 2020
To the Board of Directors of AICHI CORPORATION
PricewaterhouseCoopers Aarata LLC, Tokyo Office
Kosaku Kawahara, CPA
Designated Limited Liability Partner, Engagement Partner
Kazuaki Sekine, CPA
Designated Limited Liability Partner, Engagement Partner

OpinionPursuant to Article 444, Paragraph 4 of the Companies Act, we have audited the accompanying consolidated
financial statements, which comprise the consolidated balance sheet, the consolidated statement of income, theconsolidated statement of changes in net assets and the notes to the consolidated financial statements of AICHICORPORATION (the “Company”) for the fiscal year from April 1, 2019 through March 31, 2020.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position and results of operations of the corporate group, which consists of the Company and its
consolidated subsidiaries, for the period covered by the consolidated financial statements in conformity withaccounting principles generally accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibility
under the auditing standards is stated in “Auditor’s Responsibility for the Audit of the Consolidated Financial
Statements.” We are independent of the Company and its consolidated subsidiaries in accordance with theprovisions related to professional ethics in Japan, and are fulfilling other ethical responsibilities as an auditor.
We believe that we have obtained sufficient and appropriate audit evidence to provide a basis for our audit
opinion.
Responsibilities of Management and the Audit and Supervisory Committee for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements inaccordance with accounting principles generally accepted in Japan, and for designing and operating suchinternal control as management determines is necessary to enable the preparation and fair presentation of theconsolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing whether it isappropriate to prepare the consolidated financial statements in accordance with the premise of a going concern,and for disclosing matters relating to going concern when it is required to do so in accordance with accounting
principles generally accepted in Japan.
The Audit and Supervisory Committee is responsible for monitoring the execution of Directors’ duties related
to designing and operating the financial reporting process.
Auditor’s Responsibility for the Audit of the Consolidated Financial Statements
Our responsibility is to obtain reasonable assurance about whether the consolidated financial statements as awhole are free from material misstatement, whether due to fraud or error, and to express an opinion on the
consolidated financial statements from an independent standpoint in an audit report, based on our audit.
Misstatements can occur as a result of fraud or error, and are deemed material if they can be reasonably
expected to, either individually or collectively, influence the decisions of users taken on the basis of theconsolidated financial statements.
We make professional judgment in the audit process in accordance with auditing standards generally acceptedin Japan, and perform the following while maintaining professional skepticism.
-1-

・ Identify and assess the risks of material misstatement, whether due to fraud or error. Design and implement
audit procedures to address the risks of material misstatement. The audit procedures shall be selected andapplied as determined by the auditor. In addition, sufficient and appropriate audit evidence shall be obtained toprovide a basis for the audit opinion.
・ In making those risk assessments, the auditor considers internal control relevant to the entity’s audit in orderto design audit procedures that are appropriate in the circumstances, although the purpose of the audit of theconsolidated financial statements is not to express an opinion on the effectiveness of the entity’s internal control.
・ Assess the appropriateness of accounting policies adopted by management and the method of their application,
as well as the reasonableness of accounting estimates made by management and the adequacy of related notes.
・ Determine whether it is appropriate for management to prepare the consolidated financial statements on thepremise of a going concern and, based on the audit evidence obtained, determine whether there is a significant
uncertainty in regard to events or conditions that may cast significant doubt on the entity’s ability to continue asa going concern. If there is a significant uncertainty concerning the premise of a going concern, the auditor isrequired to call attention to the notes to the consolidated financial statements in the audit report, or if the notes tothe consolidated financial statements pertaining to the significant uncertainty are inappropriate, issue a modified
opinion on the consolidated financial statements. While the conclusions of the auditor are based on the audit
evidence obtained up to the date of the audit report, depending on future events or conditions, an entity may beunable to continue as a going concern.
・ Besides assessing whether the presentation of and notes to the consolidated financial statements are inaccordance with accounting principles generally accepted in Japan, assess the presentation, structure, andcontent of the consolidated financial statements including related notes, and whether the consolidated financial
statements fairly present the transactions and accounting events on which they are based.
・ Obtain sufficient and appropriate audit evidence regarding the financial information of the Company and its
consolidated subsidiaries in order to express an opinion on the consolidated financial statements. The auditor is
responsible for instructing, supervising, and implementing the audit of the consolidated financial statements, andis solely responsible for the audit opinion.
We communicate with the Audit and Supervisory Committee regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the Audit and Supervisory Committee with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other mattersthat may reasonably be thought to bear on our independence, and where applicable, related safeguards.
Interest
Our firm and engagement partners have no interests in the Company or its consolidated subsidiaries requiring
disclosure under the provisions of the Certified Public Accountants Act of Japan.

* The original audit report is in Japanese. This English translation is for readers’ convenience and reading thistranslation is not a substitute for reading the original audit report in Japanese.

