FINANCIAL REPORT(Report under Article 24, paragraph 1 of the Financial Instruments and Exchange Act)
Business Year from April 1, 2021 to March 31, 2022
(The 74th Term)(TRANSLATION)

ARISAWA MFG. CO., LTD.
E01152TABLE OF CONTENTS
Page Number
Cover Page
PART I. INFORMATION ON THE BUSINESS ................................................................... 1
I. General Conditions of Business .............................................................................................. 1
1. Changes in Principal Management Indicators, etc. ........................................................ 1
2. History ............................................................................................................................ 3
3. Description of Business .................................................................................................. 4
4. Status of Subsidiaries and Affiliated Companies ........................................................... 6
5. Status of Employees ....................................................................................................... 8
II. Status of Business .................................................................................................................. 9
1. Management Policy, Management Environment and Tasks to be Addressed ................ 9
2. Business Risks, etc. ...................................................................................................... 10
3. Analyses of Consolidated Financial Position, Business Resultsand Cash Flows by the Corporate Managers ................................................................ 11
4. Agreements with Managerial Implications, etc. ........................................................... 18
5. Research and Development Activities .......................................................................... 18
III. Status of Facilities .............................................................................................................. 20
1. Outline of Capital Investment ...................................................................................... 20
2. Status of Major Facilities.............................................................................................. 20
3. Plans for Installation and Retirement, etc. of Facilities ................................................ 22
IV. Status of the Submitting Company .................................................................................... 23
1. Status of Shares, etc. ..................................................................................................... 23(1) Total Number of Shares, etc. ................................................................................. 23(2) Status of Stock Acquisition Rights, etc. ................................................................ 24(3) Status of Exercise of Moving Strike Convertible Bonds, etc. ............................... 25(4) Changes in the Number of Shares Issued and Outstanding, Capital Stock, etc. .... 26(5) Status of Shareholder Categories ........................................................................... 27(6) Status of Major Shareholders ................................................................................ 28(7) Status of Voting Rights ......................................................................................... 30(8) Director and Employee Stock Ownership Plan ..................................................... 30
2. Status of Acquisition of Treasury Stock, etc. ............................................................... 32
3. Dividend Policy ............................................................................................................ 33
4. Status of Corporate Governance, etc. ........................................................................... 34(1) Outline of Corporate Governance.......................................................................... 34(2) Status of Directors and Officers ............................................................................ 38(3) Status of Audit ....................................................................................................... 43(4) Remuneration, etc. of Directors and Corporate Auditors ...................................... 45(5) Status of Shareholding ........................................................................................... 48
V. Status of Accounting ........................................................................................................... 54
1. Consolidated Financial Statements, etc. ....................................................................... 55(1) Consolidated Financial Statements ........................................................................ 55(2) Other .................................................................................................................... 106
2. Financial Statements, etc. ........................................................................................... 107(1) Financial Statements ............................................................................................ 107(2) Details of Major Assets and Liabilities ............................................................... 122(3) Other .................................................................................................................... 123
VI. Outline of Share Handling of the Submitting Company .................................................. 123
VII. Reference Information on the Submitting Company ...................................................... 124
1. Information on Parent Company, etc. of Submitting Company ............................ 124
2. Other Reference Information ................................................................................ 124
PART II. INFORMATION ON GUARANTY COMPANIES, ETC.
OF THE SUBMITTING COMPANY ................................................................ 125[Independent Auditors’ Report]

Cover Page
Document to be filed:

Financial Report

Statutory basis:

Article 24, paragraph 1 of the Financial Instruments and Exchange Act

Filing to:

Director-General of the Kanto Local Finance Bureau

Date of filing:

June 29, 2022

Business year:

The 74th Term (From April 1, 2021 to March 31, 2022)

Company name (Japanese):

Kabushiki-Kaisha Arisawa Seisakusho

Company name (English):Arisawa Mfg. Co., Ltd.

Name and title of representative:

Yuta Arisawa, President and Representative Director

Location of head office:5-5, Minami-honcho 1-chome, Joetsu-shi, Niigata

Telephone number:(025) 524-5126

Contact person:

Shuichi Kubota, Operating Officer supervising, Corporate Strategy
Department

Place of contact:5-5, Minami-honcho 1-chome, Joetsu-shi, Niigata

Telephone number:(025) 524-5126

Contact person:

Shuichi Kubota, Operating Officer supervising, Corporate Strategy
Department

Places where copies of this Financial Report

Arisawa Mfg. Co., Ltd., Tokyo Branch Office

are made available for public inspection:(12-5, Yanagibashi 2-chome, Taito-ku, Tokyo)
Tokyo Stock Exchange, Inc.
(2-1, Nihonbashi Kabutocho, Chuo-ku, Tokyo)

PART I.

INFORMATION ON THE BUSINESS

I. General Conditions of Business1. Changes in Principal Management Indicators, etc.
(1) Consolidated Management Indicators, etc.
Term

70th term

71st term

72nd term

73rd term

74th term

Closing month

March 2018

March 2019

March 2020

March 2021

March 2022

40,90944,72845,97046,43943,089

4,044

4,297

2,783

3,578

4,204

3,453

2,861

212

2,160

3,911

4,498

2,200

△117

3,808

4,530

52,49353,46249,01847,44447,96572,38273,096

71,70967,257

68,6891,378.16

1,397.78

1,387.76

1,388.50

1,434.46

96.35

79.15

6.14

64.94

117.40

95.51

78.70

6.12

64.84

117.32

Net sales (Millions of yen)
Ordinary income or loss ()(Millions of yen)
Profit or loss () attributableto owners of the parent(Millions of yen)Comprehensive income(Millions of yen)
Net assets (Millions of yen)
Total assets(Millions of yen)
Net assets per share (Yen)
Net income or loss ()per share(Yen)

Fully diluted net income per
share

(Yen)

Equity ratio

(%)

68.6

69.3

64.3

68.8

69.6

Return on equity

(%)

7.2

5.7

0.4

4.7

8.3

Price earnings ratio (Times)

10.2

10.0

130.7

15.4

8.2

2,181

2,893

4,837

610

5,901

△471

△3,304

6,580

1,567

2,869

△59

△576

△4,431△5,703△4,042

8,829

7,718

14,725

11,48816,893

Cash flows from operating
activities (Millions of yen)
Cash flows from investing
activities (Millions of yen)
Cash flows from financing
activities (Millions of yen)
Cash and cash equivalents at
the end of period(Millions of yen)

Number of employees(Parenthesized figures
1,426
1,432
1,454
1,433
1,425
indicate the average number
(295)
(313)
(294)
(290)
(316)
of temporary employees notincluded in the total)
Note: “Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan Statement No.29, March 31, 2020), etc.
have been applied from the beginning of the current consolidated fiscal year. Principal Management Indicators, etc. for thecurrent consolidated fiscal year are shown after application of the said Accounting Standard, etc.

-1-

(2) Management Indicators, etc. of the Submitting Company
Term

70th term

71st term

72nd term

73rd term

74th term

Closing month

March 2018

March 2019

March 2020

March 2021

March 2022

28,50329,26931,63531,66826,648

2,451

2,602

2,365

1,932

2,852

2,503

1,947

6,792

1,396

2,348

7,458

7,541

7,594

7,623

7,643

36,02436,22636,381

34,47033,614

Net sales(Millions of yen)

Ordinary income or loss ()(Millions of yen)
Net income or loss ()(Millions of yen)
Capital stock (Millions of yen)
Number of shares issued andoutstanding(Thousands of shares)
Net assets(Millions of yen)

36,13836,571

38,931

40,48441,016

Total assets(Millions of yen)

46,19545,68851,53549,85950,225999.83

1,005.76

1,166.03

1,208.98

1,226.75

34.00
(－)

30.00
(－)

30.00
(－)

39.00
(－)

95.00
(5.00)

69.83

53.87

195.86

41.98

70.49

69.22

53.56

195.28

41.91

70.44

Net assets per share(Yen)

Dividend per share(Yen)(Parenthesized figures indicate
the amount of interim dividend
per share included in the total)
Net income or loss ()per share(Yen)

Fully diluted net income per
share

(Yen)

Equity ratio

(%)

78.0

79.7

75.2

80.8

81.4

Return on equity

(%)

7.2

5.4

18.1

3.5

5.8

(Times)

14.1

14.7

4.1

23.8

13.6

(%)

48.7

55.7

15.3

92.9

134.8

592
(99)

602
(119)

614
(134)

606
(99)

599
(90)

130.4
(115.9)109.6(110.0)114.6(99.6)

144.9(141.5)151.5(144.3)

1,349

1,350

1,148

1,118

1,072

Price earnings ratio
Dividend payout ratio

Number of employees(Parenthesized figures indicate
the average number of temporary
employees not included in the
total)
Shareholders' gross yield(%)（Comparative Indicator：
dividend-included TOPIX（Tokyo Stock Price Index））
Highest share price(Yen)

Lowest share price
(Yen)
695
655
680
738
844
Note: 1. “Highest share price” and “Lowest share price” are recorded in Tokyo Stock Exchange (First section).
2. “Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan Statement No.29, March 31, 2020),
etc. have been applied from the beginning of the current consolidated fiscal year. Principal Management Indicators, etc. forthe current consolidated fiscal year cumulative and the current consolidated fiscal year are shown after application of thesaid Accounting Standard, etc.

-2-

2. History
July 1949▪ Incorporation of Arisawa Mfg. Co., Ltd. (hereinafter referred to as either the “Company” or the“Submitting Company”, as the case may be), succeeding the businesses of “Arisawa Manufacturing”,
which was founded in 1909 and manufactured Battenburg lace, narrow woven fabrics, electricalinsulating tapes and glass fiber fabrics, etc.

April 1954

▪ Established a resin processing division.

June 1954▪ Relocated the Head Office from Ohmachi, Takada-shi (currently Joetsu-shi), Niigata to Minamihoncho, Takada-shi.

May 1959▪ Opened Tokyo Sales Office and Osaka Sales Office.

September 1960

▪ OTC trading of the Company’s stock started at Tokyo Securities Dealers Association.

October 1961

▪ The Company’s stock was listed on the Second Section of Tokyo Stock Exchange.

December 1966

▪ Incorporated Arisawa Jushi Kogyo Co., Ltd. (currently a consolidated subsidiary), which conducts
molding and processing of resin products related to industrial application structural materials.

June 1968▪ Opened a factory in Oaza-Nakadahara, Takada-shi (currently Joetsu-shi), Niigata, establishing new
resin processing facilities.

August 1973

▪ Incorporated Eagle Co., Ltd., which operates a driving range.

March 1974

▪ Incorporated Myoko Shinko Co., Ltd., which conducts processing of resin products related to electricalinsulating materials.

June 1974▪ Absorbed Arisawa Shoji Co., Ltd. and reorganized the sales division into Tokyo Branch Office andOsaka Branch Office (Osaka Branch Office was closed down in September 2015).

April 1976

▪ Incorporated Yuai Sangyo, Ltd., which manufactures glass fiber fabrics and special fiber fabrics related
to electrical insulating materials.

May 1987▪ Incorporated Arisawa Logistics, Ltd., which conducts warehouse management and logistics operations.

July 1991▪ Incorporated Polatechno Co., Ltd. (which manufactures polarizing plates for use in liquid crystal
displays) through joint capital investment with Nippon Kayaku Co., Ltd.

December 1994

▪ Opened Technological Development Center on the premises of Nakadahara Factory.

October 1996

▪ Acquired Arisawa Polywork Co., Ltd. (which conducts molding and processing of resin products
related to industrial application structural materials) with capital contribution of Arisawa Logistics, Ltd.

July 1999▪ Opened a factory in Oaza-Nakadahara (on the west side of the current Nakadahara Factory), Joetsu-shi,
Niigata, establishing new resin processing facilities.

July 2000▪ Incorporated Arisawa Fiber Glass Co., Ltd. (currently a consolidated subsidiary), spinning off the glass
cloth manufacturing division of the Submitting Company (related to electronic materials and electricalinsulating materials) and consigning manufacture of glass cloth to Arisawa Fiber Glass Co., Ltd.

September 2002

▪ The Company’s stock was listed on the First Section of Tokyo Stock Exchange.

April 2003

▪ Myoko Shinko Co., Ltd. absorbed Arisawa Polywork Co., Ltd., Yuai Sangyo, Ltd. and Arisawa
Logistics, Ltd. and changed its corporate name to Arisawa Sogyo Co., Ltd. (currently a consolidated
subsidiary).

March 2006

▪ Stock of Polatechno Co., Ltd. was listed on the JASDAQ Securities Exchange.

October 2009

▪ Acquired shares of ThinFlex Corporation (currently a consolidated subsidiary).

December 2010

▪ Howa Sangyo Ltd., a subsidiary, changed its corporate name to Protec International Holdings Co., Ltd.
(currently a consolidated subsidiary) and acquired shares of Protec Arisawa Europe, S.A. and Protec
Arisawa America, Inc. (both currently consolidated subsidiaries).

July 2011▪ Arisawa Sogyo Co., Ltd. absorbed Eagle Co., Ltd.

October 2015

▪ Opened Kansai Sales Office in Kyoto-shi, Kyoto. (Relocated to Osaka-shi, Osaka in March 2018)

November 2017

▪ Acquired all shares of Satosen Co., Ltd., which conducts manufacturing and sales of electronicmaterials (currently a consolidated subsidiary).

October 2019

▪ Sold all shares of Polatechno Co., Ltd. excluding it from the affiliate companies accounted for underequity method.

December 2021

▪ Made ThinFlex Corporation a wholly owned subsidiary (currently a consolidated subsidiary).

April 2022

▪ Moved from the 1st Section to the Prime Market along with the market restructuring of the Tokyo
Stock Exchange.

-3-3. Description of BusinessOur corporate group (hereinafter referred to as either “our Group” or the “Group”, as the case may be) is
comprised of the Company, thirteen (13) subsidiaries and four (4) affiliated companies and is engaged in
manufacturing and sales of electronic materials, industrial application structural materials, electrical insulating
materials and display materials. It also develops business activities such as sales of goods related to each businesssegment as well as logistics and other services.
Description of business of our Group and the capacities of the Company and its associated companies with respect
to each business segment are as follows.
The business segments shown below are categorized in the same manner as those shown in V. Status of Accounting– 1. Consolidated Financial Statements, etc. – (1) Consolidated Financial Statements – [Notes].
(1) Electronic Materials
The Company manufactures and sells materials for flexible and rigid printed circuit boards, etc. that are used
as electronic materials, while Arisawa Fiber Glass Co., Ltd., a subsidiary, manufactures glass cloth for printed
circuit boards. ThinFlex Corporation, a subsidiary, also manufactures and sells materials for flexible printed
circuit boards, etc., while Satosen Co., Ltd., a subsidiary, manufactures and sells rigid printed circuit boards.
(2) Industrial Application Structural Materials
The Company and its subsidiaries, Protec Arisawa Europe, S.A. and Protec Arisawa America, Inc.
manufacture and sell filament winding molded products for use as industrial application structural materials.
The Company manufactures and sells honeycomb panels and prepregs, etc. for aircraft. Arisawa Sogyo Co.,
Ltd., a subsidiary, manufactures and sells pultrusion molded products and FRP ski sheets, etc.
Protec International Holdings Co., Ltd. conducts business management of the aforesaid Protec Arisawa
companies as the holding company of these subsidiaries engaged in the water treatment business with theirfilament winding molded products.
(3) Electrical Insulating Materials
Arisawa Fiber Glass Co., Ltd., a subsidiary, manufactures glass cloth and glass tapes for use as electricalinsulating materials, and the Company sells such glass cloth and glass tapes. The Company manufactures andsells prepregs, etc. for electrical insulation, while Arisawa Sogyo Co., Ltd., a subsidiary, and Arisawa Jushi
Kogyo Co., Ltd., another subsidiary, manufacture these products.
(4) Display Materials
The Company manufactures and sells 3D display filters, etc. for use as display materials. ColorLink Japan,
Ltd., a subsidiary, manufactures and sells special optical components. Innovision FlexTech Corporation
manufactures and sells screens, etc.
(5) Other Businesses
The Company conducts sales of the related goods mentioned above in (2) and (3). In addition, Arisawa Sogyo
Co., Ltd., a subsidiary, conducts logistics operations and also operates a driving range.
The above matters are abstracted in the following Business Activities Diagram.

-4-

ColorLink Japan, Ltd.

TopFlex

Corporation

Innovision FlexTech Corporation

Satosen

Co.,

Ltd.

Arisawa Jushi Kogyo Co., Ltd.

Protec International Holdings Co., Ltd.

Protec Arisawa Europe, S.A.

Protec Arisawa America, Inc.
Ar i sa wa S o g yo Co . , Lt d .

Transactions of products, etc.

Consolidated subsidiary

Industrial application structural materials

Arisawa Fiber Glass Co., Ltd.

Electrical insulating materials

Display materials

ThinFlex Corporation

Arisawa Mfg. Co., Ltd. (Manufacture and sales)

Electronic materials(Business Activities Diagram)

Affiliated company accounted for underthe equity method

Other transactions(Note)

Arisawa Sogyo Co., Ltd. is engaged in other businesses in addition to the manufacture of electrical insulating
materials and the manufacture and sales of industrial application structural materials.

-5-4. Status of Subsidiaries and Affiliated Companies

Name(Consolidated
subsidiaries)
ThinFlex
Corporation(See Note 2
and Note 5)
ThinFlex
Technology
Corporation(B.V.I.)(See Note 2)
TopFlex
Corporation(See Note 2
and Note 6)
Satosen Co.,Ltd.

Location

Capital stock(Thousands of Description of core
yen except asbusinessotherwise noted)

Electronic materials

100.0

British Virgin
Islands

15,710(Thousands of
US dollar)

Electronic materials

100.0(100.0)---

Kunshan City,
P.R. China

17,000(Thousands of
US dollar)

Electronic materials

100.0(100.0)

Sales of electronic material
products

99,540Electronic materials

100.0

Leasing of land
Concurrent directorship

100.0

Consignment manufacture of glass
fiber fabrics related to electronicmaterials and electrical insulating
materials,
Leasing of buildings andmanufacturing equipment,
Financial support,
Concurrent directorship

100.0

Financial support,
Concurrent directorship

Osaka-shi,
Osaka

100,000

Electronicmaterials,
Electrical insulating
materials

ProtecInternational
Holdings Co.,
Ltd.

Joetsu-shi,
Niigata

101,830

Industrial
application
structural materials

1,670
Munguia, Spain (Thousands of
euro)

Industrial
application
structural materials

3,200(Thousands of
US dollar)

Industrial
application
structural materials

30,950Electrical insulating
materials,
Industrial
application
structural materials,
Other businesses

Arisawa Sogyo
Co., Ltd.

(%)

Supply of raw materials as well as
sales of products related toelectronic materials,
Concurrent directorship

Joetsu-shi,
Niigata

Protec Arisawa
America, Inc.

Relevant descriptions

1,006,377
Kaohsiung(Thousands ofCounty, Taiwan
Taiwan dollar)

Arisawa Fiber
Glass Co., Ltd.
(See Note 2)

Protec Arisawa
Europe, S.A.

Votinginterest
held by theCompany

Vista, CA,
U.S.A.

Joetsu-shi,
Niigata

Arisawa Jushi
Kogyo Co.,
Ltd.

Joetsu-shi,
Niigata

ColorLink
Japan, Ltd.

Joetsu-shi,
Niigata

10,000198,201

Electrical insulating
materials

Display materials

-6-

100.0
(100.0)Financial support,
Concurrent directorship

100.0(100.0)Financial support,
Concurrent directorship

100.0

Consignment manufacture as wellas consignment of warehousing
and logistics operations of resin
products related to electricalinsulating materials and industrial
application structural materials,
Leasing of buildings, machineryand equipment

100.0

Consignment manufacture of resin
products related to electricalinsulating materials,
Leasing of land and buildings,
Concurrent directorship97.2

Leasing of buildings, machineryand equipment,
Supply of raw materials,
Concurrent directorship

Name

Location

Capital stock(Thousands of Description of core
yen except asbusinessotherwise noted)

Votinginterest
held by theCompany(%)

Relevant descriptions(Affiliatedcompanies
accounted forunder theequity method)
Innovision263,516
Sales and purchase of products
Kaohsiung
FlexTech(Thousands of Display materials
35.4 related to display materials,
City, Taiwan
Corporation
Taiwan dollar)
Concurrent directorship
Note: 1. Segment names are stated in the column “Description of core business”.
2. The company falls under the category of specified subsidiary.
3. Parenthesized figures in the column “Voting interest held by the Company” indicate the ratio of indirect ownership to thepertinent total.
4. The company submits its own financial report.
5. The Company acquired all shares of ThinFlex Corporation as of December 20, 2021 and made the Corporation and its
wholly owned subsidiary, TopFlex Corporation (Kunshan), wholly owned subsidiaries.
6.
Net sales (excluding inter-company sales between the consolidated companies) of TopFlex Corporation account for morethan ten hundredths (10/100) of the Group’s consolidated net sales.
Key income and loss indices, etc. of TopFlex Corporation(Thousands of yen)
(1) Net sales
7,057,211(2) Ordinary income
582,275(3) Net income
531,635(4) Net assets
3,144,324(5) Total assets
8,163,332-7-

5. Status of Employees(1) Status of Consolidated Group(As of March 31, 2022)
Segment name

Number of employees

Electronic materials

894

（204）

Industrial application structural materials

236

（55）

Electrical insulating materials

99

（9）

Display materials

120

（17）

1,349

（285）

Other

35

（21）

Unallocated (Common)

41

（10）

1,425

（316）

Total of reportable segments

Total
Note: 1.

2.

The column “Number of employees” indicates the number of full-time employees (excluding persons on loan to companies
outside our Group from those within our Group and including persons on loan to companies within our Group from thoseoutside our Group), while the annual average number of temporary employees (including part-timers, employees
dispatched from staffing agencies and seasonal workers) is stated in the parentheses.
The number of employees stated as that of “Unallocated (Common)” is the number of those who belong to theadministrative departments of the Company.

(2) Status of Submitting Company
Number of employees

Average age (Years old)

Average length of service (Years)

44.1

20.3

599（90）
Segment name(As of March 31, 2022)
Average annual salary(Thousands of yen)
6,070

Number of employees

Electronic materials

391

（69）

Industrial application structural materials

75

（3）

Electrical insulating materials

48

（7）

Display materials

44

（1）

558

（80）

Unallocated (Common)

41

（10）

Total

599

（90）

Total of reportable segments

Note: 1.

2.
3.

The column “Number of employees” indicates the number of full-time employees (excluding persons on loan to othercompanies from the Company and including persons on loan to the Company from other companies), while the annual
average number of temporary employees (including part-timers, employees dispatched from staffing agencies and seasonal
workers) is stated in the parentheses.
“Average annual salary” includes bonuses and extra wages.
The number of employees stated as that of “Unallocated (Common)” is the number of those who belong to theadministrative departments of the Company.

(3) Status of Labor Union
The labor union of the Submitting Company belongs to the local division of the Japanese Federation of Textile,
Chemical, Food, Commercial, Service and General Workers’ Unions and has made sound development since its
formation in 1946. The labor-management relations are harmonious, and efforts are made to develop theCompany’s business through mutual cooperation. The union membership as of March 31, 2022 stands at 469
members.

-8-

II. Status of Business
1. Management Policy, Management Environment and Tasks to be Addressed
The Company and our corporate Group, ever since its initiation, have been working on technologicalinnovations and product development to build up unique technologies that integrate the “weaving, coating
and molding” elements of its expertise while consistently fulfilling users’ needs, thereby increasing its
corporate value. Along with the globalization of markets and the rapid diversification of needs, we will
strive to further differentiate technologies as well as improve quality and productivity, thereby creating
corporate value.
Note that matters stated concerning the future in the text are based on judgments made by our Group as ofthe end of the current consolidated fiscal year.
(1) Basic Policies of Corporate Management
Grounded in the motto “Create, Innovate and Challenge”, our Group makes it its management policy to:(i) create new values and enhance customer satisfaction;(ii) anticipate customer needs and create a new business with creative technology;(iii) improve quality and productivity, and strengthen business quality.
(iv) contribute to solving the social and environmental issues, and realize the sustainable growth.
Under such management policy, we aim to create corporate value and, along with the improvement of capitalefficiency and contribution to society, enhance shareholder value of the Company by means of enhancing customer
satisfaction, developing differentiated products with our unique technology and improving profitability throughthorough cost reduction.

(2) Mid- to Long-Term Management Strategies
Our corporate group aims to work on technological innovation and product development while consistently
fulfilling users’ needs and realize its sound survival and sustainable growth, thereby increasing its mid- to longterm corporate value. Specifically, to maintain and expand the revenue base of existing business, we implement
strategic investments in new business that maximizes the synergy effect with existing business and has a highprofitability of capital besides improving and expanding productivity and investing in the development of new
products that anticipate user’s needs. We also select themes that have impacts on society and environment and aim
to contribute to society through business. Specifically, we place the following as important issues and are working
on them, i.e. (i) contribution to a decarbonized society (achieving carbon neutrality, promotion of energy saving
and resource saving, substituting with renewable energy, provision of environmental load reduction materials), (ii)promotion of a circular economy (reduction of emissions, strengthening supply chain management), (iii)enhancement of governance (organization with high ethical standards, organization system with a culture of
openness), (iv) development of diverse human resources and enhancement of descent work (development of nextgeneration human resources, a company where all employees work actively). Particularly, we publicized “Carbon
Neutral Initiatives” on our website on June, 2021 because we especially recognize climate change as a pressing
issue.
- In the electronic materials segment, we proceed with the development of new products, centering on mobile
devices, in-vehicle devices and semiconductors. We also continue our exhaustive cost-cutting efforts and work
to strengthen our base of operations in Asian market.
- In the industrial application structural materials segment and electrical insulating materials segment, we
promote new product development and sales expansion focusing on transportation infrastructure, water
treatment and new energy fields, with a view to further growth.
- In the display materials segment, we work to further expand sales of new products utilizing our unique
technology primarily in the fields of high-definition displays for medical use.
- We deepens collaboration with the overseas consolidated subsidiaries and work to further expand sales bystrengthening the technical service to customers.
The Group announced the medium-term management plan that incorporates the above-mentioned contents on
October, 2020 and its progress report on May, 2021 and May, 2022. We aim to achieve ROIC (Return on Invested
Capital) of 6% or more for the fiscal year ending on March 31, 2025.

(3) Business and Financial Tasks to be Preferentially Addressed
Our Group promotes the following as the tasks to be addressed in order to ensure accelerated and thorough-9-

implementation of the aforesaid management strategies.
- Exhaustive review of manufacturing technologies and materials selection in order to realize more competitive
cost structure- Thorough cost reduction by means of improving management techniques (centering on the Arisawa
Production System) and proprietary technologies as well as enhancing professional competence of individual
employees- Promotion of enhanced cooperation among the manufacturing, sales and technical divisions in pursuit of more
efficient business operations- We implement strategic investments in new business that maximizes the synergy effect with existing businessand has a high profitability of capital.
It should be noted that our corporate group has an adequate liquid fund while the impact of the new corona virus
infection (COVID-19) continues. Although a prospect of demands for air travelers is uncertain and a fall in somedemand is expected in segments such as industrial application structural materials segment that deals with thematerials for aircraft in the future due to the travel restrictions, we expect that our corporate group as a whole will
stay solid including the mainstay electronic materials segment due to an incorporation of stay-at-homeconsumption, etc. If it takes time to settle the situation, the impact may be greater than we expect, but we will
implement each of the above measures in the medium-term management plan for October, 2020 promptly while
paying close attention to market conditions and ensure our sound survival and sustainable growth.

(4) Objective Indicators, etc. for Judgement on the Status of Achievement of Managerial Goals
The Group sets ROIC as a target management indicator and aims at ROIC of 6% or more for the fiscal year
ending on March 31, 2025 in the medium-term management plan for October, 2020.
The results for the fiscal year ending on March 31, 2022 were 4.4%.

(5) Climate Change Initiatives
Effects from climate change such as recent increase and increased severity of extreme weather events are
becoming serious globally. The Group as a manufacturer that produces products from chemicals recognizes a
climate change issue facing us as one of important business challenges.
The Group has been so far actively involved in environmental protection activities and consistently improved
them by promoting the reduction, etc. of electricity and gas consumption, hazardous chemical substance, andindustrial waste in accordance with our Environmental Policy, as the Environmental Protection and Management
Committee deliberates on the activities. We publicized “Carbon Neutral Initiatives” on our website on June, 2021
with the aim to continuously contribute to a decarbonized society through business as mentioned in “(2) Mid- toLong-Term Management Strategies” above. As part of our initiatives on environmental issues, we proceeded withanalysis and examination targeting at our main businesses in accordance with the framework of TCFD (Task Forceon Climate-related Financial Disclosures) recommendations and disclosed the result on our website, based on ourbelief that the recommendations will contribute to the development of a decarbonized and sustainable society.

2. Business Risks, etc.
Among the matters related to the status of business and the status of accounting, etc., which are stated in the
Financial Report, the major risks that the corporate managers recognize may have a significant impact on the
consolidated financial position, business results and cash flows of the consolidated companies are as follows.
The matters stated concerning the future in the text are based on judgments made by our Group as of the end of
the current consolidated fiscal year.

(1) Fluctuations in Demand for Products
Major users of the products manufactured and sold by our Group are information equipment manufacturers,
electronic component manufacturers, industrial electronic device manufacturers, etc., and fluctuations in demand
for these electronic devices affect the results of operations of our Group.

(2) Dependence on Particular Products
Net sales of our Group depend largely on the electronic materials segment. A sales decline in this segment may
affect the results of operations of our Group.

- 10 -

(3) Development of New Businesses
Our Group is making efforts to launch several new businesses, and the status of progress in such efforts may
affect the results of operations of our Group.

(4) Procurement of Raw Materials
If purchase prices of the raw materials purchased by our Group rise sharply due to escalating price of crude oiland copper, such rise may affect the results of operations of our Group.

(5) Impact of Disasters
The vast majority of our Group’s production bases are located in Joetsu-shi, Niigata, Japan. In the event of anearthquake or other disaster, the resultant disruption or interruption of production activities, etc. may affect theresults of operations of our Group.

(6) Environmental Regulations
Businesses of our Group are subject to various legal regulations, including, but not limited to, those applicable
to environmental protection. If any significant liability or obligation accrues to our Group in connection withcompliance with any such environmental or other kind of regulation, such liability or obligation may affect theresults of operations of our Group.

(7) The Impact of the Spread of the New Corona Virus Infection
With regard to the spread of the new corona virus infection (COVID-19), while there has been some progress
towards its containment with the progress of vaccinations, it remains uncertain because the timing of thecontainment of the new corona virus infection (COVID-19) cannot be predicted and the effect on the economy
has been prolonged. The disruption of supply chain and production activities and the negative impact on thedomestic economy and markets, etc. may affect the results of operation of our Group.
Furthermore, our Group gives first priority to the safety and health of all the stakeholders and implements not
only the infection prevention measures thoroughly in accordance with the administrative guidelines to prevent thefurther spread of the infection but also the measures such as prohibition of domestic and overseas business trips
in principle with an effective utilization of teleconference system, implementation of telework (working fromhome), an opening of a satellite office, etc.

3. Analyses of Consolidated Financial Position, Business Results and Cash Flows by the Corporate
Managers(1) Overview of Operating Results, etc.
Overview of financial conditions, results of operations and status of cash flows (hereinafter referred to as operating
results, etc.) of the Group (the Company, a consolidated subsidiary and companies accounted for under the equity
method) in the consolidated fiscal year is as follows.
“Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan Statement No.29, March
31, 2020), etc. have been applied from the current consolidated fiscal year.
Accordingly, the net sales for the current consolidated fiscal year decreased greatly compared to the previous
consolidated fiscal year.
As a result, we explain the net sales without stating increase (decrease) compared with the previous consolidated
fiscal year and year-to-year comparison (%) in the explanation about the business results for the current consolidated
fiscal year.
For details, see “V. Status of Accounting - 1. Consolidated Financial Statements, etc. - (1) Consolidated Financial
Statements notes (Changes in Accounting Policies)”.
i) Financial Position and Operating Results
The Japanese economy in the current consolidated fiscal year was affected by the spread of the new corona virus
infection (COVID-19), but vaccination made progress and economic activities were gradually normalized. On theother hand, it remained uncertain due to the worsening situation in Ukraine and the continuing severe conditions
related to soaring energy costs and raw material prices. Under such circumstances, the business results of ourGroup (the Company, its consolidated subsidiaries and the companies accounted for under the equity method) forthe current consolidated fiscal year showed net sales of 43,089 million yen, an operating income of 3,320 million
yen (representing a 6.5% increase as compared with the previous consolidated fiscal year), an ordinary income of
4,204 million yen (representing a 17.5% increase as compared with the previous consolidated fiscal year) and a- 11 -

profit attributable to owners of the parent of 3,911 million yen (representing a 81.0% increase as compared withthe previous consolidated fiscal year).
Business results with respect to each segment are as follows.
Electronic materials
In the electronic materials segment, as a result of supply chain constrains, net sales were 29,768 million yen,
due to decrease in the sales of our mainstay product, i.e. materials for flexible printed circuit boards for multifunctional cellular phones (the amount of orders received decreased by 6.9% to 17,867 million yen, and the
production output decreased by 2.8%, as compared with the previous consolidated fiscal year on a nonconsolidated basis of the Submitting Company), while the segment income or loss recorded an income of 2,907
million yen (representing a 2.5% decrease as compared with the previous consolidated fiscal year) due to adecrease in sales.
Industrial application structural materials
In the industrial application structural materials segment, due to a decrease in sales of aircraft materials as aresult of sluggishness in the aviation industry, etc., net sales were 7,053 million yen, while the segment income
or loss recorded an income of 872 million yen (representing a 7.1% decrease as compared with the previous
consolidated fiscal year) due to a decrease in sales.
Electrical insulating materials
In the electrical insulating materials segment, due to an increase in infrastructure-related sales, net sales were2,604 million yen, while the segment income or loss recorded an income of 303 million yen (representing a
58.0% increase as compared with the previous consolidated fiscal year) due to an increase in sales.
Display materials
In the display materials segment, due to an increase in 3D imaging-related materials sales and in sales ofpolarization control optical components by ColorLink Japan, Ltd., net sales were 3,253 million yen, while thesegment income or loss recorded an income of 815 million yen, representing a 268.4% increase as comparedwith the previous consolidated fiscal year due to an increase in net sales of 3D imaging-related materials, profit
improvement of ColorLink Japan Ltd., etc.
Other (other businesses)
In other businesses, net sales were 410 million yen, while the segment income or loss recorded an income of
172 million yen (representing a 29.4% decrease as compared with the previous consolidated fiscal year).
ii) Cash Flows
Cash and cash equivalents (hereinafter referred to as the “Funds”) as of the end of the current consolidated
fiscal year were 16,893 million yen, representing a year-on-year increase of 5,404 million yen, or 47.0%.
The following is the status of each cash flow category during the current consolidated fiscal year and the key
factors of such status.
(Cash flows from operating activities)
Funds earned from operating activities were 5,901 million yen, representing an 866.6% increase as comparedwith the previous consolidated fiscal year. This was due largely to an increase in the Funds comprising 4,965
million yen in income before income taxes and 2,170 million yen in depreciation, etc. as well as a decrease in
the Funds comprising 1,486 million yen in increase in inventories, etc.
(Cash flows from investing activities)
Funds disbursed for investing activities were 2,869 million yen, representing a 83.1% increase as comparedwith the previous consolidated fiscal year. This was due largely to an increase of 3,339 million yen, etc. fromsales of investment securities by selling bonds held, etc. for an additional acquisition of shares aimed at making
ThinFlex Corporation, a consolidated subsidiary in Taiwan, a wholly owned subsidiary as well as a decrease in
the Funds comprising the expenditure of 1,907 million yen for purchases of property, plant and equipment, etc.
(Cash flows from financing activities)
Funds disbursed from financing activities were 4,042 million yen, representing a 29.1% decrease as comparedwith the previous consolidated fiscal year. This was due largely to a decrease of 2,439 million yen for
acquisition of a subsidiary without change of scope of consolidation by an additional acquisition of shares for
ThinFlex Corporation, a consolidated subsidiary in Taiwan, etc.
iii) Status of Production, Receipt of Orders and Sales
1) Production Results and Status of Receipt of Orders
Our Group (the Company and its consolidated subsidiaries; the same shall apply hereinafter) manufacturesand sells such an extensive and varied range of products that even the products of the same type are not- 12 -

necessarily uniform in capacity, construction, form or other respects. Also, quite a few of our products are not
manufactured on a made-to-order basis. Such being the case, we do not indicate any segmentalized production
volume and order volume in monetary amounts or quantities.
For this reason, we indicate the status of production, receipt of orders and sales in a correlation with thebusiness results with respect to each of the segments shown in “(1) Overview of Operating Results, etc. - i)
Financial Position and Operating Results”
2) Sales Results
Net sales for the current consolidated fiscal year with respect to each reportable segment are as follows.

Segment nameCurrent consolidated fiscal year
(From April 1, 2021 to March 31,
2022)(Millions of yen)Comparison with the previous
consolidated fiscal year (%)

Electronic materials

29,768△5.9

Industrial application structural
materials

7,053

△20.2

Electrical insulating materials

2,604

11.3

Display materials

3,253

15.3

42,678

△6.5

Other

410

△47.8

Total

43,089△7.2

Total of reportable segments

Note: 1. Inter-segment transactions are eliminated by setoff.
2. Sales results with respect to each major customer and their respective ratios to the total sales amount for the last two
consolidated fiscal years are as follows.

