CONSOLIDATED FINANCIAL STATEMENTS
TAMURA CORPORATIONAS OF MARCH 31, 2020

Independent Auditor’s Report

The Board of Directors
TAMURA CORPORATION
OpinionWe have audited the accompanying consolidated financial statements of TAMURACORPORATION and its consolidated subsidiaries (the Group), which comprise the consolidatedbalance sheet as at March 31, 2020, and the consolidated statements of income, comprehensive
income, changes in net assets, and cash flows for the year then ended, and notes to the consolidated
financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2020, and its
consolidated financial performance and its consolidated cash flows for the year then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our audit of theconsolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management, the Corporate Auditor and the Board of Corporate
Auditors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with accounting principles generally accepted in Japan, and forsuch internal control as management determines is necessary to enable the preparation of
consolidated 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 theGroup’s ability to continue as a going concern and disclosing, as required by accounting principles
generally accepted in Japan, matters related to going concern.
The Corporate Auditor and the Board of Corporate Auditors are responsible for overseeing theGroup’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:・ Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive tothose risks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the consolidated financial statements is not expressing an opinion on the effectiveness of theGroup’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation inaccordance with accounting principles generally accepted in Japan.
・ Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the groupaudit. We remain solely responsible for our audit opinion.
We communicate with the Corporate Auditor and the Board of Corporate Auditors
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 Corporate Auditor and the Board of Corporate Auditors with a statement that
we have complied with the ethical requirements regarding independence that are relevant to our
audit of the financial statements in Japan, and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and whereapplicable, related safeguards.

Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect tothe year ended March 31, 2020 are presented solely for convenience. Our audit also included thetranslation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation
has been made on the basis described in Note 1(a) to the consolidated financial statements.

Ernst & Young ShinNihon LLC
Tokyo, Japan
July 30, 2020
Takaki Hirota
Designated Engagement Partner
Certified Public Accountant
Yohei Ikeda
Designated Engagement Partner
Certified Public Accountant

TAMURA CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED BALANCE SHEET

Thousands of
U.S. dollars(Note 1(a))
March 31,
2020

Millions of yen
March 31,
2020
2019
ASSETS
Current Assets :Cash on hand and in banks (Notes 5 and 6)¥

16,669¥15,990$152,927

Trade notes and accounts receivable (Note 6)

20,853

22,100191,312Inventories (Note 8)

13,197

13,424

121,073

Other current assets

2,476

2,853

22,716

(81)

(58)

(743)

53,11454,309487,285

Buildings and structures

20,23921,007

185,679

Machinery and equipment

26,66826,098244,661

Lease assets

4,233

891

38,835

51,14047,996469,175(31,493)(32,175)(288,927)

Allowance for doubtful accounts
Total current assets
Property, Plant and Equipm ent: (N ote 16)

Accumulated depreciation

19,647

15,821

180,248

Land

5,136

5,159

47,119Construction in progress

1,899

1,515

17,422

26,682

22,495

244,789

1,329

1,719

12,193subsidiaries and affiliates

2,461

2,256

22,578Net defined benefit asset (Note 10)

2,346

1,994

21,523

628

1,189

5,761

Property, plant and equipment, net
Investm ents and Other Assets:
Investment securities in other than non-consolidated

subsidiaries and affiliates (Notes 6 and 7)
Investment securities in non-consolidated

Deferred tax assets (Note 15)
Intangible assets

1,490

1,581

13,670

Other assets

611

593

5,605

Allowance for doubtful accounts

(68)

(63)

(624)

Total investments and other assets

8,797

9,269

80,706

Total assets¥

The accompanying notes are an integral part of these statements.

2

88,593¥86,073$

812,780

Millions of yen
March 31,
2020
2019

Thousands of
U.S. dollars(Note 1(a))
March 31,2020

11,943$

L IABIL IT IES AN D N ET ASSET
Current L iabilities :Trade notes and accounts payable (Note 6)¥

Short-term loans (Notes 6 and 9)¥

12,095109,569

4,924

7,591

45,174Current portion of long-term debt (Notes 6 and 9)

309

282

2,835

Lease obligations (Notes 6 and 9)

973

195

8,927

Income taxes payable (Note 6)

394

824

3,615

Accrued bonuses

923

1,055

8,468

Accrued bonuses for directors

46

75

422

2,858

3,294

26,22022,37025,411

205,230

Long-term debt (Notes 6 and 9)

13,586

9,279

124,642

Lease obligations (Notes 6 and 9)

2,506

531

22,991

Deferred tax liabilities (Note 15)

92

94

844

2,920
455

3,136
467

26,7894,174

19,55913,507

179,440

11,82911,829108,523

Additional paid-in capital

17,01917,038156,138

Retained earnings

19,121

18,924

175,422

(256)

(274)

(2,349)47,71347,517437,734(268)

78(2,459)

0

－

0

(402)

(37)

(3,688)Other current liabilities
Total current liabilities
L ong-term L iabilities :Net defined benefit liability (Note 10)
Other long-term liabilities
Total long-term liabilities
N et Assets
Shareholders' Equity:
Common stock:
Authorized - 252,000,000 shares
Issued and outstanding – 82,771,473 shares

Treasury stock (Note 12)
Total shareholders' equity
Accumulated Other Comprehensive Income:Unrealized holding gain (loss) on securities
Deferred gain (loss) from hedging instruments(Notes 6 and 17)
Translation adjustments
Retirement benefits liability adjustments (Note 10)

(633)

(793)

(5,807)(1,303)(752)(11,954)

Share subscription rights

161

153

1,477

Non-controlling interests

93

237

853

Total accumulated other comprehensive income

Total net assets

46,664

T otal liabilities and net assets¥

The accompanying notes are an integral part of these statements.

3

88,59347,155¥86,073428,110$

812,780

TAMURA CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENT OF INCOME ANDCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME(CONSOLIDATED STATEMENT OF INCOME)

Thousands of
U.S. dollars(Note 1(a))

Millions of yen

Year ended
March 31,

Year ended March 31,
2020
N et Sales

¥

2019

79,655¥2020

87,008$730,780

Cost of Sales (N ote 14)

57,18561,448524,633

Gross profit

22,47025,560206,147

20,181

20,960185,147

2,289

4,600

21,000Interest and dividend income

157

146

1,440

Equity in earnings of affiliates

161

186

1,477

Interest expense

(321)

(235)

(2,945)

61

(70)

560

(101)

(32)

(927)

Other income

501

2,725

4,596

Other expenses

(277)

(204)

(2,541)

Selling, general and adm inistrative expenses(Notes 13, 14 and 21)
Operating income
Other Incom e (Expenses):Foreign exchange gain (loss)
Unrealized loss on derivative financial instruments

Profit before income taxes

181

2,516

1,660

2,470

7,116

22,660

862

1,363

7,908

Incom e T axes (N ote 15)
Current
DeferredP rofit

585

(652)

5,367

1,447

711

13,275

1,023

6,405

9,385

(1)

8

(9)

P roft attributable to:Non-controlling interests
Owners of parent

¥

1,024

¥

6,397

$

Yen

9,394
U.S. dollars

P er Share:
Basic profit attributable to owners of parent

¥

12.48

¥

78.00

$

0.11

Diluted profit attributable to owners of parent

12.40

77.51

0.11

Cash dividends per share

10.00

10.00

0.09

The accompanying notes are an integral part of these statements.

4

(CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME)

Thousands of
U.S. dollars(Note 1(a))

Millions of yen

Year ended
March 31,

Year ended March 31,
2020
Profit

¥

2019

1,023

¥

2020

6,405

$

9,385

Other Com prehensive Incom e (N ote 11):
Unrealized holding gain (loss) on securities
Deferred gain (loss) from hedging instruments
Translation adjustments
Retirement benefits liability adjustments
Share of other comprehensive income ofaffiliates accounted for by the equity method
Total other com prehensive incom e
Com prehensive incom e

(347)

(394)

0

－

(3,183)0(311)(1,348)(2,853)

159

422

1,459

(56)

(124)

(514)

(555)

(1,444)(5,091)

¥

468

¥

4,961

$

4,294

¥

461

¥

4,960

$

4,229

Total com prehensive incom e attributable to:
Owners of parent
Non-controlling interests

7

The accompanying notes are an integral part of these statements.

5

1

65

TAMURA CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENT OF CHANGES IN NET ASSETSFor the year ended March 31, 2020
Millions of yen
Shareholders’ equity
Number ofsharesissuedBalance at April 1, 2019

Additional
paid-inCommonstock

82,771,473¥

11,829capital¥Treasurystock(Note 12)

Total
shareholders'equity¥¥Retainedearnings

17,038¥18,924(274)

47,517

Changes during the year
Cash dividends paid
Profit attributable to ownersof parent for the period
Purchases of treasury stock
Disposal of treasury stock(1)

Changes in the Company's
equity due to transactions
with noncontrolling interests

(18)

(821)

(821)

1,024

1,024

(6)

(0)

(0)

18

11
(18)

Net changes in items otherthan those in shareholders’equity－Total changes during the year
Balance as of March 31, 2020

82,771,473－
11,829¥¥(19)
17,019¥197
19,121

18
(256)

¥

196
47,713¥

Millions of yen
Accumulated other comprehensive income
Unrealized

Balance at April 1, 2019
Changes during the year
Cash dividends paid
Profit attributable to ownersof parent for the period
Purchases of treasury stock
Disposal of treasury stock

Retirement

Total

benefits

accumulated

Deferredholding gain

gain(loss)

liability

other

Share

Non-

(loss) on

from hedging

Translation

adjustments

comprehensive

subscription

controllingsecurities

instruments

adjustments(Note 10)

incomerightsinterests

Total net
assets

¥

¥

¥

¥

78

－ ¥

(37) ¥(793) ¥

(752) ¥

153

237

(821)
1,024
(0)
11

Changes in the Company's
equity due to transactions
with noncontrolling interests(18)

Net changes in items otherthan those in shareholders’equityTotal changes during the year
Balance as of March 31, 2020

47,155

¥

(346)

0

(346)
(268) ¥

0
0

¥

(365)

160

(365)
(402) ¥

160
(551)(633) ¥ (1,303) ¥

6

(551)

8
8
161

(144)

