Consolidated Balance Sheet
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
December 31, 2018 and 2019
U.S. Dollars(Thousands)

Yen(Millions)(Note 1)

2018

2019

¥113,066¥110,369$1,007,386

23,90921,913200,009

Less – Allowance for doubtful accounts

(104)

(53)

(491)

Short-term investments (Note 4)

2,500

2,301

21,002Merchandise and finished goods

25,01424,353

222,284

998

954

8,710

Raw materials and supplies

9,696

8,572

78,241Other current assets

4,823

5,101

46,562

179,902173,510

1,583,706

Land

6,633

6,640

60,607

Buildings and structures

48,93650,580461,671

Machinery and equipment

78,134

83,623

763,268

Construction in progress

11,09916,288

148,672

144,804

157,133

1,434,220(70,778)(76,628)(699,422)

74,02580,504

734,797

Investment securities (Note 4)

9,208

10,980100,227

Long-term loans receivable

453

－

－

Deferred tax assets – non-current (Note 8)

825

704

6,429

2,633

2,543

23,21813,121

14,229129,876¥267,050¥268,244$2,448,380

ASSETS

2019

Current Assets:
Cash and bank deposits (Notes 3, 4)Trade notes and accounts receivable (Note 4)

Work in process

Total current assets

Property, Plant and Equipment:Less – Accumulated depreciation
Property, plant and equipment, net

Investments and Other Assets:

Other investments and other assets
Total investments and other assets

Total Assets

U.S. Dollars(Thousands)

Yen(Millions)
LIABILITIES AND NET ASSETS

2018(Note 1)

2019

2019

Current Liabilities:
Trade notes and accounts payable (Note 4)¥6,376¥6,003$54,797

Accrued income taxes

1,812

1,966

17,947

Accrued bonuses due to employees

265

249

2,273

Accrued bonuses due to directors

161

172

1,575

Other current liabilities

9,832

8,730

79,682

18,44817,121

156,275

－

635

5,795

Accrued benefits for stock payment

117

142

1,301

Liability for retirement benefits (Note 7)

2,259

2,139

19,530

17

17

159

1,393

2,716

24,790

359

299

2,734

Total long-term liabilities

4,147

5,950

54,311

Total liabilities

22,59523,071

210,587

20,70420,704

188,981

Additional paid-in capital

20,41920,419186,380

Retained earnings

212,594

216,974

1,980,415(7,400)(10,014)(91,410)

246,318

248,084

2,264,367

2,020

3,456

31,548

(37)

(2)

(19)

(3,074)(5,777)(52,735)

(897)

(712)

(6,502)(1,988)(3,035)(27,708)

124

124

1,134

Total current liabilities
Long-term Liabilities:
Long-term loans payable

Asset retirement obligations
Deferred tax liabilities – non-current (Note 8)
Other long-term liabilities – non-current

Net Assets (Note 2):
Shareholders’ Equity
Common stock, no par value:
Authorized: 200,000,000 shares
Issued: 68,562,462 shares in 2018
68,562,462 shares in 2019

Treasury stock, at cost: 1,323,854 shares in 2018
and 1,826,945 shares in 2019
Total shareholders’ equity
Accumulated other comprehensive income
Net unrealized holding gains on securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Retirement benefits liability adjustments (Note 7)
Total accumulated other comprehensive income
Subscription rights to shares
Total net assets

244,454245,172

2,237,792

Total Liabilities and Net Assets¥267,050¥268,244$2,448,380

See notes to consolidated financial statements.

Consolidated Statement of Income
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2018 and 2019

U.S. Dollars(Thousands)

Yen(Millions)
Net Sales (Note 17)
Cost of Sales
Gross profit
Selling, General and Administrative Expenses (Notes 12, 14)
Operating income
Other Income (Expenses):
Interest and dividend income
Exchange gain, net
Gain on sale of raw material scrap
Gain (loss) on disposal of fixed assets, net (Note 15)
Soil restoration related expenses
Special severance payment
Other, net
Profit before Income Taxes
Income Taxes (Note 8):
Current
DeferredProfitProfit attributable to owners of parent(Note 1)

2018
¥143,116
98,78844,32723,084
21,243

2019¥131,807
90,77641,031
23,486
17,5442019$1,203,061
828,554374,507214,368
160,138

889
1,474
1,520
4,790
(292)
(274)
(27)
8,080
29,323

1,121
990
1,378
(586)
－
(90)
(180)
2,634
20,17910,2409,044
12,586(5,354)－(822)(1,646)24,048184,187

6,433
(35)
6,398
22,925¥22,925

5,091
853
5,944
14,234¥14,234

46,471
7,790
54,261
129,925$129,925

Yen
Per Share Data (Note 11):
Profit attributable to owners of parent - Basic- Diluted
Dividends applicable to current year earnings
See notes to consolidated financial statements.

2018

2019

¥341.19341.05135.00¥214.00
213.91135.00U.S. Dollars
2019
$1.95
1.95
1.23

Consolidated Statement of Comprehensive Income
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2018 and 2019

U.S. Dollars(Thousands)

Yen(Millions)
ProfitOther Comprehensive Income (Note 9)
Net unrealized holding gains (losses) on securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Retirement benefits liability adjustments
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests
See notes to consolidated financial statements.

(Note 1)

2018
¥22,9252019¥14,234

2019$129,925(2,526)50(7,517)306(9,686)¥13,2381,436
35(2,703)
184(1,047)¥13,187

13,107319(24,675)
1,688(9,560)$120,365¥13,238¥－¥13,187¥－$120,365$－

Consolidated Statement of Changes in Net Assets
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2018 and 2019
Number of Shares(Thousands)
2018
2019
Common Stock:
Beginning balance
69,12568,562
Treasury stock cancellation(563)－
Ending balance
68,562
68,562

U.S. Dollars(Thousands)

Yen(Millions)(Note 1)

2018

2019

2019

¥20,704－¥20,704¥20,704－¥20,704$188,981－$188,981¥20,4190(0)¥20,419¥20,419－－¥20,419$186,380－－$186,380¥200,713
22,925(8,172)(2,871)¥212,594
14,234(9,832)(137)$1,940,437
129,925(89,749)(1,258)

－

116

1,060

¥212,594¥216,974$1,980,415

Treasury Stock:
Beginning balance
Treasury stock acquisition
Treasury stock disposal
Treasury stock cancellation
Ending balance¥(7,486)(3,002)215
2,872¥(7,400)¥(7,400)(4,082)
1,468－¥(10,014)$(67,547)(37,262)
13,400－$(91,410)

Net Unrealized Holding Gains on Securities:
Beginning balance
Net change during the year
Ending balance¥4,546(2,526)¥2,020¥2,0201,436¥3,456$18,441
13,107$31,548

¥(87)
50
¥(37)

¥(37)
35
¥(2)

$(338)
319$(19)

Foreign Currency Translation Adjustments:
Beginning balance
Net change during the year
Ending balance¥4,443(7,517)¥(3,074)¥(3,074)(2,703)¥(5,777)$(28,060)(24,675)$(52,735)

Retirement Benefit Liability Adjustments:
Beginning balance
Net change during the year
Ending balance¥(1,203)306¥(897)¥(897)
184¥(712)$(8,190)
1,688$(6,502)

Total Accumulated Other Comprehensive Income:
Beginning balance
Net change during the year
Ending balance¥7,698(9,686)¥(1,988)¥(1,988)(1,047)¥(3,035)$(18,148)(9,560)$(27,708)

¥130
(5)
¥124

¥124
－
¥124

$1,134－$1,134¥242,179
22,925(8,172)(3,002)
216－(9,692)¥244,454¥244,454
14,234(9,832)(4,082)
1,330
116(1,047)¥245,172$2,231,237
129,925(89,749)(37,262)
12,141
1,060(9,560)$2,237,792

Additional Paid-in Capital:
Beginning balance
Treasury stock disposal
Treasury stock cancellation
Ending balance
Retained Earnings:
Beginning balance
Profit attributable to owners of parent
Dividends paid
Treasury stock cancellation
Increase in retained earnings due to merger of
non-consolidated subsidiaryEnding balance

Deferred Gains or Losses on Hedges:
Beginning balance
Net change during the year
Ending balance

Subscription Rights to Shares:
Beginning balance
Net change during the year
Ending balance
Total Net Assets:
Beginning balance
Profit attributable to owners of parent
Dividends paid
Treasury stock acquisition
Treasury stock disposal
Consolidation of subsidiaries
Net changes in items other than those in shareholders’ equity
Ending balanceSee notes to consolidated financial statements.

