AICHI CORPORATION
Audited Financial Statements(English Translation)

March 31, 2019

Independent Auditors’ Report(English Translation*)
May 16, 2019
To the Board of Directors of AICHI CORPORATION
PricewaterhouseCoopers Aarata LLC
Kosaku Kawahara, CPA
Designated Limited Liability Partner, Engagement Partner
Yoshiyuki Ohashi, CPA
Designated Limited Liability Partner, Engagement Partner

We have audited, pursuant to Article 444 (4) of the Companies Act of Japan, the consolidated financial
statements, which consist of the consolidated balance sheet, consolidated statement of income, consolidated
statement of changes in equity and notes to consolidated financial statements of AICHI CORPORATION(hereinafter referred to as the "Company") for the fiscal year from April 1, 2018 to March 31, 2019.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inconformity with accounting principles generally accepted in Japan, including establishing and operating internal
control that management determines is necessary to enable the preparation and fair presentation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements from an independent
standpoint based on our audit. We conducted our audit in accordance with auditing standards generally acceptedin Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected and adopted depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
preparation and fair presentation of the consolidated financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theinternal control. An audit also includes evaluating the appropriateness of accounting policies used bymanagement, the method of application of the policies, and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Audit Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, thefinancial position and the 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.
Interest
We have no interest in or relationship with the Company which is required to be disclosed pursuant to theprovisions 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.
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AICHI CORPORATION
Consolidated Balance Sheet
As of March 31, 2019
In Thousands of Yen
AssetsCurrent assets:
Cash and deposits¥

1,442,894

Deposits paid

24,286,493

Notes and accounts receivable – trade24,159,059

Finished goods

1,470,999

Work in process

1,644,939

Raw materials and supplies

1,258,816

Other

610,479

Allowance for doubtful accounts(82)

Total current assets

54,873,600

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

8,246,952

Machinery, equipment and vehicles

2,698,089

Tools, furniture and fixtures

312,063

Land

8,525,575

Construction in progress

133,835

Other

394,234

Total property, plant and equipment

20,310,751

Intangible assets

1,015,904

Investments and other assets:
Investment securities

6,576,365

Deferred tax assets

304,456

Other

1,486,882

Allowance for doubtful accounts(5,784)

Total investments and other assets

8,361,920

Total non-current assets

29,688,576

Total assets¥-2-

84,562,176

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¥

10,311,428
1,281,952
32,000201,738
3,045,582
14,872,702

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

616,30244,1003,401,625
372,567
4,434,596
19,307,299

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

10,425,325
9,923,356
44,118,766(917,709)
63,549,738

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-3-

3,441,100(1,624,044)(182,650)
70,733¥

1,705,138
65,254,877
84,562,176

AICHI CORPORATION
Consolidated Statement of Income
Fiscal Year from April 1, 2018 to March 31, 2019
In Thousands of Yen
Operating revenue:
Net sales¥

61,838,950

Operating costs and expenses:
Cost of sales

47,832,283

Gross profit

14,006,667

Selling, general and administrative expenses

7,006,595

Operating profit

7,000,072

Non-operating income:Interest and dividend income

155,363

Foreign exchange gains

31,498

Other

208,480
395,342

Non-operating expenses:
Other

2,204
2,204
Ordinary profit

7,393,210

Extraordinary income:Gain on sales of non-current assets

22

Gain on sales of investment securities

413,690413,712Extraordinary losses:
Loss on sales of investment securities

6,150

Loss on sales of non-current assets

479

Loss on retirement of non-current assets

23,272

Impairment loss

395
30,297

Profit before income taxes

7,776,626

Income taxes – current

2,378,500

Income taxes – deferred(126,929)

Profit5,525,055

Profit attributable to owners of parent-4-¥5,525,055

AICHI CORPORATION
Consolidated Statement of Changes in Equity
Fiscal Year from April 1, 2018 to March 31, 2019
(In Thousands of Yen)
Shareholders’ equity

Items
Balance at the beginning of current
periodSharecapitalCapitalsurplus10,425,325

Retainedearnings

9,923,356

Total
shareholders’equityTreasuryshares40,301,476(917,134)

59,733,023

Changes in items during period
Dividends of surplus(1,707,764)(1,707,764)

Profit attributable to owners ofparent5,525,055

5,525,055

Purchase of treasury shares
Net changes of items other thanshareholders' equity
Total changes in items during
periodBalance at the end of current period