¥

(144)
93 ¥

(687)
(491)
46,664

For the year ended March 31, 2019
Millions of yen
Shareholders’ equity
Number ofsharesissuedBalance at April 1, 201882,771,473

Additional
paid-inCommonstock¥

Retainedearnings

capital11,829¥17,037¥

13,346

Treasurystock(Note 12)

Total
shareholders'equity

¥

¥

(288)

41,924

Changes during the year
Cash dividends paid

(819)

(819)

Profit attributable toowners of parent forthe period

6,397

6,397

Purchases of treasury stock
Disposal of treasury stock
Net changes in items otherthan those in shareholders’equityTotal changes during the year
Balance as of March 31, 2019

1

(0)

(0)

(0)

14

15
－

82,771,473¥－
11,829¥1
17,038¥

5,578
18,924

14
(274)

¥

5,593
47,517¥

Millions of yen
Accumulated other comprehensive income
Retirement

Total

benefits

accumulated

Unrealized

liability

other

Share

Non-

(loss) on

Translation

adjustments

comprehensive

subscription

controllingsecurities

adjustments(Note 10)

incomerightsinterests¥¥

holding gain

Balance at April 1, 2018

472

1,428

¥

(1,215) ¥

685

¥

143

¥

244

Total net
assets¥42,996

Changes during the year
Cash dividends paid

(819)

Profit attributable toowners of parent forthe period

6,397

Purchases of treasury stock(0)

Disposal of treasury stock
Net changes in items otherthan those in shareholders’equityTotal changes during the year
Balance as of March 31, 2019

15

¥

(394)

(1,465)422(1,437)

10

(394)
78 ¥

(1,465)(37) ¥

422(793) ¥

(1,437)(752) ¥

10
153

7

¥

(7)

(1,434)

(7)
237 ¥

4,159
47,155

For the year ended March 31, 2020

Number ofsharesissuedBalance at April 1, 2019

Commonstock

82,771,473$

108,523

Thousands of U.S. dollars (Note 1(a))
Shareholders’ equity
Treasury
Additional
paid-in
Retained
stock
capitalearnings(Note 12)

Total
shareholders'equity$$156,312$

173,615$(2,514)435,936

Changes during the year
Cash dividends paid

(7,532)(7,532)

Profit attributable to ownersof parent for the period

9,394

9,394

Purchases of treasury stock
Disposal of treasury stock(9)

Changes in the Company's
equity due to transactions
with noncontrolling interests

(55)

(0)

(0)

165

101

(165)

(165)

Net changes in items otherthan those in shareholders’equityTotal changes during the year
Balance as of March 31, 2020

82,771,473$－
108,523$(174)
156,138$

1,807
175,422$165(2,349)$1,798
437,734

Thousands of U.S. dollars (Note 1(a))
Accumulated other comprehensive income
Unrealized

Balance at April 1, 2019
Changes during the year
Cash dividends paid

Deferred

Retirement

Total

benefits

accumulated

holding gain

gain(loss)

liability

other

Share

Non-

(loss) on

from hedging

Translation

adjustments

comprehensive

subscription

controllingsecurities

instruments

adjustments(Note 10)

incomerightsinterests

Total net
assets$$$ (7,275)$ (6,899)$ 1,404$ 2,174$ 432,615

715

－ $

(339)

(7,532)

Profit attributable to ownersof parent for the period

9,394

Purchases of treasury stock
Disposal of treasury stock

(0)
101

Changes in the Company's
equity due to transactions
with noncontrolling interests(165)

Net changes in items otherthan those in shareholders’equity(3,174)

Total changes during the year
Balance as of March 31, 2020

(3,174)$ (2,459)$

0(3,349)1,468(5,055)73

00(3,349)$ (3,688)

1,468$ (5,807)(5,055)$ (11,954)

73$ 1,477

The accompanying notes are an integral part of these statements.

8$(1,321)(6,303)(1,321)853(4,505)$ 428,110

TAMURA CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENT OF CASH FLOWSMillions of yen
Year ended March 31,
2020
Cash F lows from Operating Activities :Profit before income taxes
Depreciation
Changes in accrued bonuses
Changes in accrued bonuses for directors
Changes in allowance for doubtful accounts
Changes in net defined benefit liability
Interest and dividend income
Interest expense
Foreign exchange loss
Equity in earnings of affiliates
Loss (gain) on sales of investment securities
Changes in trade receivable
Changes in inventories
Changes in trade payable
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash F lows from Investing Activities :Transfers to time deposits
Purchase of tangible fixed assets
Proceeds from sale of tangible fixed assets
Purchase of investment securities
Proceeds from sale of investment securities
Proceeds from sale of affiliated companies
Other
Net cash used in investing activities
Cash F lows from F inancing Activities :Changes in short-term loans
Increase in long-term debt
Repayment of long-term debt
Repayment of lease obligations
Purchase of treasury stock
Proceeds from sales of treasury stock
Cash dividends paid
Cash dividends paid to non-controlling shareholders
Additional investments in consolidated subsidiaries
Net cash provided by (used in) financing activities
Effect of Exchange Rate Changes on Cash andCash Equivalents¥

N et Increa s e (Decrea s e) i n C a s h a nd C a s h Eq ui va l ent s

Cash and Cash Equivalents at the Beginningof the Year
Cash and Cash Equivalents at the Endof the Year (N ote 5)¥

The accompanying notes are an integral part of these statements.

9

2,470
3,266
(132)
(29)
29
(372)
(157)
321
51
(161)
0
1,067
44
(45)
545
6,897
266
(320)
(1,387)
5,456

Thousands of
U.S. dollars(Note 1(a))
Year ended
March 31,

2019
¥

7,116
2,219
(87)
10
(44)
(49)
(146)
235
7
(186)
(164)
(75)
(1,434)
(83)
(741)
6,578
261
(249)
(1,921)
4,669

2020
$

22,66029,963(1,211)(266)
266(3,413)(1,440)2,945
468(1,477)
0
9,789
404
(413)
5,000
63,2752,441(2,936)(12,725)
50,055(399)(4,438)
248
(297)
0
39
(126)
(4,973)－(6,302)
1,544
(43)
329
15
359
(4,098)(3,661)(40,716)2,275(2,725)0358(1,155)(45,624)(2,555)
4,557
(284)
(873)
(0)
0
(817)
(7)
(162)
(141)

3,321
4,831
(5,992)
(236)
(0)
0
(816)
(12)
－
1,096

(23,440)
41,807(2,606)(8,009)(0)0(7,495)(64)(1,486)(1,293)

(66)

(427)

(606)

276

1,240

2,532

15,841

14,601

145,330

16,117¥

15,841$

147,862

TAMURA CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies(a) Basis of presentation of the consolidated financial statements
The accompanying consolidated financial statements of TAMURACORPORATION (the “Company”) and its consolidated subsidiaries (collectively,
the “Companies”) are prepared on the basis of accounting principles generally
accepted in Japan, which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards, and havebeen compiled from the consolidated financial statements prepared by theCompany as required by the Financial Instruments and Exchange Law of Japan.
Certain items presented in the consolidated financial statements submitted to the
Director of Kanto Local Finance Bureau in Japan as required by the Financial
Instruments and Exchange Law of Japan have been reclassified for theconvenience of readers outside Japan.
Amounts in U.S. dollars are included solely for the convenience of readers outside
Japan. The rate of ¥109=U.S. $1, the approximate rate of exchange on March 31,
2020 has been used in translation. The inclusion of such amounts is not intended to
imply that Japanese yen have been or could be readily converted, realized or
settled in U.S. dollars at the above rate or any other rate.
(b) Principles of consolidation and accounting for investments in non-consolidated
subsidiaries and affiliates
The accompanying consolidated financial statements include the accounts of theCompany and, with the exception of entities which are not material, those of its 34
majority owned subsidiaries. All significant inter-company accounts andtransactions have been eliminated on consolidation.
Effective from the year ended March 31, 2020, TAMURA
AUTOMOTIVE-ELECTRONICS (FOSHAN) LTD. and TAMURA ELECTRONICS(SUZHOU) CO., LTD. were added as consolidated subsidiaries because they were
newly established by the Company.
Investments in non-consolidated subsidiaries and affiliates are carried at cost
since their total assets, net sales and the Company’s interests in their net income(loss), or retained earnings, in aggregate, do not have a material effect on the
consolidated financial statements.
The fiscal year end of the foreign consolidated subsidiaries is December 31. The
necessary adjustments for significant transactions between the fiscal year end of
the Company and the fiscal year end of the foreign consolidated subsidiaries, if any,
are made in the preparation of the consolidated financial statements.
(c) Financial instruments(1) Derivatives
All derivatives are stated at fair value, with changes in fair value included in
net profit or loss for the period in which they arise, except for derivatives
designated as “hedging instruments” (see Note 1(c)(3) Hedge accounting below).