-2-

AICHI CORPORATION
Consolidated Balance Sheet
As of March 31, 2020
In Thousands of Yen
AssetsCurrent assets:
Cash and deposits¥

1,364,112

Deposits paid

29,293,978

Notes and accounts receivable – trade

19,045,242

Finished goods

1,540,793

Work in process

1,357,019

Raw materials and supplies

1,273,767

Other

603,867

Allowance for doubtful accounts(1,963)

Total current assets

54,476,818

Non-current assets:
Property, plant and equipment:
Buildings and structures

7,842,154

Machinery, equipment and vehicles

2,656,961

Tools, furniture and fixtures

273,412Land

8,524,839

Construction in progress

1,634

Other

450,021

Total property, plant and equipment

19,749,024

Intangible assets

839,521

Investments and other assets:
Investment securities

5,641,595

Deferred tax assets

372,397

Other

1,691,355

Allowance for doubtful accounts(7,051)

Total investments and other assets

7,698,297

Total non-current assets

28,286,842

Total assets¥-3-82,763,661

In Thousands of Yen
Liabilities
Current liabilities:
Notes and accounts payable – trade
Income taxes payable
Provision for bonuses for directors (and other officers)
Provision for product warranties
Other
Total current liabilities¥

8,547,921
949,564
32,000138,4092,847,419
12,515,315

Non-current liabilities:
Deferred tax liabilities for land revaluation
Provision for retirement benefits for directors (and other officers)
Retirement benefit liability
Other
Total non-current liabilities
Total liabilities

616,30243,6001,221,468
422,019
2,303,391
14,818,706

Net assets
Shareholders’ equity:
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity

10,425,325
9,923,356
47,334,222(918,004)
66,764,898

Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets-4-2,886,803(1,624,044)(311,330)
228,626¥

1,180,055
67,944,954
82,763,661

AICHI CORPORATION
Consolidated Statement of Income
Fiscal Year from April 1, 2019 to March 31, 2020
In Thousands of Yen
Operating revenue:
Net sales¥

58,336,392

Operating costs and expenses:
Cost of sales

46,094,744

Gross profit

12,241,648

Selling, general and administrative expenses

6,384,535

Operating profit

5,857,112

Non-operating income:Interest and dividend income

147,635

Other

249,707397,342

Non-operating expenses:
Foreign exchange losses

33,737

Other

732
34,470Ordinary profit

6,219,984

Extraordinary income:Gain on sales of non-current assets

331

Gain on sales of investment securities

173,182

Insurance claim income

742,479
915,994

Extraordinary losses:
Loss on sales of non-current assets

1,035

Loss on retirement of non-current assets

8,376

Loss on cancellation of insurance policies

3,340

Impairment loss

25,23837,991

Profit before income taxes

7,097,987

Income taxes – current

2,069,770

Income taxes – deferred

105,012

Profit

4,923,204

Profit attributable to owners of parent-5-¥4,923,204

AICHI CORPORATION
Consolidated Statement of Changes in Equity
Fiscal Year from April 1, 2019 to March 31, 2020
(In Thousands of Yen)
Shareholders’ equity

Items
Balance at beginning of period

SharecapitalCapitalsurplus10,425,325

Retainedearnings

9,923,356

Total
shareholders’equityTreasury
Shares44,118,766(917,709)

63,549,738

Changes during period
Dividends of surplus(1,707,748)(1,707,748)

Profit attributable to owners ofparent

4,923,204

4,923,204

Purchase of treasury shares

(295)

(295)

Net changes of items other thanshareholders' equity
Total changes during period
Balance at end of period－－

3,215,455(295)

3,215,160

10,425,325

9,923,356

47,334,222(918,004)

66,764,898

Accumulated other comprehensive income

Items

Valuation difference
on available-for-sale securities

Balance at beginning of period

Foreign currencytranslation
adjustment

Revaluation reserve for land
3,441,100(1,624,044)(182,650)

Changes during period
Dividends of surplus
Profit attributable to owners ofparentPurchase of treasury shares
Net changes of items other thanshareholders' equity(554,296)(128,680)

Total changes during period(554,296)－(128,680)

Balance at end of period

2,886,803(1,624,044)(311,330)

Accumulated other comprehensive income

Items
Remeasurements of defined benefit plans
Balance at beginning of period

70,733

Total accumulated other comprehensive
income1,705,138

Total net assets

65,254,877

Changes during period
Dividends of surplus(1,707,748)

Profit attributable to owners ofparent

4,923,204

Purchase of treasury shares(295)

Net changes of items other thanshareholders' equity

157,892(525,083)(525,083)

Total changes during period

157,892(525,083)

2,690,076

Balance at end of period

228,626

1,180,055

67,944,954-6-

AICHI CORPORATION
Notes to Consolidated Financial Statements
Summary of Significant Accounting Policies
1.

Basis of consolidation
The accounts of AICHI CORPORATION (the “Company”) and all of its 3 subsidiaries are included in
the consolidated financial statements.
Name of the consolidated subsidiaries
Zhejiang Aichi Industrial Machinery Co., Ltd.
AICHI NZ LIMITEDAICHI AUS PTY LTD
Aichi Training Center Co., Ltd., which used to be a consolidated subsidiary, was excluded from thescope of consolidation in the three months ended June 30, 2019, as it was merged with theCompany as of June 1, 2019.

2.

Application of equity method(1) Overview of affiliates accounted for by the equity method
One affiliate is accounted for by the equity method.
Name of the affiliate
Hangzhou Aichi Engineering Vehicles Co., Ltd.
(2) Special matters concerning application procedures of the equity method
Although the fiscal year end date of Hangzhou Aichi Engineering Vehicles Co., Ltd. is December 31,
when preparing the consolidated financial statements, the Company uses the affiliate’s provisional
financial statements, which are calculated assuming the fiscal year end date is March 31.

3.