Customer name

Previous consolidated fiscal year
(From April 1, 2020 to March 31, 2021)

Current consolidated fiscal year
(From April 1, 2021 to March 31, 2022)

Amount(Millions of yen)Amount(Millions of yen)

Ratio (%)

Ratio (%)

Sumitomo Shoji Chemicals
－
－
4,986
10.7
Co., Ltd.
(Statement is omitted as there is no customer who accounts for 10/100 or more of sales results in the current consolidated
fiscal year.)- 13 -

(2) Details of analysis and study regarding the conditions of operating results etc. from the viewpoint ofcorporate managers.
Details of perception, analysis and study regarding the conditions of operating results etc. of our Group from theviewpoint of corporate managers are as followings.
The matters regarding future in the following sentences were judged as of end of the current consolidated fiscal
year.
i) Details of Perception, Analysis and Study regarding Financial Position and Conditions of Operating Results
In the current consolidated fiscal year, we worked for the continuous growth of existing business by making
the capital expenditures for improvement and expansion of production capacity mainly related to our mainstay
electronic materials. At the same time, we continued an aggressive effort for the market expansion and thegrowth of our Group by developing new products that anticipated changes in markets in each segment.
Electronic materials, as the core products of our Group, increased in orders (including our subsidiary, "ThinFlex
Corporation") for multifunctional mobile devices and supported the whole Group. Regarding industrial
application structural materials, electrical insulating materials, and display materials, we look forward to further
growth and we will continue to develop new products and to increase profitability.
Meanwhile, in the course of the current consolidated fiscal year, the new corona virus infection spread andhas not been entirely contained as of this moment. Its impact is described in “II. Status of Business 1.
Management Policy, Management Environment and Tasks to be Addressed.” Also, factors that may givematerial impact to operating results of our Group are described in "II. Status of Business 2. Business Risks, etc.",
so please refer to it.
Analysis of financial position and operating results in the current consolidated fiscal year of our Group is asfollows.
1) Analysis of Financial Conditions(Assets)
Total assets as of the end of the current consolidated fiscal year were 68,689 million yen (67,257million yen
as of the end of the previous consolidated fiscal year), representing a year-on-year increase of 1,431 million
yen, or 2.1%.
The main factor for this is a decrease of 2,790 million yen of investment securities by selling bonds held foran additional acquisition of share aimed at making ThinFlex Corporation, a consolidated subsidiary in Taiwan,
a wholly owned subsidiary, as well as an increase of 4,126 million yen in cash and deposits, etc.
(Liabilities)
Total liabilities as of the end of the current consolidated fiscal year were 20,723 million yen (19,812 million
yen as of the end of the previous consolidated fiscal year), representing a year-on-year increase of 910 million
yen, or 4.6%.
The main factor for this is an increase of 810 million yet in income taxes payable, etc.
(Net assets)
Total net assets as of the end of the current consolidated fiscal year were 47,965 million yen (47,444 million
yen as of the end of the previous consolidated fiscal year), representing a year-on-year increase of 520 million
yen, or 1.1%.
The main factor for this is a decrease of 1,385 million yen in capital surplus due to an additional acquisitionof shares of ThinFlex Corporation, a consolidated subsidiary in Taiwan, as well as an increase of 1,562 million
yen in retained earnings, etc.

- 14 -

2) Analysis of Results of Operations(Net sales)
Net sales for the current consolidated fiscal year were 43,089 million yen (46,439 million yen for the previous
consolidated fiscal year), representing a year-on-year decrease of 3,349 million yen, or 7.2%. Cost of sales was
34,422 million yen (38,501 million yen for the previous consolidated fiscal year) through our thorough costcutting efforts, representing a year-on-year decrease of 4,079 million yen and signifying a 3.0 percentage point
increase in the ratio of cost of sales to 79.9%.
As a result, gross profit was 8,667 million yen (7,938 million yen for the previous consolidated fiscal year),representing a year-on-year increase of 729 million yen and signifying a 3.0 percentage point increase in theratio of gross profit to 20.1%.
(Operating income or loss)
Total selling, general and administrative expenses for the current consolidated fiscal year were 5,346 million
yen (4,820 million yen for the previous consolidated fiscal year) despite our thorough cost-cutting efforts,
representing a year-on-year increase of 526 million yen and signifying a 2.0 percentage point increase in theratio of selling, general and administrative expenses to 12.4%.
As a result, operating income was 3,320 million yen (3,118 million yen for the previous consolidated fiscal
year), representing a year-on-year increase of 202 million yen and signifying a 1.0 percentage point increase in
the ratio of operating profit to 7.7%.
(Ordinary income or loss)
Non-operating income and expenses for the current consolidated fiscal was an income of 883 million yen (anincome of 459 million yen for the previous consolidated fiscal year), representing an increase of 423 million
yen. A main factor for this is the posting of 445 million yen in foreign exchange gains.
As a result, ordinary income was 4,204 million yen (3,578 million yen for the previous consolidated fiscal
year), representing a year-on-year increase of 626 million yen and signifying a 2.1 percentage point increase in
the ratio of ordinary profit to 9.8%.
(Income or loss before income taxes)
Extraordinary income or loss for the current consolidated fiscal year recorded an income of 761 million yen(a loss of 61 million yen for the previous consolidated fiscal year), representing an increase of 822 million yen.
The main factor for this was an increase of gain or loss on sales of investment securities (an income of 9 million
yen for the previous consolidated fiscal year and an income of 777 million yen for the current consolidated
fiscal year, representing an increase of 767 million yen). As a result, income before income taxes was 4,965
million yen (3,516 million yen for the previous consolidated fiscal year), representing a year-on-year increaseof 1,449 million yen and signifying a 3.9 percentage point increase in the ratio of profit before income taxes to
11.5%.
(Profit or loss attributable to owners of the parent)
Total income taxes for the current consolidated fiscal year were 961 million yen (918 million yen for theprevious consolidated fiscal year), representing a year-on-year increase of 43 million yen. As the bottom line,
profit attributable to owners of the parent for the current consolidated fiscal year was 3,911 million yen (2,160
million yen for the previous consolidated fiscal year), representing a year-on-year increase of 1,750 million yen
and signifying a 4.4 percentage point increase in the ratio of profit attributable to owners of the parent to 9.1%.

- 15 -

ii) Details of Analyses and Study Regarding Cash Flows and Information on Financial Resources for Capital and
Liquidity of Funds
Status of each cash flow category during the current consolidated fiscal year and the factors behind such status
are stated in II. Status of Business - 3. Analyses of Consolidated Financial Position, Business Results and Cash
Flows by the Corporate Managers - (1) Overview of Operating Results, etc. - ii) Cash Flows.
(Cash flow indicators)
Previous consolidated fiscal year
(As of March 31, 2021)

Current consolidated fiscal year
(As of March 31, 2022)

Equity ratio (%)

68.8

69.6

Equity ratio on a mark-to-market basis (%)

49.6

46.4

Ratio of interest-bearing liabilities to cash flows(Years)13.6

1.5

Interest coverage ratio (Times)

3.7

43.6

Note: Equity ratio: Total shareholders’ equity / Total assets
Equity ratio on a mark-to-market basis: Total market capitalization / Total assets
Ratio of interest-bearing liabilities to cash flows: Interest-bearing liabilities / Operating cash flows
Interest coverage ratio: Operating cash flows / Interest paid
1. All indicators above are calculated on the basis of the consolidated financial results.
2. Total market capitalization is calculated by multiplying the number of shares issued and outstanding at the end of theperiod (excluding treasury stock) by the closing price per share at the end of the period.
3. Interest-bearing liabilities represent all those liabilities (stated in the consolidated balance sheets) on which interest ispaid.
4. For operating cash flows, the amount of “Net cash provided by (used in) operating activities” stated in the consolidated
statements of cash flows is used. For the interest paid, the amount of “Interest expenses paid” stated in the consolidated
statements of cash flows is used.
1) Financial resources for capital and liquidity of funds

Our Group makes it our basic policy to stably secure the liquidity of funds and the resources of capital requiredfor business operations. Though we basically use our own capital for short-term working capital, we hold acontract for overdraft agreements with main financing banks so as to procure temporary working capitalefficiently in time of insufficiency. Regarding the capital relating to capital formation such as business
investments, we basically procure our own capital and long-term borrowings from financial institutions in view offinancing cost and risk diversification. Additionally, for the purpose of efficient fund management, reducing offinancial risk and saving of interest expenses, our Group started "Group Finance".
2) Objective Indicators etc. for Judgement on the Status of Achievement of Management Policy, Management
Strategies and Managerial goals
Our Group’s managerial and financial goals are described in II. Status of Business 1. Management Policy,
Management Environment and Tasks to be Addressed.
iii) Significant Accounting Estimates and Assumptions Used in Making Such Estimates
The consolidated financial statements of our Group are made based upon the corporate accounting standards
which are generally accepted in Japan. In preparing this consolidated financial statements, the management are
required to estimate for accounting. With respect to such estimates, the management comprehensively considers
and reasonably judges past results, present circumstances, etc.; nevertheless, actual results may become different
from the said estimates due to uncertainty peculiar to estimating.
The critical accounting policies adopted for the preparation of financial statements are described in"Important Matters Underlying Preparation of Consolidated Financial Statements" of "V. Status of Accounting:
1. Consolidated Financial Statements, etc. (1) Consolidated Financial Statements Notes ", among which thefollowing critical accounting policies are considered to have a profound effect on the important judging andestimating in course of preparing consolidated financial statements.
1) Allowance for doubtful accounts
In our Group, as a reserve for potential loan losses, an estimated uncollectible amount is recorded based on
the historical loan-loss ratio in the case of general accounts receivable, and in light of the collectability in each
instance in the case of some specific accounts receivable, e.g. doubtful receivables. When a financial condition- 16 -

of customers gets worse and their solvency declines, an additional allowance may need recording.
2) Assessment of recoverability of deferred tax assets
When applying tax effect accounting, our Group reasonably estimates recoverability of deferred tax assets
and records such assets after deduction of valuation allowance. Recoverability of deferred tax assets depends on
the possibility of future untaxable depreciation of taxable items and on the future taxable income estimated on
the basis of future profitability; therefore, if such estimated amount vary, a profit may fluctuate due to reversal
or additional recording of the deferred tax assets.
3) Impairment of securities and investment securities
Our Group holds securities and investment securities; we use, as valuation methods, the market method on
securities other than stocks and others without a quoted market price and use the cost method on securities
without a quoted market price. We conduct treatments for impairment on our owned securities according toreasonable standards, because we bear the risk of price fluctuation in the stock market (if such securities have aquoted market price) and investees' business results etc. may worsen (if such securities have no quoted market
price).
Our Group has conducted necessary treatments for impairment on securities and investment securities.
Additionally, if any loss which is not reflected on the current book value occurs or any book value becomes
uncollectible due to deteriorating market conditions, worsening business results of investees, etc. in the future,
further treatments for impairment may be required according to the said standards.
4) Impairment of non-current assets
Our Group applies Accounting Standard for Impairment of Fixed Assets, and is grouping non-current assets
on the basis of business unit which generates cash flow independently. When the recoverable amount of anasset group falls below book amount, such different amount is perceived as an impairment loss. When therecoverable amount of an asset group further goes down in the future, further recording of an impairment loss
may be required.
This application shows an impairment loss of 12,928 thousand yen as extraordinary losses in manufacturing
facilities of the submitting company in the current consolidated fiscal year.
5) Valuation of inventories
Our Group reduces the book value of inventories when their net selling price falls below its book value. In
addition, when inventories are recognized to be slow-moving more than a certain period of time, we assume that
their realizability of sales is declining and promptly amortize them with a book value reduction method on aregular basis, depending on the elapse of the time. Furthermore, we individually reduce their book value whensales are recognized to be difficult. The net selling price may have a serious impact on loss on valuation of
inventories depending on future changes of market environment and differences in sales forecasts because it isevaluated based on sales results, etc.

- 17 -

4. Agreements with Managerial Implications, etc.
No applicable matter.

5. Research and Development Activities
Major research and development activities of our Group are conducted by the Submitting Company as well as
ThinFlex Corporation, Satosen Co., Ltd. Protec Arisawa Europe, S.A., Protec Arisawa America, Inc. and ColorLink
Japan, Ltd., consolidated subsidiaries of the Submitting Company, and these companies are also disseminating
technologies to other consolidated subsidiaries.
As a technology-oriented corporate group, we adopt a flexible organization as a basis for our research anddevelopment activities in order to match the increasingly diversified and sophisticated needs of the users. Centering on
our core business fields, i.e. the electronic materials field, the industrial structural materials field, the electricalinsulating material field and the display materials field, we vigorously pursue research and development of newtechnologies and new products, aiming at launching new products to the market, nurturing of next generation products,
forward-looking promotion of technologies and expansion of fundamental technologies.
Examples of electronic materials include materials for FPCs (flexible printed circuit boards), glass cloth for printed
circuit boards and prepregs for special printed circuit boards, etc. Examples of industrial structural materials include
in-car materials, materials for use in water treatment equipment, materials for aircraft interiors. Examples of electricalinsulating materials include prepregs for use in electrical insulating and various molded products, etc. Examples ofdisplay materials include 3D-filters, optical molded products, etc.
As of the end of the current consolidated fiscal year, we had 165 employees involved in research and development
activities, and our total research and development expenses incurred in the current consolidated fiscal year amounted
to 1,926 million yen.
Research and development achievements and the amount of research and development expenses incurred withrespect to each field during the current consolidated fiscal year were as follows.
(1) Electronic Materials Field- Materials for flexible printed circuit boards
With regard to mobile devices, 5G communication products are becoming more common and full-scale 5G
communication will require communication in higher frequency (millimeter wave) region. Electronic devices used forhigh-speed communication in this millimeter wave region require reduction in signal transmission loss. In order to deal
with this, we have a lineup of various low-dielectric FPC materials which have low signal transmission loss. Studies
for the next-generation 6G communication system have been started and this will require even higher frequency. To
deal with this trend, we have developed copper-clad laminate using fluorine materials which have superior lowdielectric property. Its evaluation is underway among our customers.
- In-car electronic materials
Further adoption of materials for flexible printed circuit boards is under consideration for the purpose of weight
reduction and downsizing of electronic materials in automobiles that are being electrified.
One of the materials required for in-car FPC is FPC with thick copper circuit adapted to high current. It requires tobe about 10 times thicker than copper circuit used in mobile devices, etc. We have successfully developed copper-cladlaminate corresponding to this demand by using our processing technology. Its evaluation for adoption is underway
among our customers.
In addition, as on-board IC power modules are improving performance, an amount of heat generation of IC is on therise and adhesive sheets with superior heat dissipation property are required to efficiently radiate the heat generated
from it. We have developed a 15W/mK product, which is industry-leading levels, in addition to a line-up of various
insulating adhesive sheets whose heat dissipation property is from 1 to 10W/mK and started to provide its samples toour customers.
Research and development expenses incurred with respect to electronic materials amounted to 1,185 million yen.

- 18 -

(2) Industrial Application Structural Materials Field and Electrical Insulating Materials Field- Water treatment FRP pressure vessels
Our FRP pressure vessels have been used widely for water treatment such as seawater desalination. In recent years,
they have obtained the conformity certification pursuant to the amended Food Sanitation Act in Japan and are applied
for drinking water. Our consolidated subsidiaries, Protec Arisawa Europe, S.A. and Protec Arisawa America, Inc., areconducting qualification tests to obtain ACS (Attestation de Conformite Sanitaire; French Certificate of Sanitary
Conformity) and NSF-61 certification (American National Standard for Drinking Water). We will continue to develop
products that can contribute to securing water resources.
- Environmental load reduction materials for aircrafts
In recent years, as environmental regulations are becoming stricter, environmental load reduction materials are
required in the aviation industry. Honeycomb panels used for wall materials of airframe's interior containenvironmental load materials such as halogen and antimony to make them flame-retardant. We have developed theworld’s first honeycomb panel materials whose environmental load is reduced with non-halogen and non-antimony byusing our own compounding technique. We will proceed with customer evaluation with the aim of adoption by aircraft
manufacturers.
- Materials for disaster countermeasures
As natural disasters such as floods, earthquakes, and typhoons occur more frequently, buildings and structuralmembers are being reinforced and disaster-prevention measures are being taken. CFRP cured using carbon-fiber as
reinforcement fiber and impregnated with high-strength resin is adopted for reinforcement of structural members, andits applications are expected to develop in a variety of fields. Moreover, as the demand for FRP materials which are
flame-retardant to prevent the spread of fire is growing, we have developed a transparent GFRP sheet which has UV
and IR cut performance as well as high transmittance and high rigidity besides flame-retardance by using our own
resin compounding and molding technology. Customer evaluation is underway for application to exterior materials,
etc. We will continue to focus our efforts on these fields and develop differentiated materials.
Research and development expenses incurred with respect to composite materials amounted to 477 million yen.
(3) Display Materials Field- 3D display materials
The 3D display systems incorporating the Company’s “Xpol®” are being adopted in the medical field because of
their high reliability and 3D performance. In recent years, they are being increasingly adopted for use in microscopic
surgery using high-quality 4K resolution displays in addition to endoscopic surgery. Their customer evaluation isunderway for robotic surgical application because of their unique Xpol® design that balances an adequate 3D viewing
angle and brightness even at high resolution. From now on, they are expected for the development of applications inremote medical care which uses a 5G high-speed communication.
- Functional adhesive materials
We have been developing, with our own resin compounding technique, functional adhesive materials that are to be
used for display-related parts. We started to provide to our customers the samples whose functions are customized
according to purposes such as mini LED and LCD. Functional adhesive materials that were developed with resin
compounding that does not use solvent for the purpose of environmental load reduction achieved both high reliability
and transparency and received customer certification. The 3D display systems incorporating the Company’s “Xpol®”are adopted in the medical field because of their high reliability and 3D performance. In recent years, they are also
increasingly adopted for use in microscopic surgery using 4K resolution displays in addition to endoscopic surgery.
We will work on developing new products with consideration for further resolution improvement and expanding use to
remote medical care and remote construction under a high-speed communication environment.
Research and development expenses incurred with respect to display materials amounted to 249 million yen.

- 19 -

III. Status of Facilities
1. Outline of Capital Investment
Our Group concentrates its capital investment in the expansive and growing fields in order to keep pace with therapid technological innovation and the tough sales competition and made capital expenditures totaling 2,268 million
yen in the current consolidated fiscal year.
The principal component of our capital investment in the current consolidated fiscal year was 1,817 million yen
for production equipment related to electronic materials centering on materials for flexible printed circuit boards.
In this regard, no retirement or sale, etc. of facilities or equipment that may significantly affect our Group’s
production capacity was conducted in the current consolidated fiscal year.

2. Status of Major Facilities(1) Submitting Company
As of March 31, 2022
Book value
Name ofbusiness place(Location)

Segment nameNature of facilities

Electronic materials
manufacturing facilities,
Electronic materials,
Industrial application
Minami-honcho Industrial application
structural materials
Factory
structural materials,
manufacturing facilities,(Joetsu-shi,
Electrical insulating
Electrical insulating
Niigata)materials,
materials manufacturing
facilities,

Buildings Machinery,
Land
Lease
Number ofandequipment
Other
Total
(Thousands
assetsstructures and vehicles(Thousands (Thousands employeesof yen) (Thousands(Thousands (Thousandsof yen)of yen)(Area m2)of yen)of yen)of yen)402,190

50,061

Nakadahara
Factory(Joetsu-shi,
Niigata)Electronic materials
manufacturing facilities,
Electronic materials, Industrial application
Industrial application structural materials
structural materials,
manufacturing facilities,
Electrical insulating Electrical insulating
materials,
materials manufacturing
Display materials
facilities,
Display materials
manufacturing facilities

2,174,971

1,013,409

NakadaharaNishi Factory(Joetsu-shi,
Niigata)

Industrial application
Industrial application
structural materials,
structural materials,
Display materials
Display materials
manufacturing facilities

209,691

568,960

Head Office(Joetsu-shi,
Niigata)

Head office(Common)

Other facilities

590,612

2,567

Tokyo Branch
Office(Taito-ku,
Tokyo)

Electronic materials,
Industrial application
structural materials,
Electrical insulating
materials,
Other facilities
Display materials,
Other,
Head office(Common)136,505

7,394- 20 -

55,095（18,204）

292,136（114,643）

356,454（33,941）

100,691（26,963）

298,820
（577）

58

25

39,564546,936

257,573

310,347

4,048,438

396
(66)

16,28814,905

1,166,301

71
(－)

－

52,618746,489－

27,169469,889

(11)

33
(12)

38
(1)

(2) Domestic Subsidiaries
As of March 31, 2022
Book value
Company
nameName ofbusiness
place(Location)

Segment nameNature of facilities

SatosenCo., Ltd.

--(Osaka-shi,
Osaka)

Electronicmaterials,

Electronicmaterials
manufacturing--(Joetsu-shi,
Niigata)Electronicmaterials,
Electricalinsulating
materials

Arisawa
Sogyo Co.,
Ltd.

--(Joetsu-shi,
Niigata)

Industrial
application
structural
materials,
Electricalinsulating
materials,
Other

Arisawa
Jushi
Kogyo
Co., Ltd.

--(Kawaguchi-shi,
Saitama)Electricalinsulating
materials

ColorLink
Japan, Ltd.

--(Joetsu-shi,
Niigata)

Arisawa
Fiber
Glass Co.,Ltd.

Displaymaterials

Electronicmaterials
manufacturing
facilities,
Electricalinsulating
materials
manufacturing
facilities
Industrial
application
structural
materials
manufacturing
facilities,
Electricalinsulating
materials
manufacturing
facilities
Electricalinsulating
materials
manufacturing
facilities
Display materials
manufacturing
facilities

Machinery,
Buildings
equipment
Land
Number ofandLease assets
Other
Total
and
(Thousands
structures(Thousands (Thousands (Thousands employees
vehiclesof yen)(Thousandsof yen)of yen)of yen)(Thousands (Area m2)of yen)of yen)138,986

30,693291,900（4,373）－37,133498,71383(101)352,554306,966

120,061（36,965）

69,97011,495

861,04793(34)

277,451

30,211

262,447（49,319）－

25,566595,67794(26)

49,88639,751

31,561（2,407）－

3,992

125,19215(－)

80,75738,44949,188（4,684）－

12,437

180,83276(16)(3) Overseas Subsidiaries
As of March 31, 2022
Book value
Company
nameName ofbusiness
place(Location)

Segment nameThinFlex
Corporation--(KaohsiungCounty,Taiwan)Electronicmaterials

Electronicmaterials
manufacturing
facilities

1,301,602

959,534-

438,043(See Note
4)975,316

3,674,498

223(－)

TopFlex
Corporation--(Kunshan
City,
P.R. China)

Electronicmaterials

Electronicmaterials
manufacturing
facilities

245,744130,066-

44,470(See Note
4)

19,747440,027

131(－)

ProtecArisawa
Europe,S.A.

--(Munguia,
Spain)

Industrial
application
structural
materials

85,406

215,899

31,060（8,891）-

8,537

340,903

78(46)

ProtecArisawa
America,
Inc.

--(Vista, CA,
U.S.A.)

Industrial
application
structural
materials

15,206

43,640--21,27980,126

37
(3)

Note:

1.

Buildings Machinery,Land
Number ofandequipment
Lease assets
Other
Total
Nature of facilities(Thousands
structures and vehicles(Thousands (Thousands (Thousands employeesof yen)(Thousands (Thousandsof yen)of yen)of yen)2(Area m )of yen)of yen)Industrial
application
structural
materials
manufacturing
facilities
Industrial
application
structural
materials
manufacturing
facilities

Among the columns under “Book value”, “Other” indicates the total of tools, furniture and fixtures and construction in progress.

- 21 -

2.

Major facilities leased out by the Submitting Company to its domestic subsidiaries are included in the facilities of the pertinentsubsidiaries respectively.
Facilities and employees in Kansai office are included in Satosen Co., Ltd.
The land-use rights, 361,856 thousand yen (39,265㎡) and 46,129 thousand yen (30,136㎡), are included in the lease assets of ThinFlex
Corporation and TopFlex Corporation.
The parenthesized figures in the column “Number of employees” indicate the number of temporary employees not included in thepertinent total.

3.
4.
5.

3. Plans for Installation and Retirement, etc. of Facilities(1) Installation, etc. of Material Facilities
Name ofbusiness placeorcompany

Location

Segment
nameNature of facilities

Investment amount

Source offunds

Total amountAmountto behitherto
invested
disbursed(Thousands (Thousands ofof yen)yen)

Scheduled start andcompletion months

Start

Completion

May2021

Capacity
increase
uponcompletion

TopFlex
Corporation

Kunshan City, Electronic
P.R. China materials

Electronicmaterials
manufacturing
facilities

714,206

233,439 Own funds

September2022－

TopFlex
Corporation

Kunshan City, Electronic
P.R. China materials

Electronicmaterials
manufacturing
facilities

902,400

270,720 Own funds February2022 October2023－

Arisawa Mfg.
Co., Ltd.

Joetsu -shi,
NiigataElectronicmaterials

Electronicmaterials
manufacturing
facilities

668,500

379,915 Own funds

September20
21

June2022－

Note: 1. The amounts stated above do not include consumption tax, etc.
2. No amount or value is shown in the column “Capacity increase upon completion” as it is difficult to reasonably determine any pertinent
amount or value.

(2) Retirement, etc. of Material Facilities
There is no plan for retirement, etc. of material facilities.

- 22 -

IV. Status of the Submitting Company
1. Status of Shares, etc.
(1) Total Number of Shares, etc.
1) Total number of shares
Class

Total number of shares authorized to be issued

Common stock

130,000,000

Total

130,000,000

2) Shares issued and outstanding
Number of shares issued andoutstanding as of the end of
the business year
(As of March 31, 2022)

Class

Number of shares issued andoutstanding as of the filingdate of the Financial Report(As of June 29, 2022)

Name of financial instruments
exchange where the shares arelisted or authorized financial
instruments firms association
where the shares are registered

Remarks

Number ofsharesconstituting
one full unit:
100---

Common stock

33,614,824

33,616,324

Tokyo Stock ExchangeFirst Section as of the end of
the business year)
Prime Market (as of the filingdate of the Financial Report)

Total

33,614,824

33,616,324

---

Note:

1.

2.
3.

The number of shares issued through the exercise of stock acquisition rights in the period from June 1, 2022 to the filingdate of this Financial Report is not included in the column “Number of shares issued and outstanding as of the filing dateof the Financial Report”.
The Company disposed of 23,435 shares of treasury stock for restricted stock compensation as of July 21, 2021 upon aresolution by the Board of Directors on June 25, 2021.
23,435 shares out of shares issued and outstanding as of the filing date of this Quarterly Report are by contribution in kind
(20,997 thousand yen of monetary compensation claims) when treasury stock was disposed of for restricted stockcompensation.

- 23 -

(2) Status of Stock Acquisition Rights, etc.
1) Details of Stock Option Scheme
Stock acquisition rights issued under the Companies Act were as follows.
Date of resolution

June 28, 2017

5 directors of the Company,
5 directors of the Company,
194 employees of the Company, 211 employees of the Company,
and 10 directors and employees and 11 directors and employeesof subsidiaries of the Companyof subsidiaries of the Company

Category and number of persons to whom stockacquisition rights shall be granted
Number of stock acquisition rights (Units)※

Class, contents and number of shares subject to stockacquisition rights

2,340〔2,299〕

2,635〔2,608〕

Common stock 234,000〔229,900〕

Common stock 263,500〔260,800〕

Amount to be paid per share at the time of exercising eachstock acquisition right (Yen) ※Exercise period for stock acquisition rights

1,004

1,104

(See Note 1)

July 1, 2019 throughJune 30, 2022※

Issuance price and amount credited to equity capital in theevent of share issuance through the exercise of stockacquisition rights (Yen) ※Issuance price※2(See Note 2)

Conditions for the exercise of stock acquisition rights

June 28, 2018

(See Note 1)

July 1, 2020 throughJune 30, 2023

1,035 Issuance price

1,272

Amount credited to equity capital Amount credited to equity capital

518

636

Matters concerning the transfer of stock acquisition rights

Any transfer of stock acquisition rights shall be subject to theapproval of the Board of Directors.

Matters concerning the grant of stock acquisition rights inconnection with acts of reorganization(See Note 3)

Date of resolution

June 27, 20194 directors of the Company,
4 directors of the Company,
208 employees of the Company, 147 employees of the Company,
and 14 directors and employees and 13 directors and employeesof subsidiaries of the Company of subsidiaries of the Company

Category and number of persons to whom stockacquisition rights shall be granted
Number of stock acquisition rights (Units)※

Class, contents and number of shares subject to stockacquisition rights

2,470〔2,469〕

1,303〔1,268〕

Common stock 247,000〔246,900〕

Common stock 130,300〔126,800〕

Amount to be paid per share at the time of exercising eachstock acquisition right (Yen) ※Exercise period for stock acquisition rights

922

890

(See Note 1)

July 1, 2021 throughJune 30, 2024※

Issuance price and amount credited to equity capital in theevent of share issuance through the exercise of stockacquisition rights (Yen) ※Issuance price※2(See Note 2)

Conditions for the exercise of stock acquisition rights

June 25, 2020

(See Note 1)

July 1, 2022 throughJune 30, 2025

1,090 Issuance price

1,061

Amount credited to equity capital Amount credited to equity capital

545

530.5

Matters concerning the transfer of stock acquisition rights

Any transfer of stock acquisition rights shall be subject to theapproval of the Board of Directors.

Matters concerning the grant of stock acquisition rights inconnection with acts of reorganization(See Note 3)※ The contents are described as of the end of the current business year (March 31, 2022). With respect to the items whichchanged during the period from the end of the current business year to the end of the month previous to the filing (May 31,2022), the contents thereof are described in [ ] as of the end of the month previous to the filing. No other contents changed
from the end of the current business year.
Note 1. If the Company conducts a stock split or a reverse stock split after the issuance of stock acquisition rights, the paid-in amountshall be adjusted in accordance with the following calculation formula, and any fraction less than 1 yen arising from suchadjustment shall be rounded up to the nearest integer value.
Paid-in amount after adjustment =Paid-in amount before adjustment- 24 -

×1
Ratio of stock split and reverse stock split

If the Company issues new shares (except in the case of the issuance of new shares through the exercise of stock options) or
disposes of shares of treasury stock at a price less than the current market price of the Company’s common stock, the paid-in
amount shall be adjusted in accordance with the following calculation formula, and any fraction less than 1 yen arising fromsuch adjustment shall be rounded up to the nearest integer value.
Number of shares issued &outstanding

Paid-in amount after adjustment = Paid-in amount before adjustment ×+

Number of new shares being issued × Paid-in
amount per share
Current market price per share

Number of shares issued & outstanding + Number of new shares being issued

If the Company disposes of shares of treasury stock, the “Number of new shares being issued” shall instead be read as the“Number of shares of treasury stock being disposed of”.
2. Being a director, an advisor or an employee of the Company or a director, an advisor or an employee of a subsidiary of theCompany at the time of exercising the rights. But as for the resolution of June 25, 2020, being a director or an employee of
the Company or a director or an employee of a subsidiary of the Company
3. In the event that a merger agreement in which the Company becomes a defunct company has been approved, or that a
proposal for approval of a stock swap agreement (or for a transfer of shares) in which the Company becomes a wholly
owned subsidiary has been approved at a general meeting of shareholders, except where the surviving company or theCompany’s wholly owning parent company succeeds to the obligation to grant stock acquisition rights, the Company shallbe able to acquire the stock acquisition rights without consideration.

2) Details of Rights Plan
No applicable matter.
3) Status of Other stock acquisition right
No applicable matter.

(3) Status of Exercise of Moving Strike Convertible Bonds, etc.
No applicable matter.

- 25 -

(4) Changes in the Number of Shares Issued and Outstanding, Capital Stock, etc.
PeriodNumber of shares issued andoutstanding
ChangeBalance

Capital stock(Thousands of yen)
ChangeBalance

Legal capital surplus(Thousands of yen)
ChangeBalance

From April 1, 2017
to March 31, 2018
(See Note 1)

344,500

36,024,124

141,222

7,458,242

141,170

6,570,209

From April 1, 2018
to March 31, 2019
(See Note 1)

202,100

36,226,224

83,4507,541,693

83,406

6,653,615

From April 1, 2019
to March 31, 2020
(See Note 1)

155,300

36,381,524

52,3337,594,026

52,402

6,706,017

From April 1, 2020
to November 30, 2020
(See Note 1)

24,90036,406,424

8,595

7,602,621

8,595

6,714,612

November 30, 2020
(See Note 2)△2,000,000

34,406,424－

7,602,621－

6,714,612

From December 1,
2020
to March 31, 2021
(See Note 1)

64,10034,470,524

21,017

7,623,638

21,017

6,735,630

From April 1, 2021
to August 31, 2021
(See Note 1)

19,80034,490,324

6,276

7,629,915

6,276

6,741,906

August 31, 2021
(See Note 2)△900,000

33,590,324－

7,629,915－

6,741,906

From September 1,
2021
to March 31, 2022
(See Note 1)

24,50033,614,824

13,862

7,643,777

13,862

6,755,769

Note 1.
2.
3.

The increases are due to the exercise of stock acquisition rights.
This is due to the retirement of treasury stock.
In the period from April 1, 2022 to May 31, 2022, the number of shares issued and outstanding increased by 1,500 shares,
and the amount of capital stock and that of legal capital surplus increased by 894 thousand yen respectively, all through theexercise of stock acquisition rights.

- 26 -

(5) Status of Shareholder Categories
Status of Shares (Number of shares constituting one full unit: 100)
Category

Number ofshareholders

Governments
Financialand local
institutions
governments－

21

Financial
Foreign corporations, etc.
instruments
Otherbusiness corporations Other than
Individuals
operators
individuals

31

105

93

18

Individuals
and others

11,006

As of March 31, 2022
Status ofsharesconstituting
less thanTotal
one full
unit
11,274－

Number ofshares held
(Units－109,214
10,042
27,587
69,525
177
118,842 335,387
76,124
except asotherwise
noted)
Ratio of thenumber of
－
－
32.56
2.99
8.23
20.73
0.05
35.44
100.00shares held
(%)
Note:
1. Out of 212,975 shares of treasury stock, 2,129 units are included in the column “Individuals and others”, and 75 shares areincluded in the column “Status of shares constituting less than one full unit”. 88,600 shares of the Company which a trust
account for employee stock ownership plan holds are not included in the treasury stock.
2. In the columns “Other corporations” and “Status of shares constituting less than one full unit”, shares held in the name ofJapan Securities Depository Center, Inc. are included by 5 units and 19 shares, respectively.

- 27 -

(6) Status of Major Shareholders

Full name or
corporate name

The Master Trust Bank of Japan,
Ltd. (Trust account)

Address

11-3, Hamamatsu-cho 2-chome,
Minato-ku, Tokyo

Number ofshares held

As of March 31, 2022
Ratio of the numberof shares held to thenumber of sharesissued andoutstanding(excluding treasury
stock) (%)

5,048,700

15.11

INTERTRUST
TRUSTEES(CAYMAN)LIMITED 190 ELGIN AVENUE, GERGE TOWN,SOLELY IN ITS CAPACITY AS
GRAND CAYMAN KY1-9005, CAYMAN
TRUSTEE OF JAPAN-UP
ISLANDS(Standing Proxy: Mizuho Bank, Ltd. (15-1, Konan 2-chome,
Settlement & Clearing Services
Minato-ku, Tokyo)
Department)

2,982,600

8.92

Custody Bank of Japan, Ltd. (Trustaccount)

2,048,300

6.13

1,472,166

4.40

8-12, Harumi 1-chome,
Chuo-ku, Tokyo

Mitsubishi Gas Chemical Company, 5-2, Marunouchi 2-chome,Inc. (See Note 3)
Chiyoda-ku, Tokyo
Arisawa Kenko Ltd.

11-44, Nishishiro-cho 3-chome,
Joetsu-shi, Niigata

834,338

2.49

Daishi Hokuetsu Bank, Ltd.
(Standing Proxy: The Master Trust
Bank of Japan, Ltd.)1071-1, Higashiborimae-dori 7-bancho,
Chuo-ku, Niigata-shi, Niigata(11-3, Hamamatsu-cho 2-chome,
Minato-ku, Tokyo)

743,903

2.22

The Hachijuni Bank, Ltd.
(Standing Proxy: The Master Trust
Bank of Japan, Ltd.)