Consolidated Statement of Cash Flows
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
For the years ended December 31, 2018 and 2019
U.S. Dollars(Thousands)

Yen(Millions)(Note 1)

2018

2019

2019

Cash Flows from Operating Activities:
Profit before income taxes
Depreciation and amortization
Increase (decrease) in liability for retirement benefits
Interest and dividend income
Exchange (gain) loss
(Gain) loss on disposal of fixed assets
Decrease (increase) in trade notes and accounts receivable
Decrease (increase) in inventories
Increase (decrease) in trade notes and accounts payable
Other, net
SubtotalInterest and dividends received
Income taxes paid
Net cash provided by operating activities¥29,323
7,994
127
(889)
(134)
(4,790)2,004(4,710)(207)(1,410)27,307857(7,185)
20,979¥20,179
8,581
70(1,121)
22
586
1,586
1,033
(1,013)(240)
29,684
1,152(5,006)25,830$184,187
78,328641(10,240)
209
5,354
14,477
9,429(9,246)(2,197)
270,942
10,522(45,700)
235,764

Cash Flows from Investing Activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchases of short-term investments
Proceeds from sales of short-term investments
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of investment securities
Other, net
Net cash used in investing activities－－(2,000)2,000(16,524)
6,033(1,162)(1,082)(12,735)(1,635)
1,635
－
1,000
(15,391)
81
(802)
(133)
(15,246)(14,928)
14,928－9,127(140,485)
746(7,324)(1,221)(139,157)

Cash Flows from Financing Activities:
Repayment of short-term loans payable
Proceeds from long-term loans payable
Cash dividends paid
Purchases of treasury stock
Proceeds from sales of treasury stock
Net cash used in financing activities(56)－(8,170)(3,004)
162(11,069)－635(9,830)(4,083)
1,147(12,132)－
5,795(89,729)(37,274)
10,474(110,734)(2,571)(5,396)
118,956¥113,560(1,149)(2,697)
113,560¥110,863(10,493)(24,620)
1,036,514$1,011,894

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and Cash Equivalents at the Beginning of Year
Cash and Cash Equivalents at the End of YearSee notes to consolidated financial statements.

Notes to Consolidated Financial Statements
Mabuchi Motor Co., Ltd. and Consolidated Subsidiaries
December 31, 2018 and 2019

1. Summary of Significant Accounting Policies
a Basis of presentation
The accompanying consolidated financial statements of Mabuchi Motor Co., Ltd. (the “Company”) and consolidated subsidiaries areprepared in accordance with accounting principles generally accepted in Japan, which are different in certain respects to the applicationand disclosure requirements of International Financial Reporting Standards, and are compiled from the consolidated financial
statements prepared by the Company as required by the Financial Instruments and Exchange Law of Japan.
For the purpose of this report, certain reclassifications have been made to present the accompanying consolidated financial
statements in a format which is familiar to readers outside Japan.
The consolidated financial statements are expressed in Japanese yen. However, the consolidated financial statements as of, and forthe year ended December 31, 2019, have been translated into U.S. dollars at the rate of ¥109.56 = U.S.$1, the approximate exchange
rate prevailing on December 31, 2019. Those U.S. dollar amounts presented in the consolidated financial statements and related notes
are included solely for the convenience of the reader. This translation should not be construed as a representation that all the amounts
shown could be converted into U.S. dollars.
b Principles of consolidation
The consolidated financial statements include the accounts of the Company and all significant subsidiaries. All significant inter-company
balances, transactions, and profits have been eliminated on consolidation. Investments in an unconsolidated subsidiary are stated atcost.
c Foreign currency translation
Receivables and payables denominated in foreign currencies are translated into yen at the rates of exchange in effect at the balance
sheet date, and differences arising from the translation are included in the consolidated statement of income.
The balance sheet accounts of the foreign consolidated subsidiaries are translated into yen at the rates of exchange in effect at thebalance sheet date, except for the components of net assets which are translated at their historical exchange rates. Revenue andexpense accounts are translated at the average rate of exchange in effect during the year. Differences arising from the translation arepresented as foreign currency translation adjustments in the consolidated financial statements.
d Cash equivalents
For the purposes of the consolidated statement of cash flows, the Company considers all highly liquid debt instruments purchased withan original maturity of three months or less to be cash equivalents.
e Short-term investments and investment securities
The Company classifies securities as “trading securities,” when they are held for the purpose of earning capital gains in the short-term,“held-to-maturity,” where management has the positive intent and ability to hold the securities to maturity, and “other securities,” where
those securities are not classified as either trading or held-to-maturity, which represent primarily available-for-sale securities.
Held-to-maturity securities are reported at amortized cost. Available-for-sale securities are stated at fair value with changes in
unrealized holding gains or losses, net of the applicable income taxes, presented in a separate component of net assets. However,when the fair value of held-to-maturity securities and available-for-sale securities declines significantly and the decline is considered tobe irrecoverable, such unrealized holding losses are recognized as impairment losses. Available-for-sale securities for which fair value
is not readily determinable are stated at moving average cost.
Corporate bonds classified as held-to-maturity securities and debt securities (corporate bonds) classified as available-for-salesecurities include compound financial instruments.
The Company considers a decline in the value of securities to be irrecoverable where market values decline to more than 50% of
acquisition costs. Where market values decline to between 30% and 50% of acquisition costs, the Company judges the necessity ofrecognizing any impairment losses by assessing the potential of market values to recover taking into consideration declining pricetrends and other individually relevant factors.
fInventories
Finished goods, work in process and raw materials are stated at average cost, however, where net realizable value is lower th an cost,
the carrying value of the inventory is reduced.
g Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost. Depreciation is computed primarily using the declining-balance method for theCompany (except for certain buildings) and for overseas subsidiaries, principally using the straight-line method over their estimateduseful lives. Buildings acquired by the Company on or after April 1, 1998 and facilities attached to buildings and structures acquired on
or after April 1, 2016 are depreciated using the straight-line method. Maintenance and repairs, including minor repairs and improvements,
are charged to income as incurred.
h Leased assets
Assets under finance leases, except for those under lease agreements which stipulate the transfer of ownership of the leased assets
to the lessee, are depreciated using the straight-line method over the lease period with the assumption that there is no residual value.
i
Allowance for doubtful accounts
The allowance to provide for potential loss on receivables is provided at the estimated amount of irrecoverable receivables. Allowancefor ordinary debt is computed based on the historical rate of default. For certain debts, such as those where recovery is dou btful, thelikelihood of recovery is considered on an individual basis.
The allowance for doubtful accounts is adjusted after offsetting receivables and payables between consolidated subsidiaries.
j
Accrued bonuses due to employees
Accrued bonuses due to employees are provided at the estimated amount to be paid to employees for the services rendered by thebalance sheet date.
k Accrued bonuses due to directors
Accrued bonuses due to directors and executive officers are provided at the estimated amount to be paid to directors and executive
officers for the services rendered by the balance sheet date.
l
Accrued benefits for stock payment
Accrued benefits for stock payment are provided at the amount of stocks to be paid to directors through the trust by the balance
sheet date based on the performance-linked stock compensation plan.
m Retirement benefits