Fiscal year of consolidated subsidiaries
Although the fiscal year end date of Zhejiang Aichi Industrial Machinery Co., Ltd. is December 31,
when preparing the consolidated financial statements, the Company uses the subsidiary’s provisional
financial statements, which are calculated assuming the fiscal year end date is March 31.

4.

Accounting policies(1) Valuation method of significant assets① Inventories
Inventories are stated at cost (write-down due to decreased profitability).
Finished goods and work in process are evaluated using the specific identification method.
Raw materials are mainly stated at cost, cost being determined by the moving average method.
Supplies are stated at cost, cost being determined by the last purchase price method.
② Securities
Securities are classified in accordance with “Accounting Standard for Financial Instruments.”
Available-for-sale securities whose market quotations are available are stated at fair value. Net
unrealized gains or losses are reported as a separate component in net assets, net of applicable
income taxes. Gains and losses on disposition are computed based on the moving average method.
-7-

Available-for-sale securities whose market quotations are not available are stated at cost, cost
being determined by the moving average method.
(2) Method of depreciation or amortization①

Property, plant and equipment (except for leased assets) are depreciated mainly on the
declining-balance method. In addition, buildings (except for facilities attached to buildings)
acquired on and after April 1, 1998 and facilities attached to buildings and structures acquired
on and after April 1, 2016 are depreciated on the straight-line method.

②

Intangible assets (except for leased assets) are amortized based on the straight-line method. In
addition, software for internal use is amortized on the straight-line method over estimateduseful lives (5 years).
Goodwill is amortized on the straight-line method over four years.

③

Depreciation of leased assets regarding finance leases other than those for which the ownershipof the leased items is transferred to the lessee is computed with the straight-line method overthe lease period with no residual value.

(3) Significant allowances and provisions①

Allowance for doubtful accounts
The Company provides for estimated losses on accounts receivable based on prior bad debt
experience and a review of existing receivable balances. The Company reviews individual
financial condition for doubtful or troubled receivables and provides for losses on
uncorrectable amounts. In addition, general reserve for other accounts receivable is provided
based on historical loss experience for certain past periods.

②

Provision for bonuses for directors (and other officers)
The Company provides for estimated payment of bonuses to directors.

③

Provision for product warranties
The Company provides for estimated warranty costs based on the Company’s prior experienceand estimated costs to be incurred individually calculated for certain products.

④

Provision for retirement benefits for directors (and other officers)
The Company provides for estimated cost for retirement benefits to directors based on theamount which would be payable under internal rules if all directors retired at fiscal year end
date.

(4) Retirement benefits①

Method of attributing projected benefit obligation to periods
In calculating retirement benefit obligation, projected benefit obligation attributed to thecurrent fiscal year is determined using the benefit formula basis.

②

Calculation treatment for actuarial gains or losses
Actuarial gains or losses are amortized in the fiscal year following the fiscal year in which thegain or loss is recognized by the straight-line method over a fixed period (10 years), which isshorter than the average remaining years of service of the employees.

(5) Hedge accounting
Designated hedge accounting ("Furiate-shori") is applied for foreign currency forward contracts thatmeet qualifications for designated hedge accounting.

-8-(6) Other important matters for preparing consolidated financial statements
Consumption taxes
Consumption taxes are separately recorded at each transaction.
Notes to Consolidated Balance Sheet
In Thousands of Yen
1. Accumulated depreciation of property, plant and equipment¥

20,672,005

2. Land revaluation
Pursuant to the Law Concerning Revaluation of Land (Law No. 34, March 31, 1998) and the Law toPartially Amend the Law Concerning Revaluation of Land (Law No. 19, March 31, 2001), theCompany revalued land used for business activities on March 31, 2002.
Pursuant to the Law to Partially Amend the Law Concerning Revaluation of Land (Law No. 24, March
31, 1999), the effect of this revaluation has been recorded as deferred tax liabilities for land revaluationin liabilities and as revaluation reserve for land in net assets.
Revaluation was carried out based on an amount rationally calculated using the land value for local
government tax and roadside land assessment as prescribed in Article 2, Paragraph 3 and Article 2,
Paragraph 4 of the Ordinance Implementing the Law Concerning Revaluation of Land (No. 119 of the1998 Cabinet Order, promulgated on March 31, 1998), respectively.
Revaluation date
Difference between the market value at the end of the fiscal year
ended March 31, 2020 and the carrying amount of the land after
the revaluation

March 31, 2002¥(2,456,194) thousand

Notes to Consolidated Statement of Income
In Thousands of Yen
Write-down due to decreased profitability of inventories held forsale in the ordinary course of business
Cost of sales-9-¥(90,807)

Notes to Consolidated Statement of Changes in Equity
1. Class and number of issued sharesClass of stock

As of April 1, 2019

Common stock

Increase

Decrease－

79,453,250

As of March 31, 2020－

79,453,250

2. Stock acquisition rights, etc.
There is no applicable item.
3. Cash dividends(1) Amount of cash dividends
Resolution
Annual generalshareholders’meeting on June21, 2019
Board meeting on
October 28, 2019

Class of stock

Amount of cash
dividends

Cash dividends
per share

Record dateCommon stock

Common stock

Effective date of
distribution(Thousands of Yen)
853,874

(Yen)
11.00

March 31, 2019

June 24, 2019853,873

11.00

September 30, 2019

November 27, 2019(2) Dividends whose record date falls in the fiscal year ended March 31, 2020, but the effective dateof distribution falls in the fiscal year ending March 31, 2021
Resolution(Planned)
Annual generalshareholders’meeting on
June 18, 2020