178-8, Nakagosho Okada,
Nagano-shi, Nagano(11-3, Hamamatsu-cho 2-chome,
Minato-ku, Tokyo)

660,930

1.97

DFA INTL SMALL CAP VALUE
PORTFOLIO(Standing Proxy: Citibank, N.A.,
Tokyo Branch)

Palisades West 6300, Bee Cave Road, Building
One, Austin, TX 78746, U.S.A.
(27-30, Shinjuku 6-chome, Shinjuku-ku, Tokyo)

648,379

1.94

The Master Trust Bank of Japan,
Ltd. (Retirement benefit trust
account and Mitsubishi Electric
Corporation account)11-3, Hamamatsu-cho 2-chome,
Minato--ku, Tokyo

530,536

1.58

Sanji Arisawa

Shinjuku-ku, Tokyo

463,769

1.38

15,433,621

46.20

Total

---

Note: 1. The ratio of the number of shares held to the total number of shares issued (except for treasury stock) is displayed with thenumbers truncating the numbers beyond the third decimal point. 88,600 shares of the Company which a trust account for
employee stock ownership plan holds are not included in the treasury stock excluded from the total number of shares issued
and outstanding.
2. Apart from the above, there is the treasury stock of 212,975 shares that the Company holds.
3. The number of shares held by Mitsubishi Gas Chemical Company, Inc. includes 966,306 shares that have been contributed by
Mitsubishi Gas Chemical Company, Inc. as the trust property of retirement benefit trust. The pertinent name in the Company’s
register of shareholders is “The Master Trust Bank of Japan, Ltd. (Retirement benefit trust account and Mitsubishi Gas
Chemical Company, Inc. account).”
4. Though it is described in the Change Report of the Report on Bulk Holding available for public inspection as of September 6,2018 that Sumitomo Mitsui Trust Bank, Limited and a joint holder thereof hold the shares described below as of August 31,
2018, the Company has confirmed no beneficial ownerships of the number of shares as of March 31, 2022. Therefore, such
number of shares is not included in above-mentioned Status of Major Shareholders. Details of the Change Report of theReport on Bulk Holding are as follows:- 28 -

Bulk Holders: Sumitomo Mitsui Trust Bank, Limited and two joint holder thereof
Address: 1-4-1, Marunouchi, Chiyoda-ku, Tokyo
Number of shareholdings etc.
: 1,488,200
Holding ratio of share certificates etc. : 4.12
5. Though it is described in the Change Report of the Report on Bulk Holding available for public inspection as of December
20, 2018 that BlackRock Japan Company, Limited and a joint holder thereof hold the shares described below as of December
14, 2018, the Company has confirmed no beneficial ownerships of the number of shares as of March 31, 2022. Therefore,such number of shares is not included in above-mentioned Status of Major Shareholders. Details of the Change Report of theReport on Bulk Holding are as follows:
Bulk Holders: BlackRock Japan Company, Limited and one joint holder thereof
Address: 1-8-3, Marunouchi, Chiyoda-ku, Tokyo
Number of shareholdings etc.
: 1,259,700
Holding ratio of share certificates etc. : 3.48
6. Though it is described in the Change Report of the Report on Bulk Holding available for public inspection as of December 21,
2018 that Sumitomo Mitsui Asset Management Company, Limited hold the shares described below as of December 14, 2018,
the Company has confirmed no beneficial ownerships of the number of shares as of March 31, 2022. Therefore, such numberof shares is not included in above-mentioned Status of Major Shareholders. Details of the Change Report of the Report on
Bulk Holding are as follows:
Bulk Holders: Sumitomo Mitsui Asset Management Company, Limited and one joint holder
thereof
Address: 2-5-1 Atago, Minato-ku, Tokyo
Number of shareholdings etc.
: 1,090,300
Holding ratio of share certificates etc. : 3.01
7. Though it is described in the Change Report of the Report on Bulk Holding available for public inspection as of October 2,2020 that Nippon Value Investors KK hold the shares described below as of September 30, 2020, the Company has confirmed
no beneficial ownerships of the number of shares as of March 31, 2022. Therefore, such number of shares is not included inabove-mentioned Status of Major Shareholders. Details of the Change Report of the Report on Bulk Holding are as follows:
Bulk Holders: Nippon Value Investors KK
Address: 1-8-1 Marunouchi, Chiyoda-ku, Tokyo
Number of shareholdings etc.
: 1,421,500
Holding ratio of share certificates etc. : 3.91
8. Though it is described in the Change Report of the Report on Bulk Holding available for public inspection as of March 22,2022 that Strategic Capital, Inc. hold the shares described below as of March 14, 2022, the Company has confirmed nobeneficial ownerships of the number of shares as of March 31, 2022. Therefore, such number of shares is not included inabove-mentioned Status of Major Shareholders. Details of the Change Report of the Report on Bulk Holding are as follows:
Bulk Holders: Strategic Capital, Inc.
Address: 3-14-15, Higashi, Shibuya-ku, Tokyo
Number of shareholdings etc.
: 2,982,700
Holding ratio of share certificates etc. : 8.88

- 29 -

(7) Status of Voting Rights
1) Shares issued and outstanding
As of March 31, 2022
Number of shares

Number of voting rights(Units)Remarks

Shares without voting rights

---

---

---

Shares with restricted voting rights(Treasury stock, etc.)

---

---

---

Shares with restricted voting rights(Other)

---

---

---

---

---

Category

Shares with full voting rights (Treasury
stock, etc.)

Common stock

Shares with full voting rights (Other)(See Note 1)

Common stock 33,325,800

333,258---

Shares constituting less than one full unit
(See Note 2)

Common stock

76,124------33,614,824

---

---

333,258---

Number of shares issued and outstanding
Total number of voting rights held byshareholders

212,900---

Note: 1. 500 shares held in the name of Japan Securities Depository Center, Inc. are included in the row “Shares with full voting rights(Other)”. 5 units of voting rights pertaining to shares with full voting rights held in the name of Japan Securities Depository
Center, Inc. are included in the column “Number of voting rights”.
2. 88,600 shares of the Company which a trust account for employee stock ownership plan holds are included in the row “Shareswith full voting rights (Other)”. 886 units of voting rights for shares with full voting rights of such trust account are includedin the column “Number of voting rights”.
3. 75 shares of treasury stock are included in the row "Shares constituting less than one full unit".

2) Treasury Stock, etc.
As of March 31, 2022
Name and address of shareholder

Number of shares held
Under thenames ofothersRatio of the number ofshares held to thenumber of sharesissued and outstanding(%)

Full name or
corporate name

Address

Arisawa Mfg. Co., Ltd.

5-5, Minami-honcho 1chome, Joetsu-shi,
Niigata

212,900---

212,900

0.63---

212,900---

212,900

0.63

Total

Under own
name

Total

Note: 88,600 shares of the Company which a trust account for employee stock ownership plan holds are not included in thecolumn “Under own name”.

(8) Director and Employee Stock Ownership Plan
(Remuneration plan for granting restricted stock to Directors)
1) Outline of the system
At the Board of Directors’ Meeting held on May 27, 2021, the Company revised the remuneration system for
the Company’s Directors except Outside Directors (hereinafter referred to as “eligible Directors”), passed a
resolution to introduce the restricted stock compensation system (hereinafter referred to as “this system”), which
was approved and passed at the 73rd Ordinary General Meeting of Shareholders held on June 25, 2021. The
purpose of the system is to provide incentive to eligible Directors to sustainably increase corporate value of theCompany and promote further sharing of value with its shareholders.
2) Total number of restricted stock, etc. issued or disposed of to eligible Directors
Given the above purpose, the aggregate amount of remuneration provided to eligible Directors to grant
restricted stock shall be no more than 50 million per year as an amount considered to be reasonable. The total
number of common shares that the Company issues or disposes of shall be no more than 50,000 shares per year
- 30 -

(however, if a share split (including gratis allotment of the Company’s common shares) or share consolidation of
the Company’s common shares is performed effective on any date after the date of a resolution at the 73rd
Ordinary General Meeting of Shareholders held on June 25, 2021, the total number shall be adjusted within areasonable range as necessary depending on a ratio of split and consolidation after such effective date).
Eligible Directors shall pay all monetary claims provided from the Company based on this system ascontributed properties in kind and receive issuance or disposal of the Company’s common shares.
The payment amount per share shall be determined by the Board of Directors based on the closing price of theCompany’s common shares on the Tokyo Stock Exchange on the business day preceding to the day of eachresolution of the Board of Directors (if no transaction is made on that day, the closing price on the trading day
immediately before that day) within the scope that is not particularly favorable to an eligible Director who
receives the common shares. The specific timing of provision and allocation to each eligible Director shall be
determined by the Board of Directors following consultations with the Assignment and Remuneration Advisory
Committee.
3) Scope of persons eligible for beneficiary and other rights in this system
Directors of the Company (excluding Outside Directors)- 31 -

2. Status of Acquisition of Treasury Stock, etc.
[Classes of Stock, etc.]
Acquisition of common stock under the provisions of Article 155, item 3 of the Companies Act and acquisition ofcommon stock under the provisions of Article 155, item 7 of the Companies Act.

(1) Status of Acquisition by Resolution of a General Meeting of Shareholders
No applicable matter.

(2) Status of Acquisition by Resolution of the Board of Directors
Acquisition of common stock under the provisions of Article 155, item 3 of the Companies Act
Category

Number of shares

Resolution of the Board of Directors (May 12, 2022)

Total amount (Yen)

820,000

750,000,000

Acquisition of treasury stock prior to the current business year－－

Treasury stock acquired during the current business year－－

Total remaining shares with voting rights and total value
thereofRatio of unexercised shares as of the end of the current
business year (%)

－

－

100.0

0.0

Treasury stock acquired during the current period

89,20092,776,000

Ratio of unexercised shares as of the filing date (%)

89.1

87.6

Note: The row “Treasury stock acquired during the current period” does not include the number of shares acquired from June 1,
2022 to the filing date of this Financial Report.

(3) Details of Acquisition not Authorized by Resolution of a General Meeting of Shareholders or
Resolution of the Board of Directors
Acquisition under the provisions of Article 155, item 7 of the Companies Act
Category

Number of shares

Total amount (Yen)Treasury stock acquired during the current business year

221

209,441

Treasury stock acquired during the current period－－

Note: The row “Treasury stock acquired during the current period” does not include the shares acquired through the purchase ofshares constituting less than one full unit in the period from June 1, 2022 to the filing date of this Financial Report.

(4) Status of Disposal and Holding of Acquired Treasury Stock
Current Business Year
Category

Numberof shares

Current Period

Total disposal amount(Yen)

Numberof shares

Total disposal
amount (Yen)

Acquired treasury stock offered for subscription

---

---

---

---

Acquired treasury stock disposed of throughretirement

900,000

918,310,779

---

---

Acquired treasury stock transferred in relation tomerger, share exchange and company split

---

---

---

---

23,43520,997,760

---

---

212,975---

212,975---

Other (Disposal of treasury stock by restricted
stock-based compensation)
Number of shares of treasury stock held
Note:

1. The “Number of shares of treasury stock held” in the “Current Period” does not include the shares acquired through thepurchase of shares constituting less than one full unit in the period from June 1, 2022 to the filing date of this Financial
Report.
2. Shares which a trust account for employee stock ownership plan holds are not included in the number of disposed treasury
stock and the row “Number of shares of treasury stock held”.

- 32 -

3. Dividend Policy
The Company will proactively return its funds earned during the period to shareholders as well as invest them inthe maintenance and expansion of its revenue base for existing businesses and the development of new use
applications. Specifically, the Company makes it a basic policy a total return ratio of 80% or more for performancelinked dividend and will respond flexibly to an acquisition of treasury stock in total consideration of demand offunds, financial conditions, etc.
With respect to the frequency of dividend payments, the Company specifies in its articles of incorporation that
the Company can effect interim dividend payments. Currently, however, in view of the tendency for the net sales,
etc. for the first half of fiscal year to be higher than those for the second half in the ratio to the annual result, theCompany pays a year-end dividend once a year in order to ensure equitable distribution of dividends in light ofbusiness results.
Decisions with respect to dividends from surplus are made at a general meeting of shareholders for the year-end
dividend and by the Board of Directors for the interim dividend.
With regard to the annual dividend for the current business year, the Company distributed interim dividend
payments by using the gain on sales of part of cross-shareholdings as a source and paid 5 yen per share (special
dividend). The Company also paid 90 yen per share for year-end dividends and the annual dividends during theperiod are 95 yen per share. As a result, the dividend payout ratio for the current consolidated fiscal year was 80.9%.
The Company plans to appropriate its internal reserves to research and development activities and capital
investment for business expansion, etc., aiming at enhancement of the shareholder value in future years.
The distribution of dividends from surplus for the current business year is as follows.
Total amount of dividends(Thousands of yen)

Dividend pershare (Yen)

Resolution of the Board of Directors of October28, 2022

166,887

5.00

Resolution at the Ordinary General Meeting of
Shareholders of June 28, 2022

3,006,166

90.00

Date of resolution

The Company passed a resolution at the Board of Directors’ Meeting held on May 12, 2022 on the acquisition oftreasury stock up to a total of 820,000 shares issued and outstanding and a total of 750,000,000 yen to enhanceshareholder returns and improve capital efficiency in accordance with the medium-term management plan.
Acquisition period is scheduled from May 13, 2022 to December 30, 2022. A consolidated total return ratio for thecurrent business year, taking into consideration the acquisition of treasury stock in addition to returns, is expected
to be 100.3%.

- 33 -

4. Status of Corporate Governance, etc.
(1) Outline of Corporate Governance1) Basic Concept of Corporate Governance
The Company has a corporate governance system in place to increase corporate value through sustainablegrowth and to maintain social credibility and is also making efforts to secure efficient and equitable
management and to enhance management transparency through proactive disclosure.
In terms of management efficiency, to ensure collection of highly accurate information and expeditious
decision making and executions, we aim at management by a selected few and restrict the number of Directors
to the requisite minimum. In this context, we employ the Operating Officer system to ensure speedy executionof operations under the decisions of the Board of Directors, where the Outside Directors and Outside
Corporate Auditors also attend.
In terms of equitable management, in line with the basic policy concerning improvement of the internal
control system, we improve organizations and systems for the purpose of ensuring legal compliance. In orderto enhance transparency, we promote communication with our shareholders and general investors through IR
activities, etc. and conduct disclosure practices in as active and timely a manner as possible.
2) Outline of Corporate Governance System

As for execution of operations, to ensure speedy execution and control of the management policy andmanagement plans determined at the regular or extraordinary meetings of the Board of Directors, a twelve(12)-member Board of Operating Officers (comprising one (1) Chief Executive Officer and eleven (11)Operating Officers) is in place in pursuit of management efficiency and speed.
Each Operating Officer plans and promotes operations under his or her supervision upon approval at theregular or extraordinary meetings of the Board of Directors as well as the regular meeting of the Board of
Operating Officers and strives for efficient and speedy execution of duties pursuant to the Regulations for the
Segregation of Duties, etc.
3) Reasons for Adopting Corporate Governance System

As a company employing the Board of Corporate Auditors system, we hold the meeting of the Board of
Corporate Auditors regular pursuant to the Regulations for the Board of Corporate Auditors. The Corporate
Auditors attend meetings of the Board of Directors, and the Full-time Corporate Auditor attends meetings ofthe Board of Operating Officers, etc. The Corporate Auditors also offer appropriate proposals and advice as
to execution of Directors’ duties and the status of improvement and operation of the internal control system,
etc., thereby exercising strict oversight over the management.
We also appoint, in order to exercise external oversight, two (2) Outside Corporate Auditors and five (5)Outside Directors, each of whom bears a part in management oversight in terms of laws and regulations,finance, accounting and corporate governance respectively from a neutral and objective viewpoint,
contributing to what we believe is a fully functioning corporate governance system.
4) Status of Improvement of Internal Control System and Risk Management System

The Company adopted, by resolution of the Board of Directors, the “Systems to Ensure Proper Operations”
as shown below.
a. System to ensure that execution by Directors and employees of the Company and its subsidiaries of theirrespective duties complies with the applicable laws and regulations and the Articles of Incorporation
The Company and its subsidiaries shall lay down the “Arisawa Group Corporate Action Guidelines”
applicable throughout the Group, set specific internal regulations in line with the said guidelines, and thenobserve the said internal regulations, thereby establishing a system which ensures that execution by
Directors and employees of their respective duties complies with the applicable laws and regulations andthe Articles of Incorporation.
b. System concerning storage and management of information on execution of duties of Directors of theCompany
As for the storage and management of information on execution of duties of Directors, internal
regulations for document management shall be set in line with the provisions of the applicable laws andregulations and the Articles of Incorporation to construct a system which ensures proper storage andmanagement of the relevant information.

- 34 -

c. System concerning reporting to the Company of the matters relating to execution of duties of Directors,
etc. of subsidiaries of the Company
Supervision over execution of duties of Directors, etc. of subsidiaries of the Company shall be exercisedthrough having Directors of the Company concurrently serve as Directors of subsidiaries of the Company.
Also, internal regulations for management of associated companies shall be set, establishing a system
which makes it mandatory for subsidiaries of the Company to submit their respective board minutes to
the Company and also to report the relevant material facts to the Company, both along the lines of theprovisions of the said regulations.
d. Regulations and other systems concerning management of risk of loss for the Company and its
subsidiaries
In order to comprehend and manage various risks surrounding the Group and its operations, internal
regulations managing and coping with each risk category shall be set. Observing the said regulations
establishes a system that helps reduce and mitigate business risks.
e. System to ensure efficient execution of duties of Directors of the Company and its subsidiaries
The Group shall improve internal regulations governing the segregation of duties and the scope of job
authorities to definitize each department’s duty assignment and job authorities and shall also introduce acommon accounting management system for the entire Group, etc., thereby establishing a system which
ensures efficient execution of duties of Directors of the Company and its subsidiaries.
f. Matters concerning employees assigned, upon request of Corporate Auditors of the Company, to assist
with duties of Corporate Auditors of the Company, the matters concerning independence of such
employees from Directors of the Company and the system to ensure effectiveness of instructions from
Corporate Auditors of the Company to such employees
Employees to assist with duties of a Corporate Auditor shall be appointed upon request of the Corporate
Auditor and in view of the expertise and experience, etc. required for the audit work. The employees so
appointed as assistant shall execute the relevant duties under the direction of the Corporate Auditor andalso be free from the dictates of any Director of the Company so as to ensure the independence of such
employees from Directors and the effectiveness of instructions from the Corporate Auditor to such
employees.
g. System to mandate reporting to Corporate Auditors of the Company by Directors and employees, etc. of
the Company as well as Directors, Corporate Auditors and employees, etc. of subsidiaries of the Company
and the system to ensure prevention of unfavorable treatment of those who have made such reporting on
account of the pertinent report having been madeInternal regulations stipulating the matters to be reported by Directors and employees, etc. of theCompany to Corporate Auditors shall be set so as to establish a system which mandates immediate
reporting to Corporate Auditors of all material facts with implications on the Group’s management andbusiness results. Also, the internal hotline system prohibiting unfavorable treatment of the whistle-blower
shall be maintained so that Corporate Auditors can directly receive the relevant reports from employees,
etc.
h. Matters concerning policies on the processing of costs incurred from execution of duties of Corporate
Auditors of the Company
Promptly upon receipt of a request, made by a Corporate Auditor under the provisions of Article 388of the Companies Act, for an advance payment, etc. of expenses to be incurred from execution of his or
her duties, the Company shall settle the pertinent expenses or liabilities. Also, if a Corporate Auditor
deems consultations, etc. with lawyers, chartered accountants and other specialists to be necessary forexecution of his or her duties, the Company shall allow the amount disbursed for enlisting suchconsultations, etc. as part of the necessary audit-related expenses.
i. Other systems to ensure execution of effective audits by Corporate Auditors of the Company
Corporate Auditors of the Company shall collect periodic reports from Directors of subsidiaries of theCompany, collect reports from Corporate Auditors of subsidiaries of the Company and also engage inother coordinated actions, as needed, so as to execute proper audits of the Group.

- 35 -

j. System to ensure credibility of financial reporting
To ensure credibility of financial reporting, the Group shall make continuous evaluation of the statusof improvement and operation of the internal control system for financial reporting and also remedy any
defect or flaw found in such system, thereby maintaining a system which allows the Group’s internal
control to function effectively and properly.
k. System to exclude anti-social forces
The Company and its subsidiaries shall expressly state in the “Arisawa Group Corporate Action
Guidelines” a policy to prevent and preclude any relationship with anti-social forces that pose a threat tothe order and safety of civil society. The Group shall also adopt and maintain a resolute attitude towardanti-social forces in cooperation with law enforcement and other external specialized agencies.
The Group sets forth the guidelines and code of conduct in the Compliance Manual that we shall be
resolute in its stance against and sever any relations with anti-social forces which pose a threat to civil society
and disturb economic activities in accordance with the provision of the system to secure proper operation as
well as precludes anti-social forces by preparing an internal reporting system and strengthening its internal
audit system to prevent violation of the provisions in accordance with the internal control system.
The Company’s corporate governance system is abstracted in the following diagram.

General Meeting of Shareholders

Board ofDirectors

Return9 Directors(incl. 5 Outside Directors)

Audit

Appointment, Dismissal,
Directions & Supervision
Board of
Operating
Officers
Report
12 Operating Officers(CEO and other Operating
Officers)*

Directions

Directions &Supervision
Each department, subsidiary, etc.

Internal Audit

Assignment
・Remuneration
Advisory Committee
Accounting Auditors (Ernst & Young ShinNihon LLC)

Appointment& Dismissal

Appointment& Dismissal

Internal Audit Department

Board of Corporate Auditors

3 Corporate Auditors (incl. 2 Outside Corporate Auditors)

Appointment& Dismissal

Accounting
Audit(Collaboration)*Note:The Board of Operating Officers consists of a total of eleven (12) Operating
Officers (including, but not limited to, the Chief Executive Officer), four (4) ofwhich are concurrently assumed by the relevant Directors.

5) Maximum Number of Directors
The Company’s Articles of Incorporation stipulate that the number of Directors of the Company shall not be
more than fifteen (15).
6) Requirements for Appointment of Directors
The Company’s Articles of Incorporation stipulate that a resolution on appointing Directors shall be adopted
by a majority vote of the voting rights of the shareholders who are present and also hold at least one-third (1/3)- 36 -

of all voting rights of the shareholders entitled to exercise voting rights.
It is also stipulated in the said Articles of Incorporation that no cumulative voting shall be allowed for a
resolution on appointing Directors.
7) Summary of the Terms of Contracts for Limitation of Liability
The Company’s Articles of Incorporation stipulate that the Company may, under the provisions of Article
427, paragraph 1 of the Companies Act, enter into contracts for limitation of liability with its Outside Directors
and Outside Corporate Auditors so that the Company can recruit competent persons as Outside Directors andOutside Corporate Auditors and also that the recruited Outside Directors and Outside Corporate Auditors cansoundly fulfill their expected roles. The main purport of such contracts for limitation of liability (entered into
between the Company and the Outside Directors as well as Outside Corporate Auditors under the said
stipulation) is as follows.
The Outside Directors and Outside Corporate Auditors shall, with respect to the liability for damages under
Article 423, paragraph 1 of the Companies Act, assume such liability for damages to the extent of the statutory
minimum liability amount as long as they perform their respective duties in good faith without being grossly
negligent.
8) Summary of Contents of Directors and Officers Liability Insurance Policy
The Company has entered into directors and officers liability insurance policy with an insurance company as
set forth in Article 430-3, paragraph (1) of the Companies Act, under which Directors and Auditors are all
insureds, to prevent Directors, etc. from feeling intimidated in management decision by being excessively liable.
Damage, etc. will be compensated when a Director is held liable due to its performance of duties, but claim fordamage arising out of willful misconduct or gross negligence will not be covered by the insurance policy. In
addition, the Company bears the full cost of the premiums.
9) Matters Typically Requiring a Resolution of a General Meeting of Shareholders which may be Resolved by
the Board of Directors
The Company’s Articles of Incorporation stipulate that the Company may resolve on the following mattersby voting at a meeting of the Board of Directors instead of voting at a general meeting of shareholders.
a. Organ to determine acquisition of treasury stock
The Company’s Articles of Incorporation stipulate that the Company may, under the provisions of Article
165, paragraph 2 of the Companies Act, acquire shares of treasury stock through market transactions, etc.
upon a resolution of the Board of Directors instead of that of a general meeting of shareholders. This
stipulation aims to enable an agile capital policy by authorizing the Board of Directors to resolve on theacquisition of the Company’s treasury stock.
b. Organ to determine distribution of interim dividends from surplus
The Company’s Articles of Incorporation stipulate that the Company may, under the provisions of Article
454, paragraph 5 of the Companies Act, distribute interim dividends with the record date of September 30 ofevery year upon a resolution of the Board of Directors instead of that of a general meeting of shareholders.
This stipulation aims to expeditiously return profits to the Company’s shareholders by authorizing the Boardof Directors to resolve on the distribution of interim dividends from surplus.
10) Requirements for Special Resolutions of a General Meeting of Shareholders
The Company’s Articles of Incorporation stipulate that, with respect to the requirements for special
resolutions of a general meeting of shareholders provided for in Article 309, paragraph 2 of the Companies Act,a special resolution shall be adopted by a two-thirds (2/3) majority vote of the voting rights of the shareholders
who are present and also hold at least one-third (1/3) of all voting rights of the shareholders entitled to exercise
voting rights. This stipulation aims to ensure smooth operation of general meetings of shareholders by relaxing
the quorum requirement for special resolutions of a general meeting of shareholders.

- 37 -

(2) Status of Directors and Officers
1) Directors and Officers(Number of female directors and officers: 1)(Percentage of female directors and officers: 8.0%)
Title

President
andRepresentative
Director

Name

Yuta
ArisawaCEO

Director
Division Chief,
YoshihikoElectrical
Toda
Performance
Materials
Business Div.

Director
Senior Operating
OfficersupervisingElectronic
Materials Sales
Dept.;
Division Chief,
Electronic
Materials
Business Div.

Osamu
Nakajima

Director
Senior Operating
Officersupervising
Manufacturing
Dept. and
Administration
Dept.

DirectorTakeshi
MasudaYutakaTsukahara

Date of birth

Career summary
April 1992
February 2002
August 2003
April 2007
April 2009
June 2010

Joined Mitsubishi Electric Corporation
Joined JPMorgan Securities Japan Co., Ltd.
Joined the Company
Assistant General Manager, Manufacturing Dept.
Operating Officer of the Company
Director and Senior Operating Officer of theJuly 25,Company
1969
June 2011
Director and Senior Managing Operating Officerof the Company
June 2014
President, Representative Director of the Company
June 2015
Chief Operating Officer (COO) of the Company
June 2017
Chief Executive Officer (CEO) of the Company(Current)
March 1981
Joined the Company
July 1996
General Manager, Tokyo Branch Office
June 2008
President and Representative Director of Arisawa
Jushi Kogyo Co., Ltd. (Current)
June 2008
Operating Officer of the Company
June 2014
Director and Senior Operating Officer of theJanuary 24,
Company
1958
May 2017
President and Representative Director of Arisawa
Fiber Glass Co., Ltd. (Current)
June 2017
Director and Senior Managing Operating Officerof the Company (Current)
May 2022
President and Representative Director of
ColorLink Japan, Ltd. (Current)
April 1989
Joined Mitsui & Co., Ltd.
May 2011
Department Manager, Solar Business Div.,
Functional Chemicals Business Unit of Mitsui &Co., Ltd.
April 2013
Department Manager, Advanced Materials Div.,
Functional Chemicals Business Unit of Mitsui &June 5, 1965
Co., Ltd.
July 2014
Department Manager, Business Development Div.,
Basic Chemicals Business Unit of Mitsui & Co.,
Ltd.
October 2015
Joined the Company as Operating Officer
June 2016
Director and Senior Operating Officer of theCompany (Current)
October 1990
Joined the Company
November 2003 Group Leader, Administration Planning Group
July 2008
Assistant General Manager, Manufacturing Dept.
October 2010
General Manager, Corporate Planning Dept.
April 3,June 2011
Operating Officer of the Company supervising
1963
Corporate Planning Dept.
June 2015
Operating Officer
June 2021
Director and Senior Operating Officer of theCompany (Current)
April 1968
Joined Fuji Heavy Industries Ltd. (currently
Subaru Corporation)
June 1999
Vice President and Senior General Manager, Japan
Sales & Marketing Div. of Fuji Heavy Industries
Ltd.
June 2001
Senior Vice President and Chief General Manager,
DecemberJapan Region, Subaru Sales & Marketing Div. of
Fuji Heavy Industries Ltd.
21, 1945
June 2003
Senior Vice President and Chief General Manager,
Subaru Product & Portfolio Planning Div. of Fuji
Heavy Industries Ltd.
May 2005
President and Representative Director of Tokyo
Subaru Inc.
June 2017
Director of the Company (Current)- 38 -

Term

Number ofshares of theCompany held

See
Note 4

92,132See
Note 459,009See
Note 422,451

See
Note 4

17,130See
Note 43,000

TitleName

Date of birth

Career summary

Number ofshares of theCompany held

See
Note 4---See
Note 4---See
Note 4---See
Note 4---See
Note 5700

April 1973
April 2004

Director

Koji
Nakamura

August 15,
1948

Director

Kazuo
Abiko

January 22,
1947

Director

Hirotoshi
TakadaAugust 10
1953

Director

Miho
NumataApril 18
1975

Full-time
Corporate
AuditorHisashi
Masumura

February 5,
1963

Joined Mitsui & Co., Ltd.
Managing Officer; Chief Operating Officer ofSynthetic Resins and Inorganic Chemicals
Business Unit
April 2006
Executive Managing Officer; Chief Operating
Officer of Chemicals Business Unit II
April 2009
Senior Executive Managing Officer; Chief
Operating Officer of EMEA (Europe, the Middle
East and Africa) Business Unit
March 2011Retired as Senior Executive Managing Officer
August 2011
Audit & Supervisory Board Member, SANKO
Co., Ltd. (current)
August 2016
Outside Director, Sanko Gosei Ltd. (current)
June 2020
Director of the Company (Current)
November 1978 Joined Associated Press
May 1985
Deputy General Manager of Tokyo Studio
July 2001
President, Foreign Correspondents' Club of Japan
April 2004
General Manager of Tokyo Bureau, Associated
Press
July 2007
General Manager for Northeast Asia
February 2010 Advisor
September 2010 Part-time lecturer at Tokyo University of Foreign
Studies
September 2011 Part-time lecturer at Sophia University
April 2015
Visiting Professor at Kanda University ofInternational Studies
July 2018
Auditor, Foreign Correspondents’ Club of Japan
June 2020
Director of the Company (Current)
March 1977
Joined NIPPON SEIKI CO., LTD.
April 2003
Director and President, UK-NSI Co., Ltd.
June 2005
Director, NIPPON SEIKI CO., LTD.
June 2008
Managing Director
April 2011
Representative Senior Managing Director
April 2011
General Manager, Sales Division
June 2011
Chairman, Wuhan Nissei Display System Co., Ltd.
March 2012
Chairman, Nissei Display Sales and Development
Co., Ltd.
June 2013
President and Representative Director, NIPPONSEIKI CO., LTD.
March 2014
Chairman, Dongguan Nissei Electronics Co., Ltd.
April 2014
Chairman, Hong Kong Nippon Seiki Co., Ltd.
June 2015
President and Representative Director, Executive
Officer, NIPPON SEIKI CO., LTD.
July 2015
Chairman, Hong Kong Ek Chor Nissei Co., Ltd.
July 2015
Chairman, Shanghai Nissei Display System Co.,Ltd.
March 2016
Chairman and Director, Thai Nippon Seiki Co.,Ltd.
June 2017
Vice Chairman and Director, Executive Officer,
NIPPON SEIKI CO., LTD.
June 2021
Director of the Company (Current)
December 2009 Registered as an attorney at law and joined
NUMATA LAW OFFICE
January 2016
Representative (current position)
April 2018
Civil Conciliation Commissioner, Tokyo Summary
Court (current position)
June 2020
Outside Corporate Auditor, Tokyo Boeki Holdings
Corporation (current position)
June 2021
Director of the Company (Current)
November 1987 Joined the Company
July 2005
Group Leader, Human Resources Group, Human
Resources Dept.
July 2008
Group Leader, Administration Planning Group,
Corporate Planning Dept.
October 2010
Assistant General Manager, Manufacturing Dept.
April 2012
General Manager of Human Resources Dept.
April 2018
General Manager of Human Resources Dept. andGeneral Affairs Dept.
October 2020
General Manager, General Affairs Dept.
June 2022
Full-time Corporate Auditor of the Company(Current)Term- 39 -

TitleName

Date of birth

Career summary

Number ofshares of theCompany held

See
Note 61,000

See
Note 6---

October 1987

Corporate
AuditorKoichiro
TanakaJuly 6,
1965

Corporate
AuditorKoichiYokotaMarch 3,1970

Joined Tohmatsu Aoki & Sanwa (presently
Deloitte Touche Tohmatsu LLC)
March 1991
Registered as Certified Public Accountant
August 1998
Resident Representative of Dalian Office, U.S.
Deloitte Touche Tohmatsu (Office Head)
September 2002 Managing Director of the Japanese Operations
Department in South China of Shenzhen Office in
China, Deloitte Touche Tohmatsu Limited
December 2003 Director and Executive Officer; Partner
supervising China Business and in charge of
Public Communication, Corporate Finance
Department of Deloitte Touche Tohmatsu(presently Deloitte Tohmatsu Financial Advisory
LLC)
June 2014
Retired from Deloitte Touche Tohmatsu LLC
July 2014
Established Tanaka Sogo Accountant Office,Representative Director (current)
March 2017
Outside Corporate Auditor, ODAWARAENGINEERING CO., LTD. (current)
June 2018
Auditor, Japan Automobile Research Institute(current)
June 2020
Corporate Auditor of the Company (Current)
November 1996 Registered as Certified Public Tax Accountant
April 2003
Director, Takada Branch of Kanto-Shinetsu
Certified Public Tax Accountant’s Association
January 2004
Head, Yokota Accountant Office (current)
April 2019
General Manager, Takada Branch of KantoShinetsu Certified Public Tax Accountant’s
Association
June 2020
Corporate Auditor of the Company (Current)
April 2021
Managing Director, Niigata Prefecture BranchFederation of Kanto-Shinetsu Certified Public Tax
Accountant’s Association (Current)

Term

Total:
195,422

Note:

1.

2.

3.

4.
5.
6.
7.

Figures stated in the column “Number of shares of the Company held” represent the number of shares beneficially owned
by each of the persons listed above, including their respective ownership interests under the Company’s stock ownershipplan for its directors and officers. Since the number of shares acquired in June 2021 through the said stock ownership planis yet to be confirmed as of the filing date of this Financial Report (June 28, 2021), the number of shares beneficiallyowned by each of the persons listed above as of May 31, 2021 is stated.
Among the Directors, Yutaka Tsukahara, Koji Nakamura, Kazuo Abiko, Hirotoshi Takada and Miho Numata are Outside
Directors (set forth in Article 2, item 15 of the Companies Act) falling under the outside officers (set forth in Article 2,paragraph 3, item 5 of the Ordinance for Enforcement of the Companies Act).
Among the Corporate Auditors, Koichiro Tanaka and Koichi Yokota are Outside Corporate Auditors (set forth in Article
2, item 16 of the Companies Act) falling under the outside officers (set forth in Article 2, paragraph 3, item 5 of theOrdinance for Enforcement of the Companies Act).
From the closing of the Ordinary General Meeting of Shareholders held on June 25, 2021 until the closing of the Ordinary
General Meeting of Shareholders for the fiscal year ending on March 31, 2023.
From the closing of the Ordinary General Meeting of Shareholders held on June 25, 2022 until the closing of theOrdinary General Meeting of Shareholders for the fiscal year ending on March 31, 2024.
From the closing of the Ordinary General Meeting of Shareholders held on June 25, 2020 until the closing of theOrdinary General Meeting of Shareholders for the fiscal year ending on March 31, 2024.
The Company employs the Operating Officer system to ensure expeditious execution of the operations determined by the
Board of Directors and formulation of highly transparent management strategies. The Company has a total of twelve (12)Operating Officers consisting of one (1) Chief Executive Officer, one (1) Senior Managing Operating Officer, two (2)Senior Operating Officers and the following eight (8) Operating Officers.
Makoto Tai

Takeshi Aizawa
Yoshifumi Ara

Operating Officer supervising Performance Materials Research & Development Dept. (sub),Electronic Materials Research & Development Dept., Development Support Dept.
(principal) and Analysis Center; Deputy Executive General Manager, Performance Materials
Business Div.
Operating Officer supervising Procurement Dept. and Quality Assurance Dept.; Deputy
Division Chief, Administration Div.
Operating Officer supervising Performance Materials Sales & Marketing Dept.; Deputy
Executive General Manager, Performance Materials Business Div.

- 40 -

Shuichi Fujita

Shuichi Kubota
Takao Motizuki
Takahito Tanabe
Kazumi Ikeda

8.

Operating Officer supervising Electronic Materials Technical Administration Dept.
(principal), Electronic Materials Manufacturing Engineering Dept. and Development
Support Dept. (sub); Deputy Division Chief, Electronic Materials Business Div.
Operating Officer supervising Corporate Strategy Dept.; Deputy Division Chief,
Administration Div.
Operating Officer supervising Manufacturing Dept. (principal); Deputy Division Chief,
Manufacturing Div.
Operating Officer supervising Manufacturing Engineering Dept. and Manufacturing Dept.
(sub); Deputy Division Chief, Manufacturing Div.
Operating Officer supervising General Affairs Dept. and Human Resources Dept.; Deputy
Division Chief, Administration Div.