(a) Allocation of projected retirement benefit obligation
In calculating the retirement benefit obligation, the benefit formula basis is used to allocate the projected retirement benefit obligation
to the estimated years of service of eligible employees.
(b) Method for amortizing actuarial gain or loss and prior service cost
Actuarial gains and losses are amortized commencing from the year following the year in which the gains or losses arose, primarily
using the straight-line method within the average remaining years of service of the employees, which is mainly 10 years.
Prior service costs are amortized using the straight-line method mainly over 10 years.
(c) Application of simplified method at smaller-sized companies, etc.
Certain subsidiaries have pension plans similar to the Company or unfunded retirement and termination allowance plans for
qualifying employees. Any amounts required under the rules of the plans have been fully accrued.
n Income taxes
Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax basesof assets and liabilities and their reported amounts using current enacted tax rates.
o Derivative and hedging activities
If a forward foreign exchange contract is executed to hedge a future transaction denominated in a foreign currency, the Company
defers recognition of gains or losses on revaluation of the forward foreign exchange contract until the related losses or gains on thehedged items are recognized.
p Accounting standards issued but not yet effective
Revenue Recognition(a) “Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 29 issued March
30, 2018)(b) “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30 issued March 30, 2018)
1） Overview
The Accounting Standard and the Implementation Guidance provide comprehensive principles for revenue recognition. An entity
applies the following five steps to recognize revenue.
① Identify the contracts with a customer② Identify the separate performance obligations in the contract③ Determine the transaction price④ Allocate the transaction price to the performance obligations⑤ Recognize revenue when or as the performance obligation is satisfied
2） Scheduled date of adoption
The Company expects to adopt the Accounting Standard and the Implementation Guidance from the fiscal year beginning January
1, 2022.
3） Impact of adopting the accounting standards
The Company is currently evaluating the impact of adopting the Accounting Standard and the Implementation Guidance on its
consolidated financial statements.
q Changes in presentation(Changes in line with the application of the “Partial Amendments to Accounting Standard for Tax Effect Accounting”)
The Company applied the “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February
16, 2018) from the beginning of the fiscal year ended December 31,2019. Therefore, deferred tax assets were presented in Investments
and Other Assets, deferred tax liabilities were presented in Long-term Liabilities, and notes regarding tax effect accounting were
updated.
As a result, in the consolidated balance sheet for the previous fiscal year, “Deferred tax assets” in the amount of ¥374 million, which
had been included in “Current Assets” of ¥1,570 million were included in “Deferred tax assets” of ¥825 million in “Investments andOther Assets” and “Deferred tax assets” of ¥1,196 million and “Deferred tax liabilities” of ¥69 million, which had been included in“Current Assets” and “Current Liabilities”, respectively, were included in “Deferred tax liabilities” of ¥1,393 million in “Long-term
Liabilities”.
Note 8, excluding total amount of valuation allowance, and Note 9 of “Accounting Standard for Tax Effect Accounting” prescribed in
Paragraphs 3 to 5 of Partial Amendments to Accounting Standard for Tax Effect Accounting were reflected in the notes regarding tax
effect accounting.
However, comparative information for the fiscal year ended December 31, 2018 was not disclosed in accordance with the transitional
measures prescribed by Paragraphs 7 of Partial Amendments to Accounting Standard for Tax Effect Accounting.
r Additional information(Accounting Treatment for Transactions of Delivering the Company’s Own Stock to Employees, etc., through Trusts)
1. Outline of transactions
The Company implemented an E-Ship® Trust-Type Employee Stock Ownership Incentive Plan (hereinafter, “the Incentive Plan) . The
purpose of the Incentive Plan is to promote the constant development of the Company by motivating and encouraging enthusiasm
among employees. This will be accomplished by providing incentives to raise the medium- to long-term corporate value of the Company,
enhancing the employee welfare program, and facilitating capital participation as shareholders of the Company.
The Incentive Plan is available to all employees who belong to the Mabuchi Motor Employee Shareholders Association (hereinafter,“the Employee Shareholders Association”). Under the Incentive Plan, the Company will establish a trust—the Mabuchi Motor Employee
Shareholders Association Exclusive Trust (hereinafter, “the Employee Shareholders Association Exclusive Trust”)—through a trust bank.
The Employee Shareholders Association Exclusive Trust will estimate the number of shares that the Employee Shareholders
Association is likely to acquire over the next three years and will purchase this amount in advance using bank loans. Subsequently, theEmployee Shareholders Association Exclusive Trust will continuously sell Company shares to the Employee Shareholders Association
and, if an amount equivalent to net gains on Company shares has accumulated in the Employee Shareholders Association Exclusive
Trust when the trust period comes to an end, such money will be distributed as residual assets to members of the Employee
Shareholders Association who meet the beneficiary eligibility criteria. Please note that the Company will guarantee loans taken out topurchase Company shares and will repay any outstanding portion of the loans if, due to a drop in the market price of Company shares,
an amount equivalent to the loss on sale of shares has accumulated in the Employee Shareholders Association Exclusive Trust when
the trust period comes to an end.
The Company applied the “Revised Practical Solution on Transactions of Delivering the Company’s Own Stock to Employees etc.
through Trusts” (ASBJ PITF No.30 revised on March 26, 2015).
2. Treasury shares remaining in the trust
Shares of the Company remaining in the trust are recorded as treasury stock under net assets based on the carrying value (net of
associated costs) in the trust. The carrying value was ¥634 million ($5,795 thousand) at December 31, 2019.
Per share amounts are computed based on the number of shares outstanding less treasury stock including shares of the Employee

Shareholders Association Exclusive Trust account. The number at year-end and the weighted average number of such treasury shareswere 139,100 and 7,241 shares, respectively, during the fiscal year ended December 31, 2019.
3. Carrying value of loans recorded based on the gross method
As of December 31, 2019: ¥635 million ($5,795 thousand)(Accounting Treatment for Performance-based Stock Compensation Plan for Directors and Executive Officers)
1. Outline of transactions
The Company has introduced the Executive Compensation BIP (Board Incentive Plan) Trust Plan, the executive remuneration systemclosely linked to the achievement of performance targets as set out in the medium-term management plan, with the purpose ofenhancing the motivation of Directors to contribute to improved business performance and increased corporate value over the medium
term.
Under the Plan, the Company’s shares acquired through the BIP Trust and money equivalent to the amount obtained by converting
the Company’s shares into cash (collectively, the “Company Shares, etc.”) will be delivered and paid (the “Delivery, etc.” or “delivered,etc.”) to those serving as Directors, etc., during the target period based on factors such as the status and level of attainment of
performance targets throughout the trust term. Directors, etc., will receive the Delivery, etc., of Company Shares, etc., during a certain
timeframe following the end of the target period. Originally, the target period was over the three-year period from the fiscal year ended
December 31, 2016, to the fiscal year ended December 31, 2018. However, the plan was extended and the target period is over thethree-year period from the fiscal year ending December 31, 2019, to the fiscal year ending December 31, 2021.
The Company applied the “Revised Practical Solution on Transactions of Delivering the Company’s Own Stock to Employees, etc.,
through Trusts” (ASBJ PITF No. 30 revised on March 26, 2015).
2. Treasury shares remaining in the trust
Shares of the Company remaining in the trust are recorded as treasury stock under net assets through the carrying value (net of
associated costs) in the trust. The carrying value was ¥651 million at December 31, 2018 and ¥904 million ($8,259 thousand) at
December 31, 2019.
Per share amounts are computed based on the number of shares outstanding less treasury stock including shares of the BIP Trustaccount. The number of such treasury shares at December 31, 2018 was 116,386 shares, and at December 31, 2019 was 203,226
shares, and the number of such treasury shares during the fiscal year ended December 31, 2018 was 116,386 shares and during the
fiscal year ended December 31, 2019 was 133,971 shares.

2.

Changes in Net Assets
Information regarding changes in net assets for the years ended December 31, 2018 and 2019, is as follows:a Shares issued and outstanding / Treasury stock2018
Shares Issued (Thousands)
Treasury Stock (Thousands)
Type of shares
Common stock
Common stock
Number of shares as of December 31, 201769,125
1,513
Increase in number of shares
563
Decrease in number of shares
563
637
Number of shares as of December 31, 2018
68,562
1,440
Note: 1. The decrease in the number of shares issued and the number of shares of treasury stock was due to the cancellation of 563
thousand shares.
2. The increase in the number of shares of treasury stock was due to the purchase of 563 thousand shares of treasury stock andthe purchase of 0 thousand shares of less than one unit.
3. The decrease in the number of shares of treasury stock was, other than Note 1, due to sales of 51 thousand shares to themarket accompanied by the expiration of the ESOP Trust period, sales of 12 thousand shares to Our Shareholding Associationby the ESOP Trust, disposition of 9 thousand treasury shares as restricted stock compensation, and the exercise of 1 thousandstock options.
4. There were 63 thousand shares and - thousand shares of treasury stock held by the ESOP Trust included in the number ofshares of treasury stock as of January 1, 2018 and December 31, 2018, respectively and there were 116 thousand shares and
116 thousand shares of treasury stock held by the BIP Trust included in the number of shares of treasury stock as of January
1, 2018 and December 31, 2018, respectively.