10(2) Securities
Securities held by the Companies are classified as follows:
Available-for-sale securities with market values are stated at fair value. Net
unrealized gains and losses on these securities are reported as a separate
component of shareholders’ equity at a net-of-tax amount.
Available-for-sale securities without market values are stated at cost
determined by the moving average method, except as stated in the paragraphbelow.
In cases where the fair value of equity securities issued by non-consolidated
subsidiaries and affiliates, or available-for-sale securities, has declined
significantly and such impairment of the value is not deemed temporary, thesesecurities are written down to their fair value and the resulting losses areincluded in net profit or loss for the period.
(3) Hedge accounting
Deferral hedge accounting is adopted for derivatives which qualify as hedges,
under which unrealized gain or loss is deferred as a component of net assets.
The derivatives designated as hedging instruments by the Companies are
principally forward exchange contracts and interest rate swaps. The underlying
hedged items are trade accounts receivable and trade accounts payable
denominated in foreign currencies, forecast transactions denominated inforeign currencies and interest on long-term bank loans.
The Companies have a policy to utilize the above hedging instruments in orderto reduce the Companies’ exposure to the risk of exchange rate and interest rate
fluctuations. Thus, the Companies’ purchases of the hedging instruments arelimited to, at maximum, the amount of the hedged items.
The Companies evaluate the effectiveness of their hedging activities byreference to the accumulated gains or losses on the hedging instruments andthe underlying hedged items from the commencement of the hedges.
(d) Allowance for doubtful accounts
Allowance for doubtful accounts is provided based on past experience for normal
receivables and on an estimate of collectability of receivables from companies infinancial difficulty.
(e) Inventories
Inventories are principally stated at cost determined by the following methods:
・Finished goods and work-in-process:Electronic Components business, Electronic Chemicals business andInformation Equipment business: Mainly periodic average method(Inventories with lower profitability are written down)
FA Systems business: Specific identification method (Inventories with lower
profitability are written down)

11

・Merchandise and raw materials: Mainly periodic average method (Inventories
with lower profitability are written down)
・Supplies: Mainly last purchase price method (Inventories with lower
profitability are written down)(f) Property, plant and equipment, and depreciation (excluding lease assets)
Property, plant and equipment, including significant capital expenditures andadditions, are stated at cost and are principally depreciated using thedeclining-balance method at rates based on the estimated useful lives of the assets.
Repairs and maintenance expenses are charged to income as incurred.
Intangible assets are amortized by the straight-line method over their respective
estimated useful lives.
(g) Accrued bonuses
The Company and its domestic consolidated subsidiaries have provided theestimated amounts of bonus to employees.
(h) Reserve for directors’ bonus
The Company and its domestic consolidated subsidiaries have provided theestimated amounts of directors’ bonus as a reserve for directors’ bonus.
(i) Reserve for retirement benefits
The reserve for retirement benefits represents the estimated present value of
projected benefit obligations in excess of the fair value of the plan assets.
The unrecognized prior service costs are amortized on a straight-line basis over a
period of 12 years from the year in which they arise. The unrecognized actuarial
differences are amortized on a straight-line basis over a period of 5 to 12 years fromthe year following the year in which they arise.
(j) Reserve for loss of transfer
Reserve for loss on office transfer, etc. for consolidated subsidiaries is provided at
the estimated amount of future loss related to non-cancelable periods of real estateleasing contracts.
(k) Amortization of goodwill
Goodwill is amortized on a straight-line basis over 10 years.
(l) Income taxes
The income taxes of the Company and its domestic consolidated subsidiaries
consist of corporate income taxes, local inhabitant taxes and enterprise taxes.
Deferred income taxes were determined using the assets and liabilities approach,whereby deferred tax assets and liabilities were recognized in respect of temporary
differences between the tax basis of assets and liabilities and those as reported in
the financial statements.

12Deferred tax assets relating to tax loss carryforwards are recorded because theJapanese accounting standard requires that the benefit of tax loss carryforwards
be estimated and recorded as an asset, with deduction of a valuation allowance if it
is expected that some portion or all of the deferred tax assets will not be realized.
(m) Foreign currency translation
All monetary assets and liabilities of the Company and its domestic consolidated
subsidiaries denominated in foreign currencies, whether long-term or short-term,
are translated into Japanese yen at the exchange rates prevailing at the balance
sheets dates. The foreign exchange gains and losses from translation arerecognized in the statements of income to the extent that they are not hedged byforward exchange contracts. Revenue and expenses are translated using the
average exchange rates for the respective periods.
The balance sheet accounts of the foreign consolidated subsidiaries are translated
into yen at the rate of exchange in effect at the balance sheet date. Revenue
accounts and expense accounts of the foreign consolidated subsidiaries aretranslated into yen at the average exchange rate for the year. Differences arisingfrom the translation are presented as translation adjustments and minority
interests in the consolidated financial statements.
(n) Accounting for consumption tax
Transactions subject to consumption taxes are recorded at amounts exclusive ofconsumption taxes.
(o) Profit per share
Basic profit per share of common stock is computed on the basis of the weighted
average number of shares of common stock outstanding during the respective
years, and diluted profit per share of common stock is computed on the basis of theweighted average number of shares of common stock outstanding during therespective year after giving effect to the dilutive potential of shares of common
stock to be issued upon the exercise of stock options. Cash dividends per sharerepresent the dividends declared as applicable to the respective period.
The basis of the calculation of basic profit per share and diluted profit per share forthe years ended March 31, 2020 and 2019 were as follows:
Thousands of
U.S. dollars
2020

Millions of yen
2020
Basic profit per share
Profit attributable to owners of parent forthe period
Amount not attributable to common stock
Total profit attributable to common stock
Average number of shares outstanding during the year
[thousands of shares]

2019

¥

1,024

¥

6,397

$

9,394

¥
¥

－
1,024

¥
¥

－
6,397

$
$

－
9,394

82,06682,01982,066

514

524

514

Diluted profit per share
Increase in common stock:
Subscription rights to shares[thousands of shares]13

2. Unapplied Accounting Standards, etc.
Accounting Standard for Revenue Recognition and Related Implementation
Guidance
Guidance on Disclosures about Fair Value of Financial Instruments
On March 31, 2020, the Accounting Standards Board of Japan (ASBJ) issued therevised “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29),and “Implementation Guidance on Accounting Standard for Revenue Recognition”(ASBJ Guidance No. 30).
On March 31, 2020, The ASBJ issued “Guidance on Disclosures about Fair Value of
Financial Instruments” (ASBJ Guidance No. 19)(a) Overview
The International Accounting Standards Board (IASB) and the US Financial
Accounting Standards Board (FASB) co-developed a new comprehensive revenue
recognition standard and issued “Revenue from Contracts with Customers” in May
2014 (IFRS 15 by the IASB, ASC 606 by the FASB). Considering that IFRS 15 isapplied from fiscal years beginning January 1, 2018 and ASC 606 from fiscal years
beginning after December 15, 2017, the ASBJ developed comprehensive accounting
standards for revenue recognition and issued them together with theimplementation guidance. The fundamental policy for developing the accounting
standard for revenue recognition by the ASBJ was that the accounting standard
would incorporate the fundamental principles of IFRS 15 as the starting point fromthe perspective of comparability of financial statements, which is the one of thebenefits of achieving consistency with IFRS 15. For matters to be taken into
consideration in Japan with regard to accounting practices, etc., alternative
treatments are provided within a range that would not impair financial statementcomparability.
(b) Scheduled date of adoption
The Company expects to adopt the accounting standard from the beginning of the
fiscal year ending March 31, 2022.
(c) Impact of adoption of revised accounting standard and related implementation
guidance
The Company is currently evaluating the effects of adopting Accounting Standard
for Revenue Recognition, etc. on its consolidated financial statements.
Accounting Standard for Accounting Policy Disclosures, Accounting Changes andError Corrections
On March 31, 2020, the ASBJ issued the revised “Accounting Standard for
Accounting Policy Disclosures, Accounting Changes and Error Corrections” (ASBJ
Statement No.24).
(a) Overview
This accounting standard has been released to provide an outline of the applicableaccounting principles and procedures in cases where directly relevant accounting
standards are not available.
(b) Scheduled date of adoption
The Company expects to adopt the accounting standard from the end of the fiscal
year ending March 31, 2021.
14

Accounting Standard for Disclosure of Accounting Estimates
On March 31, 2020, the ASBJ issued the “Accounting Standard for Disclosure of
Accounting Estimates” (ASBJ Statement No.31)(a) Overview
This accounting standard has been released to provide guidance on disclosure of
information that deepens the understanding of users of the financial statements
about estimates that embody a risk of a significant impact on the financial
statements of the following accounting period.
(b) Scheduled date of adoption
The Company expects to adopt the accounting standard from the end of the fiscal
year ending March 31, 2021.
3. Accounting Changes
From the beginning of the fiscal year ended March 31, 2020, consolidated subsidiaries
outside Japan adopting IFRS have applied IFRS 16 (“Leases”). Accordingly, anapproach was adopted as a transitional measure in which any cumulative impact of
the application of this standard is recognized on the initial date of application.
As a result, in the consolidated balance sheet as of March 31, 2020, the end of the
fiscal year, “leased assets” in property, plant and equipment increased by ¥2,579
million ($23,661 thousand), “lease obligations” in current liabilities increased by¥732 million ($6,716 thousand) and “lease obligations” in long-term liabilities
increased ¥1,901 million ($17,440 thousand).
The impact on the consolidated statement of income for the fiscal year was
immaterial.
4. Additional information
Impact of COVID-19 on accounting estimates
Accounting estimates are based on the assumption that the impact of COVID-19 will
largely subside by the end of June, and in the latter half of FY2021 sales will recoverto the level prior to the spread of the COVID-19 pandemic.
The Company assumed the time period mentioned above judging from the situationthat restrictions on economic activity were implemented until the end of February in
China, and that affiliated companies restarted almost normal operations from March.
Under this assumption, accounting estimates such as the collectability of deferred tax
assets were made, but the assumption for the estimates may change significantly
depending on the spread of COVID-19 and requests from national or local
governments.

15

5. Supplementary Cash Flow Information
Cash and cash equivalents in the consolidated statements of cash flows are composedof cash on hand, bank deposits with a maturity of 3 months or less and which
represent a minor risk of fluctuation in value.
As of March 31, 2020, and 2019, cash and cash equivalents consisted of the following:Thousands of
U.S. dollars
2020

Millions of yen
2020
Cash on hand and in banks
Time deposits with maturities of over 3 months
Cash and cash equivalents¥¥

16,669(552)
16,1172019¥¥

15,990(149)
15,841$$

152,927(5,065)
147,862

6. Financial Instruments
Overview(a) Policy for financial instruments
The Companies obtain necessary funding in accordance with their capital
expenditure planning. The Companies obtain medium and long-term operating
funds and funds for the purchase of equipment from banks and utilize highly liquid
financial instruments for fund management purposes.
The Companies also utilize derivative financial instruments to hedge various risks
as described in detail below and do not enter into derivatives for trading or
speculative purposes.
(b) Types of financial instruments and related risk
Operating receivables, such as notes and accounts receivable-trade, are exposed tocredit risk of customers. Operating receivables in foreign currencies are exposed toforeign currency exchange risk. Forward foreign exchange contracts are principallyused to hedge this risk.
Investment securities, the issuers of which have business relationships with theCompanies, are exposed to stock market fluctuation risk.
Maturities of operating debts, such as notes and accounts payable-trade, aremostly within six months. Though operating debts in foreign currencies are
exposed to foreign currency exchange risk, they are limited to the balances ofoperating receivables in the same foreign currency on an ongoing basis.
Loans and lease obligations related to finance leases are used mainly for operating
funds and for equipment purposes, respectively. Some consolidated subsidiaries
outside Japan provided lease obligations based on IFRS 16 (“Leases”). Maturities
of loans and lease obligations recorded as of the closing date of the fiscal year are
within 10 years. Almost all long-term loans are variable interest rate loans, andare exposed to interest rate risk. Interest rate swaps are used for certain loans inorder to hedge this risk.
In order to hedge foreign currency exchange risk associated with operating debts
and receivables in foreign currencies and interest rate risk associated with interest
expense, derivative transactions such as forward foreign exchange contracts,
currency swap transactions and interest rate swap transactions are used.
Hedging instruments, hedged items, hedging policy and effectiveness of hedgetransactions are described in “Note 1. Significant Accounting Policies, (c) Financial
instruments, (3) Hedge accounting.”
16