The Company appointed the substitute corporate auditors under the provisions of Article 329, paragraph 3 of the Companies
Act as a precaution against shortage in the number of corporate auditors required by the applicable laws and regulations
as follows: Hiroshi Hayatsu as a substitute for Hisashi Masumura, Full-time Corporate Auditor, and Hideyuki Baba as a
substitute for the Outside Corporate Auditors, i.e. Koichiro Tanaka and Koichi Yokota. The career summary of each of
the said substitute corporate auditors is shown below.
Name

Date of birth

Hiroshi Hayatsu

March 13, 1957

Hideyuki Baba

March 29, 1964

Career summary

April 1975 Joined the Company
April 2001 Leader of Information System GroupMay 2010 General Manager of Human Resources Dept.
April 2012 General Manager of General Affairs Dept.
March 2017 Resigned from the Company
April 1998
Registered at Niigata Bar Association
April 2003
Representative, Hideyuki Baba Law Office(Current)- 41 -

Term

Numberof sharesof theCompanyheld

1 year

1,767

1 year---2) Status of Outside Directors and Officers
The Company has five (5) Outside Directors and two (2) Outside Corporate Auditors. There is no special
interest between any of the outside officers and the Company except for the Company's shares described in“1) Directors and Officers.” In addition, they meet the requirements of an independent officer as provided forby Tokyo Stock Exchange, Inc. and are filed as the independent officers of the Company because there is no
possibility of conflict of interest between the said officers and the general shareholders of the Company.
Yutaka Tsukahara, an Outside Director, has been involved in the automobile industry for many years
through his experiences in sales and product & portfolio planning at Subaru Corporation, and he has also held
successive posts as President and Representative Director at Tokyo Subaru Inc. The Company has appointed
him because we deem that he will deliver opinions from an outside perspective and increase the rationality
and transparency of the Company’s management by leveraging his knowledge and experience as a manager,
cultivated through his career, as well as his knowledge in the automobile component industry.
Koji Nakamura, an Outside Director, has been involved in corporate management in Japan and overseas formany years, having served as Senior Executive Managing Officer of Mitsui & Co., Ltd. and as Director at
Sanko Gosei Ltd. The Company has appointed him because we deem that he has extensive insight andknowledge regarding global management from his experience as a managing officer at a global company andthat he will deliver opinions from an outside perspective with regard to the overall management of theCompany, particularly in the area of business strategy, and increase the rationality and transparency of theCompany’s management.
After graduating from Graduate School of The California State University, Kazuo Abiko, an Outside
Director, was appointed the General Manager of Tokyo Studio and General Manager for Northeast Asia at
Associated Press while also working as the President of Foreign Correspondents’ Club of Japan. The Company
has appointed him because we deem that he will deliver opinions from an outside perspective and increase therationality and transparency of the Company’s management by leveraging his knowledge in international
communication and standards and ethics of journalism, including his work as a part-time lecturer at Tokyo
University of Foreign Studies and Sophia University thereafter.
Hirotoshi Takada, an Outside Director, has served the Representative Director of NIPPON SEIKI CO., LTD.
and as Chairman, etc. of overseas subsidiaries, has been engaged over many years in sales and product planning,
etc. in the automobile industry; has a deep knowledge of that industry. The Company has appointed him
because we deem that he will deliver opinions from an outside perspective and increase the rationality andtransparency of the Company by leveraging his abundant experience and broad knowledge as a manager of acompany in the manufacturing industry with a global business.
Miho Numata, an Outside Director, is Representative of NUMATA LAW OFFICE, and by serving as Civil
Conciliation Commissioner of Tokyo Summary Court and as Outside Corporate Auditor of Tokyo Boeki
Holdings Corporation, while managing the law office, she has a well-balanced career. The Company has
appointed him because we deem that she will deliver opinions from an outside perspective and increase therationality and transparency of the Company by using her in-depth knowledge and experience as a legal expert
who has worked as an attorney at law for many years, and her sophisticated knowledge relating to governanceand compliance, etc.
The Company has appointed Koichiro Tanaka, an Outside Corporate Auditor, because we deem that he willappropriately utilize his suitable level of insight relating to finance and accounting as a certified public
accountant and certified tax accountant, his abundant practical experience at a major accounting firm, and his
experience working overseas in his duties as an outside Corporate Auditor from an independent and neutral
standpoint.
Koichi Yokota, an Outside Corporate Auditor, expanded activities rooted in his hometown of Joetsu-shi as
the Head of Yokota Accountant Office. The Company has appointed him because we deem that he willappropriately fulfill his duties as an outside Corporate Auditor from a neutral standpoint based on his extensive
experience and expert knowledge as a certified public tax accountant.
The Company has filed five (5) Outside Directors and two (2) Outside Corporate Auditor as independent
officers as provided for by Tokyo Stock Exchange, Inc. because the Company deems that there is no possibilityof conflict of interest between the said officers and the general shareholders of the Company. Although theCompany has no specific standards or policy in force as to independence from the Submitting Company
applicable to appointment of Outside Directors or Outside Corporate Auditors, we judge, in making any suchappointment, the independence of each candidate in terms of his or her personal, capital and business
relationships and any other interests with the Company and also comprehensively judge each candidate’s
experience and knowledge of corporate governance, internal control and financial reporting, etc.

- 42 -

3) Mutual Collaboration between supervision or auditing by Outside Directors or Outside Corporate Auditors
and internal audit, accounting audit and auditing by Corporate Auditors, as well as Relationship between
supervision or auditing by Outside Directors or Outside Corporate Auditors and Internal Control Division.
The Outside Corporate Auditors, tapping into their wealth of experience and insight, audit the legality ofbusiness operations by the Board of Directors and the effectiveness of corporate governance, etc. throughattendance at meetings of the Board of Directors and of the Board of Corporate Auditors and also review ofvarious reports on the status of internal audit and accounting audit, etc. obtained directly or via the Full-time
Corporate Auditor.
The Outside Directors receive, at the Board of Directors’ meetings, etc., reports, etc. on the internal audits
conducted upon request of the Board of Corporate Auditors and the audits by the Corporate Auditors or theaccounting auditors and maintain mutual collaboration including, but not limited to, opinion exchanges asappropriate.

(3) Status of Audit
1) Status of Auditing by Corporate Auditors
The Board of Corporate Auditors of the Company is composed of three (3) members (one [1] full-time
Corporate Auditor and two [2] Outside Corporate Auditors). The Corporate Auditors conduct periodic audits,
attend the meeting of the Board of Corporate Auditors (held regular in principle pursuant to the Regulations
for the Board of Corporate Auditors) and also raise issues, where appropriate, as to execution of Directors’
duties and the status of improvement and operation of the internal control system, etc.
Koji Ohta, a full-time Corporate Auditor, has substantial practical experience of financial and accounting
affairs in Accounting Department of the Company. In addition, Koichiro Tanaka, an Outside Corporate
Auditor, is a certified public accountant and certified tax accountant, and Koichi Yokota, an Outside Corporate
Auditor, is a certified tax accountant and has suitable level of insight relating to finance and accounting.
The meetings of the Board of Corporate Auditors were held seven times for the current business year, andthe attendance records of each auditor is as follows.
Name

The Number of Meetings

The Number of Attendances

Koji Ohta

Seven (7) times

Seven (7) times

Koichi Sakai

Seven (7) times

Seven (7) times

Shinjiro Kawai

Seven (7) times

Seven (7) times

The main issues for consideration by the Board of Corporate Auditors are an audit plan, an audit approachand assignment, important matters regarding the audit during the period, other matters regarding an executionof the Auditors, etc.
Note that activities of the Full-time Corporate Auditor are to understand and report to the Board of Corporate
Auditors the status of the Company and the content of audit by attending at the meetings of the Board of
Directors and other important meetings and exchanging information with the internal audit division, theaccounting auditors, etc.
2) Status of Internal Audit
As the internal audit division, two (2) full-time employees are assigned to the Internal Audit Dept., whichis independent of other organizations of the Company and conducts scheduled audits and unscheduled audits
as appropriate. As for scheduled audits, an audit plan is made for each term pursuant to the relevant internal
regulations, and audits are conducted after the final decision by the Chief Executive Officer. Audit results arenotified to the relevant departments along with specific advice and recommendations, while reporting to, andopinion exchanges with, the Corporate Auditors are also made.
Results of auditing by the Internal Audit Dept. are reported to the Board of Corporate Auditors, and the
Corporate Auditors share in the recognition of such results in the course of their auditing to enhance theircollective audit function.

- 43 -

3) Status of Accounting Audit
a. Name of Audit Corporation
Ernst & Young ShinNihon LLC
b. Continuous Audit Period
From 1985 on
This is as far as the Company could find with its investigation, and it might be before the above.
c. CPA who executed the audit work
Akira Igarashi
Eishi Daikoku
d. Composition of assistants involved in the audit work.
The composition of assistants involved in the accounting audit work of the Company is determined inaccordance with the criteria for selection of audit corporations and includes seven (7) certified public
accountants, five (5) of those who passed the certified public accountant examination, etc. and five (5) others.
e. Policy and reason for the selection of Audit Corporation
The Board of Corporate Auditors examines whether Accounting Auditors maintain an independent
standpoint and conduct an appropriate audit and decides on the suitability of reappointment to ensure
appropriateness and credibility of financial reporting based on the evaluation in accordance with the following“Policy on Decisions on Dismissal or Non-reappointment of the Accounting Auditors” and the evaluative
standard established by the Board of Corporate Auditors. As a result of that, it decided that it was unnecessary
not to reappoint the above Audit Corporation.
(Policy on Decisions on Dismissal or Non-reappointment of the Accounting Auditor)
If the accounting auditors is found to fall under each item of Article 340, paragraph 1 of the Companies Act,
our Board of Corporate Auditors dismisses the accounting auditors based on the unanimous approval from theBoard of Corporate Auditors.
Besides that, if it deems it necessary because there is difficulty to conduct an appropriate audit due to an
occurrence of causes, etc. to impair an independence and appropriateness of Audit Corporation, the Board of
Corporate Auditors decides on and suggests at the General Meeting of Shareholders details of a resolution
regarding dismissal or non-reappointment of the accounting auditors.
f. Evaluation of Audit Corporation by Corporate Auditors and Board of Corporate Auditors
Corporate Auditors and Board of Corporate Auditors of the Company evaluate the audit corporations inaccordance with "Practical Guidelines for Corporate Auditors, etc. regarding Evaluation of Accounting
Auditors and Setting of Selection Standards" (Japan Audit & Supervisory Board Members Association,
November 10, 2015). Board of Corporate Auditors checks on Audit Corporation with respect to the problemof quality control system, independence and expertise of the audit team, validity and efficiency of auditing,etc. by means of regular exchanging of opinions with the audit corporation, hearing of matters to be checked,
and report on the implementation of audit, etc., so we believe there is no problem.

- 44 -

4) Details, etc. of Remuneration of Accounting Auditors
a. Remuneration of Auditing Certified Public Accountants, etc.

(Thousands of yen)Previous consolidated fiscal year
Category

Submitting Company
Consolidated subsidiaries
Total

Remuneration foraudit andattestation services

Remuneration for
non-audit services

Current consolidated fiscal year
Remuneration foraudit andattestation services

Remuneration for
non-audit services

38,000－40,000

－

－

－

－

－

38,000－40,000－b. Remuneration of the same network (Ernst & Young) as Auditing Certified Public Accountants (except for a.)
Previous consolidated fiscal year
Category

Remuneration foraudit andattestation services

Remuneration for
non-audit services

Current consolidated fiscal year
Remuneration foraudit andattestation services

Remuneration for
non-audit services

－

－

－

－

Consolidated subsidiaries

2,875

1,706

3,134

1,299

Total

2,875

1,706

3,134

1,299

Submitting Company

Non-audit services of consolidated subsidiaries are composed of closing review audit and tax return.
c. Details of other significant remuneration for audit and attestation services
No applicable matterd. Policy for Determination of Remuneration of Accounting Auditors
Remuneration of Auditing Certified Public Accountants, etc. of the Company is determined by considerationof scale and characteristics of the Company as well as the number of auditing days, etc., by consultation withthe audit corporation and by getting consent of Board of Corporate Auditors.
e. Reason for the consent of Board of Corporate Auditors to remuneration of accounting auditors
Board of Corporate Auditors decided to provide consent to the amount of remuneration of accounting auditors,
etc., after carefully examining the adequacy of performance of accounting auditors and such decision-making,
etc.

(4)

Remuneration, etc. of Directors and Corporate Auditors

1) Policy of Determination on Amount of Remuneration, etc. of Directors and Corporate Auditors
The Company has established the Assignment and Remuneration Advisory Committee where an independent
Outside Director is a chairperson and the majority of the committee members are independent Outside Directors
as an advisory body to the Board of Directors in order to improve the independence, objectivity and transparencyof the procedures for determining the nomination and remuneration of Directors and to enhance corporate
governance. The policy for determining the details of individual remuneration for Directors is determined at theBoard of Directors based on deliberations and reports by the Assignment and Remuneration Advisory Committee.
Summary of the Policy of Determination on Amount of Remuneration, etc. is as follows.
a. Basic Guidelines for Remuneration System for Directors
・ The system should encourage the management to improve their performance through associating theperformance with remuneration and to exercise their solid entrepreneurship for sustainable development of
the Company.
・The system should reflect not only financial performance but also appreciation for proactive initiative basedon the management philosophy of "CIC Better today than yesterday, better tomorrow than today" with thebasic spirit of “Creation, Innovation and Challenge”.
・The system should attract excellent human resources for management who can contribute to sustainable
development and enhancement of corporate value of the Company.
Based on the basic policy, the system should be remuneration structure that is linked to shareholder interest so- 45 -

as to fully function as an incentive for sustainable enhancement of the corporate value of the Company and thatis at a reasonable level on the basis of their duties in determining remuneration of each directors. Specifically,
the remuneration for executive directors is constituted of basic remuneration as fixed remuneration,
performance-based remuneration and stock-based compensation (restricted stock-based compensation), andOutside Directors who assume a role of supervisory function should be paid only basic remuneration inconsideration of their duty.
b. Remuneration Structure
Under the policy above, the remuneration structure for Executive Directors is constituted of basic remuneration
as fixed remuneration, performance-based remuneration linked to the previous year’s performance, etc., andstock-based compensation for the purpose of sharing interests with shareholders (restricted stock-based
compensation). The remuneration ratio by type of Executive Directors is as follows; basic remuneration:
performance-based remuneration: stock-based compensation = 5 : 3 : 2 (in the case of 100% achievement of
KPI). Outside Directors who assume a role of supervisory function is paid only basic remuneration inconsideration of their duty. Basic remuneration and performance-based remuneration reflecting the previous
year’s performance is paid monthly and restricted stock-based compensation is paid yearly at fixed time.
2) Details, Reasons for Selection, and Performance and Calculation Method of Indicators (KPI) for PerformanceBased Remuneration
The Key Performance Indicators (KPI) for performance-based remuneration are consolidated operating income
for a single year and such remuneration is divided and paid equally based on the previous year’s performance
during the period of execution of duties thereof. The reasons for selecting such Indictors is that they are afinancial indicator which represents the result of primary business activities of companies and which is also usedin the bonus system for employees and that they are important to keep consistency between both systems. The
actual result for that was 3,118 million yen.
Out of amount of carbon dioxide emission reduction held up in our Carbon Neutral Project, the Company will
add goal attainment levels with respect to reduced usage resulted from improving energy use efficiency to the
Performance Indicators from 2022, and will reflect them in remuneration from July, 2023.
3) Details of Stock-Based Compensation (Non-Monetary Remuneration)
Stock-based compensation (non-monetary remuneration) shall be restricted stock-based compensation, and is
programmed to lift restrictions of transfer upon retirement for the purpose of building awareness of contribution
to sustainably increasing corporate value of the Company by clarifying the linkage between the Company’s
stock value and compensation and sharing returns and risks due to fluctuations in the value of stocks withshareholders. Furthermore, the Company issues to Executive Directors monetary compensation claim to grant
restricted stocks each year and each Executive Director pays all of such monetary claims as contributed
properties in kind and receives issuance or disposal of the Company’s common shares. The number of shares tobe allocated to each Executive Director corresponding to individually determined base amount is determined by
the Board of Directors based on the report of the Assignment and Remuneration Advisory Committee. The
payment amount per share shall be an amount not particularly favorable to the Eligible Directors based on theclosing price on the Tokyo Stock Exchange on the business day immediately preceding the date of the resolution
by the Board of Directors (if no transaction is made on that day, the closing price on the trading date immediately
before that day).
4) Matters Relating to Determining Details of Individual Remuneration, etc. for Directors
The Assignment and Remuneration Advisory Committee shall be consulted on individual remuneration basedon the resolution at the Board of Directors’ Meeting. The details of remuneration shall be consisted of the amountof basic remuneration for each Director and the evaluation allocation based on the performance of the divisionof which each Director is in charge in the performance-based remuneration. The Board of Directors shalldetermine pursuant to the report of the Assignment and Remuneration Advisory Committee.
With regard to stock-based compensation, the Board of Directors determines the details of individual
remuneration such as the number of shares to be allocated, etc. based on the report of the Assignment andRemuneration Advisory Committee.
5) Reasons for the Board of Directors’ Judgement that the Details of Individual Remuneration, etc. for theCompany’s Directors Comply with the Policy for Determination
The Board of Directors has judged that the details of individual remuneration, etc. for the Company’s Directors
comply with the policy for determination, because the Assignment and Remuneration Advisory Committee
considers multilaterally the consistency between the details of the remuneration system for the Company’s
Directors and the policy for determination.
The Assignment and Remuneration Advisory Committee verifies the validity thereof through an objective andmultifaceted benchmark analysis of remuneration based on “Management Remuneration Database” run by anoutside remuneration consultant (WTW; Willis Towers Watson).

- 46 -

6) Activity Status of the Assignment and Remuneration Advisory Committee in the Determination Process of
Individual Remuneration, etc. for the Company’s Directors
The Assignment and Remuneration Advisory Committee was held four times for the current business year anda chairperson and committee members were all present at each meeting. The composition of the Assignment
and Remuneration Advisory Committee in the determination process of individual remuneration, etc. for theCompany’s Directors is as follows.
PeriodCommittee Members

To the Ordinary General Meetingof Shareholders on June, 2021

Yutaka Tsukahara
Koji Nakamura
Kazuo Abiko
Yuta Arisawa

Outside Director (Chairperson)
Outside Director
Outside Director
President and Representative Director

From the Ordinary General
Meeting of Shareholders on June,
2021 to the Ordinary General
Meeting of Shareholders on June,
2022

Koji Nakamura
Yutaka Tsukahara
Kazuo Abiko
Hirotoshi Takada
Miho Numata
Yuta Arisawa

Outside Director (Chairperson)
Outside Director
Outside Director
Outside Director
Outside Director
President and Representative Director

7) Remuneration of Corporate Auditors, etc.
a. Basic Policy
The Company's basic policy is to pay an appropriate level of remuneration to each Corporate Auditor for the
performance of his or her duties.
b. Method of Determining Remuneration
The remuneration for Corporate Auditors is determined through discussions among the corporate auditors,
taking into consideration whether they work full-time or part-time and the division of audit work.
c. Details of Remuneration for Corporate Auditors
The remuneration for Corporate Auditors is fixed remuneration only, which is paid on a monthly basis, with
an emphasis on strengthening their independence from management.
8) The aggregate amount of remuneration, etc. of each category of Directors and Corporate Auditors, the breakdownof such aggregate amount by the type of remuneration, etc. and the number of Directors and Corporate Auditors
coveredCategory of Directors andCorporate Auditors

Aggregate amountof remuneration,
etc.
(Thousands ofyen)

Breakdown by the type of remuneration, etc.
(Thousands of yen)
NonPerformanceFixed
Monetary
Based
Remuneration
Remuneration,
Remunerationetc.

Number of
Directors
orCorporate
Auditors
coveredDirectors
166,579
103,000
54,2829,297
4(excluding Outside Directors)
Corporate Auditors(excluding Outside Corporate－－
13,83013,8301
Auditors)
Outside Directors and Outside－－
19,217
19,217
8
Corporate Auditors
Note: 1. The above table includes one Director (inside Director only) who retired at the conclusion of the 73rd Ordinary
2.

General Meeting of Shareholders held on June 25, 2021.
The details of non-monetary remuneration, etc. are restricted stock-based compensation and the amountrecorded as expenses in the current business year is shown.

9) Date and Content of Resolution of a General Meeting of Shareholders regarding Remuneration of Directors andCorporate Auditors
It was resolved at the 56th Ordinary General Meeting of Shareholders held on June 29, 2004 that the total
amount of remuneration for Directors should be no more than 30 million yen per month and the total amount of
remuneration for Corporate Auditors should be no more than 3 million yen per month. The number of Directors
or Corporate Auditors at the conclusion of this Ordinary General Meeting of Shareholders is nine Directors(including five Outside Directors) and three Corporate Auditors (one full-time Corporate Auditor and two
Outside Corporate Auditors).

- 47 -

It was resolved at the 73rd Ordinary General Meeting of Shareholders held on June 25, 2021 that remuneration
provided to grant restricted stocks shall be not more than ¥50 million per year and the number of common sharesof the Company shall be not more than 50,000 shares and that a transfer restriction period shall be from thepayment due date of the Company’s common shares allotted under the restricted stock allotment agreement to
the point of time immediately after the time of retirement from the position predetermined by the Company’s
Board of Directors among the positions of officers and employees of the Company or its subsidiaries. The
number of Directors or Corporate Auditors at the conclusion of this Ordinary General Meeting of Shareholders
is nine Directors (inside Directors only).

(5)

Status of Shareholding

1) Criterion and attitude for segmentation of investment stock
Regarding segmentation of investment stock held for purposes of pure investment and held for purposes other thanpure investment, we separate purposes of making a profit through value change of stock or dividends on stock as"purposes of pure investment " from the other purposes as "purposes other than pure investment".
2) Investment stock held for purposes other than pure investment
a. Policy on holding, Method of verifying the reasonableness of holding, and Verified matters by the Board of
Directors, etc., regarding appropriateness of holding individual stock names(1) Policy on holding
Regarding investment stock held by the Company for purposes other than pure investment (hereinafter referred
to as “Cross-shareholdings”), shares, etc. of business partners, etc. may be acquired and held if it is judged thatsuch acquisition will contribute to the enhancement of corporate value of the Company over the mid-and-long-termin terms of facilitation and reinforcement, etc. of building stable and long-term business relations, businesscollaboration or cooperative business activities with the said business partners. We will verify effectiveness ofholding, etc. in terms of mid-and-long-term economic rationality as well as maintenance and strengthening ofcomprehensive relationship. And such validation will be reported to the Board of Directors. If any stock names are
judged, through the verification, to have no reasonableness of holding, we will sell off such stocks and reduce theshareholdings.
(2) Method of verifying the reasonableness of shareholding
Regarding all Cross-shareholdings held, the Board of Directors yearly gives comprehensive consideration toquantitative analysis of transaction performances and returns, etc. through shareholdings, qualitative analysis ofstatus of business relations based on the policy on shareholding, strategic background of acquisition, etc. , as wellas risk of shareholding, etc., and then verifies and evaluates the propriety of such shareholding.
Following items are verified through the quantitative analysis:
1) whether dividend earning rate is worth capital cost or not2) annual amount of transaction, amount of profits
3) profit or loss from valuation of stock- 48 -

(3) Verified matters by the Board of Directors, etc. regarding the propriety of holding individual stock names
At the Board of Directors held in May of 2022, the Company verified status of shareholding, risk returns,
importance of business and comprehensive meaning of shareholding, with respect to all shares (20 stock names)
held as Cross-shareholdings, and decided to reduce all listed stock names.
b. Number of stock names and amount shown on balance sheets
Number ofstock names（Stocknames）

Aggregate amount of theamount shown on balance
sheets(Thousands of yen)

Unlisted stock11

59,117

Stock other than unlisted
stock

9

1,764,576（Stock names whose number of shares increased in the current business year)
Number ofstock names（Stocknames）

Aggregate amount ofacquisition price associatedwith increase in number ofshares (Thousands of yen)

Unlisted stock

－

－

－

Stock other than unlisted
stock

－

－

－

Reason for increase in number of shares（Stock names whose number of shares decreased in the current business year)
Number ofstock names（Stocknames）

Aggregate amount ofacquisition price associatedwith decrease in number ofshares (Thousands of yen)

Unlisted stock－－

Stock other than unlisted
stock

8

522,506- 49 -

c. Information regarding the number of shares for each stock name of Specified Investment Stock and Deemed
Shareholding, as well as the amount shown on balance sheets, etc.
Specified Investment Stock

Stock nameCurrent business
year

Previous business
year

Number of shares
held

Number of shares
held

Amount shown onbalance sheets(Thousands ofyen)

Amount shown onbalance sheets(Thousands of yen)

299,700

333,000

Mitsubishi Gas Chemical
Company, Inc.

Fujikura

623,675

903,762

576,500

823,500Ltd.
360,312447,160

192,500

275,000

Mitsubishi Electric Corporation
271,425- 50 -

463,787

Purpose of shareholding,quantitative effect ofshareholding, and reason forincrease in number of shares

Purpose of shareholding: As thesaid company’s group is a main
customer of electronic materials
products, it is for the maintenanceand strengthening of stablebusiness relations and theimprovement of future corporate
value through mutual efforts.
Quantitative effect ofshareholding：As a result of
verifying the reasonableness ofholding, the Company decided toreduce it because the need forholdings decreased.
Purpose of shareholding: As thesaid company’s group is a main
customer of electronic materials
products, it is for the maintenanceand strengthening of stablebusiness relations and theimprovement of future corporate
value through mutual efforts.
Quantitative effect ofshareholding：As a result of
verifying the reasonableness ofholding, the Company decided toreduce it because the need forholdings decreased.
Purpose of shareholding: As thesaid company’s group is a main
customer of electronic materials
products, it is for the maintenanceand strengthening of stablebusiness relations and theimprovement of future corporate
value through mutual efforts.
Quantitative effect ofshareholding：As a result of
verifying the reasonableness ofholding, the Company decided toreduce it because the need forholdings decreased.

Holding
shares oftheCompany

Yes

No

Yes

Stock nameCurrent business
year

Previous business
year

Number of shares
held

Number of shares
held

Amount shown onbalance sheets(Thousands ofyen)

Amount shown onbalance sheets(Thousands of yen)

406,813581,113

The Hachijuni Bank, Ltd.

165,572

234,188

92,900132,700

NOK Corporation
106,556

199,182

30,00030,000

Kaneka Corporation
106,350

136,500

34,962

49,962

Daishi Hokuetsu Financial
Group, Inc.
87,579- 51 -

130,400

Purpose of shareholding,quantitative effect ofshareholding, and reason forincrease in number of shares

Purpose of shareholding: As thesaid bank is a source of fund andprovider of financial services, it isfor the maintenance andstrengthening of stable business
relations and the improvement of
future corporate value throughmutual efforts.
Quantitative effect ofshareholding：As a result of
verifying the reasonableness ofholding, the Company decided toreduce it because the need forholdings decreased.
Purpose of shareholding: As thesaid company’s group is a main
customer of electronic materials
products, it is for the maintenanceand strengthening of stablebusiness relations and theimprovement of future corporate
value through mutual efforts.
Quantitative effect ofshareholding：As a result of
verifying the reasonableness ofholding, the Company decided toreduce it because the need forholdings decreased.
Purpose of shareholding: As thesaid bank is a source of fund andprovider of financial services, it isfor the maintenance andstrengthening of stable business
relations and the improvement of
future corporate value throughmutual efforts.
Quantitative effect ofshareholding：As a result of
verifying the reasonableness ofholding, the Company decided toreduce it because the need forholdings decreased.
Purpose of shareholding: As thesaid bank is a source of fund andprovider of financial services, it isfor the maintenance andstrengthening of stable business
relations and the improvement of
future corporate value throughmutual efforts.
Quantitative effect ofshareholding：As a result of
verifying the reasonableness ofholding, the Company decided toreduce it because the need forholdings decreased.

Holding
shares oftheCompany

Yes

No

Yes

No
(Note)1

Stock nameCurrent business
year

Previous business
year

Number of shares
held

Number of shares
held

Amount shown onbalance sheets(Thousands ofyen)

Amount shown onbalance sheets(Thousands of yen)

43,72062,420Mitsubishi UFJ Financial Group,Inc.
33,24036,933

4,655

6,655

Sumitomo Corporation
9,863

10,494

Purpose of shareholding,quantitative effect ofshareholding, and reason forincrease in number of shares

Holding
shares oftheCompany

Purpose of shareholding: As thesaid bank is a source of fund andprovider of financial services, it isfor the maintenance andstrengthening of stable business
relations and the improvement of
future corporate value throughmutual efforts.
Quantitative effect ofshareholding：As a result of
verifying the reasonableness ofholding, the Company decided toreduce it because the need forholdings decreased.
Purpose of shareholding: As thesaid group is a main customer ofelectronic materials products anda vender of raw materials, it is forthe maintenance andstrengthening of stable business
relations and the improvement of
future corporate value throughmutual efforts.
Quantitative effect ofshareholding：As a result of
verifying the reasonableness ofholding, the Company decided toreduce it because the need forholdings decreased.

No(Note)2

No(Note)3（Note）1. Daishi Hokuetsu Financial Group, Inc. holds no shares of the Company, while The Daishi Hokuetsu Bank,
Ltd., a group company of the said Group, holds shares of the Company.
2. Mitsubishi UFJ Financial Group, Inc. holds no shares of the Company, while MUFG Bank, Ltd., a groupcompany of the said Group, holds shares of the Company.
3. Sumitomo Corporation holds no shares of the Company, while Sumitomo Shoji Chemicals Co., Ltd., a groupcompany of the said Corporation, holds shares of the Company.

Deemed Shareholding
No applicable matter.
3) Investment stock held for purposes of pure investment
Current business year
Category

Previous business year

Aggregate amount of theAggregate amount of the
Number of stock names amount shown on balance Number of stock names amount shown on balance(Stock name)sheets(Stock name)sheets(Thousands of yen)(Thousands of yen)

Unlisted stock

－

－

－

－

Stock other than unlisted
stock

－

－

－

－

- 52 -

Current business year
Category

Aggregate amount of
Dividends income(Thousands of yen)

Aggregate amount of loss Aggregate amount of loss
on saleson valuation(Thousands of yen)(Thousands of yen)

Unlisted stock

－

－

－

Stock other than unlisted
stock

－

－

－

- 53 -

V. Status of Accounting
1.

Method of Preparation of Consolidated Financial Statements and Financial Statements(1) The consolidated financial statements of the Company are prepared in compliance with the “Regulations for
Terminology, Forms and Preparation Methods of Consolidated Financial Statements” (Ministerial OrdinanceNo. 28 of the Ministry of Finance, 1976).
(2) The financial statements of the Company are prepared in compliance with the “Regulations for Terminology,
Forms and Preparation Methods of Financial Statements, etc.” (Ministerial Ordinance No. 59 of the Ministry of
Finance, 1963; hereinafter referred to as the “Regulations for Financial Statements”).
The Company falls under the Special Financial Statement-Submitting Companies and prepares its financial
statements pursuant to the provisions of Article 127 of the Regulations for Financial Statements.

2.

Certification of Audit
The Company received a review of its consolidated financial statements for the current consolidated fiscal year
(From April 1, 2021 to March 31, 2022) and its financial statements for the current business year (From April 1, 2021
to March 31, 2022) conducted by Ernst & Young ShinNihon LLC under the provisions of Article 193-2, paragraph 1of the Financial Instruments and Exchange Act.

3.

Special Efforts to Secure Appropriateness of Consolidated Financial Statements, etc.
The Company makes special efforts to secure appropriateness of its consolidated financial statements, etc.
Specifically, we make efforts to improve our systems by subscription to professional journals aiming to gain correctunderstanding of the changes, etc. in the accounting standards and also affiliation with the Financial AccountingStandards Foundation aiming to ensure precise understanding of and appropriate responses to the contents of theaccounting standards, etc.

- 54 -

1. Consolidated Financial Statements, etc.
(1) Consolidated Financial Statements
1) Consolidated Balance Sheets(Thousands of yen)Previous consolidated fiscal year
(As of March 31, 2021)
AssetsCurrent assets
Cash and deposits
Notes, accounts receivable-tradeand contract assets
Notes and accounts receivabletrade
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Income taxes receivable
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment andvehiclesAccumulated depreciation
Machinery, equipment andvehicles, net
LandConstruction in progress
Other
Accumulated depreciation
Other, net
Total property, plant andequipment
Intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and otherassetsTotal non-current assets
Total assets*2

Current consolidated fiscal year
(As of March 31, 2022)

13,215,508*2*2

17,341,765－

16,073,835

16,766,218－

1,242,430
3,896,377
2,175,632
3,026,247
1,415,974
778,645△161,830
42,355,204

1,040,342
4,401,727
2,112,503
4,123,818－
797,960△15,947
45,876,007

20,846,998△14,701,594
6,145,403

21,307,346△15,245,779
6,061,567*230,457,713

30,636,775△26,585,177△27,199,168*2

3,872,536*2

3,437,606*2

1,888,569
293,853
3,225,023△2,207,990
1,017,032*2

1,889,417
1,180,188
3,544,674△2,338,379
1,206,294*2*1

13,217,395

13,775,074

244,870

279,191

10,666,038
67,179208,316
513,336△14,923*2- 55 -*2*1*2

7,875,645
51,785359,450
522,473△50,428

11,439,946

8,758,926

24,902,213
67,257,417

22,813,192
68,689,199

(Thousands of yen)Previous consolidated fiscal year
(As of March 31, 2021)
Liabilities
Current liabilities
Notes and accounts payable-trade
Current portion of bonds
Short-term loans payable
Current portion of long-term loans
payableLease obligations
Income taxes payable
Provision for product warranties
Provision for bonuses
Provision for directors’ bonuses
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans payable
Provision for retirement benefits
Lease obligations
Deferred tax liabilities
Net defined benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive
incomeValuation difference on available-forsale securities
Deferred gains or losses on hedges
Foreign currency translation
adjustment
Remeasurements of defined benefit
plans
Total accumulated othercomprehensive income
Share acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

Current consolidated fiscal year
(As of March 31, 2022)*2, *36,657,426
36,8003,606,087*2, *3

5,637,609
26,8003,562,272*2

182,724*2

957,962

87,885
277,82170,263535,756
3,870
2,659,623
14,118,258
54,4003,761,507－
487,985593,992
607,032
89,46699,956
5,694,340
19,812,598*2- 56 -

118,578
1,087,828
73,525507,532
4,503
3,214,127
15,190,739*2

27,6003,845,199
29,802556,302250,681583,365
92,521
147,282
5,532,757
20,723,496

7,623,638
4,403,396
33,374,092△1,159,364
44,241,763

7,643,777
3,017,461
34,936,822△299,704
45,298,357

1,569,049

1,229,118△8,237△50,146486,242

1,317,978△3,959△8,7342,043,095

2,488,215

193,962
965,997
47,444,819
67,257,417

149,131
29,99847,965,702
68,689,199

2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income[Consolidated Statements of Income](Thousands of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Freightage and packing expenses
Salaries and allowances
Provision for bonuses
Provision for directors’ bonuses
Retirement benefit expenses
Provision of allowance for doubtful accounts
Other
Total selling, general and administrative
expenses
Operating income
Non-operating income
Interest income
Dividends income
Foreign exchange gains
Gain on redemption of investment securities
Other
Total non-operating income
Non-operating expenses
Interest expenses
Commission for purchase of consolidated
subsidiaries shares
Rent expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Other
Total extraordinary income
Extraordinary losses
Impairment loss
Loss on retirement of non-current assets
Provision for share-based remuneration
Loss on sales of investment securities
Total extraordinary losses
Income before income taxes
Income taxes – current
Income taxes – deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of the parent

Previous consolidated fiscal year
(From April 1, 2020
to March 31, 2021)
46,439,548*2, *338,501,052
7,938,496

Current consolidated fiscal year
(From April 1, 2021
to March 31, 2022)
43,089,576*2, *334,422,042
8,667,533

723,915
1,587,133
130,417
3,870
86,2004,292
2,284,179

776,839
1,847,331
136,860
4,503
72,5896,504
2,501,959*2

4,820,009*2

5,346,587

3,118,486

3,320,946

271,61388,170206,698
48,371
309,697924,550

186,541
74,377445,378
213,189
237,934
1,157,421

110,687

120,71749,024

27,773

109,759
195,482
464,954
3,578,083

82,61742,768273,875
4,204,492

*4
*6

515
323,156
27,550351,222

*4
*6

7,566
809,606
45,938863,110*7*5

69,68429,331－
313,624
412,640
3,516,666
456,889
461,375
918,2652,598,400
437,760
2,160,640*7*5

12,92842,774
14,09832,110101,911
4,965,691
1,156,959△195,472
961,486
4,004,205
93,204
3,911,000- 57 -

[Consolidated Statements of Comprehensive Income](Thousands of yen)

ProfitOther comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, netof taxShare of other comprehensive income ofentities accounted for using equity method
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to ownersof the parent
Comprehensive income attributable to noncontrolling interests

Previous consolidated fiscal year
(From April 1, 2020
to March 31, 2021
2,598,400

Current consolidated fiscal year
(From April 1, 2021
to March 31, 2022)
4,004,205

1,120,090△339,881△6,925△42,333△41,908
888,805

137,301△4,775

1,721

24,013*- 58 -

1,209,853
3,808,254*

526,253
4,530,458

3,418,538

4,356,120

389,715

174,337

3) Consolidated Statements of Changes in Shareholders’ Equity and Other Net Assets
Previous consolidated fiscal year (From April 1, 2020 to March 31, 2021)(Thousands of yen)
Shareholders’ equity
Capital stock
Balance at beginning of current
periodCumulative effects ofchanges in accounting
policies
Restated balance