2019
Shares Issued (Thousands)
Treasury Stock (Thousands)
Type of shares
Common s toc kCommon s toc k
Number of shares as of December 31, 2018
68,562
1,440
Increase in number of shares
1,038
Decrease in number of shares
309
Number of shares as of December 31, 2019
68,562
2,169
Note: 1. The increase in the number of shares of treasury stock was due to the purchase of treasury stock, the BIP Trust, the Employee
Shareholders Association Exclusive Trust, and the purchase of shares of less than one unit( 777 thousand, 121 thousand, 139
thousand, and 0 thousand shares, respectively).
2. The decrease in the number of shares of treasury stock was due to disposition of 14 thousand treasury shares as restricted
stock compensation, allocation of 121 thousand shares and 139 shares to the third party representing the BIP Trust and the
Employee Shareholders Association Exclusive Trust, respectively, sales of 17 thousand and distribution of 16 thousand sharesof treasury stock held by the BIP Trust.
3. There were - thousand shares and 139 thousand shares of treasury stock held by the Employee Shareholders Association
Exclusive Trust included in the number of shares of treasury stock as of January 1, 2019 and December 31, 2019, respectively
and there were 116 thousand shares and 203 thousand shares of treasury stock held by the BIP Trust included in the numberof shares of treasury stock as of January 1, 2019 and December 31, 2019, respectively.

b

Share subscription rights

2018

Number of shares issued

Company

Description

Type of sharesissuedNumber ofshares at
January 1,
2018

Increase

Decrease

Number ofshares at
December 31,
2018

Balance at
December 31,
2018
Yen (Millions)

―

―

―

―

―

¥124

―

―

―

―

―

¥124

Subscription rights
as stock options
Total

Parent Company

2019

Number of shares issued

Company

Description
Subscription rights
as stock options
Total

Parent Company

Type of sharesissuedNumber ofshares at
January 1,
2019

Increase

Decrease

Number ofshares at
December 31,
2019

Balance at
December 31,
2019
Yen (Millions)

U.S. Dollars(Thousands)

―

―

―

―

―

¥124

$1,134

―

―

―

―

―

¥124

$1,134c Dividends
Dividends paid during the fiscal year ended December 31, 20182018
Shareholders’ Meeting
Board of Directors’ Meeting
Resolution by
March 29, 2018
August 10, 2018
Total amount of dividends¥4,474 million¥3,698 million
Dividends per share¥66¥55
Record date
December 31, 2017
June 30, 2018
Effective date
March 30, 2018
September 14, 2018
Note: Dividends approved at the shareholders’ meeting on March 29, 2018 paid to the ESOP Trust and the BIP Trust in the amount of¥11 million have been included in the total amount of dividends. Dividends approved at the Board of Directors’ meeting on August
10, 2018 paid to the ESOP Trust and the BIP Trust in the amount of ¥9 million have been included in the total amount of dividends.

Dividends whose record date was in the fiscal year ended December 31, 2018, but whose effective date was in the following fiscal year
2018
Shareholders’ Meeting
Resolution by
March 28, 2019
Total amount of dividends¥5,379 million
Dividends per share¥80
Record date
December 31, 2018
Effective date
March 29, 2019
Note: Dividends paid to the BIP Trust in the amount of ¥9 million have been included in the total amount of dividends.

Dividends paid during the fiscal year ended December 31, 20192019
Shareholders’ Meeting
Board of Directors’ Meeting
Mar c h 28, 2019
Augus t 9, 2019
¥5,379 million¥4,453 million
Total amount of dividends( $49,097 thous and)( $40,652 thous and)
¥80
¥67
Dividends per share( $0.73)( $0.61)
Record date
Dec ember 31, 2018
J une 30, 2019
Effective dateMar c h 29, 2019
September 17, 2019
Note: Dividends approved at the shareholders’ meeting on March 28, 2019 paid to the BIP Trust in the amount of ¥9 million ($84
thousand) have been included in the total amount of dividends. Dividends approved at the Board of Directors’ meeting on Augus t
9, 2019 paid to the BIP Trust in the amount of ¥5 million ($50 thousand) have been included in the total amount of dividends.
Resolution by

Dividends whose record date was in the fiscal year ended December 31, 2019, but whose effective date was in the following fiscal year
2019
Shareholders’ Meeting
Mar c h 27, 2020
¥4,538 million
Total amount of dividends( $41,420 thous and)
¥68
Dividends per share( $0.62)
Record date
Dec ember 31, 2019
Effective dateMar c h 30, 2020
Note: Dividends paid to the Employee Shareholders Association Exclusive Trust and the BIP Trust in the amount of ¥23 million ($212
thousand) have been included in the total amount of dividends.
Resolution byd Stock options
The Company issued the following share subscription rights for the purchase of new shares of common stock in accordance with the
Corporation Law of Japan.
For the years ended December 31, 2018 and 2019, the Company didn’t recognize nor allocate share-based compensation costs.
A description of the 2013, 2014, 2015, 2016 and 2017 Stock Option Plans as of December 31, 2019, respectively, are summarized asfollows:

Grantee categories andnumber of grantees
Number of shares
Grant date
Vesting conditions
Service period
Exercisable period

2013 Stock
Option Plan

2014 Stock
Option Plan

2015 Stock
Option Plan

2016 Stock
Option Plan

2017 Stoc kO ption Plan
6 dir ec tor s of the

6 directors of theCompany

6 directors of theCompany

6 directors of theCompany

11,940 shares of

7,980 shares of

4,650 shares of

10,360 shares of

the Company
8,180 s har es ofcommon stock
May 20, 2013
None
None
May 21, 2013 tocommon stock
April 21, 2014
None
None
April 22, 2014 tocommon stock
April 20, 2015
None
None
April 21, 2015 tocommon stock
April 20, 2016
None
None
April 21, 2016 toc ommon s toc k
Apr il 20, 2017
None
None
Apr il 21, 2017 to

May 20, 2033

April 21, 2034

April 20, 2035

April 20, 2036

Apr il 20, 2037

6 directors of the Company

Company

5 executive officers of

4 ex ec utiv e offic er s of

the Company

Note: The Company conducted a 2-for-1 stock split of its common stock on January 1, 2015. The number of shares for fiscal 2013 and2014 reflect the stock split.
The following table summarizes the option activity under the stock option plans referred to above.
2013 Stock
Option Plan

2014 Stock
Option Plan

Number of shares2016 Stock
Option Plan

2015 Stock
Option Plan

2017 Stoc kO ption Plan

Non-vested:
Outstanding as of December 31, 2018
GrantedForfeited
VestedOutstanding as of December 31, 2019

-

-

-

-

-

Vested:Outstanding as of December 31, 2018
VestedExercised
Forfeited
Outstanding as of December 31, 2019

5,800
5,800

3,880
3,880

3,810
3,810

7,800
7,800

7,630
7,630

-

Note: Number of stock options are listed after conversion to share numbers.
Price information of stock options for the 2013, 2014, 2015, 2016 and 2017 Stock Option Plans are summarized as follows:2013 Stock
Option Plan
Yen
Exercise price
Average price on exercise
Fair value on grant date

¥1
4,967

2014 Stock
Option Plan
Yen
¥1
6,158

2015 Stock
Option Plan
Yen
¥1
5,465

2016 Stock
Option Plan
Yen
¥1
4,699

2017 Stoc kO ption Plan
Yen
¥1
5,304

Since it is fundamentally difficult to reasonably estimate the forfeited number of stock options for future periods, an estim ation of thevested number is based upon actual forfeitures in prior periods.

3.

Cash and Cash Equivalents

Cash and cash equivalents at the end of the year in the accompanying consolidated statement of cash flows are reconciled to c ash andbank deposits reported in the accompanying consolidated balance sheet as of December 31, 2018 and 2019, as follows:

Cash and bank deposits
Time deposits with maturities over three months at the time of purchase
Short-term investments
Securities exposed to price risk
Cash and cash equivalents

4.