Class of stock

Resource ofdividends

Amount of cash
dividends

Common stock

Retainedearnings(Thousands of Yen)
1,009,119- 10 -Cash dividends
per share

Record date

Effective dateof distribution

(Yen)
13.00

March 31, 2020

June 19, 2020

Notes to Financial Instruments
1. Status of financial instruments held by the GroupThe Group’s fund management is limited primarily to short-term deposits while working capital andcapital investments are financed by the Group’s own fund without involving borrowings from banks orother financial institutions.
Credit risk of customers in respect to notes and accounts receivable – trade is mitigated by credit control.
Investment securities held by the Group are mainly company shares, and the fair values of listed stocks
are verified on a quarterly basis.
Regarding derivative transactions, we use forward exchange contracts in order to mitigate the exchangerisks associated with export transactions in the normal course of our business.
2. Fair value of financial instruments
Consolidated balance sheet amounts, fair values and their differences as of March 31, 2020 are as follows.
(In Thousands of Yen)
Consolidated balance
sheet amounts

Fair values

Differences(1) Cash and deposits

1,364,112

1,364,112－(2) Deposits paid

29,293,97829,293,978－19,043,279

19,043,279－

5,285,035

5,285,035－(3) Notes and accounts
receivable – trade
Allowance for doubtful
accounts (※)

19,045,242(1,963)(4) Investment securities
Available-for-salesecurities
Total assets

54,986,405

54,986,405－(5)

Notes and accounts
payable – trade

8,547,921

8,547,921－(6)

Income taxes payable

949,564

949,564－

9,497,485

9,497,485

－

－

－

－

Total liabilities(7)

Derivative transactions(※) Allowance for doubtful accounts corresponding to notes and accounts receivable – trade is deducted.
Notes:(1) Cash and deposits, (2) Deposits paid and (3) Notes and accounts receivable – trade
These are settled on short-term basis where their book values approximate their fair values, thus they
are stated at book values.
Accounts receivable – trade under designated hedge accounting (“Furiate-shori”) are evaluated at an
amount accounted for integrally with the forward exchange contracts.
(4) Investment securities
Fair values of shares are based on stock exchange quoted prices.
Unlisted shares (with consolidated balance sheet amount of ¥356,560 thousand) are not included in“Available-for-sale securities in (4) Investment securities,” as their fair values appear extremely
difficult to determine because they do not have market prices and it is impossible to estimate future
cash flows.
(5) Notes and accounts payable – trade and (6) Income taxes payable
These are settled on short-term basis where their book values approximate their fair values, thus they
are stated at book values.

- 11 -

(7) Derivative transactions
The fair values of forward exchange contracts under designated hedge accounting (“Furiate-shori”)
are included in the amount of accounts receivable – trade as they are accounted for integrally withaccounts receivable – trade which are hedged items.
Notes to Rental Property
Disclosure is omitted as the information is insignificant.
Per Share Information
In YenNet assets per share
Profit per share¥

875.3063.42

Notes to Subsequent Event
There is no applicable item.
Other Notes
There is no applicable item.

Notice to Readers:
The amounts in thousands of yen in the accompanying financial statements are stated, omitting any fractionalsums.

- 12 -

Independent Auditors’ Report(English Translation*)
May 21, 2020
To the Board of Directors of AICHI CORPORATION
PricewaterhouseCoopers Aarata LLC, Tokyo Office
Kosaku Kawahara, CPA
Designated Limited Liability Partner, Engagement Partner
Kazuaki Sekine, CPA
Designated Limited Liability Partner, Engagement Partner

OpinionPursuant to Article 436, Paragraph 2, Item 1 of the Companies Act, we have audited the accompanying
financial statements, which comprise the balance sheet, the statement of income, the statement of changes in net
assets and the related notes, and the supplementary schedules of AICHI CORPORATION (the “Company”) for
the 72th fiscal year from April 1, 2019 through March 31, 2020.
In our opinion, the financial statements and the supplementary schedules referred to above present fairly, in allmaterial respects, the financial position and results of operations for the period covered by the financial
statements and the supplementary schedules in conformity with accounting principles generally accepted inJapan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibility
under the auditing standards is stated in “Auditor’s Responsibility for the Audit of the Financial Statements andthe Supplementary Schedules.” We are independent of the Company in accordance with the provisions related toprofessional ethics in Japan, and are fulfilling other ethical responsibilities as an auditor. We believe that wehave obtained sufficient and appropriate audit evidence to provide a basis for our audit opinion.
Responsibilities of Management and the Audit and Supervisory Committee for the Financial Statements and theSupplementary Schedules
Management is responsible for the preparation and fair presentation of the financial statements and the
supplementary schedules in accordance with accounting principles generally accepted in Japan, and fordesigning and operating such internal control as management determines is necessary to enable the preparationand fair presentation of the financial statements and the supplementary schedules that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements and the supplementary schedules, management is responsible forassessing whether it is appropriate to prepare the financial statements and the supplementary schedules inaccordance with the premise of a going concern, and for disclosing matters relating to going concern when it isrequired to do so in accordance with accounting principles generally accepted in Japan.
The Audit and Supervisory Committee is responsible for monitoring the execution of Directors’ duties related
to designing and operating the financial reporting process.
Auditor’s Responsibility for the Audit of the Financial Statements and the Supplementary Schedules
Our responsibility is to obtain reasonable assurance about whether the financial statements and the
supplementary schedules as a whole are free from material misstatement, whether due to fraud or error, and to
express an opinion on the financial statements and the supplementary schedules from an independent standpoint
in an audit report, based on our audit. Misstatements can occur as a result of fraud or error, and are deemedmaterial if they can be reasonably expected to, either individually or collectively, influence the decisions ofusers taken on the basis of the financial statements and the supplementary schedules.
We make professional judgment in the audit process in accordance with auditing standards generally accepted- 13 -