(c) Risk management for financial instruments(1) Monitoring of credit risk (the risk that customers or counterparties may
default)
To screen and reduce unrecoverable risk of operating receivables, the Company
regularly monitors major customers’ credit status and manages the due dates
and balances for each customer in accordance with customer credit
management rules at the sales section in each operating division. Consolidated
subsidiaries also act based on the Company’s customer credit management
rules.
The Companies do not anticipate losses resulting from default of counterparties
to derivative transactions as these are limited to major financial institutions
with sound credit ratings.
(2) Monitoring of market risks (the risks arising from fluctuations in foreignexchange rates, interest rates and others)
The Company and certain consolidated subsidiaries principally use forward
foreign exchange contracts to hedge the foreign currency exchange risk ofoperating debts and receivables in foreign currencies, which are evaluatedmonthly for each currency. The Company uses interest rate swap transactions
to hedge interest rate risk associated with interest expense.
The Company regularly monitors the financial condition of stock issuers andstock market fluctuations and continuously reviews shareholdings considering
the market status and business relationship with the Company.
Derivative transactions entered into by the Company are implemented andcontrolled based on internal rules established by the board of directors. The
rules which stipulate transaction purpose, nature of transaction, name ofcounterparty, transaction item, loss limitation and reporting system of risk
amount. A derivative transaction which exceeds the limitation amount under
the rule requires the approval of the board meeting.
(3) Monitoring of liquidity risk (the risk that the Companies may not be able tomeet its obligations on scheduled due dates)
The Company timely formulates and updates the financing plan and controls
liquidity risk by managing ready liquidity on the basis of reports from eachdivision to the accounting department of the head office.
(d) Supplementary explanation of the fair value of financial instruments
Fair value of financial instruments is measured based on the quoted market price,
if available, or a reasonably assessed value if a quoted market price is not available.
Fair value of financial instruments is calculated based on certain valuation
assumptions and the fair value might differ if different factors are used. In
addition, the contract amount of the derivative transactions described below in“Derivative Transactions” does not represent the market risk of the derivativetransactions.

17Fair value of financial instruments
The book value on the consolidated balance sheets, fair value and difference as ofMarch 31, 2020 and 2019 were as follows. In addition, financial instruments, forwhich it is extremely difficult to measure the fair value, are not included (see “2.
Financial instruments for which the fair value is extremely difficult to measure”).
As of March 31, 2020
Millions of yen
Book value
Fair value

Difference

Cash on hand and in banks
Trade notes and accounts receivable
Investment securities
Other securities
Total assets¥¥

Trade notes and accounts payable
Short-term loans
Current portion of long-term debt
Income taxes payable
Long-term debt
Lease obligations
Total liabilities¥

Derivatives (*)¥

16,66920,853
1,319
38,841¥¥¥¥

11,943
4,924
309
394
13,586
3,479
34,635¥(138)

16,66920,853
1,319
38,841

¥

－
－
－
－

¥

¥

11,943
4,924
320
394
13,727
3,039
34,347

¥

－
－
11
－
141
(440)
(288)

¥

(138)

¥

－

As of March 31, 2019
Millions of yen
Book value
Fair value

Difference

Cash on hand and in banks
Trade notes and accounts receivable
Investment securities
Other securities
Total assets¥¥

Trade notes and accounts payable
Short-term loans
Current portion of long-term debt
Income taxes payable
Long-term debt
Lease obligations
Total liabilities¥

Derivatives (*)¥

18

15,99022,1001,709
39,799¥¥¥¥12,095
7,591
282
824
9,279
726
30,797¥(32)

15,99022,1001,709
39,799

¥

－
－
－
－

¥

¥

12,095
7,591
281
824
9,431
715
30,937

¥

－
－
(1)
－
152
(11)
140

¥

(32)

¥

－

As of March 31, 2020
Thousands of U.S. dollars
Book value
Fair value
Difference
Cash on hand and in banks
Trade notes and accounts receivable
Investment securities
Other securities
Total assets$

Trade notes and accounts payable
Short-term loans
Current portion of long-term debt
Income taxes payable
Long-term debt
Lease obligations
Total liabilities$

Derivatives (*)$

152,927
191,312
12,101
356,340$$$$

109,569
45,174
2,835
3,615
124,642
31,918317,753$(1,266)

152,927
191,312
12,101
356,340

$

$

－
－
－
－

$

$

109,569
45,174
2,936
3,615
125,936
27,881
315,111

$

－
－
101
－
1,294
(4,037)(2,642)$(1,266)$－(*) The amount is the net balance of total transactions. Amounts reported asliabilities are shown in parentheses.
Notes:
1. Methods to determine the fair value of financial instruments and other mattersrelated to securities and derivative transactions
AssetsCash on hand and in banks and Trade notes and accounts receivable
The book value approximates fair value because of the short maturity ofthese instruments.
Investment securities
The fair value of investment securities equals quoted market price. The fairvalue of debt securities is measured at the price provided by financial
institutions. Investment securities based on holding purpose are described in“Note 7. Securities”.
Liabilities
Trade notes and accounts payable, Short-term loans and Income taxes payable
The book value approximates fair value because of the short maturity ofthese instruments.
Current portion of long-term debt and Long-term debt
The fair value of current portion of long-term debt and long-term debt isbased on the present value of future cash flows discounted using the current
borrowing rate for similar debt contracts of comparable maturity.
Lease obligations
The fair value of lease obligations is based on the present value of future cash
flows discounted using the current interest rate for similar lease contracts ofcomparable maturity and contract conditions.
Derivative transactions
See “Note 17. Derivative Financial Instruments”.

19

2. Financial instruments for which the fair value is extremely difficult to measure
as of March 31, 2020 and 2019 were as follows:
Thousands of
U.S. dollars
2020

Millions of yen
2020
2019
Available-for-sale securities withoutmarket quotations:
Unlisted securities

¥

2,472

¥

2,267

$

22,679Because no quoted market price is available and it is extremely difficult todetermine the fair value, the above financial instruments are not included in thepreceding table.
3. The aggregate maturities of monetary claims and held-to-maturity securities asof March 31, 2020 and 2019 were as follows:

As of March 31, 2020
Millions of yen
Due within
Due after 1 year
1 yearthrough 5 years
Cash on hand and in banks
Trade notes and accounts receivable¥¥

16,66920,85337,522¥¥－－－As of March 31, 2019
Millions of yen
Due within
Due after 1 year
1 yearthrough 5 years
Cash on hand and in banks
Trade notes and accounts receivable¥¥

15,99022,10038,090¥¥－－－

As of March 31, 2020
Thousands of U.S. dollars
Due within
Due after 1 year
1 yearthrough 5 years
Cash on hand and in banks
Trade notes and accounts receivable$$

152,927
191,312344,239$$

4. The redemption schedules for long-term debt and lease obligations weredisclosed in “Note 9. Short-term Loans and Long-term Debt”.

20

－
－
－

7. Securities(a) As of March 31, 2020 and 2019, securities consisted of the following:Thousands of
U.S. dollars
2020

Millions of yen
2020
2019
Available-for-sale securities for whichmarket quotations are available
Acquisition cost
Book value
Unrealized gain

¥

1,512
1,317
(195)

¥

¥

1,498
1,708
210

¥

$
$

13,872
12,083(1,789)(b) Sales of securities classified as other securities and the aggregate gain and loss forthe years ended March 31, 2020 and 2019 were as follows:
Thousands of
U.S. dollars
2020

Millions of yen
2020
2019
Sales proceeds
Available-for-sale securities
Aggregate gain
Available-for-sale securities
Aggregate loss
Available-for-sale securities

¥

0

¥

329

$

0

¥

0

¥

164

$

0

¥

(0)

¥

－

$

(0)

8. Inventories
As of March 31, 2020 and 2019, inventories consisted of the following:

Millions of yen
2020
2019
Merchandise
Finished goods
Work in process
Raw materials and supplies
Total

¥

4,243
1,379
1,938
5,637
13,197

¥

21

¥

¥

4,690
1,009
1,586
6,139
13,424

Thousands of
U.S. dollars
2020
$

$

38,927
12,651
17,78051,715
121,073

9. Short-term Loans and Long-term Debt
Short-term loans as of March 31, 2020 and 2019 were principally bank overdrafts andshort-term notes bearing interest at annual average interest rates of 1.64% and1.79%, respectively.
As of March 31, 2020 and 2019, long-term debt consisted of the following:Thousands of
U.S. dollars
2020

Millions of yen
2020
Long-term loans, principally from banks (*)
Lease obligations¥

Less: current portion - Long-term loans
Less: current portion - Lease obligations
Total

¥

2019

13,895
3,479
17,374(309)(973)
16,092

¥

9,561
726
10,287
(282)
(195)
9,810

¥

$

$

127,477
31,918159,395(2,835)(8,927)
147,633(*) As of March 31, 2020 and 2019, long-term loans and lease obligations consisted of
the following:Thousands of
U.S. dollars
2020

Millions of yen
2020
Long-term loans, at an annual average rateof 0.89
Lease obligations, at an annual average rateof 3.77
Current portion- Long-term loans, at an annual
average rate of 0.39
Current portion- Lease obligations, at an annual
average rate of 3.49

¥

¥

2019

13,586

¥

9,279

$

124,642

2,506

531

22,991

309

282

2,835

973

195

8,927

17,374¥

10,287$

159,395

The aggregate annual maturities of long-term debt and lease obligations as of March
31, 2020 were as follows:
Millions of yen
Long-term
Lease
loans
obligations
Year ending March 31,
2022
2023
2024
2025
After above year