Yen (Millions)
2018
2019
¥113,066¥110,369
(6)
( 6)
2,500
2,301
(2,000)( 1,801)¥113,560¥110,863

U.S. Dollars (Thousands)
2019$1,007,386( 55)
21,002( 16,438)$1,011,894

Financial Instruments(1) Financial instrumentsa. Policies for financial instruments
The Company funds R&D expenditure and equipment investment through retained earnings to maintain a sound financial position.
According to this policy, the Company limits the management of surplus funds to short-term deposits and other highly secure financial
assets. The Company uses derivatives to mitigate risks as described below and does not engage in speculative transactions.
b. Financial instruments description and risks
Trade notes and accounts receivable are exposed to customer credit risk and some are also exposed to foreign currency risk.
Short-term investments and investment securities, primarily securities and investments in stocks of trading partners, are exposed t o
the risk of fluctuations in market prices.
Trade notes and accounts payable are due within one year, and some are exposed to foreign currency risk.
The Company uses forward foreign exchange contracts to hedge the risk of foreign exchange fluctuations associated with receivables
and payables and forecasted transactions denominated in foreign currencies.
c. Risk management of financial instruments
1. Management of credit risk (risks associated with the default of counterparties)
The Company and its consolidated subsidiaries manage credit risk in compliance with internal control rules and procedures. Th e due
dates and the balances of trade notes and accounts receivable from major counterparties are monitored and managed regularly to ensur eearly detection and to mitigate the risk of doubtful receivables.
2. Management of market risk (risks associated with fluctuations in foreign exchange rates and interest rates)
The Company and some of its consolidated subsidiaries hedge the risk of foreign exchange rate fluctuations on foreign currenc y
denominated receivables and payables and forecasted transactions, using foreign exchange forward contracts on a monthly andindividual currency basis. The Company enters into exchange contracts based on the decision of the Board of Directors and these aremonitored regularly by the head office accounting and finance department.
The Company monitors the fair value and the financial position of the respective issuers of short-term investments and investment
securities regularly in the head office accounting and finance department, and continually reviews the condition of stocks held. The
Company reports the condition of stocks held and their fair value to the Board of Directors, and monitors the rating and financial conditionsof issuers.
3. Management of liquidity risk related to financing activities (risk of non-payment on due date)
The Company manages liquidity risk centrally through the accounting and finance department, which ensures a certain amount of liquidity
through the preparation and update of cash forecasts based on reports from each department and the finance plans prepared by theaccounting departments of each subsidiary.
d. Supplemental information on the fair value of financial instruments
The Company calculates the fair value of financial instruments based on market prices, or by using reasonable estimates when market
prices are not available.
These estimates include variable factors, and therefore may change depending on changes in the underlying assumptions. The
contract amounts of the derivatives described in Note 6. Derivative Financial Instruments are not indicative of the market risk associatedwith derivatives transactions.
(2) Fair value of financial instruments
The carrying value, fair value and variance for financial instruments as of December 31, 2018 and 2019, were as follows. Fair values
that are not readily determinable are not included in the following table.

Yen (Millions)
2018
Fair value

Carrying value
Assets:(1) Cash and bank deposits(2) Trade notes and accounts receivable(3) Short-term investments and investment securities
Total assets
Liabilities
Trade notes and accounts payable
Total liabilities

Assets:(1) Cash and bank deposits(2) Trade notes and accounts receivable(3) Short-term investments and investment securities
Total assets
Liabilities
Trade notes and accounts payable
Total liabilities

Variance¥113,066
23,90911,433¥148,409¥113,066
23,90911,433¥148,409¥¥-¥6,376¥6,376¥6,376¥6,376¥¥-

Carrying value

Yen (Millions)
2019
Fair value¥110,369
21,913
13,178¥145,461¥110,369
21,913
13,178¥145,461¥ ¥ -$1,007,386
200,009120,288$1,327,684$1,007,386
200,009120,288$1,327,684$ $ -¥6,003¥6,003¥6,003¥6,003¥ ¥ -$54,797$54,797$54,797$54,797$ $ -Variance

U.S. Dollars (Thousands)
2019
Carrying value
Fair value

Variance

1: Method for calculating the fair values of financial instruments, short-term investments and derivative transactions
Assets:(1) Cash and bank deposits, (2) Trade notes and accounts receivable
The carrying value is used for the fair value of these short-term items because these amounts are approximately the same.
(3) Short-term investments and investment securities
Market prices on securities exchanges are used to determine the fair value of stock. Prices quoted by exchanges or financial institutions
are used to determine the fair value of bonds.
Liabilities:
Trade notes and accounts payable
The carrying value is used for the fair value of these short-term items because these amounts are approximately the same.
Derivative instruments:
Please refer to Note 6. Derivative Financial Instruments.
2: Carrying value of financial instruments for which fair values were extremely difficult to determine
Yen (Millions)
2018
¥275

Unlisted stocks

2019
¥103

U.S. Dollars (Thousands)
2019
$941

These items are not included in “(3) Short-term investments and investment securities” because market prices do not exist for these
items and their fair values are not readily determinable.
3: Redemption schedule for receivables and marketable securities with maturities at December 31, 2018 and 2019

Cash and bank deposits
Trade notes and accounts receivable
Short-term investments and investment securities
Other securities
Corporate bonds
Certificate of deposit
Total

Cash and bank deposits
Trade notes and accounts receivable
Short-term investments and investment securities
Other securities
Corporate bonds
Certificate of deposit
Total

Within 1 year
¥113,066
23,909Yen (Millions)2018
1-5 years
¥-

2,000
500
¥139,475¥-

Within 1 year
¥110,369
21,913

Yen (Millions)2019
1-5 years¥ -5-10 years
¥ -

1,801
500
¥134,583¥ -¥ -5-10 years¥-¥-

U.S. Dollars (Thousands)
2019
Within 1 year
1-5 years$1,007,386$ 200,009-

16,4384,563$1,228,398$ -5-10 years
$ -

$ -

5.

Investment Securities

The carrying value, fair value and variance for held-to-maturity securities as of December 31, 2018 and 2019, were as follows:(1) Held-to-maturity securities
Not applicable for the years ended December 31, 2018 and 2019.
The acquisition cost, carrying value and variance for other securities as of December 31, 2018 and 2019, were as follows:(2) Other securities
Yen (Millions)2018
Acquisition cost

Carrying value
Securities whose carrying value exceeds their acquisition cost
Stock
Credit (Corporate bonds)
Subtotal
Securities whose acquisition cost exceeds their carrying value
Stock
Credit (Corporate bonds)
Other
Subtotal
Total

Variance¥5,1531,000
6,153¥1,942
1,000
2,942¥3,211
0
3,211

3,283
1,000
995
5,279
¥11,433

3,585
1,000
1,000
5,585
¥8,528

(301)
(4)
(305)
¥2,905

Note: Unlisted stocks of ¥41 million are not included in “Other securities” because their market prices do not exist and their fair values
are not readily determinable.

Securities w hose carry ing v alue ex ceeds their acquisition cost
Stock
Credit (Corporate bonds)
Other
Subtotal
Securities w hose acquisition cost ex ceeds their carry ing v alue
Stock
Credit (Corporate bonds)
Other
Subtotal
Total

Carrying value

Yen (Millions)2019
Acquisition cost

¥8,926
1,000
542
10,468¥4,028
1,000
500
5,528

¥4,8970
42
4,939$81,473
9,127
4,950
95,551$36,773
9,127
4,563
50,464$44,6990386
45,086

1,409
801
500
2,710
¥13,178

1,499
801
500
2,800
¥8,329

( 89)
( 0)
( 90)
¥4,84912,861
7,311
4,563
24,737$120,288

13,683
7,312
4,563
25,559$76,024( 821)( 1)( 822)$44,264

Variance

U.S. Dollars (Thousands)
2019
Carrying value
Acquisition cost

Variance

Note: Unlisted stocks of ¥33 million ($302 thousand) are not included in “Other securities” because their market prices do not exist andtheir fair values are not readily determinable.
(3) Other securities soldNot applicable for the years ended December 31, 2018 and 2019.
(4) Held-to-maturity securities soldNot applicable for the years ended December 31, 2018 and 2019.

6.