in Japan, and perform the following while maintaining professional skepticism.
・ Identify and assess the risks of material misstatement, whether due to fraud or error. Design and implement
audit procedures to address the risks of material misstatement. The audit procedures shall be selected andapplied as determined by the auditor. In addition, sufficient and appropriate audit evidence shall be obtained toprovide a basis for the audit opinion.
・ In making those risk assessments, the auditor considers internal control relevant to the entity’s audit in orderto design audit procedures that are appropriate in the circumstances, although the purpose of the audit of thefinancial statements and the supplementary schedules is not to express an opinion on the effectiveness of theentity’s internal control.
・ Assess the appropriateness of accounting policies adopted by management and the method of their application,
as well as the reasonableness of accounting estimates made by management and the adequacy of related notes.
・ Determine whether it is appropriate for management to prepare the financial statements and the
supplementary schedules on the premise of a going concern and, based on the audit evidence obtained,
determine whether there is a significant uncertainty in regard to events or conditions that may cast significant
doubt on the entity’s ability to continue as a going concern. If there is a significant uncertainty concerning thepremise of a going concern, the auditor is required to call attention to the notes to the financial statements andthe supplementary schedules in the audit report, or if the notes to the financial statements and the supplementaryschedules pertaining to the significant uncertainty are inappropriate, issue a modified opinion on the financial
statements and the supplementary schedules. While the conclusions of the auditor are based on the audit
evidence obtained up to the date of the audit report, depending on future events or conditions, an entity may beunable to continue as a going concern.
・ Besides assessing whether the presentation of and notes to the financial statements and the supplementaryschedules are in accordance with accounting principles generally accepted in Japan, assess the presentation,
structure, and content of the financial statements and the supplementary schedules including related notes, andwhether the financial statements and the supplementary schedules fairly present the transactions and accounting
events on which they are based.
We communicate with the Audit and Supervisory Committee regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the Audit and Supervisory Committee with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other mattersthat may reasonably be thought to bear on our independence, and where applicable, related safeguards.
Interest
Our firm and engagement partners have no interests in the Company requiring disclosure under the provisions of
the Certified Public Accountants Act of Japan.

* The original audit report is in Japanese. This English translation is for readers’ convenience and reading thistranslation is not a substitute for reading the original audit report in Japanese.

- 14 -

AICHI CORPORATION
Balance Sheet
As of March 31, 2020
In Thousands of Yen
AssetsCurrent assets:
Cash and deposits
Deposits paid
Notes receivable – trade
Electronically recorded monetary claims – operating
Accounts receivable – tradeFinished goods
Work in process
Raw materials and supplies
Short-term loans receivable
Other
Allowance for doubtful accounts
Total current assets
Non-current assets:
Property, plant and equipment:
Buildings
Structures
Machinery and equipment
VehiclesTools, furniture and fixtures
Land
Other
Total property, plant and equipment
Intangible assets:
Right to use water facilities
Software
Other
Total intangible assets
Investments and other assets:
Investment securities
Investments in capital
Investments in capital of subsidiaries and associates
Deferred tax assets
Long-term prepaid expenses
Guarantee deposits
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets- 15 -¥

696,379
29,293,978
2,107,460
2,803,431
14,209,350
1,434,214
1,296,569
933,735
333,099566,575(66,065)
53,608,729

6,708,403
818,816
2,392,192
2,491
236,767
8,524,839
450,021
19,133,533
1,034
483,755
15,588500,378¥

5,641,595
1,020
1,420,530
557,609
133,519
58,20721,513(7,051)
7,826,943
27,460,855
81,069,585

In Thousands of Yen
Liabilities
Current liabilities:
Notes payable – trade¥809,122

Electronically recorded obligations – operating

3,330,067

Accounts payable – trade

4,471,999

Accounts payable – other592,998

Income taxes payable

925,944

Accrued consumption taxes

170,742

Accrued expenses

1,341,238

Deposits received

247,201

Unearned revenue

371

Provision for bonuses for directors (and other officers)

32,000

Provision for product warranties

138,409

Notes payable – facilities

229,380

Electronically recorded obligations – facilities

32,792

Other99,348
Total current liabilities

12,421,617

Non-current liabilities:
Deferred tax liabilities for land revaluation

616,302

Provision for retirement benefits for directors (and other officers)

43,600

Provision for retirement benefits

1,550,889

Other

422,019
Total non-current liabilities

2,632,812

Total liabilities

15,054,429

Net assets
Shareholders’ equity:
Share capital

10,425,325

Capital surplus:
Legal capital surplus

9,941,842

Other capital surplus

13

Total capital surplus

9,941,856

Retained earnings:
Other retained earnings

45,303,219

Retained earnings brought forward

45,303,219

Total retained earnings

45,303,219

Treasury shares(918,004)