Thousands of U.S. dollars
Long-term
Lease
loans
obligations

¥

3,903
730
557
2,144
6,252

¥

587
497
368
247
807

$

35,807
6,697
5,110
19,67057,358

$

5,385
4,560
3,376
2,266
7,404

¥

13,586

¥

2,506

$

124,642$

22,99122

10. Retirement Benefit Plan(a) Outline of employee retirement benefits
The Company and certain consolidated subsidiaries have defined benefit
retirement plans covering substantially all employees. Benefits under the plans
are covered by two plans. One is governed by the regulations of the Defined Benefit
Corporate Pension Law and the other is a severance indemnity by the Companies.
KOHA CO., LTD. (KOHA) also has defined benefit retirement plans covering
substantially all employees. Benefits under the plans are covered by two plans.
One is governed by the regulations of the Defined Benefit Corporate Pension Law
and the other is a severance indemnity by KOHA.
Certain foreign consolidated subsidiaries have defined benefit pension plans anddefined benefit lump-sum payment plans. The Company also has employee
retirement benefit trusts.
During the year ended March 31, 2011, the Company and some of its domestic
consolidated subsidiaries have changed a part of their retirement benefit plansfrom defined benefit plans to defined contribution plans.
Certain foreign consolidated subsidiaries have introduced their own defined
contribution plans.
(b) Contributory defined benefit retirement plan
(1) The changes in the defined benefit obligation and fair value of plan assets
except plans for which the simplified method is applied for calculating
retirement benefit obligations adopted by certain consolidated subsidiaries,
during the years ended March 31, 2020 and 2019 were as follows:
Millions of yen
2020
2019

Thousands of
U.S. dollars
2020

Change in benefit obligations:Benefit obligation, the beginning of the year
Service cost
Interest cost
Actuarial loss (gain)
Benefit payments
Effects of changes in foreignexchange rates
Changes due to transfer
Other
Benefit obligation, the end of the year¥¥

12,543
505
55
76
(770)

¥

12,941
449
55
(142)
(602)

$

115,073
4,633
505
697
(7,064)

27

(159)

248

185
－
12,621－
1
12,543

1,697－
115,789¥$

Change in fair value of plan assets:
Plan assets, the beginning of the year
Expected return on plan assets
Actuarial gain
Employer contributions
Benefit payments
Effects of changes in foreignexchange rates
Changes due to transfer
Plan assets, the end of the year¥

11,513
253
(83)
766
(533)

¥

48
¥

23

183
12,147

11,578
238
(246)
519
(448)

$

(128)
¥

－
11,513

105,624
2,321
(761)
7,027
(4,890)
440

$

1,679
111,440

(2) Changes in the defined benefit obligation and fair value of plan assets
estimated by the simplified method for calculating retirement benefit
obligations for the years ended March 31, 2020 and 2019.
Millions of yen
2020
2019

Thousands of
U.S. dollars
2020

Change in net defined benefit liability
Net defined benefit liability,
the beginning of the year
Service cost
Benefit payments
Benefit obligation, the end of the year

¥

112

¥

13
(25)
100

¥

110

¥

7
(5)
112

$

1,028

$

119
(230)
917

(3) Reconciliation of the projected benefit obligation and plan assets with net
defined benefit liability and asset reflected on the consolidated balance sheets
as of March 31, 2020 and 2019.
Millions of yen
2020
2019
Funded projected benefit obligation
Plan assets¥

12,152(12,147)
5
569

¥

¥

574

¥
¥

¥
Unfunded projected benefit obligation
Net of liability and asset reported on
the consolidated balance sheets
Net defined benefit liability
Net defined benefit asset
Net of liability and asset reported on
the consolidated balance sheets

Thousands of
U.S. dollars
2020

12,075(11,513)
562
580

$

¥

1,142

$

5,266

2,920
(2,346)¥

3,136(1,994)$

26,789(21,523)

574

¥

1,142

$

5,266

¥

111,486(111,440)
46
5,220

$

(4) Components of pension expense for the years ended March 31, 2020 and 2019.
Millions of yen
2020
2019
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial differences
Amortization of prior service cost
Other
Net pension expense

¥

¥

24

517
55
(253)
362
(28)
23
676

¥

¥

457
55
(238)
370
(28)
11
627

Thousands of
U.S. dollars
2020
$

$

4,743
505
(2,321)
3,321
(257)
211
6,202

(5) Remeasurements of defined benefit plans
The components of remeasurements of defined benefit plans (before tax effect)in accumulated other comprehensive income and other comprehensive income
were as follows for the years ended March 31, 2020 and 2019.
Thousands of
U.S. dollars
2020

Millions of yen
2020
2019
Prior service cost
Net actuarial difference
Total

¥
¥

28
(197)
(169)

¥

28
(306)
(278)

¥

¥
¥

(79)
846
767

¥

(107)
1,043
936

¥

$

257
(1,807)(1,550)Thousands of
U.S. dollars
2020

Millions of yen
2020
2019
Unrecognized prior service cost
Unrecognized actuarial difference
Total

$

$
$

(725)
7,762
7,037

(6) Matters related to pension assets
i. Major components of pension assets
The fair values of plan assets, by major category, as a percentage of total plan
assets as of March 31, 2020 and 2019 were as follows.
2020

2019
29
44

Bonds
Equity securities
Life insurance company
general accounts
Cash and cash equivalents
Other

%

31
47

11

12

8
8
100

1
9
100

%

(*)Of total plan assets, 22% and 22% were included in a retirement benefit
trust (stocks, cash and bank deposits) established for the corporate pension
plan as of March 31, 2020 and 2019, respectively.
ii. Method for expected long-term rate of return on pension plan
The Companies determine the expected long-term rate of return on pension
plan assets based on the current and expected asset allocation, as well as thecurrent and expected long-term rate of return from various assets whichconstitute the plan assets.

25

%

%

(7) Assumptions used in actuarial calculations
The assumptions used in accounting for the above plans for the years ended
March 31, 2020 and 2019 were as follows.

Discount rates
Expected rates of long-term
return on plan assets
Expected rates of salary

2020

2019

0.0 ~ 5.3 %0.0 ~ 5.3 %1.8 ~ 2.8

1.8 ~ 3.3

2.0 ~ 5.0

2.0 ~ 5.0(c) Defined contribution plans
The required contributions by the Companies were ¥191 million ($1,752 thousand)and ¥176 million for the years ended March 31, 2020 and 2019, respectively.
11. Other Comprehensive Income
Reclassification adjustments and the related tax effects for components of othercomprehensive income for the years ended March 31, 2020 and 2019 were as follows:
Thousands of
U.S. dollars
2020

Millions of yen
2020

2019

Unrealized holding gain (loss) on securities
Amount arising during the period
Reclassification adjustments for gains andlosses included in net income
Before tax effectTax effectUnrealized holding gain (loss) on securities
Deferred gain (loss) from hedging instruments
Amount arising during the period
Reclassification adjustments for gains andlosses included in net income
Before tax effectTax effect
Deferred gain (loss) from hedging instruments
Translation adjustments
Amount arising during the period
Reclassification adjustments for gains andlosses included in net income
Before tax effectTax effectTranslation adjustments
Retirement benefits liability adjustments
Amount arising during the period
Reclassification adjustments for gains andlosses included in net income
Before tax effectTax effect
Retirement benefits liability adjustments
Share of other comprehensive income ofaffiliates accounted for by the equity method
Amount arising during the period
Total amount of other comprehensive income

¥

¥

26

(405)

¥

(368)

$

(3,716)

18

(123)

166

(387)
40
(347)

(491)
97
(394)

(3,550)367(3,183)

0

－

0

－

－

－

0
(0)
0

－
－
－

0
(0)
0

(311)

(1,318)(2,853)

－

(40)

－

(311)
－
(311)

(1,358)10(1,348)(2,853)－(2,853)

(164)

(62)

(1,505)

333

341

3,056

169
(10)
159

279
143
422

1,551
(92)
1,459

(56)

(124)

(514)

(555)

¥

(1,444)$(5,091)

12. Treasury Stock
The Company had 680 thousand shares and 728 thousand shares of treasury stock asof March 31, 2020 and 2019, respectively, in order to prepare for the exercise of stock
options granted to certain directors and executive officers, subject to the approval of
the General Meeting of Shareholders.
The amount of treasury stock is stated at cost and is presented as a separate
component of shareholders’ equity.
13. Selling, General and Administrative Expenses
For the years ended March 31, 2020 and 2019, the significant components of selling,
general and administrative expenses were as follows:

Millions of yen
2020
Salaries
Pension expense
Research and development expense
Freight
Provision for directors’ bonuses
Accrued bonuses

¥

6,480
641
939
2,051
42
595

2019
¥

6,359
599
926
2,252
70
677

Thousands of
U.S. dollars
2020$

59,4505,881
8,615
18,817385
5,459

14. Research and Development Expenses
Total research and development expenses included in manufacturing costs andselling, general and administrative expenses amounted to ¥1,035 million ($9,495
thousand) and ¥1,067 million for the years ended March 31, 2020 and 2019,respectively.