Derivative Financial Instruments

The Company enters into forward exchange contracts and options, and forward precious metal contracts, as a normal part of ris kmanagement efforts. The Company also utilizes compound financial instruments for the purpose of efficient management of surplus
funds. However, only principal guaranteed instruments are used, and derivatives are not used for speculative trading purposes . As aresult, the Company is exposed to risk of currency rate fluctuations and commodity price risk. The Company is also exposed to credit
related losses in the event of the nonperformance of the counterparties to foreign exchange contracts, precious metal contrac ts andcompound instruments. Management believes such credit risks are minor because of the high credit worthiness of the counterparties
and as such financial instruments are not held for trading purposes.
Forward precious metal contracts are used by the Company to hedge the risk of changes in market prices resulting from the purchaseof precious metals as raw materials for motor products. These contracts are long-term purchase contracts of raw materials, and are also
not in the scope of the accounting standards of financial instruments.
The fair value of derivative transactions for which hedge accounting is not applied is the forward foreign exchange quotation or the
price provided by correspondent financial institutions.

(1) Derivative transactions for which hedge accounting is not applied
1. Forward exchange contracts and currency option transactions
Yen (Millions)2018
Maturity over 1 year

Contract amountNon-market transactions
Forward exchange contracts
Sell US$
Total¥19,708¥19,708¥¥-¥23,083¥23,083¥ ¥ -$210,689$210,689$ $ -Revaluation gain/loss¥3¥3

Fair value

Revaluation gain/loss

¥9
¥9

¥9
¥9

U.S. Dollars (Thousands)
2019
Maturity over 1 year
Fair value

Contract amountNon-market transactions
Forward exchange contracts
Sell US$
Total

¥3
¥3

Yen (Millions)2019
Maturity over 1 year

Contract amountNon-market transactions
Forward exchange contracts
Sell US$
Total

Fair value

Revaluation gain/loss

$90
$90

$90
$90

Fair value

Revaluation gain/loss¥9,918¥9,918¥532¥532

Fair value

Revaluation gain/loss¥8,294¥8,294¥1,183¥1,183

2. Forward precious metal contracts
Yen (Millions)2018
Maturity over 1 year

Contract amountNon-market transactions
Buy
Total

¥9,385¥9,385¥5,654¥5,654
Yen (Millions)2019
Maturity over 1 year

Contract amountNon-market transactions
Buy
Total

¥7,110¥7,110¥3,108¥3,108

U.S. Dollars (Thousands)
2019
Maturity over 1 year
Fair value

Contract amountNon-market transactions
Buy
Total

$64,901$64,901$28,376$28,376$75,707$75,707

Revaluation gain/loss$10,805$10,805(2) Derivative transactions for which hedge accounting is applied
Dividends receivable from foreign subsidiaries
Yen (Millions)2018
Hedge accounting method
Principle-based accounting

Hedging instrument
Forward exchange contracts
Sell US$

Hedged item
Dividends

Total

Contract amount

Maturity over 1 year

Fair value¥4,314¥4,314

¥¥-

¥(53)
¥(53)

Contract amount

Maturity over 1 year

Fair value

¥539
¥539

¥ ¥ -

¥( 3)
¥( 3)

Maturity over 1 year

Fair value$ $ -$( 27)$( 27)Yen (Millions)
2019
Hedge accounting method
Principle-based accounting

Hedging instrument
Forward exchange contracts
Sell US$

Total

Hedge accounting method
Principle-based accounting
Total

Hedging instrument
Forward exchange contracts
Sell US$

Hedged item
Dividends

U.S. Dollars (Thousands)
2019
Hedged item
Contract amount
Dividends$4,919$4,919

7.

Retirement Benefit Plans

The table below sets forth the plans’ status and amounts recognized in the consolidated balance sheets at December 31, 2018 and 2019.
1. Movement in retirement benefit obligations

Beginning balance
Service cost
Interest cost
Actuarial loss (gain)
Benefit paid
Other
Ending balance

Yen (Millions)
2018
2019
¥12,130¥11,455
479
479
73
55
(157)
77
(909)
( 595)(161)
26¥11,455¥11,499

U.S. Dollars (Thousands)
2019$104,557
4,377
510
710
( 5,436)
241$104,960

Yen (Millions)2018¥10,013
100
89
451
(661)
(119)
¥9,873

2019¥9,87395
170
462( 567)( 241)¥9,794

U.S. Dollars (Thousands)
2019$90,122
876
1,559
4,221
( 5,177)( 2,205)$89,396

2019
¥415
59
( 35)
( 5)
¥434

U.S. Dollars (Thousands)
2019$3,795544( 321)( 51)$3,966

2. Movement in plan assets

Beginning balance
Expected return on plan assets
Actuarial gain (loss)
Contributions paid by the employer
Benefit paid
Other
Ending balance

3. Movement in retirement benefit obligations calculated using the simplified method

Beginning balance
Retirement benefit cost
Benefit paid
Other
Ending balance

Yen (Millions)
2018
¥415
61
(44)
(16)
¥415

4. Reconciliation from retirement benefit obligations and plan assets to liability (asset) for retirement benefits

Unfunded retirement benefit obligations
Total net liability for retirement benefits at December 31

Yen (Millions)
2018
2019
¥11,455¥11,499(9,873)( 9,794)
1,581
1,705
415
434
¥1,997¥2,139U.S. Dollars (Thousands)
2019$104,960( 89,396)
15,563
3,966$19,530

Liability for retirement benefits
Total net liability for retirement benefits at December 31

Yen (Millions)2018¥1,997¥1,9972019¥2,139¥2,139U.S. Dollars (Thousands)
2019$19,530$19,530

Yen (Millions)
2018
¥479
73
(100)
180
0
61
288
¥984

2019
¥479
55
( 95)
159
0
59
96
¥756

U.S. Dollars (Thousands)
2019$4,377510( 876)
1,455
6
544
883
$6,901

Funded retirement benefit obligations
Plan assets

5. Retirement benefit costs

Service cost
Interest cost
Expected return on plan assets
Amortization of unrecognized actuarial gain
Amortization of prior service cost
Retirement benefit costs applying a simplified method
Other
Total retirement benefit costs for the fiscal y ear ended December 31

6. Retirement benefits liability adjustments before tax effect in other comprehensive income
Yen (Millions)2018
Prior service cost
Actuarial loss
Total balance amount for the year

2019
¥0
252
¥253

¥0
408
¥409

U.S. Dollars (Thousands)
2019
$6
2,303
$2,310

7. Retirement benefits liability adjustments before tax effect in accumulated other comprehensive income
Yen (Millions)2018
Unrecognized prior service cost
Unrecognized actuarial loss
Total balance amount for the year

¥0
1,150
¥1,151

2019
¥0
898
¥898

U.S. Dollars (Thousands)
2019
$1
8,198
$8,2008. Plan assets
The fair values of plan assets, by major category, as a percentage of total plan assets were as follows:①

Plan assets at December 31, 2018 and 2019, comprise:

General accounts
Bonds
StocksCash and deposits
Other
Total

2018
67.6%
13.4%
5.1%
3.0%
10.9%
100.0%

2019
66.1%
12.4%
5.6%
3.5%
12.4%
100.0%② Long-term expected rates of return
The expected rates of return on plan assets have been estimated based on the anticipated allocation to each asset class and the
expected long-term returns on assets held in each category.
The assumptions used in accounting for the above plans were as follows:
Discount rates
Expected rates of return on plan assets
Expected rates of salary increase

8.