Total shareholders’ equity

64,752,395

Valuation and translation adjustments:
Valuation difference on available-for-sale securities

2,886,803

Revaluation reserve for land

(1,624,044)

Total valuation and translation adjustments

1,262,759

Total net assets

66,015,155

Total liabilities and net assets¥- 16 -

81,069,585

AICHI CORPORATIONStatement of Income
Fiscal Year from April 1, 2019 to March 31, 2020
In Thousands of Yen

Operating revenue:
Net sales¥

57,961,298

Operating costs and expenses:
46,205,809

Cost of sales

11,755,489

Gross profit

6,118,120

Selling, general and administrative expenses

5,637,368

Operating profit

Non-operating income:Interest and dividend income

156,416

Other

36,902
193,319

Non-operating expenses:
2Interest expenses

24,245

Foreign exchange losses

605

Other

24,853
5,805,834

Ordinary profit

Extraordinary income:Gain on extinguishment of tie-in shares

174,908

Gain on sales of investment securities

173,182

Insurance claim income

742,479
1,090,570

Extraordinary losses:
Loss on valuation of investments in capital of subsidiaries and

145,045

associates
Loss on sales of non-current assets

1,025

Loss on retirement of non-current assets

8,301
736

Impairment loss

3,340

Loss on cancellation of insurance policies

158,449
Profit before income taxes

6,737,956

Income taxes – current

1,971,465

Income taxes – deferred

121,433

Profit¥- 17 -

4,645,057

AICHI CORPORATIONStatement of Changes in Equity
Fiscal Year from April 1, 2019 to March 31, 2020
(In Thousands of Yen)
Shareholders’ equity
Items

Balance at beginning of period

Capital surplus

SharecapitalLegal capital surplus

Other capital surplus

Total capital surplus

10,425,325

9,941,842

13

9,941,856

－

－

－

－

10,425,325

9,941,842

13

9,941,856

Changes during period
Dividends of surplus
ProfitPurchase of treasury shares
Net changes of items other thanshareholders' equity
Total changes during period
Balance at end of period

Shareholders’ equity
Items

Retainedearnings
Other retained earnings
Retained earnings brought
forwardBalance at beginning of period

Totalshareholders’equityTreasurysharesTotal retained
earnings

42,365,910

42,365,910(917,709)

61,815,381

Dividends of surplus(1,707,748)(1,707,748)(1,707,748)

Profit4,645,057

4,645,057

4,645,057

Changes during period

Purchase of treasury shares

(295)

(295)

Net changes of items other thanshareholders' equity
Total changes during period

2,937,309

2,937,309(295)

2,937,013

Balance at end of period

45,303,219

45,303,219(918,004)

64,752,395

Items

Valuation difference on
available-for-salesecurities

Valuation and translation adjustments

Balance at beginning of period

Revaluation reserve forland

3,441,100(1,624,044)

Total valuation andtranslation adjustments
1,817,055

Total net assets

63,632,437

Changes during period
Dividends of surplus(1,707,748)

Profit4,645,057

Purchase of treasury shares
Net changes of items other thanshareholders' equity(295)(554,296)(554,296)(554,296)

Total changes during period(554,296)－(554,296)

2,382,717

Balance at end of period

2,886,803(1,624,044)

1,262,759

66,015,155- 18 -

AICHI CORPORATION
Notes to Financial Statements
Significant Accounting Policies
1. Valuation of securities
Securities are classified in accordance with “Accounting Standard for Financial Instruments.”
Available-for-sale securities whose market quotations are available are stated at fair value. Net
unrealized gains or losses are reported as a separate component in net assets, net of applicable income
taxes. Gains and losses on disposition are computed based on the moving average method.
Available-for-sale securities whose market quotations are not available are stated at cost, cost being
determined by the moving average method.

2. Valuation of inventories
Inventories are stated at cost (write-down due to decreased profitability).
(1) Finished goods and work in process are evaluated using the specific identification method.
(2) Raw materials are evaluated using the moving average method.
(3) Supplies are stated at cost, cost being determined by the last purchase price method.
3. Method of depreciation or amortization(1) Property, plant and equipment (except for leased assets) are depreciated mainly on the
declining-balance method. In addition, buildings (except for facilities attached to buildings)
acquired on and after April 1, 1998 and facilities attached to buildings and structures acquired on
and after April 1, 2016 are depreciated on the straight-line method.
(2) Intangible assets (except for leased assets) are amortized on the straight-line method. In addition,
software for internal use is amortized on the straight-line method over estimated useful lives (5years).
(3) Depreciation of leased assets regarding finance leases other than those for which the ownership ofthe leased items is transferred to the lessee is computed with the straight-line method over the lease
period with no residual value.
(4) Long-term prepaid expenses are amortized on the straight-line method.
4. Allowances and provisions(1)

Allowance for doubtful accounts
The Company provides for estimated losses on accounts receivable based on prior bad debt
experience and a review of existing receivable balances. The Company reviews individual financial
condition for doubtful or troubled receivables and provides for losses on uncorrectable amounts. In
addition, general reserve for other accounts receivable is provided based on historical loss
experience for certain past periods.