2715. Income Taxes
As of March 31, 2020, and 2019, the significant components of deferred tax assets andliabilities were as follows:
Millions of yen
2020
Deferred tax assets:
Tax loss carryforwards(*2)
Loss on valuation of inventories
Accrued enterprise taxes
Accrued bonuses
Net defined benefit liability
Loss on valuation of investment securities
Loss on impairment of fixed assets
Unrealized profit on inventories
Other
Subtotal
Valuation allowance(*1) :Tax loss carryforwards(*2)
Deductible temporary differences
Subtotal
Total deferred tax assets

¥

1,624
126
25
287
1,254
165
53
225
452
4,211
(1,443)(1,311)(2,754)
1,457¥

Deferred tax liabilities:
Net defined benefit asset
Unrealized holding gain (loss) on securities
Other
Total deferred tax liabilities
Net deferred tax assets

2019

¥

162
51
709
922
535

¥

¥

¥
¥

¥

1,487
83
60
328
1,292
196
53
209
495
4,203
(959)
(1,218)(2,177)
2,026
190
91
651
932
1,094

Thousands of
U.S. dollars
2020
$

$
$

$

14,899
1,156
229
2,633
11,505
1,514
486
2,064
4,147
38,633(13,238)(12,028)(25,266)
13,367
1,486
468
6,505
8,459
4,908

(*1) The increase in the valuation allowance for tax loss carryforwards was mainly
a result of the carefully consideration of its recoverability in light of theuncertain status of the impact of COVID-19.
(*2) The breakdown of tax loss carryforwards and deferred tax assets by expiration
is as follows.
As of March 31, 2020
Millions of yen
Tax loss

Valuation
allowance

Deferred tax
assets¥¥carryforwards(1)

Within 1 year¥

Over 1 year
but within 3 years
Over 3 years
but within 5 years
Over 5 years
but within 10 years
Over 10 years
¥

35

(35)

－

465

(454)

11

129

(19)

110

323

(275)

48

672

(660)

12

1,624

¥

28

(1,443)¥181 (2)

As of March 31, 2019
Millions of yen
Tax loss

Valuation
allowance

Deferred tax
assets¥¥carryforwards(1)

Within 1 year¥

Over 1 year
but within 3 years
Over 3 years
but within 5 years
Over 5 years
but within 10 years
Over 10 years
¥

24

(14)

10

525

(240)

285

156

－

156

78

(30)

48

704

(675)

29

1,487

¥

(959)

¥

528 (2)As of March 31, 2020
Thousands of U.S. dollars
Tax loss

Valuation
allowance

carryforwards(1)

Within 1 year$

Over 1 year
but within 3 years
Over 3 years
but within 5 years
Over 5 years
but within 10 years
Over 10 years
$

321

$

(321)

Deferred tax
assets$－4,266(4,165)

101

1,183

(174)

1,009

2,963

(2,523)

440

6,166

(6,055)111

14,899$(13,238)$

1,661 (2)(1) The Companies calculate tax loss carryforwards using the statutory tax rate.
(2) The Companies assess the possibility of realizing deferred tax assets basedon estimated future taxable income for each taxpaying entity calculatedusing the medium-term management plan.

29

The reconciliation between the statutory tax rate and the effective tax rates for theyears ended March 31, 2020 and 2019 was as follows:
2020
Statutory tax rate
Effect of:
Non-deductible expenses for tax purpose
Non-taxable items
Inhabitant tax on per capita basis
Amortization of goodwill
Equity in earnings of affiliates
Tax rate difference applied forforeign subsidiaries
Change in valuation allowance
Foreign income taxes
Retained earnings of subsidiaries
Others
Effective tax rates

2019

30.6 %

30.6 %

5.4
(4.0)
1.1
0.8
(2.0)

1.7
(3.3)
0.4
0.3
(0.8)

(2.9)

(2.6)

19.3
8.4
2.3
(0.4)
58.6 %(18.3)
2.7
0.8
(1.5)
10.0 %

16. Leases
Finance lease transactions (lessee)(a) Finance lease transactions with ownership transfer
Lease assets:
・Property, plant and equipment: Display units (machinery and equipment)
・Intangible fixed assets: Software
Lease assets are depreciated using the same method as fixed assets.
(b) Finance lease transactions without ownership transfer
Lease assets:
・Property, plant and equipment: Building and structures, machinery andequipment in connection with Electronic Components business, machineryand equipment in connection with IT, warehouse facilities and factories, sales
offices and company vehicles which apply IFRS16 at overseas subsidiaries
・Intangible fixed assets: Software
Lease assets are depreciated by the straight-line method over the respective
lease terms, assuming no residual value.
Operating lease transactions (lessee)
The future payments under non-cancelable operating leases as of March 31, 2020
and 2019 were as follows:

Millions of yen
2020
Due within one year
Due after one year

¥
¥

2019
25
45
70

¥
¥

30

188
183
371

Thousands of
U.S. dollars
2020
$
$

229
413
642

(*) At some subsidiaries outside Japan IFRS 16 (“Leases”) have been adopted fromthe beginning of the fiscal year ending March 31, 2020. In line with this adoption,
the Company generally recognizes all leases as a lessee as assets or liabilities on
the consolidated balance sheet. So, the operating lease of these subsidiaries are
not included in amount of the current fiscal year.
17. Derivative Financial Instruments
The Companies do not hold or issue derivatives for trading purposes and it is theCompanies’ policy to use derivatives only for the purpose of reducing exposure tomarket risks and financing costs in accordance with internal policies.
The Companies do not anticipate any losses resulting from default of thecounterparties as these are limited to major financial institutions with sound credit
ratings.
As of March 31, 2020, and 2019, for which hedge accounting has not been applied aresummarized as follows:(a) Foreign currency-related transactions
As of March 31, 2020
Millions of yen
Contract
amountDerivative transactions

Portion maturing
over one year

Fair value

Difference

Transactions outside the market:
Forward foreignexchange contracts:
Buy
USD

¥

191

¥

－

¥

(0)

¥

(0)

¥

1,320

¥

1,320

¥

(47)

¥

(47)

¥

1,511

¥

1,320

¥

(47)

¥

(47)

Currency swaps:
Receive in Japanese
yen and pay in U.S.
dollars

Total

As of March 31, 2019
Millions of yen
Contract
amountDerivative transactions

Portion maturing
over one year

Fair value

Difference

Transactions outside the market:
Forward foreignexchange contracts:
Buy
USD

¥

66

¥

31

－

¥

0

¥

0

As of March 31, 2020
Thousands of U.S. dollars
Contract
amountDerivative transactions

Portion maturing
over one year

Fair value

Difference

Transactions outside the market:
Forward foreignexchange contracts:
Buy
USD

$

1,752

$

－

$

(0)

$

(0)

$

12,110$12,110

$

(431)

$

(431)

$

13,862$

12,110

$

(431)

$

(431)

Interest rate and currency
swaps:
Receive in Japanese
yen and pay in U.S.
dollars

Total(*) Price provided by financial institutions.
(b) Rate and Currency-related transactions
As of March 31, 2020
Millions of yen
Contract
amountDerivative transactions

Portion maturing
over one year

Fair value

Difference

Transactions outside the market:
Interest rate and currency
swaps:
Receive variable andpay fixed
Receive in U.S. dollars
and pay in Thai baht

¥

568

¥

568

¥

(90)

¥

(90)

As of March 31, 2019
Millions of yen
Contract
amountDerivative transactions

Portion maturing
over one year

Fair value

Difference

Transactions outside the market:
Interest rate and currency
swaps:
Receive variable andpay fixed
Receive in U.S. dollars
and pay in Thai baht

¥

576

¥

32

576

¥

(32)

¥

(32)

As of March 31, 2020
Thousands of U.S. dollars
Contract
amountDerivative transactions

Portion maturing
over one year

Fair value

Difference

Transactions outside the market:
Interest rate and currency
swaps:
Receive variable andpay fixed
Receive in U.S. dollars
and pay in Thai baht

$

5,211

$

5,211

$

(826)

$

(826)

(*) Price provided by financial institutions.
The notional amounts and the fair value of the derivative instruments outstanding asof March 31, 2020 and 2019, for which hedge accounting has been applied aresummarized as follows:(a) Foreign currency-related transactions
As of March 31, 2020
Millions of yen
Derivative transactions

Main hedged
items

Contract
amountPortion maturing
over one year

Fair value

Foreign exchange allocation method:
Forward foreignexchange contracts:
Sell
USD
EUR

Trade
accounts
receivable

¥

843

¥

－

¥

(*1)

30

－

(*1)

Trade
accounts
payable

1,075

－

(*1)

Trade
accounts
receivable

0

－

0

Buy
USD

Deferral hedge accounting:
Forward foreignexchange contracts:
Sell
USD
Total

¥

33

1,948

¥

－

¥

0

As of March 31, 2019
Millions of yen
Derivative transactions

Main hedged
items

Contract
amountPortion maturing

Fair value

over one year

Foreign exchange allocation method:
Forward foreignexchange contracts:
Sell
USD
EUR

Trade
accounts
receivable

¥

950

¥

－

¥

(*1)

10

－

(*1)

443

－

(*1)

Buy
USD

Trade
accounts
payable

Total

¥

1,403

¥

－

¥

－

As of March 31, 2020
Thousands of U.S. dollars
Derivative transactions

Main hedged
items

Contract
amountPortion maturing
over one year

Fair value

Foreign exchange allocation method:
Forward foreignexchange contracts:
Sell
USD
EUR

Trade
accounts
receivable

$

7,734

$

－

$

(*1)

275

－

(*1)

Trade
accounts
receivable

9,863

－

(*1)

Trade
accounts
receivable

0

－

0

Buy
USD

Deferral hedge accounting:
Forward foreignexchange contracts:
Sell
USD
Total

$

17,872$－$(*1) The fair value is included in the fair value of the accounts receivable-trade and theaccounts payable-trade since the forward foreign exchange contracts are accounted
for as part of accounts receivable and payable under the allocation method forhedge accounting.
(*2) Price provided by financial institutions.

340

(b) Interest rate-related transactions
As of March 31, 2020
Millions of yen
Derivative transactions
Interest-rate swaps:
Pay fixed and receive
variable

Main hedged
items

Contract
amountLong-term
debt¥Portion maturing

Fair value

over one year

5,320

¥

5,320

¥

(*)

As of March 31, 2019
Millions of yen
Derivative transactions
Interest-rate swaps:
Pay fixed and receive
variable

Main hedged
items

Contract
amountLong-term
debt¥Portion maturing

Fair value

over one year

4,482

¥

4,420

¥

(*)

As of March 31, 2020
Thousands of U.S. dollars
Derivative transactions
Interest-rate swaps:
Pay fixed and receive
variable

Main hedged
items

Contract
amountLong-term
debt$

48,807

Portion maturing
over one year$

48,807

Fair value$(*)(*) The fair value is included in the fair value of long-term debt since the short-cut
method is applied.