2018
Mainly 0.3%
Mainly 1.0%
Mainly 2.8%

2019
Mainly 0.4%
Mainly 1.0%
Mainly 2.7%

Income Taxes

1. Income taxes in Japan applicable to the Company consist of corporation tax, inhabitant’s taxes and enterprise tax, which, in theaggregate, resulted in statutory rates of approximately 30.7% and 30.5% for the years ended December 31, 2018 and 2019, respectively.
Income taxes of the foreign consolidated subsidiaries are based generally on the tax rates applicable in their countries of incorporation.
The reconciliation between the effective tax rates reflected in the consolidated statement of income and the effective statut ory tax rates
for the years ended December 31, 2018 and 2019 was as follows:

Effective statutory tax rates
Tax credits on dividend income
Different tax rates applied to foreign subsidiaries
Tax deduction
Undistributed earnings in foreign subsidiaries
Valuation allowance
Other, net
Effective tax rates

2018
Percentage
30.7
0.9
(9.8)
(1.3)
0.9
2.0
(1.6)
21.8

2019
Percentage
30.5
1.1( 5.6)( 1.0)
1.9
1.7
0.9
29.5

2. The significant components of deferred tax assets and liabilities at December 31, 2018 and 2019, were as follows:
Yen (Millions)
2019

U.S. Dollars (Thousands)
2019

¥85
138
537
320
247
71
11
93
16
1,455
1,068
436
4,482
-

¥88
141
508
247
71
7
27
0
1,312
1,436
427
4,270
( 1,436)

$811
1,295
4,645
2,261
650
64
250
8
11,981
13,107
3,905
38,981( 13,107)-( 441)( 4,031)(1,550)¥2,931( 1,877)¥2,392( 17,139)$21,841¥(2,480)
(54)
(885)
(79)
¥(3,499)¥(567)¥( 2,853)( 52)( 1,393)( 105)¥( 4,404)¥( 2,011)$( 26,043)( 481)( 12,716)( 960)$( 40,202)$( 18,360)

2018
Deferred tax assets:
Enterprise tax payable
Depreciation
Liability for retirement benefits
Loss on retirement of fixed assets
Valuation losses on investment securities and other assets
Valuation losses on golf club membership
Impairment loss
Net unrealized holding gains on securities
Deferred gains or losses on hedges
Unrealized profits on inventories and fixed assets
Loss carried forward (Note)
Other
Subtotal
Valuation allowance for tax loss carried forward (Note)
Valuation allowance for total amount of future deductible
temporary differences, etc.
Subtotal
Total
Deferred tax liabilities:
Tax on undistributed earnings in foreign subsidiaries
Reserve for reduction entry
Unrealized holding gains on securities
Other
Total
Net deferred tax assets (liabilities)

Loss carried forward
Valuation allowance
Deferred tax assets

Loss carried forward
Valuation allowance
Deferred tax assets

Within 1 year
¥ -Within 1 year
$ -1-2 years¥ -1-2 years$ -2-3 years
¥2
( 2)
-

Yen (Millions)2019
3-4 years
¥49
( 49)
-

U.S. Dollars (Thousands)
2019
2-3 years
3-4 years
$21
$447
( 21)
( 447)-＊: Loss carried forward was calculated by multiplying the effective statutory tax rate.

4-5 years¥146( 146)-

Over 5 years¥1,238( 1,238)-

Total¥1,436( 1,436)-

4-5 years$1,333( 1,333)-

Over 5 years$11,305( 11,305)-

Total$13,107( 13,107)-

9．Consolidated Statement of Comprehensive Income
The following table presents reclassification adjustments and tax effects for each component of other comprehensive income for theyears ended December 31, 2018 and 2019.
Yen (Millions)
U.S. Dollars (Thousands)
2018
2019
2019
Net unrealized holding gains (losses) on securities:
Amount arising during the year¥(3,313)¥1,944$17,743
Reclassification adjustments for gains and losses included in net income
Amount before tax effect(3,313)
1,944
17,743Tax effect787( 508)( 4,636)
Net unrealized holding gains (losses) on securities(2,526)
1,436
13,107
Deferred gains or losses on hedges:
Amount arising during the year
73
50
459
Tax effect
(22)
( 15)
( 140)
Deferred gains or losses on hedges
50
35
319
Foreign currency translation adjustments:
Amount arising during the year
(7,517)( 2,703)( 24,675)
Retirement benefits liability adjustments:
Amount arising during the year
227
92
848
Reclassification adjustments for gains and losses included in net income
181
160
1,462
Amount before tax effect
409
253
2,310
Tax effect
(103)
( 68)
( 622)
Retirement benefits liability adjustments
306
184
1,688
Total other comprehensive income¥(9,686)¥( 1,047)$( 9,560)

10. Shareholders’ Equity
Under the Japanese Corporation Law (“the Law”), the entire amount paid for new shares is required to be designated as common stock.
However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the price of the newshares as additional paid-in capital, which is included in capital surplus.
Under the Law, where a distribution of earnings is made, the smaller of an amount equal to 10% of the dividend or the excess, if any,of 25% of common stock over the total of additional paid-in capital and the legal earnings reserve must be set aside as additional paidin capital or as part of the legal earnings reserve. The legal earnings reserve is included in retained earnings in the accompanying
consolidated balance sheets.
As of December 31, 2019, the total amount of additional paid-in capital and the legal earnings reserve exceeded 25% of the common
stock; therefore, no additional transfer is required.
Additional paid-in capital and the legal earnings reserve may not be distributed as dividends. However, by a resolution at a shareholders ’meeting, additional paid-in capital and the legal earnings reserve may be transferred to other retained earnings and capital surplus,
respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statementsof the Company in accordance with the Law.
Year-end dividends are approved by the shareholders after the end of each fiscal year, and semiannual interim cash dividends are
declared by the Board of Directors after the end of each interim six-month period.
On September 17, 2019, interim dividends (¥67 or $0.61 per share) totaling ¥4,453 million ($40,652 thousand) were paid toshareholders based on the shareholders’ record at June 30, 2019. On March 27, 2020, the shareholders approved the declaration ofdividends (¥68 or $0.62 per share) totaling ¥4,538 million ($41,420 thousand).

11. Amounts per ShareYen
Profit attributable to owners of parent
Basic
Diluted

2018

2019

¥341.19¥341.05¥214.00¥213.91
Yen

Net assets

2018¥3,640.08

2019¥3,690.86

U.S. Dollars
2019
$1.95
$1.95
U.S. Dollars
2019$33.68Notes: 1. Per share amounts are computed based on the number of shares outstanding less treasury stock including shares of the ESOP
trust and the BIP trust during the fiscal year ended December 31, 2018. Those during the fiscal year ended December 31, 2019are computed based on the number of shares outstanding less treasury stock including shares of the Employee Shareholders
Association Exclusive Trust and the BIP trust
2. The numbers at year end of such treasury shares were 0 and 116,386 shares, respectively, during the fiscal year ended
December 31, 2018, and 139,100 and 203,226 shares, respectively, during the fiscal year ended December 31, 2019.
3. The weighted average numbers of such treasury shares were 29,988 and 116,386 shares, respectively, during the fiscal year
ended December 31, 2018, and 7,241 and 133,971 shares, respectively, during the fiscal year ended December 31, 2019.
The bases for calculation (net assets per share) are as follows:

Total net assets
Amounts deducted from total net assets:
Share subscription rights
Net assets attributable to shares of Common stock
Number of Common stock on December 31 (Shares)

Yen (Millions)
2018
2019
¥244,454¥245,172
124
124
124
124
¥244,330¥245,048
67,122,222
66,393,191

U.S. Dollars (Thousands)
2019$2,237,792
1,134
1,134
$2,236,658-

The bases for calculation (basic and diluted profit attributable to owners of parent per share) are as follows:
Yen (Millions)
2018
Profit attributable to owners of parent per share
Profit attributable to owners of parent
Amounts not attributable to ordinary shareholders
Profit attributable to owners of parent in relation to Common stock
Average number of Common stock (Shares)
Diluted profit attributable to owners of parent per share
Profit attributable to owners of parent adjustments
Increase in number of shares of Common stock (Shares)
Share subscription rights (Shares)

2019

U.S. Dollars (Thousands)
2019¥22,925
22,92567,191,599¥14,234
14,234
66,517,552$129,925
129,925-

29,24329,243

28,913
28,913-

12. Selling, General and Administrative Expenses
The main components of “Selling, General and Administrative Expenses” for the years ended December 31, 2018 and 2019, were as
follows:

Packing and freightage expenses
Salaries and wages
Provision for bonuses due to employees
Provision for bonuses due to directors
Retirement benefit expenses
Employee benefit costs
Depreciation
Provision of allowance for doubtful debts
Research expenses

Yen (Millions)2018¥1,173
9,341
262
161
596
1,927
1,565
(56)
1,159

2019
¥1,142
9,775
252
165
541
1,878
1,716
( 41)
1,075

U.S. Dollars (Thousands)
2019$10,426
89,226
2,304
1,508
4,937
17,144
15,671( 383)
9,816

13. Contingent Liabilities
As of December 31, 2018 and 2019, the Company is contingently liable principally for forward precious metal contracts in the amountsof ¥9,385 million and ¥7,155 million ($65,308 thousand), respectively.