Capital surplus

Retained earnings

Treasury stock

Total shareholders’equity7,594,026

6,706,017

34,256,590△3,204,797

45,351,837

7,594,026

6,706,017

34,256,590△3,204,797

45,351,837

29,612

29,612

Changes of items during theperiodIssuance of new shares

59,224

Dividends from surplus△997,370△997,370

Profit attributable to ownersof the parent

2,160,640

2,160,640

Purchase of treasury stock△2,045,767

Retirement of treasury stock
Purchase of shares of
consolidated subsidiaries

△334

△334

2,045,767－△2,332,233△2,332,233

Net changes of items otherthan shareholders' equity
Total changes of items during
the period
Balance at end of current
period29,612△2,302,621△882,498

2,045,433△1,110,073

7,623,638

4,403,396

33,374,092△1,159,364

44,241,763

Accumulated other comprehensive income
Valuation Deferred gains
Total
Share
differenceor losses on
Foreignaccumulated
Remeasuremeacquisitionon
hedgescurrencyother
nts of definedrightsavailabletranslation
comprehensive
benefit plansfor-saleadjustment
incomesecurities
Balance at beginning of current
periodCumulative effects ofchanges in accounting
policies
Restated balance

Noncontrollinginterests

Total net
assets448,970△1,311

478,798△141,260

785,197

166,148

2,714,984

49,018,167

448,970△1,311

478,798△141,260

785,197

166,148

2,714,984

49,018,167

Changes of items during theperiodIssuance of new shares

59,224

Dividends from surplus△997,370

Profit attributable to ownersof the parent

2,160,640

Purchase of treasury stock△334

Retirement of treasury stock－

Purchase of shares of
consolidated subsidiaries
Net changes of items otherthan shareholders' equity
Total changes of items during
the period
Balance at end of current
period△2,332,233
1,120,078△6,925

7,444

137,301

1,257,897

27,814 △1,748,986

1,120,078△6,925

7,444

137,301

1,257,897

27,814 △1,748,986 △1,573,348

1,569,049△8,237486,242△3,9592,043,095

193,962- 59 -

965,997△463,274

47,444,819

Current consolidated fiscal year (From April 1, 2021 to March 31, 2022)(Thousands of yen)
Shareholders’ equity
Capital stock
Balance at beginning of current
periodCapital surplus

7,623,638

4,403,396

Retained earnings

Treasury stock

33,374,092

Cumulative effects of changes
in accounting policies

Total shareholders’equity△1,159,364

44,241,763

39,939

Restated balance

7,623,638

4,403,396

20,13920,13933,414,032

39,939△1,159,364

44,281,702

Changes of items during theperiodIssuance of new shares
Dividends from surplus
Profit attributable to ownersof the parent

40,278△1,466,926△,466,926

3,911,000

3,911,000

Purchase of treasury stock△82,621△82,621

Disposal of treasury stock△2,973

23,971

20,997Retirement of treasury stock△918,310

918,310－Purchase of shares of
consolidated subsidiaries△1,406,074△1,406,074

Net changes of items otherthan shareholders' equity
Total changes of items during
the period
Balance at end of current
period20,139△1,385,935

1,522,790

859,660

1,016,654

7,643,777

3,017,461

34,936,822△299,704

45,298,357

Valuationdifferenceonavailablefor-salesecurities
Balance at beginning of current
period

1,569,049

Accumulated other comprehensive income
Total
Share
DeferredForeignaccumulated
Remeasuremeacquisition
gains orcurrencyother
nts of definedrightslosses ontranslation
comprehensive
benefit planshedgesadjustment
income△8,237486,242△3,9592,043,095

193,962

Noncontrollinginterests

Total net
assets965,997

47,444,819

Cumulative effects of changes
in accounting policies
Restated balance

39,9391,569,049△8,237486,242△3,9592,043,095

193,962

965,997

47,484,758

Changes of items during theperiodIssuance of new shares

40,278Dividends from surplus△1,466,926

Profit attributable to ownersof the parent

3,911,000

Purchase of treasury stock△82,621

Disposal of treasury stock

20,997－Retirement of treasury stock
Purchase of shares of
consolidated subsidiaries
Net changes of items otherthan shareholders' equity
Total changes of items during
the period
Balance at end of current
period

△1,406,074△339,930△41,908

831,735△4,775445,120△44,831△935,998△535,710△339,930△41,908

831,735△4,775445,120△44,831△935,998

480,944

1,229,118△50,146

1,317,978△8,7342,488,215

149,131

29,99847,965,702- 60 -

4) Consolidated Statements of Cash Flows(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2020
to March 31, 2021)
Cash flows from operating activities
Income before income taxes
Depreciation
Impairment loss
Share-based compensation expenses
Increase (decrease) in provision for productwarranties
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for directors'
bonuses
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in provision for sharebased remuneration
Increase (decrease) in net defined benefit
liability
Interest and dividends income
Subsidy income
Interest expenses
Bad debts expenses
Foreign exchange losses (gains)Share of (profit) loss of entities accounted forusing equity method
Loss (gain) on sales of investment securities
Loss (gain) on redemption of investment
securities
Loss (gain) on sales of non-current assets
Loss on retirement of property, plant andequipment
Gain on reversal of share acquisition rights
Decrease (increase) in notes and accounts
receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts
payable-trade
Increase (decrease) in accrued consumption
taxes
Decrease (increase) in other assets
Increase (decrease) in other liabilities
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes (paid) refund
Proceeds from subsidy income
Net cash provided by (used in) operating
activities

3,516,666
2,107,827
69,68473,411△83△34,761△923
35,975- 61 -

Current consolidated fiscal year
(From April 1, 2021
to March 31, 2022)
4,965,691
2,170,976
12,92833,103△5,754△28,223
633
16,261－

56,85465,982△30,538△359,784△147,490
110,687
29,048△229,332△260,918△69,973
120,7175,424△397,726

46,062

15,342△9,532△777,496

2,304

211,764△515△7,566

6,255

18,337△27,550△45,938

985,325

1,597,125△799,651△1,486,568△283,709△1,268,486△163,601

108,975△159,878
353,207
5,185,625
410,659△162,805△4,970,454
147,490

80,366201,045
4,782,141
294,691△135,227
889,594
69,973

610,515

5,901,174

(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2020
to March 31, 2021)
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time
deposits
Purchase of securities
Proceeds from sales of securities
Purchase of property, plant andequipment
Proceeds from sales of property, plantand equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment
securities
Payments of loans receivableCollection of loans receivable
Decrease (increase) in otherinvestments
Net cash provided by (used in)investing activities
Cash flows from financing activities
Net increase (decrease) in short-termloans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Repayments of lease obligations
Payments for long-term accounts
payable - other
Redemption of bonds
Proceeds from issuance of commonsharesPurchase of treasury stock
Cash dividends paid
Cash dividends paid to non-controllinginterests
Payments from changes in ownershipinterests in subsidiaries that do not
result in change in scope of
consolidation
Proceeds from changes in ownershipinterests in subsidiaries that do not
result in change in scope of
consolidation
Net cash provided by (used in) financing
activities
Effect of exchange rate change on cash
and cash equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
periodCash and cash equivalents at end of
period*1

Current consolidated fiscal year
(From April 1, 2021
to March 31, 2022)△1,771,360－

200,000

1,673,970△900,000
1,100,000－－△1,908,002△1,907,427

1,097

10,909△75,825△672,081△99,703△103,247

5,610,543

3,339,166△29,000
41,020△91,234
87,427△29,040△40,393

1,567,351

2,869,467△1,281,546△324,835

1,681,977△478,069△64,882

1,269,158△798,849△81,838△99,170△50,805△36,800△36,800

50,032

34,021△334△995,340△82,621△1,463,025△155,966△68,154△4,324,082△2,439,158

1,000

－

△5,703,182△4,042,908

287,618

677,087△3,237,696

5,404,820

14,725,985

11,488,288

11,488,288[Notes](Important Matters Underlying Preparation of Consolidated Financial Statements)- 62 -*1

16,893,109

1. Matters concerning scope of consolidation(1) Number of consolidated subsidiaries: eleven (11)Names of major consolidated subsidiaries:
ThinFlex Corporation, ThinFlex Technology Corporation (B.V.I.), TopFlex Corporation, Satosen Co., Ltd.,
Arisawa Fiber Glass Co., Ltd., Protec International Holdings Co., Ltd., Protec Arisawa Europe, S.A., Protec
Arisawa America, Inc., Arisawa Sogyo Co., Ltd., Arisawa Jushi Kogyo Co., Ltd., ColorLink Japan, Ltd.,(2) Names, etc. of major non-consolidated subsidiaries
Major non-consolidated subsidiaries:
Kashiwa Seiki Co., Ltd.
(Reasons for excluding the above-mentioned non-consolidated subsidiaries from the scope of consolidation)
The non-consolidated subsidiaries are small in size, and their aggregate total assets, net sales, net income orloss (Amount corresponding to the Company’s equity interest) and retained earnings (Amount corresponding to
the Company’s equity interest), etc. do not materially affect the consolidated financial statements.
2. Matters concerning application of equity method(1) Number of affiliated companies accounted for under the equity method: one ()Names of major affiliated companies:
Innovision FlexTech Corporation(2) As the non-consolidated subsidiaries (Kashiwa Seiki Co., Ltd.) and the affiliated companies (Ryoyu Industrial
Corporation and two (2) other company) to which the equity method is not applied have only slight effects on
the consolidated financial statements in terms of net income or loss (Amount corresponding to the Company’s
equity interest) and retained earnings (Amount corresponding to the Company’s equity interest), etc. (even if
they are excluded from the scope of application of the equity method) and also bear no significance as a whole,these companies have been excluded from the scope of application of the equity method.
(3) With respect to those companies accounted for under the equity method whose closing dates differ from theconsolidated closing date, the financial statements for the relevant business year of each such company havebeen used.
3. Matters concerning business year, etc. of consolidated subsidiaries
The closing date of ThinFlex Corporation, TopFlex Corporation, ThinFlex Technology Corporation (B.V.I.),
Protec Arisawa Europe, S.A. and Protec Arisawa America, Inc., all of which are consolidated subsidiaries, is
December 31 of each year.
In preparation of consolidated financial statements, financial statements as of the said closing date are used;provided, however, that for the important transactions conducted in the period from January 1 to March 31 (i.e. theconsolidated closing date), the adjustments necessary for consolidation purposes have been made.
4. Matters concerning accounting policies(1) Valuation standards and valuation methods for important assets
1) Securities
Available-for-sale securities
Securities other than stocks and others without a quoted market price:
Stated at fair market value. (Valuation differences are reported as a component of net assets, and the costof securities sold is calculated using the average cost method.)
Stocks and others without a quoted market price:
Stated at average cost.
2) Derivative financial instruments
Stated at fair market value.
3) Inventories
Merchandise, finished goods, semi-finished goods and work in process:
The Company and its domestic consolidated subsidiaries primarily adopt the cost method on a first-in,
first-out basis (The amount shown on the balance sheets is calculated by writing inventories down due to a
decline in profitability.), and the overseas subsidiaries primarily adopt the lower-of-cost-or-market method
based on the moving average method.
Raw materials and supplies:
The Company and its domestic consolidated subsidiaries primarily adopt the cost method based on the
periodic average method (The amount shown on the balance sheets is calculated by writing inventories- 63 -

down due to a decline in profitability.), and the overseas subsidiaries primarily adopt the lower-of-cost-ormarket method based on the moving average method.
(2) Methods of depreciation and amortization of important depreciable assets
1) Property, plant and equipment (excluding lease assets)
The Company and its domestic consolidated subsidiaries adopt the declining-balance method, except for thebuildings (excluding accompanying facilities) acquired on or after April 1, 1998, and accompanying facilities
and structures acquired on or after April 1, 2016, which are depreciated using the straight-line method. The
overseas consolidated subsidiaries adopt the straight-line method.
The useful life mostly falls within the ranges shown below:
Buildings and structures: ten (10) years to thirty-one (31) years
Machinery, equipment and vehicles: four (4) years to nine (9) years
2) Intangible assets (excluding lease assets)
The straight-line method is adopted. Software used by the Company is amortized over an estimated in-houseusable period. (Currently five (5) years)
In addition, technology-related assets are amortized over the economic useful life (8 years).
3) Lease assets
Lease assets related to finance lease transactions that entail transfer of title
Depreciation and amortization is based on the same method as applied to self-owned non-current assets.
Lease assets related to finance lease transactions that do not entail transfer of title
Depreciation and amortization is based on the straight-line method that takes the lease period as theuseful life and sets the residual value at zero (0).
(3) Standards for recording important allowances and provisions
1) Allowance for doubtful accounts
As a reserve for potential loan losses, an estimated uncollectible amount is allocated based on the historicalloan-loss ratio in the case of general accounts receivable, and in light of the collectibility in each instance in thecase of some specific accounts receivable, e.g. doubtful receivables.
2) Provision for bonuses
The Company and some of its consolidated subsidiaries, in preparation for the payment of bonuses to theirrespective employees, allocate such portion of the expected aggregate bonus amount that is recognizable in thecurrent consolidated fiscal year.
3) Provision for directors’ bonuses
Some of the Company’s consolidated subsidiaries, in preparation for the payment of bonuses to theirrespective directors and officers, make a relevant allocation based on the expected aggregate amount of suchbonus payment for the current consolidated fiscal year.
4) Provision for share-based remuneration
As a reserve for the Company’s stock benefit to employees under the stock benefit regulations, it isallocated based on the expected aggregate amount of share benefit obligation as of the end of the current
consolidated fiscal year.
5) Provision for product warranties
As a reserve for warranty expenses potentially incurred with respect to the products delivered to customers,
an amount reasonably expected to accrue in such expenses is estimated and appropriated.
(4) Accounting methods concerning retirement benefits
1) Method of inter-period attribution of expected retirement benefits
In calculating retirement benefit obligations, the benefit formula is employed as the method of attributing theestimated amount of each employee’s retirement benefits to his or her service period up to the end of the current
consolidated fiscal year.
2) Method of recognizing actuarial differences as expenses
Actuarial differences are recognized as expenses, effective from the consolidated fiscal year immediately
following the year of occurrence of each such difference, in an amount prorated using the straight-line method
over a certain number of years (Currently five (5) years) within the average remaining service period of theemployees at the time of occurrence of the said difference in each consolidated fiscal year.
3) Adoption of simplified method by small-scale businesses, etc.
Some of the Company’s consolidated subsidiaries employ, in calculating their respective net defined benefit- 64 -

liabilities and retirement benefit expenses, a simplified method which deems the size of retirement benefit
obligations to be equal to the aggregate amount of retirement benefits payable assuming the voluntary
retirement of all employees at the end of the current period.
(5) Standards for recording important revenues and expenses
Notes on the standards for recording important revenues and expenses are omitted as the same details areshown in “Notes (For Revenue Recognition) 2. Basic Information for understanding revenue from contracts
with customers” of Consolidated Financial Statements.
(6) Standards for translating important foreign currency assets and liabilities into Japanese currency
Foreign currency monetary assets and liabilities are translated into Japanese yen at the spot exchange rate
as of the consolidated closing date, and the resulting translation differences are entered as income or loss, as
the case may be. Assets and liabilities of overseas subsidiaries, etc. are translated into Japanese yen at the spot
exchange rate as of the consolidated closing date, and their respective incomes and expenses are translated into
Japanese yen at the average exchange rate during the period, with the resulting translation differences being
recorded as part of “Foreign currency translation adjustment” and “Non-controlling interests” in the “Netassets” section.
(7) Accounting method of significant hedge transactions
1) Method of hedge accounting
The Company adopts the deferred hedge accounting. With respect to the forward exchange contracts thatmeet the requirements of hedge accounting, we adopt the designated hedge accounting.
2) Hedging instruments and hedged items
Hedging instruments: Forward exchange contracts
Hedged items: Monetary claims denominated in foreign currencies, Anticipated transactions in foreign
currencies
3) Hedging policy
Forward foreign exchange transactions are conducted within the scope of actual demand for the purpose ofdeterring risks involved in transactions denominated in foreign currencies from the fluctuations in the foreignexchange market. These transactions will never be entered for speculative purpose.
4) Method of assessing hedge effectiveness
The Company assesses the effectiveness of hedging based on the ratio of changes that is calculated bycomparing the cumulative total of the market fluctuations of hedged items with that of hedging instruments.
However, when the forward foreign exchange transactions are by designated hedge accounting, suchassessment of effectiveness is omitted.
(8) Method and period of amortization of goodwill
Goodwill is amortized using the straight-line method over a five (5)-year period.
(9) Scope of funds in the consolidated statements of cash flows
The funds consist of cash on hand, demand deposits that are immediately withdrawable and short-term
investments with a maturity of three (3) months or less from the date of acquisition which are readily
convertible to cash and carry only a negligible risk of value fluctuations.
(10) Other important matters concerning preparation of consolidated financial statements
Accounting methods concerning deferred assets
Stock delivery expenses are fully charged to expenses when they are paid.

- 65 -

(Significant Accounting Estimates)
1. Valuation for Inventories(1) Amount recorded in the consolidated financial statements for the current consolidated fiscal year
Loss on valuation of inventory and inventory at the end of period related to aircraft materials are as follows:(Thousands of yen)Previous consolidated fiscal year

Current consolidated fiscal year

Loss on valuation of inventory

15,41937,819Merchandise and finished goods

324,702292,638

Work in process

157,010

109,095(2) Other information that contributes to the understanding of users of financial statements
1) Calculation method
With regard to inventories that are slow-moving or to be disposed of because they have been cut off from theoperating cycle and for which it is difficult to measure the net selling price according to a reasonably estimatedprice, their carrying amount is written down in accordance with the holding period and demand trends.
2) Major assumptions
Demand related to aircraft materials has been rapidly declining due to the spread of the new coronavirus infection(COVID-19). For this reason, the valuation of such inventories is estimated based on the expected future sales, andthe major assumption is the expected sales volume. The assumption of the expected sales volume takes into accountthe future prospects for the containment of the new coronavirus infection (COVID-19) and trends in aircraft-related
demand including the influence of international situation in Ukraine.
3) Effect on the consolidated financial statements for the next consolidated fiscal year
We assume the expected sales volume on the presumption that the new coronavirus infection (COVID-19) will becontained in the next consolidated fiscal year and demand for aircraft will gradually recover. However, the timing of
the containment of the new coronavirus infection (COVID-19) and the impact on demand trends are highly
uncertain, and there is a risk that this will have a significant impact on the inventory valuation decisions in the next
consolidated fiscal year.
(Changes in Accounting Policies)(Application of Accounting Standard for Revenue Recognition, etc.)“Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan Statement No.29, March
31, 2020; hereinafter referred to as the “Revenue Recognition Accounting Standard”), etc. have been applied fromthe current consolidated fiscal year and the Company recognizes revenue at the amount expected to be received in
exchange for goods or services when control of the promised goods or services is transferred to customers.
As a result, for transactions where the role of the Company falls under an agent of sales of products to customers,
the total amount of considerations received from customers have previously been recognized as revenue, but themethod has been changed to recognize revenue at the net amount, subtracting the amount paid to third parties fromthe total amount of considerations. In addition, with regard to buy-sell transactions in which the Company provides
parts to suppliers with compensation and bears a repurchase obligation, the amount equivalent to the ending
inventory of the provided parts retained by suppliers are recognized as liabilities pertaining to buy-sell transactions.
Furthermore, with regard to buy-sell transactions in which the Company purchases parts from suppliers and bears asell-back obligation, sales and cost of goods sold have previously been recorded at the time of sell-back to suppliersof parts, but the method has been changed to recognize only the net amount equivalent to processing cost as revenue.
Moreover, for sales to some customers, in connection with transfer of control over assets to customers over time, themethod of recognizing revenue over time according to the progress of manufacture was adopted.
For the application of the Revenue Recognition Accounting Standard, etc., the Company complies with thetransitional treatment set forth in the proviso of paragraph 84 of the Revenue Recognition Accounting Standard. The
cumulative effects resulting from retroactive application of the new accounting policy before the beginning of thecurrent consolidated fiscal year were added to or subtracted from retained earnings at the beginning of the current
consolidated fiscal year and the new accounting policy has been applied from the beginning balance; provided,
However, that by applying the method set forth in paragraph 86 of the Revenue Recognition Accounting Standard,
the new accounting policy has not been retroactively applied to contracts for which almost all revenue has beenrecognized in accordance with the previous treatment before the beginning of current consolidated fiscal year. With
respect to contract amendments which were made before the beginning of the current consolidated fiscal year,- 66 -

accounting treatment was made under the terms of contract after all contract amendments were reflected by applying
the method set forth in paragraph 86, item (1) of the Revenue Recognition Accounting Standard and the cumulative
effects were added to or subtracted from retained earnings at the beginning of the current consolidated fiscal year.
As a result, in the current consolidated fiscal year, sales decreased by 3,575,029 thousand yen, cost of sales
decreased by 3,546,941 thousand yen, and operating income, ordinary income and income before income taxes
decreased by 28,087 thousand yen respectively. The balance of retained earnings at the beginning of the current
quarter increased by 39,939 thousand yen.
As the Revenue Recognition Accounting Standard, etc. have been applied, “notes and accounts receivable”
indicated in “current assets” in the consolidated balance sheet for the previous consolidated fiscal year is presented
in “notes receivable, accounts receivable and contract assets” from the current consolidated fiscal year. In
accordance with the transitional treatment set forth in paragraph 89-2 of the Revenue Recognition AccountingStandards, reclassification has not been made by the new presentation method regarding the previous consolidated
fiscal year. In addition, in accordance with the transitional treatment set forth in paragraph 89-3 of the Revenue
Recognition Accounting Standards, “Notes (For Revenue Recognition)” for the previous consolidated fiscal year
were not stated.
(Application of Accounting Standard for Fair Value Measurement, etc.)“Accounting Standard for Fair Value Measurement” (Accounting Standards Board of Japan Statement No. 30,
July 4, 2019; hereinafter referred to as the “Fair Value Measurement Standard”), etc. have been applied from the
beginning of the current consolidated fiscal year. In accordance with the transitional treatment set forth in paragraph
19 of the Fair Value Measurement Standard and paragraph 44-2 of the “Accounting Standard for Financial
Instruments” (Accounting Standards Board of Japan Statement No. 10, July 4, 2019), the new accounting policy set
forth in the Fair Value Measurement Standard, etc. was applied prospectively. There is no impact due to thisapplication.
Notes were also made on “Matters Concerning Breakdown by Level of the Fair Values of Financial Instruments”
in “Notes Related to Financial Instruments”. However, in accordance with the transitional treatment set forth inparagraph 7-4 of the “Implementation Guidance on Disclosures about Fair Value of Financial Instruments”(Accounting Standards Board of Japan Guidance No.19, July 4, 2019), the notes related to the previous consolidated
fiscal year was not stated.
(Accounting Standards etc. not yet applied)
Accounting standard, etc. for calculating fair value- “Implementation Guidance on Accounting Standard for Fair Value Measurement” (Accounting Standards Board ofJapan Guidance No.31, June 17, 2021)(1) Overview“Implementation Guidance on Accounting Standard for Fair Value Measurement” (Accounting Standards Boardof Japan Guidance No.31) had been intended to be studied over a year after its issuance because, at the time ofissuance on July 4, 2019, reviewing “Fair Value Measurement of Investment Trust” had been thought to need acertain period of time for discussion with parties involved and notes on fair value in “Investments in Partnerships,
etc. Which Record an Amount Corresponding to Equity Holding at a Net Amount in Balance Sheets” had requireda certain consideration, but such Guidance was revised and issued on June 17, 2021.
(2) Scheduled date of application
The Accounting Standard and the Implementation Guidance mentioned above will be applied at the start of the
fiscal year beginning on April 1, 2021.
(3) Effect of application of the accounting standard, etc.
The effect of the application of the “Implementation Guidance on Accounting Standard for Fair Value
Measurement,” on the consolidated financial statements is currently under evaluation.

- 67 -

(Changes in Presentation)< Consolidated Balance Sheets>“Provision for product warranties”, which was presented as part of “Other” in “Current liabilities” in the previous
consolidated fiscal year, is separately stated effective from the current consolidated fiscal year due to a rise inquantitative materiality. In order to reflect such change in presentation, a reclassification has been made in the
consolidated financial statements for the previous consolidated fiscal year. As a result, 2,729,887 thousand yen of“Other”, listed within “Current liabilities” in the consolidated balance sheets for the previous consolidated fiscal year,
has been reclassified into the combination of 70,263 thousand yen of “Provision for product warranties” and2,659,623 thousand yen of “Other”.
<Consolidated Statements of Income>1. “Subsidy income”, which was separately stated within “Non-operating income” in the previous consolidated
fiscal year, is presented as part of “Other” effective from the current consolidated fiscal year due to a fall inquantitative materiality. In order to reflect such change in presentation, a reclassification has been made in the
consolidated financial statements for the previous consolidated fiscal year.
As a result, 147,490 thousand yen of “Subsidy income”, listed within “Non-operating income” in the
consolidated statements of income for the previous consolidated fiscal year, has been reclassified as part of“Other”.
2. “Gain on redemption of investment securities”, which was presented as part of “Other” in “Non-operating
income” in the previous consolidated fiscal year, is separately stated effective from the current consolidated
fiscal year due to a rise in percentage of the pertinent amount to more than ten hundredths (10/100) of theaggregate amount of Non-operating income. In order to reflect such change in presentation, a reclassification
has been made in the consolidated financial statements for the previous consolidated fiscal year.
As a result, 210,578 thousand yen of “Other”, listed within “Non-operating income” in the consolidated
statements of income for the previous consolidated fiscal year, has been reclassified into the combination of
48,371 thousand yen of “Gain on redemption of investment securities” and 309,697 thousand yen of “Other”(including a reclassification of 147,490 thousand yen from Subsidy income in 1).
3. “Loss on redemption of investment securities”, which was separately stated within “Non-operating expenses” inthe previous consolidated fiscal year, is presented as part of “Other” effective from the current consolidated
fiscal year due to a fall in quantitative materiality. In order to reflect such change in presentation, areclassification has been made in the consolidated financial statements for the previous consolidated fiscal year.
As a result, 50,675 thousand yen of “Loss on redemption of investment securities”, listed within “Nonoperating expenses” in the consolidated statements of income for the previous consolidated fiscal year, has been
reclassified as part of “Other”.
4. “Loss on retirement of non-current assets”, which was presented as part of “Other” in “Extraordinary losses” inthe previous consolidated fiscal year, is separately stated effective from the current consolidated fiscal year due
to a rise in percentage of the pertinent amount to more than ten hundredths (10/100) of the aggregate amount ofExtraordinary losses. In order to reflect such change in presentation, a reclassification has been made in the
consolidated financial statements for the previous consolidated fiscal year.
As a result, 29,331 thousand yen of “Other”, listed within “Extraordinary losses” in the consolidated statements
of income for the previous consolidated fiscal year, has been reclassified into the combination of 29,331
thousand yen of “Loss on retirement of non-current assets”.

- 68 -

(Notes Related to Consolidated Balance Sheets)*1 Items related to non-consolidated subsidiaries and affiliated companies are as follows.
(Thousands of yen)Previous consolidated fiscal year
(As of March 31, 2021)

Current consolidated fiscal year
(As of March 31, 2022)

318,210357,566

Investment securities (Stock)*2 Assets subject to a security interest and secured liabilities
Assets subject to a security interest are as follows.

(Thousands of yen)Previous consolidated fiscal year
(As of March 31, 2021)

Current consolidated fiscal year
(As of March 31, 2022)

Cash and deposits
Buildings and structures
Machinery, equipment and vehicles
Property, plant and equipment (Other)Land
Investments and other assets (Other)

25,7603,652,513
948,440
98,159558,408
20,976

(
(
(
(
(
(

--- )
2,757,742)
831,156)
57,451)
199,190)--- )--3,766,813
948,214129,106
558,408
27,939

(
(
(
(
(
(

--- )
2,917,071)
903,157)
84,636)
199,190)
--- )

Total

5,304,257( 3,845,541 )

5,430,481(

4,104,056)

Secured liabilities are as follows.

(Thousands of yen)Previous consolidated fiscal year
(As of March 31, 2021)

Short-term loans payable
Current portion of long-term loans payable
Long-term loans payable
Total

946,514
182,724
729,174
1,858,412

Current consolidated fiscal year
(As of March 31, 2022)

(
(
(

－)
133,332)
680,558

982,972
722,870(

813,890)

1,712,146

6,304

(
(
(

－)
680,558)－)(

680,558)

The parenthesized figures represent factory foundation mortgages and the liabilities secured by such mortgages.

*3 The Submitting Company has an overdraft agreement in effect with each of its five (5) partner banks to ensure
efficient procurement of operating funds. The following is the balance of unexecuted loans under such overdraft
agreements as of the end of the current and previous consolidated fiscal years.
(Thousands of yen)Previous consolidated fiscal year
(As of March 31, 2021)

Current consolidated fiscal year
(As of March 31, 2022)

Total amount of a loan commitment agreement
Aggregate overdraft limit
Drawdowns

1,200,000
6,300,000－－
6,000,000－

Balance of unexecuted loans

7,500,000

6,000,000- 69 -

(Notes Related to Consolidated Statements of Income)*1 Revenue from contracts with customers
With regard to net sales, revenue from contracts with customers and other revenues are not separately stated. The amountof the revenue from contracts with customers is stated in “Notes (For Revenue Recognition) 1. Information on the
breakdown of revenue from contracts with customers” of Consolidated Financial Statements.
*2 Total amount of research and development expenses included in manufacturing costs for the current period andgeneral and administrative expenses(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2020
to March 31, 2021)

Current consolidated fiscal year
(From April 1, 2021
to March 31, 2022)
1,905,553

1,926,483*3 Closing inventories are stated in the amount after writing inventories down due to a decline in profitability, andthe following loss on valuation of inventories or gain on reversal of loss on valuation of inventories () are
included in the cost of sales.
(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2020
to March 31, 2021)

Current consolidated fiscal year
(From April 1, 2021
to March 31, 2022)△150,707

103,982*4 Details of gain on sales of non-current assets are as follows.
(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2020
to March 31, 2021)
Machinery, equipment and vehicles

Current consolidated fiscal year
(From April 1, 2021
to March 31, 2022)
515*5 The loss on retirement of non-current assets is due mainly to the retirement of buildings.
*6 The gain on sale of investment securities is due mainly to the sale of cross-shareholdings.

- 70 -

7.566

*7 Impairment loss
Previous consolidated fiscal year (From April 1, 2020 to March 31, 2021)
Our Group recorded an impairment loss with respect to the following asset group(s) in the previous
consolidated fiscal year.
Impairment loss
Location
Usage
Type(Thousands of yen)

Arisawa Mfg. Co., Ltd.
(Joetsu-shi, Niigata)

Industrial Application Structural materials
manufacturing facilities

ColorLink Japan, Ltd.
(Joetsu-shi, Niigata)

Display materials manufacturing facilities

Machinery, equipment
and vehicles; etc.
Buildings
andstructures; machinery,equipment
andvehicles; Constructionin progress; etc.

69,684

106,689

Our Group conducts asset grouping grounded in its business segments and based primarily on product lines(each line representing a family of products), while each asset becomes the subject of asset grouping in the casesof assets for rent and idle assets, etc.
Of the Group’s business assets, those asset groups whose profitability significantly declined due largely to afall in the market price of the relevant products, etc. have been written down to the recoverable amount, and theaggregate amount of such write-downs, 69,684 thousand yen, was recorded as an impairment loss in
extraordinary losses. The said aggregate amount consists of 60,177 thousand yen of machinery, equipment andvehicles, and 9,507 thousand yen of others. Note that a carrying amount is measured according to value in use,
but it is assessed according to memorandum value because future cash flow is negative.
Current consolidated fiscal year (From April 1, 2021 to March 31, 2022)
Our Group recorded an impairment loss with respect to the following asset group(s) in the current consolidated
fiscal year.
Impairment loss
Location
Usage
Type(Thousands of yen)

Arisawa Mfg. Co., Ltd.
(Joetsu-shi, Niigata)

Industrial Application Structural materials
manufacturing facilities

machinery, equipment
and vehicles; etc.

12,928

Our Group conducts asset grouping grounded in its business segments and based primarily on product lines(each line representing a family of products), while each asset becomes the subject of asset grouping in the casesof assets for rent and idle assets, etc.
. Of the Group’s business assets, those asset groups whose profitability significantly declined due largely toa fall in the market price of the relevant products, etc. have been written down to the recoverable amount, andthe aggregate amount of such write-downs, 12,928 thousand yen, was recorded as an impairment loss in
extraordinary losses. The said aggregate amount consists of 11,686 thousand yen of machinery, equipment andvehicles, and 1,242 thousand yen of others.
Note that a carrying amount is measured according to value in use, but it is assessed according to memorandum
value because future cash flow is negative.

- 71 -

(Notes Related to Consolidated Statements of Comprehensive Income)*Reclassification adjustment and tax effects relating to other comprehensive income(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2020
to March 31, 2021)
Valuation difference on available-for-sale securities:
Amount arising in the current fiscal year

Current consolidated fiscal year
(From April 1, 2021
to March 31, 2022)

1,617,700

499,596△6,227△989,261

Before tax effects

1,611,473△489,665

Tax effects△491,383

149,783

Valuation difference on available-for-sale securities

1,120,090△339,881△12,404△75,510

1,975

12,404△10,429△63,106

3,503

21,197△6,925△41,908

Reclassification adjustment

Deferred gains or losses on hedges:
Amount arising in the current fiscal year
Reclassification adjustment
Before tax effects
Tax effects
Deferred gains or losses on hedges
Foreign currency translation adjustment:△42,333△
888,805

Remeasurements of defined benefit plans, net of tax:
Amount arising in the current fiscal year

92,602△28,500

Reclassification adjustment

104,953

21,628Before tax effects

197,555△6,871

Tax effects△60,2542,095

137,301△4,775

1,721

24,013

1,209,853

526,253

Amount arising in the current fiscal year

Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method:Amount arising in the current fiscal year
Total other comprehensive income- 72 -

(Notes Related to Consolidated Statements of Changes in Shareholders’ Equity and Other Net Assets)
Previous consolidated fiscal year (From April 1, 2020 to March 31, 2021)
1. Matters concerning class and number of shares issued and outstanding and of shares of treasury stock
Number of shares at the
beginning of theconsolidated fiscal year

Increase in the numberof shares during theconsolidated fiscal year

Decrease in the numberof shares during theconsolidated fiscal year

Number of shares at theend of the consolidated
fiscal year

36,381,524

89,0002,000,000

34,470,524

36,381,524

89,0002,000,000

34,470,524

Shares issued and outstanding
Common stock (See Note
1,2)
Total
Treasury stock

Common stock (See Note
3,135,830
359
2,000,000
1,136,189
3,4)
Total
3,135,830
359
2,000,000
1,136,189
Note: 1. The increase of 89,000 shares in the number of shares issued and outstanding (common stock) is due to an issuance of newshares through the exercise of stock acquisition rights.
2. The decrease of 2,000,000 shares in the number of shares issued and outstanding (common stock) is due to the retirementof treasury stock.
3. The increase of 359 shares in the number of shares of treasury stock (common stock) is due to a purchase of sharesconstituting less than one full unit.
4. The decrease of 2,000,000 shares in the number of shares of treasury stock (common stock) is due to the retirement oftreasury stock.

2. Matters concerning stock acquisition rights and treasury stock acquisition rights

Details of stockacquisition rights

Stock acquisition rights
issued as stock options

---

---

---

---

---

183,970

Stock acquisition rights
issued as stock options

---

---

---

---

---

9,992

---

---

---

---

---

193,962

Category

Submitting
Company(Parent
company)
Consolidated
subsidiaries
Total

Number of shares subject to stock acquisition
Balance at therightsend of the
At theIncrease
DecreaseAt the end of consolidated
beginning offiscal year
during theduring thethethe
consolidated consolidated consolidated (Thousands ofconsolidatedyen)fiscal year
fiscal year
fiscal year
fiscal year

Class ofshares subject
to stockacquisitionrights3. Matters concerning dividends(1) Dividends paid
Resolution

Class of shares

Total amount of dividends(Thousands of yen)

Dividend pershare (Yen)

Ordinary General
Meeting ofCommon stock
997,370
30.00
Shareholders ofJune 25, 2020
Note:
The dividend per share of 35 yen includes a special dividend of 11 yen.

Record date

Effective date

March 31, 2020

June 26, 2020

(2) Dividends whose record date belongs to the current consolidated fiscal year but whose effective date belongs to
the next consolidated fiscal year
Resolution

Class of shares

Total amount ofdividends(Thousands of yen)

Source ofdividends

Ordinary General
Meeting of
Shareholders ofJune 25, 2021

Common stock

1,300,039

Retainedearnings- 73 -

Dividend pershare (Yen)Record date

39.00 March 31, 2021

Effective dateJune 28, 2021

Current consolidated fiscal year (From April 1, 2021 to March 31, 2022)
1. Matters concerning class and number of shares issued and outstanding and of shares of treasury stock
Number of shares at the
beginning of theconsolidated fiscal year

Increase in the numberof shares during theconsolidated fiscal year

Decrease in the numberof shares during theconsolidated fiscal year

Number of shares at theend of the consolidated
fiscal year

34,470,524

44,300900,000

33,614,824

34,470,524

44,300900,000

33,614,824

1,136,189

89,221

923,835

301,575

Shares issued and outstanding
Common stock (See Note
1,2)
Total
Treasury stock
Common stock (See Note
3,4)
Total
Note: 1.
2.
3.