(575)

(575)

－

－

3,817,290(575)

3,816,715

10,425,325

9,923,356

44,118,766(917,709)

63,549,738

Accumulated other comprehensive income

Items

Valuation difference
on available-for-sale securities

Balance at the beginning ofcurrent period

Foreign currencytranslation
adjustment

Revaluation reserve for land
3,199,125(1,624,044)

75,631

Changes in items during period
Dividends of surplus
Profit attributable to owners ofparentPurchase of treasury shares
Net changes of items other thanshareholders' equity
Total changes in items during
periodBalance at the end of current
period241,975(258,281)

241,975－(258,281)

3,441,100(1,624,044)(182,650)

Accumulated other comprehensive income

Items
Remeasurements of defined benefit plans
Balance at the beginning ofcurrent period(433,505)

Total accumulated other comprehensive
income1,217,206

Total net assets

60,950,230

Changes in items during period
Dividends of surplus(1,707,764)

Profit attributable to owners ofparent5,525,055

Purchase of treasury shares(575)

Net changes of items other thanshareholders' equity
Total changes in items during
periodBalance at the end of current
period-5-504,238

487,932

487,932

504,238

487,932

4,304,647

70,733

1,705,138

65,254,877

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 4 subsidiaries are included in
the consolidated financial statements.
Name of the consolidated subsidiaries
Aichi Training Center Co., Ltd.
Zhejiang Aichi Industrial Machinery Co., Ltd.
AICHI NZ LIMITEDAICHI AUS PTY LTD

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 (computed by reducing the book value to reflect deterioration in
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.
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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 lease assets) are depreciated mainly on the
declining-balance method. In addition, buildings (except for its accessory structures) acquired
on and after April 1, 1998 and accessory structures of buildings and structures acquired on andafter April 1, 2016 are depreciated on the straight-line method.

②

Intangible assets (except for lease 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 to eight 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 and corporate auditors.

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 for certain products.

④

Provision for retirement benefits for directors (and other officers)
The Company provides for estimated cost for retirement benefits to directors and corporate
auditors based on the amount which would be payable under internal rules if all directors andcorporate auditors 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 and prior service costs
Prior service costs are amortized as incurred by the straight-line method over a fixed period (10years), which are shorter than the average remaining years of service of the employees.
Actuarial gains or losses are amortized in the fiscal year following the fiscal year in which thegain or loss is recognized primarily by the straight-line method over a fixed period (10 years),
which is shorter than the average remaining years of service of the employees.

(5) Hedge accounting
Hedge accounting is applied for foreign currency forward contracts when certain conditions are met.

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(6) Other important matters for preparing consolidated financial statements
Consumption taxes
Consumption taxes are separately recorded at each transaction.
Changes of Presentation Method
Consolidated Balance Sheet
The Company applied “Ministerial Ordinance to Partially Amend Regulation for Enforcement of theCompanies Act and Regulation on Corporate Accounting” (Ministry of Justice Ordinance No. 5, March 26,2018) which is associated with “Partial Amendments to Accounting Standard for Tax Effect Accounting”(ASBJ Statement No. 28, February 16, 2018) from the fiscal year ended March 31, 2019. Accordingly,
deferred tax assets are presented under “Investments and other assets” and deferred tax liabilities arepresented under “Non-current liabilities.”-8-Notes to Consolidated Balance Sheet
In Thousands of Yen(1) Accumulated depreciation of property, plant and equipment¥

19,345,621(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 lands 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 land revaluation 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 on the land revaluation dateabove and the carrying amount of the land after the revaluation

March 31, 2002¥(2,482,787) thousand

Notes to Consolidated Statement of Income
In Thousands of Yen
Amount of reduction in book value of inventories held for normal
sales purpose due to the lowered earnings
Cost of sales-9-¥110,305

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

As of April 1, 2018

Common stock

Increase

Decrease－

79,453,250

As of March 31, 2019－79,453,250(2) Stock acquisition rights, etc.
There is no applicable item.
(3) Cash dividends① Amount of cash dividends
Resolution
Annual generalshareholders’meeting on June21, 2018
Board meeting on
October 26, 2018