14. Research and Development Expenses
Expenditures relating to research and development activities are charged to income as incurred and amounted to ¥4,939 million and¥4,958 million ($45,260 thousand) for the years ended December 31, 2018 and 2019, respectively.

15. Other Income (Expenses)
A gain of ¥6,023 million on the sale of buildings and structures was recognized for the years ended December 31, 2018 and included in
Gain (loss) on disposal of fixed assets, net. A loss of ¥1,050 million on the disposal of construction in progress and ¥533 million ($4,871
thousand) on the disposal of machinery and vehicles was recognized and included in Gain (loss) on disposal of fixed assets, net, for theyears ended December 31, 2018 and 2019, respectively.

16.

Impairment of Fixed Assets

There were no impairment losses relating to fixed assets to be disclosed in the notes for the fiscal years ended December 31, 2018and 2019.

17.

Segment Information

1. Overview of reporting segments
The reporting segments of the Company and its consolidated subsidiaries are regularly reviewed by the Board of Directors using thesegregated financial information available within each segment of the Company and its consolidated subsidiaries, to determine theallocation of management resources and evaluate business results.
The Company and its consolidated subsidiaries specialize in small motors manufacturing and sales as a single line of business. The
Company is in charge of the business activities in Japan. Meanwhile, subsidiaries located overseas are in charge of operations in Asia,
North and Latin America, Europe, etc. Subsidiaries located overseas are independent management units and propose comprehensive
product strategies while pursuing business expansion.
Since the Company and its consolidated subsidiaries are composed of regional segments based on a manufacturing and sellingsystem, the Company and its consolidated subsidiaries have designated “Japan,” “Asia,” “North and Latin America” and “Europe” astheir reporting segments.
2. Methods for calculating net sales, profits or losses, assets, liabilities and other items by reporting segment
The accounting policies and methods for the Group’s reporting segments are the same as described in “1. Summary of Significant
Accounting Policies.”
Intersegment net sales are based on prevailing market prices. The “Partial Amendments to Accounting Standard for Tax EffectAccounting” have been applied from the beginning of the fiscal year ended December 31 ,2019 and have also been applied retroactively
to the segment assets of the previous fiscal year.

3. Information concerning net sales, profits or losses, assets, liabilities and other items by reporting segment
Yen (Millions)
Net sales:Japan
External customers
Intersegment
Total
Asia
External customers
Intersegment
Total
North and Latin America
External customers
Intersegment
Total
EuropeExternal customers
Intersegment
Total
Corporate and elimination
Consolidated
Segment profit or loss:
Japan
Asia
North and Latin America
EuropeCorporate and elimination
Consolidated
Segment assets:
Japan
Asia
North and Latin America
EuropeCorporate and elimination
Consolidated
Others:Depreciation and amortization:
Japan
Asia
North and Latin America
EuropeCorporate and elimination
Consolidated
Increase in tangible and intangible fixed assets:
Japan
Asia
North and Latin America
EuropeCorporate and elimination
Consolidated

2018

2019

U.S. Dollars (Thousands)
2019¥13,032
87,898100,931¥14,091
79,477
93,568$128,617
725,419854,037

75,581
78,262
153,844

64,427
71,242
135,669

588,058
650,257
1,238,316

20,505420
20,92523,013
1,573
24,586210,055
14,357
224,41233,996
79
34,075(166,661)¥143,116

30,27482
30,356( 152,374)¥131,807

276,330748
277,079( 1,390,783)$1,203,061¥7,062
13,529(1,085)
1,325
410¥21,243¥6,37010,058( 266)
828
553¥17,544$58,147
91,805( 2,432)
7,563
5,055
$160,138¥111,909
166,481
25,03021,726(58,099)¥267,050¥115,529
167,088
30,615
21,599( 66,588)¥268,244$1,054,489
1,525,082
279,443
197,147( 607,783)$2,448,380¥1,151
6,535
628
7
(329)
¥7,994¥1,204
6,698
856
146
( 324)¥8,581$10,996
61,1387,819
1,335( 2,961)$78,328

¥129
9,626
3,410
1,966
(584)
¥14,548¥829
12,3374,669
542( 874)¥17,504$7,573112,60742,6194,950( 7,980)$159,769

Notes: 1. (1) Corporate and elimination for segment profit or loss of ¥410 million in fiscal 2018 and ¥553 million ($5,055 thousand) in
fiscal 2019 represent intersegment transaction eliminations.
(2) The segment assets eliminations include: corporate assets of ¥56,298 million in fiscal 2018 and ¥55,536 million ($506,902
thousand) in fiscal 2019, not allocated to each segment; intersegment debt and credit eliminations of ¥(114,398) million in
fiscal 2018 and ¥(122,124) million ($(1,114,685) thousand) in fiscal 2019. Corporate assets primarily include the parent
company’s surplus funds for investment (e.g., cash and bank deposits and short-term investments) and long-term
investment funds (e.g., investment securities).
(3) The depreciation and amortization eliminations of ¥(329) million in fiscal 2018 and ¥(324) million ($(2,961) thousand) in
fiscal 2019 represent intersegment transaction eliminations.
(4) Increase in tangible and intangible fixed assets eliminations of ¥(584) million in fiscal 2018 and ¥(874) million ($(7,980)
thousand) in fiscal 2019 represent intersegment transaction eliminations.
2. Segment profit or loss is adjusted for operating income reported in the consolidated statement of income.

Related information
Information on net sales, tangible fixed assets and impairment losses by geographic area is summarized as follows. For the fiscal year
ended December 31, 2018, sales to one specific major customer in the amount of ¥14,392 million accounted for 10% or more of
consolidated net sales. For the fiscal year ended December 31, 2019, sales to any specific customer didn’t account for 10% or more of
consolidated net sales.
Geographical Information
Yen (Millions)
Net sales
Japan
Asia
North and Latin America
Europe
Total

2018

2019

¥13,59775,022
20,49933,996¥143,116¥14,428
64,09023,01330,274¥131,807

Yen (Millions)Tangible fixed assets
Japan
Asia
North and Latin America
EuropeTotal

U.S. Dollars (Thousands)
2019$131,693
584,982
210,055
276,330$1,203,061

2018

2019

U.S. Dollars (Thousands)
2019¥16,438
45,102
9,263
3,221¥74,025¥15,357
48,665
12,872
3,608¥80,504$140,173
444,188
117,497
32,938$734,797

There were no impairment losses relating to fixed assets to be disclosed for the fiscal years ended December 31, 2018 and 2019.
Notes: 1. Net sales in China in the amount of ¥35,724 million and ¥31,614 million ($288,559 thousand) for the years ended December
31, 2018 and 2019, respectively were included in Asia.
2. Tangible fixed assets in China in the amount of ¥25,684 million and ¥25,627 million ($233,908 thousand) and in Vietnam in theamount of ¥14,462 million and ¥18,984 million ($173,281 thousand) were included in Asia for the years ended December 31,
2018 and 2019, respectively. Tangible fixed assets in Mexico in the amount of ¥9,251 million and ¥12,857 million ($117,352
thousand) for the year ended December 31, 2018 and 2019, respectively were included in North and Latin America.

18.

Subsequent Events

Setting the Maximum Allowance for Acquisition of Treasury StockOn February 13, 2020, the Company resolved, at the Board of Directors’ meeting, to set the maximum allowance for acquisition oftreasury stock pursuant to the provisions of Article 156 of the Companies Act, applied by replacing terms pursuant to the provisions ofArticle 165, Paragraph 3, of said Act, as described below.
1. Reasons for the purchase of treasury stock
The Company purchases treasury stock in order to implement a flexible capital policy to respond to changes in the business environment
and to improve shareholder returns and capital efficiency.
2. Details of matters pertaining to the purchase of treasury stock(1) Class of shares to be purchased: Common stock of the Company(2) Total number of shares to be purchased: 1,200,000 shares (maximum)(1.8% of the total number of shares issued [excluding treasury stock])(3) Total amount of purchase cost: ¥3.0 billion ($27,382 thousand) (maximum)(4) Purchase period: February 14, 2020 to December 31, 2020
(5) Purchase method: Purchase in the open market through discretionary trading