4.

5.

1,136,189
89,221
923,835
301,575
The increase of 44,300 shares in the number of shares issued and outstanding (common stock) is due to an issuance of newshares through the exercise of stock acquisition rights.
The decrease of 900,000 shares in the number of shares issued and outstanding (common stock) is due to the retirement oftreasury stock.
The increase of 89,221 shares in the number of shares of treasury stock (common stock) is due to an increase of 221 shares
resulting from the purchase of shares constituting less than one full unit and an increase of 88,900 shares resulting from theacquisition of treasury stock by a trust account for employee stock ownership plan.
The decrease of 923,835 shares in the number of shares of treasury stock (common stock) is due to a decrease of 900,000
shares resulting from the retirement of treasury stock, a decrease of 23,435 shares resulting from the disposal of treasury
stock as restricted stock-based compensation, and a decrease of 400 shares resulting from granting to eligible persons by atrust account for employee stock ownership plan.
88,600 shares of the Company which a trust account for employee stock ownership plan holds are included in the row“Number of shares at the end of the current consolidated fiscal year” of treasury stock.

2. Matters concerning stock acquisition rights and treasury stock acquisition rights

Category

Submitting
Company(Parent
company)
Total

Number of shares subject to stock acquisition
Balance at therightsend of the
At theIncrease
DecreaseAt the end of consolidated
beginning offiscal year
during theduring thethethe
consolidated consolidated consolidated (Thousands ofconsolidatedyen)fiscal year
fiscal year
fiscal year
fiscal year

Details of stockacquisition rights

Class ofshares subject
to stockacquisitionrightsStock acquisition rights
issued as stock options

---

---

---

---

---

149,131

---

---

---

---

---

149,131

3. Matters concerning dividends(1) Dividends paid
Resolution

Class of shares

Total amount of dividends(Thousands of yen)

Dividend pershare (Yen)

Ordinary General
Meeting of
Shareholders of June25, 2021

Common stock

1,300,039

Board of Directors ofOctober 28, 2021

Common stock

166,887

Record date

Effective date

39.00

March 31, 2021

June 28, 2021

5.00

September 30,
2021

December 2,
2021

Note: “Total amount of dividends” under a resolution at the Board of Directors’ Meeting of October 28, 2021 includes the dividendsof 444 thousand yen on the Company’s shares which a trust account for employee stock ownership plan holds.

- 74 -

(2) Dividends whose record date belongs to the current consolidated fiscal year but whose effective date belongs to
the next consolidated fiscal year
Resolution

Class of shares

Total amount ofdividends(Thousands of yen)

Source ofdividends

Dividend pershare (Yen)Record date

Effective dateOrdinary General
Meeting ofRetained
Common stock
3,006,166
90.00 March 31, 2022 June 29, 2022
Shareholders ofearnings
June 28, 2022
Note: “Total amount of dividends” includes the dividends of 7,974 thousand yen on the Company’s shares which a trust account for
employee stock ownership plan holds.

(Notes Related to Consolidated Statements of Cash Flows)*1 The correlation between the balance of cash and cash equivalents at the end of the current and previous consolidated
fiscal years and the amounts shown for the corresponding items on the relevant consolidated balance sheets(Thousands of yen)Previous consolidated fiscal year
Current consolidated fiscal year
(From April 1, 2020
(From April 1, 2021
toto March 31, 2021)
March 31, 2022)
Cash and deposits
Time deposits with a deposit term of more than three months
Securities (Money management fund)

13,215,508△2,085,650
358,429

17,341,765△522,39073,733

Cash and cash equivalents

11,488,288

16,893,109

2

The details of material non-cash transactions
Previous consolidated fiscal year (From April 1, 2020 to March 31, 2021)
No applicable matter.
Current consolidated fiscal year (From April 1, 2021 to March 31, 2022)
No applicable matter.

(Notes Related to Lease Transactions)(As lessee)
Finance lease transactions
1. Finance lease transactions that entail transfer of title
1) Details of lease assets
Property, plant and equipment
Boiler-related facilities mainly. (falling under “Machinery, equipment and vehicles” respectively)
2) Methods of depreciation and amortization of lease assets
As is stated in (Important Matters Underlying Preparation of Consolidated Financial Statements) - 4. Mattersconcerning accounting policies - (2) Methods of depreciation and amortization of important depreciable assets.
2. Finance lease transactions that do not entail transfer of title and the right-of-use assets at the IFRS 16-applied
subsidiaries of our Group1) Details of lease assets
Property, plant and equipment
Land and photovoltaic facility, mainly. (falling under “Machinery, equipment and vehicles” respectively)
2) Methods of depreciation and amortization of lease assets
As is stated in (Important Matters Underlying Preparation of Consolidated Financial Statements) - 4. Mattersconcerning accounting policies - (2) Methods of depreciation and amortization of important depreciable assets.
(Notes Related to Financial Instruments)
1. Matters concerning the status of financial instruments(1) Policies for financial instruments
Our Group obtains funds required in light of its financing plan and business plan (mainly through bank loans),and invest any temporary surplus funds in highly liquid financial instruments, and also obtains short-term
operating funds through bank loans. Our Group makes use of derivative transactions in order to avoid the risks
mentioned below and maintains a policy of eschewing speculative transactions.
- 75 -

(2) Description of financial instruments and risks associated with such financial instruments
Notes and accounts receivable, a type of operating receivables, are exposed to customer credit risk, and foreign
currency operating receivables are also exposed to exchange rate fluctuation risk.
Securities and investment securities consist of those held primarily as pure investments and equity shares in
the Company’s business partners and are exposed to market price fluctuation risk.
Notes and accounts payable, a type of operating payables, are mostly due in approximately four (4) months.
The notes and accounts payable denominated in foreign currencies are exposed to exchange rate fluctuation risk.
Loans payable are primarily aimed at obtaining funds required for capital investment. They are fixed rate loans
and liabilities and therefore are not exposed to interest rate fluctuation risk.
Derivative transactions conducted by our Group are restricted to forward exchange contracts with the
purpose to hedge exchange fluctuation risk in respect of operating receivables denominated in foreign currency.
To learn about hedging instruments and hedged items with respect to hedge accounting, hedging policy andmethod of assessing hedge effectiveness, etc., refer to "4. Matters concerning accounting policies (6)Accounting method of significant hedge transactions" in [Notes] (Important Matters Underlying Preparation ofConsolidated Financial Statements) described above.

(3) Risk management system for financial instruments
1) Management of credit risk (Risks associated with default of contract by business partners, etc.)
As for notes and accounts receivable, the sales departments set a credit limit for each of the Company’s
regular customers, monitoring such customers’ respective payment schedules, remaining credit lines andoverall business conditions in an attempt to promptly recognize and reduce doubtful accounts.
As for securities and investment securities held for the purpose of fund management, higher-rated bonds
are selected to minimize credit risk.
2) Management of market risk (Risks associated with fluctuations in foreign exchange rates and interest rates,
etc.)
As for some foreign currency operating receivables and payables, forward exchange contracts may be
employed to avoid exchange rate fluctuation risk.
As for securities and investment securities, the Company continually reviews the holding status in light of
the relevant market conditions and business relations.
The execution and management of derivative transactions are conducted, pursuant to the management rulesthat specify transaction authority and transaction amount limits, by the department in charge with the approvalof the person in charge of settlement.
3) Management of liquidity risk (Risk that payment cannot be made as and when due under contract) in financing
activities
The Company has entered into an overdraft agreement with its partner banks to ensure expeditious
financing and to minimize liquidity risk.
In financing activities, the Company prepares and updates a financial plan under its business plan andcapital investment plan and maintains liquidity on hand, etc. in an attempt to minimize liquidity risk.
(4) Supplementary explanations on matters concerning fair value, etc. of financial instruments
The fair value of financial instruments is based on either the quoted market price, if available, or a reasonably
estimated price where no market price is available. As variable factors are incorporated in the determination of
the said reasonably estimated price, such price may vary depending on the choice among different assumptions,etc.

- 76 -

2.

Matters concerning fair value, etc. of financial instruments
The amount shown on the consolidated balance sheets, the fair value and the difference between the former andthe latter are as follows.
Previous consolidated fiscal year (As of March 31, 2021)(Thousands of yen)Amount shown on
consolidated balance
sheetsSecurities and investment
securities(*3)
Total assets(Long-term loans payable (*2)
Total liabilities

Fair value

Difference

11,498,297

11,498,297－

11,498,297

11,498,297－

3,944,231

3,946,090

1,859

3,944,231

3,946,090

1,859(*1) With regard to “Cash and deposits”, “Notes and accounts receivable-trade”, “Income taxes receivable”, “Notes
and accounts payable-trade”, and “Short-term loans payable”, statement is omitted as they are cash and the fairvalue of these items approximates their respective book values due to their short maturities.
(*2) The current portion of long-term loans payable is included.
(*3) As these instruments have no quoted market price, and it is deemed extremely difficult to reasonably determine
their respective fair values, they are not included in “Securities and investment securities”.
The amount of such instruments shown on the consolidated balance sheets is as follows.
(Thousands of yen)
Category

Previous consolidated fiscal year

Unlisted stock, etc.

410,171

Current consolidated fiscal year (As of March 31, 2022)
Amount shown on
consolidated balance sheets(Thousands of yen)
Fair value

Difference

Securities and investment securities(*3)

8,499,304

8,499,304－

Total assets

8,499,304

8,499,304－

4,803,162

4,813,217

10,055

4,803,162

4,813,217

10,055Long-term loans payable (*2)
Total liabilities(*1) With regard to “Cash and deposits”, “Notes and accounts receivable-trade”, “Income taxes receivable”, “Notes andaccounts payable-trade”, “Short-term loans payable”, and “Income taxes payable”, statement is omitted as they
are cash and the fair value of these items approximates their respective book values due to their short maturities.
(*2) The current portion of long-term loans payable is included.
(*3) As these instruments have no quoted market price, and it is deemed extremely difficult to reasonably determine
their respective fair values, they are not included in “Securities and investment securities”.
The amount of such instruments shown on the consolidated balance sheets is as follows.
(Thousands of yen)
Category

Previous consolidated fiscal year

Unlisted stock, etc.

416,683- 77 -

Note: 1. Scheduled amount of redemption after the consolidated closing date of monetary receivables and securities witha maturity datePrevious consolidated fiscal year (As of March 31, 2021)(Thousands of yen)
Due within one
year
Deposits
Notes and accounts
receivable–trade
Securities andinvestment
securities
Available-forsale securities
with a maturity
date(1) Government
bonds, local
government
bonds, etc.
(2) Corporatebonds(3) Other
Total

Due after one year
and within five years

Due after five years
and within ten years

13,209,933

－

－

－

16,766,218

－

－

－

－

－

－

520,504

3,740,239

1,167,203

663,318

340,093

162,551－

440,572

30,836,749

3,902,790

1,167,203

1,103,891－

Current consolidated fiscal year (As of March 31, 2022)

Deposits
Notes andaccounts
receivable–trade
Securities andinvestment
securities
Available-forsale securities
with a maturity
date(1) Government
bonds, local
government
bonds, etc.
(2) Corporatebonds(3) Other
Total

Due after ten years(Thousands of yen)

Due within one year

Due after one year
and within fiveyears

17,335,701

－

－

－

15,971,983

－

－

－

－

－

－

－

952,805

3,166,732

1,014,867

258,854

7,649

169,310

388,840

49,88334,268,140

3,336,042

1,403,708

308,738- 78 -

Due after five years
and within ten
years

Due after ten years

2. Scheduled amount of repayment after the consolidated closing date of corporate bonds, long-term loans payable,lease obligations and other interest-bearing liabilities
Previous consolidated fiscal year (As of March 31, 2021)(Thousands of yen)
Due after one
Due after two Due after three Due after four
Due within one
Due after five
year and within years and within years and within years and within
year
years
two years
three years
four years
five years
Short-term loans payable

3,606,087

－

－

－

－

－

Long-term loans payable

182,724

1,346,017

702,802633,500

514,349564,836

3,788,811

1,346,017

702,802633,500

514,349564,836

Total

Current consolidated fiscal year (As of March 31, 2022)(Thousands of yen)

Due after one
Due after two Due after three Due after four
Due within one
Due after five
year and within years and within years and within years and within
year
years
two years
three years
four years
five years
Short-term loans payable

3,562,272

－

－

－

－

－

Long-term loans payable

957,962

1,506,557

885,705

718,181606,564

128,190

4,520,235

1,506,557

885,705

718,181606,564

128,190

Total

3. Matters concerning breakdown, etc. by level of fair values of financial instruments
The fair values of financial instruments are classified into the following three levels in accordance with theobservability and significance of inputs used in the fair value measurement.
Level 1 fair value: Fair values measured by quoted prices of the assets or liabilities being measured which are formedin active markets among inputs for observable fair value measurement.
Level 2 fair value: Fair values measured by inputs for fair value measurement other than those for Level 1 among inputs
for observable fair value measurement.
Level 3 fair value: Fair values measured by inputs for unobservable fair value measurement.
When multiple inputs which significantly affect fair value measurement are used, the fair values are classified into
the lowest level of priority in fair value measurement, choosing from among the respective levels those inputs belong
to.
(1) Financial instruments shown at fair value on the consolidated balance sheets

Current consolidated fiscal year (As of March 31, 2022)(Thousands of yen)
Fair value

Category
Level 1

Level 2

Level 3

Total

Securities and investment securities
Available-for-sale securities
1,764,576－－

1,764,576

Corporate bonds－

5,845,322－

5,845,322

Other

－

889,405－

889,405

1,764,574

6,734,728－

8,499,304

Equity Shares

Total assets(2) Financial instruments other than those shown at fair value on the consolidated balance sheets(Thousands of yen)

Current consolidated fiscal year (As of March 31, 2022)

Fair value
Category
Level 1Long-term loans payable
Total liabilities

Level 2

Level 3

Total－

4,813,217－

4,813,217－

4,813,217－

4,813,217(Notes) Description of the valuation techniques used in the fair value measurement and the inputs for the fair value
measurement- 79 -

Securities and investment securities
Listed stocks, bonds and others are evaluated with quoted market prices. As the listed stocks are traded on active markets,their fair value is classified into the level 1 fair value. On the other hand, as the bonds and others that the Company holds aretraded less frequently and not regarded as quoted market prices in active markets, their fair value is classified into the level 2
fair value.
Long-term loans payable
As the fair value of these loans is measured with the discounted present value method based on the sum of the principal andthe interest rate with the residual period of the liabilities and credit risk added, it is classified into the level 2 fair value.

- 80 -

(Notes Related to Securities)
1. Available-for-sale securities
Previous consolidated fiscal year (As of March 31, 2021)(Thousands of yen)Type

Amount shown on
consolidated balance
sheetsAcquisition cost

(1) Equity Shares

2,562,410

1,015,585

1,546,825－－－

5,752,022

5,091,195

660,827

Difference(2) Bonds
Those whose amountshown on consolidatedbalance sheets exceeds theacquisition cost1) Government bonds, local
government bonds, etc.
2) Corporate bonds3) Other473,241

426,660

46,580(3) Other904,829

849,338

55,491

Subtotal

9,692,504

7,382,779

2,309,725

0

0

－

－

－

－

1,423,718

1,474,384△50,666－－－(3) Other

382,074

383,371△1,297

Subtotal

1,805,792

1,857,756△51,963

11,498,297

9,240,535

2,257,761(1) Equity Shares(2) Bonds
Those whose amountshown on consolidatedbalance sheets does notexceed the acquisition cost1) Government bonds, local
government bonds, etc.
2) Corporate bonds3) Other

Total

Current consolidated fiscal year (As of March 31, 2022)(Thousands of yen)Type

Amount shown on
consolidated balance
sheetsAcquisition cost

(1) Equity Shares

1,658,020

634,298

1,023,721－－－

4,460,026

3,867,458

592,567

721,042

631,772

89,270(3) Other

1,146,800

1,051,519

95,280Subtotal

7,985,889

6,185,049

1,800,840

106,556

136,380△29,823－－－

288,019292,837△4,818－－－(3) Other

118,839

123,616△4,777

Subtotal

513,414552,834△39,419

8,499,304

6,737,884

1,761,420

Difference(2) Bonds
Those whose amountshown on consolidatedbalance sheets exceeds theacquisition cost1) Government bonds, local
government bonds, etc.
2) Corporate bonds3) Other(1) Equity Shares(2) Bonds
Those whose amountshown on consolidatedbalance sheets does notexceed the acquisition cost1) Government bonds, local
government bonds, etc.
2) Corporate bonds3) OtherTotal- 81 -

2. Available-for-sale securities sold
Previous consolidated fiscal year (From April 1, 2020 to March 31, 2021)
Type

Amount sold(1) Equity Shares(Thousands of yen)

Total gain on sale

Total loss on sale412,530

243,437

115

－

－

－

4,211,027

96,763

304,566

376,360

6,721

45,029(3) Other

1,710,625

23,607

14,591

Total

6,710,543

370,530

364,303(2) Bonds
1) Government bonds,
local government
bonds, etc.
2) Corporate bonds3) Other

Current consolidated fiscal year (From April 1, 2021 to March 31, 2022)
Type

Amount sold(1) Equity Shares(Thousands of yen)

Total gain on sale

Total loss on sale

1,192,231

911,858

4,053

－

－

－

1,915,602

200,758

29,481

349,466

31,802

－

2,393

215

－

3,459,693

1,144,634

33,535(2) Bonds
1) Government bonds,
local government
bonds, etc.
2) Corporate bonds3) Other(3) OtherTotal

3. Securities subject to impairment
No applicable matter.

- 82 -

(Notes Related to Derivative Transactions)
1. Derivative transaction not subject to hedge accounting
Previous consolidated fiscal year (As of March 31, 2021)
Statement is omitted as it is not material.
Current consolidated fiscal year (As of March 31, 2022)
Statement is omitted as it is not material.
2. Derivatives transactions subject to hedge accounting
Currency-related transactions
Previous consolidated fiscal year (As of March 31, 2021)
Hedge accounting
methodType of transactions

Major hedged items

Contract amount(Thousands ofyen)Contract
amount due
after 1 yearperiod(Thousands ofyen)

Anticipatedtransactions in foreign
currencies

329,818－△12,404

329,818－△12,404

Fair value(Thousands ofyen)

Forward foreign exchangetransactions
Deferral hedge
accounting

Short open position
U.S. dollar
Total

Note:

The method of calculating the fair market value is based on the price presented by the counterparty financial institution.

Current consolidated fiscal year (As of March 31, 2022)
Hedge accounting
methodType of transactions

Major hedged items

Contract amount(Thousands ofyen)Contract
amount due
after 1 yearperiod(Thousands ofyen)

Anticipatedtransactions in foreign
currencies

766,150－△75,510766,150－△75,510

Fair value(Thousands ofyen)

Forward foreign exchangetransactions
Deferral hedge
accounting

Short open position
U.S. dollar
Total

Note:

The method of calculating the fair market value is based on the price presented by the counterparty financial institution.

- 83 -

(Notes Related to Retirement Benefits)
1. Outline of retirement benefit plans adopted by the GroupThe Company and some of its consolidated subsidiaries adopt, as a defined benefit scheme, the defined benefit
corporate pension plan and the retirement lump-sum distribution plan. The Submitting Company shifted to thedefined benefit corporate pension plan from the qualifying retirement pension plan as of April 1, 2007. Someof the Company’s domestic consolidated subsidiaries participate in the Smaller Enterprise Retirement
Allowance Mutual Aid System as a defined contribution scheme. Some of the Company’s overseas
consolidated subsidiaries adopt the defined contribution retirement allowance plan.
2.

Defined benefit scheme (including plans employing the simplified method)(1) Reconciliation between the beginning and ending balances of retirement benefit obligations
Previous consolidated fiscal year
(From April 1, 2020
to March 31, 2021)
Balance of retirement benefit obligations
at the beginning of year
Service cost
Interest cost
Actuarial differences generated
Retirement benefits paid
Balance of retirement benefit obligations
at the end of year

(Thousands of yen)
Current consolidated fiscal year
(From April 1, 2021
to March 31, 2022)

4,584,049

4,729,106

277,353
13,642△11,393△134,544

268,754
14,06622,701△173,869

4,729,106

4,860,759(2) Reconciliation between the beginning and ending balances of plan assets

Balance of plan assets at the beginning of year
Expected return on plan assets
Actuarial differences generated
Employer contributions
Retirement benefits paid

Previous consolidated fiscal year
(From April 1, 2020
to March 31, 2021)
3,845,442
38,454
81,208291,207△134,238
4,122,074

Balance of plan assets at the end of year

(Thousands of yen)
Current consolidated fiscal year
(From April 1, 2021
to March 31, 2022)
4,122,074
41,220△5,798
293,768△173,869
4,277,395(3) Reconciliation between the ending balance of retirement benefit obligations and plan assets combined
and the net defined benefit liability and net defined benefit asset shown on consolidated balance sheets
Previous consolidated fiscal year
(As of March 31, 2021)
4,688,717
Retirement benefit obligations under the funded plans△4,122,074
Plan assets(Thousands of yen)
Current consolidated fiscal year
(As of March 31, 2022)
4,817,579△4,277,395

566,642

540,183Retirement benefit obligations under the unfunded
plans

40,38943,180Net amount of liability and asset shown on
consolidated balance sheets

607,032

583,365

Net defined benefit liability

607,032

583,365

Net amount of liability and asset shown on
consolidated balance sheets

607,032

583,365- 84 -

(4) Amount of retirement benefit expenses and components thereofService cost
Interest cost

Previous consolidated fiscal year
(From April 1, 2020
to March 31, 2021)
277,353
13,642(Thousands of yen)
Current consolidated fiscal year
(From April 1, 2021
to March 31, 2022)
268,754
14,066

Expected return on plan assets
Recognized actuarial loss

△38,454
104,953△41,220
21,628Retirement benefit expenses incurred under
defined benefit scheme

357,495

263,228(5) Remeasurements of defined benefit plans, net of tax
Remeasurements of defined benefit plans, net of tax (before tax effects) consist of the following.
(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2020
to March 31, 2021)
197,555

Actuarial differences(6) Remeasurements of defined benefit plans
Remeasurements of defined benefit plans (before tax effects) consist of the following.

Unrecognized actuarial differences

Previous consolidated fiscal year
(As of March 31, 2021)△5,696(Thousands of yen)
Current consolidated fiscal year
(As of March 31, 2022)△12,568(7) Matters concerning plan assets
1) Rough breakdown of plan assets
The categorical distribution of the total plan assets held is as follows.
Previous consolidated fiscal year Current consolidated fiscal year
(As of March 31, 2021)(As of March 31, 2022)
Life insurance company general accounts
51%
51%
Trust bank special accounts
25%
25%Life insurance company special accounts
24%
24%
Total
100%
100%
Note: Each account comprises a diverse range of investment asset classes centering on domestic bonds, in areflection of the basic policy of securing stable returns.

2) Method of determining the expected long-term rate of return on plan assets
The current and expected future allocations of the plan assets as well as the current and anticipatedlong-term rates of return on the diverse range of asset classes comprising the plan assets are taken into
account in determining the expected long-term rate of return on plan assets.
(8) Matters concerning actuarial assumptions
Major actuarial assumptions
Previous consolidated fiscal year Current consolidated fiscal year
(As of March 31, 2021)(As of March 31, 2022)
Discount rate
0.3%
0.3%
Expected long-term rate of return on plan assets
1.0%
1.0%
1.1～2.8%
1.1～2.8%
Expected rates of salary increase3.

Defined contribution scheme
The total amount required for contributions to the defined contribution plans of some of the Company’s
domestic consolidated subsidiaries and overseas consolidated subsidiaries was 78,147 thousand yen for theprevious consolidated fiscal year (From April 1, 2020 to March 31, 2021) and 83,746 thousand yen for thecurrent consolidated fiscal year (From April 1, 2021 to March 31, 2022).

- 85 -

Current consol(From A
to March

(Notes Related to Stock Options, etc.)
1. Amount recorded as expenses and item of expenses associated with stock options(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2020
to March 31, 2021)

Current consolidated fiscal year
(From April 1, 2021
to March 31, 2022)

73,411

17,355

Share-based compensation expenses in cost of sales
and selling, general and administrative expenses

2. Amount recorded as income due to forfeiture by non-exercise of rights(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2020
to March 31, 2021

Current consolidated fiscal year
(From April 1, 2021
to March 31, 2022)

27,55045,938Gain on reversal of share acquisition rights

3. Outline and scale of stock options and changes(1) Submitting Company
1) Outline of stock options
Directors’ remuneration
stock option in 2017

Employees, etc.
stock option in 2016

Employees, etc.
stock option in 2017

Category and number ofgrantees

187 employees and advisors of theCompany, and 14 directors andemployees of subsidiaries of theCompany

5 directors of the Company

194 employees and advisors of theCompany, and 10 directors andemployees of subsidiaries of theCompany

Number of stock options(See Note)

234,000 shares of common stock

75,000 shares of common stock

235,300 shares of common stock

Grant dateAugust 16, 2016

August 16, 2017

August 16, 2017

Conditions for vesting

No condition for vesting is set, but
the condition for exercising the rights
is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

No condition for vesting is set, but
the condition for exercising the rights
is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

No condition for vesting is set, but
the condition for exercising the rights
is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

Requisite service period

1 year and 11 months(August 16, 2016 through June30, 2018)

1 year and 11 months(August 16 2017 through June30, 2019)

1 year and 11 months(August 16, 2017 through June30, 2019)

Exercise period

July 1, 2018 through June 30, 2021

July 1, 2019 through June 30, 2022

July 1, 2019 through June 30, 2022

- 86 -

Directors’ remuneration
stock option in 2018

Employees, etc.
stock option in 2018

Directors’ remuneration
stock option in 2019

5 directors of the Company

211 employees and advisors of theCompany, and 11 directors andemployees of subsidiaries of theCompany

4 directors of the Company

Number of stock options(See Note)

75,000 shares of common stock

257,300 shares of common stock

55,000shares of common stock

Grant dateAugust 16, 2018

August 16, 2018

August 16, 2019

No condition for vesting is set, but
the condition for exercising therights is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

No condition for vesting is set, but
the condition for exercising therights is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

No condition for vesting is set, but
the condition for exercising therights is as follows:- Being a director or an employee of
the Company (including anadvisor and a counselor) or adirector or an employee of a
subsidiary of the Company(including an advisor) at the timeof exercising the rights.

Requisite service period

1 year and 11 months(August 16, 2018 through June30, 2020)

1 year and 11 months(August 16, 2018 through June30, 2020)

1 year and 11 months(August 16, 2019 through June 30,
2021)

Exercise period

July 1, 2020 through June 30, 2023

July 1, 2020 through June 30, 2023

July 1, 2021 through June 30, 2024

Category and number ofgrantees

Conditions for vesting.
Directors’ remuneration
stock option in 2020

Employees, etc.
stock option in 2019

Employees, etc.
stock option in 2020

Category and number ofgrantees

208 employees and advisors of theCompany, and 14 directors andemployees of subsidiaries of theCompany

4 directors of the Company

147 employees and advisors of theCompany, and 13 directors andemployees of subsidiaries of theCompany

Number of stock options(See Note)

271,000 shares of common stock

55,000shares of common stock

271,800 shares of common stock

Grant dateAugust 16, 2019

August 17, 2020

August 17, 2020

Conditions for vesting

No condition for vesting is set, but
the condition for exercising therights is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

No condition for vesting is set, but
the condition for exercising therights is as follows:- Being a director or an employee of
the Company or a director or an
employee of a subsidiary of theCompany at the time of exercising
the rights.

No condition for vesting is set, but
the condition for exercising therights is as follows:- Being a director or an employee of
the Company or a director or an
employee of a subsidiary of theCompany at the time of exercising
the rights.

Requisite service period

1 year and 11 months(August 16, 2019 through June 30,
2021)

1 year and 11 months(August 17, 2020 through June 30,
2022)

1 year and 11 months(August 17, 2020 through June 30,
2022)

Exercise period

July 1, 2021 through June 30, 2024

July 1, 2022 through June 30, 2025

July 1, 2022 through June 30, 2025

Note:

Stated in terms of shares of stock.

- 87 -

2) Scale of stock options granted and changes
Stock options that existed during the current consolidated fiscal year (fiscal year ended March 31, 2022) arecovered, with the number of stock options stated in terms of shares of stock.
(a) Number of stock options
Employees, etc. stock
option in 2016

Directors’ remuneration
stock option in 2017

Employees, etc. stock
option in 2017

At the end of the previous
consolidated fiscal year

－

－

－

Granted－－－Forfeited－－－

Vested－－－Outstanding

－

－

－

69,80075,000226,100－－－

Exercised

19,80010,000－Forfeited

50,00045,00012,100－20,000214,000

Before vested

After vested(Shares)(Shares)At the end of the previous
consolidated fiscal year
VestedExercisable

Directors’ remuneration
stock option in 2018

Employees, etc. stock
option in 2018

Directors’ remuneration
stock option in 2019

At the end of the previous
consolidated fiscal year－－

55,000Granted－－－Forfeited－－

45,000

Vested－－10,000

Outstanding

－

－

－

75,000248,100－

Vested－－10,000Exercised－－

10,000Forfeited

45,00014,600－Exercisable

30,000233,500－

Before vested

After vested
At the end of the previous
consolidated fiscal year

(Shares)(Shares)- 88 -

Employees, etc. stock
option in 2019

Directors’ remuneration
stock option in 2020

Employees, etc. stock
option in 2020

266,000

55,000270,300

Granted－－－Forfeited

9,500

45,000150,000

Vested265,500－－－

10,000120,300－－－

Vested256,500－－

Exercised

4,500

－

－

Forfeited

5,000

－

－

Exercisable

247,000－－

Before vested(Shares)At the end of the previous
consolidated fiscal year

Outstanding
After vested(Shares)At the end of the previous
consolidated fiscal year

- 89 -

(b) Unit price information
Employees, etc. stock
option in 2016

Directors’ remuneration
stock option in 2017

Employees, etc. stock
option in 2017

Exercise price

(Yen)

536

1,004

1,004

Average stock price at the timeof exercise

(Yen)

955

962

－

Fair value at the grant date

(Yen)

98

188

188

Directors’ remuneration
stock option in 2018

Employees, etc.
stock option in 2018

Directors’ remuneration
stock option in 2019

Exercise price

(Yen)

1,104

1,104

922

Average stock price at the timeof exercise

(Yen)

－

－

983

Fair value at the grant date

(Yen)

168

168

168

Employees, etc.
stock option in 2019

Directors’ remuneration
stock option in 2020

Employees, etc.
stock option in 2020

Exercise price

(Yen)

922

890

890

Average stock price at the timeof exercise

(Yen)

1,012

－

－

Fair value at the grant date

(Yen)

168

171

171

4. Method of estimating the number of stock options vested
Only the actual number of forfeited stock options is reflected because it is basically difficult to reasonably
estimate the number of stock options that will be forfeited in the future.

- 90 -

(Notes Related to Tax Effect Accounting)
1. Breakdown by major occurrence factor of deferred tax assets and deferred tax liabilities(Thousands of yen)Previous consolidated
fiscal year
(As of March 31, 2021)

Current consolidated
fiscal year
(As of March 31, 2022)

Deferred tax assets
Loss on valuation of investment securities
Impairment loss
Tax loss carry-forward (See Note)
Loss on valuation of inventories
Retirement allowance
Provision for bonuses
Allowance for doubtful accounts
Other
Deferred tax assets subtotal
Valuation allowance related to Tax loss carry-forward(See Note)
Valuation allowance related to the total of deductible
temporary differences etc.
Valuation allowance subtotal
Deferred tax assets total
Deferred tax liabilities
Valuation difference on available-for-sale securities
Retained earnings of subsidiaries and associates
Other
Deferred tax liabilities total
Net amount of deferred tax assets (liabilities)- 91 -

438,528447,077
367,486
171,712
185,740
164,585
166,679
322,626

395,154363,659
334,733
204,125
176,702
157,129
111,772
506,684

2,264,438

2,249,962△356,355△334,733△1,214,042△1,060,251△1,570,398△1,394,985

694,039

854,977△689,648△286,290△103,777△540,736△149,019△56,451△1,079,716△746,207△385,676

108,769

Note: Amount of Tax loss carry-forward and deferred tax assets thereof by maturity date of carryforward
Previous consolidated fiscal year (As of March 31, 2021)(Thousands of yen)
Due after
Due after
Due after
Due after
Due within
one year
Due after five
two years
three year
four year
Total
one year
and within
years
and within
and within
and within
two years
three years
four years
five years
Tax loss carryforward (※)
Valuation
allowance

－

3,799

－

57,096

21,533

285,057

367,486－△3,799－△57,096△21,533△273,926△356,355

Deferred tax
－
－
－
－
－
11,131
assets(※) "Tax loss carry-forward" indicates the amount multiplied by Normal effective statutory tax rate.
Current consolidated fiscal year (As of March 31, 2022)
Due after
Due after
Due within
one year
two years
one year
and within
and within
two years
three years
Tax loss carryforward (※)
Valuation
allowance

11,131(Thousands of yen)
Due after
three year
and withinfour years

Due after
four year
and within
five years

Due after five
years

Total

－

－

57,096

14,23576,500186,900

334,733－－△57,096△14,235△76,500△186,900△334,733

Deferred tax
－
－
－
－
－
－
assets(※) "Tax loss carry-forward" indicates the amount multiplied by Normal effective statutory tax rate.

2. Breakdown by item of major causes of any significant difference between the normal effective statutory tax rate
and the effective income tax rate after tax effect accounting
Previous consolidated
fiscal year
(As of March 31, 2021)
Normal effective statutory tax rate
(Adjustments)
Items permanently excluded from taxable income
Valuation allowance
Retained earnings of subsidiaries and associates
Special tax deductions
Difference in tax rates with overseas subsidiaries
Dividends income eliminated in consolidation
Other
Effective income tax rate after tax effect accounting- 92 -

Current consolidated
fiscal year
(As of March 31, 2022)

30.5%

30.5%

△2.3%
△2.1%
2.1%
△0.8%
△3.9%
2.2%
0.4%
26.1%

△4.9%
△3.6%
△2.8%
△2.6
△2.1%
5.0
△0.1%
19.4%

－

(Business combination)(Transactions under common control, etc.)
Acquisition of additional shares of a subsidiary1.
Summary of transaction(1) Name and business description of the combined entity
Name of the combined entity: ThinFlex Corporation (a consolidated subsidiary of the Company)
Business description: Production and sales of materials for flexible printed circuit boards, etc.
(2) Date of business combination
May 21, 2021 (Deemed acquisition date: April 1, 2021)
December 20, 2021 (Deemed acquisition date: January 1, 2022)(3) Legal form of business combination
Share acquisition in exchange for cash(4) Company name after business combination
No change has been made.
(5) Other matters concerning summary of transaction
The Company made ThinFlex Corporation a wholly-owned subsidiary through the acquisition of
additional shares from non-controlling interests on May, 21, 2022 and the purchase by squeeze-out on
December 20, 2021.
2.
Summary of accounting treatments implemented
It was treated as a transaction with non-controlling shareholders among transactions under common
control, etc. based on “Accounting Standard for Business Combination” and “Guidance on AccountingStandard for Business Combinations and Accounting Standard for Business Divestitures”,
3.
Matters listed in the case of additional acquisition of shares in subsidiaries
Acquisition cost of the acquired company and breakdown by type of consideration
Consideration for acquisition Cash
2,439,158thousand yen
Acquisition cost
Note:

4.

2,439,158thousand yen

The consideration for acquisition is stated as a sum of transactions on May 21, 2021 and December 20, 2021.

Matters concerning changes in the Company's interest in transactions with non-controlling shareholders(1) Main reasons for changes in capital surplus
Acquisition of additional shares of a subsidiary(2) Amount of capital surplus decreased due to transactions with non-controlling shareholders
1,406,074thousand yen
Note: The amount of capital surplus is stated as a sum of transactions on May 21, 2021 and December 20, 2021.

(Notes Related to Asset Retirement Obligations)
Asset retirement obligations that are recorded in the consolidated balance sheets(1) Outline of asset retirement obligations
These are restoration obligations, etc. in connection with real estate rental agreements for certain factories
and offices.
(2) Method of calculating the amount of asset retirement obligations
An estimated useful life of thirty-one (31) years and a discount rate at 1.9% are used in calculating theamount of asset retirement obligations.
(3) Changes in the aggregate amount of asset retirement obligations(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2020
to March 31, 2021)

Current consolidated fiscal year
(From April 1, 2021
to March 31, 2022)

Balance at the beginning of year
Adjustment due to lapse of time
Other increase or decrease (: decrease)92,310171△3,01589,466174
2,880

Balance at the end of year

89,466

92,521- 93 -

(Notes Related to Real Properties for Rent, etc.)
Statement is omitted as the aggregate value of the real properties for rent, etc. is not material.
(For Revenue Recognition)
1. Information on the breakdown of revenue from contracts with customers
Current consolidated fiscal year (From April 1, 2021 to March 31, 2022)(Thousands of yen)
Other
Total
(See Note)

Reportable segment

Goods transferred
at a point in time
Goods transferredover time
Revenue fromcontracts withcustomers
Other revenue
Net
sales
externalcustomers

Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Subtotal

29,768,120

3,239,910

2,604,011

2,065,748

37,677,790

410,644

38,088,435－

3,813,877－

1,187,263

5,001,151－

5,001,151

29,768,120

7,053,787

2,604,011

3,253,011

42,678,931

410,644

43,089,576

－

－

－

－

－

－

－

29,768,120

7,053,787

2,604,011

3,253,011

42,678,931

410,644

43,089,576

toNote: The column “Other” represents business operations that do not fall under any of the reportable segments andincludes the related goods sales, the logistics-related operations and other businesses, etc.
2.