Class of stock

Amount of cash
dividends

Cash dividends
per share

Record dateCommon stock

Common stock

Effective date of
distribution(Thousands of Yen)
853,884

(Yen)
11.00

March 31, 2018

June 22, 2018853,880

11.00

September 30, 2018

November 28, 2018

② Dividends whose record date falls in the fiscal year ended March 31, 2019, but the effective dateof distribution falls in the fiscal year ending March 31, 2020
Resolution(Planned)
Annual generalshareholders’meeting on
June 21, 2019

Class of stock

Resource ofdividends

Amount of cash
dividends

Common stock

Retainedearnings(Thousands of Yen)
853,874- 10 -Cash dividends
per share

Record date

Effective dateof distribution

(Yen)
11.00

March 31, 2019

June 24, 2019

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, 2019 are as follows.
(In Thousands of Yen)
Consolidated balance
sheet amounts

Fair values

Differences① Cash and deposits

1,442,894

1,442,894－② Deposits paid

24,286,493

24,286,493－③ Notes and accounts
receivable – trade
Allowance for doubtful
accounts (※)

24,159,059(82)
24,158,976

24,158,976－④ Investment securities
Available-for-salesecurities

6,149,005

6,149,005－

Total assets

56,037,370

56,037,370－

10,311,428

10,311,428－⑤

Notes and accounts
payable – trade⑥

Income taxes payable

Total liabilities⑦

Derivative transactions

1,281,952

1,281,952－

11,593,381

11,593,381

－

－

－

－

(※) 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 ¥427,360 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.

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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.

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Notes to Rental Property
Disclosure is omitted as the information is insignificant.
Per Share Information
In YenNet assets per share
Profit per share¥

840.6471.18

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.

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Independent Auditors’ Report(English Translation*)
May 16, 2019
To the Board of Directors of AICHI CORPORATION
PricewaterhouseCoopers Aarata LLC
Kosaku Kawahara, CPA
Designated Limited Liability Partner, Engagement Partner
Yoshiyuki Ohashi, CPA
Designated Limited Liability Partner, Engagement Partner

We have audited, pursuant to Article 436 (2) i of the Companies Act of Japan, the financial statements, which
consist of the balance sheet, statement of income, statement of changes in equity and notes to financial
statements, and the supplementary schedules of AICHI CORPORATION (hereinafter referred to as the"Company") for the 71st fiscal year from April 1, 2018 to March 31, 2019.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements andsupplementary schedules in conformity with accounting principles generally accepted in Japan, including
establishing and operating internal control that management determines is necessary to enable the preparationand fair presentation of financial statements and the supplementary schedules that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements and supplementary schedules from an
independent standpoint based on our audit. We conducted our audit in accordance with auditing standards
generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements and the supplementary schedules are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements and the supplementary schedules. The procedures selected and adopted depend on theauditor’s judgment, including the assessment of the risks of material misstatement of the financial statements
and the supplementary schedules, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the preparation and fair presentation of the financial statements and the
supplementary schedules in order to design audit procedures that are appropriate in the circumstances, but notfor the purpose of expressing an opinion on the effectiveness of the internal control. An audit also includes
evaluating the appropriateness of accounting policies used by management, the method of application of thepolicies, and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements and the supplementary schedules.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Audit Opinion
In our opinion, the financial statements and the supplementary schedules referred to above present fairly, in allmaterial respects, the financial position and the results of operations for the period covered by the financial
statements and the supplementary schedules in conformity with accounting principles generally accepted inJapan.

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Interest
We have no interest in or relationship with the Company which is required to be disclosed pursuant to theprovisions 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.

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AICHI CORPORATION
Balance Sheet
As of March 31, 2019
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
Total current assets
Non-current assets:
Property, plant and equipment:
Buildings
Structures
Machinery and equipment
VehiclesTools, furniture and fixtures
Land
Construction in progress
Other
Total property, plant and equipment
Intangible assets:
Right to use water facilities
Software
Other
Total intangible assets
Investments and other assets:
Investment securities
Shares of subsidiaries and associates
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- 16 -¥

409,601
24,286,493
4,250,508
2,405,509
17,698,709
1,303,393
1,570,422
901,923554,950
579,097
53,960,609

6,993,087
883,6452,366,373
3,825
274,292
8,525,575
129,084394,234
19,570,118
1,128
531,550
19,851
552,530¥

6,576,365
30,0001,220
1,565,576
425,355
94,71859,43564,336(5,784)
8,811,223
28,933,872
82,894,481