(2)

Provision for bonuses for directors (and other officers)
The Company provides for estimated payment of bonuses to directors.

(3)

Provision for product warranties
The Company provides for estimated warranty costs based on the Company’s prior experience andestimated costs to be incurred individually calculated for certain products.

(4)

Provision for retirement benefits for directors (and other officers)
The Company provides for estimated cost for retirement benefits to directors based on the amountwhich would be payable under internal rules if all directors retired at fiscal year end date.

- 19 -

(5)Provision for retirement benefits
The Company provides for estimated cost for future severance payments to employees based on
actuarial present value of retirement benefit obligation and pension plan assets.
① Method of attributing projected benefit obligation to periods
In calculating retirement benefit obligation, projected benefit obligation attributed to thecurrent fiscal year is determined using the benefit formula basis.
② Calculation treatment for actuarial gains or losses
Actuarial gains or losses are amortized in the fiscal year following the fiscal year in which thegain or loss is recognized by the straight-line method over a fixed period (10 years), which isshorter than the average remaining years of service of the employees.

5. Hedge accounting
Designated hedge accounting ("Furiate-shori") is applied for foreign currency forward contracts thatmeet qualifications for designated hedge accounting.
6. Other(1) Accounting treatment for retirement benefits
The accounting treatment for unrecognized actuarial differences for retirement benefits differ fromthat of the consolidated financial statements.
(2) Consumption taxes
Transactions are recorded at amounts exclusive of consumption tax and regional consumption tax.
Notes to Balance Sheet
In Thousands of Yen
1. Accumulated depreciation of property, plant and equipment¥

20,012,257

2. Receivables from and payables to subsidiaries and affiliates:
Short-term receivables
Short-term payables¥¥

30,474,320
282,756

3. Land revaluation
Pursuant to the Law Concerning Revaluation of Land (Law No. 34, March 31, 1998) and the Law toPartially Amend the Law Concerning Revaluation of Land (Law No. 19, March 31, 2001), theCompany revalued land used for business activities on March 31, 2002.
Pursuant to the Law to Partially Amend the Law Concerning Revaluation of Land (Law No. 24, March
31, 1999), the effect of this revaluation has been recorded as deferred tax liabilities for land revaluationin liabilities and as revaluation reserve for land in net assets.
Revaluation was carried out based on an amount rationally calculated using the land value for local
government tax and roadside land assessment as prescribed in Article 2, Paragraph 3 and Article 2,
Paragraph 4 of the Ordinance Implementing the Law Concerning Revaluation of Land (No. 119 of the1998 Cabinet Order, promulgated on March 31, 1998), respectively.
Revaluation date
Difference between the market value at the end of the fiscal year
ended March 31, 2020 and the carrying amount of the land after
the revaluation- 20 -March 31, 2002¥(2,456,194) thousand

Notes to Statement of Income
In Thousands of Yen
1. Transactions with subsidiaries and affiliates:
Operating transaction
Net sales
Goods purchased
Selling, general and administrative expenses
Non-operating transaction
2. Write-down due to decreased profitability of inventories held forsale in the ordinary course of business
Cost of sales

¥
¥
¥
¥

2,693,302
3,134,823
19,156
31,946¥(109,532)

Notes to Statement of Change in Net Assets
Class and number of treasury stock
Class of stock
Common stock

As of April 1, 2019

Increase

1,828,270

Decrease
399

As of March 31, 2020－

1,828,669(Major cause of movement)
Increase of treasury stock is due to acquisition of shares less than one unit.
Deferred Tax Assets and Liabilities
1. The significant components of deferred tax assets and liabilities were as follows:
In Thousands of Yen
Deferred tax assets
Inventories
Accrued enterprise tax and business office tax
Provision for product warranties
Provision for retirement benefits
Accrued bonuses
Buildings, structures, machinery and equipment
Land
Investment securities
OthersSubtotal
Valuation allowance
Total deferred tax assets¥

29,073
66,85642,1591,081,600
287,274
44,924569,306
146,604
378,426
2,646,226(1,020,057)
1,626,169

In Thousands of Yen
Deferred tax liabilities
Valuation difference on available-for-sale securities
OthersTotal deferred tax liabilities
Deferred tax assets (Net)¥(1,059,679)(8,880)(1,068,560)
557,609

2. Deferred tax assets in relation to revaluation reserve for land
In Thousands of Yen
Deferred tax assets
Unrealized loss on land revaluation
Valuation allowance
Deferred tax assets (Net)
Deferred tax liabilities
Unrealized gain on land revaluation
Deferred tax liabilities (Net)- 21 -¥

923,260(923,260)－¥(616,302)(616,302)

Related Party Transactions
Related party transactions are as follows:
Parent company and major corporate shareholders, etc.

Type

Parentcompany

Name ofthe relatedcompany

Capital(inthousandsof Yen)Description ofbusiness or
occupation

Equityownership
percentage

Relationship of relatedcompany
Interlocking
directorate

BusinessrelationshipTransaction
Nature ofamounttransactions (in thousandsof Yen)Sale ofspecially
Manufacture
Crossequippedand sale ofcompany
vehicles as
Toyotaautomobiles,(owned)transfer
Deposits
well as saleIndustries
80,462,672 industrial
direct2 personspaid (Net)and purchase※
Corporation
vehicles, and52.2%of their
textileEmployeeparts;
machinery, etc.
1 person
deposits of
funds

Note:

5,007,484

Balance at
year-end
Account(in thousandsof Yen)Deposits
paid

Commercial terms and condition※ With regards to deposits paid, the Company conducted transactions using CMS (CashManagement Service) operated by Toyota Industries Corporation, and charged interest on deposits
paid in accordance with market interest rates. Transaction amount is indicated on the net value
basis.
Per Share Information
In YenNet assets per share
Profit per share¥

850.4459.84

Notes to Subsequent Event
There is no applicable item.
Notes to Companies to Which the Restriction on Consolidated Dividends Applies
There is no applicable item.
Other Notes
There is no applicable item.