Basic information for understanding revenue from contracts with customers
Our Group recognizes revenue based on the following five-step approach.
Step 1: Identify the contracts with customers
Step 2: Identify the performance obligations
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
Our Group manufactures and sells products such as electronic materials, industrial application structural
materials, electrical insulating materials, display materials, etc. to electronic parts manufacturers, informationequipment manufacturers, industrial electronics manufacturers, etc. as our main customers. As our Group
determines that control of the products is transferred to customers and their performance obligations are satisfied
upon delivery for many of the products, revenue is recognized at that time. In domestic sales, revenue isrecognized at the time of shipment if a period of time from shipment to the moment of control of the products
being transferred to customers is a regular term. Moreover, our Group recognizes revenue pertaining to some ofindustrial application structural materials and display materials over a period of time according to the progressof performance obligations, because control of assets is transferred to customers as obligations under contracts
with customers are satisfied.
With regard to determining the transaction price, our Group determines an amount by deducting price reduction,
product returns, etc. from promised considerations in contracts with customers. The considerations toperformance obligations are received within one year after performance obligations are satisfied and does notinclude significant financing components.
With regard to buy-sell transactions which corresponds to repurchase agreements and in which the Company
provides parts to suppliers with compensation and bears a repurchase obligation, as financial transactions, theprovided parts retained by suppliers are recognized as inventories, and the amount equivalent to the ending
inventory of the provided parts retained by suppliers are recognized as “liabilities pertaining to buy-selltransactions.” With regard to buy-sell transactions in which the Company purchases parts from suppliers andbears a sell-back obligation, only the net amount equivalent to processing cost is recognized as revenue. As fortransactions where the role of the Company falls under an agent of sales of products to customers, revenue isrecognized at the net amount, subtracting the amount paid to third parties from the total amount of considerations.

- 94 -

3． Information to understand the amount of revenues for the current consolidated fiscal year and after the next
consolidated fiscal year
1) Balance, etc. of contract assets and contract liabilities(Thousands of yen)
Beginning of theconsolidated fiscal year

End of the consolidated

16,766,218

15,971,983

Contract assets

304,849

101,852

Contract liabilities

7,238

21,162

Receivables from contracts withcustomers
Notes and accounts receivable trade

fiscal year

Contract assets are related to considerations with revenue recognized but unclaimed in contracts where performanceobligations are satisfied for a specific period. Contract assets are reclassified into receivables from contracts with customers
at the time when rights to payment become unconditional. This is usually the time when an invoice is issued to customers.
Contract liabilities are related to the amount equivalent to the ending inventory of the provided parts retained by suppliers.
2) Transaction prices allocated to remaining performance obligations
As there are no significant contracts whose originally expected contract period lasts more than one year, our Group applies apractical expedient and omits statement with regard to transaction prices allocated to remaining performance obligations. There isalso no significant amount not included in transaction prices in considerations from contracts with customers.

(Segment Information, etc.)[Segment Information]
1. Outline of reportable segments
Reportable segments of the Company are those constituent units of the Company who make available
separate financial information and also are subject to periodic review by the board of directors aimed atdetermining the distribution of management resources and evaluating business results.
The Company has manufacturing and sales systems in place for each category of product and service at its
head office, etc. and conducts business activities based on the comprehensive strategies that the Company
develops for the domestic and overseas markets as to its products and services.
The Company’s business, therefore, consists of several segments that represent each category of product andservice and are based on the said manufacturing and sales systems. Such segments are the four (4) reportablesegments of the Company, i.e. “Electronic materials business”, “Industrial application structural materials
business”, “Electrical insulating materials business” and “Display materials business”.
“Electronic materials business” produces materials for flexible and rigid printed circuit boards, etc.
“Industrial application structural materials business” produces filament winding molded products, honeycomb
panels and prepregs for aircraft, pultrusion molded products and FRP ski sheets, etc. “Electrical insulating
materials business” produces glass cloth, glass tapes and prepregs for electrical insulation, etc. “Display
materials business” produces 3D display filters and special optical components, etc.
2.

Method of calculating the amount of net sales, income or loss, assets, liabilities and other items with respect toeach reportable segment
The accounting methods applied to the reported business segments are basically the same as those stated inthe (Important Matters Underlying Preparation of Consolidated Financial Statements).
The amount of income or loss recorded for each reportable segment is based on the operating income orloss (before amortization of goodwill).
Inter-segment revenues and transfers are based on the prevailing market price.
As stated in Changes in Accounting Policies, the Revenue Recognition Accounting Standard, etc. havebeen applied from the beginning of the current consolidated fiscal year and the accounting method for
Revenue Recognition was changed. Accordingly, the method for measuring the income or loss of businesssegments was changed.
As a result, compared to a conventional method, sales of electronic materials decreased by 2,204,067
thousand yen, sales of industrial application structural materials decreased by 569,319 thousand yen, the- 95 -

segment income or loss decreased by 37,425 thousand yen, sales of electrical insulating materials decreased
by 17,938 thousand yen, sales of display materials decreased by 783,704 thousand yen, and the segment
income or loss increased by 9,337 thousand yen.

- 96 -

3.

Information on the amount of net sales, income or loss, assets, liabilities and other items with respect to eachreportable segment
Previous consolidated fiscal year (From April 1, 2020 to March 31, 2021)(Thousands of yen)
Reportable segment

Net sales
Net sales to externalcustomers
Inter-segment sales
or transfers
Total

Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Subtotal

31,650,346

8,842,592

2,340,444

2,820,157

45,653,540

786,008

46,439,548

－

－

－

－

－

836,354

836,354

Other(See Note)

Total

31,650,346

8,842,592

2,340,444

2,820,157

45,653,540

1,622,363

47,275,903

Segment income

2,981,124

939,199

192,241

221,311

4,333,877

243,688

4,577,566

Segment assets

30,226,999

8,632,419

2,746,374

3,197,787

44,803,580

1,280,605

46,084,186

1,491,153

255,026

88,710115,033

1,949,923

21,6801,971,604－－－

173,640

173,640－

173,640

1,466,520

244,778

98,476

37,1101,846,886

74,567

1,921,453

Other
Depreciation
Investment incompanies
accounted forunder the equity
methodIncrease inproperty, plant andequipment andintangible assets

Note: The column “Other” represents business operations that do not fall under any of the reportable segments and includes therelated goods sales, the logistics-related operations and other businesses, etc.

Current consolidated fiscal year (From April 1, 2021 to March 31, 2022)(Thousands of yen)
Reportable segment
Other(See Note)

Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Subtotal

29,768,120

7,053,787

2,604,011

3,253,011

42,678,931

410,644

43,089,576

－

－

－

－

－

841,914

841,914

29,768,120

7,053,787

2,604,011

3,253,011

42,678,931

1,252,559

43,931,491

Segment income

2,907,853

872,934

303,709815,392

4,899,889

172,152

5,072,042

Segment assets

35,050,267

9,028,816

2,848,872

4,213,533

51,141,489

1,239,760

52,381,249

1,583,170

192,068

82,494

134,192

1,991,926

23,3752,015,301－－－

212,996

212,996－

212,996

1,887,184

205,290

90,01984,6502,267,144

23,8102,290,954

Net sales
Net sales to externalcustomers
Inter-segment sales
or transfers
Total

Total

Other
Depreciation
Investment incompanies
accounted for underthe equity method
Increase inproperty, plant andequipment andintangible assets

Note: The column “Other” represents business operations that do not fall under any of the reportable segments and includes therelated goods sales, the logistics-related operations and other businesses, etc.

- 97 -

4.

Difference between the total amount of reportable segments and the pertinent amount shown on the
consolidated financial statements as well as the key components of such difference (Matters concerning
difference adjustment)(Thousands of yen)
Net sales

Previous consolidated fiscal year

Current consolidated fiscal year

Total of reportable segments

45,653,540

42,678,931

Net sales in the category “Other”

1,622,363

1,252,559

Elimination of inter-segment transactions△836,354△841,914

Net sales shown on the consolidated financial
statements

46,439,548

43,089,576(Thousands of yen)

IncomePrevious consolidated fiscal year

Current consolidated fiscal year

Total of reportable segments

4,333,877

4,899,889

Income in the category “Other”

243,688

172,152

Elimination of inter-segment transactions

3,666

14,456

Unallocated corporate expenses (See Note)△1,440,791△1,725,483△21,954△40,068

Adjustment of inventories

Operating income shown on the consolidated
3,118,486
3,320,946
financial statements
Note: “Unallocated corporate expenses” are mostly general and administrative expenses that are not attributable to any of thereportable segments.
(Thousands of yen)
AssetsPrevious consolidated fiscal year

Current consolidated fiscal year

Total of reportable segments

44,803,580

51,141,489

Assets in the category “Other”
Elimination of claims to administrative departmentsof the head office
Unallocated corporate assets (See Note)

1,280,605

1,239,760△782,751△756,467

21,977,937

17,104,485△21,954△40,068

Adjustment of inventories

Total assets shown on the consolidated financial
67,257,417
68,689,199
statements
Note: “Unallocated corporate assets” are mostly investment securities, etc. that are not attributable to any of the reportablesegments.
(Thousands of yen)Amount shown on the
Total of reportable
Other
Adjustment
consolidated financial
segments
statements
Other item

Depreciation

Previous
consolidated
fiscal year

Current
consolidated
fiscal year

Previous
consolidated
fiscal year

Current
consolidated
fiscal year

Previous
consolidated
fiscal year

Current
consolidated
fiscal year

Previous
consolidated
fiscal year

Current
consolidated
fiscal year

1,949,923

1,991,926

21,68023,375

136,223

155,674

2,107,827

2,170,976

Increase in property, plantand equipment and1,846,886 2,267,144
74,567
23,810298,926
77,320 2,220,379 2,368,275
intangible assets
Note: The adjustment to “Increase in property, plant and equipment and intangible assets” represents capital investment in theassets used for the common corporate purpose.

- 98 -

[Related Information]
Previous consolidated fiscal year (From April 1, 2020 to March 31, 2021)
1. Information by product and service(Thousands of yen)

Net sales to externalcustomers

Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Other

Total

31,650,346

8,842,592

2,340,444

2,820,157

786,008

46,439,548

2. Information by region(1) Net sales(Thousands of yen)Japan

P.R. China

19,419,125

15,474,946

Other country or
regionTotal

11,545,477

46,439,548

Note: Net sales are categorized by country or region on the basis of customer locations.

(2) Property, plant and equipment(Thousands of yen)Japan

Taiwan9,271,469

Other country or
region3,191,195

Total

754,730

13,217,395

3. Information by major customer(Thousands of yen)
Customer name

Net sales

Relevant segment

Sumitomo Shoji Chemicals Co., Ltd.

4,986,141

Electronic materials businessCurrent consolidated fiscal year (From April 1, 2021 to March 31, 2022)
1. Information by product and service(Thousands of yen)

Net sales to externalcustomers

Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Other

Total

29,768,120

7,053,787

2,604,011

3,253,011

410,644

43,089,576

2. Information by region(1) Net sales(Thousands of yen)Japan
17,323,899

P.R. China
12,872,209

Other country or
region12,893,467

Total
43,089,576

Note: Net sales are categorized by country or region on the basis of customer locations.

(2) Property, plant and equipment(Thousands of yen)Japan
9,239,517

Taiwan3,674,498

Other country or
region861,058- 99 -

Total
13,775,074

3. Information by major customer
Out of net sales to external customers, as there is no customer who accounts for 10% or more of the net sales
in the consolidated statements of income, statement is omitted.
[Information on impairment loss on non-current assets with respect to each reportable segment]
Previous consolidated fiscal year (From April 1, 2020 to March 31, 2021)(Thousands of yen)

Impairment loss

Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials－

69,684－

Displaymaterials

Unallocated/
Eliminated

Other

－

－

Total

－

69,684Current consolidated fiscal year (From April 1, 2021 to March 31, 2022)(Thousands of yen)

Impairment loss

Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials－

12,928－

Displaymaterials

Unallocated/
Eliminated

Other

－

－

Total

－

[Information on amortization of goodwill and unamortized balance with respect to each reportable segment]
Previous consolidated fiscal year (From April 1, 2020 to March 31, 2021)
No applicable matter.
Current consolidated fiscal year (From April 1, 2021 to March 31, 2022)
No applicable matter.
[Information on gain on bargain purchase with respect to each reportable segment]
No applicable matter.

- 100 -

12,928

(Information on Related Parties)
1. Transactions with related parties
Transactions between the company submitting the consolidated financial statements and related parties
Directors and major shareholders (individuals only), etc. of the company submitting the consolidated financial
statements
Previous consolidated fiscal year (From April 1, 2020 to March 31, 2021)
No applicable matter.
Current consolidated fiscal year (From April 1, 2021 to March 31, 2022)
Capital stock
Full name orType

corporate nameor investment
Locationin capital(Thousands ofyen)

Ratio ofBusiness outline voting rightor occupation

holding

Balance at

Amount ofRelationship

Description

transactionof transaction (Thousands of(held), etc.

the end of
Item

year
(Thousands

yen)of yen)Directorof animportantsubsidiary

Hidetaka
Nonami－

0.07%
Director of
directly－ Arisawa Fiber held
Glass Co., Ltd.

－

Exercise of
the right ofstock option

19,260－of theCompany

Terms of transactions and the policy for determining the terms of transactions, etc.
The table above covers the exercises in the current consolidated fiscal year of the rights of share acquisition rights granted
under a resolution at the Board of Directors’ Meeting of the Company of June 28, 2017 and June 27 2019.
The column “Amount of transaction” indicates the amount obtained by multiplying the number of shares of stock granted
through the exercise in the current consolidated fiscal year of the pertinent right of share acquisition rights by the paid-in
amount per share.

2.

Notes with respect to parent or important affiliated companies(1) Information on parent
No applicable matter.
(2) Condensed financial information on important affiliated companies
No applicable matter.

- 101 -－

(Per Share Information)
Previous consolidated fiscal year
(From April 1, 2020
to March 31, 2021

Current consolidated fiscal year
(From April 1, 2021
to March 31, 2022)

Net assets per share

1,388.50 yen

1,434.46 yen

Net income per share

64.94 yen

117.40 yen

Fully diluted net income per share
64.84 yen
Note: The bases of calculation of net income per share and fully diluted net income per share are as follows.
Previous consolidated fiscal year
(From April 1, 2020
to March 31, 2021)

117.32 yen

Current consolidated fiscal year
(From April 1, 2021
to March 31, 2022)

Net income per share
Profit attributable to owners of the parent(Thousands of yen)Amount not attributable to common
stockholders (Thousands of yen)
Profit attributable to owners of the parent
pertaining to common stock (Thousands ofyen)
Average number of shares of common stockduring the year

2,160,640

3,911,000－－

2,160,640

3,911,000

33,271,733

33,312,484－－

52,79823,631(52,798)(23,631)

Fully diluted net income per share
Adjustment of profit attributable to ownersof the parent (Thousands of yen)
Increase in the number of shares of common
stock(Number of shares subject to stockacquisition rights included in the figure
above)
Outline of dilutive shares that were notincluded in the calculation of fully diluted net
income per share due to a lack of dilutive effect

Note:

Eight (8) types of stock acquisition Four (4) types of stock acquisitionrights:rights:Resolution at the Board of Directors’ Resolution at the Board of Directors’Meeting of June 28, 2017 (75,000 Meeting of June 28, 2017 (20,000
shares);shares);Resolution at the Ordinary General Resolution at the Ordinary General
Meeting of Shareholders of June 28, Meeting of Shareholders of June 28,2017 (226,100 shares);2017 (214,000 shares) ;Resolution at the Board of Directors’ Resolution at the Board of Directors’Meeting of June 28, 2018 (75,000 Meeting of June 28, 2018 (30,000
shares);shares); andResolution at the Ordinary General Resolution at the Ordinary General
Meeting of Shareholders of June 28, Meeting of Shareholders of June 28,2018 (248,100 shares) ;2018 (233,500shares).
Resolution at the Board of Directors’Meeting of June 27, 2019 (55,000
For details, see IV. Status of theshares);Submitting Company - 1. Status of
Resolution at the Ordinary General Shares, etc. - (2) Status of Stock
Meeting of Shareholders of June 27, Acquisition Rights, etc.
2019 (266,000 shares).
Resolution at the Board of Directors’Meeting of June 25, 2020 (55,000
shares); andResolution at the Ordinary General
Meeting of Shareholders of June 25,
2020 (270,300 shares).
For details, see IV. Status of theSubmitting Company - 1. Status of
Shares, etc. - (2) Status of Stock
Acquisition Rights, etc.
The Company’s shares which are shown as treasury stock in shareholders’ equity and which a trust account for employee
stock ownership plan holds are included in the number of treasury stock excluded in the calculation of the average number- 102 -

of shares of common stock during the period when net income (or loss) per share is calculated ( - shares for the previous
consolidated fiscal year and 56,483 shares for the current consolidated fiscal year).

(Significant Subsequent Events)
The Company passed a resolution at the Board of Directors’ Meeting held on May 12, 2022 on the acquisitionof treasury stock under the provisions of Article 156 as applied following the deemed replacement of terms
pursuant to the provisions of Article 165, paragraph 3 of the Companies Act and the retirement of treasury
stock under the provisions of Article 178 of the Companies Act.
1. Reasons for the acquisition and retirement of treasury stock
To enhance shareholder returns and improve capital efficiency in accordance with the medium-term
management plan.
2. Details of the matters of the acquisition of treasury stock(1) Type of stock to be acquired
The Company’s common stock(2) Total number of stock for acquisition
820,000 shares (maximum)(3) Total acquisition cost of stock
750,000,000 yen (maximum)(4) Acquisition period
From May 13, 2022 to December 30, 2022
(5) Acquisition method
Market purchase on the Tokyo Stock Exchange
3. Details of the matters of the retirement of treasury stock(1) Type of stock to be retired
The Company’s common stock(2) Total number of stock for retirement
Number of stock excluding 200,000 shares from the sharesacquired in 2. (2) above(3) Scheduled date of the retirement
January 31, 2023

- 103 -

(Consolidated Supplementary Schedules)[Schedule of corporate bonds]
Company

Satosen Co.,Ltd.

Satosen Co.,
Ltd.

Total

Issue

First series
unsecuredbond (Private
placement
bond)
Second series
unsecuredbond (Private
placementbond)－Issue date

Balance atBalance at end
beginning ofof current
current period
period(Thousands of (Thousands of
yen)
yen)

Interest rate(%)

Collateral

Maturity date

March 31,2017

30,000(20,000)

10,000(10,000)

0.21

None

April 15,
2022

April 28,
2017

61,200(16,800)

44,400(16,800)

0.25

None

May 24, 2024－

91,200(36,800)

54,400(26,800)－－－

Note: 1. The parenthesized figures represent the outstanding balance of redemptions due within 1 year.
2. Redemption amounts within five years of the consolidated closing date are shown below.
Within one year
(Thousands of yen)

1-2years(Thousands of yen)

26,8002-3years(Thousands of yen)

16,8003-4years(Thousands of yen)

4-5years(Thousands of yen)－

10,800－[Schedule of loans payable, etc.]
Category

Balance at theBalance at the end
Average
beginning of currentof current period interest rate Repayment period
period(Thousands of yen)(%)(Thousands of yen)
3,606,087

3,562,272

0.65

---

Current portion of long-term loans payable

182,724

957,962

0.31---

Current portion of lease obligations

87,885

118,5786.23---

3,761,507

3,845,199

0.91

2023 to 2030

487,985556,3024.542023 to 2038

50,805

5,179

1.57

---

5,179

－

－

---

8,182,174

9,045,495－---

Short-term loans payable

Long-term loans payable (excluding the current portion)
Lease obligations (excluding the current portion)
Other interest-bearing liabilities
Current portion of long-term accounts payable - other
Other interest-bearing liabilities
Long-term accounts payable - other(excluding the current portion)
Total
Note:

1. The column “Average interest rate” indicates the weighted average interest rate to the balance of loans payable, etc. at
the end of the current period.

- 104 -

2. The scheduled amount of repayment of long-term loans payable (excluding the current portion), lease obligations(excluding the current portion) and long-term accounts payable - other (excluding the current portion) over the five (5)years after the consolidated closing date is as follows.
(Thousands of yen)
Due after four years
Due after one year andDue after two years
Due after three years
and within five
within two years
and within three years
and within four years
years
Long-term loans payable
Lease obligations

1,506,557

885,705

718,181606,564

117,778

120,452

98,26955,640[Schedule of asset retirement obligations]
As the amount of asset retirement obligations as of the beginning of the current consolidated fiscal year and as ofthe end of the current consolidated fiscal year is not more than one hundredth (1/100) of the aggregate amount ofliabilities and net assets as of the beginning of the current consolidated fiscal year and as of the end of the current
consolidated fiscal year respectively, statement has been omitted under the provisions of Article 92-2 of theRegulations for Terminology, Forms and Preparation Methods of Consolidated Financial Statements.

- 105 -

(2) Other
Quarterly Information, etc. in the Current Consolidated Fiscal Year
(Cumulative period)
Net sales(Thousands of yen)
Income before income
taxes(Thousands of yen)
Profit attributable toowners of the parent(Thousands of yen)
Net income per share(Yen)(Accounting period)
Net income per share(Yen)First quarter

Second quarter

Third quarter

Current consolidated
fiscal year

10,785,102

21,744,712

32,663,855

43,089,576

1,095,327

2,527,494

3,900,344

4,965,691

777,220

1,745,834

2,971,168

3,911,000

23.31

52.38

89.18

117.40First quarter

Second quarter

23.31

29.07

- 106 -

Third quarter
36.81

Fourth quarter
28.23

2. Financial Statements, etc.
(1) Financial Statements
1) Balance Sheets(Thousands of yen)Previous business year
(As of March 31, 2021)

Current business year
(As of March 31, 2022)

AssetsCurrent assets
Cash and deposits

7,427,761

Notes receivable-trade*2,

Accounts receivable-trade*2

7,016,148

283,622*2

235,152

8,282,802*2

8,544,602－

101,852

165,296

230,593

1,042,117

1,040,342

Merchandise and finished goods

2,606,227

2,638,457

Work in process

1,274,119

1,001,928

Raw materials and supplies

1,373,239

1,487,412

70,83475,627

Contract assets
Electronically recorded monetary claimsoperating
Securities

Prepaid expenses*2

Accrued income
Income taxes receivable
Short-term loans receivable from subsidiaries
and associates
Other

*2

44,921*2

51,755

1,415,974－

1,444,915

1,396,773

238,897*2

395,686

Allowance for doubtful accounts△216,764△306,764

Total current assets

25,453,966

23,909,569

Non-current assets
Property, plant and equipment
Buildings*1

3,786,312*1

Structures
Machinery and equipment*1

306,444*1

296,510*12,204,894*1

1,916,812

Tools, furniture and fixtures*1

179,962*1

222,721Land*1

1,376,078*1

1,376,078

Vehicles

22,027

3,672,196

23,281

Lease assets

249,081343,857

Construction in progress

34,827232,253

8,159,629

8,083,713

Total property, plant and equipment- 107 -

(Thousands of yen)Previous business year
(As of March 31, 2019)

Current business year
(As of March 31, 2020)

Intangible assets
Software

84,562

115,929

Other

9,631

9,541

Total intangible assets

94,194125,470

Investments and other assets
Investment securities

9,411,949

6,526,531

Shares of subsidiaries and associates

6,438,404

11,396,735

Long-term prepaid expenses

129,160

85,211

Other

177,905

103,326

Allowance for doubtful accounts△5,607△5,053

Total investments and other assets

16,151,812

18,106,751

24,405,637

26,315,935

49,859,604

50,225,504

Total non-current assets
Total assets
Liabilities
Current liabilities
Notes payable-trade*2

181,723*2

117,218

Accounts payable-trade*2

3,881,685*2

2,610,044

Electronically recorded obligations-operating*2

1,160,458*2

1,427,050

Short-term loans payable*4500,000*4

640,000

Current portion of long-term loans payable*1

133,332*1

680,558

Accounts payable-other*2562,781*2

720,749

Accrued expenses

104,543

98,603

Income taxes payable

41,072

789,062

Unearned revenue

1,915

10,976

Lease obligations

51,12581,443

Deposits received

26,60326,924

Provision for bonuses

357,625

336,456

Other
Total current liabilities- 108 -

239,488412,0027,242,357

7,951,091

(Thousands of yen)Previous business year
(As of March 31, 2021)

Current business year
(As of March 31, 2022)

Non-current liabilities
Long-term loans payable*1

680,558*1－－

29,802

Provision for retirement benefits

560,946

527,617

Provision for loss on guarantees

295,458

246,643

Lease obligations

201,485259,755

Asset retirement obligations

28,991

29,166

Deferred tax liabilities

288,31485,414

Other

76,84879,982

2,132,603

1,258,382

9,374,960

9,209,474

7,623,638

7,643,777

Legal capital surplus

6,735,630

6,755,769

Total capital surplus

6,735,630

6,755,769

748,262748,262

15,85014,982

24,020,000

21,020,000

768,016

3,768,354

Provision for share-based remuneration

Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus

Retained earnings
Legal retained earnings
Other retained earnings
Reserve for advanced depreciation of noncurrent assets
General reserve
Retained earnings brought forward

25,552,129

25,551,599

Treasury stock△1,159,364△299,704

Total shareholders’ equity

38,752,033

39,651,442

Valuation and translation adjustments
Valuation difference on available-for-salesecurities

1,548,640

1,215,457

Total valuation and translation adjustments

1,548,640

1,215,457

183,970

149,13140,484,643

41,016,030

49,859,604

50,225,504

Total retained earnings

Share acquisition rights
Total net assets
Total liabilities and net assets- 109 -

2) Statements of Income(Thousands of yen)Previous business year
(From April 1, 2020
to March 31, 2021)

Current business year
(From April 1, 2021
to March 31, 2022)

Net sales*1

31,668,607*1

26,648,241

Cost of sales*1

27,854,265*1

22,517,292

Gross profit

3,814,342

Selling, general and administrative expenses*1,*2

Operating income

2,599,288

4,130,948*1,*2

1,215,053

2,809,122
1,321,826

Non-operating income
Interest and dividends income*1

596,342*1

219,586*1

204,022

Foreign exchange gains*1

92,534

Rent income
Gain on redemption of investment securities

429,816*1

48,371

Other
Total non-operating income

897,878
225,607
213,189*1

1,160,858

115,902
1,882,394

Non-operating expenses
Interest expenses*1

Rent expenses

14,849*1

227,400

Provision of allowance for doubtful accounts

*1

Other

145,848
54,897

Total non-operating expenses

26,859229,044*1

89,445
6,343

442,996351,692

1,932,915

2,852,528

Gain on sales of investment securities

320,621297,841

Gain on reversal of share acquisition rights

27,55045,938148－

348,321343,779

Loss on sales of investment securities

313,624

32,110

Impairment loss

69,684

12,928Loss on retirement of non-current assets

27,605

41,143

Provision for share-based remuneration－

14,098

Total extraordinary losses

410,914100,280

Income before income taxes

1,870,322

3,096,027

Ordinary income
Extraordinary income

Other
Total extraordinary income
Extraordinary losses

Income taxes-current

134,422821,728

Income taxes-deferred

339,204△73,976

Total income taxes

473,627

747,752

1,396,694

2,348,274

Net income- 110 -

3) Statements of Changes in Shareholders’ Equity and Other Net Assets
Previous business year (From April 1, 2020 to March 31, 2021)(Thousands of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Capital stock

Balance at beginning of current period

Reserve forLegal capital Total capital Legal retainedadvancedsurplussurplusearnings
depreciationof non-current
assetsGeneralreserve

Retainedearnings
brought
forwardTotal
retainedearnings

7,594,026

6,706,017

6,706,017

748,262

17,066

19,020,000

7,413,243

27,198,572

7,594,026

6,706,017

6,706,017

748,262

17,066

19,020,000

7,413,243

27,198,572

29,612

29,612

29,612
1,215－

Dividends from surplus△997,370△997,370

Net income (loss)

1,396,694

1,396,694△5,000,000－

Cumulative effects of changes inaccounting policies
Restated balance
Changes of items during the period
Issuance of new shares
Reversal of reserve for advanced
depreciation of non-current assets△1,215

Provision of general reserve

5,000,000

Purchase of treasury stock△2,045,767 △2,045,767

Retirement of treasury stock
Net changes of items other thanshareholders' equity
Total changes of items during theperiodBalance at end of current period

29,612

29,612

29,612－△1,2155,000,000△6,645,227△1,646,443

7,623,638

6,735,630

6,735,630

748,262

15,85024,020,000

768,016

25,552,129

ShareacquisitionrightsTotal net
assetsValuation and translation
adjustments
Valuation
Total
Total
difference on valuation andshareholder
available-fortranslations’ equity sale securities adjustments

Shareholders’ equity
Treasurystock
Balance at beginning of current period△3,204,797

38,293,819

471,520

471,520

166,148

38,931,487△3,204,797

38,293,819

471,520

471,520

166,148

38,931,487

Cumulative effects of changes inaccounting policies
Restated balance
Changes of items during the period
Issuance of new shares

59,224

59,224－－

Dividends from surplus△997,370△997,370

Net income (loss)

1,396,694

1,396,694

－

－

△334

△334

△334

2,045,767－－

Reversal of reserve for advanced
depreciation of non-current assets

Provision of general reserve
Purchase of treasury stock
Retirement of treasury stock
Net changes of items other thanshareholders' equity
Total changes of items during theperiodBalance at end of current period

1,077,119

1,077,119

17,821

1,094,941

2,045,433

458,213

1,077,119

1,077,119

17,821

1,553,155△1,159,364

38,752,033

1,548,640

1,548,640

183,970

40,484,643- 111 -

Current business year (From April 1, 2021 to March 31, 2022)(Thousands of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Capital stock

Balance at beginning of current
periodCumulative effects of changes inaccounting policies

6,735,630

6,735,630

Total
retainedearnings

39,405807,421

25,591,534

868－△1,466,926△1,466,926

2,348,274

2,348,274

3,000,000－

Disposal of treasury stock△2,973△2,973Retirement of treasury stock△918,310△918,310

6,735,630

20,13920,13920,139748,262

15,85024,020,000

Retainedearnings
brought
forward39,405
6,735,630

15,850Generalreserve

25,552,129

7,623,638

748,262

Reserve foradvanceddepreciationof non-current
assets768,016

Restated balance

7,623,638

Legal capital Total capital Legal retained
surplussurplusearnings

24,020,000

Changes of items during the period
Issuance of new shares
Reversal of reserve for advanced
depreciation of non-current assets△868

Dividends from surplus
Net income (loss)△3,000,000

Provision of general reserve
Purchase of treasury stock

Net changes of items other thanshareholders' equity
Total changes of items during theperiod20,13920,13920,139－△868△3,000,000

2,960,932△39,935

Balance at end of current period

7,643,777

6,755,769

6,755,769

748,262

14,982

21,020,000

3,768,354

25,551,599

Valuation and translation
adjustments
Total
Valuation
Total
valuationdifference on
andshareholder
available-fors’ equity sale securities translation
adjustments

ShareacquisitionrightsTotal net
assets183,970

40,484,643

Shareholders’ equity
Treasurystock
Balance at beginning of current
periodCumulative effects of changes inaccounting policies
Restated balance△1,159,364

38,752,033

1,548,640

1,548,640

39,405△1,159,364

38,791,438

39,405
1,548,640

1,548,640

183,970

40,524,049

Changes of items during the period
Issuance of new shares
Reversal of reserve for advanced
depreciation of non-current assets
Dividends from surplus
Net income (loss)
Provision of general reserve

40,27840,278－－△1,466,926△1,466,926

2,348,274

2,348,274－－

Purchase of treasury stock△82,621△82,621△82,621

Disposal of treasury stock

23,971

20,997

20,997Retirement of treasury stock

918,310－－

Net changes of items other thanshareholders' equity△333,182- 112 -

△333,182△34,839△368,021

Total changes of items during theperiod859,660

860,003△333,182△333,182△34,839

491,981

Balance at end of current period△299,704

39,651,442

1,215,457

1,215,457

149,13141,016,030- 113 -

[Notes](Important Accounting Policies)
1. Valuation standards and valuation methods for assets(1) Valuation standards and valuation methods for securities
1) Equity stakes in subsidiaries and affiliated companies
Stated at average cost.
2) Available-for-sale securities
Securities other than stocks and others without a quoted market price:
Stated at fair market value (Valuation differences are reported as a component of net assets, and the costof securities sold is calculated using the average cost method.)
Stocks and others without a quoted market price:
Stated at average cost.
(2) Derivative financial instruments
Stated at fair market value.
(3) Valuation standards and valuation methods for inventories
1) Merchandise, finished goods, semi-finished goods and work in process
The cost method on a first-in, first-out basis is adopted. (The amount shown on the balance sheets is
calculated by writing inventories down due to a decline in profitability.)
2) Raw materials and supplies
The cost method based on the periodic average method is adopted. (The amount shown on the balance
sheets is calculated by writing inventories down due to a decline in profitability.)
2. Methods of depreciation and amortization of non-current assets(1) Property, plant and equipment (excluding lease assets)
The declining-balance method is adopted, except for the buildings (excluding accompanying facilities)
acquired on or after April 1, 1998 and accompanying facilities and structures acquired on or after April 1,
2016, which are depreciated using the straight-line method.
The useful life mostly falls within the ranges shown below:
Buildings: fifteen (15) years to thirty-one (31) years
Machinery and equipment: eight (8) years to nine (9) years(2) Intangible assets (excluding lease assets)
The straight-line method is adopted. Software used by the Company is amortized over an estimated inhouse usable period. (Currently five (5) years)(3) Lease assets
Lease assets related to finance lease transactions that entail transfer of title
Depreciation and amortization is based on the same method as applied to self-owned non-current assets.
Lease assets related to finance lease transactions that do not entail transfer of title
Depreciation and amortization is based on the straight-line method that takes the lease period as the usefullife and sets the residual value at zero (0).
3. Standards for translating foreign currency assets and liabilities into Japanese currency
Foreign currency monetary assets and liabilities are translated into Japanese yen at the spot exchange rate asof the closing date, and the resulting translation differences are entered as income or loss, as the case may be.
4. Standards for recording allowances and provisions(1) Allowance for doubtful accounts
As a reserve for potential loan losses, an estimated uncollectible amount is allocated based on thehistorical loan-loss ratio in the case of general accounts receivable, and in light of the collectability in each
instance in the case of some specific accounts receivable, e.g. doubtful receivables.
(2) Provision for bonuses
In preparation for the payment of bonuses to its employees, the Company allocates an expected
aggregate amount of such payment.
(3) Provision for retirement benefits- 114 -

As a reserve for the payment of retirement benefits to employees, an amount is appropriated on the basisof the estimated amounts of retirement benefit obligations and plan assets as of the end of the current
business year.
1) Method of inter-period attribution of expected retirement benefits
In calculating retirement benefit obligations, the benefit formula is employed as the method of
attributing the estimated amount of each employee’s retirement benefits to his or her service period up
to the end of the current business year.
2) Method of recognizing actuarial differences as expenses
Actuarial differences are recognized as expenses, effective from the business year immediately
following the year of occurrence of each such difference, in an amount prorated using the straight-line
method over a certain number of years (Currently five (5) years) within the average remaining service
period of the employees at the time of occurrence of the said difference in each business year.
(4) Provision for loss on guarantees
In order to prepare for loss on guarantees, etc., the estimated amount of losses is shown, taking into
account the financial conditions, etc. of guaranteed parties.
(5) Provision for share-based remuneration
As a reserve for the Company’s share-based remuneration to employees under the share delivery
regulations, it is allocated based on the expected aggregate amount of share benefit obligation as of theend of the current business year.
5. Standards for recording important revenues and expenses
Notes on the standards for recording important revenues and expenses are omitted as the same details areshown in “Notes (For Revenue Recognition) 2. Basic information for understanding revenue from contracts
with customers” of Consolidated Financial Statements.
6. Accounting method of significant hedge transactions(1) Method of hedge accounting
The Company adopts the deferred hedge accounting. With respect to the forward exchange contracts
that meet the requirements of hedge accounting, we adopt the designated hedge accounting.
(2) Hedging instruments and hedged items
Hedging instruments : Forward exchange contracts
Hedged items: Monetary claims denominated in foreign currencies, Anticipated transactions
in foreign currencies(3) Hedging policy
Forward foreign exchange transactions are conducted within the scope of actual demand for the
purpose of deterring risks involved in transactions denominated in foreign currencies from thefluctuations in the foreign exchange market. These transactions will never be entered for speculative
purpose.
(4) Method of assessing hedge effectiveness
The Company assesses the effectiveness of hedging based on the ratio of changes that is calculated bycomparing the cumulative total of the market fluctuations of hedged items with that of hedging
instruments. However, when the forward foreign exchange transactions are by designated hedge
accounting, such assessment of effectiveness is omitted.
7. Other important matters underlying preparation of financial statements(1) Accounting methods concerning retirement benefits
The method of accounting for an unappropriated portion of unrecognized actuarial differences
concerning retirement benefits is different from the method of accounting applied to the same in the caseof the consolidated financial statements.
(2) Accounting methods concerning deferred assets
Stock delivery expenses are fully charged to expenses when they are paid.
(Significant Accounting Estimates)
1. Valuation of Inventories(1) Amount recorded in the financial statements for the current business year

- 115 -

(Thousands of yen)Previous business year

Current business year

Loss on valuation of inventory

15,41937,819Merchandise and finished goods

324,702292,638

Work in process

157,010

109,095(2) Other information that contributes to the understanding of users of financial statements
1) Calculation method
With regard to inventories that are slow-moving or to be disposed of because they have been cut off fromthe operating cycle and for which it is difficult to measure the net selling price according to a reasonably
estimated price, their carrying amount is written down in accordance with the holding period and demand
trends.
2) Major assumptions
Demand related to aircraft materials has been rapidly declining due to the spread of the new coronavirus
infection (COVID-19). For this reason, the valuation of such inventories is estimated based on the expected
future sales, and the major assumption is the expected sales volume. The assumption of the expected sales
volume takes into account the future prospects for the containment of the new coronavirus infection(COVID-19) and trends in aircraft-related demand.
3) Effect on the financial statements for the next business year
We assume the expected sales volume on the presumption that the new coronavirus infection (COVID19) will be contained in the next business year and demand for aircraft will gradually recover. However, thetiming of the containment of the new coronavirus infection (COVID-19) and the impact on demand trends
including the influence of international situation in Ukraine are highly uncertain, and there is a risk that thiswill have a significant impact on the inventory valuation decisions in the next business year.