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

1,424,910

Electronically recorded obligations – operating

4,133,664

Accounts payable – trade

4,870,413

Accounts payable – other815,345

Income taxes payable

1,255,127

Accrued expenses

1,470,449

Deposits received

257,385

Unearned revenue

371

Provision for bonuses for directors (and other officers)

32,000

Provision for product warranties

201,738

Notes payable - facilities

162,745

Electronically recorded obligations – facilities

26,744Other

90,444
Total current liabilities

14,741,341

Non-current liabilities:
Deferred tax liabilities for land revaluation

616,302

Provision for retirement benefits for directors (and other officers)

44,100

Provision for retirement benefits

3,487,730

Other372,567
Total non-current liabilities

4,520,701

Total liabilities

19,262,043

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

42,365,910

Retained earnings brought forward

42,365,910

Total retained earnings

42,365,910

Treasury shares(917,709)

Total shareholders’ equity

61,815,381

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

3,441,100

Revaluation reserve for land

(1,624,044)

Total valuation and translation adjustments

1,817,055

Total net assets

63,632,437

Total liabilities and net assets¥- 17 -

82,894,481

AICHI CORPORATIONStatement of Income
Fiscal Year from April 1, 2018 to March 31, 2019
In Thousands of Yen

Operating revenue:
Net sales¥

61,030,688

Operating costs and expenses:
47,874,374

Cost of sales

13,156,314

Gross profit

6,598,601

Selling, general and administrative expenses

6,557,713

Operating profit

Non-operating income:Interest and dividend income

331,042

Foreign exchange gains

62,713

Other

50,728444,484

Non-operating expenses:
30

Interest expense

1,800

Other

1,831
7,000,367

Ordinary profit

Extraordinary income:22

Gain on sales of non-current assets

413,690

Gain on sales of investment securities

413,712Extraordinary losses:
64

Loss on sales of non-current assets

23,009Loss on retirement of non-current assets

395

Impairment loss

6,150

Loss on sales of investment securities

29,619Profit before income taxes

7,384,460

Income taxes – current

2,339,304

Income taxes – deferred(145,229)

Profit¥- 18 -

5,190,385

AICHI CORPORATIONStatement of Changes in Equity
Fiscal Year from April 1, 2018 to March 31, 2019
(In Thousands of Yen)
Shareholders’ equity
Items

Balance at the beginning of current
periodCapital surplus

SharecapitalLegal capital surplus

10,425,325

Other capital surplus

Total capital surplus

9,941,842

13

9,941,856

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

－

－

－

－

Balance at the end of current period

10,425,325

9,941,842

13

9,941,856

Shareholders’ equity
Items

Retainedearnings
Other retained earnings
Retained earnings brought
forwardBalance at the beginning of current
periodTotal
shareholders’equityTreasurysharesTotal retained
earnings

38,883,289

38,883,289(917,134)

58,333,336

Dividends of surplus(1,707,764)(1,707,764)(1,707,764)

Profit5,190,385

5,190,385

5,190,385

Changes in items during period

Purchase of treasury shares

(575)

(575)

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

3,482,620

3,482,620(575)

3,482,045

Balance at the end of current period

42,365,910

42,365,910(917,709)

61,815,381

Valuation and translation adjustments
Items

Balance at the beginning of current period

Valuation difference on
available-for-salesecurities

Revaluation reserve forland

3,199,125(1,624,044)

Total valuation andtranslation adjustments
1,575,080

Total net assets

59,908,417

Changes in items during period
Dividends of surplus(1,707,764)

Profit5,190,385

Purchase of treasury shares(575)

Net changes of items other thanshareholders' equity

241,975

Total changes in items during period

241,975

Balance at the end of current period

3,441,100- 19 -

241,975

241,975－

241,975

3,724,020(1,624,044)