Notice to Readers:
The amounts in thousands of yen in the accompanying financial statements are stated, omitting any fractionalsums.

- 22 -

29,293,978

Audit Report(English Translation*)

The Audit and Supervisory Committee has audited the performance of duties by the Directors of AICHICORPORATION (hereinafter referred to as the "Company") during its 72nd fiscal term, from April 1, 2019 toMarch 31, 2020. We hereby reports as follows regarding the methods and results of our audit.
1. Methods and Contents of our Audit
The Audit and Supervisory Committee received reports periodically from Directors, employees and otherrelevant personnel about the details of Board of Directors’ resolutions concerning the matters set forth in Article399-13, Paragraph 1, Item 1(b) and (c) of the Companies Act, as well as the establishment and operational statusof the system maintained (internal control system) based on such resolutions, and then requested explanations asnecessary, expressed opinions and conducted the audit through the methods described below.
(i) Following the auditing policies, allocation of duties and other relevant matters established by the Audit
and Supervisory Committee, and cooperating with the audit division (internal control division) of theCompany, we participated in important meetings, received reports from the Directors on mattersregarding performance of their duties, requested explanations as necessary, reviewed important
approval documents and relevant materials, and inspected the status of operations and financial
positions at the head office and principal business offices. With respect to subsidiaries, wecommunicated and exchanged information with Directors, Auditors and other relevant personnel ofsubsidiaries, and received reports from subsidiaries on their business as necessary.
(ii) We examined the particulars to be given due consideration pursuant to Article 118, Item 5(a) as well as
the judgment and the reason pursuant to Article 118, Item 5(b) of the Regulation for Enforcement of theCompanies Act set forth in the business report, based on the status of deliberations at the meetings ofthe Board of Directors and others.
(iii) We monitored and verified whether the Accounting Auditor maintained its independence andimplemented appropriate audits, and received reports from the Accounting Auditor regarding theperformance of its duties and requested explanations as necessary. In addition, we received notice fromthe Accounting Auditor that “systems for ensuring that the performance of the duties of the Accounting
Auditor is being carried out correctly” (matters set forth in each item of Article 131 of the Regulation
on Corporate Accounting) were prepared in accordance with the Quality Control Standards for Audits(Business Accounting Council on October 28, 2005) and other relevant standards, and requested
explanations as necessary.
Based on the above methods, we examined the business report and the supplementary schedules thereof, thefinancial statements (balance sheet, statement of income, statement of changes in equity and notes to financial
statements) and the supplementary schedules thereof, as well as the consolidated financial statements(consolidated balance sheet, consolidated statement of income, consolidated statement of changes in equity andnotes to consolidated financial statements) for the current fiscal year.
2. Results of the Audits(1) Results of audit of business report and other relevant documents(i) In our opinion, the business report and the supplementary schedules thereof are in accordance with therelated laws and regulations, and the Articles of Incorporation, and fairly represent the Company’s
condition.
(ii) We have found no evidence of wrongful action or material violation of related laws and regulations or
the Articles of Incorporation, related to the performance of duties by the Directors.
(iii) In our opinion, the contents of the resolutions of the Board of Directors related to the internal controls
system are fair and reasonable. In addition, we have found no matters to remark regarding thedescription in the business report and the performance of duties by the Directors related to such internal
controls system.
(iv) With respect to the transaction with the parent companies and other parties as described in the business
report, we found no matters to remark regarding the particulars to be given due consideration so that theinterest of the Company will not be harmed when executing such transaction, as well as the judgment
made by the Board of Directors and the reason thereof regarding whether or not such transaction will
harm the interest of the Company.

- 23 -

(2) Results of audit of financial statements and supplementary schedules thereof
In our opinion, the methods and results employed and rendered by PricewaterhouseCoopers Aarata LLC are
fair and reasonable.
(3) Results of audit of consolidated financial statements
In our opinion, the methods and results employed and rendered by PricewaterhouseCoopers Aarata LLC are
fair and reasonable.
May 28, 2020
Audit and Supervisory Committee, AICHI CORPORATION
Audit and Supervisory Committee Member
Shigehiro Takatsuki
Audit and Supervisory Committee Member
Takushi Ito
Audit and Supervisory Committee Member
Kiyoshi Tojo
Audit and Supervisory Committee Member
Kenji Aonuma(Note) Audit and Supervisory Committee Members, Mr. Shigehiro Takatsuki, Mr. Takushi Ito, and Mr. Kiyoshi
Tojo are Outside Directors as stipulated in Article 2, Item 15 and Article 331, Paragraph 6 of theCompanies Act.

* The original audit report is in Japanese. This English translation is for readers' convenience and reading thistranslation is not a substitute for reading the original audit report in Japanese.

- 24 -