18. Financial Guarantees
The Company is contingently liable as a guarantor of borrowings for non-consolidated
subsidiaries (NOVEL CRYSTAL TECHNOLOGY, INC.) in the amounts of ¥16
million ($147 thousand) and ¥19 million for the years ended March 31, 2020 and
2019, respectively.
19. Business Combination, etc.
There was no significant business combination for the years ended March 31, 2020.
20. Loan Commitment
In order to achieve more efficient and flexible financing, the Company has concluded
loan commitment contracts with five financial institutions.
The status of these contracts as of March 31, 2020 and 2019 is summarized asfollows:

35

Thousands of
U.S. dollars
2020

Millions of yen
2020
Maximum overdraft amountand total amount of loan commitment
Executed loan amounts
Net amount

2019

¥

2,500

¥

2,500

$

22,936

¥

－
2,500

¥

1,500
1,000

$

－
22,936

21. Stock Options(a) Stock options expenses recognized in selling, general and administrative
expenses for the years ended March 31, 2020 and 2019
Thousands of
U.S. dollars
2020

Millions of yen
2020
Selling, general and administrative expenses

¥

2019
19

¥

26

$

(b) Outline of stock options and changes
a. Outline of stock options
Date of resolution
Title and number of grantees
Number of stock options
Grant dateCondition for vesting
Requisite service period
Exercise period

Date of resolution
Title and number of grantees
Number of stock options
Grant dateCondition for vesting
Requisite service period
Exercise period
Date of resolution
Title and number of grantees
Number of stock options
Grant dateCondition for vesting
Requisite service period
Exercise period

The 2nd Stock Option Plan
June 29, 2005
Directors 6(Exclude outside director)
Executive officers 9
Common shares 35,000
July 1, 2005
Retirement of director andexecutive officer
N.A.

The 3rd Stock Option Plan
June 29, 2006
Directors 6(Exclude outside director)
Executive officers 6
Common shares 28,000
July 1, 2006
Retirement of director andexecutive officer
N.A.

The 4th Stock Option Plan
June 28, 2007
Directors 6(Exclude outside director)
Executive officers 7
Common shares 30,000
July 1, 2007
Retirement of director andexecutive officer
N.A.

For the period of five years fromthe next day of retirement of
director and executive officer

July 1, 2006 to

July 1, 2007 toJune 30, 2036

June 30, 2037

The 5th Stock Option Plan
June 27, 2008
Directors 6(Exclude outside director)
Executive officers 6
Common shares 42,000
July 1, 2008
Retirement of director andexecutive officer
N.A.
July 1, 2008 toJune 30, 2038
The 8th Stock Option Plan
June 29, 2011
Directors 6(Exclude outside director)
Executive officers 6
Common shares 65,000
July 1, 2011Retirement of director andexecutive officer
N.A.
July 1, 2011 toJune 30, 2041

The 6th Stock Option Plan
June 26, 2009
Directors 6(Exclude outside director)
Executive officers 4
Common shares 77,000
July 1, 2009Retirement of director andexecutive officer
N.A.
July 1, 2009 toJune 30, 2039
The 9th Stock Option Plan
June 28, 2012
Directors 6(Exclude outside director)
Executive officers 6
Common shares 72,000
July 1, 2012Retirement of director andexecutive officer
N.A.
July 1, 2012 toJune 30, 2042

The 7th Stock Option Plan
June 29, 2010
Directors 6(Exclude outside director)
Executive officers 6
Common shares 52,000
July 1, 2010Retirement of director andexecutive officer
N.A.
July 1, 2010 toJune 30, 2040
The 10th Stock Option Plan
June 27, 2013
Directors 6(Exclude outside director)
Executive officers 6
Common shares 78,000
July 1, 2013
Retirement of director andexecutive officer
N.A.
July 1, 2013 toJune 30, 2043

36

174

Date of resolution
Title and number of grantees
Number of stock options
Grant dateCondition for vesting
Requisite service period
Exercise period
Date of resolution
Title and number of grantees
Number of stock options
Grant dateCondition for vesting
Requisite service period
Exercise period

The 11th Stock Option Plan
June 26, 2014
Directors 6(Exclude outside director)
Executive officers 6
Common shares 52,000
July 1, 2014
Retirement of director andexecutive officer
N.A.
July 1, 2014 toJune 30, 2044
The 14th Stock Option Plan
June 28, 2017
Directors 6(Exclude outside director)
Executive officers 8
Common shares 37,000
July 1, 2017Retirement of director andexecutive officer
N.A.
July 1, 2017 toJune 30, 2047

The 12th Stock Option Plan
June 26, 2015
Directors 7(Exclude outside director)
Executive officers 5
Common shares 36,000
July 1, 2015
Retirement of director andexecutive officer
N.A.
July 1, 2015 toJune 30, 2045
The 15th Stock Option Plan
June 27, 2018
Directors 6(Exclude outside director)
Executive officers 7
Common shares 43,000
July 1, 2018
Retirement of director andexecutive officer
N.A.
July 1, 2018 toJune 30, 2048

The 13th Stock Option Plan
June 28, 2016
Directors 6(Exclude outside director)
Executive officers 5
Common shares 50,000
July 1, 2016Retirement of director andexecutive officer
N.A.
July 1, 2016 toJune 30, 2046
The 16th Stock Option Plan
June 26, 2019
Directors 5(Exclude outside director)
Executive officers 10
Common shares 41,300
July 1, 2019
Retirement of director andexecutive officer
N.A.
July 1, 2019 toJune 30, 2049

The Company's stock option plans were designed as stock compensation to directors andexecutive officers after the directors’ retirement benefit plan was abolished in June 2005.

b. Stock options granted and changes
The movement in the number of stock options for the year ended Mach 31, 2020is presented after conversion to the number of shares.
Number of stock options
Date of resolution
Before vested
Previous fiscal year-end
GrantedForfeited
VestedOutstanding
After vested
Previous fiscal year-end
VestedExercised
Forfeited
Exercisable
Date of resolution
Before vested
Previous fiscal year-end
GrantedForfeited
VestedOutstanding
After vested
Previous fiscal year-end
VestedExercised
Forfeited
Exercisable(Shares)

The 2nd Stock Option Plan
June 29, 2005

The 3rd Stock Option Plan
June 29, 2006

The 4th Stock Option Plan
June 28, 2007

12,000－－－12,00011,000－－－11,00013,000－－－13,000

－
－
－
－
－

－
－
－
－
－

－
－
－
－
－

The 5th Stock Option Plan
June 27, 2008

The 6th Stock Option Plan
June 26, 2009

The 7th Stock Option Plan
June 29, 2010

20,000－－－20,00049,000－－4,000
45,00039,000－－5,000
34,000

－
－
－
－
－

－
4,000
4,000
－
－

3,000
5,000
8,000
－
－

37

Date of resolution
Before vested
Previous fiscal year-end
GrantedForfeited
VestedOutstanding
After vested
Previous fiscal year-end
VestedExercised
Forfeited
Exercisable
Date of resolution
Before vested
Previous fiscal year-end
GrantedForfeited
VestedOutstanding
After vested
Previous fiscal year-end
VestedExercised
Forfeited
Exercisable
Date of resolution
Before vested
Previous fiscal year-end
GrantedForfeited
VestedOutstanding
After vested
Previous fiscal year-end
VestedExercised
Forfeited
Exercisable

The 8th Stock Option Plan
June 29, 2011

The 9th Stock Option Plan
June 28, 2012

43,000－－5,000
38,00057,000－－9,000
48,00074,000－－15,00059,000

3,000
5,000
8,000
－
－

4,000
9,000
10,000－3,000－
15,00011,000－4,000

The 11th Stock Option Plan
June 26, 2014

The 12th Stock Option Plan
June 26, 2015

29,000－－3,000
26,00044,000－－6,000
38,000－11,000
3,000
－
8,000

－
3,000
－
－
3,000

－
6,000
－
－
6,000

The 14th Stock Option Plan
June 28, 2017

The 15th Stock Option Plan
June 27, 2018

Exercise price
Average stock price at exercise
Fair value at the grant date
Date of resolution
Exercise price
Average stock price at exercise
Fair value at the grant date
Date of resolution
Exercise price
Average stock price at exercise
Fair value at the grant date
Date of resolution
Exercise price
Average stock price at exercise
Fair value at the grant date

The 16th Stock Option Plan
June 26, 2019

32,000－－4,000
28,00037,400－－6,300
31,100－41,3001,200
2,600
37,500

－
4,000
1,000
－
3,000

－
6,300
2,700
－
3,600

－
2,600
600
－
2,000

(Yen)
The 2nd Stock Option Plan
June 29, 2005

The 3rd Stock Option Plan
June 29, 2006

1－－

Exercise price
Average stock price at exercise
Fair value at the grant date
Date of resolution

The 13th Stock Option Plan
June 28, 2016

50,000－－11,00039,000Price information
Date of resolution

The 10th Stock Option Plan
June 27, 2013

The 5th Stock Option Plan
June 27, 2008

1－
464
The 6th Stock Option Plan
June 26, 20091－
426
The 8th Stock Option Plan
June 29, 2011

1
703
348
The 9th Stock Option Plan
June 28, 2012

1
583
203
The 11th Stock Option Plan
June 26, 2014

1
602
151
The 12th Stock Option Plan
June 26, 2015

1
717
321
The 14th Stock Option Plan
June 28, 2017

1－
423
The 15th Stock Option Plan
June 27, 2018

1
621
439

38

1
621
617

The 4th Stock Option Plan
June 28, 2007

1－
653
The 7th Stock Option Plan
June 29, 2010

1
606
203
The 10th Stock Option Plan
June 27, 2013

1
520
163
The 13th Stock Option Plan
June 28, 2016

1－
229
The 16th Stock Option Plan
June 26, 2019

1
621
474

(c) Valuation technique used to determine the fair value of stock options
The 16th stock options granted in the fiscal year ended March 31, 2020 werevalued using the following valuation technique.
Valuation technique: Black-Scholes option-pricing model
Principal assumptions used in the option-pricing model:
Date of resolution

The 16th Stock Option Plan
June 26, 2019

Expected volatility(*1)
Average expected life(*2)
Expected dividends(*3)
Risk-free interest rate(*4)

40.89%
10 years
10 yen per share-0.16%(*1) Calculated based on the actual stock prices from April 2009 to June 2019.
(*2) The average expected life could not be estimated rationally as data wasinsufficient. Therefore, it was estimated assuming that the options were
exercised at the 1/3 point of the exercise period.
(*3) Calculated based on actual dividends on common stock for the year ended
March 31, 2019, the dividend policy of the Company and prior years’ actual
dividends.
(*4) Japanese government bond yield corresponding to the average expected life.
(d) Method of estimating the number of stock options to be vested
Only the actual number of forfeited stock options is reflected because it is difficult
to rationally estimate the number of stock options that will be forfeited in the
future.
22. Segment Information(a) Overview of reportable segments
The reportable segments of the Companies are components for which separate
financial information is available and which are reviewed regularly by the boardof directors in deciding resource allocation and in assessing performance.
Each business division develops comprehensive business strategies for products
in Japan and overseas and conducts business activities.
Accordingly, the Company consists of three reportable segments, identified by the
products and based on the business divisions, which are classified as the“Electronic Components” business, the “Electronic Chemicals / FA Systems”
business and the “Information Equipment” business.
The “Electronic Components” business manufactures transformers, reactors, AC
adaptors, battery chargers, piezoelectric ceramic products and LED-related
products. The “Electronic Chemicals / FA Systems” business manufactures solder
paste, solder resist, flux and soldering system. The “Information Equipment”
business manufactures audio mixing console for broadcast used, wirelessmicrophone system, communication network equipment and OEM products.