- 116 -

(Changes in Accounting Policies)(Application of Accounting Standard for Revenue Recognition, etc.)“Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan Statement No.29,
March 31, 2020; hereinafter referred to as the “Revenue Recognition Accounting Standard”), etc. have been
applied from the beginning of the current business year and the Company recognizes revenue at the amount
expected to be received in exchange for goods or services when control of the promised goods or services istransferred to customers.
As a result, for transactions where the role of the Company falls under an agent of sales of products tocustomers, the total amount of considerations received from customers have previously been recognized asrevenue, but the method has been changed to recognize revenue at the net amount, subtracting the amount paid
to third parties from the total amount of considerations. In addition, with regard to buy-sell transactions inwhich the Company provides parts to suppliers with compensation and bears a repurchase obligation, theamount equivalent to the ending inventory of the provided parts retained by suppliers are recognized asliabilities pertaining to buy-sell transactions. Furthermore, with regard to buy-sell transactions in which theCompany purchases parts from suppliers and bears a sell-back obligation, sales and cost of goods sold havepreviously been recorded at the time of sell-back to suppliers of parts, but the method has been changed torecognize only the net amount equivalent to processing cost as revenue. Moreover, for sales to some customers,in connection with transfer of control over assets to customers over time, the method of recognizing revenue
over time according to the progress of manufacture was adopted.
For the application of the Revenue Recognition Accounting Standard, etc., the Company complies with thetransitional treatment set forth in the proviso of paragraph 84 of the Revenue Recognition Accounting Standard.
The cumulative effects resulting from retroactive application of the new accounting policy before the beginningof the current business year were added to or subtracted from retained earnings at the beginning of the current
business year and the new accounting policy has been applied from the beginning balance; provided, however,that by applying the method set forth in paragraph 86 of the Revenue Recognition Accounting Standard, the
new accounting policy has not been retroactively applied to contracts for which almost all revenue has beenrecognized in accordance with the previous treatment before the beginning of the current business year. With
respect to contract amendments which were made before the beginning of the current business year, accounting
treatment was made under the terms of contract after all contract amendments were reflected by applying themethod set forth in paragraph 86, item (1) of the Revenue Recognition Accounting Standard and the cumulative
effects were added to or subtracted from retained earnings at the beginning of the current business year.
As a result, in the current business year, sales decreased by 3,658,783 thousand yen, cost of sales decreased
by 3,627,558 thousand yen, and operating income, ordinary income and income before income taxes decreasedby 31,225 thousand yen respectively. The balance of retained earnings at the beginning of the current quarter
increased by 39,405 thousand yen.
In accordance with the transitional treatment set forth in paragraph 89-2 of the Revenue Recognition
Accounting Standards, reclassification has not been made by the new presentation method regarding theprevious business year.
(Application of Accounting Standard for Fair Value Measurement, etc.)“Accounting Standard for Fair Value Measurement” (Accounting Standards Board of Japan Statement No. 30,
July 4, 2019; hereinafter referred to as the “Fair Value Measurement Standard”), etc. have been applied from the
beginning of the current business year. In accordance with the transitional treatment set forth in paragraph 19 of
the Fair Value Measurement Standard and paragraph 44-2 of the “Accounting Standard for Financial Instruments”(Accounting Standards Board of Japan Statement No. 10, July 4, 2019), the new accounting policy set forth in the
Fair Value Measurement Standard, etc. was applied prospectively. There is no impact due to this application.
(Changes in Presentation)<Statements of Income>1. “Reversal of provision for loss on guarantees”, which was separately stated within “Non-operating income” inthe previous business year, is presented as part of “Other” effective from the current business year due to afall in quantitative materiality. In order to reflect such change in presentation, a reclassification has been made- 117 -

in the financial statements for the previous business year. As a result, 155,599 thousand yen of “Reversal ofprovision for loss on guarantees”, listed within “Non-operating income” in the statements of income for theprevious business year, has been reclassified as part of “Other” listed within “Non-operating income” in thestatements of income for the previous business year, has been reclassified as part of “Other”.
2. “Foreign exchange gains” and “Gain on redemption of investment securities”, which was presented as part of“Other” in “Non-operating income” in the previous business year, is separately stated effective from the current
business year due to a rise in percentage of the pertinent amount to more than ten hundredths (10/100) of theaggregate amount of Non-operating income. As a result, 189,329 thousand yen of “Other”, listed within “Nonoperating income” in the statements of income for the previous business year, has been reclassified into the
combination of 92,534 thousand yen of “Foreign exchange gains”, 48,371 thousand yen of “Gain on
redemption of investment securities” and 204,022 thousand yen of “Other” (including a reclassification of
155,599 thousand yen from Reversal of provision for loss on guarantees in 1).
3. “Gain on reversal of share acquisition rights”, which was presented as part of “Other” in “Extraordinary income”
in the previous business year, is separately stated effective from the current business year due to a rise inpercentage of the pertinent amount to more than ten hundredths (10/100) of the aggregate amount ofExtraordinary income. As a result, 27,699 thousand yen of “Other”, listed within “Extraordinary income” inthe statements of income for the previous business year, has been reclassified into the combination of 27,550
thousand yen of “Gain on reversal of share acquisition rights” and 148 thousand yen of “Other”.
4. “Loss on retirement of non-current assets”, which was presented as part of “Other” in “Extraordinary losses”
in the previous business year, is separately stated effective from the current business year due to a rise inpercentage of the pertinent amount to more than ten hundredths (10/100) of the aggregate amount ofExtraordinary losses. As a result, 27,605 thousand yen of “Other”, listed within “Extraordinary losses” in thestatements of income for the previous business year, has been reclassified into the combination of 27,605
thousand yen of “Loss on retirement of non-current assets”.
(Notes Related to Balance Sheets)*1 Assets subject to a security interest and secured liabilities corresponding thereto
Assets subject to a security interest(Thousands of yen)Previous business year
(As of March 31, 2021)

Current business year
(As of March 31, 2022)

Buildings
Structures
Machinery and equipment
Tools, furniture andfixturesLand2,548,529
209,212
831,156
57,451(2,548,529)(209,212)(831,156)

2,719,922
197,149
903,157(2,719,922)(197,149)(903,157)(57,451)

84,636(84,636)

266,508(199,190)

266,508(199,190)

Total

3,912,858(3,845,541)

4,171,373(4,104,056)

Secured liabilities

Current portion of long-termloans payable
Long-term loans payable
Total(Thousands of yen)Previous business year
(As of March 31, 2021)

Current business year
(As of March 31, 2022)

133,332(133,332)

680,558

680,558(680,558)－－

813,890(813,890)

680,558(680,558)(680,558)

The parenthesized figures represent factory foundation mortgages and the liabilities secured by such mortgages.

- 118 -

*2

Monetary receivables and payables outstanding with associated companies (excluding those separately stated)(Thousands of yen)Previous business year
(As of March 31, 2021)

Short-term monetary receivables
Short-term monetary payables*3

817,213
1,027,066

Current business year
(As of March 31, 2022)
908,437
1,203,271

Guarantee liabilities
Accounts borrowed from financial institutions of associated companies and Guarantee liabilities for
performance guarantee
Previous business year
(As of March 31, 2021)

Satosen Co., Ltd.
(Loan guarantee)
Protec Arisawa America, Inc.
(Product warranty)(Thousands of yen)
Current business year
(As of March 31, 2022)

742,069

883,044

11,17812,357*4 The Company has an overdraft agreement in effect with each of its five (5) partner banks to ensure efficient
procurement of operating funds. The following is the balance of unexecuted loans under such overdraft
agreements as of the end of the current and previous business years.
(Thousands of yen)Previous business year
(As of March 31, 2020)

Current business year
(As of March 31, 2021)－

Total amount of a loan commitment agreement
Aggregate overdraft limit
Drawdowns

1,200,000
6,300,000－

6,000,000－

Balance of unexecuted loans

7,500,000

6,000,000(Notes Related to Statements of Income)*1 Volume of transactions with associated companies
Previous business year
(From April 1, 2020
to March 31, 2021)
Gross operating transaction volume
Net sales
Value of goods laid in

2,437,195
4,048,297
456,723

Gross non-operating transaction volume(Thousands of yen)
Current business year
(From April 1, 2021
to March 31, 2022)
2,103,999
3,918,900
1,007,126*2 Approximately 48% of the amount of selling, general and administrative expenses recorded for the previous
business year falls under selling expenses, while the remaining 45% falls under general and administrative
expenses. Approximately 52% of the amount of selling, general and administrative expenses recorded for thecurrent business year falls under selling expenses, while the remaining 55% falls under general andadministrative expenses. The major items of selling, general and administrative expenses and their respective
amounts are as follows.
Previous business year
(From April 1, 2020
to March 31, 2021)
Salaries and allowances
Provision for bonuses
Retirement benefit expenses
Freightage and packing expenses
Depreciation
Other

616,355
75,06573,213
717,769
81,6691,035,216- 119 -

(Thousands of yen)
Current business year
(From April 1, 2021
to March 31, 2022)
707,049
96,361
58,032744,238
83,7601,119,679

(Notes Related to Securities)
Equity stakes in subsidiaries and affiliated companies
Previous business year (As of March 31, 2021)
Category

Amount shown onbalance sheets

Equity stakes in subsidiaries
Note:(Thousands of yen)
Fair value

5,482,441

Difference

13,164,426

7,681,985

Amount shown on the balance sheets for the equity stakes in subsidiaries and affiliated companies whose fair value isdeemed extremely difficult to reasonably determine(Thousands of yen)
Category

Previous business year

Equity stakes in subsidiaries

735,582

Equity stakes in affiliatedcompanies

220,380

As these equity stakes have no quoted market price, and it is deemed extremely difficult to reasonably
determine their respective fair values, they are not included in the tables entitled “Equity stakes in subsidiaries
and affiliated companies” shown before.
Current business year (As of March 31, 2022)
Category(Thousands of yen)Amount shown onbalance sheets－

Equity stakes in subsidiaries
Note:

Fair value

Difference－－

Amount shown on balance sheets for stocks and others without a quoted market price which are not included above.
(Thousands of yen)
Category

Current business year

Equity stakes in subsidiaries

11,176,354

Equity stakes in affiliatedcompanies

220,380- 120 -

(Notes Related to Tax Effect Accounting)
1. Breakdown by major occurrence factor of deferred tax assets and deferred tax liabilities(Thousands of yen)Previous business year
(As of March 31, 2021)

Current business year
(As of March 31, 2022)

Deferred tax assets
Loss on valuation of investment securities
Impairment loss
Provision for retirement benefits
Provision for bonuses
Provision for loss on guarantees
Allowance for doubtful accounts Provision for bonuses
Other
Deferred tax assets subtotal
Valuation allowance

396,165
317,774
171,088
109,075
90,11467,823219,982

396,165289,935
160,923
102,619
75,226
95,104282,214

1,372,024△941,834

1,402,188△946,715

Deferred tax assets total
Deferred tax liabilities
Valuation difference on available-for-sale securities
Other

430,190

455,473△679,619△38,885△533,402△7,485

Deferred tax liabilities total△718,504△540,887

Net amount of deferred tax liabilities△288,314△85,414

2.

Breakdown by item of major causes of any difference between the normal effective statutory tax rate and theeffective income tax rate after tax effect accounting
Previous business year
(As of March 31, 2021)

Current business year
(As of March 31, 2022)

30.5％

30.5％

Items permanently excluded from taxable income

△4.2％

△6.2％

Special tax deductions

△0.9％

△2.3％

Items permanently excluded from tax-deductible
expenses
Other

0.7％

0.9％

△0.8％

1.3％

Effective income tax rate after tax effect accounting

25.3％

24.2％

Normal effective statutory tax rate
(Adjustments)(For Revenue Recognition)
Notes on the basic information for understanding revenue from contracts with customers are omitted as the same details areshown in “Notes (For Revenue Recognition)” of the Consolidated Financial Statement.

(Significant Subsequent Events)(Purchase of treasury stock)
Notes are omitted as the details are shown in “Notes (Significant Subsequent Events)” of Consolidated Financial
Statements.

- 121 -(Supplementary Schedules)[Schedule of property, plant and equipment, etc.](Thousands of yen)

Category

Property,plant andequipment

Type of assets

Balance at the
beginning ofcurrent period

Amount ofdecrease incurrent period

Amount ofdepreciation oramortization incurrent period

Balance at theend of current
periodAccumulated
depreciation or
accumulated
amortization

Buildings

3,786,312

178,301

11,489280,928

3,672,196

11,231,810

Structures

306,444

29,965－39,898296,510

1,245,881

Machineryandequipment

2,204,894

370,806

17,895(11,686 )

640,992

1,916,812

20,990,146

Vehicles

22,027

16,811383

15,17423,281

196,431

Tools,
furnitureand fixtures

179,962

135,561

1,679(1,242 )91,123

222,721

1,462,364

1,376,078－－－

1,376,078－

Lease assets

249,081

152,846

2,084

55,985

343,857

92,879Constructionin progress

34,827

1,343,486

1,146,060－

232,253－

Total property,
plant andequipment

8,159,629

2,227,779

1,179,592(12,928 )1,124,103

8,083,713

35,219,515

Software

84,562

61,270－29,903

115,929

－

Other

9,631

－

－

90

9,541

－

Land

Intangible
assetsAmount ofincrease incurrent period

Total
intangible－
94,194
61,27029,994125,470
assetsNote: 1. Key components of the increase in the current period are as follows.
(Thousands of yen)
Machinery andElectronic materials manufacturing facilities
310,649
equipment
Industrial application structural materials manufacturing facilities
32,101
Electrical insulating materials manufacturing facilities
25,737
Construction in progress
Electronic materials manufacturing facilities
938,960
Entire facilities of the Company
192,963
Electrical insulating materials manufacturing facilities
106,500
2. Key components of the decrease in the current period are as follows.
Construction in progressTransfer to the main account(Thousands of yen)884,293

3. The amount in parentheses in the “Amount of decrease in current period” column is the amount of impairment loss.

[Schedule of allowances and provisions](Thousands of yen)
Balance at the
beginning of current
periodAmount of increasein current period

Allowance for doubtful accounts

222,371

310,593

221,147

311,817

Provision for bonuses

357,625

336,456

357,625

336,456

Provision for loss on guarantees
Provision for share-based
remuneration

295,458－

48,815

246,643－

29,802－29,802Item(2) Details of Major Assets and Liabilities- 122 -

Amount of decrease Balance at the end of
in current period
current period－

Statement is omitted as the relevant information is stated in the consolidated financial statements.

(3) Other
No applicable matter.

VI. Outline of Share Handling of the Submitting Company

Business year

From April 1 to March 31

Ordinary General Meeting of
Shareholders

To be held in June

Record date

March 31

Record dates of distribution ofdividends from surplus

September 30 and March 31

Number of shares per unit

100 shares

Purchase of shares constituting
less than one full unit
(Special account)
Stock Transfer Agency Dept.,
Handling place

Mitsubishi UFJ Trust and Banking Corporation
1-1 Nikko-cho, Fuchu-shi, Tokyo
Sumitomo Mitsui Trust Bank, Limited

Transfer agent

1-4-1, Marunouchi, Chiyoda-ku, Tokyo

Forwarding office

Purchase fees

Method of giving public notice

Privileges of shareholders
Note:--The amount obtained by prorating the consignment fee per unit (prescribed by
Tokyo Stock Exchange) according to the number of shares constituting lessthan one full unit purchased
Public notices of the Company shall be given by electronic means; provided,
however, that if an electronic public notice cannot be provided due to an
accident or any other unavoidable reason, the Company shall publish its public
notice in the Nikkei newspaper.
Electronic public notices URL:
http://www.arisawa.co.jp/japanese/koukoku.html
None

Pursuant to the provisions of the Articles of Incorporation of the Company, the shareholders of the Company’s sharesconstituting less than one full unit may not exercise any rights other than: (i) the rights set forth in each item of Article 189,
paragraph 2 of the Companies Act; (ii) the right to make requests under the provisions of Article 166, paragraph 1 of theCompanies Act; and (iii) the right to receive allotment of the shares offered and allotment of the stock acquisition rights
offered in proportion to the number of shares held by each such shareholder.

- 123 -

VII. Reference Information on the Submitting Company
1. Information on Parent Company, etc. of Submitting Company
The Company has no parent company, etc. provided for in Article 24-7, paragraph 1 of the Financial
Instruments and Exchange Act.

2. Other Reference Information
The Company submitted the following documents between the commencement date of the current businessyear and the date of submission of the Financial Report.
(1) Financial Report, documents attached thereto and Confirmation Letter
Business year from April 1, 2020 to March 31, 2021 (The 73rd Term)
Submitted to the Director-General of the Kanto Local Finance Bureau on June 28, 2021.
(2) Internal Control Report and documents attached thereto
Submitted to the Director-General of the Kanto Local Finance Bureau on June 28, 2021.
(3) Quarterly Report and Confirmation Letter(The First Quarter of the 74th Term) (From April 1, 2021 to June 30, 2021)
Submitted to the Director-General of the Kanto Local Finance Bureau on August 10, 2021.
(The Second Quarter of the 74th Term) (From July 1, 2021 to September 30, 2021)
Submitted to the Director-General of the Kanto Local Finance Bureau on November 12, 2021.
(The Third Quarter of the 74th Term) (From October 1, 2021 to December 31, 2021)
Submitted to the Director-General of the Kanto Local Finance Bureau on February 14, 2022.
(4) Extraordinary Report
Submitted to the Director-General of the Kanto Local Finance Bureau on July 1, 2021.
This is an Extraordinary Report under the provisions of Article 19, paragraph 2, item 9-2 of the Cabinet
Office Ordinance on Disclosure of Corporate Affairs, etc. (Results of exercise of voting rights at thegeneral meeting of shareholders) .
(5) Share Buyback Report
Reporting Period (From May 1, 2022 to May 31, 2022)
Submitted to the Director-General of the Kanto Local Finance Bureau on June 10, 2022

- 124 -

PART II.

INFORMATION ON GUARANTY COMPANIES, ETC. OF THE
SUBMITTING COMPANY

No applicable matter.

- 125 -

Independent Auditors’ Reportconcerning consolidated financial statements and internal control report
June 28, 2022
To the Board of Directors of Arisawa Mfg. Co., Ltd.
Ernst & Young ShinNihon LLC
Niigata office
Akira Igarashi
Designated Limited Liability Partner and Engagement Partner,

Certified Public Accountant
Eishi Daikoku
Designated Limited Liability Partner and Engagement Partner,

Certified Public Accountant<Audit of Financial Statements>
Audit Opinion
For the purpose of granting audit certification under the provisions of Article 193-2, paragraph 1 of the Financial Instruments andExchange Act, we have audited the consolidated financial statements of Arisawa Mfg. Co., Ltd. listed in the “Status of Accounting” forthe consolidated fiscal year from April 1, 2021 to March 31, 2022, consisting of the consolidated balance sheets, consolidated statements
of income, consolidated statements of comprehensive income, consolidated statements of changes in shareholders’ equity and other net
assets, consolidated statements of cash flows, important matters underlying preparation of consolidated financial statements, other notes
and consolidated supplementary schedules.
In our opinion, the above consolidated financial statements fairly present, in all material respects, the financial conditions of Arisawa
Mfg. Co., Ltd. and its consolidated subsidiaries as of March 31, 2022 as well as the results of their operations and their status of cash
flows for the consolidated fiscal year ended March 31, 2022 in accordance with the corporate accounting standards generally acceptedin Japan.
Basis for the Audit Opinion
We conducted our audit in accordance with the auditing standards generally accepted in Japan. Our responsibility in the auditing
standards is stated in “The Responsibility of Auditors in the Consolidated Financial Statements Audit.” We are independent of theCompany and its consolidated subsidiaries and fulfill other ethical responsibilities as an auditor.in accordance with the code ofprofessional ethics in Japan. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Key Audit Matters
Key audit matters are those matters that the auditor, as a professional expert, considers to be particularly important in the audit of theconsolidated financial statements for the current consolidated fiscal year. Those are matters that were addressed in the course of
performing the audit of the consolidated financial statements as a whole and in forming the audit opinion thereon, and we do not
express specific opinions on these matters.

- 126 -

Valuation for Inventories
Details of Key Audit Matters and Reasons for Decisions

Audit Response

As stated in the Notes (Significant Accounting Estimates),
there was a sharp decline in demand for aircraft materials dueto the spread of the new coronavirus infection (COVID-19),
and a valuation loss of 37,819 thousand yen is recorded forthe relevant inventories (292,638 thousand yen formerchandise and finished goods, and 109,095 thousand yen
for work in process). The valuation of these inventories is
estimated based on the expected future sales, and the major
assumption is the expected sales volume. The assumption for
the expected sales volume takes into account the future
prospects for the containment of the new coronavirus
infection (COVID-19) and trends in aircraft-related demand
including the influence of international situation in Ukraine.
In estimating the valuation of inventories, we assume theexpected sales volume on the presumption that the newcoronavirus infection (COVID-19) will be contained in thenext consolidated fiscal year and demand for aircraft will
gradually recover. However, the key assumptions that take
into account the timing of this containment and the impact on
demand trends entail uncertainty and require management's
judgment. Therefore, we have determined that these mattersconstitute key audit matters.

We principally performed the following audit procedures inconsidering the valuation of inventories.
- We obtained information on confirmed orders after the endof the fiscal year and compared them with the expected sales
volume in order to examine the situation after the end of the
fiscal year with regard to the expected sales volume.
- We compared and analyzed the actual sales volume in thepast with the expected sales volume in order to examine thefact that the expected sales volume is based on the actual sales
volume in the past.
- Information on aircraft-related orders and the production
planning of business partners, etc. were obtained andconsulted in order to examine the timing of corona
containment and demand trends and the influence ofinternational situation in Ukraine taken into account in the
key assumptions.
- The auditor made assumptions about the expected sales
volume and compared it to the company's inventory valuation
based on assumptions set by the Company in order toexamine the effect of uncertainties of the estimates forvaluation of inventories.
- The auditor discussed with management on the expectedsales volume to examine whether it complied withmanagement environment and measures which management
assumed, including the timing of the new corona virus
infection (COVID-19).

Other Information
The other information comprises the information included in the financial report, but does not include the consolidated financial
statement, the consolidated financial results, and our auditor’s reports thereon. Management is responsible for the preparation anddisclosure of the other information. The Corporate Auditors and the Board of Corporate Auditors are responsible for overseeing
the Directors' execution of duties relating to the improvement and operation of the reporting process for the other information.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form ofassurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Responsibility of Management and Corporate Auditors and Board of Corporate Auditors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance withthe corporate accounting standards generally accepted in Japan. This includes improvement and operation of such internal control
as the management deems necessary for the preparation and fair presentation of consolidated financial statements free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing whether it is appropriate to prepare
the consolidated financial statements based on the going concern assumption and disclosing the items regarding the going concern

assumption in accordance with the corporate accounting standards generally accepted in Japan if such items are required to bedisclosed.
Responsibility of Corporate Auditors and Board of Corporate Auditors is to monitor the execution of Directors’ duties in the
improvement and operation of the financial reporting process.
Responsibility of Auditors in the Consolidated Financial Statements Audit
Responsibility of auditors is to express an opinion on the consolidated financial statements from an independent standpoint in
the auditors’ report based on our audit by obtaining reasonable assurance about whether the consolidated financial statements as awhole are free from material misstatement due to fraud or error. Material misstatement is judged to be material if it is likely tooccur due to fraud or error and, individually or in aggregation, is reasonably expected to have an impact on decisions made byusers of the consolidated financial statements.
Auditors make professional judgements and conduct the followings with an attitude of professional skepticism through an
auditing process in accordance with the auditing standards generally accepted in Japan.
・We identify and assess a risk of material misstatement due to fraud or error. We also design and conduct the audit proceduresthat address the risk of material misstatement. The selection and application of the audit procedures depend on the auditor's
judgment. In addition, we obtain sufficient and appropriate audit evidence to provide a basis for our audit opinion.
・In making such risk assessments, the auditors review internal controls relevant to the audits in order to design audit proceduresthat are appropriate under the circumstances, while it is not the objective of an audit of the consolidated financial statements
to express an opinion on the effectiveness of the entity’s internal control.
・We evaluate the accounting policies adopted by the management and appropriateness of their methods of application as well
as reasonableness of the accounting estimates made by the management and validity of related notes.
・We conclude whether it is appropriate for the management to prepare the consolidated financial statements with the going
concern assumption and, based on the obtained audit evidence, whether a material uncertainty regarding events or conditions
that may cast significant doubt on the going concern assumption exists. If a material uncertainty regarding the going concern
assumption exists, it is required to promote awareness to the notes in the consolidated financial statements in the auditors’
report, or if the notes regarding a material uncertainty in the consolidated financial statements are inappropriate, it is required
to express an opinion with exceptive items to the consolidated financial statements. Conclusion by the auditors is based on
the audit evidence obtained by the day of the audit report, but a company may not be able to exist as the going concern
depending on future events or conditions.
・We evaluate not only whether the presentation and notes of the consolidated financial statements are in accordance withgenerally accepted accounting principles but also whether the presentation, structure, and contents of the consolidated financial
statements including related notes as well as the consolidated financial statements properly present underlying transactions
and accounting events.
・We obtain sufficient and appropriate audit evidence regarding the financial information of the Company and its consolidated
subsidiaries to express an opinion about the consolidated financial statements. The auditors are responsible for instruction,
supervision, and execution of audits regarding the consolidated financial statements. The auditors assume responsibility for
an audit opinion all by themselves.
The auditors make reports to Corporate Auditors and Board of Corporate Auditors on the scope of a planned audit and its timingof conduct, material audit findings including material weaknesses of internal control identified in the audit process, and othermatters required by the auditing standards.
The auditors make reports to Corporate Auditors and Board of Corporate Auditors on that they complied with the code ofprofessional ethics on independence in Japan, matters that are reasonably believed to have an impact on the auditors’ independence,and the details of safeguards if those are implemented to remove or mitigate inhibitors.
Among the matters discussed with Corporate Auditors and Board of Corporate Auditors, Corporate Auditors shall determine
matters that are considered to be particularly significant in the audit of the consolidated financial statements for the current
consolidated fiscal year as key audit matters and state them in the auditor's report. However, if publication of such matters is
prohibited by laws and regulations, or if the auditor judges that such matters should not be reported because the disadvantages ofreporting such matters in the auditor's report are reasonably expected to outweigh the public interest, albeit in an extremely limited
manner, such matters shall not be included in the auditor's report.
<Audit of Internal Control>
Audit Opinion

For the purpose of granting audit certification under the provisions of Article 193-2, paragraph 2 of the Financial Instruments
and Exchange Act, we have audited the internal control report as of March 31, 2022 of Arisawa Mfg. Co., Ltd.
In our opinion, the above internal control report, in which Arisawa Mfg. Co., Ltd. represents that its internal control overfinancial reporting is effective as of March 31, 2022, fairly presents, in all material respects, the evaluation results of its internal
control over financial reporting in accordance with the evaluation standards for internal control over financial reporting generally
accepted in Japan.
Basis for the Audit Opinion
We conducted an internal control audit in accordance with the auditing standards for internal control over financial reporting
generally accepted in Japan. Our responsibility in the auditing standards for internal control over financial reporting is stated in“Responsibility of the Auditors in Internal Control.” We are independent of the Company and its consolidated subsidiaries andfulfill other ethical responsibilities as an auditor in accordance with the code of professional ethics in Japan. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibility of Management and Corporate Auditors and Board of Corporate Auditors for the Internal Control ReportManagement is responsible for the improvement and operation of internal control over financial reporting as well as the
preparation and fair presentation of the internal control report in accordance with the evaluation standards for internal control overfinancial reporting generally accepted in Japan.
Responsibility of Corporate Auditors and Board of Corporate Auditors is to monitor and verify the status of improvement andoperation of the internal control system for financial reporting.
In this regard, there is a possibility that internal control over financial reporting cannot completely prevent or detect false
statements in financial reporting.
Responsibility of Auditors in Internal Control Audit
Our responsibility is to express an opinion on the internal control report from an independent standpoint by obtaining reasonableassurance about material misstatement in the internal control report based on our internal control audit.
The auditors make professional judgements and conduct the followings with an attitude of professional skepticism through an
auditing process in accordance with the auditing standards for internal control over financial reporting generally accepted in Japan.
・We conduct audit procedures to obtain audit evidence about the results of evaluating internal control over financial reportingstated in the internal control report. Audit procedures for an internal control audit are selected and applied at our own judgment,
based on the gravity of the impact on the credibility of financial reporting.
・We evaluate the overall presentation of the internal control report, including a review of the statements made by the
management with respect to the scope, procedures, and results of the assessment of internal control over financial reporting.
・We obtain sufficient and appropriate audit evidence about the results of evaluating internal control over financial reportingstated in the internal control report. The auditors are responsible for instruction, supervision, and execution of audits regarding
the internal control report. The auditors assume responsibility for an audit opinion all by themselves.
The auditors make reports to Corporate Auditors and Board of Corporate Auditors on the scope of a planned internal control
audit and its timing of conduct, the results of exercising the internal control audit, material weaknesses identified in internal control
to be disclosed, the results of their correction, and other matters required by the auditing standards of internal control.
The auditors make reports to Corporate Auditors and Board of Corporate Auditors on that they complied with the code ofprofessional ethics on independence in Japan, matters that are reasonably believed to have an impact on the auditors’ independence,and the details of safeguards if those are implemented to remove or mitigate inhibitors.
Interest
There exists no special interest between the Company and its consolidated subsidiaries and this audit corporation or its
engagement partners which is required to be stated pursuant to the provisions of the Certified Public Accountants Act.
Note:

1. An original of the above quarterly review report is separately archived by the Company (the company submitting the Quarterly
Report).
2. XBRL data are not included in the subject of the audit.

Independent Auditors’ Report
June 28, 2022
To the Board of Directors of Arisawa Mfg. Co., Ltd.
Ernst & Young ShinNihon LLC
Niigata office
Akira Igarashi
Designated Limited Liability Partner and Engagement Partner,

Certified Public Accountant
Eishi Daikoku
Designated Limited Liability Partner and Engagement Partner,

Certified Public Accountant
Audit Opinion
For the purpose of granting audit certification under the provisions of Article 193-2, paragraph 1 of the Financial Instruments
and Exchange Act, we have audited the financial statements of Arisawa Mfg. Co., Ltd. listed in the “Status of Accounting” forthe 74th business year from April 1, 2021 to March 31, 2022, consisting of the balance sheets, statements of income, statements ofchanges in shareholders’ equity and other net assets, important accounting policies, other notes and supplementary schedules.
In our opinion, the above financial statements fairly present, in all material respects, the financial conditions of Arisawa Mfg.
Co., Ltd. as of March 31, 2022 and the results of its operations for the business year ended March 31, 2022 in accordance with thecorporate accounting standards generally accepted in Japan.
Basis for the Audit Opinion
We conducted our audit in accordance with the auditing standards generally accepted in Japan. Our responsibility in the auditing
standards is stated in “Responsibility of the Auditors in Financial Statements Audit.” We are independent of the Company and its
consolidated subsidiaries and fulfill other ethical responsibilities as an auditor in accordance with the code of professional ethics
in Japan. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Key Audit Matters
Key audit matters are those matters that the auditor, as a professional expert, considers to be particularly important in the auditof the financial statements for the current business year. Those are matters that were addressed in the course of performing theaudit of the financial statements as a whole and in forming the audit opinion thereon, and we do not express specific opinions onthese matters.
Valuation of Inventories
This is omitted because it is identical to the key audit matters (valuation of inventories) described in the audit report on the
consolidated financial statements.
Other Information
The other information comprises the information included in the financial report, but does not include the consolidated financial
statement, the consolidated financial results, and our auditor’s reports thereon. Management is responsible for the preparation anddisclosure of the other information. The Corporate Auditors and the Board of Corporate Auditors are responsible for overseeing
the Directors' execution of duties relating to the improvement and operation of the reporting process for the other information.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in theaudit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Responsibility of Management and Corporate Auditors and Board of Corporate Auditors for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the corporate
accounting standards generally accepted in Japan. This includes improvement and operation of such internal control as the
management deems necessary for the preparation and fair presentation of financial statements free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing whether it is appropriate to prepare the financial
statements based on the going concern assumption and disclosing the items regarding the going concern assumption in accordancewith the corporate accounting standards generally accepted in Japan if such items are required to be disclosed.
Responsibility of Corporate Auditors and Board of Corporate Auditors is to monitor the execution of Directors’ duties in the
improvement and operation of the financial reporting process.
Responsibility of Auditors in Financial Statements Audit
Responsibility of auditors is to express an opinion on the financial statements from an independent standpoint in the auditors’
report based on our audit by obtaining reasonable assurance about whether the financial statements as a whole are free frommaterial misstatement due to fraud or error. Material misstatement is judged to be material if it is likely to occur due to fraud or
error and, individually or in aggregation, is reasonably expected to have an impact on decisions made by users of theconsolidated financial statements.
The auditors make professional judgements and conduct the followings with an attitude of professional skepticism through an
auditing process in accordance with the auditing standards generally accepted in Japan.
・We identify and assess a risk of material misstatement due to fraud or error. We also design and conduct the audit proceduresthat address the risk of material misstatement. The selection and application of the audit procedures depend on the auditor's
judgment. In addition, we obtain sufficient and appropriate audit evidence to provide a basis for our audit opinion.
・In making such risk assessments, the auditors review internal controls relevant to the audits in order to design audit proceduresthat are appropriate under the circumstances, while it is not the objective of an audit of the financial statements to express an
opinion on the effectiveness of the entity’s internal control.
・We evaluate the accounting policies adopted by the management and appropriateness of their methods of application as well as
reasonableness of the accounting estimates made by the management and validity of related notes.
・We conclude whether it is appropriate for the management to prepare the financial statements with the going concern assumption
and whether a material uncertainty regarding events or conditions that may cast significant doubt on the going concern
assumption exists based on the obtained audit evidence. If a material uncertainty regarding the going concern assumption exists,
it is required to promote awareness to the notes in the financial statements in the auditors’ report, or if the notes regarding amaterial uncertainty in the financial statements are inappropriate, it is required to express an opinion with exceptive items to thefinancial statements. Conclusion by the auditors is based on the audit evidence obtained by the day of the audit report, but acompany may not be able to exist as a going concern depending on future events or conditions.
・We evaluate not only whether the presentation and notes of the financial statements are in accordance with generally accepted
accounting principles in Japan but also whether the presentation, structure, and contents of the financial statements including
related notes as well as the financial statements properly present underlying transactions and accounting events.
The auditors make reports to Corporate Auditors and Board of Corporate Auditors on the scope of a planned audit and its
timing of conduct, material audit findings including material weaknesses of internal control identified in the audit process, andother matters required by the auditing standards.
The auditors make reports to Corporate Auditors and Board of Corporate Auditors on that they complied with the code ofprofessional ethics on independence in Japan, matters that are reasonably believed to have an impact on the auditors’
independence, and the details of safeguards if those are implemented to remove or mitigate inhibitors.
Among the matters discussed with Corporate Auditors and Board of Corporate Auditors, Corporate Auditors shall determine
matters that are considered to be particularly significant in the audit of the financial statements for the current business year as
key audit matters and state them in the auditor's report. However, if publication of such matters is prohibited by laws andregulations, or if the auditor judges that such matters should not be reported because the disadvantages of reporting such mattersin the auditor's report are reasonably expected to outweigh the public interest, albeit in an extremely limited manner, such mattersshall not be included in the auditor's report.
Interest
There exists no special interest between the Company and this audit corporation or its engagement partners which is required to
be stated pursuant to the provisions of the Certified Public Accountants Act.

Note:

1. An original of the above quarterly review report is separately archived by the Company (the company submitting the Quarterly
Report)..
2. XBRL data are not included in the subject of the audit.