1,817,055

63,632,437

AICHI CORPORATION
Notes to Financial Statements
Significant Accounting Policies(1) Valuation of securities
Securities are classified in accordance with “Accounting Standard for Financial Instruments.”
Investments in subsidiaries and affiliates are stated at cost, cost being determined by the moving
average method.
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 (computed by reducing the book value to reflect deterioration in
profitability).
Finished goods and work in process are evaluated using the specific identification method.
Raw materials are evaluated using the moving average method.
Supplies are stated at cost, cost being determined by the last purchase price method.
(3) Method of depreciation or amortization
Property, plant and equipment (except for lease assets) are depreciated mainly on the declining-balancemethod. In addition, buildings (except for its accessory structures) acquired on and after April 1, 1998
and accessory structures of buildings and structures acquired on and after April 1, 2016 are depreciatedon the straight-line method.
Intangible assets (except for lease assets) are amortized on the straight-line method. In addition,
software for internal use is amortized on straight-line method over estimated useful lives (5 years).
Goodwill is amortized on the straight-line method over eight years.
Depreciation of leased assets regarding finance leases other than those for which the ownership of theleased items is transferred to the lessee is computed with the straight-line method over the lease periodwith no residual value.
Long-term prepaid expenses are charged to income on the straight-line method.
(4) 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 and corporate auditors.

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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 and corporate auditors
based on the amount which would be payable under internal rules if all directors and corporate
auditors retired at fiscal year end date.
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 and prior service costs
Prior service costs are amortized as incurred by the straight-line method over a fixed period (10years), which are shorter than the average remaining years of service of the employees.
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
Hedge accounting is applied for foreign currency forward contracts when certain conditions are met.
(6) Other① Accounting treatment for retirement benefits
The accounting treatment for unrecognized actuarial differences for retirement benefits andunrecognized prior service costs differ from that of the consolidated financial statements.
② Consumption taxes
Consumption taxes are separately recorded at each transaction.
Changes of Presentation Method
Balance Sheet
The Company applied “Ministerial Ordinance to Partially Amend Regulation for Enforcement of theCompanies Act and Regulation on Corporate Accounting” (Ministry of Justice Ordinance No. 5, March 26,2018) which is associated with “Partial Amendments to Accounting Standard for Tax Effect Accounting”(ASBJ Statement No. 28, February 16, 2018) from the fiscal year ended March 31, 2019. Accordingly,
deferred tax assets are presented under “Investments and other assets” and deferred tax liabilities arepresented under “Non-current liabilities.”- 21 -

Notes to Balance Sheet
In Thousands of Yen(1) Accumulated depreciation of property, plant and equipment¥

18,643,431(2) Receivables from and payables to subsidiaries and affiliates:
Short-term receivables
Short-term payables¥¥

26,513,887
412,898(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 on the land revaluation dateabove and the carrying amount of the land after the revaluation

March 31, 2002¥(2,482,787) 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

¥
¥
¥
¥

3,559,966
4,514,550
8,870
29,122¥

92,075

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

As of April 1, 2018

Increase

1,827,418

Decrease
852

As of March 31, 2019－

(Major cause of movement)
Increase of treasury stock is due to acquisition of shares less than one unit.

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1,828,270

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 office tax payable
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

67,91481,36761,4491,062,362
324,361
61,162569,082
146,604
316,867
2,691,172(955,142)
1,736,030

In Thousands of Yen
Deferred tax liabilities
Valuation difference on available-for-sale securities
OthersTotal deferred tax liabilities
Deferred tax assets (Net)¥(1,301,794)(8,880)(1,310,674)
425,355(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)923,260(923,260)－¥- 23 -(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:

(829,924)

Account

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

24,286,493

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¥

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.

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819.7466.86

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.

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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 71st fiscal term, from April 1, 2018 toMarch 31, 2019. We hereby reports as follows regarding the methods and results of our audit.
1. Methods and Contents of our Audit(1) 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
Article 399-13, Paragraph 1, Item 1(b) and (c) of the Companies Act, as well as the establishment andoperational status of the system maintained (internal control system) based on such resolutions, and thenrequested explanations as necessary, 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), we
participated in important meetings, received reports from the Directors on matters regarding
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 thehead office and principal business offices. With respect to subsidiaries, we communicated andexchanged information with, Directors, Auditors and other relevant personnel of subsidiaries, andreceived 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) related to the relevant 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.

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(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 23, 2019
Audit and Supervisory Committee, AICHI CORPORATION
Audit and Supervisory Committee Member
Takeshi Suzuki
Audit and Supervisory Committee Member
Shigehiro Takatsuki
Audit and Supervisory Committee Member
Takushi Ito
Audit and Supervisory Committee Member
Satoru Kawataki(Note) Audit and Supervisory Committee Members, Mr. Takeshi Suzuki, Mr. Shigehiro Takatsuki and Mr.
Takushi Ito 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.

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