39

(b) Calculation method for net sales, segment income or loss, and other items of thereportable segments
The accounting policies of the segments are substantially the same as thosedescribed in Note 1. Significant Accounting Policies.
Segment income is based on operating income.
Inter-segment sales are recorded at the same prices used in transactions withthird parties.
As noted in “Note 3. Accounting Changes”, consolidated subsidiaries outside Japan
adopting IFRS have applied IFRS 16 (“Leases”) from the beginning of the fiscal
year ended March 31, 2020. Accordingly, an approach was adopted as atransitional measure in which any cumulative impact of the application of thisstandard is recognized on the initial date of application.
The impact on segment income(loss) for the fiscal year ended March 31, 2020 was
immaterial.
(c) Information on net sales, income or loss, assets and liabilities, and other items by
the reportable segment
Year ended March 31, 2020
Millions of yen

Electronic
Components

Reportable segments
Electronic
Chemicals /Information
FA Systems
Equipment

¥

¥

Other
(*1)

Subtotal

Total

Adjustments(*2)

79,655¥

Consoli－
dated
(*3)

Net Sales
SalesCustomers
Inter-segment
Segment
income (loss)

50,872

25,342

¥

3,440

¥

79,654

¥

1

¥

－

¥

79,655

0

98

59

157

640

797

(797)

－

50,87225,4403,499

79,811641

80,452(797)

79,655

¥

275

¥

2,553

¥

77

¥

2,905

¥

(12)

¥

2,893

¥

(604)

¥

2,289

¥

2,028

¥

1,091

¥

123

¥

3,242

¥

8

¥

3,250

¥

16

¥

3,266

¥

61

¥

39

¥

－

¥

100

¥

－

¥

100

¥

－

¥

100

¥

3,461

¥

980

¥

78

¥

4,519

¥

2

¥

4,521

¥

1

¥

4,522

Other items
Depreciation andamortization
Amortization of
goodwill
Increase in tangible
and intangible
fixed assets

Year ended March 31, 2019
Millions of yen

Electronic
Components

Reportable segments
Electronic
Chemicals /Information
FA Systems
Equipment

¥

¥

Other
(*1)

Subtotal

Total

Adjustments(*2)

87,008¥

Consoli－
dated
(*3)

Net Sales
SalesCustomers
Inter-segment
Segment
income (loss)

54,79528,084

¥

4,123

¥

87,002

¥

6

¥

－

¥

87,008

－

80

78

158

665

823

(823)

－

54,79528,164

4,201

87,160671

87,831(823)

87,008

¥

962

¥

3,572

¥

481

¥

5,015

¥

18

¥

5,033

¥

(433)

¥

4,600

¥

1,175

¥

912

¥

109

¥

2,196

¥

8

¥

2,204

¥

15

¥

2,219

¥

65

¥

42

¥

－

¥

107

¥

－

¥

107

¥

－

¥

107

¥

3,873

¥

2,153

¥

77

¥

6,103

¥

2

¥

6,105

¥

14

¥

6,119

Other items
Depreciation andamortization
Amortization of
goodwill
Increase in tangible
and intangible
fixed assets

40

Year ended March 31, 2020
Thousands of U.S. dollars

Electronic
Components

Reportable segments
Electronic
Chemicals /Information
FA Systems
Equipment

$

$

Other
(*1)

Subtotal

Total

Adjustments(*2)

730,780$

Consoli－
dated
(*3)

Net Sales
SalesCustomers
Inter-segment
Segment
income (loss)

466,716

232,495$

31,560$730,771

$

9

$

－

$

730,780

0

899

541

1,440

5,872

7,312

(7,312)－466,716

233,394

32,101

732,211

5,881

738,092(7,312)730,780

$

2,523

$

23,422$706$

26,651

$

(110)

$

26,541$(5,541)$

21,000$18,606$

10,009

$

1,128

$

29,743$73$

29,816$

147$

29,963

$

559

$

358

$

－

$

917

$

－

$

917

$

－

$

917

$

31,752

$

8,991

$

716

$

41,459$18$

41,477$

9$41,486

Other items
Depreciation andamortization
Amortization of
goodwill
Increase in tangible
and intangible
fixed assets(*1) “Other” includes businesses not included in the reportable segments, which
includes the transportation, warehouse businesses in the years ended March
31, 2020 and 2019.
(*2) Adjustments for segment income (loss) were as follows:
Millions of yen
2020
Inter-segment eliminations
Corporate costs (*)
Total

¥

64
(668)
(604)

¥

2019
¥
¥

68
(501)
(433)

Thousands of
U.S. dollars
2020
$
$

587
(6,128)(5,541)(*) Corporate costs are mainly future R&D expenses at the head office, which are notallocated to the reportable segments.
(*3) Segment income is adjusted with operating income in the consolidated
statement of income.
(*4) Adjustments for “Depreciation and amortization” and “Increase in tangible andintangible fixed assets” are mainly capital investment and depreciation
relating to future R&D assets at the head office, which are not allocated to thereportable segments.
(*5) Assets of the Company are not allocated to the business segments.

41

(d) Related information(1) Information by product and service

SalesCustomers

SalesCustomers

SalesCustomers

Electronic
Components

Year ended March 31, 2020
Millions of yen
Electronic
Chemicals /Information
FA Systems
Equipment
Other

¥

¥

50,872

25,342

¥

3,440

¥

1

Electronic
Components

Year ended March 31, 2019
Millions of yen
Electronic
Chemicals /Information
FA Systems
Equipment
Other

¥

¥

54,79528,084

¥

4,123

¥

Electronic
Components$$

232,495$

31,560¥$79,655

Consolidated
6

Year ended March 31, 2020
Thousands of U.S. dollars
Electronic
Chemicals /Information
FA Systems
Equipment
Other466,716

Consolidated¥

87,008

Consolidated
9$730,780(2) Information by geographical area
i. SalesJapan
Net Sales¥

34,757

China
¥

Japan
Net Sales¥

37,11018,084

China¥

24,187

Year ended March 31, 2020
Millions of yen
North and
South
Other Asia
EuropeAmerica¥

15,464

¥

7,423

¥

3,651

¥

Year ended March 31, 2019
Millions of yen
North and
South
Other Asia
EuropeAmerica¥

14,155

42

¥

7,502

¥

3,764

Consoli－
dated

Other
276

¥

Consoli－
dated

Other
¥

290

79,655¥87,008

JapanNet Sales$Year ended March 31, 2020
Thousands of U.S. dollars
North and
South
Other Asia
EuropeAmericaChina

318,872$

165,908$

141,872$

68,101$33,495

Consoli－
dated

Other
$

2,532

$

730,780

ii. Property, plant and equipment
Year ended March 31, 2020
Millions of yen

Japan
Property, plantand equipment¥

15,861

China
¥

5,996

Other Asia
¥

3,813

North andSouth
America

Europe
¥

768

¥

244

Consoli－
dated¥

26,682

Year ended March 31, 2019
Millions of yen

Japan
Property, plantand equipment¥

14,972

China
¥

3,532

Other Asia
¥

3,289

North andSouth
America

Europe
¥

458

¥

244

Consoli－
dated¥

22,495

Year ended March 31, 2020
Thousands of U.S. dollars

Japan
Property, plantand equipment$

145,513

China$

55,009Other Asia$

34,982

North andSouth
America

Europe
$

7,046

$

2,239

Consoli－
dated$

244,789(3) Information by major customer
This information has been omitted because there is no specific customer
representing 10% or more of net sales recorded in the consolidated statements
of income for the years ended March 31, 2020 and 2019.
(e) Information about impairment loss on fixed assets for each reportable segment
Fiscal year ended March 31, 2020: Not applicable
Fiscal year ended March 31, 2019: Not applicable43

(f) Information about amortization and balance of goodwill for each reportablesegment:

Amortization
Balance as ofMarch 31

Amortization
Balance as ofMarch 31

Amortization
Balance as ofMarch 31

Electronic
Components

Year ended March 31, 2020
Millions of yen
Electronic
Chemicals /Information
FA Systems
Equipment
Other

¥

¥

61
15

39

¥

318

－

¥

－

Electronic
Components
¥

¥

77

42

¥

370

－

¥

－

Electronic
Components
$

$

138

358

$

2,917

－
－

¥

$

Consolidated
－

¥

107
447

Consolidated－$－(g) Information about gains on negative goodwill for each reportable segment
Fiscal year ended March 31, 2020: Not applicable
Fiscal year ended March 31, 2019: Not applicable
23. Related Party Transactions
Fiscal year ended March 31, 2020: Not applicable
Fiscal year ended March 31, 2019: Not applicable
24. Subsequent Events
There were no significant subsequent events for the years ended March 31, 2020
and 2019.

44

100
333

－

Year ended March 31, 2020
Thousands of U.S. dollars
Electronic
Chemicals /Information
FA Systems
Equipment
Other

559

－
－

Year ended March 31, 2019
Millions of yen
Electronic
Chemicals /Information
FA Systems
Equipment
Other

65

Consolidated

917
3,055